Saturday, July 5, 2014

U.S. sanctions against the BNP and the emergence of a tri-polar legal world. Part I: The U.S. Legal problematic

Enormous fines and public apology, accompanied by partial disqualification from the banking profession in dollars, the sanction against the BNP is not only very strong, it may seem to some totally exorbitant in Law and in facts.

This is partly because even broader than the autonomy of the judicial decision, we find here the very large autonomy of the unilateral administrative decision. Which could be called: le Fait du Prince. It is the U.S. government which is exercising independently of any external control - for now, as you can imagine future judicial remedies - in respect of a very large entity, the BNP. Major large banks are global, international. They have branches in almost every country.

Some legal logic would dictate that each country enacts its financial norms and enforce these standards on its territory and do not extend its long arm jurisdiction (legal American theory jurisdiction of jurisdiction extending beyond borders which is called literally the long arm jurisdiction) over the entire planet, or any other country in which these banks have activities.

This would be to forget that the U.S. financial system and the U.S. economy as well as the U.S. legal system are based on the legal theory and practice to search for big pockets. In other words, while the administrative and judicial civil legal system, e.g. French legal system, will seek to define the responsibilities of offender's by regulations, including criminal, on behalf of the interests of the State and its citizens, the people, the largest number, some common law systems like the American legal system will seek civil monetary responsibilities and will look for those who can pay.

The American legal system, based primarily on negligence, liability and damages (often considerable) seeks to sue, join in lawsuits or in administrative proceedings the greatest number of individuals and corporations. It then determines one or a few targets through lengthy investigations and plea bargain in which individuals and corporations are encouraged to denounce each other in order to be exempted partly or wholly by loading the other responsibilities the widest possible and fractionated. Therefore this division of responsibilities is based on the facts but also mainly on the ability to pay.

Then the judicial or administrative system will identify the greatest potential target for paying damages and focus its attacks on him. The other co-leaders will be invited to denounce one or a few big payers and benefit from reductions in charges and penalties, even full exemptions.

If criminal law is used, it is to support and act as leverage to civil law. The threat of criminal sanctions will push the offender to accept significant civil penalties in exchange for reduced criminal penalties allowed by the plea bargain.

This is why non-American financial institutions, businesses and even non-American States sometimes struggle to grasp and accept this American supremacy which they consider in effect a way for Uncle Sam to dictate fiscal policy to the world.

Theoretically, the basis of U.S. law in that federal law is passed by the Congress of the United States, or the law of a State is passed by the parliament of one of 50 the State of the Union and will apply DE JURE to the U.S.
In reality it does apply DE FACTO to the world.
According to the American Constitution, the constitutions of every State in the Union and the international legal system, these laws are intended to apply only to the territory and legal persons, individuals and corporations, who live on the territory or have their main activity on the territory (link, principal place of business, point de rattachement).

Curiously, in the interest of an extensive cause of action, it is simply not the case.

Take the BNP case as an illustration.

Will, however, Europe, China, and the rest of the world, remain passive before such a concept of an American global law?

This is the subject of the following parts:
The European response
The Chinese response

Prof. Olivier Chazoule