Between Efficiency and Sovereignty: Transnational Actors, the European Union, and the Regulation of Bankruptcy
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Between Efficiency and Sovereignty: Transnational Actors, the European Union, and the Regulation of Bankruptcy1 Francesco Duina Department of Sociology, Bates College, Pettengill Hall, Lewiston, ME 04240, USA E-mail: [email protected]
The regulation of regional markets has traditionally challenged the sovereignty of the member states. The increasing presence of transnational actors has intensified this challenge. Those actors can benefit from single regulatory regimes that streamline their operations and activities. No country, however, is inclined to renounce its domestic approach. Can the tension between efficiency and sovereignty be resolved? The recent adoption of a transnational bankruptcy regulation in the European Union (EU) offers instructive insights. The intense struggle lasted from 1960 to 2000. The solution involves a clever compromise: elevating from the national to the regional level the law of the member state most implicated by a given bankruptcy. The approach merits careful consideration, for it departs both from parallel efforts at bankruptcy regulation by the United Nations, NAFTA, and the Scandinavian countries, and from the EU’s own efforts in areas other than bankruptcy. Avoiding harmonization improves member states’ acceptance, while reliance on established national regimes guarantees oversight over much of the bankruptcy process. The absence of a fixed legislative framework, however, limits the number of issue areas that this type of approach can effectively target. Comparative European Politics (2006) 4, 1–22. doi:10.1057/palgrave.cep.6110067 Keywords: bankruptcy; company law; efficiency; regulation; sovereignty; transnational companies
Introduction The regulation of regional markets has traditionally challenged the sovereignty of nation states. The strongest examples come from the European Union (EU), where qualified majority voting, an entrepreneurial Commission, an activist European Court of Justice, and bureaucratic mechanisms have deprived the member states of their historical control over the production and direction of law (Ross, 1995; Pierson, 1996; Jabko, 1999; Alter, 2001; Pollack, 2003). Other noteworthy examples come from the North American Free Trade Agreement (NAFTA), South America’s Mercosur, and other regions. There, too, observers have noted a weakening of control on the part of some states,
Francesco Duina Between Efficiency and Sovereignty
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despite the primarily intergovernmental nature of those projects (MacDonald, 1998; Walker, 2001; Kaltenthaler and Mora, 2002; Waren, 2002). The increasing number of transnational actors — an inevitable outcome of closer integration (Murray and Trudeau, 2004, 17) — is bound to pose fresh challenges to the member states. The International Labor Organization’s World Commission on the Social Dimension of Globalization estimates the presence of 65,000 transnational firms in the world (Rondinelli 2002, 393; Murray and Trudeau 2004, 15). As Figure 1 shows, the number of those companies has risen sharply in the last few decades. At times, transnational act
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