Research Handbook is the latest instalment in a series of edited volumes devoted to fiduciary law, reflecting burgeoning scholarly interest in this field. The editors’ vision is ambitious, to draw from principles developed “in varied relationship contexts over hundreds of years” in order to “unify the study of fiduciary law as a distinctive field”. As a starting point in this quest, the volume has achieved astounding success.
The book is organised around a comprehensive framework that explores both the internal components of fiduciary law (its theories, obligations, and remedies) and the external terrains in which it operates or may operate (corporations, comparative law and public governance). Each of these parts engages with cutting edge issues in the field, and in doing so sheds light on topics for further inquiry, just as one would hope to see in a research handbook. A few examples suffice.
The first part on theories seeks to define the fiduciary concept and provide novel explanations of the distinctively moralistic fiduciary rules. Velasco defines the fiduciary relationship as involving the substitutive exercise of legal capacity over the significant practical interests of the principal, whether it arises in jure through the principal's appointment or de facto when the fiduciary's influence amounts to effective control. The emphasis on substitutive capacity crucially distinguishes fiduciary relationships from relationships of influence, and helps tackle heated debates as to whether and when advisers, friends and parents can be fiduciaries.
The other theoretical chapters seek to justify strict fiduciary duties (the conduct rules) and the more deferential standard of review of fiduciary discretion (the decision rules). Harding argues that fiduciary norms perform a signalling function as to the content of the norms around which parties can build trust and reliance in the fiduciary relationship. The signalling function itself does not explain why the content of the rule is the way it is, nor is it unique to fiduciary rules, but it complements the deterrence rationale behind them. Criddle invokes republican political theory to argue that the combination of strict conduct rules and deferential decision rules is designed to protect the beneficiary and fiduciary from domination by the arbitrary exercise of power. Taking a broader standpoint beyond moral and political theory, Gold observes that law and economics conceptions of loyalty have now been incorporated into fiduciary law, and calls for adjustment of the view that fiduciary law is strongly coherent with morality. A common feature of these three chapters is the authors’ willingness to go beyond familiar accounts of deterrence or the assertion that fiduciary profits are accountable because they arise from the fiduciary relationship as an accounting relationship. In doing so, they push the theoretical boundaries of our understanding of the subject.
In the next two parts on obligations and remedies, we see further engagement with the nature and justification of fiduciary obligations, this time from a wider range of angles. The chapters on fiduciary obligations deal with: pragmatic concerns to overcome information asymmetry in the fiduciary relationship (Licht); the social and legal contexts of the proscriptive / prescriptive interpretations of fiduciary duty (Bainbridge); the uneven prophylactic operation of the no-profit rule across the contexts in which it operates (Kim); the view of fiduciary duties as involving the adoption of the principal's goals and ends as one's own (Laby); and the divergence between the concept of loyalty in fiduciary law and that found in morality (Miller). The two chapters on fiduciary remedies tackle new frontiers not yet fully explored in England and common law jurisdictions generally, but have become uncontested territory in the US. Bray considers and rejects the case for punitive damages as a trust law remedy, even if confined to egregious breaches, whereas DeMott firmly anchors the liability of third-party participants in a breach of trust in the law of torts.
The last three parts of the volume examine the variety of settings in which fiduciary rules can be found: corporations, comparative law and (possibly) public governance. Corporations are an obvious example. Hill and McDonnell provide a thought-provoking account of the problem of structural bias in corporate boards, whereby, because of their shared background, directors tend to defer to officers. This results in lax monitoring, a clear instance of which is excessive executive compensation. While the (fiduciary) duty of good faith is the most appropriate doctrinal handle to address structural bias, the Delaware courts interpreted this duty narrowly as only requiring lack of affirmative bad faith, a form structural bias seldom takes. Johnson contends that the recognition of the corporate personhood distinct from its members and officers points towards distinct corporate purposes, which typically involve wealth maximisation for shareholders but are not limited to that. He argues that coherence of this governance framework requires analysing fiduciary duties as owing to the corporation and not its underlying shareholders.
The part on comparative law presents powerful doctrinal studies of the practical force of fiduciary law in the UK, US and Australia. The chapters examine in detail contractual modifications of the fiduciary rules (Bruner), safe harbour rules and enforcement mechanisms of the director's duty of care (Conaglen and Hill), enforcement of the corporate opportunity doctrine (Gelter and Helleringer), and erosion of the practical effect of fiduciary rules due to legal and non-legal factors such as contract, regulation, mandatory arbitration and reluctance of enforcement by parties (Tuch). Their insights into the real operation of fiduciary rules provide a perfect complement to the theoretical analysis offered in this volume.
The last part tackles a controversial topic that has generated lively debates, namely the use of fiduciary law to analyse public law and governance. Fox-Decent, a leading contender of fiduciary political theory, defends the applicability of fiduciary analysis not just to judges and public officers, but also to administrative law and international law, and addresses criticisms of his theory. Galoob and Leib provide an important methodological contribution to the fiduciary political theory project, by identifying core features of fiduciary norms (such as loyalty, care, deliberation, conscientiousness and robustness) that are not disputed by any camp in the internal debate about the methods of political theory. They argue that these core features, rather than the methodological debate, should guide the development of fiduciary political theory. Lastly, Rave examines the suitability of the court to assess fiduciary disputes of elected officials, an issue also experienced in the business context, and suggests drawing from the strategies adopted there in relation to public fiduciaries.
The brief survey above does not do justice to the depth and richness of the 20 chapters in the edited volume, nor can it replace the succinct summaries of each of them in the introductory chapter. Combined together, the chapters address a few major themes emerging from the evolution of fiduciary law as a distinctive field. First, what does it mean to be a fiduciary? Is it possible to stipulate the necessary and sufficient conditions of a fiduciary relationship to replace vague notions of power, discretion and vulnerability, and to limit excessive expansion of the field? Second, even assuming that the core features of private fiduciary relationships can be found in public governance, what value add can fiduciary theory offer to resolve issues of legitimacy, equality and freedom in political theory? Third, is the proscriptive or prescriptive nature of fiduciary obligation inherent in the fiduciary concept or is it a function of the socio-economic conditions of the rule? Is there room for prescriptive fiduciary obligations in the modern society? Fourth, how do fiduciary remedies align with the theoretical foundations of fiduciary obligations? Fifth, despite the rhetoric of morality, what are the practical scope and effect of the fiduciary rules in modern corporate and business environments, and how far do they enhance corporate governance? Readers looking for insights into these questions will find thoughtful discussion of them in the volume.
Needless to say, one can always hope for fuller treatment of some aspects of fiduciary law. Personal and proprietary remedies come to mind, as they reveal an approach different from that found in contracts and torts, and as US and UK approaches to the constructive trust are markedly different. Separately, some chapters currently placed in the parts on obligations and public fiduciaries (e.g. Laby, Miller, Fox-Decent, and Galoob and Leib) arguably fit just as well in the part on fiduciary theories. Finally, on a minor stylistic note, the monochrome diagram at the end of Valesco's chapter (Fig. 4.1, p. 94) could have been printed in colour to match the references to a coloured diagram in the text of chapter, or the text could have been adjusted. But none of these detracts from the fact that the edited volume is a remarkable collection of essays that canvas, almost exhaustively, major themes and debates that excite anyone interested in fiduciary law. In doing so, the volume has unequivocally delivered its promise to lay the groundwork for the development of fiduciary law as a distinctive subject.
