October 29, 2008

What Can Constitutional Law Learn from Corporate Law?

In 2003, I argued in the Yale Law Journal that constitutional law can learn much from corporate law with respect to the protection of minorities. The Yale Law Journal has now revisited my argument in Minorities, Shareholder and Otherwise, by inviting three leading scholars--Steve Bainbridge, Richard Delgado, and Kevin Johnson to comment on the piece. I introduce this online symposium and also respond to the comments.

The Yale Law Journal has now published an online symposium on my paper through its Pocket Park, with an introduction and a response by me.

Posted by Anupam Chander on October 29, 2008 at 08:29 AM in International Finance | Permalink | Comments (1) | TrackBack

October 07, 2008

Guantanamo Detainees May Find Refuge in U.S.

A federal judge ordered the release of a small group of Chinese Muslims from Guantanamo Bay into the U.S.

In a landmark decision, U.S. District Judge Ricardo M. Urbina said it would be wrong for the Bush administration to continue holding the detainees, known as Uighurs, since they are no longer considered enemy combatants.

They have been in custody for almost seven years and have been cleared for release since 2004. Although the Chinese government has demanded custody of the Uighurs, supporters and the Bush administration fear they would be tortured if turned over to Beijing.

... In Beijing, the government demanded that all Uighurs held at the naval prison in Cuba be repatriated to China.

Foreign Ministry spokesman Qin Gang said the Uighurs are suspected of being members of the East Turkestan Islamic Movement, which the U.S. lists as a terrorist organization.

... The Uighurs have been at Guantanamo Bay since the U.S. military took custody of them in Pakistan and Afghanistan in 2001. Efforts by the Bush administration to find a home for the detainees has been complicated by fears in many countries of diplomatic reprisals by China. In 2006, Albania gave refuge to five Uighurs from Guantanamo amid Chinese protests.

Posted by Anupam Chander on October 7, 2008 at 09:18 AM in Globalization | Permalink | Comments (2) | TrackBack

October 05, 2008

Is a Lifeline Offer Enforceable, When It Comes for a Financial Institution?

In its merger arrangements with Wachovia, Citi required Wachovia to sign an "exclusivity agreement," which Citi is now accusing Wachovia of breaching.

According to the Financial Times, the exclusivity agreement provides in pertinent part as follows:

Wachovia “shall not ... solicit, initiate or take action to facilitate or encourage the submission of any acquisition proposal [or] enter into or participate in any discussions or negotiations”.

Wachovia's board has now snubbed Citi, preferring a higher offer from Wells Fargo. According to Wachovia, all Citi now has to do is trump Wells' offer.

But what of future white knights that come to the rescue of a financial institution at risk of failing? If Wachovia is allowed to walk away, will companies be less willing to promise mergers in the future with vulnerable financial institutions?

The New York Times makes the same observation:

The litigation could put regulators in a tough spot. The Wells Fargo deal may be better for taxpayers, but if it succeeds, in the future other financial institutions may not be willing to help the government, as Citigroup did, because of the risk that they might not reap the anticipated benefit.

Link: Citigroup Says Judge’s Order Suspends Wachovia Deal - NYTimes.com.

A few questions:

1. Did Wachovia violate the exclusivity agreement?

2. Did Wells Fargo tortiously interfere with Wachovia's contract with Citi?

3. If either 1 or 2 above, then what is the remedy? Should the damages be limited to the additional amount of money that Wachovia is demanding to consummate the merger with Citi? (I realize that we don't really know that amount, because a higher Citi offer will likely be met by yet another trumping offer by Wells Fargo, and on and on.)

4. Was Wachovia vulnerable to failing, had it not been for Citi's public merger offer? Would depositors have withdrawn funds from Wachovia, or institutional counterparties from deals with Wachovia, including short-term funding?

5. Will a failure by Citi deter future rescuers, or simply cause them (a) to offer better deals from the get-go, or (b) more tightly contractually locked in deals (with the possibility that these might face scrutiny from a corporate governance perspective)?

Posted by Anupam Chander on October 5, 2008 at 03:30 AM in International Finance | Permalink | Comments (0) | TrackBack