Reconciling the Irreconcilable? Sovereign Debt Restructuring and the Principles of International Law. A Law and Economics Perspective

This Thesis focuses on the principles of international law relevant to the resolution of legal disputes arising from sovereign insolvency conflicts. It attempts to contribute to the “incremental” approach literature by identifying principles, justifying their application in litigation and assessing whether they may help to reconcile the trade-offs prevalent in that context. For that purpose, this Thesis distinguishes between two different types of principles. First, it investigates the “Principles of Public International Law” (henceforth, “PIL principles”). Said category refers to norms of the law of nations which can be considered functionally and structurally similar to domestic constitutional principles (i.e., that can be regarded as “optimization” or “prima facie” requirements). This Thesis underscores the PIL principles protecting the interests of the creditors and citizens as well as the “public interest”, arguing that decision makers face a trade-off between these principles in the context of restructurings. Secondly, this Thesis inquires into the “general principles of domestic law” (henceforth, “GPDs”) which can be applied in sovereign debt restructuring. Two GPDs are identified: a “stay” on litigation and a “cram down” on dissenting creditors’ claims. Although both principles have been identified by the prior literature, this work advances a small but significant “twist” in the methodology used for that purpose: it relies exclusively on functional and comparative analysis. Moreover, this work justifies the application of said GPDs for two jurisdictions: New York and Germany. Finally, it posits that those GPDs can help to mitigate the trade-offs between PIL principles, thus reconciling the interests at stake.

Quantifying the Economics of Medical Malpractice - A View from a Civil Law Perspective

Life is full of uncertainties. Legal rules should have a clear intention, motivation and purpose in order to diminish daily uncertainties. However, practice shows that their consequences are complex and hard to predict. For instance, tort law has the general objectives of deterring future negligent behavior and compensating the victims of someone else's negligence. Achieving these goals are particularly difficult in medical malpractice cases. To start with, when patients search for medical care they are typically sick in the first place. In case harm materializes during the treatment, it might be very hard to assess if it was due to substandard medical care or to the patient's poor health conditions. Moreover, the practice of medicine has a positive externality on the society, meaning that the design of legal rules is crucial: for instance, it should not result in physicians avoiding practicing their activity just because they are afraid of being sued even when they acted according to the standard level of care. The empirical literature on medical malpractice has been developing substantially in the past two decades, with the American case being the most studied one. Evidence from civil law tradition countries is more difficult to find. The aim of this thesis is to contribute to the empirical literature on medical malpractice, using two civil law countries as a case-study: Spain and Italy. The goal of this thesis is to investigate, in the first place, some of the consequences of having two separate sub-systems (administrative and civil) coexisting within the same legal system, which is common in civil law tradition countries with a public national health system (such as Spain, France and Portugal). When this holds, different procedures might apply depending on the type of hospital where the injury took place (essentially whether it is a public hospital or a private hospital). Therefore, a patient injured in a public hospital should file a claim in administrative courts while a patient suffering an identical medical accident should file a claim in civil courts. A natural question that the reader might pose is why should both administrative and civil courts decide medical malpractice cases? Moreover, can this specialization of courts influence how judges decide medical malpractice cases? In the past few years, there was a general concern with patient safety, which is currently on the agenda of several national governments. Some initiatives have been taken at the international level, with the aim of preventing harm to patients during treatment and care. A negligently injured patient might present a claim against the health care provider with the aim of being compensated for the economic loss and for pain and suffering. In several European countries, health care is mainly provided by a public national health system, which means that if a patient harmed in a public hospital succeeds in a claim against the hospital, public expenditures increase because the State takes part in the litigation process. This poses a problem in a context of increasing national health expenditures and public debt. In Italy, with the aim of increasing patient safety, some regions implemented a monitoring system on medical malpractice claims. However, if properly implemented, this reform shall also allow for a reduction in medical malpractice insurance costs. This thesis is organized as follows. Chapter 1 provides a review of the empirical literature on medical malpractice, where studies on outcomes and merit of claims, costs and defensive medicine are presented. Chapter 2 presents an empirical analysis of medical malpractice claims arriving to the Spanish Supreme Court. The focus is on reversal rates for civil and administrative decisions. Administrative decisions appealed by the plaintiff have the highest reversal rates. The results show a bias in lower administrative courts, which tend to focus on the State side. We provide a detailed explanation for these results, which can rely on the organization of administrative judges career. Chapter 3 assesses predictors of compensation in medical malpractice cases appealed to the Spanish Supreme Court and investigates the amount of damages attributed to patients. The results show horizontal equity between administrative and civil decisions (controlling for observable case characteristics) and vertical inequity (patients suffering more severe injuries tend to receive higher payouts). In order to execute these analyses, a database of medical malpractice decisions appealed to the Administrative and Civil Chambers of the Spanish Supreme Court from 2006 until 2009 (designated by the Spanish Supreme Court Medical Malpractice Dataset (SSCMMD)) has been created. A description of how the SSCMMD was built and of the Spanish legal system is presented as well. Chapter 4 includes an empirical investigation of the effect of a monitoring system for medical malpractice claims on insurance premiums. In Italy, some regions adopted this policy in different years, while others did not. The study uses data on insurance premiums from Italian public hospitals for the years 2001-2008. This is a significant difference as most of the studies use the insurance company as unit of analysis. Although insurance premiums have risen from 2001 to 2008, the increase was lower for regions adopting a monitoring system for medical claims. Possible implications of this system are also provided. Finally, Chapter 5 discusses the main findings, describes possible future research and concludes.

