Topic 1. Essential elements of the legal system PDF

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Chapter 1

Introduction to business law

Clara Castells

PART I – INSTITUTIONS OF LEGAL SYSTEMS (Lela Mélon) 1. ESSENTIAL ELEMENTS OF THE LEGAL SYSTEM 1.1. Legal Rules and Mechanisms for their Production and Application. Primary law: Substance of the law. All the rules of conduct. These laws are legally enforceable. Secondary law: It gives powers to organs (conferring power, they say who can do what). The main example of secondary law is the constitution (it has to be general). Inheritance law and contract law are also secondary law.

What is the law? A legal rule is a behavioural rule which contains a general binding for all members of a community because it has been issued by bodies or social groups especially authorized for doing so. There is a fact pattern, and a legal consequence. Without law, this relation isn’t followed. The legal rules created by the territorial competent authorities form the legal system. (Spanish legal system, Catalan legal system, French legal system…). •

In some autonomous communities as Catalunya, their law is sometimes above the Spanish law.

Characteristics of a legal rule: -

-

It has to be GENERAL: is it is too specific it is possible that doesn’t relate to some situations (example of the female rapist). The problem of it being too general, it may be ambiguous. It has to be STABLE: So it makes it predictable so that we know how to act. It has to be PROSPECTIVE: There is no retractability (I impose the rule today and say it is valid from before). There is one exception in criminal law if it gives benefits to the one it is regulating. (If at the time you rob a bank jail time is 10 and later 5, you change to 5). PROMULGATION: It has to be published. It has to be CLEAR to solve ambiguity. If it is not, the interpretation of the judge is the one that decides which its nature is. It has to be NON-CONTRADICTORY. If it is, sometimes even a judge cannot decide what it means. (Constitution court) It has to be CONGRUENT (congruence= agreement) between all the branches: all the branches to interpret the rule in the same manner. It has to be POSSIBLE: You cannot demand something impossible from people. For example, you cannot ask a tire manufacture not to produce at all.

Socially, we punish the ones that behave in a way which is not socially accepted. Social rules existed before legal rules. Traditional definition: Centralized production of legal rules by legislatures, applied by courts, combined with centralized coercive enforcement of those rules and judgements by duly constituted governments. • • •

Legal rules / Judgements: Judgements are important because they interpret the words of the legal rules when ambiguity happens. Procedures linked to legitimacy Monopoly of coercion: ‘Monopoly on violence’ (Max Weber): If everybody could punish everyone, there would not be social order. There are authorities to guarantee that social order. Max Weber called the monopoly of coercion the monopoly of violence: who in the society has the right to be violent in order to make the law accomplished.

Chapter 1

Introduction to business law

Clara Castells

Constitution > Laws > Regulations In the EU, the Constitution is called the Treaty of Lisbon, but it functions the same way. If there is a law conflict between two countries, international law is what says which one has to be applied.

Division of powers Every state has this division of powers, which is really important. Nobody can have 2 functions in different branches on power.

LEGISLATIVE POWER: Senate is a controlling power (it controls what the Congress does), but the Congress is the one that decides. They only cooperate in the really important matters. JUDICIAL POWER: It can be individual court or Multipersonal Tribunals. Companies go to Multipersonal tribunals or arbitrage (maximum a month or two), because going to regular court takes so long (more than 2 years). EXECUTIVE POWER: Government and Public Administration. They are not only applying the law, but issuing regulations. Creating its own rules in order to solve the ambiguity. An environment can be said to be organized on the basis of a legal order if: (I)There is an identifiable entity (an institution) that deliberately supplies a normative classification scheme that designates some actions as wrongful (punishable, undesirable), and (II) actors, as a consequence of the classification scheme, forego wrongful actions to a significant extent. So, law means…. 1. Normative scheme: the substance of law, what the rule says. 2. Legitimacy: who can enact (“promulgar”) the rules and what the procedure is. 3. Enforcement: punishment for not accomplishing the law.

We distinguish between: -

Primary rules Secondary rules

The law is not there to punish. That is a consequence we want to avoid. The point of the law is to avoid that people in society behave badly.

Chapter 1

Introduction to business law

Clara Castells

Why do we need norms? The need for laws Laws are required in society to: -

Regulate individuals’ behavior: correspond with what is acceptable to the majority of individual. Promote coordination between the different agents in society. Provide certainty.

