Not a Vara Big Deal: How Moral Rights, Property Rights, and Street Art Can Coexist

Note | Intellectual Property Law
Not a Vara Big Deal: How Moral Rights, Property Rights, and Street Art Can Coexist
by Mary Daniel*

94 S. Cal. L. Rev. 927 (2021)

Keywords: Street Art, Copyright Law, VARA, 5Pointz

“Art Murder”—the accusation was sprayed in red paint onto the side of real estate developer Jerry Wolkoff’s Long Island City building.1 Underneath the denunciation was a patchy layer of white paint, and underneath that layer, decades of graffiti art that once made up 5Pointz, “the world’s premier graffiti mecca.”2 Aerosol artists from around the world travelled to the Queens neighborhood for a chance to contribute to the de

facto street art museum.3 However, the buildings that served as the artists’ canvas belonged to Wolkoff, and in 2013, hoping to benefit from the growing housing market in Long Island City, Wolkoff announced plans to raze the former factory buildings to make room for luxury high-rise condominiums.4 The potential destruction of 5Pointz caused a frenzy in the art community as artists scrambled to prevent the popular site’s demolition.5 Then, all hopes of preserving the artwork ended on the morning of November 19, 2013, when 5Pointz’s curator, Jonathan Cohen,6 awoke to discover that, at the direction of Wolkoff, more than 10,000 artworks covering 200,000 square feet were unceremoniously covered over with white paint in the middle of the night.7

Artists responded to the whitewashing by bringing suit under the Visual Artists Rights Act of 1990 (“VARA”), codified at 17 U.S.C. §106A, claiming that the destruction of the artwork was a violation of the artists’ moral rights.8 Moral rights are a relatively new feature of United States law and a feature that seemed improbable through much of the development of copyright law.9 However, in a surprising decision, the district court found in favor of the artists. Holding that painting over 5Pointz was unlawful, Judge Block ordered Wolkoff to pay the artists $6.7 million in damages.10 The decision marked the first time graffiti art was extended VARA protection.11 Wolkoff immediately appealed the district court’s decision, but in February 2020, the Second Circuit upheld Judge Block’s decision in its entirety.12

The ruling has been heralded by many as a big win for artists’ rights

that signifies courts’ growing recognition and respect for artists working in atypical mediums.13 However, many others have expressed concern that such an expansion of VARA is at odds with property law and signifies a dangerous trend of artists’ rights superseding property owners’ rights.14 Moral rights run counter to the United States’ traditionally utilitarian approach to copyright law, and the 5Pointz ruling exemplified the inevitable conflict between moral rights and property rights. Additionally, the street art movement has a reputation as a fringe community, with the term “street art” often used to describe both lawfully and unlawfully created artwork. By extending VARA protection to the unconventional medium, opponents worry that the court lowered VARA’s standard and opened the door for other mediums to push the limits of the statute.15 Fueling this anxiety, there have been other artists seeking the shelter of VARA following the 5Pointz ruling. For example, the Blued Trees movement, started by artist and activist Aviva Rahmani, is an art installation affixed to trees along planned natural gas pipeline pathways.16 Rahmani has successfully filed the project for copyright registration and hopes to use the moral rights granted by VARA to prevent the removal of the trees.17 These concerns have led to demands for the 5Pointz ruling to be overturned or for VARA to be amended, or even repealed, so as to limit its interference with property rights.18

This Note argues that VARA’s application to street art is appropriate and not something for property owners to fear. While moral rights undoubtedly conflict with property rights, it is important for the United States to recognize moral rights in order to keep up with international standards and encourage creation. Additionally, street art is no longer the fringe movement it once was; artists such as Jean-Michel Basquiat, Keith Haring, and Banksy have helped sway the public opinion of street art away from viewing it as vandalism and towards viewing it as a legitimate artistic

medium worthy of additional copyright protection.19 Finally, the language of VARA is intentionally limiting and leaves a lot of interpretation to the courts.20 Generally, courts have been hesitant to apply VARA unless clearly warranted, suggesting that cases such as Blued Trees should not be a cause for panic given the court’s careful application of VARA.21

Part II of this Note explores the development of United States copyright law. Particular emphasis is put on the resistance to the concept of moral rights. Part III discusses the 5Pointz ruling and analyzes critics’ arguments against the holding and against moral rights in general. This Part also explores the potential ramifications of the 5Pointz ruling. Part IV argues that this recent application is appropriate and not a cause for concern about overreaching. The arguments against V ARA are also addressed and concluded to be unpersuasive. The appropriateness of the application of VARA to street art is supported by public opinion and judicial interpretation, while future overreaching is prevented by the statute’s limiting language and a careful court. Blued Trees is used as an illustration of the ease with which a court can deny VARA protection. Finally, Part V suggests that VARA offers appropriate coverage presently, but future expansion of VARA may be necessary.

__________________________________________________________________________________________________________

*. Executive Senior Editor, Southern California Law Review, Volume 94, J.D. Candidate 2021, University of Southern California Gould School of Law; B.A. Communications and Fine Art 2015, Loyola University Maryland. Thank you to Professor Sam Erman for his guidance during the drafting of this Note. Additionally, thank you to my friends and family for their support and feedback. Finally, thank you to all the Southern California Law Review editors for their hard work.

 

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Divergence in Land Use Regulations and Property Rights – Article by Christopher Serkin

From Volume 92, Number 4 (May2019)
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Divergence in Land Use Regulations and Property Rights

Christopher Serkin[*]

INTRODUCTION

For the past century, property rights—and in particular development rights—have been circumscribed and largely defined by comprehensive local land use regulations. As any student of land use knows, zoning across the country shares a common DNA. Despite their local character, zoning limits on development rights in almost every American jurisdiction share a deep family resemblance borne from their common origin in the Standard Zoning Enabling Act (SZEA). Zoning for much of the twentieth century therefore converged around a core goal of separating incompatible uses of land as a kind of ex ante nuisance prevention.[1] Of course, zoning went much farther than the common law of nuisance, but its animating justification was to minimize the externalized impacts of certain kinds of intensive development.

For decades, zoning created a relatively stable and predictable system defining development rights and also neighbors’ expectations about what could be built nearby. While municipalities innovated on the margins, the shared approach meant that developers could easily assess the developable envelope and permissible uses for any property, and many became sophisticated at navigating local zoning ordinances to maximize development potential. This also resulted in equally stable political dynamics. By and large, developers and conservative property rights advocates were allies in opposing restrictive zoning, while community groups and pro-regulation liberals advocated for zoning to protect community character, in-place residents, and the environment.[2]

More recently, however, zoning has been changing. Even first principles are up for grabs, and land use regulations increasingly diverge from each other. Some municipalities today deploy zoning as a framework for bargaining with developers.[3] Others focus on sustainable development, housing affordability, community preservation, and many other goals.[4] The proliferation of new zoning goals means that property and development rights may now be strikingly different between jurisdictions. This is a period of increasing divergence in the substantive content of development rights across municipalities.

This trend towards divergence in land use regulations has not, however, resulted in the wholesale jettisoning of traditional approaches to zoning and land use regulation. In fact, while the goals may increasingly diverge, zoning’s fundamental tools remain fairly consistent. Instead of wholesale divergence in zoning and development rights, what we are actually witnessing more closely resembles multimodal convergence, where zoning regimes coalesce around multiple points instead of a single goal.[5]

The question here is whether this divergence is beneficial on balance. Any divergence has its costs, primarily in the form of increased information costs for property owners and the deadweight costs of increased special interest group rent seeking. But it comes with benefits, too, as diversity in land use goals allows consumers to select their preferred set of property rights. Too little divergence and people are locked into regimes they may not want. Too much and information costs may grow too high.

Increasing divergence—or multimodal convergence—also explains some of the new political fights around zoning and property rights. Traditional conservative and liberal positions have become unsettled as progressives have increasingly blamed zoning for the affordability crisis in many cities.[6] Some liberal groups, however, continue to embrace restrictive zoning because they prioritize environmental or community-preservation concerns or favor mandatory inclusionary zoning as a better response to affordability.[7] Simultaneously, conservative suburbs that had previously rejected land use regulations in favor of a pro-growth agenda have had second thoughts and are deploying strict new limits on development partly to constrain the burden on congestible infrastructure like roads.[8] In short, restrictive zoning and strong property rights are no longer at opposite ends of a single spectrum. Making sense of zoning’s new landscape requires grouping land use regulations as focusing primarily on one of several different possible goals. These include, among others, affordability, environmental protection, aesthetics, historic preservation, community protection, fiscal concerns, and more invidious exclusion. Sometimes these are competing goals, and sometimes they are simply orthogonal to each other. This Article identifies the range of goals that local governments today pursue through zoning and then examines the costs and benefits of this new zoning reality.

I.  Zoning’s Common Origin

In our fragmented and diverse political system, the consistency of land use regulations between municipalities may seem surprising. In fact, however, zoning everywhere in the United States shares a common—and familiar—origin in the Standard Zoning Enabling Act (SZEA).[9] Promulgated in 1926 by the Department of Commerce, the SZEA was designed as model legislation for states to adopt that would empower local governments to enact comprehensive zoning and land use regulations.[10] The approach was a success. Following a tacit blessing by the Supreme Court in Village of Euclid v. Ambler Realty Co.,[11] almost every state in the country adopted some version of the SZEA within the ensuing decades, and zoning became ubiquitous.[12]

From that origin story comes a common set of concerns that zoning was meant to address. Zoning has long been seen as a kind of ex ante nuisance prevention.[13] It separated incompatible uses of land before they arose, keeping factories out of residential neighborhoods during the urbanization and industrialization of the early twentieth century.[14] And it protected singlefamily homes from more intensive uses, in effect stratifying much of the country into single-use zones. This had a pernicious underbelly, reinforcing divisions based on class and on race, keeping apartment buildings and other forms of multifamily housing out of more affluent single-family zones.[15] Indeed, this is zoning’s original sin.[16] But this is also the fundamental justification that the Supreme Court endorsed in Euclid.[17]

Political fights emerged quickly. The mainstream arguments were not over the project of zoning, but instead over its implementation. Few people objected to the idea of using regulations to separate genuinely incompatible land uses. Indeed, the regulatory goal of minimizing externalities was consonant with both liberal and conservative convictions. But zoning’s contours have been contested now for a long time. By and large, conservatives objected to regulatory restrictions on property rights and so have advocated for limited zoning that separates only the most conflicting uses. Others on the right have advocated for even more extreme regulatory minimalism, relying on private land use controls instead of zoning and invoking covenants and homeowners’ associations as remedies for regulatory overreach.[18] Liberals, on the other hand, embraced zoning. They were willing to take a more capacious view of the harms of neighboring uses and so promoted increasingly fine-grained land use regulations.[19] The conventional understanding of attitudes towards zoning could therefore be presented along a simple spectrum from anti-regulation to pro-regulation.[20] Slowly over time, local governments moved beyond these narrow goals. Today, the underlying goals of many land use regulations have nothing to do with ex ante nuisance controls.

II.  Divergence in the Purposes of Land Use Regulation

Local governments have become increasingly creative about pursuing a variety of municipal goals through land use regulations, and zoning has become concomitantly more nuanced and sophisticated. The result is a more complex regulatory apparatus that owners must navigate to develop property in many jurisdictions. It has also resulted in widening fissures in the political fights over zoning. Although not always noticed, even by local officials and developers let alone by courts and scholars, the presumptive conservative opposition to land use regulations and liberal support has, in many cases, flipped.[21] Odd political alliances dot the landscape of local land use disputes, with—for example—affordable housing advocates working alongside for-profit developers to resist restrictive zoning ordinances.

From a distance, the divergence in local uses of zoning creates what appears to be real instability. When the dispute over zoning was framed simply in terms of more versus less regulation, the stakes were predictable and relatively clear. But now with governments pursuing many different goals in their land use regulations—with apparent divergence in the purposes of zoning—this area of law appears quite chaotic.

Municipal land use regulations no longer converge around the central organizing goal of minimizing conflicting uses of property (if they ever truly did). This is not, however, a story of entirely disorganized divergence. The proliferation of goals still relies for the most part on conventional zoning tools, even if these tools are deployed somewhat differently. What one therefore observes, looking carefully, is multimodal convergence in land use controls. And identifying those various points of convergence can go a long way to discerning patterns in—and understanding the political stakes of—zoning fights wherever they occur. The first step, however, is to survey the many goals that land use regulations today can serve and how local governments tend to pursue them.

Many of the specific objectives are by now familiar. Scholars already distinguish between growth machine and homevoter jurisdictions.[22] Advocates for sustainable development clash with NIMBYs (Not in My Backyard) and BANANAs (Build Absolutely Nothing Anywhere Near Anything”) and are joined by California’s new YIMBYs (Yes in My Backyard”).[23] It is easy to observe these fights on the ground and to see how much jurisdictions can diverge in their land use priorities. But instead of seeing these as one-off battles or through the realpolitik lens of interest-group conflicts, it is worth stepping back and canvassing the range of goals that local governments today pursue through their land use regulations.

Looking broadly, modern land use regulations often represent an effort to pursue one or more of the following goals. These are not mutually exclusive. Some are congruent with each other, but others are in inextricable tension. Many implicate a voluminous academic literature. They are presented here in only their most cursory outlines. The value of this Article is not in the exhaustive explication of any particular land use goal but instead in a broad survey of many of them together to identify the resulting content of the land use regulations that each of these goals tends to produce. What begins to emerge is a sense of real divergence in the objectives that local officials pursue through land use regulations, the implementation of which nevertheless converges around a few key zoning tools.

A.  Minimizing Harms from Neighbors

Minimizing conflicting uses of property is the original justification for zoning, and conventional land use tools are well-suited to this goal by separating residential, commercial, and industrial uses. Debates persist over what counts as incompatibility and what sorts of externalized harms need to be regulated.[24] Nevertheless, this overarching goal—and the resulting approach to zoning—are straightforward. Indeed, this objective continues to dominate land use regulation in many suburbs, where residents continue to protect low-intensity residential development by minimizing incursions of more intensive uses.[25]

B.  New Urbanism and Mixed Use

In many other areas, however, the traditional view of incompatible uses has broken down. People increasingly seek mixed uses and walkable neighborhoods, preferring that vibrancy to single-use residential areas.[26] New urbanism champions these land use goals.[27] New urbanists may still accept at least implicitly the goal of separating incompatible uses, but they adopt a very different view of what counts as incompatible.

New urbanist land use regulation therefore looks quite different from conventional Euclidean zoning. The regulatory regime still regulates land uses and development density, but it seeks vibrant and diverse uses instead of homogenous ones. In addition to some rigid use districts, then, it permits forms of mixed-use development.[28] Some zoning ordinances do this explicitly, predesignating certain zones for mixed use buildings.[29] Others do this through overlay districts or through special exceptions and variances.[30] The result is mixing more intensive and commercial uses with residential ones, often on arterial streets or in places located near mass transit.

C.  Encouraging Growth

Following Professors Harvey Molotch and William Fischel, land use literature has long divided municipalities into “growth machine” and “homevoter” jurisdictions.[31] The former seek to attract development and mobile capital and to encourage investments in new local developments. But this can be further subdivided into a number of different specific motivations. Most obviously, as the “growth machine” name implies, this pro-development attitude can reflect a straightforward desire to benefit the local development community. Builders, architects, realtors, lawyers, bankers, and others all have a strong financial interest in increased development activity.[32] Others favor growth for its own sake. A growing city feels dynamic and vibrant, even as it puts pressure on existing communities.[33] Still others are more instrumental, favoring growth for the increased economic activity that it sometimes produces and also for the services and amenities that size brings, whether a restaurant, professional sports team, or symphony, to name just some of the most obvious examples.[34]

Whatever the specific reason, this pro-growth agenda translates into a broad hostility to strict land use regulations. Municipalities that impose onerous regulatory hurdles are at a competitive disadvantage when it comes to attracting development and will expect to see development activity decrease, all else being equal. The resulting approach to zoning is therefore to minimize regulatory hurdles in order to encourage growth.

D.  Discouraging Growth

The opposite goal is also commonplace: discouraging growth. Just as some people seek growth for the amenities it brings, others may object because of increasing congestion or changes in municipal character that can accompany substantial new development.[35] It can also come simply from status quo bias.[36]

Again, whatever the specific motivation, the anti-growth agenda embraces zoning and land use regulations of all kinds. The clearest regulatory strategy to preserve the status quo is to erect as many regulatory hurdles as possible to prevent new development. Strict zoning requirements, including designating large areas of a municipality as effectively off-limits for development, are the most obvious techniques.[37] But adding new layers of regulation can be equally if not more effective. One study has demonstrated that every new regulation reduces building permits for multifamily units by 6%.[38] Historic preservation rules, strict subdivision ordinances, development impact fees, and so forth can also create an atmosphere hostile to development that drives growth elsewhere.

E.  Zoning for Tax Revenue

Zoning is increasingly bound up with issues of municipal finance. Sometimes this is direct, like using regulatory concessions as opportunities to raise money or develop infrastructure.[39] But more often, this is indirect, like using zoning to encourage land uses that have net positive budget impacts. Public schools, in particular, are often the largest expense for local governments and therefore drive land use decisions.[40]

While normatively controversial, local governments often seek to exclude affordable housing because low-income households generate relatively little revenue and yet place significant burdens on municipal budgets through impacts on schools and other municipal services. On the flip side, local governments seek land uses that generate substantial tax revenue while creating few costs.[41] Depending on the nature of the tax base, this often means seeking to attract high-valued homes for people with few if any school-aged children.

Traditionally, these dynamics have produced large-lot zones, limits or bans on multifamily housing, and other familiar, if troubling, forms of exclusionary zoning. By requiring housing that consumes more land per unit, a local government can reduce the amount of housing that can be built in any area and also can increase the land costs associated with housing, driving up prices. Admittedly, this dynamic has been shifting somewhat in recent years. Changing consumer preferences means that dense, mixed-use, multifamily development can sometimes be the most expensive, with new high-rise areas in cities like Nashville generating by far the most net tax revenue per square foot.[42] Nevertheless, in much of the country and especially in suburbs, the conventional wisdom still holds. Those places still deploy large lot zoning and bans on multifamily housing in order to exclude lower-income households and to attract and retain housing for the affluent.[43]

F.  Zoning for Fees

A more direct form of fiscal zoning comes from the bargaining opportunity that land use regulations can represent. Several decades ago, Professor Carol Rose demonstrated that zoning can be seen through the competing lenses of planning and dealing.[44] Under the dealing model, land use regulations should be seen as a kind of opening offer. Developers then must petition governments for more permissive regulations—like increases in density—and provide certain financial or in-kind benefits in exchange for regulatory largesse. Some people view this as a kind of graft, others simply as a way of ensuring that developers internalize more of the costs of increased density.[45] Regardless, many local governments have become increasingly sophisticated about enacting land use regulations that create a framework for bargaining.

The most familiar example is the imposition of impact fees or exactions. These are explicit mechanisms by which local governments charge developers for the burdens of new development, either through prespecified legislated fees or ad hoc bargains.[46] But other zoning approaches also create bargaining moments for local governments. For example, some local governments place large amounts of land into holding zones, typically industrial or agricultural zones where no other uses are permitted.[47] These do not reflect the municipality’s judgment about the highest and best use for the property but instead create such strict limits that anyone wanting to develop the property will have to seek a rezoning. Since property owners are rarely entitled to rezonings as of right, this gives municipalities discretion and so creates a meaningful opportunity to bargain for developer contributions to infrastructure, and so forth.

More generally, then, zoning ordinances can generate revenue either by imposing prespecified impact fees or by giving local officials discretion in land use decisionmaking. Vague zoning standards—like a requirement that development be “consistent” with existing community—allow local officials to deny land use applications.[48] This discretion therefore also allows officials to grant the applications but only upon certain concessions or contributions by the developer.

G.  Zoning to Increase Property Values

According to Professor Fischel’s leading account of suburbs and small local governments, homeowners dominate the political landscape and are primarily motivated by property values.[49] Most homeowners’ primary asset is their house, and so they are keenly interested in property values, seek policies and regulations that will increase local property values, and reward local politicians who provide them.[50]

There is no magic zoning bullet that will automatically create higher values. Instead, the relationship between zoning and property values is dynamic and depends tremendously on local context. Nevertheless, it is generally the case that restricting the supply of developable land will tend to increase property values. In fact, it amounts to a kind of transfer from new entrants who have to pay higher housing costs to in-place residents who see their property values climb.[51]

This does not always work. Sometimes, depending on elasticity in local markets, strict regulations can produce economic stagnation. If demand for housing is weak or very responsive to price, then overly restrictive zoning can be self-defeating.[52] But where demand is strong, as in many affluent and developed communities, restrictions on supply can increase property values for in-place property owners.

H.  Affordability

Not everyone benefits from rising property values. A countervailing pressure in many municipalities is the desire to encourage more affordable housing options.[53] Rents and home prices that are too high can drive out important members of the community—like teachers, government employees, artists, low-wage workers, and so forth—which can have adverse economic effects and can also deplete social capital.[54]

Local governments have a number of tools at their disposal to address housing affordability, but each comes with limitations. Obvious, but much maligned, tools include rent regulation and the provision of public housing.[55] But land use regulations can also be deployed to encourage affordable housing. Inclusionary zoning, for example, offers developers density bonuses in exchange for developing some number of affordable units or sometimes requires a number of affordable units outright as a condition for building.[56] More generally, too, simply increasing the supply of any form of new housing can also put downward pressure on price.[57] Cities today are experimenting with ways of relaxing density limits in order to increase the supply of new housing and thereby address affordability. In 2018, New York, for example, changed its off-street parking requirements for certain kinds of buildings, dramatically increasing the number of residential units that could be developed on any given lot.[58] The most extreme example is the YIMBY movement in California, which pushed for a change in 2018 that would have all but eliminated density limits on residential development anywhere near mass transit.[59] This would have unlocked an enormous amount of development potential throughout California’s cities. The measure failed, but there can be no doubt that affordability is motivating increasing political pressure.[60]

Not everyone agrees that unlocking development potential will help with affordability. Indeed, it might seem that developing high-end market rate housing would increase not decrease local housing costs. But the law of supply and demand is powerful, and even market-rate housing eases the demand for more modest existing housing elsewhere in the municipality and so puts downward pressure on price. In 2019, Professor Vicki Been et al. surveyed the economic literature and concluded that unlocking supply, even without explicit inclusionary zoning requirements, helps make housing more affordable, whereas supply restrictions drive prices up.[61] While responses remain controversial and contested, zoning for affordability involves lowering regulatory barriers, reducing development restrictions and unlocking increased development potential, or directly regulating price either through rent regulation or inclusionary zoning.

I.  Historic Preservation

Although not squarely “zoning” in many places, historic preservation can motivate local officials who seek to protect buildings or neighborhoods of historic significance. Designating property as historically significant can create a new layer of regulatory oversight. It therefore triggers a kind of additional veto right that can make it more difficult to build.[62] Historic preservation ordinances vary in their details and in their strength but generally require property owners to apply for a certificate of appropriateness when seeking to tear down or modify a structure designated as historically significant.[63]

J.  Community Preservation

More than historic preservation, community preservation motivates a significant amount of land use regulation. In fact, historic preservation is often a kind of rough proxy for the real concern of preventing displacement of the existing community. Development can threaten community in a number of different ways. Most directly, an influx of new residents can affect existing social ties and threaten existing social capital.[64] Development can simultaneously price some residents out of the neighborhood.[65] This gentrification—a perennial issue in local government and land use law[66]—creates its own winners and losers. The former includes primarily in-place property owners; the latter includes renters. Nevertheless, people concerned with preserving the existing in-place community will usually object to development that changes the character of a place.[67]

Some local governments have begun to experiment with community preservation directly, enacting community preservation ordinances that do not require a showing of historical significance but rather community significance to preserve a building.[68] Most use zoning’s blunter tools, again seeking to restrict new development by erecting regulatory hurdles. While this can sometimes prove self-defeating, creating stagnation and capital flight, community members will often take that risk in order to protect their social capital and communities. There is no doubt that concerns about the fragility of existing communities motivate a significant amount of restrictive zoning.

K.  Aesthetic Regulation

Today, in many places, the motivation for many land use regulations appears to be as much aesthetics as anything else. Neighbors are concerned about the impact of new development on the look of their neighborhood for its own sake and often oppose development primarily because they think it will be ugly.[69]

Sometimes, this concern is explicitly included in zoning ordinances by requiring architectural review.[70] Such architectural review provisions tend to create greater homogeneity in building design, often specifying a narrow list of appropriate architectural styles for any new buildings.[71] Homogeneity does not ensure beauty, of course, and can in fact create the opposite.[72] But it is a proxy for uncontroversial buildings and so minimizes aesthetic outliers.

Some jurisdictions have also turned away from traditional use-based zoning ordinances to form-based codes instead. As their name implies, these codes focus on the particular form that buildings can take—on bulk, shape, and so forth—instead of on the permitted uses. These often impose quite specific design requirements that function like de facto aesthetic regulations.[73]

L.  Environmental Protection: Sustainable Development

We have now long understood the important role that land use regulations can play in climate change.[74] Real estate development contributes significantly to carbon emissions. The sprawl associated with single-family residential suburbs is much more carbon intensive than dense development closer to people’s jobs and to commercial centers.[75]

Energy conservation is a backdrop for many discussions about new development. This can translate directly into land use regulation. Zoning that minimizes sprawl and that encourages denser development near transportation will lower carbon emissions.[76] Indeed, this is the explicit goal of sustainable development, which has generated an enormous amount of zoning activity and scholarly interest.[77] The blueprint for sustainable development remains contested, but experts broadly agree that urban living produces much less carbon than suburban and rural living. They therefore favor increasing density in the urban core while discouraging the land-consuming sprawl that has characterized development for much of the past century.[78]

M.  Environmental Protection: Animals and Habitats

A related motivation for land use regulation, especially in rural areas, is more traditional environmental protection and specifically the protection of environmental resources like wetlands. Wetland regulations are often administrated at the state level, rather than the local level.[79] Nevertheless, they function as sometimes dramatic limits on development. Other kinds of environmental regulations have a similar effect. Septic regulations can prove more restrictive than zoning in controlling density in rural areas without municipal wastewater.[80] Explicit environmental review through the National Environmental Policy Act (“NEPA”) or its state analogues also shape large-scale development.[81]

Other municipalities focus environmental efforts on wildlife habitat. The most sophisticated efforts involve taking an inventory of animal pathways and then seeking to create habitat connectivity by preventing development that interferes with those pathways.[82] Wildlife overlay districts seek to preserve critical habitat and to promote ecological health. More often, however, local governments pursue what is better characterized as aesthetic environmentalism. The goal is to promote a community character that includes vegetation, trees, open space, and a general sense of nature, regardless of the actual impact on wildlife or natural resources. Proponents often object to cookie-cutter suburbs and promote more large-lot development that preserves a more rural feel.

The result for zoning is increased restriction on development, but the location for these restrictions is motivated by a concern for natural resources and not by aesthetics, community character, and so forth.