International openness in transition countries: further evidence on foreign direct investment

The thesis focuses on the process of international openness of Transition Countries. This study provides a theoretical analysis based on reference literature, and an empirical analysis which is aimed at estimating some main effects of Foreign Direct Investment. Transition has represented a highly complex phenomenon, characterized by several aspects, whose interaction has shaped the developmental path of each country involved. Although the thesis focuses on economic issues it is outstanding to underline that Transition implies political, institutional, and even social deep changes, which must be taken into consideration in the general overview of the contex. The empirical part has been developed along two different ways: a country analysis and a firm analysis, thus allowing to widen the study and delve deeper into the use of econometric instruments. More specifically, in the first empirical stage both static (Fixed Effects) and dynamic (LSDV Corrected) methodologies have been implemented, whereas in the second stage the Cox Proportional Function has been chosen in order to handle with censored data.

Three Essays in Spatial Economics

This work contributes to the field of spatial economics by embracing three distinct modelling approaches, belonging to different strands of the theoretical literature. In the first chapter I present a theoretical model in which the changes in urban system’s degree of functional specialisation are linked to (i) firms’ organisational choices and firms’ location decisions. The interplay between firms’ internal communication/managing costs (between headquarters and production plants) and the cost of communicating with distant business services providers leads the transition process from an “integrated” urban system where each city hosts every different functions to a “functionally specialised” urban system where each city is either a primary business center (hosting advanced business services providers, a secondary business center or a pure manufacturing city and all this city-types coexist in equilibrium.The second chapter investigates the impact of free trade on welfare in a two-country world modelled as an international Hotelling duopoly with quadratic transport costs and asymmetric countries, where a negative environmental externality is associated with the consumption of the good produced in the smaller country. Countries’ relative sizes as well as the intensity of negative environmental externality affect potential welfare gains of trade liberalisation. The third chapter focuses on the paradox, by which, contrary to theoretical predictions, empirical evidence shows that a decrease in international transport costs causes an increase in foreign direct investments (FDIs). Here we propose an explanation to this apparent puzzle by exploiting an approach which delivers a continuum of Bertrand- Nash equilibria ranging above marginal cost pricing. In our setting, two Bertrand firms, supplying a homogeneous good with a convex cost function, enter the market of a foreign country. We show that allowing for a softer price competition may indeed more than offset the standard effect generated by a decrease in trade costs, thereby restoring FDI incentives.

