The article considers the impact of money market funds (MMFs) reforms in the US and the EU on the money market fund industry and global financial stability. The 2008 financial crisis proved that MMFs are a source of considerable instability to the global financial system, and highlighted their susceptibility to runs. The shareholders’ incentive to redeem their shares before others do when there is a perception that the MMFs might suffer a loss makes MMFs vulnerable to runs. Given this reality, the article argues that the emphasis of the financial regulators on achieving the stability of the entire financial system after the 2008 financial crisis necessitates the strictness of the new reforms.
Divided into six parts, the article outlines the attributes and classification of MMFs, the definition of financial stability, and the run and systemic risk posed by MMFs during the financial crisis, before assessing the MMFs’ reforms in the US and the EU and the impacts of these reforms on the MMFs industry and global financial stability system. The major component of the US reform is the introduction of the floating net asset value (FNAV), where an MMF’s share price will fluctuate to reflect the daily market value of the fund assets. In the EU the new regulation provides investors with a high degree of optionality for investing by introducing Low Volatility Net Asset Value (LVNAV) MMFs.
The article concludes that despite that, the reforms are likely to jeopardise the viability of some categories of MMFs, they enhance global financial stability, and the complexity of the reforms has made MMFs more appropriate products to financial institutions’ investors than retail investors.
The article is published in Volume 31, Issue 2, pp. 303-335 of the European Business Law Review and can be accessed here.
The issue of legal representation in arbitration proceedings accounts for one of the sub-factors of ‘formal legal structure’ and ‘national arbitration law’ that disputing parties consider before choosing a seat of arbitration. Indeed, the ability of disputing parties in arbitration to freely select their desired representatives is embedded in the foundational principle of party autonomy, which continues to act as an incentive to settle cross-border disputes through international arbitration. However, while this may be the norm, a few countries take a different approach.
In Nigeria, a literal interpretation of the national arbitration rules prevents parties from selecting persons not admitted to the Nigerian bar as their representatives in arbitration proceedings. Upon being approached, courts of coordinate jurisdiction have interpreted the provisions in different ways. Therefore, this article examines the probable impact of this position on parties’ non-selection of the jurisdiction and its law in international arbitration proceedings. The article identifies scope for reform in the law and makes suggestions for creating a more liberal legislative and judicial framework in order to promote Nigeria as a seat of international arbitration.
The full article is published in Issue 2, Volume 37 of the Journal of International Arbitration and can be accessed here.
Breaking up is hard to do and current laws in the UK and Wales can make it a lot harder. Dr. Samantha Davey, Lecturer in Law at the University of Essex, explains why divorce law is ready for reform.
Divorce law in England and Wales has been discussed, dissected and been the subject of dismay for decades. Many practitioners and academics alike take issue with a fault-based approach to divorce because it is seen as out of date and unnecessarily cumbersome. Under the Matrimonial Causes Act 1973, there is one ground for divorce, namely that the couple’s marriage has irretrievably broken down. In order to establish this, there is a need to demonstrate that one of the following reasons exists: adultery; unreasonable behaviour; two years separation with consent; two years separation with no consent (desertion); or five years separation.
Aside from encouraging divorcing couples to play the blame game in divorce papers, which only serves to encourage conflict, there are two other main difficulties with these reasons for divorce. Couples’ relationships may break down for reasons other than adultery and unreasonable behaviour. Couples may grow apart or may decide that they wish to go their separate ways. Such couples may prefer to do so without assigning blame to one party but may not wish to wait two years before they divorce. The current procedure requires one party to seek to divorce another and demonstrate some type of fault on the part of the other party.
As a consequence, couples who may have ended their relationship amicably, sometimes feel forced to strain the ground of ‘unreasonable behaviour’ (e.g. domestic abuse, social isolation or debt) to find a reason for a speedy divorce or, as an alternative, wait two years before divorcing. Meanwhile, the spouses may form new relationships and may wish to move on with their lives.
Another issue is that if one party contests the divorce, this may delay the divorce unnecessarily. In practice, this is rare, but it happened in the case of Owens v Owens UKSC 41 which highlighted how out-of-date and potentially absurd the existing law on divorce is. In this case, Mrs Owens sought a divorce on the basis of her husband’s unreasonable behaviour. Mr Owens contested the divorce and the judge who assessed the divorce application determined that her evidence of the alleged unreasonable behaviour of Mr Owens was insufficient and refused to permit the divorce. This led to a protracted court battle which led to an important decision on divorce by the UK Supreme Court. Lord Wilson affirmed the decisions of the initial judge and the Court of Appeal but stated that: ‘Parliament may wish to consider whether to replace law which denies to Mrs Owens any present entitlement to a divorce…’.