N.  Economic Intervention

Zoning and land use controls can be an important if sometimes problematic tool for local governments to affect economic outcomes. At the most parochial level, land use regulations can be used as a kind of economic protectionism for in-place businesses by excluding competition.[83] Prohibitions on new entrants, coupled with grandfather protection for existing businesses, can create a kind of regulatory mini-monopoly. This can look like pure rent seeking or just naked economic favoritism for in-place businesses.[84] Sometimes, however, local governments can justify anti-competitive zoning on broader economic grounds. For example, some local governments have tried to use zoning and land use controls to exclude large box stores like Wal-Mart, ostensibly to preserve smaller businesses and downtown commercial areas, and the positive externalities they generate.[85]

Local governments can also use zoning to pursue specific economic goals. For example, noncumulative zoning in industrial areas is best understood as a kind of subsidy for industry by keeping property values lower for industrial land.[86] In other instances, local governments can create what amount to aspirational zones for uses they seek to attract—like New York City creating a new biomedical zone.[87] And even more broadly, local governments may use land use regulations to try to generate agglomeration surplus through a sufficient density of a particular kind of business or industry: think, here, of tech in Silicon Valley; insurance in Hartford, Connecticut; theater on Broadway; and so forth.[88] These places and industries may all have their own specific land use needs, and local governments are often especially solicitous of these industry-driven zoning requirements.[89]

O.  Exclusion and Segregation

In addition to the more-or-less principled justifications for land use regulation identified above, there are also more overtly pernicious ones that are important to acknowledge. Zoning can be used to exclude disfavored groups or businesses. This is most obvious and familiar in the context of racially motivated zoning. Although explicitly race-based zoning is clearly unconstitutional and illegal, exclusionary zoning often has a racially discriminatory impact, if not motivation. Because this can be so difficult to detect and to prove, it remains widespread.[90] For example, opposition to affordable housing or simply to less expensive multifamily housing may well be motivated for some people by racial animus.[91] The political fights over such housing are therefore often accompanied by charges of racism and can be bitter and ugly.[92]

Table 1 summarizes the different municipal goals described in this Section and the resulting implications for zoning.

 

What should be immediately apparent is the extent of convergence in the resulting approaches to zoning, even as land use objectives continue to diverge. Clearly, Table 1 obscures, through simplification, important limits on the extent of convergence. New urbanists, for example, will not favor relaxed zoning restrictions in all of the same places, or in the same way, as environmentalists. Nor are these interests mutually exclusive, even in the same person or political body. Someone can prioritize aesthetic concerns in one place and affordable housing in another in the same municipality. There is nothing inherently inconsistent in those views.

Indeed, questions of location and scale create persistent tensions in each of these approaches. Increased density in one place might increase property values but make other parts of the municipality more affordable. Local renters who might find themselves priced out of that particular neighborhood might therefore object, even though the effect of increased supply is to improve affordability.[93] Similarly, favoring density, transitoriented development, or a more urban mixed-use streetscape does not mean favoring those elements everywhere. They can conflict with concerns over historic or community preservation in particular locations in ways that are not internally inconsistent.

III.  Evaluating MultiModal Convergence

A.  The Costs and Benefits of Divergence

The diverging goals of land use regulations—and the resulting property and development rights that they circumscribe—create both costs and benefits. They also create new political alliances that can make the real stakes of zoning fights increasingly opaque. Being clear eyed about these dynamics allows for a more careful assessment of the changing landscape of land use regulations.

The most obvious cost of the proliferation of land use goals comes from the difficulty in navigating divergent regulatory regimes. When zoning codified the straightforward goal of separating incompatible uses of property, it was relatively easy for property owners and developers to anticipate ahead of time what uses would be permitted on any particular property. Comprehensive plans gave a sense of the municipality’s preferences and priorities, while the zoning ordinance prescribed broad categories of uses and densities that it would allow. A developer seeking to build new multifamily housing or a new commercial center would look for property with the right physical and regulatory characteristics to decide what land to buy and where to develop. And this process was relatively transparent.

Divergence in land use goals can obscure some of zoning’s signaling and channeling functions. Today, the content of the zoning ordinance does not necessarily reveal the municipality’s underlying purposes and goals and so can make the regulatory treatment of land more opaque. The fact that property is zoned as agricultural, for example, does not necessarily mean the municipality is hostile to development there. It might mean, instead, that local officials are open to a rezoning for a price.[94] Likewise, the fact that development will require a normally routine special use permit, or a less routine variance, does not mean a developer should expect to get it if the development will occupy land that local officials believe is important for habitat or the local officials are simply opposed to growth. In other words, divergence in the underlying purposes of land use regulations—especially in specific locations within a municipality—means that it can be difficult for property owners and developers to know ahead of time what uses will be permitted in any particular place. The contours of property rights and development potential are therefore rendered at least partially obscure.

Divergence in land use regulations creates another cost, too, in the form of special interest group rent seeking.[95] Support for—or opposition to—some land use approval can now include special interest group pressure from many different directions. Those interventions are costly themselves, but they can also create a more complex and less transparent set of choices for local officials. The results can be less effective regulations, whether judged by efficiency, by public preference, or any other metric.

There are benefits of the seeming divergence, however. Most importantly, multiplicity in land use regulations can allow people to better satisfy their individual preferences by choosing to live in a place that pursues their particular regulatory priorities. And they will not always choose to live in the place where their property rights are the most expansive. Indeed, it is quite to the contrary. While no one likes to be told what they can and cannot do on their own property, almost everyone likes being able to tell neighbors what they can do on theirs. Many people will willingly trade greater restrictions on their own land for equivalent restrictions on their neighbors. The proliferation of common interest communities, many of which are subject to much more burdensome property restrictions than any local zoning ordinance would ever impose, is proof that many people prefer this tradeoff.[96] Just as people can choose to live in a place with good public schools, or low taxes, or mass transit, or lots of open space, regulatory priorities can be important selection criteria for homeowners.

Relatedly, satisfying consumers’ regulatory preferences facilitates Tieboutean sorting.[97] This has structural benefits. Desirable regulatory regimes will be capitalized into property values, at least to some extent. That provides an important feedback mechanism for local governments seeking to satisfy consumer preferences. Where regulatory choices are limited to the binary options of “more” or “less,” price becomes an unhelpful or even perverse signal. More regulation will tend to restrict supply and so drive up prices, all else being equal. The pressure from sorting will always favor more restrictive zoning. But in a world of multimodal convergence, where local governments pursue a variety of regulatory objectives, sorting starts to generate meaningful price signals in property values. For example, the fact that many local governments have sought to brand themselves as “green” cities, partly through their land use regulations, demonstrates at least their perception of the benefits of such sorting.[98]

In theory, then, the proliferation of attitudes towards land use regulations, as well as the regulations themselves, should allow for consumers to satisfy their regulatory preferences and to purchase the bundle of property rights that they want. To the extent they are visible to outsiders—sometimes an unrealistic assumption—land use priorities allow for more efficient sorting.[99]

The tension between predictability and clarity in property rights on the one hand and satisfying diverse preferences on the other creates a meaningful limit on the goals that local governments should be able to pursue and how they pursue them. Too much divergence and information costs become too high. But too little and more people will be stuck in regimes that do not actually reflect their interests. Multimodal convergence therefore represents a surprisingly appropriate compromise between the certainty of unidimensional land use goals and more chaotic divergence. It also means that not everyone in a municipality must agree on the same goals to still be able to agree on an approach to zoning. The fact that different substantive goals can produce the same attitude towards zoning in a particular dispute means that more people can satisfy their regulatory preferences with fewer options.

This is not to say that the extent of the observed divergence that exists today is appropriate. It may be too great, and so the information costs are already too high. Or it may not be enough, and people are being forced into regulatory regimes that do not satisfy their preferences. This is, fundamentally, an empirical question, and one that would require further exploration to try to resolve. The observation here is simply that some degree of divergence is desirable, and that multimodal convergence reflects a kind of tacit compromise between an overly rigid set of land use goals and a regulatory free-for-all.

Multimodal convergence also provides a useful way of thinking about political alignments and narratives in contemporary land use fights. It explains why many land use disputes today involve such unlikely bedfellows. For example, the motives of the growth machine and affordable housing advocates may be very different, but their view of zoning may be quite consistent.[100]

These dynamics also make it more difficult to understand the “real” stakes of many land use disputes. Does opposition to multifamily housing in a particular place come from concern about habitat loss, from aesthetic preferences, or from racist opposition to the likely low-income residents who are predicted to move in? Any of those views would be consistent with a vote against the new development.

The purpose of highlighting these dynamics is not, ultimately, to favor one over another. Appropriate concerns in one place may be entirely inappropriate somewhere else. But bringing awareness to the diversity of goals that can be implicated by modern land use disputes should allow for more explicit evaluations of the trade-offs in any zoning decision. Even if the motivation for restrictive zoning is aesthetic, for example, it is important to recognize the impact on affordability. Conversely, encouraging growth may help affordability or create opportunities for agglomeration, but with the possibility of burdening infrastructure beyond what it can easily support and displacing in-place local residents.

But these dynamics do reveal that different groups sometimes end up advocating for land use regulations against their expressed interests. These groups are either being disingenuous about their actual motivations or are mistaken about how different substantive policies translate into land use regulation. The survey of land use goals in the previous part makes it easier to identify these unexpected positions and to explore alternative explanations.

B.  An Example: Nashville’s Music Row

Consider a recent land use fight in Nashville, Tennessee. There is nothing particularly special about this example. Indeed, its point here is its banality—if interesting local color. Nor does it implicate every different interest identified above. But it does reveal the complicated goals of modern land use controversies.

Nashville’s Music Row is two long, multiblock streets near and roughly parallel to the campus of Vanderbilt University. Its name comes from the many recording and music studios located along these long strips.[101] The buildings, however, look residential and are an eclectic hodgepodge that includes craftsman-style bungalows from the first half of the twentieth century, some modern buildings, and a few small office buildings. Increasing development pressure, however, has led to the redevelopment of many of these music-industry uses into new apartment buildings.[102] This has led to heated conflict over the future of Music Row, culminating in a two-year building moratorium that recently ended.[103]

At first glance, fights over the future of Music Row look entirely conventional. Groups arrayed against the development include NIMBY neighbors as well as preservationists. One of the most hard-fought development battles on Music Row concerned RCA Studio A. In 2014, when a developer announced plans to tear down and redevelop the property, singer-songwriter Ben Folds wrote an open letter to the musical community imploring that the building be saved.[104] He listed the musicians who recorded hit records there, including The Beach Boys, Dolly Parton, Jewel, Kesha, Hank Williams Jr., and many, many others. Folds was himself the tenant at the time, and he organized an aggressive and ultimately successful effort to buy the building and preserve it as a recording studio.[105]

While Studio A was saved through a voluntary transaction for $5.7 million, other building and redevelopment plans remain fiercely contested by preservationists. But historic preservation is an awkward fit because many of the buildings are not historical in any way. The historic preservationists are focused less on the buildings than on the musical history that they represent. In fact, it appears that their interests are not about preserving the architecture but are instead about preserving the music industry more broadly. One preservationist, for example, articulated the agenda this way: “We can’t just sit back and let Nashville’s unique history be destroyed and its present-day musical culture lost.”[106]

Other opposition to development appears to be more about preserving the community’s character than about any historic resources.[107] One longtime bartender said of the development on Music Row: “It’s not Nashville anymore. It used to be a little place, with a little airport, that had some fantastic music and big personalities and millions of different stories. Now it’s a metropolis, this is a big city.”[108] Others have focused their opposition on the associated infrastructure burdens and, in particular, on traffic.[109] Indeed, traffic has become a flashpoint in Nashville. There is no consensus about how to address it, but many people oppose all new development until a plan is in place.[110]

Finally, additional opposition comes from community groups who worry about affordability.[111] Any new construction in and around Music Row is likely to be very expensive. Many people worry that any new housing will be unaffordable, and that this will displace current residents. Housing costs in Nashville have been skyrocketing, putting particular pressure on affordable housing. According to one study, Nashville has lost 18,000 affordable housing units since 2000, and 44% of Nashville renters are housingcost burdened.[112] Opponents of new development often focus on affordability as a central objection.[113]

On the opposite side are developers who see a significant financial opportunity in the Music Row redevelopment.[114] Their interests are predictable. But the City also sees a substantial fiscal upside. Not only does new development generate more property tax revenue, but also its net fiscal impact is even more positive. Where dense urban infill has occurred nearby, the net tax revenue per square foot is dramatically higher than anywhere else in the metro area because of the relatively low cost of building out infrastructure and the high property values.[115] This, coupled with the City’s generally lax approach to land use regulation, makes redevelopment of Music Row appear all but inevitable, despite the interests aligned on the other side. Whoever wins, the controversy seems entirely predictable and conventional.

A closer look at the stakes, however, reveals a more complicated dynamic, and one that is increasingly representative of modern land use fights. Consider, first, the effect on traffic: a central source of opposition. This is a perplexing reason to oppose redevelopment. Music Row is adjacent to Vanderbilt and in the heart of the City. Yes, new residential buildings will increase local traffic to some extent, but it should marginally reduce traffic in the City more broadly. It is not exactly transit-oriented development since there is no meaningful transit in Nashville. But it is development that is closer to the places people work and play and so will result in fewer vehicle miles traveled. Traffic has a lot of political valence, and it makes tactical sense for opponents to use it as a reason to push back against development, but it seems misguided as a basis for objecting new buildings on Music Row. For this same reason, those concerned with sustainable development should favor dense infill in places like Music Row over suburban sprawl. This also reduces development’s total carbon footprint.

Increased housing costs citywide are also a poor reason to oppose the redevelopment of Music Row. While new housing may well precipitate a change in the character of the particular neighborhood and increase prices there, the best evidence demonstrates that adding supply will decrease median property values in the City and increase affordability. This is true even if the new housing stock is exclusively market rate and expensive. Such is the power of supply and demand.[116] Opposition to new development by immediate neighbors on grounds of affordability is rational if parochial—what Professor Been has labeled City NIMBYs.[117] Opposition based on concerns about housing costs throughout the city makes little sense.

There are countervailing peculiarities on the other side as well. Focusing on the fiscal impact of redevelopment, tax implications are only part of the story. Many business leaders and politicians have argued that it is in Nashville’s economic interest to preserve the music industry.[118] Preventing redevelopment of Music Row means that music studios do not need to compete with residential developers and so amounts to a kind of subsidy for the music business. There are agglomeration economies that come from the clustering of music studios in one particular area: musicians and songwriters frequently collaborate throughout the day, musicians record together, industry executives meet and do business in person up and down Music Row.[119] And, as traffic problems worsen throughout the city, the value of spatial proximity is only increasing.

Yes, market pressures demonstrate that the property is more valuable as residential or mixed-use development. Putting the property to a higher and better use unlocks value, by definition. However, the music industry produces significant benefits—positive externalities—for the City as a whole and should perhaps be preserved for that reason. It generates significant economic activity and also creates a kind of identity that attracts businesses and residents. If those benefits exceed the marginal value of redevelopment, then the City has a fiscal reason to subsidize the industry and prevent redevelopment, even if that means missing out on some increased tax revenue.

None of this reveals what the right answer is for Nashville. But it does demonstrate how the stakes of modern land use and zoning fights often go far beyond the traditional proregulation and antiregulation camps. It also reveals how different groups’ interests do not converge around any singular goal. Instead, different constituencies are motivated by very different underlying goals. Ultimately, people choose to live, to work, and to invest in Nashville for very different reasons. Some like the small-city feel of the place, others the music industry, still others the statewide emphasis on property rights and economic liberties, and others the appealing and new housing stock in increasingly dense mixed-use neighborhoods. But ultimately, these are all different views that can be reflected in different land use policies. Allowing Nashville to make decisions about which goals it will prioritize will give voters and property owners the opportunity to pursue or protect those aspects of the city that they most want.

 


[*] *..  Elizabeth H. & Granville S. Ridley, Jr. Professor of Law, Vanderbilt Law School. Christina Jeffcoat provided excellent research assistance.

 [1]. For the seminal Supreme Court case recognizing the utility of zoning in this area, see Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 387–89 (1926).

 [2]. Christopher Serkin, The New Politics of New Property and the Takings Clause, 42 Vt. L. Rev. 1, 3–6, 13 (2017).

 [3]. Robert C. Ellickson et al., Land Use Controls 95, 332–33 (4th ed. 2013) (discussing revenue related purposes of zoning and “dealmaking” by local governments); Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 Calif. L. Rev. 837, 879 (1983) (discussing local governments’ desire to retain flexibility to bargain ad hoc with developers).

 [4]. Ellickson et al., supra note 3, at 114–15, 121, 328, 858 (discussing local governments’ ability to zone for more purposes than originally anticipated in the SZEA and examples of local governments that use zoning to achieve sustainability, affordability, and preservation goals); see also Melvyn R. Durchslag, Forgotten Federalism: The Takings Clause and Local Land Use Decisions, 59 Md. L. Rev. 464, 464–65 (2000) (discussing various municipal land use goals); Serkin, supra note 2, at 6–7 (comparing differing political attitudes toward environmental zoning versus rent regulations).

 [5]. Thanks to Professor Edward Cheng for labeling the phenomenon of multimodal convergence.

 [6]. See Conor Friedersdorf, San Francisco’s Self-Defeating Housing Activists, Atlantic (Dec. 29, 2015), https://www.theatlantic.com/politics/archive/2015/12/san-francisco-is-confused-about-the-villain-thats-making-it-unaffordable/422091; Ilya Somin, Why More Liberal Cities Have Less Affordable Housing, Wash. Post: Volokh Conspiracy (Nov. 2, 2014), https://www.washingtonpost.
com/news/volokh-conspiracy/wp/2014/11/02/more-liberal-cities-have-less-affordable-housing/?utm_ter
m=.b355844b719a. See generally Vicki Been, City NIMBYs, 33 J. Land Use & Envtl. L. 217 (2018) (exploring increasing “Not In My Backyard” (“NIMBY”) policies in cities and the resulting effect on urban housing costs).

 [7]. Serkin, supra note 2, at 14–15.

 [8]. See Emily Badger, The Bipartisan Cry of ‘Not in My Backyard’, N.Y. Times (Aug. 21, 2018), https://www.nytimes.com/2018/08/21/upshot/home-ownership-nimby-bipartisan.html; Mike Rosenberg, Housing Construction in Local Suburbs Is at Historic Lows, While Seattle Is Setting Records, Seattle Times, https://www.seattletimes.com/business/real-estate/king-county-suburbs-slow-their-housing-growth-canceling-out-seattle-building-boom (last updated Aug. 11, 2018, 12:49 AM).

 [9]. A Standard State Zoning Enabling Act (Advisory Comm. on Zoning, U.S. Dep’t of Commerce, rev. ed. 1926).

 [10]. See, e.g., Christopher Serkin, Existing Uses and the Limits of Land Use Regulation, 84 N.Y.U. L. Rev. 1222, 1232–33 (2009) (briefly describing the history of the SZEA and citing sources on the topic).

 [11]. Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 394–95 (1926).

 [12]. See, e.g., Rose, supra note 3, at 848–49 & n. 29 (briefly describing history of zoning in the United States).

 [13]. See, e.g., Brian Galle, In Praise of Ex Ante Regulation, 68 Vand. L. Rev. 1715, 1724 (2015) (“[Z]oning laws restrict development before it results in unwanted burdens on neighbors, while nuisance suits impose liability after the damage has begun.”); G. Donald Jud, The Effects of Zoning on Single-Family Residential Property Values: Charlotte, North Carolina, 56 Land Econ. 142, 142 (1980) (“One of the principal purposes of municipal zoning ordinances is to protect property owners from the deleterious external effects that may arise when incompatible land uses exist within the same neighborhood.”); Carol M. Rose, Property Rights, Regulatory Regimes and the New Takings Jurisprudence—An Evolutionary Approach, 57 Tenn. L. Rev. 577, 588 (1990) (“As land resources became more developed, we progressed from a regime of ‘anything goes’ with one’s landed property, to a regime of post hoc judicial control on ‘nuisances,’ to a regime of legislatively defined, ex ante regulation.”); Mariana Valverde, Taking ‘Land Use’ Seriously: Toward an Ontology of Municipal Law, 9 Law Text Culture 34, 52 (2005) (identifying a “religion of incompatible land uses that was codified in the 1916 New York City zoning ordinance”).

 [14]. See Euclid, 272 U.S. at 386–91 (analogizing a town’s ability to prevent industry from building in residential areas to the law of nuisances).

 [15]. See Ambler Realty Co. v. Village of Euclid, 297 F. 307, 316 (N.D. Ohio 1924) (stating that the true purpose of separating single-family residences and apartment buildings was to further economic class divisions), rev’d 272 U.S. 365 (1926); Richard H. Chused, Euclid’s Historical Imagery, 51 Case W. Res. L. Rev. 597, 613–14 (2001) (discussing how the Supreme Court’s language in Euclid’s majority opinion created a negative, stereotypical image of apartment buildings, validating zoning as a way to segregate based on race and class).

 [16]. Christopher Serkin, Capitalization and Exclusionary Zoning, Interdisc. Ctr. Herzliya (forthcoming 2019) (manuscript at 5) (on file with author).

 [17]. Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 394–97 (discussing the effects of apartment buildings on single-family residences and concluding that as apartments come very near to being nuisances, it is within a municipality’s police powers to exclude them from single-family residential areas); see also Chused, supra note 15, at 614.

 [18]. The intuition appears to be that burdens imposed by voluntary associations, like the private governance of a homeowner’s association, are preferable to public regulatory authority. It is not obvious why that should be since people can choose their local governments just as they can choose their residential subdivisions. For early endorsement of more but not exclusive reliance on nuisance law, see Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. Chi. L. Rev. 681, 68283, 761–62 (1973).

 [19]. See Serkin, supra note 2, at 6–7, 13.

 [20]. William A. Fischel, The Homevoter Hypothesis 14–16, 18 (2001) (comparing “growth machine” jurisdictions with “homevoter” jurisdictions).

 [21]. For some recognition of these changes, see Been, supra note 6, at 219–23; Serkin, supra note 2, at 13–16.

 [22]. See Been, supra note 6, at 218 (noting that cities have traditionally been viewed as “growth machines” and suburbs as favoring NIMBY policies to protect “homevoter” property values).

 [23]. See Edward H. Ziegler, Sustainable Urban Development and the Next American Landscape: Some Thoughts on Transportation, Regionalism, and Urban Planning Law Reform in the 21st Century, 42 Urb. Law. 91, 92–99 (2010) (discussing the NIMBY’s opposition to sustainable development); Ben Lockshin, Beyond NIMBY: Understanding Different Affordable Housing Advocates and Detractors (Part 1), Greater Greater Wash. (Sept. 26, 2017), https://ggwash.org/view/64879/beyond-nimby-understanding-different-affordable-housing-advocates-detractors (discussing the differences between NIMBYs and BANANAs); Alana Semuels, From ‘Not in My Backyard’ to ‘Yes in My Backyard’, Atlantic (July 5, 2017), https://www.theatlantic.com/business/archive/2017/07/yimby-groups-pro-dev elopment/532437 (discussing the rise of YIMBY views in California in response to the need for high-density housing).

 [24]. See generally Holly Doremus, Takings and Transitions, 19 J. Land Use & Envtl. L. 1 (2003) (discussing the effects of changing morals, technology, and scientific understanding on land use regulations); William A. Fischel, The Law and Economics of Cedar-Apple Rust: State Action and Just Compensation in Miller v. Schoene, 3 Rev. L. & Econ. 133 (2007) (concluding that the government should regulate land uses that harm uses with higher commercial values).

 [25]. See Wayne Batchis, Enabling Urban Sprawl: Revisiting the Supreme Court’s Seminal Zoning Decision Euclid v. Ambler in the 21st Century, 17 Va. J. Soc. Pol’y & L. 373, 379–80 (2010) (explaining that the single-use zoning structure exists in the majority of U.S. jurisdictions); Nicole Stelle Garnett, Save the Cities, Stop the Suburbs?, 116 Yale L.J. Pocket Part 192 (2006), http://yalelawjournal.org/forum/save-the-cities-stop-the-suburbs (discussing the persistence of single-use zoning in suburbs).

 [26]. See, e.g., J. Peter Byrne, The Rebirth of the Neighborhood, 40 Fordham Urb. L.J. 1595, 1596–97 (2013) (arguing that new urban residents seek vibrant, mixed-use neighborhoods).

 [27]. Doris S. Goldstein, New Urbanism—Planning and Structure of the Traditional Neighborhood Development, 17 Prob. & Prop. 9, 9 (2003) (“New Urbanism is a land planning philosophy advocating compact, mixed-use, pedestrian-friendly development.”).

 [28]. See id. at 10 (discussing how new urban developments separate residential and commercial sections but also allow a mixture of uses in residential sections).

 [29]. For an example of explicit mixed-use zoning, see Seaside, FL., Code of Ordinances ch. 158, no. 83-10 (1983); Samantha Salden, The Seaside Code: The Poster That Started It All, Seaside Res. Portal, https://seaside.library.nd.edu/essays/the-code (last visited May 11, 2019) (discussing the Seaside Code as the first application of new urbanism in a form-based code).

 [30]. Brian W. Ohm & Robert J. Sitkowski, The Influence of New Urbanism on Local Ordinances: The Twilight of Zoning?, 35 Urb. Law. 783, 785 (2003) (comparing flexible techniques such as overlay zoning to the rigidity of single-use districts); Scott B. Osborne, Planning Issues in Mixed-Use Developments, 21 Prac. Real Est. Law. 29, 30 (2005) (discussing new urbanist zoning through conditional use permits and special zoning designations).

 [31]. Fischel, supra note 20, at ix, 15–16; Harvey Molotch, The City as a Growth Machine: Toward a Political Economy of Place, 82 Am. J. Soc. 309, 30910 (1976).

 [32]. S. Rodgers, Urban Growth Machine, in 12 International Encyclopedia of Human Geography 40, 41–42  (Rob Kitchin & Nigel Thrift, eds., 2009) (describing the property investors, developers, financiers, etc. that make up the growth machine).

 [33]. See Office of Policy Dev. & Research, U.S. Dep’t of Hous. & Urban Dev., Ensuring Equitable Neighborhood Change: Gentrification Pressures on Housing Affordability 5–6 (2016), https://www.huduser.gov/portal/sites/default/files/pdf/Insights-Ensuring-Equitable-Growth.pdf (discussing the burdens of rapid urban growth on existing communities).

 [34]. See William K. Jaeger, The Effects of Land-Use Regulations on Property Values, 36 Envtl. L. 105, 112–17 (2006) (discussing how land use decisions can increase property values and “amenity” benefits); see, e.g., Scott Cohn, New Insights on How Cities and States Stack Up in the Race to Win Amazon’s $5 Billion HQ2, CNBC, https://www.cnbc.com/2018/07/05/new-clues-on-how-cities-stack-up-in-the-race-to-win-amazons-hq2.html (last updated July 10, 2018, 7:42 PM) (explaining that Amazon’s criteria for new headquarters includes an area with more than one million people and urban locations that can attract and retain talent).

 [35]. See Michelle Shortsleeve, Challenging Growth-Restrictive Zoning in Massachusetts on a Disparate Impact Theory, 27 B.U. Pub. Int. L.J. 361, 380 (2018) (describing how municipalities use zoning to limit population growth, and thus constrain congestion and preserve community aspects).

 [36]. Eric A. Cesnik, The American Street, 33 Urb. Law. 147, 173–84 (2001) (discussing how metropolitan planning is constrained by the status quo or the existing look and function of the area).

 [37]. See Robert C. Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 Yale L.J. 385, 390–92 (1977) (describing the various ways municipalities prevent all development in certain areas).

 [38]. Kristoffer Jackson, Do Land Use Regulations Stifle Residential Development? Evidence from California Cities, 91 J. Urb. Econ. 45, 54 (2016); see also Been, supra note 6, at 227–28.

 [39]. See infra Section II.F.

 [40]. Ellickson et al., supra note 3, at 649–50 (discussing the high public costs of public schools). For an analysis of the interplay between fiscal land use decisions and public schools, see Eric A. Hanushek & Kuzey Yilmaz, Land-Use Controls, Fiscal Zoning, and the Local Provision of Education, 43 Pub. Fin. Rev. 559, 563–67 (2015).

 [41]. See Paul G. Lewis, Retail Politics: Local Sales Taxes and the Fiscalization of Land Use, 15 Econ. Dev. Q. 21, 24–26 (2001) (arguing that the quest for retail development and its resulting sales tax revenue motivates California’s land use decisions).

 [42]. Christopher Serkin & Leslie Wellington, Putting Exclusionary Zoning in Its Place: Affordable Housing and Geographic Scale, 40 Fordham Urb. L.J. 1667, 1684 (2013); Smart Growth Am., Fiscal Impact Analysis of Three Development Scenarios in Nashville-Davidson County, TN 11 (2013), https://smartgrowthamerica.org/app/legacy/documents/fiscal-analysis-of-nashville-develop ment.pdf (showing the tax revenue generated by the one high-rise area as compared to two other developments).

