Case Against Supplemental Bankruptcy Jurisdiction: A Constitutional, Statutory, and Policy Analysis

In this Article Professor Block-Lieb critically examines the power of a federal district or bankruptcy court to adjudicate jurisdictionally insufficient claims which arise out of a common nucleus of operative fact with a proceeding which “arises under” the Bankruptcy Code, or “arises in” or “relates to” a bankruptcy case. After considering Article III of the United States Constitution, relevant statutory provisions--including the newly enacted supplemental jurisdictional provision (28 U.S.C. § 1367)-- and the conflicting policy objectives of these statutory provisions, the Article concludes that a district court\u27s adjudication of supplemental claims related to a “related to” proceeding may be unconstitutional, unauthorized by statute, and inconsistent with the primary purpose of bankruptcy jurisdiction--the efficient administration of a bankruptcy estate. As to a district court\u27s exercise of jurisdiction over supplemental claims related to an “arising under” or “arising in” proceeding, it proposes that a balancing approach be adopted. It also contends that additional constitutional concerns are raised when a non-Article III bankruptcy court exercises any form of supplemental bankruptcy jurisdiction, and advocates limiting the power of bankruptcy courts accordingly

Soft and Hard Strategies: The Role of Business in the Crafting of International Commercial Law

Part I returns to the classic definition of hard international law initially put forward by Kenneth Abbott and Duncan Snidal and related IR scholars and analyzes existing commercial law treaties in light of this definition. It concludes that virtually none of these commercial law treaties constitute “hard” international law because nearly all commercial law treaties rely on national courts for enforcement. But Abbott and Snidal’s focus on the extent to which international law is legalized—and especially the extent to which it is enforced by international actors—may matter less with commercial than other more public international lawmaking. This is because the mostly private law governing commercial transactions conceives of obligation and enforcement in ways distinct from its public law counterparts. Part II explains the distinction between private and public laws that govern purely domestic commerce. Many commercial transactions are not governed by regulatory legislation imposing “top down” obligations enforced by the state but rather contractual obligations that are self-regulating and mostly self-enforcing. In the absence of mandatory commercial regulation, businesses assert their interests domestically through privately organized contracts and litigation brought to enforce these contracts as well as through political pressure for reform of judicial administration. Where regulation does exist or has been proposed, businesses may also look to influence this regulation by lobbying legislators and executives. Part III considers the implications of commercial lawmaking for international settings and, in particular, state and non-state (that is, business) interests in the production of international versions of such laws. State sovereignty interests vary depending on the type of international commercial law reform proposed, whether regulatory or otherwise; business’ autonomy interests also vary along this axis. These interests may diverge, although the interests of states and businesses are also interconnected and subject to change based on assertions of influence. Soft law may aid in bridging these differences in various ways—through its gap-filling, advocacy, and socializing functions. Businesses are uniquely capable of fulfilling these functions through soft international law, capabilities that Part III explores both with reference to the detail of various international commercial laws and with regard to broader theoretical concerns

Austerity, Debt Overhang, and the Design of International Standards on Sovereign, Corporate, and Consumer Debt Restructuring

Following the Asian Financial Crisis, sovereign debt defaults prompted calls by the International Monetary Fund (IMF) for a statutory Sovereign Debt Restructuring Mechanism (SDRM). In promoting the SDRM, IMF leaders argued that countries\u27 sovereign debt problems needed something like U.S. Chapter 11, which is to say that IMF leaders supported the SDRM proposal with reference to legal claims rather than relying on purely economic arguments about the welfare benefits of resolving debt overhang. Framing the debate in this way caught on, but by 2005 the IMF board of directors had rejected the SDRM proposal. The current Global Financial Crisis similarly has resulted in more than several sovereign borrowers\u27 defaults and has, in turn, renewed calls for revision of the process for restructuring sovereign indebtedness. This time, however, the rhetoric has shifted away from legal metaphor. Rather than comparing sovereign borrowers to corporations in financial distress, sovereign debt has been discussed in terms reminiscent of household debt. Countries should, we are told, practice financial austerity. This paper unpacks the differences among indebtedness owed by public and private, corporate and consumer, borrowers, and the distinct implications for restructuring these different sorts of debt. It argues that modern economic literature on sovereign debt has been chasing the wrong metaphor. The puzzle of sovereign debt shifts when sovereign borrowing is viewed through the lens of consumer (not corporate) borrowing. This shift in metaphor promises more than a new rhetori

Permissive Bankruptcy Abstention

Parts I and II of this Article provide background discussions. Part I discusses the abstention doctrines applied outside the bankruptcy context. Part II describes the doctrines governing abstention from bankruptcy jurisdiction. Because the development of the bankruptcy abstention doctrines is complicated, Part II proceeds chronologically, beginning with the Supreme Court\u27s decision in Thompson v. Magnolia Petroleum Co., and concluding with a discussion of case law interpreting the current permissive bankruptcy abstention provision, 28 U.S.C. § 1334(c)(1), which was enacted with the 1984 amendments to the Bankruptcy Code. Relying on this background material, Part III contends that section 1334(c)(1) should be construed to incorporate both the bankruptcy and non-bankruptcy abstention doctrines. Parts IV, V and VI consider the contours of bankruptcy abstention in light of the institutional and qualitative differences between bankruptcy jurisdiction and other grants of federal jurisdiction. Part IV focuses on the constitutional distinctions between the judicial authority of non-Article III bankruptcy courts and Article III district courts, and concludes that there is no constitutional basis for the substantially distinct grounds for abstention from bankruptcy jurisdiction and from other grants of federal jurisdiction. Part V considers whether the scope of the permissive bankruptcy abstention provision should differ depending upon whether arising in and related to proceedings are best characterized as a form of federal question or supplemental jurisdiction. It contends that, no matter how bankruptcy jurisdiction over proceedings arising under state law is categorized, questions regarding the scope of section 1334(c)(1) are questions of statutory construction. Read as such, the permissive bankruptcy abstention provision should not be construed to adopt distinct standards for abstention from different sorts of bankruptcy proceedings. Part VI turns to the functional purposes of the broad grant of bankruptcy jurisdiction-the expeditious resolution of bankruptcy cases. Although Congress generally understood the consolidation of all bankruptcy jurisdiction in a single federal forum as the best means of accomplishing this bankruptcy goal of expeditiousness, there may be circumstances in which efficiency in administration is better accomplished through a delegation of judicial duties. Only in these limited circumstances, however, should the functional distinction between bankruptcy and district courts justify a broader abstention doctrine