Basic functions of the law: 1. Providing legal certainty: the consequences of behaving in some way are known. 2. Facilitating planning and coordination. 3. Maintaining order and keep the peace

Public/ Private law Public law: it regulates the relationship between the State and the individual. For example: Criminal law: State says what you can and cannot do not to go to jail. Finance law: How to collect taxes, how much from who, in which way…. Administrative law: It determines relations between regions and says who has power to do what. International public law: It determines relationships between States. (Ambassadors and consulates). Constitutional law: It tells us who can do what and when. Labor law: It tells the workers’ rights (Minimum wage, social protection…). Private law: it regulates the relationship between individuals and companies (individual vs. individual, individual vs. company, or company vs. company). A company has a legal personality. For example: Civil law: It includes family law (divorces, kids…), contract law. Commercial law: Important part of it is consumer protection. International private law: When there are relationship conflicts amongst people from different countries. Labor law*: The contract that employees get with their employers. 1.2. The Two Legal Systems: Civil Law and Common Law Production of legal rules: Legal traditions. 1. 2. 3. 4. 5.

Common law: US, UK (except Scotland). It is decided from the cases Civil law: Europe. There are property laws. Socialist law: Russia. Only the state has a property right. There is more equality. Islamic law – Religious law: When there is a funeral, women cannot go to the graveyard. Mixed systems: This happens in colonies.

Chapter 1

Introduction to business law

Clara Castells

1. COMMON LAW The US, Australia and New Zeland have common law because of the UK (colonialization). A contract in a place with common law is more specific, because you don’t have the law to back you up, so you have to be more specific. It has its origin in England in 1066. Its main purpose was to increase the royal power (at the expense of feudal lords). Common law is judge-made law: The conflict is brought to the judge, and he decides based on that case, creating a general rule from those specific circumstances for all the next cases. (This is why in the US they study cases and here we study laws). ORIGINS 1150-1160: King Henry II of England imposed equal law on all England based on what the judges decide; it wwas a system of actions (writs*) and a system of courts of law to protect these actions (secular tribunals). But, why do judges have this much power? Because the first judges were literate and trusted people (historically seen like that). *Writ (form of action): ‘a command of the King directed to the relevant person (official, judge), containing a brief indication of a matter under dispute and instructing the addressee to call the defendant into his court and to resolve the dispute in the presence of the parties’ (Zweigert and Koelz, 1998, p.184). This means that he identified the important concepts, and then trusted a judge to solve it. When there were similar cases, they were all solved in the same way. Resolution of a dispute, and when there is a similar case, decide in the same exact way. This is a solution and a problem at the same case, because if it is only similar but not the same, there was no law. To solve this problem, equity (something that happens to our possessions) cases started to be judged in the 15th century, when a formal Court of Chancery was created with jurisdiction (power to decide) over pleas in equity. Common law is found in yearbooks and reports, in cases which are decided every year. The difference between a yearbook and a report is organization. In yearbooks, they are organized by years and in reports by keywords.

Precedent: case which was similar to yours and which decision is a model followed to decide in following cases. (Principle of stare decisis). Stare decisis: model which tells you how to act based on precedent.

Chapter 1

Introduction to business law

Clara Castells

Two different precedents:

Persuasive precedent: The precedent has the power of explanation. You don’t have to follow it word by word but you have the explanations to decide. When the court is deciding, they have persuasive precedent one another, you finding support for your arguments in previous precedent. The more similar cases you find, the more persuasive your argument is, but it doesn’t mean you have to decide in the same exact way.

Binding precedent: It comes from a court that is higher than you. For example, for appellate court, the supreme court is binding. This means you have to decide in the same way your superior court decided if the facts are the same. If you don’t decide in a different way, there can be an appeal (complaint that your case was decided wrongly to a higher court). -

Horizontal stare decisis: same (level) court: The following State can be inspired in the decision another State took, in which case it is horizontal stare decisis. Vertical stare decisis: higher court(s): State decides what level on the federal/State law.

vertical stare decisis. *Stare decisis: to stay by things decided.

Bad legal norms survive to precedents, sometimes easier than in the civil law (this is the downside of the stare decisis).

Lawyers are better in finding precedents than judges, since they must be completely objective. Lawyer: It helps solve everyday issues. General attorney: Lawyer of the state. (Trying to make murders not happen again).

Chapter 1 Introduction to business law Clara Castells Precedents can be precise (they apply to a specific case) and flexible (as the characteristics of the cases change, the decision changes) at the same time. When cases are not that specific, there is no rule for it. On the other hand, too much flexibility can lead to confusion (you don’t know how to act).

The legal certainty issue is the biggest problem of the common law, because the better your lawyer is, the more possibilities you have to get away with breaking the system.

Additional sources of law in common law -

Legislation: (says federation has the right to decide what?) The rights of every person/institution. Specific points that still legislated in US. Custom: Something that we are used to repeat (social norms). Conventions: International treaties.

CHARACTERISTICS 1. Mostly unwritten 2. Stare decisis 3. Adversarial: There are two parties defending their opinion, and the judge decides based on this. The evidence which is not presented, the judge does not know. 4. Role for juries (bench of people deciding). 5. Judicial review. Judge decides on the legal facts and the jury on other questions. This is on criminal law, and there is not always a jury. In the US, if you are called to be a juror, you must absolutely go.