 [43]. Been, supra note 6, at 21923.

 [44]. Rose, supra note 3, at 882, 889–91.

 [45]. See, e.g., Vicki Been, Impact Fees and Housing Affordability, 8 Cityscape 139, 143–47 (2005) (discussing the advantages and disadvantages of development fees); Arthur C. Nelson, Development Impact Fees: The Next Generation, 26 Urb. Law. 541, 548–53 (1994) (addressing various objections to development fees).

 [46]. See Jim Rossi & Christopher Serkin, Energy Exactions, 104 Cornell L. Rev. (forthcoming 2019).

 [47]. See Robert C. Ellickson, The Role of Economics in the Teaching of Land-Use Law, 1 UCLA J. Envtl. L. & Pol’y 1, 7 (1980).

 [48]. See Erin Ryan, Zoning, Taking, and Dealing: The Problems and Promise of Bargaining in Land Use Planning Conflicts, 7 Harv. Negot. L. Rev. 337, 347–49 (2002) (noting the increasingly discretionary practice of land use decisionmaking).

 [49]. Fischel, supra note 20, at 18.

 [50]. Id. at 5–6.

 [51]. Vicki Been, “Exit” as a Constraint on Land Use Exactions: Rethinking the Unconstitutional Conditions Doctrine, 91 Colum. L. Rev. 473, 483 (1991); Molly S. McUsic, Looking Inside Out: Institutional Analysis and the Problem of Takings, 92 Nw. U.L. Rev. 591, 62526 & n.162 (1998).

 [52]. Been, supra note 51, at 504, 509 (discussing how one community’s overly stringent regulation may result in an otherwise beneficial development being taken to a community with better regulatory policies).

 [53]. See Been, supra note 6, at 22729 (noting the contributions of restrictions on housing supply to the lack of affordable housing options).

 [54]. Steven J. Eagle, “Affordable Housing” as Metaphor, 44 Fordham Urb. L.J. 301, 306–21 (2017) (discussing the diverse economic and social benefits of affordable housing); see also Keith Wardrip et al., Ctr. for Hous. Policy, The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development 10–13 (2011), https://providencehousing.org/wp-con tent/uploads/2014/03/Housing-and-Economic-Development-Report-2011.pdf.

 [55]. Serkin, supra note 16 (offering a tentative justification for rent regulation).

 [56]. For an overview of inclusionary zoning, see Cecily T. Talbert et al., Recent Developments in Inclusionary Zoning, 38 Urb. Law. 701, 70203 (2006).

 [57]. See Vicki Been et al., Supply Skepticism: Housing Supply and Affordability, 29 Housing Pol’y Debate 25, 29 (2019).

 [58]. N.Y.C., NY, The Zoning Resolution, art. II, ch. 5 (2018), https://www1.nyc.gov/site/ planning/zoning/access-text.page.

 [59]. Benjamin Schneider, YIMBYs Defeated as California’s Transit Density Bill Stalls, Citylab (Apr. 18, 2018), https://www.citylab.com/equity/2018/04/californias-transit-density-bill-stalls/558341.

 [60]. See id.

 [61]. Been et al., supra note 57, at 27–29.

 [62]. See Vicki Been et al., Preserving History or Restricting Development? The Heterogeneous Effects of Historic Districts on Local Housing Markets in New York City, 92 J. Urb. Econ. 16, 17 (2016) (“We find that construction activity falls in districts after designation, as expected given the rules accompanying designation.”).

 [63]. For a description of zoning for historic preservation, see J. Dennis Doyle, Historic Preservation Zoning in Maryland, 5 Md. L.F. 100, 101–05 (1976).

 [64]. See Catherine Hart, Community Preference in New York City, 47 Seton Hall L. Rev. 881, 905 (2017) (explaining that the influx of high-income individuals into low-income communities “replaces local residents and deprives long-time residents of the stake they have built in their community”).

 [65]. Been, supra note 6, at 242–44.

 [66]. See Sheryll Cashin, The Failures of Integration 32427 (2004); Rachel D. Godsil, The Gentrification Trigger: Autonomy, Mobility, and Affirmatively Furthering Fair Housing, 78 Brook. L. Rev. 319, 335–37 (2013) (discussing a more nuanced approach to gentrification).

 [67]. The built environment is also important for community preservation, even independent of the financial pressures that can come from gentrification. As Professor Carol Rose observed decades ago, buildings can be important for constituting community, and indeed preservation efforts should be evaluated to that end. See Carol M. Rose, Preservation and Community: New Directions in the Law of Historic Preservation, 33 Stan. L. Rev. 473, 488–91 (1981).

 [68]. See William A. Fischel, Neighborhood Conservation Districts: The New Belt and Suspenders of Municipal Zoning, 78 Brook. L. Rev. 339, 347–49 (2013) (discussing community preservation techniques other than those based on historic status).

 [69]. See, e.g., Dan Grossman, Think Those Slot Homes in Denver Are Ugly? You’re Not Alone, 9 News, https://www.9news.com/article/money/personal-finance/real-estate/think-those-slot-homes-in-de
nver-are-ugly-youre-not-alone/73-490912391 (last updated Nov. 10, 2017, 2:44 PM) (discussing Denver residents’ aesthetic opposition to homes described as “Minecraft characters, Lego characters,” and  “robots”).

 [70]. See Shawn G. Rice, Zoning Law: Architectural Appearance Ordinances and the First Amendment, 76 Marq. L. Rev. 439, 446–48 (1993) (discussing the ways that architectural appearance ordinances can limit the aesthetics of communities).

 [71]. Id. at 446 (describing architectural appearance ordinances as limiting “excessive dissimilarity” and requiring “conformity” or “harmony” (citations omitted)).

 [72]. See Edward Scissorhands (20th Century Fox Dec. 6, 1990).

 [73]. For a description of form-based codes, see Nicole Stelle Garnett, Hoover Inst., Upscaling the Neighborhood 18–32 (2018), https://www.hoover.org/sites/default/files/upscaling_ the_neighborhood_revised_final_garnett_0.pdf.

 [74]. For an overview of this dynamic, see generally David Markell, Climate Change and the Roles of Land Use and Energy Law: An Introduction, 27 J. Land Use & Envtl. L. 231 (2012) (discussing the effect that “land use, energy efficiency, and mobile and stationary source emission reduction approaches” can have on climate change).

 [75]. See Reid Ewing et al., Smart Growth Am., Measuring Sprawl and Its Impact 18–19 (2002), https://www.smartgrowthamerica.org/app/legacy/documents/MeasuringSprawl.PDF.

 [76]. Patricia E. Salkin, Sustainability and Land Use Planning: Greening State and Local Land Use Plans and Regulations to Address Climate Change Challenges and Preserve Resources for Future Generations, 34 Wm. & Mary Envtl. L. & Pol’y Rev. 121, 147–56 (2009) (surveying regulatory land use techniques meant to increase sustainability).

 [77]. See, e.g., John R. Nolon, An Environmental Understanding of the Local Land Use System, 45 Envtl. L. Rep. 10215, 10220–21 (2015).

 [78]. Other kinds of less conventional responses are possible as well. For an example of one, see Rossi & Serkin, supra note 46.

 [79]. See George F. Gramling, III, Wetland Regulation and Wildlife Habitat Protection: Proposals for Florida, 8 Harv. Envtl. L. Rev. 365, 37778 (1984).

 [80]. See Christopher Serkin, Public Entrenchment Through Private Law: Binding Local Governments, 78 U. Chi. L. Rev. 879, 913 (2011) (discussing how building infrastructure with limited capacity can be more controlling than zoning).

 [81]. See Bradley C. Karkkainen, Whither NEPA, 12 N.Y.U. Envtl. L.J. 333, 349 (2004) (arguing that environmental-informative requirements function as regulatory penalties, creating incentives to upgrade environmental standards early in projects).

 [82]. Critical Paths for Vermont Wildlife, Nat’l Wildlife Fed’n, https://www.nwf.org/Our-Work/Habitats/Wildlife-Corridors/Northeast (last visited May 12, 2019).

 [83]. See, e.g., Ensign Bickford Realty Corp. v. City Council of Livermore, 137 Cal. Rptr. 304, 309 (Ct. App. 1977); Sprenger, Grubb & Assocs., Inc. v. City of Hailey, 903 P.2d 741, 74849 (Idaho 1995).

 [84]. See Coniston Corp. v. Village of Hoffman Estates, 844 F.2d 461, 466–67 (7th Cir. 1988).

 [85]. A downtown commercial district may generate significant positive effects, which a big-box store at the edge of town can threaten. See Scott L. Cummings, Law in the Labor Movement’s Challenge to Wal-Mart: A Case Study of the Inglewood Site Fight, 95 Calif. L. Rev. 1927, 194852 (2007).

 [86]. Roderick M. Hills, Jr. & David Schleicher, The Steep Costs of Using Noncumulative Zoning to Preserve Land for Urban Manufacturing, 77 U. Chi. L. Rev. 249, 25356 (2010) (acknowledging the prevalence of the use of noncumulative zoning for these purposes but ultimately arguing against it).

 [87]. Transwestern, New York City Life Science Market 5 (2017), https://download.trans
western.com/public/Media/NY-Life-Science-Outlook_2Q2017.pdf.

 [88]. See Roderick M. Hills & David Schleicher, Planning an Affordable City, 101 Iowa L. Rev. 91, 11516 (2015) (“Many cities have no adequate substitutes, because they create agglomeration economies that rivals cannot duplicate.”).

 [89]. Broadway enjoys a special zoning district. For an interesting overview of New York’s zoning code, see Allison Meier, How Zoning Laws Shaped New York City over the Last Century, Hyperallergic (Dec. 14, 2016), https://hyperallergic.com/341092/mastering-the-metropolis-mcny.

 [90]. See Donald J. Smythe, The Power to Exclude and the Power to Expel, 66 Clev. St. L. Rev. 367, 39799 (2018) (analyzing the continued use of exclusionary zoning by local governments).

 [91]. See, e.g., Timothy J. Choppin, Breaking the Exclusionary Land Use Regulation Barrier: Policies to Promote Affordable Housing in the Suburbs, 82 Geo. L.J. 2039, 2054 (1994) (“Discrimination, both racial and economic, is one reason suburban residents oppose affordable housing.”).

 [92]. See Mick Dumke, Amid Affordable Housing Dispute, Conservatives Seek a Home on the Northwest Side, Chi. Sun-Times (May 23, 2018, 10:48 AM), https://chicago.suntimes.com/news/
affordable-housing-chicago-northwest-side-gop-conservative-republicans-northwest-side-jefferson-park-illinois-policy-institute (describing a political fight over a proposed affordable housing project in Chicago).

 [93]. See Been et al., supra note 57, at 2527.

 [94]. See Rose, supra note 3, at 862–63, 897; see also Melanie Yingst, Commission OKs Rezoning of Properties, Troy Daily News (June 14, 2018), https://www.tdn-net.com/news/43184/commission-oks-rezoning-of-properties (discussing an Ohio local zoning commission’s decision to rezone two agricultural properties to allow residential development of the area).

 [95]. See generally Jonathan R. Macey, Promoting Public-Regarding Legislation Through Statutory Interpretation: An Interest Group Model, 86 Colum. L. Rev. 223 (1986) (discussing interest-group rent seeking).

 [96]. See Robert H. Nelson, Privatizing the Neighborhood: A Proposal to Replace Zoning with Private Collective Property Rights to Existing Neighborhoods, 7 Geo. Mason L. Rev. 827, 833 (1999) (arguing that the proliferation of common interest communities demonstrates their appeal).

 [97]. Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416, 417–20 (1956).

 [98]. See Denise Ryan, The $31b “Green” Branding of Vancouver, Vancouver Sun (Jan. 31, 2016), http://www.vancouversun.com/business/green+branding+Vancouver/11686117/story.html.

 [99]. See Tiebout, supra note 97, at 418.

 [100]. Serkin, supra note 2, at 13–15.

 [101]. See Jessi Maness, The History of Music Row: 60 Years of Greatness, Sports & Ent. Nashville (Oct. 13, 2015), http://sportsandentertainmentnashville.com/the-history-of-music-row-60-years-of-greatness.

 [102]. See, e.g., Michelle C. Kroft, Show Your Support—Help Save Music Row at the Rally the Row Event July 24th!, Hist. Nashivlle, Inc. (July 16, 2018), http://historicnashvilleinc.org/show-your-support-help-save-music-row-at-the-rally-the-row-event-july-24th [https://perma.cc/UVK8-R89Z] (“Since 2013, 43 buildings with music industry connections have been demolished—most to make way for apartment buildings.”); see also Margaret Renkl, The Day the Music Died, N.Y. Times (Jan. 21, 2019), https://www.nytimes.com/2019/01/21/opinion/nashville-music.html (outlining the gentrification of Music Row).

 [103]. See Tony Gonzalez, Music Row Apartments Halted, Prompting New Study, Tennessean (Feb. 12, 2015 6:44 PM), https://www.tennessean.com/story/news/local/2015/02/12/music-row-apartment-plan-halted-prompting-study/23324495.

 [104]. Open Letter from Ben Folds, owner of Grand Victor Sound (June 24, 2014), https://musicrow.com/2014/06/ben-folds-open-letter-rca-studio-a-to-be-sold.

 [105]. See Richard Fausset, Deal Saves Historic Nashville Studio, N.Y. Times (Oct. 3, 2014), https://www.nytimes.com/2014/10/04/us/deal-saves-historic-nashville-studio.html.

 [106]. Jessica Nicholson, National Trust for Historic Preservation and Historic Nashville to Hold Rally the Row Event, Music Row (July 20, 2018) (quoting Carolyn Brackett, Senior Field Officer, National Trust for Historic Preservation), https://musicrow.com/2018/07/national-trust-for-historic-preservation-and-historic-nashville-to-hold-rally-the-row-event [https://perma.cc/2DR2-6QU6%5D; see also id. (“We have to act now to save this place that is iconic and historically priceless.” (quoting Trey Bruce, Vice President, Historic Nashville)).

 [107]. See, e.g., Nashville Metro. Planning Dep’t, Music Row Detailed Plan app. (2016) [hereinafter Music Row Detailed Plan], https://www.nashville.gov/Portals/0/SiteContent/Planning/
docs/MusicRow/Music%20Row%20Detailed%20Plan%20Draft%20Recommendations__withAppendix.pdf (Survey 1 Responses Organized by Question) (listing comments from survey respondents about preserving Music Row, including: “To me, the individual buildings create an overall feel that binds the community. It’s humble and full of character.”).

 [108]. Nikki Junewicz, Historic Buildings in Danger in Music Row Redevelopment Proposal, Fox 17 Nashville (May 20, 2018) (quoting Jonathan Long, local bartender), https://fox17.com/news/local/
historic-buildings-in-danger-in-music-city-row-redevelopment-proposal [https://perma.cc/HDK4-RGL3%5D.

 [109]. See Music Row Detailed Plan, supra note 107, at app. (“GROW[TH] SHOULD NOT OCCUR BY BUILDING . . . . That would only worsen the traffic and will be less inviting for tourism.”); see also E-mail from John Dotson, Parks Broker, e-Pro, to Planning Commissioners (Dec. 6, 2016, 11:40 AM), https://www.nashville.gov/document/ID/cdd7797e-1ed5-49c7-8e20-7fc9ef4fd8a9/
December-8-2016-public-comments-received-through-December-7 (“We are most concerned about traffic, parking and infrastructure.”).

 [110]. See, e.g., Music Row Detailed Plan, supra note 107, at app. (commenting the following on getting around Music Row: “[I]nfrastructure should be considered BEFORE approval of millions of square feet of new construction, not after.”). Cf. Hiroko Tabuchi, How the Koch Brothers Are Killing Public Transit Projects Around the Country, N.Y. Times (June 19, 2018), https://www.nytimes.com/
2018/06/19/climate/koch-brothers-public-transit.html (discussing the support and opposition for a new transit plan in Nashville and other cities across the United States).

 [111]. See Office of the Mayor Megan Barry, Housing Nashville: Nashville & Davidson County’s Housing Report 1112, 40–42 (2017) [hereinafter Nashville Housing Report], https://www.nashville.gov/Portals/0/SiteContent/MayorsOffice/AffordableHousing/Housing%20Nashville%20FINAL.pdf; see also Music Row Detailed Plan, supra note 107, at app. (commenting the following concerning how to strengthen the Music Row community: “Affordability. Nashville can’t chase out all of us median income people . . . .”).

 [112]. Nashville Housing Report, supra note 111, at 11, 16.

 [113]. See David Plazas, The Costs of Growth and Change in Nashville, Tennessean, https://www.tennessean.com/story/opinion/columnists/david-plazas/2017/01/29/costs-growth-and-change-nashville/97064252 (last updated Jan. 10, 2018, 6:50 PM) (discussing how the development boom in Nashville has led to increasingly high housing costs); Stephen Trageser, Music Row Development and Neighborhood Character, Nashville Scene (Sept. 25, 2018 3:00 PM), https://www.nashvillescene.com/news/pith-in-the-wind/article/21024081/music-row-development-and-neighborhood-character (“[W]ith Nashville real estate prices as high as they are today, the chances of [neighborhood business] finding a comparable spot nearby seem slim.”) (discussing the pressure to develop Music Row and its effect on existing businesses).

 [114]. Staff Reports, Music Row Project Lands $12.8M Permit, Nashville Post (Apr. 4, 2018), https://www.nashvillepost.com/business/development/article/20999454/notes-music-row-project-lands-128m-permit (reporting that a development company has obtained a permit to build a Music Row office building expected to be worth $35 million).

 [115]. Smart Growth Am., supra note 42, at 10–11 (analyzing the significantly positive fiscal impact and tax benefit of the Gulch, a dense infill development, compared to two other Nashville developments).

 [116]. See Emily Hamilton, Three Lessons from Nashville’s Building Boom, Market Urbanism (Apr. 27, 2018), http://marketurbanism.com/2018/04/27/three-lessons-nashvilles-building-boom (“While there’s no way to legislate that great music will continue to come out of Music Row, the best way to make Nashville a good place for up and coming artists is to allow for new housing construction that will allow affordable neighborhoods to stay that way.”) (arguing that development has kept rents in other neighborhoods more affordable).

 [117]. See Been, supra note 6, at 242–43.

 [118]. See Patrick Sisson, On a Mission to Preserve Nashville’s Music Row, Meridian, https://www.meridian.net/tennessee/2016/11/10/13592846/nashville-live-music-row (last visited May 12, 2019) (describing the outsize impact Music Row has had on Nashville’s economy).

 [119]. See Carolyn Brackett & Randall Gross, Nat’l Trust for Historic Pres., A New Vision for Music Row 15 (2016), https://www.nashville.gov/Portals/0/SiteContent/Planning/docs/
MusicRow/Music%20Row%20Recommendations%20Report%20April%202016.pdf (“Like in the early days of Music Row, many industry leaders and participants still walk between offices and meet up for lunch, networking, contracting, or collaboration.”).

 

From Nuisance to Environmental Protection in Continental Europe – Article by Vanessa Casado Perez & Carlos Gomez Liguerre

 

From Volume 92, Number 4 (May 2019)
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from nuisance to environmental protection in Continental Europe

Vanessa Casado Perez[*] & Carlos Gomez Liguerre[†]

Introduction

Neighboring relationships are prone to conflict. The use of an estate has effects on the one next to it. A doctor may be bothered by the noise coming from a confectioner’s business.[1] The more heterogeneous the uses of the pieces of property are, the more likely conflicts are to arise. While individuals have always had the capacity to affect the enjoyment of their neighbors, the situations became more complex with the advent of industrialization, which put residential and industrial users in close proximity.

Historically, the law of nuisance has been used to solve these conflicts. Nuisance law combines property and liability rules leading to injunction and damage remedies.[2] Today, regulation has been added to the mix of solutions to neighbors’ disputes. In environmental matters—the litmus test for nuisance—the choices are even more varied. As pollution got more egregious, regulation took the center stage. The increase in the number of parties tested the limits of the institution of nuisance. Regulation initially took the form of permits and licenses for the most egregiously polluting industries, often requiring those industries to adopt some precautions and, thus, reducing the potential nuisances. Second, land use planning mitigated the conflict between uses by regulating whether they were allowed to be in close proximity. Third, countries enacted environmental laws because industrialization brought the potential for smoke and particles to travel beyond the land of the immediate neighbor. Furthermore, even ex post liability has taken a regulatory turn with publicly enforced environmental liability schemes.

Nuisance was the first line of defense against pollution, but today it has been mostly superseded by regulatory schemes.[3] This shift left nuisance with a limited role—solving issues between a small number of close by neighbors—in almost every jurisdiction that lacks figures like public nuisance.[4] While it is foreseeable that two parties will negotiate ex ante to achieve a socially desirable outcome—for example, two parties may establish an easement or servitude between neighboring plots of land precluding potential nuisance[5]—the situation in which large amounts of people or their lands are affected requires a different type of response.

Even though its role has been reduced, private law nuisance regulation has not been static. Not only has the regulatory landscape become more complex, but also, as law and economics literature has analyzed, nuisance provisions have gone beyond the building blocks of property and liability rules, demonstrating the complexity of current regulation in scenarios of conflicting uses of property[6] and acknowledging the interplay with public regulatory standards.

The codification and evolution of nuisance in civil law jurisdictions illustrates perfectly the evolution just described. This Article analyzes the evolution and complexity of the legal responses to neighboring conflicts in European civil law countries. All of the civil codes analyzed (France, Germany, Spain, the Netherlands, and Catalonia) are based on Roman law rules that are not always clear. The fuzziness of those Roman law rules explains, in part, why the civil codes did not respond homogenously to nuisances, despite this common origin. The first Subsection briefly describes the institution of nuisance in Roman law. Then, this Article describes the original codification of nuisance and the changes in the treatment of this institution. After assessing the initial divergence and the trends towards similar rules across jurisdictions, this Article explains the potential forces of convergence at the European level: the Draft Common Frame of Reference, the E.U. Environmental Liability Directive, and the decisions of the European Court of Human Rights.[7]

I.  Comparative Analysis of Nuisance Provisions

A.  Nuisance and Roman Law: A Common Origin

Continental civil law jurisdictions’ nuisance regulation has a common origin: Roman law. There are few Roman texts dealing with nuisance. It is clear from the Digest of Justinian (“Digest”) that there was an action against someone who interferes with another’s property with intention to injure (innuria).[8] The response to the most common nuisance situation, in which a landowner injures another’s piece of land by using his own land in a purportedly legal way without aiming at affecting the enjoyment of his neighbors, did not have a clear footing in Roman law.[9]

There was a sense that although private property was absolute, there were some inacceptable interferences. Among interferences, smoke was the one that troubled medieval jurists the most when interpreting the Digest. The Digest explained that an owner of a cheese shop emitting smoke cannot interfere with his neighbor’s property, but the owner who emits smoke from a hearth can.[10] Bartolus of Saxoferrato, one of the greatest medieval jurists, suggested that what matters is the amount of smoke and the normal or abnormal character of the activity.[11] The lack of consensus among medieval jurists translated into different provisions in different jurisdictions at the time of codification.

B.  Evolution: From Property to Torts

While there was discussion about the limits of property in Roman law, the civil codes adopted a very broad vision of property as stated in article 544 of the French Civil Code of 1804: “[p]roperty is the right of enjoying and disposing of things in the most absolute manner, provided they are not used in a way prohibited by the laws or statutes.”[12] The same trend can be observed in article 348 of the Spanish Civil Code[13] and in section 903 of the German one.[14] But this trend continues even today; the Catalan Civil Code, the most recent of continental Europe, still captures the same idea.[15]

Even though property was deemed absolute, European civil codes did not absolutely ignore negative externalities caused by a use of a piece of real estate property to neighboring ones. European civil codes regulate the equivalent of the tort of nuisance in two ways: as an action protecting property by injunction and as a tort action for damages.[16]

The regulation against nontrespassory invasions is understood primarily as a regulation between neighboring owners, and solutions are sought first in the realm of property. As a result of their common Roman law origins, European civil codes approach property holistically.[17] In this first building block—the property one—nuisance is configured as a sub-type of trespass, with the difference being that intrusion, instead of being physical, is produced by intangible substances.[18] The European civil codes incorporate rules that seek to solve the problem of immissions (nontrespassory invasions) ex ante through the constitution of easements, which allow the owner of an estate to carry out annoying activities and force the owner of another estate to put up with them. The easement can be constituted by agreement between the affected parties or by law. The basic ex post remedy against a nuisance is the action of cessation (from the Roman law actio negatoria),[19] with which the affected owner can paralyze the activities that are not covered by a servitude, similar to the remedy of injunction. This action is both an action and remedy. The right of damages has, in this first building block, a residual position.

Property rules, however, do not work that well when the owners are no longer contiguous and when the victims of the immission are many and cannot be identified ex ante.[20] As a result of the industrialization and the proliferation of highly polluting industrial activities, the scenario just described with multiple parties affected became commonplace. At that time, in the late nineteenth to early twentieth century, a second phase started where tort law and its ex post remedies supplemented the property protection in continental European legal traditions. Liability rules were applied to nuisance cases by either extending the rules of the law of torts or by jurisprudential doctrines, such as abuse of rights, which require reparation of the damage caused even though it is caused in the exercise of a pre-existing right. Some jurisdictions extended the general fault-based torts and, in other jurisdictions, strict liability provisions were enacted.[21] As we shall see, the idea of strict liability was difficult for European civil codes to embrace,[22] but the problems that nuisance tackles fit better in a strict liability framework. In fact, strict liability is preferable to forms of negligence because it affects the incentives of the polluter in relation to both precautions and the level of activity.[23]

In a third phase, even tort law proves to be insufficient. Administrative regulations start by regulating dangerous activities to health and the environment, becoming the benchmark for the standard of care. In most cases, those activities that have been authorized according to administrative regulations cannot be enjoined.[24] The estate owner affected by another’s activity can only request compensation for the damages he suffered. The role of liability rules has, thus, been reinforced in this phase dominated by administrative rules.

Remedies offer the most succinct way to summarize the evolution of nuisance. Initially, injunction (cessation action) was the main remedy. Then, jointly with injunction, damage compensation entered the picture. Finally, damage compensation became the main private law remedy because the tortfeasor may have had to pay compensation but the tortfeasor did not need to stop the action if it was protected by an administrative license.[25]

C.  Country Provisions

This Section describes the different provisions. As noted, the original codification of nuisances in the different civil codes was not homogenous even though all traditions stem from Roman law. The lack of homogeneity across jurisdictions could also be explained by the date of approval and the stage of industrialization of different countries at the initial point of codification. The civil codes, which codify all of private law, of different countries were approved at different points in their history, from the 1800s to the early 2000s. Some codes were approved during the first industrial revolution, which ended in the early 1800s; others in the midst of the second industrial revolution in the late 1800s and early 1900s; and others around the mid-1900s when zoning was introduced. The differences, as shall be seen, do not exactly track the different levels of industrialization. It would be expected that a higher level of industrialization at the time of codification translated into a more fine-grained nuisance provision. In a more refined version of such a hypothesis, those countries where industrialization is mature may give a clearer response to nuisance. Before, while on their way to industrialization, the marginal value of the immission is high enough that the willingness to stop it may be lower.[26] But as industrialization advances, the marginal benefit of more industrial activities declines, and thus, conflicts may be solved favoring the nonindustrial actor.[27] This is reflected in the jurisprudence of the German courts, which updated its interpretation of the nuisance provisions.[28] The latter illustrates that the legislator was not the only driving force of change in nuisance provisions: courts also played an important role, which is not a common feature in civil law. Finally, convergence has been prompted by the preeminent role of administrative regulation on nuisances that may affect a large number of estates: jurisdictions are converging toward highly complex nuisance regulations.[29]

The following Subsections explore the regulation in five different jurisdictions, and Section I.D summarizes the threads underlying European regulation.

