This is an article I published in the Philadelphia Lawyer, p. 20 (Fall 1997) (PDF), about the now-defunct Multilateral Agreement on Investment, or MAI. At the time I was in favor of it and somewhat naively optimistic that a fairly universal pro-private property rights agreement might be adopted. Sigh.

For more background on related matters, see my book International Investment, Political Risk, and Dispute Resolution: A Practitioner’s Guide (Oxford University Press, 2005) and my Online Appendix XVII, “Online Resources”.

The Re-emerging International Framework for Protection of Investment

By Stephan Kinsella¹

(version submitted to The Philadelphia Lawyer, September 1997 issue)

We’ll take and take until not even the nails in their shoes are left.  We will take American investments penny by penny until nothing is left.

                                                                                                 —Fidel Castro, 1960² 

Less than seventy-five years after it officially began, the contest between capitalism and socialism is over: capitalism has won.

                                                                                        —Robert Heilbroner, 1989³ 

American entrepreneurs are, by and large, used to operating within a relatively fixed and predictable background of overarching state and federal laws.  If something goes wrong with a business transaction—e.g., one party breaches a contract or intentionally defrauds or harms another—the wronged party that he can very likely resolve the matter in some court, according to some applicable law, whether federal or state.

Similarly, if an investor’s property rights are damaged or otherwise taken by the government, the investor can obtain redress, typically in the form of compensation, in court.  In the West, though protection of property rights is far from perfect, it is largely taken for granted that the government is constitutionally prohibited from taking one’s property (including investments) without due process and just compensation.  Thus, trade and investment flourish in western countries, since both contractual and property rights and protected.

International trade, and investment in foreign countries (known as foreign direct investment), require protection as well.  With respect to foreign trade—for example, trade between an American company and a foreign company—the parties cannot simply assume that they are both subject to jurisdiction in the courts of the same nation.  Despite this seeming difficulty, however, foreign trade has been able to thrive since disputes can be settled, and contracts enforced, even between parties of different nations.  This has long been possible with the international Law Merchant, in which disputes between merchants of different countries are settled in neutral, largely private arbitration proceedings.

Today, for example, private arbitration is frequently conducted in accordance with the rules of the International Centre for the Settlement of Investment Disputes (ICSID), the International Chamber of Commerce (ICC), or the American Arbitration Association (AAA).  In addition, dispute resolution and other aspects of foreign trade are buttressed to some extent by the foreign trade framework established by multilateral agreements such as the General Agreement on Tariffs and Trade (GATT), and its successor, the World Trade Organization (WTO).  Thus, private parties have been and continue to be able to rely on and enforce the contracts necessary for foreign trade.

Foreign direct investment is another matter.  Companies investing in other countries are not able to rely on private measures such as arbitration agreements to ensure that the host state (the state hosting foreign investment) does not interfere with investments.  States have sovereignty over property within their territory, and thus foreign investment is always subject to the threat of expropriation by the host state.  Investing in foreign regimes is thus said to be subject to “political risk,” especially in those states with a history of hostility to capitalism and property rights, such as the former communist states and other developing economies.

Nevertheless, international law does provide certain rules that states must follow in expropriating foreign investment.  Prior to this century, host states generally adhered to such rules.  For example, it has long been established under background or general principles of international law that a host state may expropriate the property of foreign investors only if the expropriation is non-discriminatory, for a public purpose, and accompanied by “appropriate” compensation—otherwise, the expropriation is “illegal” under international law.  Indeed, these rules were considered so sacrosanct that, until the early part of this century, force was sometimes used or threatened by a home state against another state in response to a taking of the property of the home state’s nationals.

The strength of these rules has been diluted in this century, however, roughly concurrently with the rise of socialism and socialist ideologies—naturally enough, since capitalism and the property rights that underlie foreign investment are anathema to such worldviews.  The rise of such anti-property-rights ideologies and other factors have led many states to disregard or deny the existence of international law limits on expropriation, leading to a wave of expropriations and nationalizations up until the 1970s, by states such as the Soviet Union, Mexico, China, Egypt, Cuba, and Libya.

In addition, some states and anti-Western commentators fomented controversy and debate over the meaning of the “appropriate compensation” requirement of international law.  While it seems clear that it must mean full compensation—compensation for the fair market value of the investment expropriated—as, for example, must be awarded in America if property is expropriated by government, others have argued that something far less than full compensation can be awarded, especially in “special” circumstances such as when an entire industry is nationalized and the government would be unable to engage in the nationalization if it had to pay for it with the fair market value of the property taken.

Thus, international law rules meant to protect foreign investment have become clouded with some uncertainty (although many would argue that international law always has and still does require full compensation, despite the vociferous protests to the contrary).  Additionally, the use of force against a nation solely for an act of expropriation would nowadays be politically unthinkable, and international law has evolved to the point where such force would probably be considered illegal, as well.

The upshot is that it is uncertain to what extent the investors of today can rely on background principles of international law for protection of foreign investment.  Ironically, in the aftermath of the fall of communism/socialism, it is the formerly communist and developing Third World nations that most need Western investment—investment that is discouraged by the weakening of private property protection brought on by these states’ former hostility to property rights and capitalism.

One way to overcome this uncertainty and strengthen the protection of foreign investment under international law is through the use of treaties.  Treaties may be used to explicitly provide for standards of investment protection superior to those embodied in the background general principles of international law, much like a contract can change the default rules of law applicable to the parties.

By entering into a treaty, a state “internationalizes” the commitments contained therein—i.e., the breach of the obligations undertaken in a treaty is an independent and serious breach of international law, under the principle pacta sunt servanda (agreements are to be respected).  Host states are, therefore, reluctant to breach a treaty obligation that has been voluntarily and expressly undertaken.

Accordingly, by entering into a treaty with one or more other states, a prospective host state can bind itself under international law to respect foreign investment, thereby rendering any arguable uncertainty in general principles of international law moot—even if the host state itself has previously resisted the Western interpretation of general principles of international law.

Currently, some regional treaties, such as NAFTA and the Treaty of the Establishment of the Caribbean Common Market (Andean Agreement), do address investment protection issues on a regional basis, but they do not cover all nations, and hence are not universal.  Similarly, there has been a growing nexus of so-called bilateral investment treaties (BITs), which obligate the signatory parties to respect the property rights of foreign investors.  Hundreds of BITs have been executed to date—America, for example, has concluded dozens of these BITs with countries ranging from Albania to Zaire.  However, since each BIT covers only one pair of countries, there are now an overwhelmingly huge and unwieldy number of BITs, many having different standards and scope.  Also, many pairs of countries do not have BITs in place.  Thus, at this point in time neither the WTO nor any other international agreements provide for substantial, universal, and uniform protection for foreign direct investment.

