Artificial Intelligence (AI) applications are increasingly used in negotiations. In this essay, I investigate the impact of such applications on negotiation dynamics. A key variable is information. Smart algorithms will drastically reduce information and transaction costs, improve the efficiency of negotiation processes, and identify optimal value creation options. The expected net welfare benefit for negotiators and societies at large is huge. At the same time, asymmetric information will assist the algorithmic negotiator, allowing them to claim the biggest share of the pie. The greatest beneficiary of this information power play could be BigTech and big businesses more generally. These negotiators will increasingly deploy specialized negotiation algorithms at scale, exploiting information asymmetries and executing value claiming tactics with precision. In contrast, smaller businesses and consumers will likely have to settle for generic tools like the free version of ChatGPT. However, who will ultimately be the big winners in AI-powered negotiations depends crucially on the laws that regulate the market for AI applications.

This article presents the results of an empirical study on the design of efficient judicial dispute resolution systems for business-to-business (B2B) commercial disputes in a digital world. To the best of our knowledge, we are the first to undertake such an inquiry after the pandemic, post-Brexit, and in the face of an artificial intelligence (AI) wave which has gained momentum on an unprecedented scale in the last three years and has passed an inflection point. We interviewed 24 senior legal practitioners and business leaders, and we conducted an online survey which returned 275 responses from dispute resolution professionals worldwide. The majority of survey participants practice in the United States, in the United Kingdom, in Germany and in France. We argue that courts are also an indispensable part of the civil justice infrastructure for B2B commercial disputes. As far as stakeholder preferences are concerned, we find that the push for digitization and for using AI tools to improve the efficiency of judicial proceedings is strong. AI applications have already become a cornerstone of dispute resolution practice. “Online courts” should be “on offer” in commercial disputes. Providing user-friendly and reliable digital / AI tools for information management and analysis, communication and decision-making is key, as are clear protocols for online hearings. But disputing parties do not want to be judged by machines. Rather, they request competent and specialized human decision-makers. Courts need to be on top of the game with respect to the subject matter of the dispute. Parties also request planning and efficient case management. A case management conference and a process plan are essential. Finally, courts should offer an “early neutral evaluation” - a non-binding preliminary evaluation be a third party, with or without (mediated) settlement discussions - if the parties agree to this in the case management conference.

The recent bailout of Credit Suisse is noteworthy for many reasons. One of them is that, while AT1 bondholders were wiped out, shareholders were not. This violates the ‘absolute priority rule’ which is central to corporate reorganisations and bank resolution regimes. In this article, we analyse the motives and mechanics of the write-down and argue that, given the bond terms, the prospect for a legal challenge by the bondholders is slim. At the same time, we question the merits of the write-down. Bondholders should fare no worse than common equity, regardless of whether a financial institution is put in an insolvency proceeding or bailed out, and the applicable bond terms should reflect this. We also raise the issue of a more principled approach to bailouts more generally.

In this article, I discuss the possibilities and limitations of restructuring laws against the background of geopolitical shocks such as the COVID-19 pandemic and the current energy crisis. I make two claims, one narrow and focused on German bankruptcy law, and one broad with a cross-jurisdictional reach. My narrow claim relates to ‘StaRUG’, the new German restructuring regime. I argue that this law is a superfluous and flawed instrument. It should be repealed. My second claim is much broader. I argue that bankruptcy laws, including restructuring laws, are generally ill-suited to deal with the economic consequences of geopolitical or macroeconomic shocks as a ‘first line of defence’. Bankruptcy laws are not designed to provide the structural assistance at scale which the businesses affected by these shocks need. At the same time, massive state aid for distressed businesses in times of crisis and, in particular, ad hoc bailouts of large critical firms, are also problematic. I propose that firms’ resilience against geopolitical or macroeconomic shocks should be strengthened, and that best practices (‘principles’) for bailouts should be developed.

This essay identifies and analyses key developments and regulatory challenges of “Digital Dispute Resolution”. We discuss digital enforcement and smart contracts, internal complaint handling mechanisms, external online dispute resolution and courts in a digital world. Dispute resolution innovations originate primarily in the private sector. New service providers have high-powered incentives and face fewer institutional restrictions than the courts. We demonstrate that with smart contracts, digital enforcement and internal complaint handling, a new era of dispute resolution by contract without a neutral third party dawns. This development takes the idea of a “privatization of dispute resolution” to its extreme. It promises huge efficiency gains for the disputing parties. At the same time, risks of an extremely unequal distribution of these gains, to the detriment of less vigilant parties, and of undermining the rule of law loom large. The key regulatory challenge will be to control the enormous power of large, sophisticated commercial actors, especially platforms. We suggest regulatory tools to address this problem. 

In this essay, we propose a principled approach for government bailouts of critical/systemic firms who find themselves in COVID-19-induced financial distress. We also demonstrate why bankruptcy is the wrong tool to address the problems of these types of firms.