1.  France

 The broadest regulation of the protection of the right to enjoy one’s property can be found in the oldest regulation of the ones analyzed: the Napoleonic Code of 1804. The French Civil Code states the following in its article 544: “[p]roperty is the right of enjoying and disposing of things in the most absolute manner, provided they are not used in a way prohibited by the laws or statutes.”[30]

In fact, the preparatory works of the Code make no mention of nuisance.[31] Thus, to challenge a nuisance situation, the only option was the general damage action, which is a fault-based liability clause in article 1382 of the Code: “[e]very action of man whatsosever which occasions injury to another, binds him through whose fault it happened to reparation thereof.”[32]

The traditional nuisance scenario does not often fit a framework based on fault, though. Thus, it was up to the French judges to find a solution to neighboring problems. They used an “abus de droit” framework, particularly for interferences created with the aim to affect the neighbor.[33] If property were absolute, abusing only one’s own rights would be the source of liability. Later, French judges also created the doctrine of “troubles de voisinage” (neighbors’ problems) when a use of land was unduly offensive.[34] The analysis of “troubles de voisinage” is based on the idea that one who profits from an activity that his neighbor does not and imposes harm on him should compensate his neighbor for the harm. Nonetheless, if the neighbor has chosen a particularly sensitive activity, he should not be compensated. This judge-made law is still in place, but it has been complemented by regulation mitigating nuisances. For example, the Planning Code prohibits issuing a building permit if a structure “may be exposed to grave nuisance . . . , and in particular, those due to noise.[35] This rule is not tailored to the particular situation and has no standard of unreasonableness. But judges have not been the only source of change. For example, the French Code of Construction and Housing allows the “coming to the nuisance” defense.[36]

In March 2017, the Ministry of Justice of the French Government issued a draft bill amending the tort provisions in the Civil Code (Projet de Réforme de la Responsabilité Civile).[37] The Project aims to modernize the tort provisions (extra-contractual liability) in the Civil Code, pushing the agenda set by Ordinance n°2016-131 of February 10, 2016 for the reform of contract law, the general regime of obligations and proof of obligations.[38] The proposed text includes a nuisance provision.

The Project would amend article 1244 of the Code as follows:

The owner, lessee, holder of a title whose principal object is a permission to occupy or exploit land or a building, or a person who commissions work on land or enjoys the latter’s authority, who causes a nuisance exceeding the normal inconveniences of being neighbours, is liable strictly for the harm resulting from the nuisance.

Where a harmful activity has been authorised by an administrative means, the court may, however, award damages or order reasonable measures permitting the nuisance to be stopped.[39]

2.  Germany

Almost a century after the approval of the Napoleonic Code, the German Civil Code (“BGB”), approved in 1896 (coming into force in 1900), regulated ownership with more limitations than its French counterpart in section 1004:

If ownership is impaired in any other way than by deprivation or withholding of possession, the owner may require the disturber to remove the injury. If a continuance of the injury is to be apprehended, the owner may apply for an injunction.

The claim is barred if the owner is bound to submit to the injury.[40]

Even before the BGB, German courts had ruled on neighbors’ disputes applying standards of strict liability. In fact, up until 1883, industrial users were always at the losing end. In 1883, the Supreme Court of the Empire (Reichsgericht) adopted the locality rule, around the same time as industrial interests grew in importance. The interpretation of this provision in the early years of the twentieth century was clearly favorable to the developing industry: instead of defining locality as the surrounding area, courts looked at the situation in other cities.[41] This locality rule was incorporated in section 906 of the BGB, showing this slightly more limited conception of ownership. Section 906 expands the type, although not the choice necessarily, of remedies available. Instead of an injunction, if damages resulted from a nuisance that the plaintiff had to tolerate, the defendant would have to pay permanent damages. Section 906 of the current BGB provides the following:

(1) The owner of a plot of land may not prohibit the introduction of gases, steam, smells, smoke, soot, warmth, noise, vibrations and similar influences emanating from another plot of land to the extent that the influence does not interfere with the use of his plot of land, or interferes with it only to an insignificant extent.

. . . (2) The same applies to the extent that a material interference is caused by a use of the other plot of land that is customary in the location and cannot be prevented by measures that are financially reasonable for users of this kind. Where the owner is obliged to tolerate an influence under these provisions, he may require from the user of the other plot of land reasonable compensation in money if the influence impairs a use of the owner’s plot of land that is customary in the location or its income beyond the degree that the owner can be expected to tolerate.[42]

In 1994, this text was added to paragraph (1):

An insignificant interference is normally present if the limits or targets laid down in statutes or by statutory orders are not exceeded by the influences established and assessed under these provisions. The same applies to values in general administrative provisions that have been issued under section 48 of the Federal Environmental Impact Protection Act [Bundes-Immissionsschutzgesetz] and represent the state of the art.[43]

This legislative amendment goes in line with codifying the complex rules that Professors Georg von Wangenheeim and Fernando Gomez analyzed[44] or the broader pliability rules (a combination of property and liability rules) that Abraham Bell and Gideon Parchomovsky introduced.[45] In its current reading, section 906 is a great example of how legislation has tried to resolve the tension between the public interest and the principle of free enjoyment of one’s property. In other words, it shows the connection between administrative law and nuisance. The effect of embracing administrative law solutions for environmental issues and neighbor relations reduces the remedies toolkit. This scheme is reflected today not only in the 1994 version of the BGB but also in a provision of the 1974 Federal Act for the protection against emissions.[46] Like the BGB, this Act excludes injunctions (actio negatoria) and only allows for requiring precautions or compensation for both harm to one’s property and lost income if it stems from an activity that has been licensed by the administration. This concept of denial damage is gaining terrain.

Nonetheless, this displacement of injunctions was also not an innovation in Germany. Since 1869, when the Industrial Code for the North German Federation was issued, case law has recognized it. The Industrial Code established that there was no injunction if the activity emitting the nuisance had a license.[47] This defense was extended by courts to all cases where there was a permit[48] or, more recently, when the activities were deemed in the public interest.[49] Once again, in this realm, courts went beyond the text. Courts have connected the locality rule and administrative operating licenses rule that “a facility not licensed by the administration could not be judged as customary in a place.”[50] Courts have also affected the relationship between administrative statutes and nuisance when judges have encountered cases in which there was a violation of emissions administrative standards. While the violation does not automatically trigger the application of nuisance because the link between the damage and the violation needs to be proven, courts have reversed the burden of proof.[51]

3.  Spain

The Spanish Civil Code of 1889 is thought to be influenced by the French Napoleonic Code, but its nuisance regulation is far more specific than the French one, perhaps because it was approved almost a century later. The specific regulation of article 590 of the Spanish Civil Code suggests that there is not a clear correlation between industrial development and the intricacies of the nuisance regulation because Germany was equally, if not more developed, than Spain and both their codes give specific responses to nuisance.

The detailed regulation in the Spanish Civil Code may be explained by the existence of a historical regulation of nuisance. In Spain, there were references in the Partidas of Alfonso X (The Wise) and in el Fuero Real,[52] both from the thirteenth century. In the early nineteenth century, a legal text (the Novisima Recopilacion), while not properly regulating nuisance, established rules about fire prevention or location of industries that demonstrate the concerns regarding nuisance.

This legal tradition is embodied in article 590 of the Spanish Civil Code, which is located in the property part of the Code. It reads as follows:

Nobody may build near a wall belonging to another or a party wall wells, drains, aqueducts, ovens, forges, chimneys, stables, deposits of corrosive materials, artefacts which moved by steam engine, or machines which, by themselves, or as a result of their products are dangerous or harmful, without keeping the distances provided in applicable regulations and local customs, and without performing the necessary protective works, subject to the conditions provided by the same regulations as to the manner of performing them. 

In the absence of regulations, the precautions deemed necessary to prevent any damage to the neighbouring properties or buildings shall be taken, after the issuance of an expert report.[53]

Again, the Spanish Civil Code offers a more detailed regulation in article 1908 in the part dedicated to torts. It specifically targets situations that may amount to a nuisance and adopts a strict liability rule. A codified strict liability rule in the late nineteenth century was not common. Article 1908 reads as such:

Likewise, the owners shall be liable for damages caused:

1. By the explosion of machines which have not been taken care of with due diligence, and by the inflammation of explosive substances which have not been put in a safe and suitable place.

2. By excessive fumes which are harmful to persons or properties.

3. By the fall of trees placed on transit spaces, unless it results from force majeure.

4. By the emanations of drains or deposits of infectious materials which have been built without observing precautions appropriate to their location.[54]

In Spain, too, the role of courts has been central. While scholars of other jurisdictions perceive courts as moving in a single direction, Spanish courts have used different tests. As a recent Supreme Court decision states: “[t]he response of the Spanish legal regime and its complementary case law to the problem of harm caused to an individual by immissions that today we would label as ‘environmental’ has not been homogeneous.[55] Echoing Roman law, the requirement of intention dominated some nuisance cases even though article 1908 does not require fault. From there, courts incorporated the French doctrine of abuse of rights, which was incorporated in the Spanish Civil Code in 1974,[56] during the dictatorship years. When the doctrine of abuse of rights fell short, courts looked to other European countries, namely Germany, for a model to follow. There, the distinction between nuisances that must be tolerated and those that must not hinges on the abnormal use of the property.[57] The confusion in the jurisprudence has been such that while there is no requirement of fault to request an injunction, courts have applied fault principles when an action for damages caused by nuisance has been brought.[58] In some of the cases in which they required fault when they should not have, the courts paid lip service to negligence by setting the bar of diligence extremely high, even in cases where the activity was subjected to a license and public regulation had been complied with.[59]

4.  Netherlands

In the Netherlands, the discussion under the old Civil Code from 1838, which preceded the industrial revolution starting around 1850, traced a similar path to the one in French private law. Initially, the approach focused on the idea of property and the abuse of rights under article 625 of the old Civil Code, which determined that an owner could not use his property in a way that caused nuisance to others.[60] This was criticized because it treated article 625 as a basis for liability beyond the general negligence provision of article 1401, which read: “[e]very unlawful act which causes damage to another obliges the person by whose fault that damage was caused to compensate it.”[61] When the focus shifted to article 1401, the role of article 625 was interpreted to be merely that there was no defense against liability based on exercising one’s own property right.[62] The unlawfulness of article 1401 required either a violation of a statutory duty or the infringement of a right. In nuisance actions, Dutch courts expanded the traditional grounds for unlawfulness by adopting a proper social conduct test to determine when the nuisance was unlawful and, as a consequence, negligent. Based on this test, in 1919, the Dutch Supreme Court accepted noise as a violation of a property right.[63] The same 1919 decision made clear that holding a license did not give those creating a nuisance immunity from a tort action. In this case, the legislature responded faster than the courts. The Industrial Nuisance Act of 1875[64] adopted a complex licensing system and an expansive view of nuisance by declaring that the denial of a license could be based on one of the following grounds: “(1) danger; (2) damage to property. . . ; and (3) serious nuisance, e.g. nuisance that makes a house partially or entirely impossible to live in and spreading of waste or disgusting smells.”[65]

One of the scholars who defended the assertion that article 1401 was the provision applicable to nuisance cases was a drafter of the new 1992 Civil Code, and accordingly, the social conduct test is still the controlling approach. The new Civil Code, though, has more specific provisions. Article 5:37 reads as follows:

The owner of immovable property may not, to a degree or in a way that is unlawful according to Article 6:162 of the Civil Code, cause nuisance to owners of other immovable properties by instigating sounds, vibrations, smells, smoke or gases or by denying these owners daylight or fresh air or by taking away the support of buildings or constructions.[66]

The reference to article 6:162[67] is still a reference to negligence, showing the difficulty that civil law jurisdictions had in accommodating strict liability. The interpretation of the unlawfulness of the conduct depended on the definition of proper social conduct in Dutch case law. The test for proper social conduct is a multifactor test, which allows courts room to adapt the rule to the particular circumstances, such as the locality.[68]

While negligence still plays a role, its role has been diminished by the advent of explicit strict liability in many instances, such as the collapse of real property (article 6:174),[69] or the damage caused by dangerous substances (article 6:175).[70] The latter incorporates administrative standards to define when a substance is dangerous, and thus, the article applies. The switch between a property rule and a liability rule—that is, between injunction and damages—is not based on an administrative standard in the Dutch Civil Code. It is based on the public interest; the court will assess if a nuisance must be tolerated, although with compensation, based on compelling reasons of public interest (article 6:168).[71] Administrative regulations define what is in the public interest, but the Dutch Civil Code allows courts to look beyond regulations.

5.  Catalonia

One of the most recent civil codes, the Catalan Civil Code of 2006, has a more detailed regulation. It includes a cessation action on articles 544-5[72] and 544-6,[73] and then it devotes two articles to regulate what legal (article 546-13) and illegal (article 546-14) nuisances are, paying close attention to the role of regulation, as well as the economic benefits of the conflicting activities. It is worth noting that before the codification in 1990, the Catalan Parliament passed an act on nuisance with very similar regulations regarding the connections with administrative regulations. Both recognize that even though an activity may comply with existing regulations, it may still be a nuisance if damage occurs and the damage caused should be compensated. Both also established the nonrebuttable presumption that if an activity exceeds the legal limits set in specific legislation, the activity is a nuisance. It also regulates a situation reminiscent of the famous U.S. case, Boomer v. Atlantic Cement Co.[74] The Catalan Civil Code allows an activity to continue while compensating for past and future damages if the cessation of said activity will have dire economic consequences. The nuisance provisions seem to align with the current regulation in section 906 of the BGB and, in general, with the trend toward the incorporation of administrative law in private law analysis.

1. The proprietors of an estate must tolerate emissions coming from a neighbouring estate that are innocuous or that cause prejudice that is not substantial. In general, prejudice is considered substantial when it exceeds the limit or indicative values established by the laws or regulations.

2. The proprietors of an estate must tolerate emissions that cause substantial prejudice if they are the result of the normal use of the neighbouring estate, according to the regulations, and if putting an end to them involves an expenditure that is economically disproportionate.

3. In the case referred to in Section 2, the proprietors affected have the right to receive indemnification for damage caused in the past and economic compensation, set by common agreement or judicially, for any that may be caused in the future if these emissions excessively affect the produce of the estate or its normal use, according to local custom.

. . . 5. Substantial emissions that come from administratively authorised installations give the neighbouring proprietors affected the right to request the adoption of technically possible and economically reasonable measures to prevent the damaging consequences and to request indemnification for the damage caused. If the consequences can not be prevented in this way, the proprietors have the right to economic compensation, established by common agreement or judicially, for damage that may occur in the future.[75]

D.  Comparative Analysis

First, although every continental civil code analyzed has a common origin in Roman law, the lack of clarity in Roman norms still seeped into the codification. Moreover, as mentioned, it cannot be said that their Roman origins translated into convergence at the time of codification. Similarly, the divergence at the outset cannot be explained by the different levels of industrialization. The hypothesis was that differences between nuisance provisions included in the civil codes traced the economic development of the particular country. The idea behind such a hypothesis is that those rules enacted at the beginning of industrialization coupled with development of urban areas would be more detailed because the conflicts between neighboring activities would be more acute, particularly in the absence of zoning and other public regulations. Germany and Spain approved their civil codes at roughly the same time, and while Germany had a higher level of industrialization, its provisions do not necessarily reflect this. An alternative hypothesis could be that at the beginning of industrialization, while conflicts were acute, institutional actors felt the need to be lenient toward those industrial activities imposing on their neighbors given that the social benefits they brought were high. Thus, jurisdictions would pay more heed to nuisance once industrialization was mature, and the marginal benefit from an industrial activity may not exceed the marginal harm to a nonindustrial actor.[76] Broad nuisance provisions may suggest that these adaptations could occur at the judicial level.

Second, while nuisance provisions did not change much in the codes until the 1990s, their interpretations have. Judges have been very important driving forces of evolution and convergence in nuisance law toward strict liability.

Third, the evolution of nuisance provisions where they have been amended or where recent provisions have been enacted acknowledges the complexity of the current framework regulating relations between neighbors increasingly dominated by public law. Borrowing Professor Mark Geistfeld’s title, it can be said that the newest provisions make explicit the role of tort law in the age of statutes.[77] As a result, these provisions are more complex.

There are two main tenets of this relationship between tort and administrative regulation. First, some regulations specifically state that if there is damage and the defendant has violated the pertinent administrative regulations, it will be assumed that the damage is substantial enough that the nuisance does not need to be tolerated.[78] Even in the absence of such an explicit regulation, if damage exists, there would be a strong presumption against the defendant before the courts. Second, complying with the administrative regulation does not mean that nuisance is excluded if there is damage, but rather the remedy changes, as will next be described. As Professors Georg von Wangenhein and Fernando Gomez pointed out, nuisance rules today are a combination of property and liability rules, and the switch between the two types of rules is provided by a regulatory standard.[79] While administrative regulation could explicitly preempt nuisance actions by declaring an activity a legal nuisance,[80] thus requiring the landowner affected to endure it, the avenue most commonly taken by European jurisdictions is that even when in compliance with the regulation, damages and preventive measures, but not injunctions, are available.[81] The impact of the coordination with administrative standards on Coasean bargaining remains to be analyzed. If an actor needs to comply with a regulation, the option of paying the party supporting a higher level of interference becomes less attractive because the actor will also face a fine.[82]

II.  Forced Convergence at the European Level?

All the civil law jurisdictions analyzed are part of the European Union and parties to the European Convention on Human Rights. As a result, there could be transnational forces of convergence, defining either nuisance rules themselves or the realm in which private nuisance can operate.

This Article analyzes three potential sources of convergence. First, while there has not been a binding harmonization of private law and, thus, there is no European nuisance, the Draft Common Frame of Reference (“DCFR”), which offers a sort of uniform civil code for European countries, will be briefly discussed. The DCFR can offer a sense of what direction jurisdictions will take in the future, a focal point for convergence of sorts. Next, this Article covers the Environmental Liability Directive. All countries analyzed above need to implement the Directive. Given the subject matter of the Directive, it has a clear impact on nuisance. It has a potential impact in two ways. First, for those regulations that incorporate the administrative standard to assess whether the interference is substantial, the standard is now homogeneous because it is set at the European level. Second, it establishes a public liability regime, and thus may compete with private nuisance actions. Finally, this Section reviews the decisions of the European Court of Human Rights that have considered nuisances a violation of a person’s right to respect for his private and family life as well as his home. National authorities that fail to respond to nuisances promptly and adequately may be found in violation of the European Human Rights Convention. As a consequence, national authorities may reduce even further the need for nuisance provisions to play a complementary role, although its existence clearly plays such a role and contributes to deterrence.

A.  The Draft Common Frame of Reference

In 2009, the European Commission published the DCFR.[83] The DCFR is similar to the Uniform Commercial Code and the Restatement in the United States, without being either.[84] Although it has been described a “European Civil Code in all but name,”[85] it is not yet that. It sets up the minimum common denominator across the private law of European countries that should facilitate the future unification of private law at the European level to strengthen the common market, but there is not yet anything to restate. The DCFR aims to serve as a model for both future European Law and future national law as it also identifies the best legal solutions.[86]

Article VI.-3:206 of the DCFR (Accountability for damage caused by dangerous substances or emissions) states the following :

(1) A keeper of a substance or an operator of an installation is accountable for the causation by that substance or by emissions from that installation of personal injury and consequential loss, loss within VI.-2:202 (Loss suffered by third persons as a result of another’s personal injury or death), loss resulting from property damage, and burdens within VI.-2:209 (Burdens incurred by the State upon environmental impairment), if:

(a) having regard to their quantity and attributes, at the time of the emission, or, failing an emission, at the time of contact with the substance it is very likely that the substance or emission will cause such damage unless adequately controlled; and

(b) the damage results from the realisation of that danger.

. . . (3) “Emission” includes:

(a) the release or escape of substances;

(b) the conduction of electricity;

(c) heat, light and other radiation;

(d) noise and other vibrations; and

(e) other incorporeal impact on the environment.

. . . (5) However, a person is not accountable for the causation of damage under this Article if that person:

(a) does not keep the substance or operate the installation for purposes related to that person’s trade, business or profession; or

(b) shows that there was no failure to comply with statutory standards of control of the substance or management of the installation.[87]

The DCFR targets only harm to people or property, not pure ecological damage. As such, diminished revenues by a restaurant as a result of the loss of an environmental amenity do not fall under this article. The scope is limited to: (1) substances—solid, liquid, or gas—that are objectively dangerous, either by nature or because they are kept in large quantities; and (2) emissions—a broader concept. The DCFR adopts strict liability for nuisances created by commercial or industrial activities. Non-professional parties, according to the comments to the DCFR, may still be liable but under a negligence rule.[88] According to article 3:102 of the DCFR, a person is negligent when he “does not meet the particular standard of care provided by a statutory provision whose purpose is the protection of the person suffering the damage from that damage.”[89] Furthermore, under the DCFR, compliance with public regulation standards offers a defense, an issue not admitted in every jurisdiction. The DCFR may be a force of convergence in the future if either the European Union decided to enact these provisions or if countries used it as a focal point for future reforms of their civil codes. As of today, it shows the tension between negligence and strict liability that many European jurisdictions face when regulating nuisance and the need to acknowledge the preeminence of administrative regulations.

B.  E.U. Environmental Liability Regulation

1.  Directive

It is impossible to fully grasp the role of nuisance in European law without understanding the European Directive 2004/35, of 21 of April, on environmental liability with regard to the prevention and remedying of environmental damage.[90] This Directive aims at protecting public property or common goods that are not covered by civil code rules protecting private property and at solving the collective action problem normally associated with such environmental damage. Furthermore, the transboundary character of many environmental issues made the common regulation necessary. The Directive adopts the “polluter pays” principle[91] and specifically states that it is complementary to the national regulations. For the purpose of this piece, article 3(3) states: “[w]ithout prejudice to relevant national legislation, this Directive shall not give private parties a right of compensation as a consequence of environmental damage or of an imminent threat of such damage.”[92]

The content of article 3(3) leaves national nuisance provisions intact, and it is surprising for two reasons. First, Directive 2004/35 deviated from the content of the White Paper[93] that started the legislative process for this Directive. In that White Paper, the Commission pointed at the need to create a level playing field for all the actors subject to E.U. environmental liability.[94] Given that the European Union embraces the complementarity between private and public enforcement, the lack of harmonization of private remedies is surprising because the Directive was expected to follow the steps of other European regulations, such as defective products.[95] It is remarkable that something similar happened in the case of waste regulation. The substantive regulation of waste management in the European Union was accompanied by a proposal of harmonized liability framework, in which compliance with a license to operate was not considered a defense.[96] The proposal was abandoned, and now waste falls under the Environmental Liability Directive.

Second, the European Union is a member of the Aahrus Convention, and it has been argued that the European Union’s lack of civil remedies in the environmental liability directive may be in tension with article 9(2)(b) of the Convention, which calls for such remedies.[97] In fact, in 2016, the European Commission in its roadmap, titled “[c]ommunication on access to justice at national level related to measures implementing EU environmental law,” expressed the problems that still exist due to the lack of harmonization across member states.[98]

2.  Countries’ Responses

Each country must incorporate the contents of the Directive 2004/35 into their own national legislation. All national laws incorporating the E.U. regulation go beyond harm to the environment by including provisions that carve out property damages. Those private damages are not dealt with in the special legislation.[99] The statutes seem to set up clear boundaries between environmental damage and other types of damages, closing the door to potential claims of breach of statutory duty because the scope of the norm does not cover those private interests. Instead, private damages are subject to the general nuisance rules. It is difficult to imagine a case in which a court will deny that, provided there is property damage, there is no nuisance when the defendant has been found liable under the environmental liability statutes. A violation of the statute will play a role when ascertaining fault, or where nuisance is governed by strict liability, a violation can be sufficient evidence that the damage reaches the threshold of significance and that such nuisance should not be tolerated.[100]

C.  Nuisance as a Violation of Human Rights

An interesting development in this field is the jurisprudence of the European Court of Human Rights (“ECHR”), which considers nuisance a violation of human rights. The ECHR did so in López Ostra v. Spain. The plaintiff, López Ostra, lived near the town’s waste-treatment plant, which caused odors, fumes, and noise.[101] The Spanish executive authorities were passive and did not respond promptly to stop the nuisance.[102] The ECHR in López Ostra expressed that: “severe environmental pollution may affect individuals’ well-being and prevent them from enjoying their homes in such a way as to affect their private and family life adversely, without, however, seriously endangering their health.”[103]

Accordingly, the Court decided that López Ostra had a right to respect for her private and family life, her home, and her correspondence according to article 8 of the European Convention on Human Rights:

1. Everyone has the right to respect for his private and family life, his home and his correspondence.

2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.[104]

Courts generally give Spain’s authorities room to balance the rights of the individual with the public interest, but in this case, Spanish authorities had gone too far. The Court awarded López Ostra pecuniary damages based on the depreciation of her home and nonpecuniary damages to compensate for her mental anguish.[105] The Kingdom of Spain had to pay 4,000,000 pesetas in 1998 (around 27,719 in U.S. dollars).[106]

The ECHR has had the opportunity to reiterate the same doctrine in two subsequent cases on immissions. Both cases were against Spain and about noise nuisances. The cases are Moreno Gómez v. Spain[107] and Cuenca Zarzoso v. Spain.[108] In the first decision, the Court stated that:

Although the object of Article 8 is essentially that of protecting the individual against arbitrary interference by the public authorities, it may involve the authorities’ adopting measures designed to secure respect for private life even in the sphere of the relations of individuals between themselves . . . . Whether the case is analysed in terms of a positive duty on the State to take reasonable and appropriate measures to secure the applicants’ rights under paragraph 1 of Article 8, or in terms of an interference by a public authority to be justified in accordance with paragraph 2 of Article 8, the applicable principles are broadly similar. In both contexts regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole. Furthermore, even in relation to the positive obligations flowing from the first paragraph of Article 8, in striking the required balance the aims mentioned in the second paragraph may be of a certain relevance . . . .[109]

López Ostra, Moreno Gómez, Cuenca Zarzoso, and other decisions, such as the decision dealing with the noise produced by runaways at Heathrow Airport, should push public authorities to enforce the environmental regulations to prevent and stop nuisances, thus reducing the sphere of private law. There is an obligation of the States that have signed the European Convention on Human Rights to adopt the appropriate administrative measures to prevent nuisances that affect the lives of their citizens.

Conclusion: Is There Still a Role for Private Law?

This Article’s analysis of the nuisance provisions in several European civil law countries has shown the different stages of the protection against nuisances: from property, to torts, and then to public regulation. At the time of codification, these European countries did not converge even though their traditions all stem from Roman law. Some countries have almost no provision of nuisance; in other countries, fault liability triggers damages that are combined with cessation actions; and yet, others adopted strict liability.

These divergent nuisance provisions still play a role today, albeit a reduced one. European civil law jurisdictions’ nuisance provisions reflect the evolution from nuisance problems between two adjacent neighbors to a scenario of nuisance conflicts between heterogeneous users with a high number of potential defendants. Like in the common law, nuisance provisions work well for the former. For the latter, public regulations take the central stage. Recently enacted or amended civil codes converge in the sense that they acknowledge the interplay between private law and public regulation. In many cases, private nuisance is not wholly displaced, but the remedies available to defendants will depend on whether the activity causing a nuisance has been administratively authorized. If it is administratively authorized, the cessation action that leads to an injunction remedy is no longer available.

 


[*] *. Associate Professor, Texas A&M School of Law. Research Associate Professor, Texas A&M Department of Agricultural Economics. Affiliated Researcher, The Bill Lane Center for the American West, Stanford University. E-mail: vcasado@law.tamu.edu.

[†] †. Profesor Titular, Universitat Pompeu Fabra Barcelona. Humboldt Research Scholarship for Experienced Researchers – Alexander von Humboldt Stiftung. E-mail: carlos.gomez@upf.edu. The authors want to thank the organizers of and participants in the Convergence and Divergence in Private Law conference held at the New York University School of Law on November 13, 2018. The authors thank Joseph Rebagliati and Steffani Fausone for their excellent research assistance.