This gap in international law may be about to be largely repaired by the proposed Multilateral Agreement on Investment (MAI), which is currently being negotiated by the 29 member-countries of the Organization for Economic Cooperation and Development (OECD).⁴ Talks on the MAI were initiated in early 1995 and were originally expected to be concluded by June 1997, but as of this writing [May 1997] appear likely to continue until late 1997 to mid-1998.  The MAI is aimed at providing protection for foreign investment, by way of having the signatory states enter into a binding treaty obligation to respect foreign investment.

Although being negotiated among the mostly industrialized, developed countries of the OECD, it is hoped that the MAI, once ratified, will be joined by a wide number of countries, including developing countries. The MAI is expected to provide for, among other things, non-discrimination, limits on expropriation, and effective dispute resolution.

Under the MAI, for example, host states are expected to agree to expropriate foreign investment only if the expropriation is: (a) for a public purpose, (b) performed in a non-discriminatory manner, and—the most essential protection—(c) accompanied by prompt, adequate, and effective compensation equivalent to the fair market value of the investment.  The dispute resolution measures should provide for a predictable and peaceable means of settling disputes between foreign investors and the host state, and also for disputes between the investor’s home state and the host state.

In explicitly calling for a fair market value compensation standard, the MAI should remove the uncertainty that has settled on the compensation standard in decades past.  Additionally, since states are reluctant to breach treaties, tying investment protection standards to a treaty should cause developing states to be even more reluctant to expropriate foreign investment in breach of the MAI’s standards.  These standards promise to apply more universally and uniformly than the standards provided by the inconsistent patchwork of BITs and other regional treaties.

Thus, the MAI should serve to lower political risk and thus increase foreign direct investment in such regimes.  It is also possible that the MAI negotiations will be expanded to include provisions to inhibit and deter investments in property expropriated without compensation or otherwise in violation of international law—similar to the prohibitions on “trafficking” in illegally confiscated property in the so-called Helms-Burton or Libertad Act of 1996—which should help further dissuade host states from illegally expropriating investment.⁵ 

The MAI also should improve on other current mechanisms and practices for protecting investment, as well.  For example, some developing states provide for investment protection in national legislation, such as investment codes.  These laws, however, may be changed at will by the host state, without necessarily violating international law: unlike the obligations in a treaty, promised contained in municipal law are not internationalized.  Internationalizing the state’s commitments to protect investment by means of a treaty such as the MAI is, therefore, also superior to merely embodying investment standards in municipal law, since it makes the state more likely to abide by such commitments, and consequently allows investors more security in relying on such commitments to protect their property rights.

Another technique open to some investors is the negotiation of agreements directly between the investor and the host state, referred to as concessions or investor-state agreements.  These agreements, like treaties, can provide for strong protection of the investor’s property and other rights, and can be structured so as to internationalize the host state’s obligations—i.e., to make the host state obligated under international law to respect the agreement.  This option is not usually feasible for smaller investors, however, and in any event is expensive to negotiate and not as desirable as having a ratified umbrella treaty between the investor’s home state and the host state.

Foreign investors also often deal with political risk by acquiring political risk insurance.  Such insurance is available from a number of sources, including state-sponsored insurance agencies such as the United States’ Overseas Private Investment Corporation (OPIC), private insurers such as Lloyd’s of London, and multilateral agencies such as the World Bank’s Multilateral Investment Guarantee Agency (MIGA).  Of course, it is preferable to investors to be able to have political risk itself lowered, so that expropriation is less likely (and also so that political risk insurance becomes cheaper).  Additionally, government-sponsored insurance—which dominates the field—is morally and economically problematic since it involves redistribution of wealth and the economic inefficiencies that inevitably accompany government intervention in the market.⁶ Thus the MAI is also to be welcomed, to the extent that it reduces the resort to government-sponsored investment insurance schemes.

The MAI promises to improve on the present international regime for the protection of foreign direct investment and to strengthen the protection afforded to such investment.  If drafted to properly embody strong protection for foreign direct investment, and if ratified by a large number of both developing and developed states, the MAI stands to benefit both investors and host states, and thereby to further increase the wealth of nations.

1.  LL.M., University of London; J.D., M.S., B.S., Louisiana State University.  The author is a member of the Intellectual Property Department and International Law Practice Group of Schnader Harrison Segal &amp; Lewis in Philadelphia, and co-author <i>Protecting Foreign Investment Under International Law: Legal Aspects of Political Risk</i> (Dobbs Ferry, New York: Oceana Publications, 1997).  Email: nskinsella@shsl.com; http://www.shsl.com.  The views expressed herein are those of the author alone, and should not be attributed to any other person or entity.  
2.  New York Times, 21 August 1960, § 3(F), p. 1, quoted in Eric N. Baklanoff, Expropriation of U.S. Investment in Cuba, Mexico, and Chile 112 (1975).
3.  Robert Heilbroner, “The Triumph of Capitalism,” The New Yorker, Jan. 23, 1989, p. 98.  The superiority of capitalism over socialism had been rigorously proved back in 1920 by the great Austrian economist Ludwig von Mises.  See Ludwig von Mises, Economic Calculation in the Socialist Commonwealth (1990) (1920); see also Ludwig von Mises, Socialism: An Economic and Sociological Analysis (J. Kahane trans., 3d rev’d ed. 1981) (1922).  Mises’s ideas were initially thought to have been refuted by socialist economists, in what is known as the “socialist calculation debate.”  The false conclusion that the socialists won the debate by disproving Mises’s claims was perpetuated in the following decades by economists such as Heilbroner.  See, e.g., Robert Heilbroner, Between Capitalism and Socialism (1970), pp. 88-93, in which Heilbroner claimed that Mises was wrong, that socialist economic calculation was possible, and that the “superior performance” of socialism would “soon reveal the outmoded inadequacy of a free enterprise economy.”  Despite decades of unjust and unfortunate neglect, Mises has finally been vindicated by the universally acknowledged failure of socialism as a viable economic system.  See Gertrude E. Schroeder, “The Dismal Fate of Soviet-Type Economies: Mises Was Right,” Cato J., v. 11, no. 1 (Spring/Summer 1991), p. 13; “Labor Party leader flips on policy,” Philadelphia Inquirer, Apr. 8, 1997, p. A2 (describing the British Labor Party’s endorsement of privatization of state-owned enterprises and recent elimination of a Marxist clause in its constitution advocating common ownership of the means of production).  Even Heilbroner now admits: “It turns out, of course, that Mises was right.”  Robert Heilbroner, “After Communism,” The New Yorker, Sept. 10, 1990, p. 91, 92.  See also Mark Skousen, “‘Just because socialism has lost does not meant that capitalism has won’: Interview with Robert L. Heilbroner,” Forbes, May 27, 1991, p. 130.  For further discussion of the socialist calculation debate, see Murray N. Rothbard, “The End of Socialism and the Calculation Debate Revisited,” 5 Rev. Austrian Econ. 51 (1991); Don Lavoie, Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered (1985); David Ramsay Steele, From Marx to Mises: Post-Capitalist Society and the Challenge of Economic Calculation (1992).
4. For further discussion of the MAI and related issues, see “American Bar Association Section of International Law and Practice Report to the House of Delegates: Multilateral Agreement on Investment,” 31 International Lawyer 205 (1997); and William H. Witherell, “Developing International Rules for Foreign Investment: OECD’s Multilateral Agreement on Investment,” 32 Business Economics 38 (January 1997).  Other information regarding the current status of the MAI negotiations was obtained from the U.S. Department of State, Office of Investment Affairs, International and Financial Development, Bureau of Economics and Business Affairs, and from the OECD web site at <http://www.oecd.org>.
5.  See, e.g., Stuart E. Eizenstat, “A Multilateral Approach to Property Rights,” Wall Street Journal, Apr. 21, 1997.
6. But see Maura B. Perry, “A Model for Efficient Foreign Aid: The Case for Political Risk Insturance Activities of the Overseas Private Investment Corporation,” 36 Va. J. Int’l L. 511 (1996) (arguing that OPIC provides more efficient than private political risk insurance because, inter alia, it is able to actually reduce political risk because host states are reluctant to illegally expropriate an investment insured by an agency of the U.S. government).

