COMPARATIVE PRIVATE LAW LEGAL TRANSPLANTS University of Oslo Prof. Giuditta Cordero Moss

Legal Transplants Circulation of legal models –Reception of structure and principles of a legal system –”Borrowing” of ad hoc legal rules

Reasons for legal transplants Imposition –E.g.: French law - colonies Prestige –E.g.: German law - pandectists Efficiency –E.g: English law – financial transactions Chance –E.g.: Russian transition

Legal transplants and legal families Cross-family transplants Possible: –Legal families are classification of legal models, not legal models themselves Difficult: –Legal families present structures and principles that may not be compatible with rules generated under different structures

Multiple models Russian company law before JSC Act 1995: –Gov.Decree 601/90: JSC – US model –Enterprises Act 90: LLC – German model

Multiple models – criticism Transplant from common law into a civil law system Coexistence of models from two different legal families Classification describes to reality, not reality adapts to classification Main consequences : richness of system

Incompatible models Decree 2296/93: Transplant of trust into Russian system

Incompatible models? Trust – common law: –Dual property: formal ownership, beneficial interest –Injunction to use property in best interests of beneficiary –Tracing with third parties (if bad faith) –Protection against trustee’s creditors Ownership – civil law: –Unitary property –Fiduciary obligations –Only contractual liability

Transplant of different models Trust transplanted into various civil law systems: Louisiana, Quebec, Scotland, Japan, Liechtenstein,… Why is it incompatible with the Russian system?

Transplant of trust into Russia Context: improvement of industry prior to privatisation. –Shares transferred to banks against loan, banks manage companies, on maturity loan repaid or bank remains owner of company Art. 1: ”The institution of trust is transplanted into the civil law of the Russian Federation” Art. 13:Trustee responds of proper performance with all its assets

Comparison of models Common law trust: –Transfer of formal ownership, creation of beneficial interest –Injunction –Tracing –Separation from trustee’s assets Decree 2296 trust: –Transfer of total ownership –Contractual liability of trustee in case of breach of fiduciary obligations

Incompatible models - conclusion Trust may be transplanted from common law to civil law Transplant of trust by Decree 2996 not successful Decree 2996 failed to see function, legal effects and remedies in the original system and differences in the own system Decree 2996 transplanted terminology, but not legal effects

Transplants at a lower level Contract practice in business transactions –Use of English language –Use of English language contract models Contract regulation is tailored to common law even if governed by civilian law

Common law v. Civil law Literal interpretation Exhaustive contractual regulation Caveat emptor Judge shall ensure accurate implementation of agreement Purposive interpretation Extensive and analogical interpretation Implied principles and rules Judge shall ensure fair and balanced deal

Expectations of drafters Count on contractual regulation and details What is not in the contract is not part of it Contract to be performed literally irrespective of balance bewteen interests Contract is integrated by implied terms Contract details are mer illustrations and may be extended Good faith and fair dealing restrict literal application of the contract

Common law models governed by civilian law Does contract practice effect a legal transplant of ”caveat emptor” into governing law? –To what extent is this transplant feasible? –To what extent is this transplant justified? ex.htmlhttp:// ex.html