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Erasmus Law Review

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Issue 2, 2020 Expand all abstracts
Article

Access_open Basel IV Postponed: A Chance to Regulate Shadow Banking?

Keywords Basel Accords, EU Law, shadow banking, financial stability, prudential regulation
Authors Katarzyna Parchimowicz and Ross Spence
AbstractAuthor's information

    In the aftermath of the 2007 global financial crisis, regulators have agreed a substantial tightening of prudential regulation for banks operating in the traditional banking sector (TBS). The TBS is stringently regulated under the Basel Accords to moderate financial stability and to minimise risk to government and taxpayers. While prudential regulation is important from a financial stability perspective, the flipside is that the Basel Accords only apply to the TBS, they do not regulate the shadow banking sector (SBS). While it is not disputed that the SBS provides numerous benefits given the net credit growth of the economy since the global financial crisis has come from the SBS rather than traditional banking channels, the SBS also poses many risks. Therefore, the fact that the SBS is not subject to prudential regulation is a cause of serious systemic concern. The introduction of Basel IV, which compliments Basel III, seeks to complete the Basel framework on prudential banking regulation. On the example of this set of standards and its potential negative consequences for the TBS, this paper aims to visualise the incentives for TBS institutions to move some of their activities into the SBS, and thus stress the need for more comprehensive regulation of the SBS. Current coronavirus crisis forced Basel Committee to postpone implementation of the Basel IV rules – this could be perceived as a chance to complete the financial regulatory framework and address the SBS as well.


Katarzyna Parchimowicz
LLM. Finance (Frankfurt), PhD candidate at the University of Wrocław, Poland, Young Researcher at the European Banking Institute, Frankfurt, Germany – katarzyna.parchimowicz@uwr.edu.pl.

Ross Spence
EURO-CEFG PhD Fellow at Leiden University Law School, Young Researcher at the European Banking Institute and Research Associate at the Amsterdam Centre for Law and Economics – r.spence@law.leidenuniv.nl.
Article

Access_open Ship Recycling Financial Instruments: A Tax or Not a Tax?

Some Brief Reflections

Keywords Ship Recycling Fund, Ship Recycling License, green ship scrapping, EU concept of tax, earmarked tax
Authors Han Kogels and Ton Stevens
AbstractAuthor's information

    In this article the question is reviewed whether two by the EU Commission proposed financial instruments to stimulate ‘green’ ship scrapping, (i) a Ship Recycling Fund (SRF) and (ii) a Ship Recycling License (SRL), might be qualified as a ‘tax’ under Article 192(2) TFEU. Qualification as such a “tax” would mean that the EU Commission can only introduce such a financial instrument with unanimity voting. The authors first explore the concept of ‘tax’ in the TFEU in general and in Article 192(2) TFEU in particular. Based on this analysis, the authors conclude that levies paid to an SRF might be qualified as an ‘earmarked tax’ falling within the definition of a ‘fiscal provision’ in the meaning of Article 192(2) TFEU, which means that levies to such a fund can only be introduced by unanimity voting. The SRL fee consists of two elements: (i) a fee to cover administrative expenses and (ii) a contribution to a savings account. The fee to cover administrative expenses is qualified by the authors as a retribution that should not be qualified as a fiscal provision in the meaning of Article 192(2) TFEU. The contribution to a blocked savings account can neither be qualified as a tax nor as a retribution. Therefore, the SRL fee can be introduced without unanimity voting by the EU Council.


Han Kogels
Prof. Dr. H.A. Kogels is Emeritus professor of European tax law Erasmus School of Law.

Ton Stevens
Prof. Dr. A.J.A. Stevens is Professor of corporation tax law Tilburg University and of counsel Loyens & Loeff, Rotterdam. He was previously holding the chair of international tax law at Erasmus School of Law and initially involved in the ship recycling financial instrument project but did not participate in the drafting of the final report.
Article

Access_open The Effectiveness Paradigm in Financial Legislation – Is Effectiveness Measurable?

Keywords effectiveness, effectiveness measurement methodologies, financial legislation, legislative objective, product approval governance
Authors Jeroen Koomans
AbstractAuthor's information

    How can you determine if financial legislation is effective? This article seeks to identify three characteristics that make up the basis for an effectiveness review, being the determination what the legislative objective is, who is it aimed at and what approach is taken to achieve this objective. Determining the legislative objective may prove to be a challenging undertaking, and the uncertainties that come with that affect the other two characteristics as well. And even if a clear legislative objective can be established, how can you be sure that its achievement was in fact attributable to the legislation under review? What do you compare your results to absent a baseline measurement and how can the vast number of variables that affect the effectiveness of the legislation under review be accounted for, if at all? Is effectiveness in financial legislation at all measurable and, when measured, what is its value in practice?