This a text version of my Comments on Draft Law on Stimulation of Foreign Investments in Romania, prepared for ABA/CEELI (Spring 1997)

***

M E M O R A N D U M

March 25, 1997

TO:                 Mr. John C. Knechtle

Director, Legal Assessments, ABA/CEELI

FROM:           N. Stephan Kinsella [current contact info as of 04/2002: www.KinsellaLaw.com]

RE:                 Draft Law on Stimulation of Foreign Investment for the Republic of Romania

The following are my comments on the referenced Draft Law. Please note that these comments are my personal opinion and do not represent the opinion of my firm, Schnader Harrison Segal & Lewis, or any of its clients. In the following, my focus, in general, is on the issue of whether and to what extent the Draft Law serves to protect private property, in particular private property related to foreign direct investment in Romania.

General Reaction

The Draft Law is commendable in that it is an attempt by Romania to add further protections to the private property of foreign investors. However, the Draft Law is problematic in that it is somewhat vague, it does not go far enough in protecting the private property of investors, and it leaves too much discretion in the hands of government in deciding whether to accord “special” treatment to investment. The Draft Law also rests on the assumption that some investments ought to be given favorable treatment, which rests on the false assumption that some investments are objectively “worse” than others, and that the government can accurately assess which investments are relatively more desirable than others. The Draft Law will result in some investors being given favorable treatment with respect to other investors, which is problematic and undesirable. To the extent possible, the Draft Law should be revised to clarify and strengthen the security of a foreign investor’s property rights, as explained in more detail below. The protections provided by the law should be broadened and extended to as many investors and types of investment as possible to reduce the discriminatory treatment that the Draft Law would otherwise provide.

Preliminary Considerations

The protection of private property of foreign investors is essential if Romania is to attract foreign direct investment. This is the essential touchstone by which any proposed policy, law, regulation, or regime is to be judged. The degree to which private property rights are respected is extremely significant in attracting foreign investment. The Draft Law should be amended to clarify and strengthen the security of a foreign investor’s property rights, for example by taking steps to lower political risk and taxation rates.

Many changes to the legal and political climate of Romania could be suggested to contribute to these factors. Constitutional, limited government, low taxes, respect for private property, the free market, and civil liberties contribute to both a health economy and to a low political risk.

Promulgating a pro-foreign investment law which provides for government guarantees that property rights will be respected can also play an important role in attracting foreign investment. However, as investors are all too aware, even a pro-investment law may be changed at a later time by the legislature due to the government’s legislative sovereignty. A new government may desire to nationalize certain industries, for example. Thus, the ability of Romania to promulgate new laws that might override property rights previously guaranteed to investors tends to reduce the attractiveness of any government guarantees that are made. For a developing economy such as Romania, such guarantees should be made more effective by reducing the chance that the laws will change to investors’ detriment.

One way to increase the likelihood that such a guarantee, once granted, will be respected by future governments is to implement a constitutionally limited government, with an independent judiciary having the power of judicial review. Another way is to make the guarantees binding under international law, since states are often reluctant to be seen as clearly violating international law. An investment agreement executed between the host state and investor accordingly may be “internationalized,” so that the state’s obligations contained therein are binding under international law. For example, the agreement may contain both an international arbitration clause, which grants jurisdiction to a neutral third party (such as the International Center for the Settlement of Investment Disputes (ICSID)), and a stabilization clause. A stabilization clause provides that the law in force in the state on a given date is the relevant law for purposes of interpreting the investment agreement, regardless of future legislation. This effectively “freezes” the legal regime in place on a certain date, so that any future changes in law contrary to the state’s guarantees are without effect, at least under international law.

General Comments

The Draft Law essentially assumes that there is some background protection of the private property of foreign investors, such as that provided by international law, other municipal laws in force, or by treaties entered into by Romania (see, e.g., Art. 3). The Draft Law then attempts to add another measure of protection to foreign investors by providing for various tax and custom duty exemptions or favorable rates, and other incentives, if the investment qualifies for such treatment under the Draft Law or in the determination of the Government. (Art. 4.)

One problem with the foreign investment regime established by the Draft Law is that it will result in some types of investment being favored over others. This presumes that some types of investment are objectively superior, more efficient, or otherwise more preferable than others; and that the Government accurately assess proposed investments accordingly. However, government is notoriously incapable of determining which type and amount of investment or other capital allocation is efficient or proper. This is why Russian-style centralized economic planning has failed so disastrously. Economic planning on a more modest scale is also unwise. Government is unable to centrally collect the relevant information that would be required to efficiently allocate capital; and even if all the relevant information could be centrally collected, government is unable to efficiently allocate capital since centralization destroys the private property and market price system that otherwise efficiently allocates capital.  Further, even assuming away these problems, decisions will tend to be made or at least influenced by political factors, such as favoritism, corruption, bribery, and special interest lobbying.

