UNIFYING THE LAW OF CROSS-BORDER SECURITIZATION:
The author maintained elsewhere that "the laws governing cross-border securitization are developed first by decentralized lawmaking 'markets,' and then absorbed by centralized lawmaking of communities, large intermediaries, and corporations." This paper explores the process by which cross-border securitization law becomes standardized and the law applicable to it becomes uniform. How can decentralized "markets" produce laws that are even approximately uniform?
The lawmaking of cross-border securitization has been analogized to lex Merchantoria, the law created by merchants in their dealings, and the rules created by their institutions. However, unlike the merchants and their institutions, the parties to cross-border securitization, are not organized or repeat players. They do not structure the transactions or the rules under which they operate. Rather, they express their needs, which are then addressed in the transaction documents. The transactional documents are prepared by the lawyers with the consent of the actors. Some of the innovative structures on which the success of the transactions may depend are created by lawyers and other professionals, such as investment bankers. Unlike other contract documents to which the parties rarely resort, the documents of cross-border securitization provide guidelines to which the parties refer more often. Therefore, a more accurate name and description of cross-border securitization lawmaking is lex Juris.
The paper examines the reasons for the emergence of lawyer-made law (LML) in the United States and in civil law countries. It explains the differences between the usual LML and lex Juris governing cross-border securitization, emphasizing its breadth, its scope and its far-reaching coverage. It also addresses the question of how this type of law creation can be, and is, standardized, in a decentralized, contract-driven market.
The paper suggests that lex Juris belongs to a growing group of cross-border
contract-based legal systems; for example, the laws of the Internet. Lex
Juris may be the forerunner of laws governing global activities, which,
by their very nature, escape tight controls of domestic laws. But these
activities still require laws to regulate the relationships among interacting
actors and those who affect them, and to maintain a peaceful co-existence
with applicable domestic laws.
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