DISTRIBUTION OF COMMON LAW Australia, Canada (not Quebec since it was French), India, New Zealand and South Africa. United States (Louisiana has civil law). Note: Great Britain (England, wales and Scotland) has no common legal system. While many English statutes are applicable in scotlanf, the Scottish private law is based primarly on roman law and represents a mix of common and civil law.

2. CIVIL LAW It is predominant in western Europe . The codification* of rules happened in 18th century. *Code: an authoritative, comprehensive and systematic collection of general clauses and legal principles, divided into Books or Parts. Traditionally: primary sources of law (now Constitutions). Codes appeared before Christ, and turned into constitutions before when the states appeared.

Roman law was so developed, that the legal system from today is based on it. So for civil law, the influence of roman law was exceptionally important.

Chapter 1

Introduction to business law

Clara Castells

INFLUENCES: Canon law: Law imposed by the church. Germanic law Customary practices and local regulations (social norms). Historical development codification process: If a bad social norm found it ay through codification at that time, it has survived, since codes are extremely hard to be changed. (The more general the law the more difficult to change). - Natural Law* and Enlightenment as main intellectual foundations *Natural law = self-enforced social norms. Those were the norms in codification, because they were the social norms at that time. Those civil codes covered: - Civil procedure - Criminal law - Commercial law (Taxes)

Codes create the civil law rather than revealing the existing law. Laws replace, rather than supplement, previous law. Precedent is not necessary binding: you can find different facts and apply law in a different way, but if the supreme court says you are wrong, you are. Inquisitorial rather than adversarial: Specially in criminal law. The judge does not only know the evidence that is presented to him, but he has the right to ask questions to the defendant.

Civil law does not usually use juries, but they can sometimes be found (only for serious criminal cases).

SOURCES OF LAW IN CIVIL LAW COUNTRIES Where one has to look to determine what legal rules are applicable to govern the relationship: - Primary sources (binding): enacted law and custom for a number of countries, sometimes also general principles of law. - Secondary sources (not binding, might have weight when primary sources are absent, unclear or incomplete) such as case law and the writings of the legal scholars. Case law is a primary source in common law and a secondary source in civil law. (Case study= Taking the previous cases Into account in order to decide). Sources of law have different legal force, they form so-called ‘hierarchy’ of legal acts: - In federal states, special rules concerning correlation between federal and state law. - Also international law rules have special effect on national law of the country. Which one represents the EU? It is sui generis (‘de su propio género’), it is different. It is more than an international treaty but it is below the constitution.

Chapter 1

Introduction to business law

Clara Castells

European Union PRIMARY LEGISLATION

SECONDARY LEGISLATION (The EU has the right to do their own rules)

The treaties General principles (CJEU: Court of Justice EU) International treaties Directives & Regulations Decisions Opinions Recommendations

LEGAL INTERPRETATION 1. Literal interpretation: When the rule is so simple and literal it doesn’t need to be interpreted. 2. Contextual interpretation: The rule is unclear but the context of the rue is taken into account in order to understand it (if the rule is in the part of property rights, this is how you have to interpret it). 3. According to the historical and legislative background: Some research is needed to interpret it like that. 4. Sociological interpretation or interpretation according to the social reality of the time 5. Teological interpretation (preferencial application)

OTHER INTERPRETATIVE CRITERIA 1. Logical interpretation 2. Interpretation according to the constitutional principles (really general rules) 3. Interpretation according to the EU principles and laws

3. SOCIALIST LAW The only owner in the socialist law is the State: it emphasizes communal values over individual rights; low-tolerance crime control. Socialist law was originated in 1917 with the Russian Revolution and USSR. It is based on codified Marxist/ Leninist ideology: Individuals are taken care of up to the point to make you enough productive, but not too much at the expense of others. *Chinese Socialist law: It is based in the same system, but the values are different from the Russian socialist law. Socialist law is inquisitorial (more powers to the judges). Other countries with socialist law: Cuba, Eastern Europe (in the past), … Quasi-jury system: collegial bench; one to three professional judges and two of your lay people’s assessors. It is a very punitive law system

4. ISLAMIC LAW (SHARIA) Distinctions: 1. Based on direct revelation from God (Constitution: Koran). 2. Attempts to regulate behavior and thought process (Influence as a community just because you pertain to the Islamic religion). 3. Does not require uniformity of law (The law can be applied in different ways)

Chapter 1

Introduction to business law

Clara Castells

It is somewhere in between inquisitorial and adversarial: It depends on every situation but it is highly regulated (you can’t always act in the same way). Precedent is absent, and there is no use of juries.

5. MIXED SYSTEMS

THE RULE OF LAW The recognition that there are FUNDAMENTAL PRINCIPLES AND VALUES stressing human dignity and value. These rules and principles are articulated and formalized in writing and contained in revered documents. Substantive laws and administrative procedures are implemented to hold the state and its agents to those values and principles....