Tuesday Tips: New Scholarship for the Week of March 16
Kish Parella
Abstract
Corporate directors and officers substantially influence how well—or poorly—a corporation addresses human rights risks. But their involvement is often hidden or misunderstood, despite the reality that many corporate human rights abuses occur because of explicit choices made by their leadership that, on many occasions, inevitably lead to human rights violations. The failure to understand their role in past corporate human rights violations leads to ineffective strategies to prevent future ones as leading international, regional, and domestic laws and norms on business and human rights inadequately address the corporate governance gaps that facilitate human rights violations.
This Article identifies the critical role that corporate boards and officers play in human rights violations committed by their corporations. It introduces a four-part typology that categorizes the different executive choices at the root of many of the most infamous corporate human rights violations today and in the recent past. These abuses arose from decisions made by the corporate directors and officers: Some neglected their oversight responsibilities; others approved deals with entities known to violate human rights; and still others created and endorsed business models that depend on exploiting human rights. By understanding these choices and their consequences, senior management and their legal counsel can better understand the root causes of corporate human rights abuses and identify blind spots in their governance practices.
This Article also explains that corporate law and governance play a crucial role in addressing human rights violations. Courts, victims, and advocates cannot rely exclusively on human rights law to prevent corporate human rights violations. Instead, the root of the problem may be within corporate law and the governance decisions of the board of directors and officers. This Article explains that corporate directors and officers should prioritize human rights within their corporations for three important reasons that are derived from corporate law: legal liability for breaching fiduciary duties (Delaware driver); shareholder investigations and activism (shareholder driver); and converging expectations on good governance driven by foreign legislators, multinational corporations, international organizations, and multilateral executive coordination (global drivers). Each of these contributions can improve both the prevention of corporate human rights abuses and accountability for it should it occur.
Johan David Michels, Christopher Millard, & Camille Abou Farhat
Abstract
In this paper, we report the results of a detailed survey of 20 standard contracts for chat-based generative AI services from 13 leading providers. We cover both US providers, such as Anthropic, Google, Microsoft, and OpenAI, and European and Chinese providers, such as Alibaba, DeepSeek, and Mistral. We analyse the terms and conditions that govern both commercial and consumer use of the services for customers in the UK and across Europe. We cover a range of contractual issues including the choice of law and forum for disputes; provider duties and liability for breach of contract; acceptable use policies; and termination. We compare trends across providers and analyse the survey findings in light of English and EU law, including consumer protection law, the Data Act, and the AI Act.
Luke Herrine
Abstract
This Article examines why student loans became central to higher education finance in the United States and how they have undermined their own centrality over time. As the liberal constituency for funding redistributive social programs weakened in the 1970s, student loans enabled stable coalitions in favor of federal support for college affordability by bringing together lawmakers with divergent ideological commitments. Three features made student loans effective coalition stabilizers: their structure as demand-side subsidies that avoided federalism concerns and conflicts over university governance; their “political lightness” as credit programs that satisfied fiscal hawks and could be characterized as either government largesse or individual responsibility; and their creation of a sophisticated lobbying industry-including servicers, guaranty agencies, and for-profit colleges-that advocated for their perpetuation. However, stabilizing higher education finance through debt came with significant costs. The insider-driven politics of student loans involved corruption and fraud. The ideology of individual investment obscured structural labor market inequalities. The focus on demand-side subsidy contributed to a market dynamic that made higher education more unequal and more vocationalized. By the 2010s, these costs began to destabilize the very coalitions student loans had assembled: hidden costs became increasingly evident, scandals delegitimized insider politics, and growing borrower distress fueled an outsider politics against student debt. The COVID pandemic accelerated these dynamics, leaving the politics of higher education finance profoundly unstable. Drawing on scholarship from history, political science, sociology, economics, and legal studies, this Article provides a new framework for understanding the political economy of student loans-one that explains their endurance without treating them as inevitable. Along the way, the Article offers insights into the conditions under which higher education finance might be restabilized, whether through a reformed loan program or through a transition to more direct institutional funding and grants.
Gregory Makoff & Sean D. O’Connell
Abstract
This Paper presents a new theoretical framework for understanding how insolvent foreign nation-states work out their defaulted debts. “Sovereign debt restructuring,” as the process is known, is of critical importance to the dozens of developing countries around the world who have borrowed over 1 trillion dollars under the law of the State of New York and other jurisdictions. It explains how and why the prevailing system of sovereign debt restructuring works even though it operates informally and is based on voluntary, out-of-court negotiations supported by the inclusion of voting clauses in sovereign bonds to bind-in holdout creditors (“Collective Action Clauses”). The theory of sovereign debt restructuring is introduced through a review of the famous 2001 and 2003 policy debates (known as “the CAC-SDRM debate”) that pitted the U.S. Treasury, which favored the voluntary, contract-based approach based approach that is used today against the International Monetary Fund (“I.M.F.”), which favored the adoption of a formal, treaty-based, Chapter-11-like statutory scheme, which it called a Sovereign Debt Restructuring Mechanism (“SDRM”). Material from these debates plus additional insights borrowed from the theory of corporate insolvency, the doctrine of sovereign immunity, and financial history are then used to argue that a workable system must be based on the voluntary participation of the sovereign and other stakeholder groups. This Paper sets out design principles for designing a workable voluntary sovereign debt restructuring system and presents a model of how the various parties and processes are effectively coordinated. This Paper concludes with the proposal of two incremental reforms to help fill observed gaps in the prevailing system: (i) an expansion of existing statutory stay powers to limit to the potential for disruption of out-of-court negotiations brought by uncooperative creditors; and (ii) a limitation on payment-blocking injunctions like the one granted in the Argentina bond litigation that led to a fresh default on 30 billion dollars of performing, but previously-restructured bonds.