Fighting corruption with pyramids: A Law and Economics approach to combating corruption in post-socialist countries

Corruption is, in the last two decades, considered as one of the biggest problems within the international community, which harms not only a particular state or society but the whole world. The discussion on corruption in law and economics approach is mainly run under the veil of Public choice theory and principal-agent model. Based on this approach the strong international initiatives taken by the UN, the OECD and the Council of Europe, provided various measures and tools in order to support and guide countries in their combat against corruption. These anti-corruption policies created a repression -prevention-transparency model for corruption combat. Applying this model, countries around the world adopted anti-corruption strategies as part of their legal rules. Nevertheless, the recent researches on the effects of this move show non impressive results. Critics argue that “one size does not fit all” because the institutional setting of countries around the world varies. Among the countries which experience problems of corruption, even though they follow the dominant anti-corruption trends, are transitional, post-socialist countries. To this group belong the countries which are emerging from centrally planned to an open market economy. The socialist past left traces on institutional setting, mentality of the individuals and their interrelation, particularly in the domain of public administration. If the idiosyncrasy of these countries is taken into account the suggestion in this thesis is that in public administration in post-socialist countries, instead of dominant anti-corruption scheme repression-prevention-transparency, corruption combat should be improved through the implementation of a new one, structure-conduct-performance. The implementation of this model is based on three regulatory pyramids: anti-corruption, disciplinary anti-corruption and criminal anti-corruption pyramid. This approach asks public administration itself to engage in corruption combat, leaving criminal justice system as the ultimate weapon, used only for the very harmful misdeeds.

Regulating Vertical Agreements: A Comparative Law & Economics analysis of Brazil and Europe

This PhD thesis discusses antitrust enforcement of anti-competitive vertical agreements in Europe and in Brazil from an institutional perspective. It considers both the evolution of the legal framework and the application of the existing policies, with the analysis of case studies. The research highlights the main challenges of the current approaches adopted by the competition authorities in these jurisdictions and formulates specific proposals for future improvements. Because the Brazilian competition rules were originally inspired by the European legal framework, this thesis also summarizes the contemporary discussions regarding comparative law and the efficiency of transplanting laws and good practices. In a Law & Economics perspective, vertical agreements have always been a paradoxical topic and constitute one of the most dynamic disputes for antitrust enforcement. The reason for that concern is the fact that those contracts among companies are complex in nature. Taking into account this background, the thesis provides an original analysis of the pro- and anti-competitive effects of vertical agreements, based on the classical literature of Law & Economics. One of the novelties of the research is the extension of the economic analysis of vertical agreements to also consider new forms of contractual abuses in the context of digital markets, such as the contractual restrictions that are being put I practice in e-commerce platforms. The international comparative approach focuses on the Brazilian and European experiences, and opens up a reflection about the policy recommendations applied to several countries with similar economic and institutional realities.

Ex ante contracts to arbitrate tort claims - A law and economics perspective

This research addresses the use of ex ante contracts to arbitrate tort claims in domestic settings using law and economics research methodologies. Potential economic benefits from using arbitration, particularly between informed and knowledgeable parties and in international business transactions, are not guaranteed in domestic disputes. Arbitration can potentially be used to manipulate the adjudication process. This research has several findings. There is a lack of information available concerning the use of arbitration to adjudicate tort claims. Proxy measurements concerning the demand for third party adjudication and other legal indicators are a poor substitute for the information hidden behind the veil of arbitration. There is the potential for the strategic use of ex ante contracts to arbitrate tort claims by repeat player tortfeasors to domestic tort claims, both individually and in concert with other repeat player firms. These strategic efforts aim to: manipulate enforcement errors for tort claims, avoid procedural rules which have the effect of lowering enforcement errors, enable a unique type of domestic forum arbitrage, shirk from taking due care, capture the economic benefit of using arbitration, manipulate the stock of precedents and production of public goods from courts, collude in these underlying efforts, restrain competition, indirectly fix prices, and other aims which increase the repeat player tortfeasor’s or their industries economic gains related to their underlying contracts and tort disputes. This research also demonstrates how this subject is appropriate for further academic research and why states should be cautious of giving carte blanche to arbitrate all domestic tort claims.