Legal Theory Blog

Kotani on Regulation of Sexual Imagery in Japan

Junko Kotani (Shizuoka University) has posted Regulation of Sexual Expression in Japan: Criminalisation of Non-Consensual Distribution of Private Sexual Images and Beyond (Australian Journal of Asian Law, Vol. 23, No. 2, Article 9, 125-138, 2022) on SSRN.  Here is the abstract:

Sexually explicit images are regulated in Japan for different reasons. For example, obscene expression is prohibited to protect society’s minimum standards of sexual morality and ‘harmful books’ are regulated to preserve healthy environments for youth. In recent years, the non-consensual dissemination of sexual images has become a serious social problem, which disproportionately harms women in society. In response, Japan enacted the Act on Prevention of Damage Caused by Provision of Private Sexual Image Records to address this problem and protect the reputations and peaceful private lives (私生活の平穏) of victims. The Act represents a stark contrast to the traditional prohibition of sexual images intended to protect sexual morality or healthy environments in society. This article focuses on the regulation of sexually explicit images in Japan. First, it provides an overview of the history of the regulation of sexual images and explains how the problem of the non-consensual distribution of sexual images previously fell through the gaps of the legal scheme. It then examines the Private Sexual Images Act and the concept of sexual privacy protected by the Act. Finally, it discusses the controversial 2022 legislation that has challenged the country’s adult entertainment video industry.

Lee, Schoenherr, & Starmans on Legal Uncertainty and Economic Activity

Jiwon Lee (Princeton University), David Schoenherr (Princeton University, Bendheim Center for Finance; European Corporate Governance Institute (ECGI)), & Jan Starmans (Department of Finance, Stockholm School of Economics) have posted The Economics of Legal Uncertainty on SSRN.  Here is the abstract:

In this paper, we study how legal uncertainty affects economic activity. We develop a parsimonious model that generates different types of legal uncertainty, which reduce economic activity and which can be classified as idiosyncratic (i.e., diversifiable) or systematic (i.e., nondiversifiable). We test the prediction of the model using micro-level data on bankruptcy judges and corporate loans from Korea. Exploiting differences in judges' debtor-friendliness combined with random judge assignment to restructuring cases and exogenous judge rotations in the judicial system, we compute time-varying court-level measures of debtor-friendliness and legal uncertainty. We first document that firms are more likely to file for restructuring in more debtor-friendly courts with lower legal uncertainty. We further show that legal uncertainty reduces the size of credit markets. The effects are driven by high-risk firms that are most sensitive to bankruptcy law. On examining interest rates, we find that credit supply is relatively more sensitive to systematic than to idiosyncratic sources of legal uncertainty relative to credit demand.

Kim on Expectations and Corporate Prosociality

Hajin Kim (The University of Chicago Law School) has posted Expecting Corporate Prosociality on SSRN.  Here is the abstract:

Teaching people that corporations must exclusively maximize profits can reduce “win-wins”—what is both profitable and good for society. If everyone believes that corporations must maximize profits only, nobody will protest when corporate pursuits of profits harm society—the firms were fulfilling their duty and meeting investor and consumer expectations. But what if people instead believed that corporations should consider their social impacts, even sometimes at the expense of profits? Consumers, employees, and investors might be more willing to object to corporate harms by changing their purchasing, job choice, and investing behaviors or by petitioning corporate leaders for redress. Those objections would change firm incentives. And in response to those tangible incentives, even purely profit-maximizing firms would try to do more good and less harm because doing so would be more profitable.

This paper develops and empirically tests this theory of stakeholder expectations and corporate prosociality. Two preregistered studies with nearly 1300 participants provide initial empirical support for the idea that stakeholder expectations (of exclusive profit maximization or of the possibility of corporate prosociality) affect their protest decisions. Amazon Mechanical Turk workers had the opportunity to sign a real Greenpeace petition against Amazon, the platform that runs Mechanical Turk. Those randomly assigned to learn an exclusive profit maximization norm were less likely to sign the petition than those randomly assigned to learn that firms can and should care about society. Exclusive profit maximization led participants to believe it less appropriate and effective for employees to push for social change, and that fewer firms would care and fewer others would protest. Expecting corporate prosociality instead could thus plausibly make it easier for firms to do well by doing good.

