Legal Multiplicity

The idea that multiple laws might regulate behavior in a single territorially defined jurisdiction is familiar to legal scholars. The phenomenon appears in the literature under a variety of names, including global legal pluralism, institutional multiplicity, and legal globalization.Footnote ² None of those terms captures the full range of situations in which laws might have these kinds of overlapping effects, hence the term “legal multiplicity.” This section will elaborate on the potential causes of legal multiplicity by briefly reviewing various bodies of law—besides national law—that might regulate behavior in a given territory.

Supranational or subnational law. The most straightforward source of legal multiplicity is multilevel governance—the situation in which multiple levels of government are recognized to have authority over a particular territory.Footnote ³ This is the case in virtually every country in the world. In addition, in many countries, and particularly former colonies, customary authorities exercise regulatory power alongside the state.Footnote ⁴

Although constitutional architects may attempt to make the regulatory domains of different governments and customary authorities separate watertight compartments, it is common for them to have overlapping regulatory authority, particularly in federal states. And even when a single level of government has prescribed norms in a given domain, other levels might administer or enforce the norms. For instance, local, state, and national police forces often have concurrent authority to enforce certain criminal laws.

Foreign law applied extraterritorially. Another well-understood cause of legal multiplicity is extraterritorial regulation by states or, in the case of the EU, combinations of states. Classic examples arise in competition law and anti-bribery law.Footnote ⁵ Mergers, cartels, and bribery around the world are potentially subject to extraterritorial regulation by countries such as the United States and the EU. As a result, firms operating in, say, Latin America may be subject to very different legal constraints depending on their ties to the United States or the EU.

Foreign law that generates spillover effects. Foreign law can exert influence outside its territory even without being legally binding. These kinds of spillover effects can arise through several mechanisms.Footnote ⁶

One straightforward spillover mechanism is conditionality: the foreign country may condition access to its consumers or suppliers on compliance with certain norms, such as human rights norms. If the foreign market is sufficiently large, local suppliers will be strongly motivated to comply with the foreign norms, again regardless of local law.

Another frequently discussed spillover mechanism involves influence on the compliance costs of multinational enterprises. It sometimes will be difficult for a firm to comply with different laws in different countries. When this happens, the firm is likely to end up complying with the laws of a single jurisdiction in every country, regardless of local law. As a result, the law of the preferred jurisdiction will spill over to other jurisdictions.Footnote ⁷

There is a variety of other mechanisms through which foreign law might induce compliance beyond its borders. For instance, local actors might comply with foreign legal norms in efforts to send signals to stakeholders or regulators, to emulate esteemed foreign counterparts, or because they find them morally compelling.

Spillover effects are not limited to foreign laws that induce compliance with their terms. Foreign laws that influence cross-border flows of people, goods, services, or ideas also can have significant local effects. Consider U.S. laws that provide for deportation of foreign nationals, or that prohibit and thereby reward trafficking in illicit drugs, or which facilitate purchases of guns to be sold across borders. Variations in these laws have influenced patterns of violent crime and trafficking throughout Latin America and the Caribbean.Footnote ⁸

Private ordering can be another driver of legal multiplicity. One way is by triggering the extraterritorial application of foreign laws. A firm might be incorporated in Delaware, have credit agreements governed by New York law, have concluded contracts with suppliers and customers that purport to be governed by the laws of myriad jurisdictions, and file for bankruptcy in an English court.Footnote ⁹ Modern private international law often gives effect to these sorts of jurisdictional choices, at least for commercial actors, thereby allowing foreign laws to regulate activities well beyond their territory. And, of course, different firms operating in the same territory might make different jurisdictional choices. This all sets the stage for legal multiplicity.

Private ordering also can create legal multiplicity more directly by layering privately formulated norms on top of state-sponsored law.Footnote ¹⁰ It makes sense to treat the legal obligations contained in private instruments as sources of legal multiplicity when they have a material effect on the impact of state law, in other words, when otherwise similar actors are subject to materially different combinations of private and state-sponsored norms. For instance, it is not uncommon for firms that supply multinational enterprises to agree to protect workers’ health and safety, the environment or consumer privacy in the course of their operations. Those obligations often differ from and serve as either substitutes or complements for national law. Or to provide another example, online platforms like Taobao can provide not only norms but also dispute resolution mechanisms that provide an alternative to state-sponsored contract law and litigation.Footnote ¹¹

Some of the potential interactions between state-sponsored and private ordering push the boundaries of the definition of legal multiplicity because private regimes do not necessarily rely on state enforcement and so arguably do not qualify as “law.” For example, a platform like Taobao can enforce its rules against market participants by threatening to exclude them from its platform.Footnote ¹² And buyers can enforce the promises that sellers make to them by using ratings to trigger reputational sanctions. Whether the result of the platform’s interaction with state law is called legal multiplicity rather than, say, “regulatory multiplicity,” the practical consequences are the same.