Jeroen Koomans
Jeroen Koomans is affiliated to the University of Amsterdam FEB Academy for Banking and Insurance and employed by ABN AMRO Bank N.V.
Article

Access_open South African Mandatory Offers Regime: Assessing Minorities’ Leverage to Seek Recourse and Equal Treatment in Takeover Bids

Keywords company takeovers, mandatory offers, minority shareholders, equal treatment, acquisition procedure
Authors Paul Nkoane
AbstractAuthor's information

    A firm intention announcement must be made when the offeror is able and willing to acquire securities, and when a mandatory offer must be made. When the firm intention announcement is implemented, some sort of a contract is created. This rule has helped to determine the particular time the offeror should be liable to minorities. The question of when the offeror should bear the obligation to implement mandatory offers in aborted takeovers is thus no more problematic. Previously, the courts wrestled with this issue, but delivered what appears to be unsatisfactory decisions. This article will discuss the effect of a firm intention announcement and the responsibility that attends the making of that announcement. It intends to illustrate the extent of liability the offeror must bear in the event of a lapsed takeover, before and after the making of the firm intention announcement. The article examines the manner in which takeover rules can be enforced, and whether the current measures afford minorities proper protection. This brings to light the issue of equal treatment in takeovers and the fallacy thereof. A minor appraisal of the takeover rules in two jurisdictions in Europe (the United Kingdom and the Netherlands) is conducted to assess how equal treatment for minorities is promoted. Due to the difficulty minorities may experience in enforcing equal treatment in company takeovers, the article advocates for the alteration of the current South African takeover procedure for the promotion of minorities’ interests and for establishing rules that provide the offeror adequate information.


Paul Nkoane
Paul Nkoane is a lecturer at the College of Law of the University of South Africa in Pretoria.
Article

Access_open The Relationship between Empirical Legal Studies and Doctrinal Legal Research

Keywords empirical legal studies, legal research methods, doctrinal legal research, new legal realism, critical legal studies, law and policy
Authors Gareth Davies
AbstractAuthor's information

    This article considers how empirical legal studies (ELS) and doctrinal legal research (DLR) interact. Rather than seeing them as competitors that are methodologically independent and static, it suggests that they are interdependent activities, which may each be changed by interaction with the other, and that this change brings both opportunities and threats. For ELS, the article argues that DLR should properly be understood as part of its theoretical framework, yet in practice little attention is given to doctrine in empirical work. Paying more attention to DLR and legal frames generally would help ELS meet the common criticism that it is under-theorised and excessively policy oriented. On the other hand, an embrace of legal thinking, particularly of critical legal thinking, might lead to loss of status for ELS in policy circles and mainstream social science. For DLR, ELS offers a chance for it to escape the threat of insular sterility and irrelevance and to participate in a founded commentary on the world. The risk, however, is that in tailoring legal analysis to what can be empirically researched legal scholars become less analytically ambitious and more safe, and their traditionally important role as a source of socially relevant critique is weakened. Inevitably, in offering different ways of moving to normative conclusions about the law, ELS and DLR pose challenges to each other, and meeting those challenges will require sometimes uncomfortable self-reflection.


Gareth Davies
Gareth Davies is Professor of European Law at the Faculty of Law of the Vrije Universiteit Amsterdam.
Article

Access_open Migration and Time: Duration as an Instrument to Welcome or Restrict

Keywords Migration, EU migration law, time
Authors Gerrie Lodder
AbstractAuthor's information

    States apply different material conditions to attract or restrict residence of certain types of migrants. But states can also make use of time as an instrument to design more welcoming or more restrictive policies. States can apply faster application procedures for desired migrants. Furthermore, time can be used in a more favourable way to attract desired migrants in regard to duration of residence, access to a form of permanent residence and protection against loss of residence. This contribution makes an analysis of how time is used as an instrument in shaping migration policy by the European Union (EU) legislator in the context of making migration more or less attractive. This analysis shows that two groups are treated more favourably in regard to the use of time in several aspects: EU citizens and economic- and knowledge-related third-country nationals. However, when it comes to the acquisition of permanent residence after a certain period of time, the welcoming policy towards economic- and knowledge-related migrants is no longer obvious.


Gerrie Lodder
Gerrie Lodder is a lecturer and researcher at the Europa Institute of Leiden University.