Grunwald on Racial Bias in Criminal Records

Ben Grunwald (Duke University School of Law) has posted Racial Bias in Criminal Records on SSRN.  Here is the abstract:

Objectives: Government officials use criminal records as proxies for past conduct to decide who and how to investigate, arrest, charge, and punish. But those records may be racially biased measures of individual behavior. This paper develops a theoretical definition of bias in criminal records in terms of measurement error. It then seeks to provide empirical estimates of racial bias in official arrest records for a broad swath of offenses.

Method: I use official arrest and self-reported crime data from the Pathways to Desistance study to estimate Black-to-white and Hispanic-to-white crime ratios conditional on arrest. I also develop a novel, theory-based empirical test of differential reporting across racial and ethnic groups.

Results: Compared to white subjects with the same number of arrests, Black subjects committed 53, 30, 23, and 56% fewer property, violent, drug, and DUI offenses, respectively, and Hispanic subjects committed 19 and 46% fewer drug and DUI offenses. The analysis finds relatively little evidence of differential reporting that would bias my estimates upwards, with the possible exception of drug trafficking offenses.

Conclusion: The results provide evidence that Pathways subjects’ arrest records are racially biased measures of their past criminal behavior, which could bias decisions of criminal justice officials and risk assessment algorithms that are based on arrest records.

Recommended.

Patel on Fraud on the Crypto Market

Menesh S. Patel (University of California, Davis - School of Law) has posted Fraud on the Crypto Market (Harvard Journal of Law & Technology, Forthcoming) on SSRN.  Here is the abstract:

Crypto asset trading markets are booming. Traders in the United States presently can buy and sell hundreds of crypto assets on dozens of crypto exchanges, and this trading is expected to further intensify in the coming years. While investors are increasingly turning to crypto asset trading as a vehicle for portfolio appreciation and diversification, the popularization of secondary crypto asset trading risks significant investor harm through increased incidents of fraud. False or misleading statements by crypto asset sponsors or third parties have the prospect of financially impairing traders in crypto asset trading markets, including everyday traders who are ill-equipped to sustain significant investment losses. These significant investment losses will occur alongside and exacerbate any losses that traders may sustain through inherent changes in relatively volatile crypto asset prices.

As traders seek judicial redress for their fraud-related injuries, courts will be asked to make doctrinal determinations that will be pivotal to injured traders’ ability to recover. A primary issue that courts will need to confront is whether crypto asset traders can avail themselves of Fraud on the Market in connection with claims asserted under SEC Rule 10b-5 or CFTC Rule 180.1. This Article addresses that question and has as its intended audience not just academics, but also courts, practitioners, and market participants.

The Article shows that as a doctrinal matter Fraud on the Market is available in securities and commodities fraud cases involving crypto assets that trade on crypto exchanges, especially in light of the Supreme Court’s decision in Halliburton II, which resolved that Fraud on the Market is predicated on just a generalized notion of market efficiency, rather than a strict financial economic notion of efficiency. Drawing on how courts apply the doctrine to fraud cases involving stock transactions, the Article articulates a framework for how Fraud on the Market should be applied to the crypto asset context and explores methodological issues relevant to the framework’s application in a given crypto asset case.

Christensen on Justice Sites and International Criminal Law

Mikkel Jarle Christensen (iCourts, Faculty of Law, University of Copenhagen) has posted Justice Sites and the Fight against Atrocity Crimes on Cambridge Core.  Here is the abstract:

This article develops a new conceptual framework designed to critically study how locality and transversal power relations structure activity and developments in the global field of international criminal justice. The framework is built around the concept of “justice sites,” defined as localities in which organized and social labor—in this case, working with international criminal justice—takes place. The potential effects of social labor performed in specific sites of justice are structured partly by their locality and the resources to which it gives access and partly by their structural position in wider transversal chains of cooperation and competition that cut across different globalized and national fields. In addition to structuring the connections between justice sites, transversal power relations link sites of justice to “practice sites” embedded in other fields in which localized, social labor is not routinely engaged with international criminal justice. Such linkages demonstrate how the framework, developed to study how locality and transversal relations shape the fight against atrocity crimes, can also be used to investigate sites engaged in and across other globalized and national fields of justice, law, governance, and security.