Legal Metrics

Legal metrics come in two main flavors: they measure either characteristics of the legal system itself or outcomes likely to be influenced by the legal system. Metrics that capture the legal system can be further divided into measures that focus on characteristics of legal norms, the legal institutions that enforce or administer legal norms, or the practices of legal officials.Footnote ¹³

To illustrate these distinctions, consider various possible metrics of the strength of property rights. Measures of the strength of property clauses in constitutional texts or of jurisprudence concerning protection of property rights will capture legal norms. The number of judges on courts with jurisdiction over challenges to expropriation of property rights might be a measure of the strength of institutions. And the speed with which judges hand down decisions in cases challenging expropriations might be a practice-based measure of the strength of property rights. Meanwhile, other metrics might focus on outcomes likely to be influenced by legal protection of property rights. These could include the number of successful expropriations or the population’s confidence that their property rights will be protected, or levels of investment in real property.

It is not difficult to see how legal multiplicity might influence the relationship between metrics focused on the legal system and metrics focused on outcomes. This is certainly true for rule of law metrics, that is to say, legal metrics designed to capture concepts such as constraints on the executive, respect for property rights, personal safety, or corruption.Footnote ¹⁴

Consider metrics that focus on constraints on the executive. The relevant constraints might be imposed by domestic constitutional laws and institutions, but in some societies international or supranational bodies also impose significant constraints.Footnote ¹⁵ This is certainly the case in the European Union, where national governments have been checked to some extent by the Court of Justice of the European Union, the European Commission, and the European Court of Human Rights.Footnote ¹⁶ In other regions, institutions beyond the state constrain state action in ways that might be less elaborate than their European counterparts but equally or more effective.Footnote ¹⁷ In all these settings, rule of law metrics that focus solely upon domestic legal constraints tell only a part of the story of limits on state action. The presence of extra-national constraints on state behavior might explain divergence between scores on rule of law metrics that focus on domestic institutional hallmarks of the rule of law, such as independence of domestic courts, and those focused on state behavior.Footnote ¹⁸

Respect for property rights also may be influenced by multiple institutions. Property rights in a given locale may be protected not only by national constitutional law but also by subnational constitutional or customary law. And some foreign investors may be able to rely on the terms of international investment treaties, including investor-state dispute settlement before an international arbitral tribunal, to protect their rights. Meanwhile, other contractually acquired rights might be enforceable not only in the national courts but also by resort to international commercial arbitration applying foreign laws or dispute resolution mechanisms provided by an online platform.

In this scenario, outcome-based legal metrics easily could be divorced from metrics focused on the national legal system. Imagine a country in which metrics based on the number of judges or the structure and staffing of anti-corruption agencies suggest that the legal system is grossly inadequate. Surveys of foreign investors in the country could still report high levels of protection of property rights. And a survey of users of an online home rental platform could report high levels of confidence that their bookings will be respected.

The same kinds of issues may arise for metrics that focus on personal safety. Consider, for example, a country that serves as a transshipment point for illicit drugs in which violence is driven primarily by conflicts among drug traffickers, and those conflicts are in turn shaped by enforcement practices in the importing states. Scores on outcome-based metrics that capture levels of violence may bear no relation to scores on metrics that capture the strength of the penalties provided under local law or the quality and professionalism of local police forces.Footnote ¹⁹

Similar divergence is possible for legal metrics that focus on corruption. If extraterritorial anti-bribery law effectively discourages officials from soliciting bribes from foreign investors, scores on corruption metrics that focus on foreign firms’ perceptions of the prevalence of bribery might diverge from scores on metrics that capture objective features of a country’s national anti-corruption institutions.Footnote ²⁰

Practical Implications

The possibility of legal multiplicity has several important implications for the use, design, and study of legal metrics.Footnote ²¹

First are the implications for the interpretation of legal metrics. It should be clear from the above that in the face of legal multiplicity we should be cautious about interpreting metrics that capture characteristics of the legal system as measures of regulatory outcomes. Correlatively, we also should be cautious about interpreting measures of regulatory outcomes as measures of the characteristics of legal institutions.

Second, information about legal multiplicity can be used to enhance the analytical value of legal metrics. Any attempt to understand causal relationships involving either laws or regulatory outcomes will benefit from considering all the potentially relevant laws. So, for example, efforts to understand outcome-based rule of law scores in Caribbean countries should consider not only domestic legal, social, and economic factors but also the extent to which the countries are exposed to the effects of U.S. laws concerning guns, narcotics, and immigration. By the same token, comparative case studies of Caribbean countries that aim to capture countries with similar legal systems should consider metrics that capture not only features of domestic law, such as whether the countries share a common law heritage, but also the extent to which countries are exposed to U.S. legal influences.

The broader point is that legal metrics focused exclusively on domestic institutions or outcomes risk obscuring the roles that foreign and international law play in shaping events within countries. Accounting for legal multiplicity illuminates international relationships of power and dependence. Identifying and tracing those relationships helps to understand the consequences of colonialism and neo-colonialism and may affect assessments of the relative responsibility of foreign and domestic actors for variations in laws and outcomes relating to not only the rule of law but also other social, economic, and political phenomena.

This leads to a third and final observation: additional research on the extent and effects of legal multiplicity is likely to shed light on the limitations of existing legal metrics and point to ways to enhance their value.