News and Events

TILEC Work in Progress: Konrad Borowicz

Contracts as regulation: the ISDA Master Agreement
10:45-11:45, M 1003

The economic literature considers public regulation to be a universal response to market failures, but it does not recognize the jurisdictional limitations of the effects of public regulation. While international public regulation can be seen as a response to that limitation, private contracts can also be used as regulatory instruments reducing the cost of alternative methods of cross-border regulation in the form of international public regulation. This paper develops a conceptual account of contracts as regulatory instruments using the ISDA Master Agreement as an example building in particular on its role in the emerging frameworks for resolution of cross-border financial institutions. Conceptually, there are two components to the claim that contracts can display regulatory characteristic. Firstly, contracts regulate market failures rather than opportunism in bilateral relations. Secondly, contracts limit the freedom of parties to undertake certain behaviors. Contracts perform a regulatory function through a combination of restrictive features in their design and in the design of the regulatory architecture of enforcement, in which courts play a central role.

When: 20 February 2019 10:45

End date: 20 February 2019 11:45