 [1]. R.H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1, 2 (1960).

 [2]. This mix of remedies makes the analysis of this legal institution complex. “There is perhaps no more impenetrable jungle in the entire law than that which surrounds the word ‘nuisance.’”   Prosser and Keeton on the Law of Torts § 86, at 616 (W. Page Keeton et al. eds., 5th ed. 1984). Professor Henry Smith states that “[i]n light of these conflicting strains of thought about nuisance, the law of nuisance is widely regarded as a ‘mess,’ a ‘wilderness of law,’ a ‘legal garbage can,’ and a ‘mystery.’” Henry E. Smith, Exclusion and Property Rules in the Law of Nuisance, 90 Va. L. Rev. 965, 970 (2004) (citations omitted). However, Professor Smith believes that there it is not so such a mess but a combination of property rights delineating strategies. Id.

 [3]. The literature is rich on the choice between ex ante regulation or ex post liability as substitutes. For an account on this topic, see Steven Shavell, Economic Analysis of Accident Law 27784 (1st ed. 1987).

 [4]. For a definition of public nuisance, see Nuisance, Encyclopædia Britannica, https://www.
britannica.com/topic/nuisance#ref59803 (last visited May 17, 2019). For an analysis of public nuisance, see generally John E. Bryson & Angus Macbeth, Public Nuisance, the Restatement (Second) of Torts, and Environmental Law, 2 Ecology L.Q. 241 (1972).

 [5]. Richard A. Epstein, The Economic Structure of Roman Property Law, in The Oxford Handbook of Roman Law and Society 513, 521 (Paul J. du Plessis et al. eds., 2016).

To prevent undue complication of the title, the general law restricts the scope of servitudes. It is not possible to place a servitude on a servitude, or subject them to time limitations or specific conditions. Similarly, servitudes can only bind adjacent properties, thus reducing the difficulty of detecting who is in breach, and facilitating (by reducing the number of parties) the renegotiation or termination of the servitude. These restrictions on freedom of contract give greater clarity to third persons without imposing serious economic disadvantages on the initial parties or their successors in title. The practices that are barred are ones that generally do not make economic sense. The added clarity to the relationship allows servitudes to hold their value over time.

Id.

 [6]. Saul Levmore, Unifying Remedies: Property Rules, Liability Rules, and Startling Rules, 106 Yale L.J. 2149, 2160–66 (1997).

 [7]. It is important to note that this Article focuses only on regulations and remedies related to nontrespassory invasions on real property, not on noninvasive, aesthetic nuisances.

 [8]. Dig. 47.10.44 (Javolenus, From the Posthumous Works of Labeo 9).

 [9]. See James Gordley & Arthur Taylor von Mehren, An Introduction to the Comparative Study of Private Law 167–71 (2006); see also Thomas Glyn Watkin, An Historical Introduction to Modern Civil Law 25556 (1999); David B. Schorr, Historical Analysis in Environmental Law, in The Oxford Handbook of Legal History 1001, 1008 (Markus D. Dubber & Christopher Tomlins eds., 2018); Peter G. Stein, ‘Equitable’ Remedies for the Protection of Property, in New Perspectives in the Roman Law of Property 185, 194 (Peter Birks ed., 1989).

 [10]. Dig. 8.5.8 (Ulpian, Edict 17).

 [11]. See Gordley & Taylor von Mehren, supra note 9, at 16970.

 [12]. The Code Napoleon; Or, The French Civil Code art. 544, at 150 (A Barrister of the Inner Temple trans., 1827) [hereinafter The Napoleonic Code of 1804], http://files.libertyfund.org/
files/2353/CivilCode_1566_Bk.pdf (providing a translation of the French Civil Code of 1804).

 [13]. Código Civil [C.C.] [Civil Code] art. 348 (Spain), translated in Ministerio de Justicia, Spanish Civil Code 70 (Da Sofía de Ramón-Laca Clausen trans., 2013).

 [14]. “The owner of a thing may, to the extent that a statute or third-party rights do not conflict with this, deal with the thing at his discretion and exclude others from every influence.” Bürgerliches Gesetzbuch [BGB] [Civil Code], § 903, translation at https://www.gesetze-im-internet.de/
englisch_bgb/englisch_bgb.html#p3704 (Ger.).

 [15]. Property acquired legally grants to the owners the right to the full use of the properties that constitute its object and to possess and dispose thereof.” Codi Civil de Catalunya art. 541-1, translated in Law 5/2006, of 10 May, on the Fifth Book of the Civil Code of Catalonia, Relating to Real Rights, Parlament de Catalunya 23, https://www.parlament.cat/web/documentacio/altres-versions/lleis-
versions/index.html (last visited May 17, 2019).

 [16]. The structure of these legal claims resembles the order suggested by Smith, supra note 2, at 978–81, according to which the availability of different remedies depends on the level of information shared by the affected parties. The choice between property or liability rules, as the choice between exclusion and governance as strategies to delineate property rights, depends on the cost of information. Accordingly, nuisance has components of both liability and property rules.

 [17]. This holistic approach differs from the more fragmented common law one. Yun-chien Chang & Henry E. Smith, An Economic Analysis of Civil Versus Common Law Property, 88 Notre Dame L. Rev. 1, 7 (2012). According to these authors, the differences are not relevant. The divergence is just explained by a different system of property delineation. Id. at 5–6; see also Henry E. Smith, Exclusion Versus Governance: Two Strategies for Delineating Property Rights, 31 J. Legal Stud. S453, S457 (2002) [hereinafter Smith, Exclusions Versus Governance].

 [18]. The difference between trespass and nuisance is far from clear, as it happens in the common law. “The distinction between liability in trespass to land, nuisance, and Rylands v. Fletcher is extremely fine and varies from jurisdiction to jurisdiction within the Common Law.” Konrad Zweigert & Hein Kötz, Introduction to Comparative Law 606 (Tony Weir trans., 3d rev. ed.1998).

 [19]. Herbert Hausmaninger & Richard Gamauf, Am. Philological Ass’n, A Casebook on Roman Property Law 232 n.34 (George A. Sheets trans., Oxford Univ. Press 2012) (2003); see also Reinhard Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition 910 (Oxford Univ. Press 1996).

 [20]. The growth in the number of victims increases transaction costs to the potential tortfeasor because it would need to reach an agreement with each of the victims as to the best way to compensate them. In such a scenario, liability rules are better. Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089, 110809 (1972); see also Richard A. Posner, Economic Analysis of Law 62–66 (9th ed. 2014). But see Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. Chi. L. Rev. 681, 690, 72930 (1973). For Professors Louis Kaplow and Steven Shavell, the choice between a property or a liability rule lies not only on the existence of transaction costs but also on the existence of imperfect information in relation to the potential damages (of the tortfeasor, the victim, and the judge deciding the case). See Louis Kaplow & Steven Shavell, Property Rules Versus Liability Rules: An Economic Analysis, 109 Harv. L. Rev. 713, 719 (1996). For a general explanation, see Keith N. Hylton, The Economics of Nuisance Law, in Research Handbook on the Economics of Property Law 326, 32343 (Kenneth Ayotte & Henry E. Smith eds., 2011). Professor Smith defines two strategies to delineate property rights: exclusion and governance. The cessation action belongs to the former, with the rest of nuisance to the latter. Nuisance is thus a hybrid. See Smith, supra note 2, at 991. For a general account of exclusion versus governance as methods of delineating property rights, see Smith, Exclusions Versus Governance, supra note 17, at S457–67.

 [21]. For a comparative survey, see Jean Limpens et al., Liability for One’s Own Act, in 11 International Encyclopedia of Comparative Law: Torts pt. I, 119–25 (André Tunc ed., 1983).

 [22]. See Gerhard Wagner, Comparative Tort Law, in The Oxford Handbook of Comparative Law 1003, 1029–34 (Mathias Reimann & Reinhard Zimmermann eds., 2008).

 [23]. Steven Shavell, Strict Liability Versus Negligence, 9 J. Legal Stud. 1, 7 (1980).

 [24]. Administrative agencies displace owners as first-order decisionmakers who can choose any use they want for their properties. This governance rule comes accompanied by a displacement of injunction as an available remedy. The right of the neighbor not to be interfered with by the use of someone else’s plot of land is now protected only by a liability rule. This does not mean though that property rules protecting entitlements via injunction do no longer exist. They still apply to all situations in which uses do not require an administrative authorization. For an analysis of the trade-offs between property and liability rules, see Smith, supra note 2, at 104748.

 [25]. Professor Saul Levmore has described an evolution of remedies from a property rule to a liability rule. The continental European process does not fit into any of the typologies proposed by Professor Levmore. In the case of nuisance, European regulation has changed from a property rule (A stops B) to another damage compensation rule without the need to stop the activity (B pays A, but B can continue his activity provided that B complies with the administrative authorization of the activity). Levmore, supra note 6, at 2156; see also Smith, supra note 2, at 970.

 [26]. Kenneth S. Abraham, The Relation Between Civil Liability and Environmental Regulation: An Analytical Overview, 41 Washburn L.J. 379, 384 (2002).

 [27]. Id.

 [28]. See infra Section I.C.2.

 [29]. Georg von Wangenheim & Fernando Gomez, Conflicts of Entitlements in Property Law: The Complexity and Monotonicity of Rules, 100 Iowa L. Rev. 2389, 2391–95 (2015).

 [30]. The Napoleonic Code of 1804, supra note 12, art. 544, at 150.

 [31]. Gordley & Taylor von Mehren, supra note 9, at 170.

 [32]. The Napoleonic Code of 1804, supra note 12, art. 1382, at 378.

 [33]. James Gordley, Disturbances Among Neighbours in French Law, in 2 The Development of Liability Between Neighbours 65, 84–85 (James Gordley ed., 2010).

 [34]. Id. at 69; see also Thierry Kirat, Les conflits liés au voisinage. L’effet des relations juridiques sur la construction institutionnelle de l’espace, in Proximités et changements socio-économiques dans les mondes ruraux 243, 249–50 (2005) (Fr.).

 [35]. Code de l’urbanisme art. R111-3 (Fr.), translated in Gordley, supra note 33, at 79.

 [36]. Code de la construction et de l’habitation art. L112-16 (Fr).

 [37]. Projet De Reforme De La Responsabilite Civile [Reform Bill on Civil Liability], (proposed Mar. 13, 2017) (Fr.), http://www.justice.gouv.fr/publication/Projet_de_reforme_de_la_responsabilite_
civile_13032017.pdf, translated in Reform Bill of Civil Liability (proposed Mar. 13, 2017), http://www.te
xtes.justice.gouv.fr/art_pix/reform_bill_on_civil_liability_march_2017.pdf. Previously, other proposed amendments by Terre, Catala, and Béteille also included nuisance provisions intended for inclusion in the code as an anchor for the “troubles of neighbors.” Clément Bizet, Les troubles du voisinage: définition et régime, in Avant-projet de loi Réforme de la responsabilité civile 21, 22, 24 (2018), https://hal-univ-paris10.archives-ouvertes.fr/hal-01793099/document.

 [38]. Ordonnance 2016-131 du 10 février 2016 portant réforme du droit des contrats, du régime général et de la preuve des obligations, Journal Officiel de la République Française [J.O.] [Official Gazette of France], Feb. 11, 2016, No. 26. 

 [39]. Projet De Reforme De La Responsabilite Civile art. 1244.

 [40]. The German Civil Code art. 1004, at 226 (Chung Hui Wang trans., 1907), https://archive.org/
details/germancivilcod00germ/page/n3 (providing a translation of the original German Civil Code).

 [41]. Andreas Thier, Disturbances Between Neighbours in Germany 1850-2000, in 2 The Development of Liability Between Neighbours, supra note 33, at 87, 93.

 [42]. Bürgerliches Gesetzbuches [BGB] [Civil Code], § 906, translation at https://www.gesetze-im-internet.de/englisch_bgb/englisch_bgb.pdf.

 [43]. Id. § 906, para. 1, sentences 23.

 [44]. See generally von Wangenheim & Gomez, supra note 29 (analyzing the interaction between private law rules and public law regulatory standards).

 [45]. See generally Abraham Bell & Gideon Parchomovsky, Pliability Rules, 101 Mich. L. Rev. 1 (2002) (discussing contingent rules and entitlements, that is rules that protect the holder of a property entitlement or liability rule, depending on whether some condition has been met or not).

 [46]. Bundes-Immissionsschutzgesetz [BImSchG] [Federal Immission Control Act], Mar. 15, 1974, Bundesgesetzblatt, Teil I [BGBl I] at 721, last amended by Gesetz [G], July 18, 2017, BGBl I at 2771, art. 3 (Ger.), https://www.gesetze-im-internet.de/bimschg/BJNR007210974.html#BJNR00721097
4BJNG000103360.

 [47]. Gewerbeordnung für den Norddeutschen Bund [Trade Regulations for the North German Confederation], June 21, 1869, § 26 (current version at Gewerbeordnung [GewO], as amended Gesetz [G], Nov. 29, 2018, BGBl I at 2666, tit. II, https://www.gesetze-im-internet.de/gewo/BJNR002450
869.html#BJNR002450869BJNG000202301 (Ger.)).

 [48]. For an example of a case in which a court considered that neighbors had to tolerate the sparks from a railway because the railway had a permit, see Reichsgericht [RG] [Federal Court of Justice] Sept. 20, 1882, Entscheidungen des Reichsgerichts in Zivilsachen [RGZ] 265 (267), 1882 (Ger.).

 [49]. Thier, supra note 41, at 95.

 [50]. Id. at 97, 99 (citing Bundesgerichtshof [BGH] [Federal Court of Justice] Oct. 30, 1998, 140 Entscheidungen des Bundesgerichtshofes in Zivilsachen [BGHZ] 1 (6), 1999 (Ger.)). Building licenses are only one factor to consider when analyzing the customary nature of an activity, though. The role of courts in the expansion of strict liability emanating from section 906 of the BGB did not end here. Courts have applied section 906 of the BGB to cases in which there was an illegal use of land and which would result in a negligence claim if the defendant had acted with fault. Id. at 102 (citing Bundesgerichtshof [BGH] [Federal Court of Justice] Mar. 2, 1984, 90 Entscheidungen des Bundesgerichtshofes in Zivilsachen [BGHZ] 255 (262) (Ger.)).

 [51]. Id. at 100.

 [52]. Aniceto Masferrer, Relations Between Neighbours in Spanish Law 1850–2000, in 2 The Development of Liability Between Neighbours, supra note 33, at 173, 177.

 [53]. C.C. art. 590 (Spain), translated in Ministerio de Justicia, supra note 13, at 107.

 [54]. Id. art. 1908.

 [55]. S.T.S., May 31, 2007 (R.J., No. 589, p. 3431) (Spain).

 [56]. De Bases para la modificación del título preliminar del Código Civil ch. 3, art. 7, para. 2 (B.O.E. 1974, 163) (Spain).

 [57]. Masferrer, supra note 52, at 18690.

 [58]. Id. at 190–91.

 [59]. Id. at 191.

 [60]. Art. 2:625 BW (oud) (Neth.); A.J. Verheij, Fault Liability Between Neighbors in the Netherlands 18502000, in 2 The Development of Liability Between Neighbours supra note 33, at 107, 110.

 [61]. Elizabeth van Schilfgaarde, Negligence Under the Netherlands Civil Code—An Economic Analysis, 21 Cal. W. Int’l L.J. 265, 272 (1991) (alteration in original) (quoting Art. 3:1401 BW (oud) (Neth.)).

 [62]. Verheij, supra note 60, at 11011.

 [63]. HR 31 januari 1919, NJ 1919, 161 m.nt Molengraaff (Lindenbaum/Cohen) (Neth.); see also Verheij, supra note 60, at 118–19.

 [64]. Verheij, supra note 60, at 128–29. Professor A.J. Verheij describes that from 1850 to 1880, domestic industry developed thanks to steam engines, railroads, and trade. Id. at 129. In 1880, the development of heavy industry started. Id.

 [65]. Verheij supra note 60, at 125 (discussing Wet Tot Regeling Van Het Toezicht Bij Het Oprigten Van Inrigtingen, Welke Gevaar, Schade Of Hinder Kunnen Veroorzaken 10 junij 1875, S. 1875, 95 (repealed 1952) (Neth.)).

 [66]. Art. 5:37 BW (Neth.), translated in Dutch Civil Code: Book 5 Real Property Rights, Dutch Civ. L., http://www.dutchcivillaw.com/civilcodebook055.htm (last visited May 18, 2019).

 [67]. Article 6:162 reads as follows:

1. A person who commits a tortious act (unlawful act) against another person that can be attributed to him, must repair the damage that this other person has suffered as a result thereof. 

2. As a tortious act is regarded a violation of someone else’s right (entitlement) and an act or omission in violation of a duty imposed by law or of what according to unwritten law has to be regarded as proper social conduct, always as far as there was no justification for this behaviour.

3. A tortious act can be attributed to the tortfeasor [the person committing the tortious act] if it results from his fault or from a cause for which he is accountable by virtue of law or generally accepted principles (common opinion).

Art. 6:162 BW (Neth.), translated in Dutch Civil Code: Book 6 the Law of Obligations, Dutch Civ. L., http://www.dutchcivillaw.com/civilcodebook066.htm (last visited May 18, 2019).

 [68]. Verheij, supra note 60, at 116.

 [69]. Art. 6:174 BW (Neth.), translated in Dutch Civil Code: Book 6 the Law of Obligations, supra note 67. The Dutch Supreme Court refused to apply this provision to a case in which, as a result of the collapse of a building, asbestos particles had affected the premises of the neighbors. Verheij, supra note 60, at 122.

 [70]. Art. 6:175 BW (Neth.), translated in Dutch Civil Code: Book 6 the Law of Obligations, supra note 67.

 [71]. Id. art. 6:168.

 [72]. Article 544-5 reads as follows:

Negatory action is not appropriate in the following cases:

a) If the disturbances or emissions it is intended to put an end to or future disturbances or emissions that it is claimed to prevent do not prejudice any legitimate interest of the proprietors in their property.

b) If the proprietors must support the disturbance due to a provision of this code or due to legal businesses.

Codi Civil de Catalunya art. 544-5, translated in Law 5/2006, of 10 May, on the Fifth Book of the Civil Code of Catalonia, Relating to Real Rights, supra note 15, at 31.

 [73]. Article 554-6 reads as follows:

1. Negatory action is aimed at the protection of the freedom of domain of the real estate property and the re-establishment of the thing to the state prior to a legal or material disturbance.

2. In the exercise of negatory action, the corresponding indemnification for the damage and prejudice produced can be claimed. In this case, the actors do not have to prove the illegitimacy of the disturbance.

Id. art. 544-6.

 [74]. See generally Boomer v. Atl. Cement Co., 257 N.E.2d 870 (1970) (allowing for permanent damages when the harm suffered is small compared to the cost of removing the nuisance).

 [75]. Codi Civil de Catalunya art. 546-14, translated in Law 5/2006, of 10 May, on the Fifth Book of the Civil Code of Catalonia, Relating to Real Rights supra note 15, at 38–39.

 [76]. See Abraham, supra note 26.

 [77]. See generally Mark A. Geistfeld, Tort Law in the Age of Statutes, 99 Iowa L. Rev. 957 (2014) (explaining the relationship between tort law and statutes).

 [78]. This aligns with the rule 1P (B stops A up to a point, and A pays damages associated with its lawful operation) that Professor Levmore describes in his work, which enhances the seminal article by Judge Guido Calabresi and Professor A. Douglas Melamed on this topic. Levmore, supra note 6, at 2149; see also Calabresi & Melamed, supra note 20, at 1092–93.

 [79]. Von Wangenheim & Gomez, supra note 29, at 2392, 2398.

 [80]. A partial and indirect way to declare something a legal nuisance is by allowing the “coming to the nuisance” defense because it allows certain activities to continue if they were in the area before the plaintiff. This is what Article L.112-16 of the French Construction and Housing Code does. Code de la construction et de l’habitation [French Construction and Housing Code] art. L112-16 (Fr.).

 [81]. “Corrective justice is, therefore, attenuated in a regulatory system.” Richard A. Epstein, Nuisance Law: Corrective Justice and Its Utilitarian Constraints, 8 J. Legal Stud. 49, 101 (1979).

 [82]. Fines affect ex ante decisions on investments. See generally Lucian Arye Bebchuk, Property Rights and Liability Rules: The Ex Ante View of the Cathedral, 100 Mich. L. Rev. 601 (2001) (explaining the role that different ex post rules, including fines, can have on ex ante decisions despite easy bargaining and the distributive effects of the ex post rules).

 [83]. Frank Emmert, The Draft Common Frame of Reference (DCFR)—The Most Interesting Development in Contract Law Since the Code Civil and the BGB, 2 Cuadernos de la Maestría en Derecho 7, 12 (2012). For further discussion on international tort law and the DCFR, see generally Walter van Gerven et al., Cases, Materials and Text on National, Supranational and International Tort Law (2000); Gerhard Wagner, The Law of Torts in the DCFR, in The Common Frame of Reference (Gerhard Wagner ed., 2009).

 [84]. Emmert, supra note 83, at 1112; Nils Jansen & Reinhard Zimmermann, “A European Civil Code in All But Name”: Discussing the Nature and Purposes of the Draft Common Frame of Reference, 69 Cambridge L.J. 98, 10102 (2010).

 [85]. Jansen & Zimmerman, supra note 84, at 100.

 [86]. The DCFR also aimed to provide an optional set of rules that parties could choose when negotiating an agreement, particularly in contract law. Reinhard Zimmermann, The Present State of European Private Law, 57 Am. J. Comp. L. 479, 510 (2009). However, its provisions could also serve as the baseline to negotiate potential settlements between neighbors in nuisance cases. Id. at 51011.

 [87]. Study Grp. on a European Civil Code & Research Grp. on EC Private Law (Acquis Grp.), Principles, Definitions and Model Rules of European Private Law 3396 (Christian von Bar et al. eds., 2009), https://www.law.kuleuven.be/personal/mstorme/european-private-law_en.pdf.

 [88]. Id.

 [89]. Id. at 3274.

 [90]. Directive 2004/35, of the European Parliament and of the Council of 21 April 2004 on Environmental Liability with Regard to the Prevention and Remedying of Environmental Damage, 2004 O.J. (L 143) 56 (EU) [hereinafter Directive on Environmental Liability].

 [91]. Article 3(1) of the Directive sets a strict liability standard for those activities it considers particularly dangerous. Id. at 60. The list of activities can be found in Annex III of the Directive. Id. at 70–71. In all other cases—that is, on cases of environmental damage caused by activities not considered dangerous per se—liability is based on fault. For an analysis of the effect of strict liability and fault liability on the prevention of environmental damage, see Michael Faure & Göran Skogh, The Economic Analysis of Environmental Policy and Law 24161 (2003).

 [92]. Directive on Environmental Liability, supra note 90, at 61.

 [93]. Commission White Paper on Environmental Liability, COM (2000) 66 final (Feb. 9, 2000). A White Paper “launch[es] a debate with the public, stakeholders, the European Parliament and the Council in order to arrive at a political consensus.” Glossary of Summaries, EUR-Lex, https://eur-lex.europa.eu/summary/glossary/white_paper.html (last visited May 18, 2019).

 [94]. Commission White Paper on Environmental Liability, supra note 93, at 15.

 [95]. Gerrit Betlem, Torts, a European Ius Commune and the Private Enforcement of Community Law, 64 Cambridge L.J. 126, 12829 (2005). For another example, check the 2004 Intellectual Property Directive, which, following the premise that tort remedies can complement regulation to ensure deterrence, aimed at harmonizing the sanctions, including private enforcement. Directive 2004/48/EC, of the European Parliament and of the Council of 29 April 2004 on the Enforcement of Intellectual Property Rights,  2004 O.J. (L 157) 45, 81 (EU).

 [96]. Commission Proposal for a Council Directive on Civil Liability for Damage Caused by Waste, at 15, COM (1989) 282 final (Sept. 15, 1989).

 [97]. Betlem, supra note 95, at 132. A similar claim can be made in relation to the European Convention on Human Rights given that articles 6 (right to a fair trial) and 13 (right to an effective remedy) offer a similar, albeit general, protections. Id. at 13335 (analogizing the question of private civil law remedies in the context of the Environmental Liability Directive with the Muñoz decision, in which the issue was whether a standard laid by E.U. law was actionable under national tort law).

 [98]. European Comm’n, Communication on Access to Justice at National Level Related to Measures Implementing EU Environmental Law 2 (2016), http://ec.europa.eu/smart-regulation/roadmaps/docs/2013_env_013_access_to_justice_en.pdf.

 [99]. Examples of provisions stating that damages to property are not dealt with by the legislation dealing with pure environmental damage include: Loi 2008-757 du 1er août 2008 relative à la responsabilité environnementale et à diverses dispositions d’adaptation au droit communautaire dans le domaine de l’environnement (1), Journal Officel de la Republique Francaise [J.O.] [Official Gazette of France], Aug. 2, 2008, p. 12361 (Fr.); Lei n. 19/2014 de 14 de abril Define as bases da política de ambiente, art. XIII, Diário da República n. 73/2014, I Série A. 2400 (2014) (Port.); Environmental Responsibility Law art. V (B.O.E. 2007, 255) (Spain). These provisions prevent the compensation of damages decided by the public authority. The victim is obliged, then, to claim for damages before the courts. The German regulation states such principle clearly when it declares the potential liability of the tortfeasor, although it defers the case to the general courts. The Environmental Liability Act sets forth the following:

If an environmental impact caused by an installation specified in Annex 1 causes a person’s death, injury to his body or damage to his health, or damage to an item of property, the operator of the installation shall have an obligation to compensate the injured person for the resulting damage.

Umwelthaftungsgesetz [UmweltHG] [Environmental Liability Act], Dec. 10, 1990, BGBl I at 2634, last amended by Gesetz [G], July 17, 2017m BGBl I at 2421, § 1 (Ger.), https://www.gesetze-im-internet.de/englisch_umwelthg/englisch_umwelthg.html.

 [100]. Nonetheless in 2005, Professor Gerrit Betlem predicted that a harmonization of E.U. law as a result of the Environmental Liability Directive based on the breach of statutory duty. See Betlem, supra note 95, at 145–48.

 [101]. López Ostra v. Spain, 303 Eur. Ct. H.R. (ser. A) 39, 39 (1994).

 [102]. See id. at 55.

 [103]. Id. at 54.

 [104]. Id. at 53–56 (quoting European Convention on Human Rights § 1, art. 8).

 [105]. Id. at 40.

 [106]. Id. at 59.

 [107]. Gómez v. Spain, 2004-X Eur. Ct. H.R. 329.

 [108]. Zarzoso v. Spain, Eur. Ct. H.R. (2018), http://hudoc.echr.coe.int/eng?i=001-180296.

 [109]. Gómez, 2004-X Eur. Ct. H.R at 341.

 

Divergence and Convergence at the Intersection of Property and Contract – Article by Giuseppe Dari-Mattiacci & Carmine Guerriero

From Volume 92, Number 4 (May 2019)
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Divergence and Convergence at the Intersection of Property and Contract

Giuseppe Dari-Mattiacci[*] & Carmine Guerriero[†]

In this Article, we study rules that solve the conflict between the original owner and an innocent buyer of a stolen or embezzled good. These rules balance the protection of the original owner’s property and the buyer’s reliance on contractual exchange, thereby addressing a fundamental legal and economic trade-off. Our analysis is based on a unique, hand-collected dataset on the rules in force in 126 countries. Using this data, we document and explain two conflicting trends. There is a large amount of first-order divergence: both rules that apply to stolen goods and those that apply to embezzled goods vary widely across countries. Yet, there is also remarkable second-order convergence: virtually all legal systems protect the innocent buyer more strongly if the good was embezzled (rather than stolen) and if she purchased it in an open market, at an auction, or from a professional seller (as opposed to a private sale). We show that, while divergence is attributable to varying cultural values, convergence can be rationalized using a classic functional approach: these rules harmonize the owner’s incentives to protect property and the buyer’s incentives to inquire about title.