Another problem with the Draft Law is that at least some of the incentives provided are provided only at the discretion of the Government. The incentives provided in Arts. 6 and 7 appear to be available as long as the more or less objective conditions of Art. 5 are met. However, the additional incentives contemplated under Art. 8 are available only if the Government so approves; and the amount and types of incentives to be provided appear to be wholly within the discretion of the Government or the Romanian Development Agency (RDA). Further, it is not clear that an investor denied the incentives under Arts. 6 and 7 have any legal recourse to challenge this decision, so the incentives of these Arts. appear to be discretionary as well, for all practical purposes. (Additionally, the incentives under Arts. 6 and 7 require the RDA’s approval. Art. 5.)

One problem with such discretion is that it is bound to be misused for corrupt or petty purposes—e.g. influenced by bribery, special interest group lobbying, and other forms of political favoritism—from time to time. This will lead to an inefficient selection of favored investments. Further, such discretion will make Romania a less attractive home state for investment from the outset, since the discretion increases the uncertainty as to whether the investor will be able to obtain the maximum incentives available. Such favoritism can also cause an investor to fear being put to a competitive disadvantage with other investors receiving more favorable treatment. Finally, giving discretion to the Government will likely lead, in the long run, to fewer favored investments than would be favored under an overall more liberal investment policy.

The law could be improved by reducing this discretion, and by providing for a legal right of an investor to challenge a decision relating to the approval of these incentives in a Romanian court, or, better yet, in an international arbitration forum.

As mentioned above, favoritism or discrimination in investment treatment can be problematic. Ideally, there should be no discrimination between foreign investors, on the basis of nationality or any other criterion. Rather, all foreign investors (and, for that matter, municipal or local investors) ought to enjoy equal, i.e. MFN treatment. Otherwise, foreign investors could be justifiably concerned that competition between them is not fair.

A superior alternative, then, to the present regime contemplated by the Draft Law would be to accord the maximum feasible protection of private property rights to all foreign investors and types of investment. This would reduce the overhead expenses associated with government oversight, reduce corruption, and spur overall investment to a greater extent than would be obtained from piecemeal and discretionary favorable treatment.

Another general consideration concerns bribery and corruption. Bribery and corruption of public officials is well-known in many developing countries. However, American investors are prohibited by the Foreign Corrupt Practices Act (FCPA), 15 U.S.C. § 78m(b) et seq., from engaging in such activities. If bribery and political corruption are widespread in Romania, American investors will be at a competitive disadvantage with respect to investors from other regions such as Western Europe. Thus, given the existence of the FCPA, the existence of widespread bribery and corruption will tend to reduce American investment in Romania.

It is preferable, for the reasons given above regarding internationalization of obligations, that the Draft Law be given as much force as possible by internationalizing it, for example by making its terms part of a multilateral treaty or bilateral investment treaties (BITs), or by incorporating its provisions into internationalized, stabilized investor-state contracts. Romania also ought to attempt to strengthen the protections of private property and foreign investment provided in BITs and other treaties. Romania also ought to support the negotiation of the OECD’s multilateral agreement on investment (MAI), and seek to accede thereto as soon as possible. 

The Draft Law should include a Statement of Principles that clearly indicates that Romania recognizes the importance and sanctity of private property, and that purpose of the Draft Law is to protect the private property rights of foreign investors. Such a statement may be useful in persuading investors that Romania is serious in its commitment to protecting and respecting investors’ property rights. This statement would also increase the chance that the Draft Law, in cases of ambiguity, would be interpreted in favor of investors’ property rights.

“Foreign investment” is insufficiently defined in the Draft Law. Further, it is often unclear whether contractual rights are considered to be property rights on an equal footing with other types of property rights. The Draft Law should clearly define foreign investment, and should provide that foreign investment includes “property” and “property rights” or foreign investors, including immovables and movables, corporeals and incorporeals, intellectual property rights, and contract rights. As a general matter, it is preferable to adopt general terminology or concepts utilized in or compatible with established Western legal systems, primarily Anglo-American common-law concepts and terms.

Detailed Comments

The following comments are made with reference to the relevant section of the Draft Law. These comments assess various provisions of the Draft Law without further criticizing the Draft Law’s assumption that favorable investment conditions will be accorded only to some investors or types of investment, and only at the Government’s discretion. Thus, the suggestions below are aimed at strengthening the investment protections currently provided by the Draft Law, even though it would be preferable if these investment protections would not be handed out selectively by the Government.

Art. 2. The term “foreign capital companies” is not well-defined. Also, the fact that the treatment to be given to such companies is to be “in accordance with the laws in force” serves to reduce the certainty of any guarantee of treatment by making it conditional on laws in force.

Art. 5. The capital requirements ought to be lowered as much as feasible to extend the favorable coverage provided by the Draft Law to as many investments as possible.

Art. 6. The term “contribution in cash effectively disbursed” is confusing and unclear.

Art. 7. The three-year exemption from payment of import customs and value-added taxes ought to be extended as much as possible, for example to six, ten, twenty years, or longer. Another useful change would be to allow the exemption period to be indefinitely repeated for an investor. This automatic renewal of protections could be usefully applied to other favorable treatments provided by the Draft Law.

A problematic aspect of Art. 7 is the provision that the exemptions provided therein are conditioned upon the investor’s securing of financing of imports using sources from abroad that do not encumber Romania’s “balance of payments.” This ought to be completely deleted from the Draft Law, since it rests on the economically fallacious (but widespread) mercantilist idea that there can be a “favorable” or “unfavorable” balance of trade. Unlike a budget deficit, which is undesirable, it is irrelevant whether there is a trade “surplus” or “deficit,” since this results from the sum total of a large number of individual credit transactions, each of which presumably benefits both parties thereto.  Developing economies ought to be careful not to adopt fallacious economic doctrines unwisely adopted in the West in this century. While the West’s free-market systems are worth emulating, various Western policies are not, such as our anti-trust laws, fiat-money and Federal-reserve-controlled banking system and other Keynesian-based institutions and policies, protectionism, and the like.

Art. 8 contains several possible “additional incentives” that are unacceptably vague, such as “high technology,” “free writ of possession over land,” and the like.

Art. 9 states that the RDA provides investment counseling to foreign investors. It is not clear why this ought to be monopolized or even engaged in by a government agency. Private enterprise would better fill this need.

Art. 13. The prohibition against nationalization or expropriation of investments should be clarified and broadened, to clarify that these concepts include both indirect and creeping expropriation.