For many years, despite repeated expressions of dismay about the state of the law on divorce, this area of family law has not been a priority for reform by the government. The Law Commission proposed reform in 1990 and expressed a number of concerns with the divorce law. It was seen as unfair and unjust, as undermining the potential to save marriages and as likely to exacerbate conflict. The Owens case, however, gave the government a powerful judicial nudge to consider reform seriously.
Consequently, in April 2019, the Justice Secretary announced that divorce legislation would be reformed to help reduce family conflict. The ground ‘irretrievable breakdown’ would remain but the five facts would be replaced with a requirement to provide a statement about irretrievable breakdown. It would also provide for a joint divorce application to be made by both parties and remove the potential for one party to contest the divorce.
In essence, the proposed legal reform via the Divorce, Dissolution and Separation Bill ends the use of fault based divorce and provides well-needed modernisation to the law on divorce by reducing conflict and by preventing a scenario like Owens v Owens from occurring again. Currently, the Bill is passing through the House of Lords where it will reach the report stage on the 17th of March 2020. It will be a welcome change which will bring divorce law into the 21st century.
For further discussion of the Owens case and an overview of the proposed changes to the law on divorce, see: Samantha Davey, Family Law (10th edn, Palgrave Macmillan 2020).
This article first published on the MIHE Blog and is reproduced on the Essex Law Research Blog with permission and thanks. The original post can be accessed here.
Godswill Agbaitoro, PhD candidate at the University of Essex, and Dr Eghosa Osa Ekhator, Senior Lecturer in Law at the University of Derby, have published a book chapter titled ‘Energy Law and Policy in Nigeria with Reflection on the International Energy Charter and Domestication of the African Charter’.
Since the 1960s, energy resources, in particular oil and gas, have maintained a dominant position in the Nigerian economy. In fact, due to the availability of vast abundance of energy resources (conventional and unconventional), Nigeria remains one of the top nations both in Africa and to the rest of the world at least in terms of energy resources development. Over the years, this position prompted the central government of Nigeria to become signatories to a number of international documents mainly to explore avenues that would assist the country to remain relevant at the international level. In this book chapter, Dr Eghosa Osa Ekhator and Godswill Agbaitoro examine the benefits of one of these international documents – the International Energy Charter (IEC) – to signatory countries, such as Nigeria, with a view to illustrating its future relevance and influence in respect of domestic energy laws and policies.
The main outcome of the chapter is to point out some critical roles of the IEC in respect of energy governance and, more importantly, its impact on Nigeria in terms of maintaining its place in the global energy landscape. With this in mind, the authors examine possible contributions of the IEC to the ability of signatory countries to enhance international cooperation aimed at addressing contemporary energy challenges, while enabling these countries to harness their full energy resource potential.
Part of the analysis provided in the chapter flows from the authors’ quest to answer the main research question: whether the IEC possesses the requisite elements to transform Nigeria’s energy laws and policies so as to bring about positive outcomes in the country’s energy sector? To answer this, the authors argue for possible domestication of the IEC, in the same way as the African Charter on Human and Peoples’ Rights (African Charter) has been domesticated in Nigeria; and concludes that lessons can be gleaned from its successful domestication. Of course, this was not suggested without considering some barriers that may hinder the successful implementation of the IEC in Nigeria.
The chapter appears in Romola Adeola and Ademola Oluborode Jegede (eds), Governance in Nigeria post-1999: Revisiting the democratic ‘new dawn’ of the Fourth Republic (Pretoria University Law Press 2019). To read more, download the book for free here and see chapter 8.
The Israel Supreme Court recently cited a paper written by Haim Abraham, Lecturer in Law at the University of Essex.
The paper titled ‘Parenting, Surrogacy, and the State’ demonstrates that Israel’s legislation, and regulation of assisted reproduction treatments, systematically discriminates individuals and same-sex couples based on sexual orientation, family status, or gender.
By surveying the legislative and social developments in Israel in relation to surrogacy and the conceptualisation of the family unit, Haim shows that the right to parenthood is a fundamental negative constitutional right which extends to the use of surrogacy treatments. Furthermore, Haim establishes that the prohibition on same-sex couples and single individuals to engage in surrogacy arrangements fails to adhere to the principle of proportionality, as other less discriminatory practices are available and the harm to same-sex couples and single individuals in the current legislation outweighs its benefits.
On 27 February 2020, the Supreme Court reached the same conclusion. It held that the current Surrogacy Act of 1996 discriminates against same-sex couples and single men, and that the infringement on the rights to equality and parenthood is disproportionate.
Haim Abraham’s full paper in Hebrew is available here.