Introduction

Most legal systems around the world simultaneously advance two fundamental goals: the protection of property and the reliability of contractual exchange.[1] When stolen or embezzled personal property is sold to an innocent buyer, however, one of them needs to be prioritized over the other. This problem, which we call the “property-contract balance,”[2] arises because the thief or the embezzler commonly cannot be found or is insolvent. Therefore, we face the dilemma of either returning the property to the original owner—thereby frustrating the buyer’s contractual expectations—or upholding the transfer—thereby undermining the security of ownership.[3]

The rules addressing this issue—that is, good-faith purchase (“GFP”) rules—are as old as law itself. They can be found in the code of Hammurabi, the Talmud, Greek law, and Roman law, and Hindustani law, and they epitomize the pervasive phenomenon of transfers through (possibly unfaithful) intermediaries such as brokers, gallerists, middlemen, agents, and Internet platforms. Unauthorized agency, forged financial instruments, and double sales of personal or real property all raise analogous, GFP-like problems.[4]

The perplexing normative question of how such cases should be adjudicated is the object of an important and vast scholarship.[5] In this Article, we are concerned with the positive question of how such cases are adjudicated in different countries around the world, and if trends emerge, how such trends can be rationalized. In the analysis, we employ a unique dataset on the GFP rules in force in 126 countries around the world.[6]

To start with, we show that there is a large amount of first-order divergence across legal systems and quantify these differences using various indicators. GFP rules vary widely across countries, both for stolen and embezzled goods. This finding puts to rest a lingering debate in the literature, which has been traditionally divided in two camps: those who argue that GFP rules—and more generally private law provisions—vary,[7] as we show, and those who believe that they are rather uniform if one considers how such rules are applied in practice[8] (we account for this in our study).

Yet, we also show that there is remarkable second-order convergence—thereby vindicating both camps’ contentions—on how the protection of owners and buyers varies as a function of the mode of expropriation (theft versus embezzlement) and the context of the transfer (commercial versus private): virtually all legal systems in our dataset afford more protection to the innocent buyer if the good was embezzled rather than stolen, or if the purchase occurred in a commercial setting (we distinguish among public markets, auctions, and professional sellers, both for stolen and for embezzled goods) as opposed to a private sale. A fitting illustration is provided by the theft rule[9] versus the entrustment doctrine[10] in U.S. law: the owner prevails against a good-faith buyer of a stolen good, while the buyer prevails if the good was embezzled and she purchased it from a professional seller.

What explains these trends and how can they be reconciled? We use a combination of empirical analysis—which yields useful insights only if there is variation in the underlying data—and theoretical rationalization. We first address the question of divergence. In a previous study,[11] we developed a metric for cultural differences across countries—somewhat arbitrarily called self-reliance—capturing two distinct and important features of a country’s cultural endowment: respect for others and regard for hierarchy.[12] We show that a country’s degree of self-reliance accounts for divergence in GFP rules better than other measurable cross-country differences, including: random “disagreements,” the legal origins of a country’s current legal system, differences in political systems, and differences in religious beliefs.[13]

Our previous study dealt with stolen goods, but here, we exploit for the first time the other half of the data: embezzled goods.[14] Both analyses yield the same result: specific cultural traits are the root of comparative variation in private law rules and possibly beyond. In particular, we find that high levels of respect for others and low levels of regard for hierarchy—corresponding to a high degree of self-reliance—are associated with stronger owner protections. We demonstrate this contention using direct survey data on cultural traits and then repeat the analysis using the features of a country’s language as instrumental variables that embed cultural traits.[15] The survey data is contemporaneous to law and hence one cannot be sure there is a causal relationship rather than a simple correlation. Language, instead, does not often vary as a result of legal reforms and can be used as a stable indicator of hard-wired cultural traits.[16] To explore a possibly interesting avenue for future research, we also repeated our tests using world-wide data provided in the recent article, The Moral Machine Experiment[17] and spotted some interesting, though not very robust,[18] correlations between law and morality. More specifically, value systems that put more weight on an individual’s status and seniority are associated with stronger owner protection.

While our analysis yields insights into the causes of divergence, it also raises the question of how to rationalize (1) the relationship between legal divergence and cultural variation and (2) legal convergence. The literature has produced two main theoretical perspectives on the GFP problem. The ex anteincentives approach emphasizes that the level of protection that the law affords the original owner versus the buyer has an effect on the parties’ incentives to reduce the likelihood of potential conflicts. Namely, it dampens the owner’s incentives to protect her property and reinforces the buyer’s incentives to inquire about title.[19] Conversely, the ex postvalue approach suggests that, since something has already gone wrong, the contested good should simply be assigned to the party that surely, or absent reliable information on private valuations, values the good the most.[20]

Our analysis vindicates—again—both sides of the debate. We argue that the value approach provides a useful theoretical framework to understand divergence. The intuition is that while it is in principle more likely that the buyer attaches more value to the contested good—because high-value buyers self-select into the market—the importance of ex post reallocations is affected by the prevalence of theft—which in turn depends on the level of respect for others—and the efficiency of the enforcement system—which is a function of the level of regard for hierarchy.

In turn, we explain that the incentive approach sheds light on convergence. In a nutshell, stronger buyer protection emerges in contexts where the buyer has comparatively little control over the situation, and vice versa. In embezzlement cases, the owner can easily reduce the likelihood of expropriation by selecting a more trustworthy agent, which is not the case with theft cases. Similarly, in commercial transactions, there is a legitimate expectation that title has already been scrutinized, and hence, there is little the buyer can add.[21] In contrast, in private sales, the buyer’s effort pays off.[22]

We proceed as follows. In Part I we lay out the theoretical foundations of our approach, describe the data, and document convergence and divergence in GFP rules for stolen and embezzled goods. In Part II, we focus on divergence, show empirically that it is the product of cultural differences (in the degree of self-reliance), and compare our explanation with extant theories of comparative variation. In Part III, we address the issue of convergence and propose that, while the ex postvalue approach elucidates divergence, the ex anteincentives approach best accounts for convergence. The Appendix contains details of the analysis and of the data collection process, additional figures and regression tables.

I.  First-order divergence and second-order convergence

We focus on the regulation of the GFP for value without notice of personal property in the case of theft—in which the original owner was dispossessed by a thief—and embezzlement—in which the good was originally entrusted by the original owner to an (unfaithful) embezzler. Scholarship has traditionally been divided on the issue of divergence versus convergence in GFP rules.[23] Traditional comparative analyses were based on only a handful of countries, often covered only blackletter law, and did not generally offer a way to compare the rules in force in different countries in an unambiguous and measurable way.[24]

To overcome these challenges, we worked with 149 teams of property experts in 125 countries,[25] who generously provided their time and effort to this project. Their names and the list of countries covered in this study can be found in the Appendix. These experts are either law professors at leading universities in their respective countries or practicing lawyers associated with internationally renowned law firms, most of which are part of the Lex Mundi network. We collected the data by means of a questionnaire in which we asked the question, “[a]t what conditions does a good faith buyer acquire ownership of a stolen or embezzled good?” and investigated a number of complementary and boundary issues.[26]

We inquired about the specific rules that apply to GFP, the definition of good faith, whether good faith is presumed, whether compensation is due to the dispossessed good-faith buyer in case the owner successfully reclaims the good,[27] the general background rules of adverse possession, transfer of property and statutes of limitations, and which goods are excepted (such as cultural heritage) or registered (such as automobiles) and hence subject to a different set of rules. The data covers the period 1981–2011; there was no relevant reform over this period.[28] Importantly, experts were instructed to report the black-letter rules and how they are applied in practice by courts.

In order to obtain a comparable measure of the rules of interest in each jurisdiction, from the experts’ answers we distilled four variables indicating the number of years after which the good-faith buyer acquires title on the good in each of four situations: private sale, public market, auction, and professional seller. We repeated the same exercise twice: for stolen goods and for embezzled goods. (We focused on cases in which the good is immediately resold after theft or embezzlement.)[29] These variables provide a quantitative measure of the protection of the original owner versus the good-faith buyer in each case: the greater the number of years, the stronger the protection of the original owner, and conversely, the weaker the protection of the good-faith buyer.[30]

Table 1 provides an example of the most relevant of the variables in our dataset for four countries as compared to the United States, and of the extent of variation. Starting from the top row, Denmark provides the strongest degree of owner protection in the case of stolen goods purchased in a private sale. In this case the buyer never acquires title, hence the owner is fully protected. (The “theft rule” in the United States provides the same degree of protection.)[31] At the other end of the spectrum, Italy fully protects the buyer, who acquires title immediately. Turkey and France afford the owner an intermediate level of protection, recognizing the buyer’s title after five and three years, respectively. None of these four countries require the owner to pay compensation to the buyer when the owner reclaims a good that the buyer purchased privately (second row).

The third and fourth rows concern commercial transactions, in which the buyer purchased the good in a public market, at an auction, or from a professional seller.[32] While the main index of owner protection is the same as in private sales, Turkey and France require the owner to pay a compensatory sum to the buyer equal to the market price and the purchase price, respectively, conditional on the owner satisfying the time limitation.

Moving down the table, while France and Italy have uniform rules for stolen and embezzled goods, both Denmark and Turkey provide more protection to the buyer when the good was embezzled rather than stolen. The difference is particularly stark in Denmark, where owners are provided with full protection in the case of theft and buyers are provided with full protection in the case of embezzlement. (The buyer is fully protected in the United States under the entrustment doctrine if the embezzled good was purchased from a professional seller.)[33]

To illustrate one of the metrics we use, in Figure 1 we provide the same information as in the first row of Table 1 for all the countries in our dataset.[34] Each dot in the graph represents a different country. The position of the dot in the graph indicates the degree of owner protection for private sale; the degree of owner protection for embezzled goods is indicated on the horizontal axis and the degree of owner protection for stolen goods is indicated on the vertical axis.

The countries that can be found along the diagonal afford the same degree of protection for stolen and embezzled goods (like Italy and France). Countries above the diagonal afford more protection to the owner if the good was stolen as opposed to embezzled (like Denmark and Turkey) and, vice versa, countries below the diagonal afford less protection to the owner if the good was stolen as opposed to embezzled.

The figure shows a large degree of first-order divergence in GFP rules. Countries are widely spread out both along the vertical axis—implying variation in the GFP rules concerning theft—and along the horizontal axis—which refers to embezzlement. Next to the two polar cases (full owner protection and full buyer protection), many countries offer several different intermediate degrees of protection to the owner, with a particularly relevant amount of variation in the range from zero to ten years.

The figure also shows the extent of second-order convergence, which can be appreciated by comparing the rules for stolen goods with those for embezzled goods. With only a couple of exceptions, the vast majority of the countries in our dataset lie above the diagonal; that is, almost all countries afford more protection to the original owner when the good was stolen rather than embezzled.

Analogous results are obtained when one considers the case of theft versus embezzlement in commercial transactions in Figure 2,[35] and the case of private sales versus commercial transactions for both theft and embezzlement in Figure 3.

Table 2 shows the prevalence of buyer-compensation provisions. These provisions surface more often across commercial settings as compared to private transactions, which is consistent with a greater degree of buyer protection in commercial transactions. Likewise, with private transactions, buyer-compensation provisions are more common in cases of embezzlement as compared to theft. This is again in line with the fact that embezzlement is associated with more buyer protection. However, in commercial transactions the result is inverted: buyer-compensation provisions are more common with theft. Although apparently puzzling, this result can be rationalized by noting that, in all cases, the removal of the compensation requirement is accompanied by a shorter term of years. This suggests a substitution effect: the reason for the lower prevalence of compensation rules is the fact that the buyer effectively received more protection. In the following sections, we delve into the causes of divergence and convergence.

II.  Empirical analysis

A.  Theories of Comparative Variation and Their Empirical Implications

There are four main competing explanations for comparative variation that—given currently available data—lend themselves to empirical investigation. We introduce them in the following sections and emphasize their main empirical implications.

1.  Functional Equivalence

The functional-equivalence theory[36] holds that different legal systems most often implement the same solutions when addressing similar problems, owing to an underlying commonality of aims. This implies that, as emphasized by Professor Saul Levmore,[37] when differences in the laws of different countries are detected, they must be illusory (so that different rules actually reach the same outcome), accidental (rules differ for some random historical accident), or innocuous divergences of opinions (in cases when the optimal solution is unclear).

We can exclude the instances when differences in GFP rules are illusory. We asked country experts in our pool to report on how the black-letter law is applied in practice and to focus on the outcome of potential lawsuits. Differences remain and are substantial. If these differences are due to divergences in the way equally reasonable persons could assess the same issue, then they should not exhibit any particular pattern. If we detect a pattern in the data, we can then conclude that the functional-equivalence theory cannot explain divergence (while, as we will see in Part III, it may successfully explain convergence). Differences due to historical accidents may instead follow a pattern due, for instance, to colonization or transplantation dynamics. We discuss this issue in Section II.A.3.

2.  Culture

Countries differ sharply in terms of dominant cultural values. In turn, cultural differences may result in differences in the law.[38] Culture can be “measured” in various ways. Direct measurements are provided by questionnaires administered through world-wide surveys.[39] The problem with direct measurements of cultural differences is that they are contemporaneous to law and hence it is hard to determine whether the relationship is causal. Therefore, to inquire about the cause of comparative variation, one needs to look deeper and identify cultural traits in a way that is unlikely to be the product of private law rules or some hidden common cause.

Language provides a relatively stable measure of deep cultural traits that—controlling for colonization, which codetermined law and language in many former colonies—is unlikely to be affected by private law. More specifically, pronoun usage embeds the way in which native speakers of a certain language relate to each other.[40] On the one hand, some languages allow the speaker to drop the first-person pronoun. This rule de-emphasizes the individual in a conversation and is empirically associated with lower levels of trust and respect for others.[41] On the other hand, some languages require the speaker to choose between the formal and the informal version of the second-person pronoun. This rule is empirically associated with higher levels of regard for hierarchy.[42] Our self-reliance indicator captures both dimensions.[43]

3.  Legal Origins

Differences among legal systems can be traced back to a process of transplantation from one country to another.[44] The legal-families theory in comparative law[45] and the legal-origins theory in comparative economics[46] emphasize a particularly pervasive channel of transplantation: colonization. Empirically, this approach implies that divergence should be explained by common law rather than civil law origins; common law is associated a higher degree of private ordering in society, which in turn stresses owner protection.[47]

Instead of relying simply on the identity of the colonizer in a distant past, we empirically identify a country’s legal tradition based on its current characteristics along five dimensions: the precedential value of appellate decisions, the possibility to appeal on questions of facts, the role of equity, the adversarial character of procedure, and the scope of oral evidence.[48] This classification provides a continuous measure of proximity to a pure common law system, which in turn can be tested against self-reliance as a possible explanation for divergence.

4.  Political Economics

Politics may play an important role in determining a country’s private law institutions.[49] In our context, the protection afforded to original owners versus good-faith buyers could be a function of the balance of power between an entrenched, concentrated elite, focused on protecting static ownership, and the rest of society. As a result, we should expect less democratic systems and systems based on majoritarian rather than proportional representation to reflect the preferences of the elite[50] and tend towards higher levels of owner protection.[51]

5.  Religious Beliefs

Culture is heavily influenced by religious beliefs. Max Weber pointed out the effect of Protestantism on capitalist attitudes. He explained that, contrary to Catholics, Protestants saw worldly success as a sign of salvation and submitted to an ethics that discouraged expenditures to the benefit of re-investment.[52] A recent study has empirically documented the association of religion with an attitude towards the protection of capital. In particular, it found higher levels of creditor protection to be associated with Protestantism.[53] Analogizing to the GFP problem, we should expect Protestantism to be associated with higher levels of owner protection.[54]

B.  Testing the Explanatory Power of Alternative Theories

All of the theories of comparative variation illustrated in the previous Section are compatible with a certain degree of divergence in GFP rules but each yields different predictions as to the pattern of such divergence. While the functional-equivalence theory implies that divergence should manifest itself as random noise, all other theories, including ours, predict that divergence should follow a certain predictable pattern in response to changes in the country characteristics emphasized by the theory under examination.

These theories taken together predict that owner protection should be greater in countries displaying a stronger culture of self-reliance, a legal system nearer to a perfect common law tradition, weaker constraints on the executive, a majoritarian rather than proportional electoral system, and a larger share of Protestants in the population. If any of these variables can be shown to explain a country’s GFP rules, then we can reject the functional-equivalence hypothesis, which implies that none of them should be statistically significant.

To compare the explanatory power of these theories we ran a regression. Figure 4 visualizes the main result of the analysis, depicting the effect of self-reliance on owner protection after controlling for the determinants of comparative variation suggested by the competing theories.[55] The degree of a country’s self-reliance is measured on the horizontal axis, while the relevant owner protection indicator is measured on the vertical axis. A positively-sloped regression line indicates a positive effect of self-reliance on owner protection, and a steeper slope indicates a bigger effect. (Vice versa, a negatively-sloped line reveals a negative effect.)

Self-reliance has a positive, large, and statistically significant (at the 1% level) effect on owner protection in the case of embezzled goods. This result holds for all market configurations and allows us to reject the hypothesis that divergence is random.[56]

Similarly, Figure 4 reports the effect of a larger share of Protestants on owner protection, after controlling for all the determinants of comparative variation suggested by the competing theories (including self-reliance). In this case, the effect is smaller and negative, suggesting that a larger share of Protestants is associated with weaker owner protection. This result is inconsistent with the Weberian view that we mentioned before. Moreover, as documented in the Appendix, the coefficients attached to Protestantism are statistically significant at a 5% level only in the two upper graphs and in the bottom-left graph in Figure 5.

Similar tests on the effects of constraints on the executive, a majoritarian rather than proportional electoral system, and the common law tradition return coefficients that are statistically undistinguishable from zero. These results demonstrate that divergence in GFP rules for embezzled goods is best explained by cultural differences rather than randomness, a common rather than civil law origin, political economics, or religious beliefs. These results are in line with our previous study in which we focused on stolen goods and found the same pattern.[57] (We also ran a series of regressions—including widely used controls, related to income, natural resources, genetic variation and conflicts—and report the results in the Appendix.)

Since our analysis stresses the role of cultural and religious beliefs, moral beliefs may also play a role. We thus ran an additional regression analysis on data from the recent article, The Moral Machine Experiment,[58] which classified countries based on moral beliefs, as exemplified in a modern version of the trolley problem: an autonomous car is about to crash on either one of two (groups of) people. Respondents were essentially asked who should die and who should be spared. We found an interesting positive correlation between the propensity to spare higher-status and older individuals in a country and owner protection in GFP rules in that country (Figure 6). While these results may make intuitive sense—given that the protection of property generally favors individuals belonging to the elite as opposed to the masses and older as opposed to younger individuals—their statistical significance vanishes when introducing relevant controls. Future studies may delve deeper into the empirical relation between law and morality.

III.  Convergence and divergence in theory

Scholarship on the topic has put forward two alternative frameworks to rationalize the choice between owner protection and buyer protection in GFP. One camp[59] gives primacy to ex ante incentives to reduce the risk of unwanted transfers. In particular, the comparison is between the owner’s incentives to protect her property and the buyer’s incentives to inquire about title. The intuition is that protecting buyers provides owners with incentives to protect their property in order to reduce the likelihood of theft or embezzlement; conversely, protecting owners provides buyers with incentives to inquire about title in order to reduce the risk of paying for goods they will lose at a later time.

An alternative approach is to focus on the ex post allocation of the good to the (most likely) higher-value user between the buyer and the owner.[60] A useful heuristic is the fact that, typically, voluntary market transactions occur between a relatively high-value buyer and a relatively low-value owner. If the opposite were true, the transaction would not take place. Therefore, the potential buyers that populate a typical market are generally relatively high-value individuals.[61] Intermediaries tend to resell in those markets because the higher the buyer valuation, the greater their gains. In turn, dispossessed owners are not necessarily high-value individuals: some of them may never have sold the good while others might have in the future. Therefore, on average, the ex post conflict between the good-faith buyer and the original owner is most likely to involve a high-value buyer and an average-value owner. This in turn suggests that, in principle, ex post value is maximized in expectation if goods are assigned to the good-faith buyer.[62]

A.  The Ex PostValue Theory and First-Order Divergence

In previous studies, we have shown that country-specific characteristics affect the likelihood of ex post misallocation and, in turn, the relative desirability of buyer protection.[63] Respect for others and regard for hierarchy are relevant for the regulation of GFP transactions. Countries with a higher level of enforcement benefit more from buyer protection and hence are more likely to adopt it. The intuition is that high levels of enforcement result in goods being returned to their original owners more often under owner protection, which makes buyer protection preferable. Conversely, countries with a higher degree of trust and respect for others benefit less from buyer protection because of a lower incidence of unwanted transfers. In this way, country characteristics can be used as an explanation for the GFP rules in force.[64]

In terms of self-reliance, this analysis suggests that a higher degree of self-reliance—corresponding to higher levels of trust and respect for others and lower regard for hierarchy and enforcement—should be empirically associated with a higher level of owner protection.[65]

B.  The Ex AnteIncentives Theory and Second-Order Convergence

The ex anteincentives theories of GFP rules have traditionally been widely employed to construct normative arguments as to which rule is preferable on a global scale and have influenced scholarship more profoundly than the ex postvalue approach.[66] In turn, ex anteincentives theories are premised on the idea that improved ex post protections dilute incentives ex ante. More specifically, increasing owner protection improves the buyer’s incentives to inquire about title but reduces the owner’s incentives to “self-protect” her property.

However, this premise can be called into question in a dynamic market where prices adjust to expectations. If one allows the price that a buyer is willing to pay for a possibly stolen or embezzled good to reflect the risk that she will lose the good later on, the intuition illustrated above becomes far from obvious. While the literature has focused on the fact that legal protection affects the marginal benefits of self-protection, we argue that it also affects its marginal costs, making the result possibly indeterminate.[67]

In particular, a higher level of owner protection has a direct effect on the incentives for the owner to protect her property because it increases the probability that a stolen or embezzled good will be returned and hence lowers the benefits from efforts to protect property. However, it also has an indirect effect. If the owner is protected, the market value of goods of dubious origin decreases (as buyers may be wary of losing the good later on), which reduces the expected gains of thieves and embezzlers, making them less aggressive at the margin. This in turn makes it cheaper for the owner to protect her property, thus creating an incentive towards more self-protection for the owner. Similarly, on the buyer’s side, owner protection increases the benefits of inquiring about title but also makes goods cheaper and, hence, lowers the cost of not doing so.

Overall, the parties’ incentives may be positively or negatively affected by increased legal protection, weakening the power of the incentive-theory to explain the design of GFP rules for theft and embezzlement and, in turn, first-order divergence in GFP rules. We argue, however, that incentives can contribute to understanding second-order convergence in GFP rules.

We start with comparing theft with embezzlement. The core of the argument is that for any given marginal benefit of self-protection for the owner, the marginal cost of self-protection for the owner is lower in the case of embezzlement than in the case of theft. The reason is intuitive: while thieves are strangers, an owner chooses whom to trust. In embezzlement cases, there are many ways the owner can protect her property, because most commonly she is in a (contractual) relationship with the potential embezzler and, hence, can both screen her counterparty ex ante and control her ex post. Therefore, comparatively, the owner has lower costs of care in embezzlement cases, while the buyer’s incentives to inquire about title remain unaffected.

To stress our point, whatever effect owner protection has on the owner’s incentives to self-protect—and we have argued above that this effect is indeterminate—this effect is different in theft as opposed to embezzlement cases. In particular, the effect is comparatively more likely to go towards increased self-protection in the case of embezzlement. Convergence emerges as a second-order effect, when comparing the relative (a priori indeterminate) effect of legal protection in different setups.[68]

A similar trend can be detected by comparing the rules that apply to private transactions with those pertaining to commercial transactions made in a market, at an auction, or through a professional seller. In the latter set of cases, buyer protection is systematically stronger. This is because the original owner’s ability to protect her property remains unchanged while the buyer’s ability to inquire about title may be far greater in private transactions as compared to commercial settings. In this case, information about title, whenever available, should have already been acquired by the intermediary so there is little scope for any additional buyer’s inquiry. It may therefore be preferable to attempt to incentivize the owner.

Conclusion

In this article, we have documented first-order divergence and second-order convergence in GFP rules around the world. Our empirical analysis shows that the most likely cause of divergence is cultural differences across countries, while a likely push towards convergence remains the functional uniformity of these rules. Of the two main theoretical approaches to GFP rules, we have shown that the ex postvalue approach is well suited to rationalize divergence, while the ex anteincentive approach explains convergence. While navigating the different camps that have polarized the debate on the normative and positive analysis of GFP rules, at the various junctures of our analysis we end up vindicating both sides of the debate and emphasize that different approaches contribute different layers of the theory we advance. Our conclusions do not imply that other factors are not at play. We have offered an exploratory analysis of the effects of morality, and future research may offer a more nuanced view.