Arts. 13 and 14. The provision for compensation in the event of a (lawful) expropriation should be clarified to provide that the full, market value of nationalized property will be paid to the expropriated investor, and the concept of “equitable” principles enunciated in Art. 14 ought to be examined to ensure that there is no implication that less than full compensation can be awarded. Additionally, the following standard should be adopted to make clear to investors Romania’s commitment to the sanctity of the investors’ property rights: the standard of compensation should be the greater of the full market value of the investment, or the commercial value to the investor (which may be greater than the market value due to synergy, etc.) Further, the Draft Law should clarify that any taking is “illegal” if not done for a public purpose, or if done in a discriminatory manner. This will help to dissuage Romania from engaging in such an expropriation for fear of being seen as commiting an unlawful taking, which should help to ensure investors that Romania is sincere and serious about respecting the property rights of investors.

Art. 15 provides for a disputed amount of compensation to be established “through the courts of law, in accordance with the legal provisions.” It is unclear to what “the legal provisions” prefers. It is also unclear whether “the courts of law” contemplates only Romanian courts or whether international arbitration is available. Courts should be empowered to nullify the effects of an illegal taking or nationalization. Further, international arbitration should be authorized, and commitments in the Draft Law internationalized if possible, as discussed above.

Art. 17. “Non-mediated foreign investment” is unclear in meaning, and consequently the meaning and purpose of this article is unclear as well.

Art. 19. The certificate of investor ought to be internationalized, e.g., by stabilization and international arbitration clauses, or protected through BITs or other treaties if possible.

Recommended Commentary

Paul E. Comeaux & N. Stephan Kinsella, Protecting Foreign Investment Under International Law: Legal Aspects of Political Risk (Dobbs Ferry, New York: Oceana, 1997)

Paul E. Comeaux & N. Stephan Kinsella, “Reducing Political Risk in Developing Countries: Bilateral Investment Treaties, Stabilization Clauses, and MIGA & OPIC Investment Insurance,” 15 New York Law School Journal of International & Comparative Law 1 (1994) (copy attached)

N. Stephan Kinsella, “Lithuania’s Proposed Foreign Investment Laws: A Free Market Critique,” Russian Oil & Gas Guide, Apr. 1994, at 60 (copy attached)

Bernard H. Siegan, Drafting a Constitution for a Nation or Republic Emerging into Freedom (2d. ed. 1994)

Robert W. McGee, “Some Tax Advice for Latvia and Other Similarly Situated Emerging Economies,” 13 International Tax and Business Lawyer 223 (1996)

Daniel T. Ostas & Burt A. Leete, “Economic Analysis of Law as a Guide to Post-Communist Legal Reforms: The Case of Hungarian Contract Law,” 32 American Business Law Journal 355 (1995)

“Symposium: Development of the Democratic Institutions and the Rule of Law In the Former Soviet Union,” including the article by Judith Thornton, “Economic Reform and Economic Reality,” 28 John Marshall Law Review 847 (Summer 1995)

My recent book, Louisiana Civil Law Dictionary(Quid Pro Books, 2011), co-authored with an  Austro-libertarian legal scholar friend, Gregory Rome, was recently reviewed at the iPhoneJD blog:

November 13, 2012

Review: Louisiana Civil Law Dictionary — ebook of civil law words and phrases

I’ve reviewed several legal dictionary apps for the iPhone and iPad — Black’s Law Dictionary, Barron’s Law Dictionary,Nolo’s Plain English Law Dictionary, the Book of Jargon series by Latham & Watkins — but considering that dictionaries were traditionally books, it makes sense that an ebook dictionary could be just as useful on the iPhone and iPad as an app.  Proof of this is found in the Louisiana Civil Law Dictionary, an ebook by Chalmette, Louisiana attorney Gregory Rome and Houston, Texas attorney Stephan Kinsella.  You can purchase this ebook in several formats including Kindle and Nook, and this review is based on the iBooks version of the ebook.  The book is published by ebook publisher Quid Pro Books, the brainchild of Tulane Law Professor Alan Childress.  Prof. Childress sent me a free review copy a few weeks ago.

As you may know, unlike the other 49 states where the law is based on English common law, the law here in Louisiana is based on civil law from jurisdictions such as France.  That means that we have concepts in Louisiana that are very similar to common law concepts but have different names (e.g. “liberative prescription” instead of “statute of limitation”), plus we have many civil law concepts that are unique to Louisiana.  Black’s Law Dictionary does a decent job with some civil law terms, but a dedicated source like the one has the ability to offer more … and I was impressed by this book.

The Louisiana Civil Law Dictionary includes all of the civil law terms that I use in my practice and a bunch more that were new to me.  (I may have learned some of them when I took the bar exam back in 1994, but that space in my brain has long since been replaced by other knowledge.)  The definitions are clear and complete, and the book includes lots of hyperlinks that make it easy to jump around in the book.  Plus it is easy to slide the marker at the bottom of this ebook to jump to different sections.

Being an iBook, it also works fine on the iPhone:

  

Like all iBooks, you can also search for words in the book, which is helpful in a dictionary.

If you practice law in Louisiana, or if you just want to impress your friends with legal terms that almost sound naughty such “naked owner” and “usufruct,” then consider getting this ebook for your iPad and iPhone.

Click here to get Louisiana Civil Law Dictionary ($9.99):  

Click here to get Louisiana Civil Law Dictionary ($9.99) [Kindle version]

As most of my libertarian friends and readers know, I’ve published for a number of years books and articles in the area of political and legal theory. I’ve also engaged over the years in more practical legal writing, from law review articles to authored and edited books (I maintain a separate website, KinsellaLaw.com, for my legal practice). My legal writing has primarily covered intellectual property and patent law, and international law topics. I started writing in both areas–libertarianism and law–at the beginning of my legal career, in the early 1990s.

The way I got into legal publishing may be of some interest to aspiring legal scholars and law students. Some of my early legal writing was based in part on some of the international business law I learned during my LL.M. at University of London–many of these were published in the Russian Oil & Gas Guide and other fora, while I was an associate practicing oil & gas law at Jackson Walker in Houston, at the encouragement of my boss and mentor, Lanier Yeates.

