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Law’s Elasticity An Inquiry into the Relation of Law and Power in Finance

Published online by Cambridge University Press:  11 October 2021

Katharina Pistor
Katharina Pistor*
Affiliation:
Columbia Law School, Columbia University, New York [[email protected]].
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Abstract

Law is a powerful commitment device. By entering into a binding contract, a contracting party can invoke the coercive law enforcement powers of states to compel another party to perform. Many, if not most, contracts are carried out without ever invoking these coercive powers; they operate in the shadow of the law. Less attention has been paid to the flip side of law’s shadow: the possibility of relaxing or suspending the full force of the law, or making law elastic. While this may seem anathema to the “rule of law”, it is not an infrequent occurrence, especially in times of crisis. The elasticity of law should be distinguished from the incompleteness of law, that is, the inherent limitation lawmakers face in trying to anticipate all future contingencies. In this paper I will offer two tales of the American Insurance Group (AIG) to illustrate the elasticity of contracts as well as of law.

Résumé

Résumé

La loi est un puissant dispositif d’engagement. En concluant un contrat contraignant, une partie contractante peut invoquer les pouvoirs coercitifs d’application de la loi des États pour contraindre une autre partie à s’exécuter. Beaucoup de contrats, sinon la plupart, sont exécutés sans jamais invoquer ces pouvoirs coercitifs ; ils opèrent dans l’ombre de la loi. Moins d’attention a été accordée à l’autre côté de l’ombre de la loi: la possibilité d’assouplir ou de suspendre toute la force de la loi, ou de la rendre élastique. Si cela peut sembler anathème pour « l’état de droit », ce n’est pas rare, surtout en temps de crise. L’élasticité du droit doit être distinguée du caractère incomplet du droit, c’est-à-dire la limitation inhérente aux législateurs lorsqu’ils essaient d’anticiper toutes les éventualités futures. Dans cet article, je proposerai deux histoires autour de l’assureur AIG pour illustrer l’élasticité des contrats ainsi que celle du droit.

Zusammenfassung

Zusammenfassung

Das Gesetz stellt ein starkes, bindendes Mittel dar. Beim Abschluss eines verbindlichen Vertrags kann sich eine Vertragspartei auf staatliche Zwangsvollstreckungsbefugnisse berufen, um eine andere Partei zur Vertragserfüllung zu zwingen. Viele, wenn nicht sogar die meisten Verträge werden durchgesetzt, ohne dass diese Zwangsbefugnisse jemals in Anspruch genommen werden; sie handeln im Schatten des Gesetzes. Weniger Aufmerksamkeit wurde der anderen Seite des Schattens des Gesetzes gewidmet: der Fähigkeit, die volle Kraft des Gesetzes zu lockern oder auszusetzen, oder das Gesetz elastisch zu machen. Dies mag dem “Rechtsstaat” ein Gräuel sein, ist aber nicht ungewöhnlich, besonders in Krisenzeiten. Die Elastizität des Gesetzes muss von der Unvollständigkeit des Gesetzes unterschieden werden, d.h. von der inhärenten Beschränkung des Gesetzgebers bei dem Versuch, alle zukünftigen Eventualitäten zu antizipieren. In diesem Artikel biete ich zwei Geschichten rund um den Versicherer AIG an, um die Elastizität von Verträgen wie auch von Gesetzen zu veranschaulichen.

Keywords

LawFinanceElasticity lawIncompleteness of lawFinancial crisisDroitFinanceBanques centralesThéorie des contratsIncertitudeRechtFinanzenZentralbankenVertragstheorieUngewissheit
Type
Research Article
Information
European Journal of Sociology / Archives Européennes de Sociologie , Volume 62 , Issue 2 , August 2021 , pp. 249 - 273
Copyright
© European Journal of Sociology 2021

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