Appendix

A.  Additional Figures

B.  Econometric Analysis

C.  List of Country Experts

Besa Tauzi, Boga & Associates (Albania); António Vicente Marques and Cláudia Veloso, AVM-Advogados (Angola); Martín Bensadon, Marval O’Farrell & Marval (Argentina); Armen Melkumyan, Prudence CJSC (Armenia); Michael Back, Freehills (Australia); Wolfgang Faber, University of Salzburg (Austria); Rashid Aliyev, Baker & McKenzie, Baku, CIS Limited (Azerbaijan); Saifuddin Mahmood, Hassan Radhi & Associates (Bahrain); Al Amin Rahman and Sabrina Zarin, FM Associates (Bangladesh); Amina Khatoon, Doulah & Doulah (Bangladesh); Aliaksandr Danilevich, Belarusian State University (Belarus); Sergei Makarchuk, Law Firm CHSH Cerha Hempel Spiegelfield Hlawati, Minsk Office (Belarus); Caroline Cauffman, Maastricht University and University of Antwerp (Belgium); Tania Moody, Barrow & Williams (Belize); Mario Kempff and Patricio Rojas, CR & F Rojas Abogados (Bolivia); Meliha Povlakić and Darja Softić Kadenić, University of Sarajevo (Bosnia and Herzegovina); Rafael Gagliardi and Newton Marzagão, Demarest & Almeida Advogados (Brazil); Dimitar Stoimenov, Peterka & Partners Law Firm (Bulgaria); Camille Razalison and Adrien Rangira, John W Ffooks & Co (Burkina Faso and Ivory Coast); Jehny Ramiandrisoa and Adrien Rangira, John W Ffooks & Co (Burundi); Nimrod E Mkono, Gilbert LP Nyatanyi, Lambert Nigarura, and René-Claude Madebari, Mkono & Co. Burundi (Burundi); Eddy Ratianarivo and Adrien Rangira, John W Ffooks & Co (Cameroon); Matías Ignacio De Marchena Vicuña, Claro y Cía (Chile); Elliott Youchun Chen, Beijing Jun Ze Jun Law Offices, Shenzhen (China); Jie Chen, Jun He Law Offices (China); Ernesto Rengifo García, Universidad Externado de Colombia and Garrido & Rengifo Abogados (Colombia); Adrián Álvarez Orellana, Consortium Laclé& Gutiérrez (Costa Rica); Eduardo Calderon, Adriana Castro and Manuel Santos, BLP Abogados (Costa Rica); Hano Ernst, University of Zagreb (Croatia); Tatjana Josipovic, University of Zagreb (Croatia); Stéphanie Laulhé Shaelou, University of Central Lancashire (Cyprus); Alexandr Thöndel, Charles University (Czech Republic); Michaela Zuklínová, Charles University (Czech Republic); Arnauld Kayembe Tabu, University of Kinshasa and Kayembe Tabu Law Office Kinshasa (DRC) (Democratic Republic of Congo); Bukayafwa Deo Gratias, MBM-Conseil SCA (Democratic Republic of Congo); Francois Butedi, SADC-CNGO (Democratic Republic of Congo); Phebe Mavungu Clément, University of the Witwatersrand (Democratic Republic of Congo); Ole Borch, Bech-Bruun (Denmark); Tobias Vieth, Danders & More (Denmark); Laura Bobea Escoto, Medina & Rizek, Abogados (Dominican Republic); Pablo Ortiz-Garcia and Luis Marin-Tobar, Perez Bustamante & Ponce (Ecuador); Roque Albuja, Quevedo & Ponce (Ecuador); Ahmed El-Gammal and Nihal Madkour, Shalakany Law Office (Egypt); Monica Machuca, Aczalaw (El Salvador); Kai Kullerkupp, University of Tartu (Estonia); Liina Linsi and Monika Tamm, Lawin (Estonia); Molla Mengistu, School of Law, Addis Ababa University (Ethiopia); Muradu A Srur, Addis Ababa University, School of Law (Ethiopia); Jarmo Tuomisto, University of Turku (Finland); Sophie Tavergnier and Philippe Xavier-Bender, Gide Loyrette Nouel (France); David Kakabadze, Georgian Legal Partnership (Georgia); Vanessa Pickenpack and Klaus Guenther, Oppenhoff & Partners (Germany); Ellen Bannerman, Bruce-Lyle, Bannerman & Associates (Ghana); Norma Dawson, Queen’s University Belfast (Great Britain and Northern Ireland); Ben McFarlane, University College London (Great Britain, Hong Kong and Malaysia); Alexandra Economou, Drakopoulos Law Firm (Greece); Cristóbal Fernández and María de la Concepción Villeda, Mayora & Mayora, S.C. (Guatemala); Juan José Alcerro Milla, Carolina Aguirre Larios and Melissa Amaya Pastrana, Aguilar Castillo Love (Honduras); Gabor Fejes, Oppenheim and Partners Freshfields Bruckhaus Deringer (Hungary); Ciccu Mukhopadhaya and Surjendu Das, Amarchand Mangaldas and Suresh A. Shroff and Company, New Delhi (India); Nafis Adwani, Ali Budiardjo, Nugroho, Reksodiputro (Indonesia); Behrooz Akhlaghi, Shahrzad Majdameli, Encyeh Seyed Sadr, Camellia Abdolsamad, Ali Shahabi, Seyed Iman Mohamadian, Dr. Behrooz Akhlaghi & Associates (Iran); Caterina Gardiner, National University of Ireland, Galway (Ireland); Amnon Lehavi, Radzyner School of Law, Interdisciplinary Center (IDC) Herzliya (Israel); Alessio Greco, Istituto Mediterraneo per i Trapianti e Terapie ad Alta Specializzazione (Italy); Courtney B. Smith, Foga Daley, Attorneys at law (Jamaica); Hiroo Atsumi, Atsumi & Sakai (Japan); Bassam Abu-Rumman, Ali Sharif Zubi Advocates & Legal Consultants (Jordan); Dariya Saginova, Grata Law Firm (Kazakhstan); Saule Massalina, Salans law firm (Kazakhstan); Valikhan Shaikenov, Aequitas Law Firm (Kazakhstan); Peter Gachuhi, Kaplan and Stratton Advocates (Kenya); Atdhe Dika and Vegim Kraja, Kalo & Associates Law Firm (Kosovo); Al Noor, Al -Twaijri and Partners Law Firm (Kuwait); Babitskaya Elena Viktorovna, Veritas Law Agency Limited Liability Company (Kyrgyz Republic); Kanat Seidaliev, Grata Law Firm (Kyrgyz Republic); Nurlan Alymbaev, Law Firm Alymbaev (Kyrgyz Republic); Julija Kolomijceva, bnt Klauberg Krauklis Zab (Latvia); Tiisetso Sello-Mafatle, Sello-Mafatle Attorneys (Lesotho); Jaunius Gumbis, Lawin Lideika, Petrauskas, Valiūnas and partners (Lithuania); Simas Gudynas, Lawin Lideika, Petrauskas, Valiūnas and partners (Lithuania); Alex Schmitt, Bonn Schmitt Steichen (Luxembourg); Nenad Gavrilovic, Faculty of Law ‘Iustinianus Primus’, Skopje, University ‘Ss Cyril and Methodius’ (Macedonia); Fatima Diarra, Cabinet d’Avocats Sim (Mali); Jotham Scerri-Diacono, Ganado Advocates (Malta); Vincent Chong Leung, Juristconsult Chambers, cabinet d’avocats (Mauritius); Héctor Calatayud Izquierdo, Basham, Ringe y Correa (Mexico); Octavian Cazac and Vladimir Palamarciuc, Turcan Cazac Law Firm (Moldova); Nergui Enkhtsetseg, Anand & Batzaya Advocates (Mongolia); Neda Ivovic, University of Donja Gorica (Montenegro); Zohra Hasnaoui and Ahmad Hussein, Hasnaoui Law Firm AGIP (Abu-Ghazaleh Intellectual Property – Morocco) (Morocco); Carlos de Sousa E Brito, Carlos de Sousa E Brito & Associados (Mozambique); Win Win Aye and Khin Wint Maw, Kelvin Chia Yangon Limited (Myanmar); Willem Bodenstein and Mike Bottger, Lorentz Angula Incorporated (Namibia); Arthur Salomons, University of Amsterdam (Netherlands); Roger Tennant Fenton, Southern Cross Chambers (New Zealand); Minerva Bellorin R., Diogenes E, Velasquez V, and Mazziel A Rivera Núñez, Aczalaw (Nicaragua); Lydia Rosoanirina and Adrien Rangira, John W Ffooks & Co (Niger); Joseph Eimunjeze, Udo Udoma & Belo-Osagie (Nigeria); Jan-Ove Færstad, University of Bergen (Norway); Alastair R. Neale and Ruqaya Al Khanbashi, Jihad Al Taie Law Office (Oman); Zaid Al Khattab, Talala Abu Ghazaleh & Co (Oman); Ahsan Zahir Rizvi, Rizvi, Isa, Afridi & Angell (Pakistan); Ivette E Martínez, Patton Moreno & Asvat (Panama); Ramon Varela, Morgan & Morgan (Panama); Esteban Burt, Peroni Sosa Tellechea Burt & Narvaja (Paraguay); Manuel Villa-García Noriega, Estudio Olaechea S Civil de RL (Perù); Eduardo de los Angeles, Romulo Mabanta Buenaventura Sayoc & de los Angeles (Philippines); Jerzy Andrzej Pisuliński and Michal Kucka, Jagiellonian University in Cracow (Poland); Margarida Costa Andrade, University of Coimbra (Portugal); Monica Jardim, University of Coimbra (Portugal); Thelma Rivera, Goldman, Antonetti & Córdova, PSC (Puerto Rico); Ejan Mackaay, Université de Montréal (Quebec, Canada); Cristina Bolea and Vlad Peligrad, Clifford Chance Badea SCA (Romania); Magdalena Raducanu, Salans Moore si Asociatii SCPA (Romania); Sergey Strembelev and Natalia Dialektova, Egorov Puginsky Afanasiev & Partners Law Offices (Russia); Vannissa Rakotonirina and Adrien Rangira, John W Ffooks & Co (Rwanda and Senegal); Stephen Matthews and Abdullah Al Saab, The Law Office of Mohanned S Al-Rasheed (Saudi Arabia); Andrew Steven, University of Edinburgh (Scotland, UK); Nataša Lalatović Đorđević, Moravčević Vojnović and partners in cooperation with Schoenherr (Serbia); Žarko S. Borovčanin, Jankovic, Popovic & Mitic od (Serbia); Oredola Martyn, Clas Legal (Sierra Leone); Yi-Ling Teo, Gateway Law Corporation (Singapore); Katarína Čechová, Čechová & Partners (Slovak Republic); Tomaz Kerestes, University of Maribor (Slovenia); Athol Gordon, Bowman Gilfillan Attorneys (South Africa); Chun-Wook Hyun, Kim & Chang (South Korea); Carlos Díez Soto, Technical University of Cartagena, and Isabel González Pacanowska, University of Murcia (Spain); John Wilson, John Wilson Partners, Attorneys at Law & Notaries Public (Sri Lanka); Martin Lilja, Salzburg University (Sweden); Bénédict Foëx, University of Geneva (Switzerland); Deema Abu Zulaikha, Tag-Legal Syria (Syria); Kamanga Wilbert Kapinga, CRB Africa Legal (Tanzania); Cynthia M Pornavalai, Tilleke & Gibbins (Thailand); Phisit Dejchaiyasak, Weerawong, Chinnavat and Peangpanor Limited (Thailand); Stephen A Singh, Johnson, Camacho and Singh (Trinidad and Tobago); Issam Mokni, Ferchiou & Associés (Tunisia); Yesim Atamer, Ece Bas, Başak Başoğlu, Meliha Sermin Paksoy, and Pinar Yazici, Istanbul Bilgi University (Turkey); Emmanuel Kasimbazi, Makerere University (Uganda); Oleg Boichuk, Magisters (Ukraine); Rami Abdellatif and Mohammed Kamran, Al Tamimi Advocates & Legal Consultants (United Arab Emirates); Steven Walt, University of Virginia School of Law (United States); Pedro J Montano, Universidad de la República and Scelza & Montano (Uruguay); Juan Enrique Aigster and José Alberto Ramírez, Hoet Pelaez Castillo & Duque Abogados (Venezuela); Dang The Duc and Tuong Tran, Indochine Council (Vietnam); Sydney Chisenga, Corpus Legal practitioners (Zambia); Peter Lloyd, Gill, Godlonton & Gerrans (Zimbabwe).

D.  List of Countries and Country Codes

 


[*] *.  Professor of law and professor of economics, University of Amsterdam; Joseph P. Cunningham Visiting Professor of Commercial and Insurance Law (Fall 2018), Columbia Law School; Visiting Professor of Law (Spring 2019), New York University School of Law.

[†] †. Rita Levi-Montalcini” Associate Professor, Department of Economics, University of Bologna; e-mail: c.guerriero@unibo.it; homepage: https://sites.google.com/site/carmineguerrieroshome
page. The authors would like to thank Yun-chien Chang, Richard Epstein, Franco Ferrari, Saul Levmore, Ariel Porat, and Henry Smith for insightful comments. We are deeply grateful to Edmond Awad and his coauthors—Sohan Dsouza, Richard Kim, Jonathan Schulz, Joseph Henrich, Azim Shariff, Jean-François Bonnefon and Iyad Rahwan—for sharing with us the data from The Moral Machine Experiment. The authors would also like to thank Melissa Bales for excellent research and editorial assistance.

 [1]. This notion is central to the large literature in law and economics that has originated from R. H. Coase, The Problem of Social Cost, 3 J.L. Econ. 1 (1960). Its importance, however, had long been recognized in legal scholarship, not only in the United States. E.g., Gaetano Petrelli, L’Autenticità Del Titolo Della Trascrizione Nell’Evoluzione Storica e Nel Diritto Comparato, 53 Rivista di Diritto Civile 585, 588 (2007); J.G. Sauveplanne, The Protection of the Bona Fide Purchaser of Corporeal Movables in Comparative Law, 29 Rabel J. Comp. Int. Priv. Law 651, 651 (1965). See generally René Demogue, Les Notions Fondamentales du Droit privé: Essai Critique Pour servir d’Introduction à l’ étude des Obligations (1911) (on the notion of static versus dynamic security); Victor Ehrenberg, Rechtssicherheit und Verkehrssicherheit: mit besonderer Rücksicht auf das Handelsregister (1904) (on the notion of certainty of rights versus certainty of transactions).

 [2]. We introduced this notion in Giuseppe Dari-Mattiacci & Carmine Guerriero, Law and Culture: A Theory of Comparative Variation in Bona Fide Purchase Rules, 35 Oxford J. Legal Stud. 543 (2015) (dealing exclusively with stolen goods).

 [3]. Ashton Hawkins et al., A Tale of Two Innocents: Creating an Equitable Balance Between the Rights of Former Owners and Good Faith Purchasers of Stolen Art, 64 Fordham L. Rev. 49, 49­–50 (1995); Menachem Mautner, “The Ethernal Triangles of Law”: Toward a Theory of Priorities in Conflicts Involving Remote Parties, 90 Mich. L. Rev. 95, 95­96 (1991); see also Grant Gilmore, The Commercial Doctrine of Good Faith Purchase, 63 Yale L.J. 1057, 1057 (1954) (stressing that the historical emergence of the doctrine of good faith purchase served a commercial purpose: enabling contracting parties to rely on market transactions without costly inquiries about title); Boris Kozolchyk, Transfer of Personal Property by a Nonowner: Its Future in Light of Its Past, 61 Tul. L. Rev. 1453, 1454 (1987) (focusing on the rule’s function of enabling transfers through market intermediaries); Daniel E. Murray, Sale in Market Overt, 9 Int’l & Comp. L.Q. 24, 24–25 (1960) (arguing that the good faith purchase rules provide common sense solutions to a universal problem); Sauveplanne, supra note 1, at 651–52 (stressing the commercial logic behind good faith purchase rules). For a formal analysis, see Benito Arruñada et al., Property Rights in Sequential Exchange, 35 J.L. Econ. & Org. 127, 127­–28 (2019).

 [4]. See Benito Arruñada, Institutional Support of the Firm: A Theory of Business Registries, 2 J. Legal Analysis 525, 534­–54 (2010); Kenneth Ayotte & Patrick Bolton, Optimal Property Rights in Financial Contracting, 24 Rev. Fin. Stud. 3401, 3402–04 (2011). This Article focuses on personal property; real property is subject to registration, which in turn has different effects under different national registration systems. For analysis on real property, see generally Carmine Guerriero, Endogenous Property Rights, 59 Int. Rev. L. & Econ. 313 (2016).

 [5]. See, e.g., Alan Schwartz & Robert E. Scott, Rethinking the Laws of Good Faith Purchase, 111 Colum. L. Rev. 1332, 1333–38 (2011) (providing a recent scholarly contribution to this field that contains a review of the relevant literature).

 [6]. The raw data and a detailed description can be found in Giuseppe Dari-Mattiacci & Carmine Guerriero, A Novel Dataset on Horizontal Property Rights in 126 Jurisdictions, 11 Data Brief 557, 559–60 (2017). We dropped Taiwan due to a coding error and hence reduced the sample size to 125 countries for the purposes of this analysis. This change does not affect any of our main results since our proxy for the quality of legal enforcement is not observable for this jurisdiction. We thank Yun-chien Chang for having drawn our attention on this issue.

 [7]. See, e.g., Saul Levmore, Variety and Uniformity in the Treatment of the Good-Faith Purchaser, 16 J. Legal Stud. 43, 45 (1987); John Henry Merryman, The Good Faith Acquisition of Stolen Art, in Crime, Procedure and Evidence in a Comparative Context 275, 275–81 (John Jackson et al. eds., 2008); Patricia Youngblood Reyhan, A Chaotic Palette: Conflict of Laws in Litigation Between Original Owners and Good-Faith Purchasers of Stolen Art, 50 Duke L.J. 955, 1006 (2001).

 [8]. E.g., William M. Landes & Richard A. Posner, The Economics of Legal Disputes Over the Ownership of Works of Art and Other Collectibles, in Economics of the Arts 177, 214–17 (Victor A. Ginsburgh & Pierre-Michel Menger eds., 1996). For a historical perspective, see also Murray, supra note 3, at 50–52 (discussing how multiple legal systems across space and time have been similar).

 [9]. See Solomon R. Guggenheim Found. v. Lubell, 569 N.E.2d 426, 431 (N.Y. 1991).

 [10]. See U.C.C. § 2-403(2)–(3) (Am. Law Inst. & Unif. Law Comm’n 2018). For a constitutional perspective on the theft rule versus the entrustment doctrine, see generally Elwood Earl Sanders, Jr., (Red) Elvis Has Left the Building: Did the UCC Legalize Theft? Constitutional Concerns Arising from the UCC Entrustment Clause, A Critical Analysis of Lindholm v. Brant, 13 Appalachian J.L. 21 (2013).

 [11]. Dari-Mattiacci & Guerriero, supra note 2, at 550; see also Giuseppe Dari-Mattiacci, Carmine Guerriero & Zhenxing Huang, The Property–Contract Balance, 172 J. Institutional & Theoretical Econ. 40, 49, 60–61 (2016).

 [12]. Self-reliance takes three possible values: high, if a country has high respect for others and low regard for hierarchy; low, if a country has low respect for others and high regard for hierarchy; and medium, in the residual cases (high or low levels of both respect for others and regard for hierarchy). Collapsing two cultural dimensions into a single variable has the advantage of allowing for direct visualizations of the results.

 [13]. See infra Section II.A (providing details on these approaches and references).

 [14]. Dari-Mattiacci & Guerriero, supra note 2, at 559–60.

 [15]. See infra Section II.B.

 [16]. See Chi-yue Chiu, Language and Culture, Online Readings Psychol. & Culture, Mar. 2011, at 1, 3–5 (providing a literature review on the effects of language on culture); Emiko S. Kashima & Yoshihisa Kashima, Culture and Language: The Case of Cultural Dimensions and Personal Pronoun Use, 29 J. Cross-Cultural Psychol. 461, 462 (1998) [hereinafter Kashima & Kashima, Culture and Language]; Emiko S. Kashima & Yoshihisa Kashima, Erratum to Kashima and Kashima (1998) and Reiteration, 38 J. Cross-Cultural Psychol. 396, 396 (2005); Sean Lee, Rethinking the Relationship Between Pronoun-Drop and Individualism with Bayesian Multilevel Models, 2 J. Language Evolution 188, 192 (2017) (arguing that the associations between language and culture found by Kashima and Kashima may be driven by Indo-European languages); Amnon Lehavi & Amir Licht, BITs and Pieces of Property, 36 Yale J. Int’l L. 115, 115–18 (2011) (first to use this approach in legal scholarship); Lewis Davis, An Extension of the Kashima and Kashima (1998) Linguistic Dataset 2–4 (May 12, 2012) (unpublished manuscript) (on file with authors).

 [17]. See Edmond Awad et al., The Moral Machine Experiment, 563 Nature 59, 60­–64 (2018).

 [18]. See infra Section II.B (explaining these findings vanish when one adds relevant controls).

 [19]. See Levmore, supra note 7, at 46; Anthony Ogus, What Legal Scholars Can Learn from Law and Economics, 79 Chicago-Kent L. Rev. 383, 394–95 (2004). For a formal mathematical approach to the problem, see generally Landes & Posner, supra note 8; Caspar Rose, The Transfer of Property Rights by Theft: An Economic Analysis, 30 Eur. J.L. Econ. 247 (2010); Schwartz & Scott, supra note 5; Omri Ben Shahar, Property Rights in Stolen Goods: An Economic Analysis (1997) (unpublished manuscript) (on file with authors).

 [20]. Barak Medina, Augmenting the Value of Ownership by Protecting It Only Partially: The “Market-Overt” Rule Revisited, 19 J. L. Econ. & Org. 343, 368 (2003).

 [21]. Several previous contributions have recognized the fact that the owner is in the best position to reduce the risk of embezzlement and that the buyer is justified in assuming the presence of good title in an open commercial setting. E.g., Benito Arruñada, Institutional Foundations of Impersonal Exchange 41 (2012); Arruñada, supra note 4, at 528; Randy E. Barnett, Squaring Undisclosed Agency Law with Contract Theory, 75 Calif. L. Rev. 1969, 1996–97 (1987); Karen Theresa Burke, International Transfers of Stolen Cultural Property: Should Thieves Continue to Benefit from Domestic Laws Favoring Bona Fide Purchasers?, 13 Loy. L.A. Int’l & Comp. L.J. 427, 444–46 (1990); Saul Levmore, Rethinking Comparative Law: Variety and Uniformity in Ancient and Modern Tort Law, 61 Tul. L. Rev. 235, 287 (1986); Levmore, supra note 7, at 59; Mautner, supra note 3, at 131; Medina, supra note 20, at 346; Harold R Weinberg, Sales Law, Economics, and the Negotiability of Goods, 9 J. Legal. Stud. 569, 590–91 (1980).

 [22]. At a very general level, our analysis proposes a framework to rationalize divergence and convergence in private law rules, suggesting that divergence is driven by culture while convergence is driven by function—more precisely, the need to provide incentives for good behavior. For alternative frameworks used to addresss the same issue, see Yun-chien Chang & Henry E. Smith, Convergence and Divergence in Systems of Property Law: Theoretical and Empirical Analyses, 92 S. Cal. L. Rev. 785, 78696 (2019); Saul Levmore, Convergence and Then Downstream Divergence in Torts and Other Law, 92 S. Cal. L. Rev. 769, 78283 (2019); see also Yun-chien Chang, 214 Jurisdictions in the World Gets It Wrong: Fractional Ownership and Internal Auction in the Good-faith Purchase Problem 28–35 (2018) (unpublished manuscript) (on file with authors) (arguing that the market overt rule provides optimal incentives to owners, buyers, and intermediaries).

 [23]. See supra notes 78 and accompanying text.

 [24]. When we started collecting data for this project, the largest previous study on this matter only covered about thirty countries; for this information, see generally National Reports on the Transfer of Movables in Europe (Wolfgang Faber & Brigitta Lurger eds., 2011); Rules for the Transfer of Movables (Wolfgang Faber & Brigitta Lurger eds., 2008). Recent comparative law scholarship increasingly makes use of large datasets and a series of notable studies on this matter have been produced by Professor Yun-chien Chang, whose work is complementary with ours.

 [25]. Note that in the data we differentiate among England, Wales, Northern Ireland, and Scotland.

 [26]. The questionnaire was drafted by the two of us and Arthur Salomons and was sent to the country experts in English or French.

 [27]. While a number of countries require the original owner to pay compensation to the good-faith buyer when the good is reclaimed, interestingly, no jurisdiction in our sample contained the opposite rule, which would require a prevailing good-faith buyer to pay compensation to the original owner in order to retain the good.

 [28]. The data is freely available in Dari-Mattiacci & Guerriero, supra note 6, at 559–60. For more details and extensive summary statistics, see Dari-Mattiacci & Guerriero, supra note 2, at 55055.

 [29]. We did so because statutes of limitations start running at different times in different jurisdictions. In this way, we made sure that our comparisons are not affected by this additional source of variation.

 [30]. There are cases in which the buyer never acquires title (as reported in Table 1). We assigned to these cases the value of 30 years, which is the largest value short of “Never” in our data. We repeated the analysis with alternative proxies for “Never” and the results remain essentially the same.

 [31]. E.g., Solomon R. Guggenheim Found. v. Lubell, 569 N.E.2d 426, 431 (N.Y. 1991).

 [32]. Note that the dataset differentiates among these three cases while the table does not, because the four countries reported here apply uniform rules, in contrast with the United States. See id.

 [33]. See U.C.C. § 2-403(2)–(3) (Am. Law Inst. & Unif. Law Comm’n 2018).

 [34]. For the list of country and country codes, see infra Appendix.

 [35]. Note that there is less variance in commercial transactions, as compared to private sales. This observation is consistent both with a static push towards more buyer protection in commercial settings, which mechanically reduces variation and with a dynamic tendency towards convergence due to higher stakes and more frequent interactions. See Richard A. Epstein, The Path to the T.J. Hooper: The Theory and History of Custom in the Law of Tort, 21 J. Legal Stud. 1, 1516 (1992).

 [36]. Konrad Zweigert & Hein Kötz, Introduction to Comparative Law 33–47 (Tony Weir trans., Clarendon Press 3d rev. ed. 1998).

 [37]. Levmore, supra note 7, at 65. For further discussion, see generally Levmore, supra note 22.

 [38]. See Sjoerd Beugelsdijk & Robbert Maseland, Culture in Economics 313–18 (2011); Geert Hofstede, Cultures and Organizations 23–24 (1991); Deepak Lal, Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance 62–65 (1998) (noting the effect of culture on predominantly-Islamic countries); Philippe Aghion et al., Regulation and Distrust, 125 Q.J. Econ. 1015, 1046–47 (2010); Thorsten Beck et al.,, Law, Endowments, and Finance, 70 J. Fin. Econ. 137, 151–53 (2003); Yuriy Gorodnichenko & Gerard Roland, Culture, Institutions and the Wealth of Nations, 99 Rev. Econ. Stat. 402, 40204 (2017); Jim Granato et al., The Effect of Cultural Values on Economic Development: Theory, Hypotheses, and Some Empirical Tests, 40 Am. J. Pol. Sci. 607, 613 (1996); Avner Greif, Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies, 102 J. Pol. Econ. 912, 914 (1994); Luigi Guiso et al., Does Culture Affect Economic Outcomes?, 20 J. Econ. Persp. 23, 44–46 (2006); Amir N. Licht et al., Culture, Law, and Corporate Governance, 25 Int’l Rev. L. & Econ. 229, 253 (2005); Susan Rose-Ackerman, Corruption, in 1 The New Palgrave Dictionary of Economics and the Law 517, 521 (Peter Newman ed., 1998); Shalom H. Schwartz, A Theory of Cultural Values and Some Implications for Work, 48 Applied Psychol. Int’l Rev. 23, 25 (1999); René M. Stulz & Rohan Williamson, Culture, Openness, and Finance, 70 J. Fin. Econ. 313, 346 (2003); Guido Tabellini, Institutions and Culture, 6 J. Eur. Econ. Ass’n 255, 255–59 (2008); Claudia R. Williamson & Carrie B. Kerekes, Securing Private Property: Formal Versus Informal Institutions, 54 J.L. & Econ. 537, 564 (2011).

 [39]. For an example of one of these world-wide surveys, Ronald Inglehart, World Values Survey wave 6 (20102014), Inst. for Social Res. (2014), http://www.worldvaluessurvey.org/WVSDocument
ationWV6.jsp.

 [40]. See  Peter Mühlhäusler & Rom Harré, Pronouns and People: The Linguistic Construction of Social and Personal Identity 16–18 (Peter Trudgill et al. eds.,1990); Kashima & Kashima, Culture and Language, supra note 16, at 461–64.

 [41]. See Geert H. Hofstede, Culture’s Consequences 11–14 (Walter J. Lonner & John W. Berry eds., 1980) (classifying culture along the individualism-collectivism dimension). Italian, for instance, allows pronoun drop (low level of trust and respect for others), while English does not (high level of trust and respect for others).

 [42]. See Shalom H. Schwartz, Beyond Individualism/Collectivism: New Cultural Dimensions of Values, in Individualism and Collectivism 85, 98 (Uichol Kim et al. eds., 1994) (classifying culture along the hierarchy-egalitarianism dimension). Italian, for instance, allows the use of different second person pronouns modulated by social distance (widespread acceptance of hierarchy), while English does not (limited acceptance of hierarchy).

 [43]. See supra note 12 and accompanying text.

 [44]. See Alan Watson, Legal Transplants 16–20 (Univ. of Ga. Press 2d ed. 1993); Alan Watson, Roman Law & Comparative Law 197 (1991).

 [45]. See James Gordley, Comparative Law and Legal History, in The Oxford Handbook of Comparative Law 753, 761 (Mathias Reimann & Reinhard Zimmermann eds., 2006).

 [46]. See Rafael La Porta et al., Legal Determinants of External Finance, 52 J. Fin. 1131, 1131 (1997) (defining modern legal origins as either English, French, German, or Scandinavian).  See generally Thorsten Beck et al., Law and Finance: Why Does Legal Origin Matter?, 31 J. Fin. Econ. 653 (2003) (providing another example of legal origins); Edward L. Glaeser & Andrei Shleifer, Legal Origins, 117 Q.J. Econ. 1193 (2002) (same); Rafael La Porta et al., Law and Finance, 106 J. Pol. Econ. 1113 (1998) (same).

  [47].               Rafael La Porta et al., The Economic Consequences of Legal Origins, 46 J. Econ. Literature 285, 28587 (2008).