These were all co-authored with my friend and colleague Paul E. Comeaux. We put a lot of this together into a more comprehensive law review article, “Reducing Political Risk in Developing Countries: Bilateral Investment Treaties, Stabilization Clauses, and MIGA & OPIC Investment Insurance (original version), 15 New York Law School Journal of International and Comparative Law 1 (1994). This piece was scholarly yet practical. Shortly after the piece came out, we were approached by Susan DeMaio, a project editor at Oceana Publications, an international law publisher. Susan suggested we turn the article into a book. Paul and I did this, resulting in Protecting Foreign Investment Under International Law: Legal Aspects of Political Risk (Oceana Publications, 1997). Years later, I co-authored International Investment, Political Risk, and Dispute Resolution: A Practitioner’s Guide (Oxford University Press, 2005), a successor volume to the 1997 book. This was published with Oxford which had by then acquired Oceana; my co-author was Noah D. Rubins, an American international arbitration attorney in Paris.

Shortly after the 1997 book, Paul and I were approached by Oceana to see if we wanted to take over the editorship of one of their multi-volume treatises, Digest of Commercial Laws of the World. Unlike a lot of professors and academics that legal publishers work with, who are often late, we had turned in the manuscript for the 1997 book on time, and were young and had lots of energy and ambition. This led to my co-editorship of other Oceana (later Oxford) treatises, namely World Online Business Law, Online Contract Formation, and Trademark Practice and Forms.

I co-edited the Digest for a number of years with Paul, then later by myself.

This year West/Thomson Reuters purchased these three treatises treatise from Oxford. So now I’ll have yet another publisher. I decided to bow out of World Online Business Law, and to team up with my friend and fellow Austro-libertarian legal scholar Patrick Tinsley, to co-edit Digest. Pat, a lawyer with Avery, Dooley, Post & Avery in Belmont, Massachusetts, and I had co-authored a few law review and other articles previously. I had already gotten a trademark lawyer I know, Terry Tucker, to co-edit the Trademark treatise with me a couple years ago. I was just too busy with other pursuits to be a solo editor any more.

Another recent book also resulted from early legal writing. In 1994 I published the article “A Civil Law to Common Law Dictionary” (as published) in the Louisiana Law Review. A couple years ago another Austro-libertarian legal scholar friend of mine, the young lawyer Gregory Rome, now of Williams and Rome, and I teamed up to expand that article. This resulted in the recently published book Louisiana Civil Law Dictionary (Quid Pro Books, 2011).

Nowadays, of course, legal blogging is a widespread phenomenon, so this is another possible outlet for lawyers who want to write. I did start one of the earlier law blogs (see KinsellaLaw re-launches…), but now tend to blog more on libertarian topics, and publish more conventional articles and books for legal topics.

I’ve enjoyed the money, experience, and contacts I’ve gained from all this. It can also help with client development, and with making yourself stand out at a law firm–the partners know your name if you are a prolific and respected scholar. For law students and young lawyers with an interest in scholarship or publishing, or even teaching, take advantage of publishing opportunities when you can, even–especially–early in your career.

Update: I found some old pix from 1997 of me with my first and then-recently published book, Protecting Foreign Investment Under International Law: Legal Aspects of Political Risk, see below:

Update: See also my post Gender-Neutral Language, Reverse Racism, and Law Review Strategies, discussing another legal publishing episode (detailed in  The Enlightened Bar and Re: The Enlightened Bar), which concern an article of mine I submitted to the Texas Bar Journal. It was accepted, but the letter of acceptance informed me it could take up to a year to publish it–unless I was a minority, in which case they could scoot it to the head of the line. I was offended and withdrew it, published it (quicker) in another journal.

From the site of my publisher, Quid Pro Books, information about the release this month of my new book, Louisiana Civil Law Dictionary (with Gregory Rome; Quid Pro Books 2011). It’s available now at Amazon in paper and kindle formats, and in hardback later this month. Also available in other ebook formats. (Additional information at the dictionary’s website, Civil-Law-Dictionary.com.)

A Dictionary of Civil Law Terminology in Louisiana: Usufruct and Naked Owners Are Explained to Common Lawyers and Civilians

I have for years edited or co-edited three legal treatises, first for Oceana Publications, then for Oxford University Press, and now, for West/Thomson Reuters. These are:

• Trademark Practice and Forms (Oceana/Oxford, 2001-2011; West/Thomson Reuters 2011-present)
• World Online Business Law (Oceana/Oxford 2003-2011; West/Thomson Reuters 2011-present)
• Digest of Commercial Laws of the World (Oceana/Oxford 1998-2011; West/Thomson Reuters 2011-present)

I look forward to working with the new publisher.

This was a Texas Lawyer piece from early 2009 concerning an interesting development at the beginning of my legal career in 1991-92, as a result of the last recession. Wait, make that three recessions ago. This explains how I ended up getting an LL.M. in London.

Past, Present and Future: Survival Stories of Lawyers

By Brenda Sapino Jeffreys and Miriam Rozen

Texas Lawyer

April 27, 2009

Thompson & Knight partner Paul Comeaux Image: Mark Graham

Editor’s note: These are grim times for law students and associates, with Texas firms laying off lawyers, cutting summer associate programs and deferring start dates for incoming first-year associates due to a troubled economy. So Texas Lawyer decided to talk with attorneys who have experienced tough economic times in the past and those dealing with the current fallout to put a face to what’s happening in the legal employment market.

BigTex firms have scaled back before because of economic conditions. In 1991, for instance, Dallas firm Jackson Walker asked a number of its incoming first-year associates to consider a one-year deferment in

Stephan Kinsella, general counsel at Applied Optoelectronics Inc. in Sugar Land Image: Courtesy Stephan Kinsella

exchange for a stipend. Two lawyers who took the firm up on that offer say it turned out to be a positive experience and helped boost their careers. But does the past offer lessons for today’s associates? We talked to a lawyer laid off from a BigTex firm

who’s hunting for a new job, as well as to a Bracewell & Giuliani associate who transferred to the New York City office when she noticed her Houston corporate practice was slowing down. Here are their stories.

Europe or Bust

Friends Paul Comeaux and Stephan Kinsella were preparing to graduate from Paul M. Hebert Law Center at Louisiana State University in 1991 and start work as first-year associates at Jackson Walker in Houston when they received a tempting offer from the firm: If they deferred their start date for a year, the firm would pay them $21,000.

While $21,000 doesn’t sound like much today — and it was only a net of $14,000 because it included a $7,000 acceptance bonus — Comeaux notes that his first-year starting salary was $55,000. That’s about a third of the current starting salaries for first-year lawyers at BigTex firms.

“They had too many lawyers coming in,” Kinsella says, noting that Jackson Walker wanted up to 15 of the incoming associates to take the deferment, and he recalls that about a dozen did.

Kinsella says he and Comeaux discussed their options, and both decided to take the deferment and use the time to get an LL.M. degree in international law from King’s College at the University of London.