The current pandemic threatens lives and livelihoods across the world. A key difference compared to previous market shocks is that lockdowns and related measures have, in certain instances, made it impossible for businesses to conduct their operations. This has resulted in a very specific type of distress, one that bankruptcy is not in the best position to address effectively. If there are no revenues, the design of bankruptcy laws makes them an inadequate tool – and the sheer volume of companies going through the process may put severe stress on the system. The difficulties that the vast majority of companies are encountering may be better solved using different tools: bailouts, bail-ins or a combination thereof, deployed by the government in wide-ranging statutory schemes.

However, these schemes may not adequately address the issues of all companies; and the preservation of some of them – those that we refer to as critical/systemic – may be of such significant value to society that more intense assistance from the government is justified. We engage with the characteristics of firms that should be considered critical/systemic and the principles that should guide ad hoc rescues of those companies by the government. Firms are critical/systemic if their failure imposes significant negative externalities on the economy (or, conversely, their preservation generates significant positive externalities) or if they provide the public with an “infrastructure” not otherwise provided by the private sector. If firms are critical/systemic, the government should have the ability to bail them out, going beyond applicable statutory schemes and ensuring that the relevant externalities are considered when deciding whether to keep these companies as going concerns. Bankruptcy is a private process. It is not designed to vindicate such public considerations.

Government bailouts, however, should be governed by principles, as any government intervention in the economy, and its associated efficiency and distributional effects must be considered with care. The guiding principles that we propose and elaborate on are (i) proportionality, (ii) efficiency, (iii) equity and (iv) transparency. The application of these principles should ensure that, if the government takes ownership of a private firm through an ad hoc bailout, this is a tool of last resort, and not more than temporary – and that the pre-distress investors properly contribute to the necessary measures.

Two prominent progressive senators, Bernie Sanders and Elizabeth Warren, have recently proposed that employees should be allowed to elect 40 to 45 percent of the directors of large corporations. If implemented, such a reform would bring U.S. corporate law substantially closer to European countries like Denmark, Germany, and Sweden, where worker codetermination has long been a central feature of corporate governance.

An extensive body of theoretical and empirical scholarship analyzes codetermination’s economic impact on corporations and their employees. This Article focuses on a different issue. It examines codetermination’s potential for protecting our democracy against the dangers inherent in the accumulation of extreme wealth and power by private corporations.

Concentrated corporate wealth creates the risk that corporations will use their resources to undermine democratic institutions. This Article argues that codetermination can mitigate this risk by splitting corporate voting rights between shareholders and employees, thereby playing a role that is broadly similar to that of the Constitutional separation of powers.

COVID-19 has severely disrupted the conduct of business around the globe. In jurisdictions that impose one or more ‘lockdowns’, multiple sectors of the real economy must endure prolonged periods of reduced trading or even total shutdowns. The associated revenue losses will push many businesses into bankruptcy. No public policy response can recover these losses. States can, however, act to reduce the amplification of the shock by the way in which they treat the cohort of newly bankrupt businesses. In jurisdictions where a well-functioning reorganisation procedure can produce value maximising outcomes in normal conditions, the temptation may be to subject this cohort to such procedures. This temptation should be resisted, not only because of the (significant) costs of these procedures, or because of concerns about institutional capacity to treat a high volume of cases, but also because such procedures are likely to be a poor ‘fit’ for the treatment of COVID-19 distress. The more attractive routes to relief are bail-ins (one-time orders to creditors or counterparties, or some class thereof, to forgive), bail-outs (offers to assume the debtor’s liabilities, or a class thereof), or some combination of the two. In this paper, we explain why a public policy response is necessary to mitigate the amplification of the shock caused by trading shut-downs, and we compare treatment by the prevailing bankruptcy law with treatment by bail-ins or bail-outs along a range of dimensions. We conclude by suggesting principles to help guide the choice between bail-ins and bail-outs, and the design of either form of intervention. These principles should offer a useful starting point for thinking about the design and delivery of novel forms of relief to debtors distressed by COVID-19 related revenue losses.

Technological developments, especially digitization, artificial intelligence (AI), and blockchain technology, are currently disrupting the traditional format and conduct of arbitrations. Stakeholders in the arbitration market are exploring how new technologies and tools can be deployed to increase the efficiency and quality of the arbitration process. The COVID-19 pandemic is accelerating this trend. In this article, we analyze the “Anatomy of an Arbitration.” We argue that, functionally, fully AI-powered arbitrations will be technically feasible and should be legally permissible at some point in the future. There is nothing in the concept of arbitration that requires human control, governance, or even input. We further argue that the existing legal framework for international commercial arbitrations, the “New York Convention” (NYC) in particular, is capable of adapting to and accommodating fully AI-powered arbitrations. We anticipate significant regulatory competition between jurisdictions to promote technology-assisted or even fully AIpowered arbitrations, and we argue that this competition will be beneficial. We expect that common law jurisdictions will enjoy an advantage in this competition: machine learning applications for legal decision-making can be developed more easily for jurisdictions in which case law plays a pivotal role.