 [48].  Since many countries have undergone substantial reforms after colonization, classifying a country as a common law or a civil law jurisdiction by looking at the moment of colonization may be unwarranted. Carmine Guerriero, Endogenous Legal Traditions, 46 Int’l Rev. L. & Econ. 49, 67 (2016); Mariana Pargendler, The Rise and Decline of Legal Families, 60 Am. J. Comp. L. 1043, 1043–47 (2012). In addition, identifying the legal tradition as the country of origin of the colonizers lumps together a number of factors that are difficult to disentangle from the notion of a legal tradition, such as business culture, language, religion, preference heterogeneity and inclusiveness of political institutions, as one of us documented in previous works. See Guerriero, supra, at 67.

 [49].  Clayton P. Gillette, Who Puts the Public in Public Good?: A Comment on Cass, 71 Marq. L. Rev. 534, 534–36 (1988); Mark J. Roe, Legal Origins, Politics, and Modern Stock Markets, 120 Harv. L. Rev. 460, 463 (2006).

 [50].  Marco Pagano & Paolo F. Volpin, The Political Economy of Corporate Governance, 95 Am. Econ. Rev. 1005, 1007 (2005); See Bernd Hayo & Stefan Voigt, Endogenous Constitutions: Politics and Politicians Matter, Economic Outcomes Don’t, 88 J. Econ. Behav. & Org. 47, 48 (2013).

 [51].  In the analysis, we measure the level of democracy by the constraints on the executive as coded in the Polity IV dataset. Monty G. Marshall & Ted Robert Gurr, Polity IV Individual Country Regime Trends, 1946-2013, Polity IV Project (June 6, 2014), http://www.systemicpeace.org/
polity/polity4.htm. Please note that this website has since been updated and its data does not exactly match the data used by this Article. We also use data on the electoral systems from Lorenz Blume et al., The Economic Effects of Constitutions: Replicating—and Extending—Persson and Tabellini, 139 Pub. Choice 197, 209–25 (2009).

 [52].  See Max Weber, The Protestant Ethic and The Spirit of Capitalism 108–11 (Talcott Parsons trans., Routledge 2005).

 [53].  Stulz & Williamson, supra note 38, at 315.

 [54].  To test the effect of religion, we use data collected by Rafael La Porta et al., The Quality of Government, 15 J.L. Econ. & Org. 222, 234–44 (1999).

 [55].  For the summary statistics of all the variables we use and the estimates of our regression, see infra app. The figure reports the residuals from regressing the variable of interest (for instance, owner protection in private sales, in the upper-left graph) on all explanatory variables and compares it with the residuals from regressing self-reliance on the same explanatory variables. Through this procedure, we capture the extent to which self-reliance explains owner protection after considering the effect of other variables.

 [56].  A recent study has emphasized that the association between languages and culture is especially driven by Indo-European languages. See Lee, supra note 16, at 192. To make sure that our results are not affected by this potential problem, we repeated the analysis with countries speaking only Indo-European languages and found the same results. The sample size, though, is severely reduced, limiting the possibility of running additional tests. See the Appendix for details.

 [57].  See Dari-Mattiacci & Guerriero, supra note 2, at 57173.

 [58].  See Awad et al., supra note 17, at 60­–64.

 [59].  See supra note 19 and accompanying text.

 [60].  See supra note 20 and accompanying text.

 [61].  This remains true even though owner of stolen or embezzled goods may attach low or high value to them.

 [62].  The desirability of buyer protection is only increased if one considers a potential feedback effect on prices. Buyer protection is likely to increase the resale price of stolen or embezzled goods, because buyers are willing to pay more if their title is more secure. In turn, the increase in price could add to the self-selection of buyers: higher prices discourage low-value buyers from entering the market, reinforcing our argumentation.

 [63].  Dari-Mattiacci & Guerriero, supra note 2, at 55557; Dari-Mattiacci, Guerriero & Huang, supra note 11, at 15–16; Carmine Guerriero, Property Rights, Transaction Costs, and the Limits of the Market 3 (Dec. 4, 2018) (unpublished manuscript) (on file with authors).

 [64].  See Schwartz & Scott, supra note 5, at 1372–73.

 [65].  This approach is in line with a related study by Professors Lehavi and Licht, who proposed individualism as a cultural feature explaining the protection of property. Lehavi & Licht, supra note 16, at 117–18 (explaining that self-reliance encompasses individualism through the pronoun-drop feature of the language as one of its two subcomponents).

 [66].  In contrast, the literature on private takings originated from Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089 (1972) which almost entirely focuses on the maximization of ex post value. The problem addressed in this literature is the maximization of the chance that the good ends up in the hands of the highest value user. When voluntary transactions fail this goal because of transaction costs, involuntary transactions (takings) may be tolerated. Differently from this literature, in a GFP situation the “taking” is effectuated by an intermediary (a thief or an embezzler) rather than directly by the taker (buyer, in our setup) and hence the transaction is always involuntary from the perspective of the owner and the buyer. See Dari-Mattiacci & Guerriero, supra note 2, at 555 & n.61.

 [67].  See generally Dari-Mattiacci, Guerriero & Huang, supra note 11, for a formal model of this trade-off.

 [68].  We cannot exclude, however, that the ex postvalue theory could also help explain differences between private and commercial sales and between theft and embezzlement in cases were transaction costs systematically vary across these environments. The interaction between the original owner and the intermediary, and the higher complexity of commercial environments might increase transaction costs and call for weaker original owners’ property rights. See Calabresi & Melamed, supra note 66, at 1095–97; Guerriero, supra note 63 (manuscript at 26–27).

 

Convergence and Divergence in Systems of Property Law: Theoretical and Empirical Analyses – Article by Yun-chien Chang & Henry E. Smith

From Volume 92, Number 4 (May2019)
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Convergence and Divergence in Systems of Property Law: Theoretical and Empirical Analyses[*]

Yun-chien Chang[†] & Henry E. Smith[‡]

This Article utilizes a unique data set of property laws in 119 jurisdictions in the world to test convergence/divergence theories in comparative property law. Our theory predicts that first, because legal systems face similar positive transaction costs in delineating property rights, the structure of property law among all jurisdictions in the world will converge or remain similar since some time in the distant past. Second, our theory posits that the style of property law will tend to converge when the doctrines in question are isolated, but diverge when they are interconnected. Our data and descriptive analysis support the theory. Doctrines regarding possession, sales, condominiums, tenancies in common, and limited property rights serve as prominent examples.

Keywords

numerus clausus principle, tenancy in common, possession, sales, condominium

  Introduction 

Comparative property law faces the familiar challenge of choosing a unit of comparison. What do we compare and why? Doctrines with similar labels might serve different functions, their labels being a mere etymological accident. Examples include civil law “real rights” (rights in things) versus common law “real property,” or civilian “cause” (the reason for a contract) versus “cause” in the common law of torts.[1] Alternatively, doctrines with very different labels can show a high degree of similarity, as in common law adverse possession and civil law prescriptive acquisition.

So far so familiar. And yet the comparative problem of identifying the proper subject matter of inquiries into convergence or divergence is at its extreme in the case of property. To get a handle on what to expect in terms of convergence and divergence among systems of property law, we need a theory of how those systems work and what problems they are meant to solve. If the contours of property systems reflect the ends they are supposed to serve and the costs of achieving those ends, we can start to predict how these forces will play out in the comparative arena.

We take as our starting point an account of property’s overall architecture and its functional motivation. Property law serves as a platform for the interaction of actors in society with respect to things. Because our potential uses of resources often conflict, and most of the external objects of the world are only contingently associated with any actor, the law needs a way to protect uses, prioritize decisions about use, and facilitate the coordination of actors’ uses. In a world of zero transaction costs, we could formulate the law governing such interactions in a fully articulated fashion: every micro-action by each actor impacting each other actor with respect to each aspect of each resource would be the subject matter of a legal rule, and such rules could condition on any combination of features of other actors, things, or relations.[2] The complexity here quickly becomes intractable. In our world, property law employs (legal) things and a combination of exclusion and governance strategies to manage this complexity.[3] Because this management function could not be accomplished by contract alone or through a more articulated activity-based tort law, we can call it the “essential function” of property law.[4] And because every modern property system faces this problem to roughly the same gross extent, we can expect some similarity in the institutional responses to this basic problem. Separating the world into more or less distinct things and affording to owners rights based on exclusion over these things is a first cut, which is then refined through more use-based governance strategies that take care of especially important interactions between actors.[5]

As with other law, we can distinguish the structure and the style of a system of property law.[6] The structure of property law refers to how property law groups problems so that they need not be treated in a fully articulated fashion, and in so reshaping problems, property law serves an essential function—a function that cannot be replicated by contract. For the property systems we will be investigating, the manner of carving up the set of resource-related activities turns out to be some version of a hybrid of exclusion and governance strategies. Property law identifies things and affords owners the right to exclude, as implemented in property torts like trespass and conversion, and fine-tunes this package with rules of governance. In real property, these governance devices include nuisance, easements, covenants, and zoning, and in personal property they include bailments. In both areas, governance devices also include leases and mortgages. Sophisticated hybrids of exclusion and governance are also possible, ranging from condominiums to partnerships and corporations, and, in the common law world, to the trust. The need to employ a system based on a mixture of exclusion and governance stems from the problem of protecting uses at a positive cost, not least the intractability of an unstructured system.

Serving the essential function of property—protecting uses in a world of positive institution costs—still leaves a great deal of freedom in terms of how to serve those objectives within the framework. In any set of cultural artifacts, including law, style is a characteristic manner of doing things. Families of legal systems, like common law and civil law, have sometimes been defined in terms of style,[7] although we will not prejudge this matter here. In property law, an example of style would be the reliance on possession and a more implicit definition of ownership in common law systems versus the definition of dominion and departures from it in typical civilian systems. Likewise, a lease can be a contract given in rem protection or can be delineated as an in rem right of a limited scope. Styles of property law show great persistence overall, in at least some of their aspects. As with styles generally, this can be attributed to path dependence; because law exhibits network effects, it is difficult to change even in the face of equally good or even superior alternatives.[8]

Structure and style raise the issue of how tightly a given aspect of property law is integrated into the overall system. Private law doctrines that are most integrated into its overall system are the most difficult to change; doctrines that are easily treated in isolation, with fewer ripple effects, are conversely much easier to modify.[9] In property law, the various doctrines and institutional features sometimes interlock and sometimes do not. Those that are highly interconnected with the rest of the system, like possession, might be expected to be difficult to change, in contrast to doctrines that can safely be treated in isolation, like the contractual aspects of leases.

Our approach to convergence and divergence is rooted in a combination of the relative propensity to change and the relative closeness of starting points. In a system like property, which is some combination of spontaneous order and design, change over time (whatever its source) will flourish or be cut off depending on the resultant fitness (however defined) of the overall system. Drawing on a well-known evolutionary model, Lee Alston and Bernardo Mueller add this aspect to the bundle of rights.[10] The various elements of the bundle of rights—rights to grow tomatoes, rights to build a shed, rights to walk and so forth—may be relatively isolated or show “epistatic” connections.[11] In an epistatic connection, a change in one element will lead to an effect on a connected element. Thus, a change in one gene may produce an effect in another gene, if they are epistatically connected. Likewise, the right to draw water affects the value of the right to grow tomatoes, but the right to prevent airplane overflights is (presumably) unconnected to either the right to draw water or the right to grow tomatoes.

Once epistatic connections are in the picture, the implications of different patterns and densities of epistatic connections for the evolution of property rights are likely to be quite important. Along a spectrum, we can distinguish three types of scenarios. First, the elements in the bundle of rights might be wholly unconnected. If we get the answer right for each element, then all we have to do is add up the effects of all the elements, and we can be assured that we have optimized the entire bundle. Often, in the conventional post-realist bundle of rights picture, exactly this disaggregated pattern with no epistatic connections is assumed. If so, it is easy to change individual elements without the downside of severe, unrelated (by epistatic connection) negative effects emerging in the bundle. However, assuming epistatic connections away is unrealistic (for example, water and farming), even if convenient.

At the opposite extreme, we might have maximal epistatic connections: everything is connected with everything else. If so, the pattern of consequences to minor variations in one element of the bundle is random or chaotic and very hard to predict. This pessimistic picture does not describe our world either. Sometimes problems, like high-altitude airplane overflights, can indeed be treated largely in isolation from other problems.

In between these two extremes of zero and total connectivity is what has sometimes been called “organized complexity.”[12] Here, epistatic connections are important but far from universal. They can also be clustered. Innovation is promoted by the fact that interconnection is not complete and is semi-organized.[13] Either by design or through spontaneous variation, changes to part of the bundle can be made, and the overall effect can move in the direction of a local optimum more easily than under complete connection (and the chaotic landscape it corresponds to). This is another sense in which the bundle of rights (if one wishes to call it that) is a structured one.[14]

The notions of essential function and interconnection allow us to form expectations or even predictions about the convergence and divergence of property systems. Structural aspects of modern property systems that solve the basic problem of managing use conflict and avoiding intractability will cause some convergence on the exclusion-governance architecture. To be sure, the relative emphasis on exclusion and governance will vary according to local conditions, and in particular, it will be easier to add, subtract, or modify governance rules than it will be for analogous changes to the exclusionary setup. Property systems will converge in having a mix of exclusion and governance and will diverge more in the area of governance than in exclusion, as exclusion is one of the three essential elements in property.[15] We should also expect that, because in general it is more detachable from the system, stylistic variation more easily arises in governance than in exclusion. So, our first proposition is that structural aspects of property law should show convergence and the structures in question should be stable over time. More tellingly, even if the initial condition of the property structure is no exclusion at all, this arrangement is unlikely to persist if open access does not make sense on its own terms (that is, it fails to provide benefits that exceed the costs, or compares unfavorably with other arrangements that could be implemented).[16] A prime example is the people’s commune during the Cultural Revolution in China. Private property and individual farming had been the norm and practice, but during the revolution the government mandated a shift to limited-access common property. As is well known, this social experiment did not last long.[17] The structure of property law, therefore, will converge to an exclusion-based system, regardless of the initial conditions.

When it comes to more stylistic features, we must distinguish between those that are more interconnected and those that are less interconnected with the rest of the system of property law. Our second proposition holds that, in any aspect of the property system that is less interconnected, we should expect more stylistic variation. Tighter interconnection will lead to more uncontained ripple effects and a more jagged fitness landscape,[18] such that it is harder to achieve higher peaks of fitness. Conversely, less interconnected doctrines can respond to pressures for improvement, whether designed or not, and the improvement to that one piece of the system leads directly to an overall unambiguous contribution to fitness.

We might offer a third, dynamic, proposition: the less interconnected an aspect of the property system is, the more we should expect that it could change over time for a variety of reasons. One of these reasons is voluntary borrowing, or legal transplants due to colonialism. Previous work has found that in the admittedly small number of mixed systems that have both common and civil law heritages, there is a tendency to borrow contract law more than property law (never the latter without the former),[19] and within property law to borrow more in the in personam than in the in rem aspects.[20] Thus, in terms of changes over time, we might expect that stylistic features would converge or diverge but that more rapid changes would take place in less connected, rather than in more connected, areas of property law.

Now, after decades or centuries of evolution in property law, we might be more likely to observe the convergence of isolated (less interconnected) doctrines, if at least one of the following conditions holds: (1) there is one or a few apparently dominant strategies; (2) convergence in a global market saves transaction costs and attracts investment and business; or (3) there have been conscious or subconscious, voluntary or involuntary borrowing or legal transplants, with or without explicit efficiency concerns.[21] This is not the place to propose a full-fledged convergence and divergence theory.[22] Our key point here is only that less interconnected doctrines are more likely to vary (resulting in divergence or convergence depending on background conditions) than more interconnected ones.

In this Article, we employ a snapshot of current property systems. We are not in a position to test the third proposition—that the interconnectedness of doctrines should correlate with rapidity of change. As for the first two, assuming that systems are not subject to overwhelming pressures to converge, we can isolate our expectations: property systems should show more convergence in their less interconnected than in their more interconnected aspects. This is based on the particular conditions of our world. If all countries had the same property law to begin with, we would see that more interconnected parts of the property system remain the same—they would remain convergent. Less interconnected parts of the property system, given that they cannot become more convergent, and they vary more, will become relatively divergent. Of course, this is not our world. We live in one where the common and civil law have very different starting points (styles) in terms of property law.[23] The civil law system is also inherently plural. Hence, what is more interconnected has different starting points and remains divergent, whereas what is less interconnected could diverge or converge due to one or more of the three forces laid out above. By contrast, the basic structure is highly systemic and so should show more convergence than do more structurally peripheral aspects. And among styles of property law, we should expect those that are connected to the rest of the law to retain their greater diversity. Our theoretical framework is summarized in Table 1.

Aided by a unique data set on property laws in 119 jurisdictions in the world (see Figure 1),[24] we find that many property issues, as of 2015, are still framed in drastically different fashions. For instance, in civil law countries, rei vindicatio—the action to force someone to return possession of a thing to its owner—is the major right of a property owner, while this expression is almost nontranslatable into a legal term in English (“revindication” is the usual English word, which means nothing to common-law lawyers). Property owners in the common law, of course, are generally well protected—by different means with different labels (trespass, conversion, replevin, and so forth).

Structures of property, on the other hand, do appear to converge. Most jurisdictions, in their civil codes or case law, address the same types of property issues. This suggests that the problem of serving property’s functions at positive information cost everywhere creates the same disputes. Uncertainty over titles to real or personal property gives rise to the adverse possession doctrine. High costs of verifying true owners of movables put on sale lead to the good-faith purchaser doctrine.[25] Use rights and security rights, while often bearing very different names (for example, the land charge in England is functionally equivalent to the Reallast in Germany), are staples in virtually all property systems. Moreover, jurisdictions around the globe adopt only around ten limited property forms, and many jurisdictions explicitly reserve to the legislature the power to create new forms.[26]

The exact contents of property doctrines do not necessarily converge. Lawmakers around the world face the same issue of positive information costs, but the same problem does not always call for the same solution. Information costs only force legal systems to come up with a solution, but often anything goes.[27] Many, if not most, doctrines mix structural and stylistic aspects. When lawmakers for any reason settle on a solution, etched in civil codes or leading cases, they do not always have strong reasons to change the solution to become more like other jurisdictions.

Specifically, concrete solutions are more likely to converge if the doctrine in question is more isolated from other doctrines. This is true of structural and especially of stylistic aspects of law. In an interconnected doctrine, such as the definition of possession, convergence (indeed, any deviation from the status quo) requires moving other pieces in the whole system to go along with the change.[28] Especially in the civil law world, the fear of unintended consequences in changing a foundational doctrine in a civil code could kill any proposal for deviation. France and Germany each have their own conceptual system of possession, which is hard to uproot after hundreds of years of doctrinal interpretation. When European scholars proposed the Draft Common Frame of Reference,[29] they neither found common ground nor simplified the concept. Instead, they managed to keep the two conceptual systems of possession together—creating a lot of confusion and contradiction.[30] By contrast, a “downstream” doctrine that is more isolated from other doctrines has more wiggle room, as, in the worst-case scenario, a failed experiment would not drag the whole system down with it. Co-ownership partition is a prime example of such a doctrine. The aforementioned data show that ninety-one jurisdictions (77%) prefer partition in kind and allow partition by sale.[31] The widely adopted condominium form is another example.[32]

To be sure, we do not claim that isolation and interconnection are the only reason for doctrines to converge or diverge. Many other factors—the benefit of convergence, for one—affect lawmakers’ decisions. That is, large benefits of convergence may push interconnected doctrines toward convergence. Europe’s effort in streamlining registration of mortgages is a case in point. By contrast, small benefits of convergence will leave isolated doctrines untouched. Doctrines related to accession and finders are two examples.

In addition, rigorously testing convergence and divergence empirically would require a panel data set with 100 plus jurisdictions over the past several decades. Powered by such a panel data set, scholars could chart the evolution of property doctrines to examine whether they were the same or different in the beginning or became similar or dissimilar to one another over time. Unfortunately, no such data sets are available. Our approach is to use property laws around the world in 2015 as a snapshot and inquire whether they are the same (convergent) or still different (divergent).

I.  Convergence in Structure

Our first proposition is that property systems will converge in terms of their structure. The structure of property law responds to function more than does what we call “style.” The latter is a way of achieving a function that could easily be different, and it functions mainly as a method of communication among actors in a legal system. Because structure is functionally motivated in a deeper and more thorough sense, we expect that similar functional needs will be reflected in similar property structures—to the extent that property law responds to those functional needs. We further hypothesize that some very basic functions served by property law systems, and important constraints on the devices each system utilizes, are prevalent across jurisdictions. We are not yet in a position to test this proposition comprehensively. Nevertheless, highly suggestive illustrative evidence is available from our snapshot of 119 jurisdictions. In this Section, we will present evidence from devices, like adverse possession, that respond to the cost of verifying titles and from principles, like the limited number of property forms, that manage information costs.

A.  High Information Costs of Verifying Titles

The information costs for potential transactors to verify the identities of current owners have been high everywhere most of the time throughout history. Therefore, countries around the world, through legal transplants or imitations, develop similar strategies for reducing the expenditure of information costs to reasonable levels. Well-known doctrines such as adverse possession and good-faith purchase are cases in point. Indeed, 82 of the 119 jurisdictions (69%) have adverse possession doctrines that enable, at a minimum, good-faith possessors to acquire ownership of items of personal property. In 11 additional jurisdictions (9%) that are greatly influenced by French law, there is no need for an adverse possession doctrine for movables, as possessors of movables are immediately presumed to be the owners. 108 of the 119 jurisdictions (91%) have the good-faith purchase doctrine or the French doctrine that presumes all possessors to be owners. 108 of the 119 jurisdictions (91%) have an adverse possession doctrine that at least enables goodfaith possessors to acquire ownership of land.[33] Notably, 20 jurisdictions explicitly limit the application of the adverse possession doctrine to unregistered land. Since the main justification for the adverse possession doctrine in the contemporary world is clearing titles and aligning the gap between de jure and de facto ownership arising from high information costs,[34] a categorical rule that excludes registered land makes sense, as information costs for verifying titles to registered land should not be high.

B.  Limitations on the Number and Kinds of Property Forms

As property has in rem effects, a large number of limited property forms carved out of ownership create information costs for all potential transactors; they need to discover, understand, and price the encumbrance of such rights on real and personal property. One popular way to control the level of such information costs is to adopt a closed system, the numerus clausus, under which only the legislature can invent new property forms. As Figure 2 shows, 50 of the 119 jurisdictions (42%) explicitly stipulate the numerus clausus principle. Those that do not, such as states in the United States,[35] may endorse and enforce it in practice without promulgating the principle in statutes. Countries like South Korea and Taiwan allow custom to create new forms, but in practice very few, if any, new forms have been recognized through custom. Some systems, like those of Norway[36] and South Africa,[37] purport to have a numerus apertus (or open number) of forms, but in practice are quite strictly closed. Likewise, even Spain’s numerus apertus system is heavily limited by its registrars’ reluctance to register new forms.[38]

Another way to control information costs is to adopt only a small number of property forms. The recursive nature of property forms and, in common law jurisdictions, the existence of the trust, to a large extent make unnecessary a significant number of forms.[39] Basic forms, such as the mortgage and the usufruct (leaseholds and life estates being partial functional substitutes), go a long way in increasing the value of property. The data set we use includes twenty-six types of limited property forms.[40] Figure 3 shows that most countries have around ten forms. (The North Korean Civil Code contains zero limited property forms.) Certain forms are core, with high adoption rates: easement (99%), mortgage of real properties (98%), pledge of personal properties (97%), pledge over rights (82%), usufruct (82%), and rights of retention (roughly, the combination of artisan’s lien, mechanic’s lien, and warehouseman’s lien) (76%).[41]

II.  Divergence in Interconnected Doctrines

We do not expect convergence across the board. Instead, doctrines that are more interconnected with the rest of the system of property law should be expected to resist convergence if they start out in a divergent state. Such divergence will be a possibility mainly for stylistic aspects of property law because of the structural convergence explored in the previous section. An interconnected doctrine is difficult to change because the change will cause more severe and widespread knock-on effects throughout the law. Thus, our second proposition holds that more interconnected doctrines will show more stylistic divergence (and as taken up in the next Section, less interconnected doctrines will tend to show more stylistic convergence across property systems). We illustrate interconnected doctrines in the areas of possession, sales, and temporal divisions of property.

A.  Possession

Possession is the root of many property law doctrines, such as adverse possession, first possession, delivery of items of personal property for purposes of sale, good-faith purchase, and so forth. That the law recognizes something along the lines of possession is structural and is convergent across legal systems. As Professor Thomas Merrill points out,[42] possession is a common-sensical cue that ordinary persons in everyday life can understand. Moreover, using possession as a proxy for boundaries helps enforce the exclusion-based structure of property. But what kind of possession doctrine to implement in the law is stylistic and interconnected. That is, the specific definition of possession, while only different on the margins, is difficult to change. We see this at work in civil law jurisdictions, where several versions of intention requirements for possession exist, as shown in Table 2. By contrast, one has a hard time identifying judicial or statutory definitions of possession in common law jurisdictions, even though they have the same second-order doctrines (adverse possession and so forth).[43]

 We doubt that in practice any such intention requirement will make a substantial and substantive difference, and yet, the doctrine has not converged. Perhaps more controversially, we also doubt in practice whether no-intention or animus domini as a precondition for possession has any real world consequences. Still, the doctrine remains divergent, probably because possession is a fundamental concept and lawmakers worry that changes in definition may bring unintended consequences. Possessory notions are not only important for protecting property rights through trespass and conversion, but they also play a role in doctrines like original acquisition and adverse possession—even in animal torts, as possessors of animals in Germany and Taiwan are liable in tort when the possessed animals injure other human beings.[44] Aspects of possession intersect with bailment and with agency, security interests, and the like. A change in the definition of possession might have implications throughout property law, which might require adjustment in those areas.

Jurisdictions differ in their choices in defining possession along other dimensions as well. Twelve non-common-law jurisdictions (10%) banish “agents in possession” (that is, employees relative to their employers) from the ranks of possessors, as do several common-law jurisdictions that distinguish possession on the one hand and custody or occupation on the other hand.[45] Thirty-seven jurisdictions (31%) prefer the concept of détention (physical control along with a purpose to control on behalf of others), and provide that a person with only détention is not a possessor.

B.  Sales

What constitutes a valid sale is highly divergent across jurisdictions.[46] To transfer title to movables, in fifty-eight jurisdictions (49%) a valid sale contract itself does the trick; in fifty jurisdictions (42%), delivery (possession changing hands) is sometimes or always required; and in nine jurisdictions affected by English law, a title transfers when parties intend it to.[47] Clearly, sales are connected with a complicated web of other property doctrines—for instance, do constitutum possessorium (in which the original owner becomes a mere possessor for the acquirer of the item in question)[48] and attornment (in which the seller agrees to assign to the buyer the right to reclaim the thing in question from a third party) count as delivery by default?[49] Is there a “real agreement” (dingliche Einigung) in addition to the sale contract?[50] Are the two levels of contracts always invalid at the same time?[51] Are the services of notaries or attorneys required to execute sale contracts? And so on. For a jurisdiction to change from an intention-based system to a delivery-based system, many foundational principles have to make way.

Sales of immovables are also a case in point. In fourteen jurisdictions (12%), a valid sale contract is sufficient to sell land and buildings. In thirty-seven jurisdictions (31%), recording creates an “opposability effect” to third parties.[52] In sixty-three jurisdictions (53%), registration is necessary. Twelve of these sixty-three jurisdictions conceptualize a real agreement as one necessary element in a sale. Here, it is apparent that changing the doctrine creates ripple effects on the design of the register and the markets of middlemen and professionals. Interestingly, anecdotal evidence suggests that in France and Japan, two opposability countries, basically all sales of real estate are recorded. Hence, if they move away from opposability and require registration as a precondition for valid transfer, market practices would not need to change at all. The behaviors of sellers, buyers, and third parties would be the same. Still, there is no sign that France and Japan are making the change.