“We both jointly decided to take the deal, but we were afraid for our jobs. We were afraid that if we didn’t do something productive, we didn’t know what would happen,” Comeaux recalls. “What finally made the decision for me was, ‘Do I want to be a lawyer 20 years from now, or practicing for 19 years and having spent a year in London?’ ”

After graduating from law school, Comeaux says he and Kinsella spent a month backpacking around Europe and then took classes in London from September 1991 through July 1992.

They both took out extra student loans to pay for the advanced degree. Comeaux recalls it was about $15,000.

“It was a great year. I made a lot of friends,” Comeaux says.

Both lawyers started work at Jackson Walker in the fall of 1992. Comeaux, a real estate lawyer, says he left the firm after he started dating a lawyer at Jackson Walker’s Dallas office who later became his wife. Because of the firm’s anti-nepotism policy, he took a job in 1996 at Thompson & Knight, where he is now a partner.

Kinsella also started at Jackson Walker in 1992. But after moving to Philadelphia in 1994 where his wife had a job offer and eventually working as an associate with Duane Morris there, he moved back to Houston in 1997 and opened Duane Morris’ Houston office. In 2000, after making partner at Duane Morris, Kinsella, an intellectual property attorney, became general counsel at Applied Optoelectronics Inc. in Sugar Land.

Comeaux and Kinsella each say they made the right call in 1991. Both also say they would advise lawyers facing a mandatory deferment today to take advantage of the time to improve their skills.

But Comeaux says he probably wouldn’t do the same today, because the economic conditions are different from the early 1990s recession, and many firms are suffering more than Jackson Walker did back in 1991 when too many students accepted first-year associate offers at the firm. Back then, Comeaux says, firms were feeling the pinch of a slowdown in real estate work, but other sections were busy then, which isn’t necessarily the situation today with the tepid lending and deals market.

“My advice would be [do] not take the deferral, and take the job, and work real hard. . . . It’s hard to tell whether a big law firm is going to look the same three or four years from now. It makes more sense to jump in and get the experience now,” he says.

Kinsella says, “Well, when you get the call from the firm, you kind of freak out. You have the choice: Do I start work on time and let 10 other people take the offer? Or do I take the offer and take a year off and make myself more marketable? . . . In my mind, if you can afford it, you definitely should do it, but you probably should do something to make yourself a little more marketable.”

From Maternity Leave to Layoff

When an associate with more than five years of experience took maternity leave from her BigTex firm in Dallas in September 2008, the nation’s economy didn’t prompt worries for her growing family. Just a month earlier her lawyer-husband had felt secure enough about their household finances that he had quit his job at a smaller firm and launched a solo practice.

But by November 2008, when she was still on maternity leave with her new baby and also caring for her first child, a 2-year-old, the associate heard disquieting news from the office: Associates were being asked to leave. By the time she completed her maternity leave and returned to work in January, “The environment was very different than when I had left,” recalls the associate, who requests anonymity.

On her first day back at work, colleagues told her about rumors of additional layoffs. “Several people told me that hours were being looked at very carefully,” she says.

Some of the firm’s lawyers who previously were laid off warned her, “If there is some work, you best be the first one in line to get it.”

Then, in early March, two partners from her finance and banking practice group came to her office door to tell her the firm no longer needed her services. Not entirely surprised by the layoff, the associate says, she recalls saying to the two partners: “Thank you for the information,” followed by, “Do you know of anybody who is hiring?”

She had a month’s pay coming, and the firm didn’t care if she came to the office during that month or just stayed home. She decided to go to the office because she thought it would be a good place from which to network and look for work.

As of Texas Lawyer ‘spresstime on April 23, she had finished her last day at the firm and gone to five interviews. She has no full-time, salaried job yet, but she is working part-time on an hourly basis for a solo practitioner who handles hedge fund regulatory matters, a growth practice these days.

Her story resembles that of other laid-off lawyers in Texas, where firms such as Houston’s Andrews Kurth and Dallas’ Locke Lord Bissell & Liddell, Gardere Wynne Sewell, and Winstead have sent attorneys packing over the past four months.

But long before she was laid off, the associate says she had developed a realistic view of her future at her firm, one of the largest in the state, and one which had its financial fortunes slip in 2008.

“I knew I wasn’t on the fast track for partnership,” she says. She had spent her entire career at the firm, working in the finance and banking department. She liked the transactional work and “the people in her section,” but she knew the practice historically had been slower than others at the firm.

“Through my career, we have been light on hours,” she says. “We had a lot of clients, but that doesn’t mean they send us a lot of work.”

At present, her full focus is on finding employment.

“I have two very young children, and I am the primary breadwinner, and I supply the health benefits,” she says.

The evening after her layoff, she began polishing her résumé. In the past, she had talked to headhunters who called, even though she wasn’t looking for a new job, but she says she had noticed since about January that the headhunters had stopped calling. Now she was calling them.

She also received help from soon-to-be former colleagues.

The day she was laid off, one of the partners at her firm called a friend who is a partner in another firm to ask about opportunities there for the associate. The other firm’s partner called her back the next day and said, “What are you doing right now?”

“Working,” she told him.

“No, you are not,” he replied. “You are worrying. Why don’t you come over here right away, so we can talk about a job?”

Believing she couldn’t afford to turn him down, she agreed to make the appointment, hung up the phone, then panicked.

Wearing clothes appropriate for casual Fridays, she wasn’t dressed for a job interview at a firm. She decided to improvise and popped her head into a colleague’s office to ask if she could borrow the black jacket hanging on the back of her door.

The colleague agreed and several other female co-workers, including one partner, offered to swap clothes. One took the dress shirt off her back to give to the associate, another loaned her the dress pants she was wearing and a third offered jewelry.

“There really are a lot of really great people that have helped me,” she says.

The interview did not lead to a job. Now the former associate is looking for an in-house position. She has had four interviews and has been called back for a second interview at one company. She hopes to get an offer soon.

At her interviews, she has relied on the truth.

“I have been very honest about the fact that I was laid off and why,” she says. “Just about everybody has been very receptive to that. I don’t think people have held that against me.”

Her husband, she says, has tried to pick up the slack, taking cases as a solo that he might have rejected if she hadn’t lost her job. “He is looking at everything,” she says. So is she.

In a New York Minute

Shannon Weinberg, a fourth-year associate with Bracewell & Giuliani, is a Texan who had never lived anywhere else until the economic downturn. She graduated from the University of Texas in Austin in 1997 and earned her law degree from South Texas College of Law in 2005. After graduation, she joined Bracewell’s Houston office.

