Table of Contents
Acknowledgements v
Table of Cases xiii
List of Abbreviations xix
1 Introduction: Transnational Securities Disputes and Legal Pluralism 1
I Setting the Scene 2
II The Objective of This Book 5
III Outline of the Argument 7
IV Scope and Limitations 8
2 States, Law and Dispute Resolution 11
I The Development of the Modern State 12
II The Modern State, the Rule of Law and the Judiciary 16
III The Economic Function of Law on Private Matters and Dispute Resolution 17
A Basic Structure: Property and Contract Rights 18
B Imperfect Markets and Regulatory Law 20
C The Role of Dispute Resolution Mechanisms 21
IV States and Transnational Disputes 22
3 Securities Regulation Theory and the Importance of Private Enforcement 24
I Financial Markets 25
A The Mechanics of Price Accuracy 27
B Consequences of Price Inaccuracy 29
i Non-optimal Capital Allocation 29
ii Market Liquidity 30
iii Corporate Governance Failures 30
II Securities Regulation 31
A Rationale for Securities Regulation: Disclosure 32
B Securities Regulation in the European Union 36
III Institutional Aspects of Securities Regulation and the Importance of Private Enforcement 37
A The Regulatory Regime-Institutional Aspects 38
i The Regulatory Mix for Securities Regulation 39
ii Standards for Private Enforcement: the Interplay Between Public Law and Private Law 40
B The Importance of Private Enforcement in Securities Regulation 41
4 The Liability Regime for Securities Disputes 45
I Transacting Securities and Disputes 46
A Issuing Securities 46
B Types of Disputes 47
C Transacting Transnationally 49
II Legal Framework for Securities Liability-Issuers 50
A The United States 51
i The Securities Act of 1933 51
ii Claims under the Securities and Exchange Act of 1934 54
B European Union 58
i The European Perspective 59
ii Implementation in Domestic Systems: the Case of Spain 60
iii Other Liability Regimes 62
C Brazil 63
D Disclosure Liability Standards: Similar But Not Equal 66
III Legal Framework for Securities Liability-Financial Intermediaries 66
IV Legal Framework for Securities Liability-Informational Intermediaries 71
A Compensation 72
B The Liability Regime 74
V Concluding Remarks 77
5 Building a Transnational Securities Dispute Resolution System 79
I Problems with Transnational Dispute Resolution of Securities Transactions 80
II Dispute Resolution Systems in Transnational Securities Transactions-Institutional Considerations 81
A Investor-Issuer 81
i Setting the Incentives 82
ii Overcoming the Prohibition of Opt-Out Aggregate Litigation 83
iii Transnational Aspects 84
iv System Design and Rule of Law 84
v Implementation Aspects 85
B Investor-Financial Intermediary 85
i Transnational Aspects 86
ii Implementation Aspects 87
C Investor-Informational Intermediary 88
III Two Systems for Transnational Dispute Resolution of Securities Transactions 90
A Aggregate Litigation Through Arbitration 91
i Seat of Arbitration and Arbitrability 91
ii Arbitration Clauses 92
iii Importance of the Arbitral Institution 94
iv Possible Problems Remaining 95
B A Network of ADR Systems 96
IV Concluding Remarks 97
6 Institutional Aspects of Dispute Resolution 99
I Legal Aspects of the Institutional Framework 99
A The Legal Basis of the Dispute Resolution System 100
i Direct Jurisdictional Basis 100
ii Consent Jurisdictional Basis: Arbitration 101
iii Considerations of the Legal Basis of a Dispute Resolution System 106
B The Decision Maker's Independence and Accountability 106
i Public Officials 108
ii Private Decision Makers 109
C The Reasoning and Publicity of Decisions 110
II Economic Aspects of the Institutional Framework 112
A Costs of Maintaining a Dispute Resolution System 113
B Costs of Engaging in a Dispute Resolution Procedure 113
i Costs of Access 114
ii Costs of Evidence and Representation 115
III Implications of the Institutional Framework for a Dispute Resolution System 115
7 Alternative Models of Dispute Resolution Systems 118
I National Models 118
A Small Claims Court Model 118
B The Financial Ombudsman Service Model 120
C Self-Regulation Model 123
D Arbitration 124
i State-supervised Model 124
ii Private Arbitration Model 126
II International Models 128
A International Courts 128
B International Arbitral Institutions 130
C The European Cross-Border Mechanism for Financial Disputes: a Network of Dispute Resolution Bodies 130
III Implications 132
A General Implications 132
B EU Implications 133
8 Aggregate Litigation Design 134
I Aggregate Litigation Design: a Framework for Analysis 135
A Conflicts in Aggregate Litigation 137
i Conflicts Between Plaintiffs and Lawyer 137
ii Conflicts Between Group Members 138
iii Third-Party Financiers 139
iv Conflicts in an Opt-out Procedure 140
B Ethical Limitations 144
C Preclusion Principles and Limits on Choosing an Opt-in or Opt-out Mechanism 145
i The Operation of Preclusion - General Aspects 145
ii Types and Scope of Preclusion 149
iii Preclusion and Non-Mutual Parties: Possibility of the Opt-out Procedure 151
iv Preclusion in Arbitration: What Law Will Govern Its Operation? 156
D Final Considerations on Aggregate Litigation Design 158
II Aggregate Dispute Resolution and Securities Disputes 158
9 Aggregate Litigation Models 162
I The American Class Action 162
A A Brief History of the Class Action 162
B Types of Class Action and Their Prerequisites 165
C Class Certification 166
D Class Action and Securities Litigation 168
II Representative Actions: Brazil and Spain 170
III The Dutch Act on Collective Settlement of Mass Damages 173
IV The English Group Litigation Order 174
V The German Capital Market Model Claims Act 175
VI Aggregate Litigation and the European Union 176
VII Class Arbitration 179
A Historical Development of Class Arbitration 179
B Class Action Waivers 181
C The Types of Class Arbitration 182
i The Hybrid Model 182
ii The Provider-created Model 183
D Class Arbitration Outside the United States 184
E Class Arbitration and the European Union 185
VIII Concluding Remarks 185
10 Transnational Aspects of Dispute Resolution 187
I Jurisdiction and Enforcement 188
A Jurisdiction 188
i The Relationship Between Courts and Parties to the Disputes 190
ii The Relationship Between the Forum Court and Other Courts 191
B Recognition and Enforcement of Foreign Judgments 197
i Integrated Recognition and Enforcement Systems: the EU Example 198
ii Unilateral Recognition Systems 200
C An Attempt at a Global Convention on Jurisdiction 201
D Arbitration 202
E Jurisdiction and Enforcement Aspects of Aggregate Litigation 203
II Applicable Law 204
A Contract 206
B Tort 208
C Applicable Law in Arbitration 209
D Applicable Law in Aggregate Litigation with Transnational Elements 210
III The Public Policy Question 212
A Public Policy and Securities Disputes 212
B Public Policy and Notice in Aggregate Litigation 214
C Public Policy and Arbitrability of Securities Disputes 216
D Public Policy and Arbitration Based on Corporate Charters 218
IV Implications for Securities Disputes 220
A Investor-Issuer Disputes 220
i Exchange-based 220
ii Open Market 223
B Investor-Financial Intermediary Disputes 224
i Investor Acts Towards Financial Intermediary 225
ii Financial Intermediary Acts Towards Investor 226
C Investor-Informational Intermediary Disputes 227
V Concluding Remarks on the Transnational Aspects of Securities Disputes 228
Bibliography 229
Index 243