Giving Thanks

It is my custom to mark Thanksgiving each year on Legal Theory Blog by giving thanks.  In the past, I have thanked my own teachers both in law and philosophy.  This year, I want to thank my students.  There have been thousands, starting 37 years ago at Loyola Law School, followed by students at the University of Southern California, Boston University, the University of San Diego, the University of Illinois at Champagne-Urbana, Georgetown University, and the University of Virginia.

As the years go by, I have come to realize that teaching is truly a two-way street--and that over the years my colleagues in the classroom have taught me much more than I have ever taught them.

One student, from my very first year of teaching, David Meadows, has been in touch for all of these years.  Thank you, David, and thanks to each and every student with whom I have shared a classroom.

Stazi on Smart Contracts

Andrea Stazi (European University of Rome - Faculty of Law; National University of Singapore (NUS) - Faculty of Law) has posted Smart Contracts: Elements, Pathologies and Remedies (Forthcoming in: Law and Change: An Asian Perspective, edited by J. Loo & N. Remolina Leon, SMU, 2022) on SSRN.  Here is the abstract:

In reviewing the characteristics of “smart contracts”, above all their peculiarities of automatic execution and resistance to tampering, the paper aims to define the characteristics and peculiarities of their binding force, legal effectiveness and regulation. Thus, the paper examines the elements, pathologies and contractual remedies for smart contracts, and the related main issues that emerge in comparative contract law.

Patrick on Trial by Jury and the Australian Constitution

Jeremy Patrick (University of Southern Queensland School of Law) has posted Trial by Jury, the Great Constitutional Bait-and-Switch on SSRN.  Here is the abstract:

Section 80 of the Australian Constitution provides for trial by jury of all Federal crimes tried by indictment. However, careless framing of the provision and over-literal interpretation by the High Court of Australia has rendered the provision a nullity. Who should bear the brunt of the blame: the framers or the High Court? This draft chapter is part of a manuscript in progress that examines provisions of the Australian Constitution that have little to no operative legal effect: either through poor drafting or poor interpretation.

Here is Section 80:

The trial on indictment of any offence against any law of the Commonwealth shall be by jury, and every such trial shall be held in the State where the offence was committed, and if the offence was not committed within any State the trial shall be held at such place or places as the Parliament prescribes.

Recommended!

Begadze on Opposition Led Subnational Governments in Hungary, Poland, and Turkey

Mariam Begadze (Central European University; Central European University - Democracy Institute) has posted Playbook of Subnational Illiberalism: Autocrats face the Opposition-led Local Governments (The Hague Journal on the Rule of Law (Forthcoming)) on SSRN.  Here is the abstract:

Recognizing the growing tensions between autocrats in the center and opposition-led local governments in Hungary, Poland and Turkey since 2018-2019 local elections, the article contributes to existing literature on illiberal democracies with a subnational portion of illiberal playbook. Tactics identified through the detailed study of the European context and brief review of Latin American experience leaves us with the following categories in the playbook: abuse of (existing) supervisory and accountability mechanisms; generating of financial vulnerability; centralization (outright and indirect) and deconcentration. Each of these categories assemble various means evolving through application and reinterpretation of traditional rules pertaining to local government, as well as crisis-induced innovations. While the Polish account carries the optimism still that antecedent robust guarantees and popular support matter even when illiberals rule the center, the playbook proved successful in Hungary and Turkey. Although certain incrementalism stayed as the most vulnerable actors were the first victims of soon-to-be normalized measures, crisis in Hungary and Poland did stretch the limits to the point that ulterior motives of undermining opposition-led local governments became publicly observable. Reflecting on this phenomenon, in the end, the article poses a theoretical question whether such pretextual instrumentalization of law can itself be judicially manageable, at least in situations when clear political opponents are targeted.