But a slowdown in her corporate practice area in February made her think about creating a different future in New York City.

Mark C. Evans, Bracewell’s managing partner, says a combination of the slow times recently in Houston’s corporate practice and the still-robust work in the firm’s New York office led him to agree to Weinberg’s request that she move north.

“She had expressed an interest in moving to the people she worked with, and they were busy there and slower here. I think it’s working out very well,” he says. “Over time, she might recruit some others.”

Weinberg says she has taken a shine to the Big Apple despite the snowstorm that greeted her on her first day. The firm gave her time to study for and take the New York state bar examination and gave her a pay increase to offset Manhattan’s higher cost of living. She found a place to live easily, she says, which shows how much the financial crisis has changed the New York real estate market. She sold her car, which was useless in Manhattan, and is using firm-subsidized Metropolitan Transportation Authority tickets on the subways.

In Houston, she worked largely on transactions for public companies in the capital markets. In New York, she has kept busy with private equity acquisitions of distressed assets. “It’s extremely busy here,” she says.

Will Evans send more associates from Houston to New York? Maybe, but not immediately, he says. As it happens, the firm’s corporate practice in Houston has begun to hum again. He has found that in New York, where many local firms laid off hundreds of associates, Bracewell has attractive hiring opportunities. He says the firm recently hired a former Skadden, Arps, Slate, Meagher & Flom associate who, like Weinberg, was a fourth-year associate. But lucky for Weinberg and her big-city dreams, Evans says, there is enough work in New York to keep Weinberg and the former Skadden associate busy.

LSU Law Professor Saúl Litvinoff passed away yesterday. As noted in the LSU Law Center press release about this, Litvinoff was a true giant in the field of civil law scholarship.

Professor Emeritus and Boyd Professor of Law Saúl Litvinoff, whose impact on the legal traditions of Louisiana spanned more than 43 years, died earlier today.

“Professor Litvinoff made his mark not only on the civil law, but also on the literally hundreds of LSU Law students whom he taught over the course of his long career here. Saúl Litvinoff will go down in history as one of the greatest scholars and teachers of Louisiana law. We have lost one of the true giants in the history of our institution,” said Chancellor Jack M. Weiss.

Litvinoff, the Oliver P. Stockwell Endowed Professor, began his career at LSU as a visiting professor in 1965. He retired from the Law Center in 2009.

Ava Leavell Haymon and Cordell Haymon, a 1968 graduate of the Law Center and member of the Law Center Alumni Board of Trustees, honored Professor Litvinoff with a Distinguished Endowed Professorship in 2009 during the Law Center’s Year of Litvinoff celebration. The Haymons have been life-long friends of Professor Litvinoff and his family.

“I was privileged to enter LSU Law School the same year Professor Litvinoff joined the faculty (1965),” said Cordell Haymon. “At first he was a curiosity to us with his encyclopedic knowledge of the laws of many countries, his command of eight or nine languages, and his amazing ability to remember the names of all his students. Over the years we and several generations of law students came to appreciate the depth of his knowledge, the elegance of his teaching, and his commitment to his students and to the improvement of the law. Saúl was an extraordinary mentor and friend to my wife Ava and me, and we will miss him deeply.”

He was born in Buenos Aires, Argentina, in 1925 and began his legal career there in 1949 as an associate with Ibero Berenguer and Associates. In 1962, he worked as a Visiting Professor of Law at the University of Puerto Rico, earning his LL.M. at Yale University at the same time.

During his time at LSU, Litvinoff’s chief endeavor would be his work with the Louisiana Civil Code. His revisions of the Civil Code’s section on Obligations—one of the many examples of his work on the Civil Code—resulted in it being enacted into law in 1984. Litvinoff also served as dean of the Central American Banking School, which operated under the auspices of LSU, for 20 years. He served as a consultant to the U.S. State Department, the Louisiana Department of State, and the Central Bank of Honduras.

LSU Law Professor Emeritus Katherine Spaht, a former student and colleague, recalled Professor Litvinoff’s “superb memory and sarcastic wit.” “He taught me here in the 1960s in a freshman course on Civil Law Systems. Later, as a student, he asked me to edit his treatise on Obligations . . . It was rich and valuable experience. Students adored him. He was willing to take average or struggling students and assist them in achieving to the best of their ability.”

“Professor Litvinoff will be remembered as one of the great civilians of his time,” commented Professor Olivier Moréteau, Director of the Center of Civil Law Studies, and the Russell B. Long Eminent Scholars Academic Chair. “He will be remembered as a leader of the revision of the Civil Code of Louisiana, making it compatible with the laws of other states, modernizing without sacrificing tradition. Known and admired by comparative law scholars all over the world, Don Saúl always combined the local and the global with his unique Argentine elegance and deep understanding of human affairs.”

I did not know Saúl well before I graduated, and never took a course from him. But I somehow became close friends with him after graduation. I visited him often in his office and at his house several times to discuss philosophy, legal theory, etc. and we corresponded for many years. He often told me he wished I had been his student–primarily based on my writings on civil law and passion for legal theory–and I do wish I had. (My younger brother, oddly enough, who also knew and was friends with my wife before I even knew her, also knew Litvinoff well before I did–I believe he was his pool boy for a while.) I believe it was in 1993 or 1994 or so when I was practicing in Houston, I was visiting Baton Rouge and paid a visit to Saúl. My wife was at the time entertaining a job promotion up in Philadelphia, so we were contemplating the move, and I was looking into legal jobs in Philadelphia. I’ll never forget that when this came up in discussion, Saúl said, “I am afraid you have non-plussed me”–the idea that a man would plan his career around his wife’s was inconceivable to him.

I was extremely fond of Saúl, and always marveled at his vast, unbelievable intellect. What a fine mind, and a fine person. I’ll miss him.

My article “Radical Patent Reform Is Not on the Way” was published today (Oct. 1, 2009) in Mises Daily.

***

Hardly a day passes when we do not hear of one patent abuse or another.[1] Ridiculous patents are issued or filed and companies are enjoined from selling their products. Judgments are issued, and settlements reached, for billions of dollars. (See the Appendix for examples of ridiculous patents and outrageous judgments.) Not surprisingly, there is a growing demand for reform of our patent system.[2]

Whether their demands are modest or radical, the reformers share the belief that the patent system is broken; has gotten out of hand; and is not in sync with our fast-paced, high-tech, open-sourced, digitized world — in short, that it needs to be fixed.

FULL ARTICLE

[Mises crosspost]

In the Fall 2009 issue of LSU Alumni Magazine, “Tigers in Print” section.