The idea that a corporation’s employees should elect some of the corporation’s board members, a system known as codetermination, has moved to the forefront of U.S. corporate law policy. Elizabeth Warren’s Accountable Capitalism Act calls for employees of large firms to elect forty percent of all board members. Bernie Sanders’s Corporate Accountability and Democracy Plan goes even further and states that workers should elect forty-five percent of board members.

Both Warren’s and Sanders’s plans are broadly similar to the German law on codetermination, which for many decades has allowed employees of large German corporations to elect up to half of all board members. It is therefore unsurprising that Senator Sanders points to Germany’s successful economic development as evidence that economic progress and mandatory codetermination can go hand in hand.

However, this Article argues that codetermination promises to be a poor fit for U.S. corporations. While Germany arguably reaps significant benefits from codetermination, legal, social, and institutional differences between Germany and the United States make it highly unlikely that the United States would be able to replicate those benefits. Furthermore, the costs of codetermination probably would be much higher in the United States than they are in Germany.

What are the implications of artificial intelligence (AI) for corporate law? In this essay, we consider the trajectory of AI’s evolution, analyze the effects of its application on business practice, and investigate the impact of these developments for corporate law. Overall, we claim that the increasing use of AI in corporations implies a shift from viewing the enterprise as primarily private and facilitative, towards a more public, and regulatory, conception of the law governing corporate activity. Today’s AI is dominated by machine learning applications which assist and augment human decision-making. These raise multiple challenges for business organization, the management of which we collectively term “data governance.” The impact of today’s AI on corporate law is coming to be felt along two margins. First, we expect a reduction across many standard dimensions of internal agency and coordination costs. Second, the oversight challenges — and liability risks — at the top of the firm will rise significantly. Tomorrow’s AI may permit humans to be replaced even at the apex of corporate decision-making. This is likely to happen first in what we call “self-driving subsidiaries” performing very limited corporate functions. Replacing humans on corporate boards with machines implies a fundamental shift in focus: from controlling internal costs to the design of appropriate strategies for controlling “algorithmic failure,” that is, unlawful acts by an algorithm with potentially severe negative effects (physical or financial harm) on external third parties. We discuss corporate goal-setting, which in the medium term is likely to become the center of gravity for debate on AI and corporate law. This will only intensify as technical progress moves toward the possibility of fully self-driving corporations. We outline potential regulatory strategies for their control. The potential for regulatory competition weakens lawmakers’ ability to respond, and so even though the self-driving corporation is not yet a reality, we believe the regulatory issues deserve attention well before tomorrow’s AI becomes today’s.

Extreme sports and extreme sports sponsoring have become key features of the modern entertainment and sports industry. This article attempts to investigate fundamental issues of the law and economics of extreme sports sponsoring from a comparative perspective. A set of 40 interviews were conducted with sponsored athletes between June and September 2018. These interviews provide an up-to-date and, to the best of my knowledge, unique account of contract practice regarding extreme sports sponsoring worldwide. The main findings of the article can be summarized as follows: First, extreme sports sponsoring contracts are currently unbalanced. Risks and rewards are unbundled—while the athletes bear almost all the risks, the sponsor firms reap almost all of the rewards. This does not necessarily imply that the current contracting practice is inefficient. Unequal bargaining power and strong non-monetary incentives of athletes may account for an uneven distribution of the monetary cooperative surplus. But the available evidence suggests that the current practice incentivizes athletes to take inefficient risks, and, based on athletes’ preferences, there are ways to significantly increase the cooperative surplus compared to the status quo. In particular, firms could arrange for comprehensive health, disability and life insurance for the benefit of athletes and their families—at little costs to firms and with a significant positive effect on athletes’ welfare. Firms could establish systematic counselling, coaching and training programs for athletes, and they could move away from bonus-based compensation schemes. Second, sponsor firms face higher duties of care vis-à-vis young and/or inexperienced athletes. These athletes, in particular, are prone to “inefficient risk-taking”. Depending on the factual circumstances of the individual case, these duties may include enhanced counselling, coaching and safety training, as already mentioned. They may also require firms to refrain from subjecting young or inexperienced athletes to extremely high-powered financial incentives (bonus schemes) that encourage inappropriate risk-taking. Third, sponsors also face higher duties of care if they are involved in or influence the organization of extreme sports events or control the premises/facilities on which such events take place. Fourth, currently, sponsored athletes are treated by sponsors as independent contractors. Depending on the facts of each individual case and the applicable legal standard to delineate independent contractors from employees, this may or may not be correct. This article suggests that courts should give more weight to economic (in)dependency as a relevant standard in addition to control exercised by sponsor firms when assessing whether a sponsored athlete is an employee. Further, even if an athlete cannot be characterized as an employee of a particular sponsor, the level of control exercised by that sponsor and the athlete’s economic dependency on him or her are factors that should weigh in on the sponsor’s duties of care under contract and/or tort law, creating a more finely tuned regulatory system than the dichotomy of independent contractor and employee suggests.