The power of shareholders to replace the board is a central element in the accepted theory of the modern public corporation with dispersed ownership. This power, however, is largely a myth. I document in this paper that the incidence of electoral challenges during the 1996–2005 decade was very low. After presenting this evidence, the paper analyzes why electoral challenges to directors are so rare, and then makes the case for arrangements that would provide shareholders with a viable power to remove directors. Under the proposed default arrangements, companies will have, at least every two years, elections with shareholder access to the corporate ballot, reimbursement of campaign expenses for candidates who receive a sufficiently significant number of votes (for example, one-third of the votes cast), and the opportunity to replace all the directors; companies will also have secret ballot and majority voting in all directors elections. Furthermore, opting out of default election arrangements through shareholder-approved bylaws should be facilitated, but boards should be constrained from adopting without shareholder approval bylaws that make director removal more difficult. Finally, I examine a wide range of possible objections to the proposed reform of corporate elections, and I conclude that they do not undermine the case for such a reform.
In “International Human Rights in American Courts,” Judge William Fletcher analyzes the implications of the Supreme Court’s recent opinion in Sosa v. Avarez-Machain. The plaintiff in Sosa brought suit for tortious violation of customary international law under 28 U.S.C. § 1350, the Alien Tort Statute (“ATS”). The Court held that the federal courts can enforce norms of customary international law in suits brought under the ATS only if the norms are established with sufficient clarity to satisfy the restrictive criteria set forth in the Court’s opinion.
According to Judge Fletcher, the Court answered two questions in Sosa. First, there is a limited federal common law of international human rights based on customary international law. Second, that federal common law is both jurisdiction-conferring in the sense of “arising under” federal law, and supreme in the sense of the Supremacy Clause. Professors Jack Goldsmith and Curtis Bradley, among others, had raised questions about the legitimacy of the line of human rights cases based on customary international law that began with the Second Circuit’s 1980 decision in Filartiga v. Pena-Irala. The Court’s response was that, within the scope of the federal common law permitted by Sosa, Filartiga remains good law.
However, the Supreme Court in Sosa did not answer questions about the possible preemptive scope of the federal common law on international human rights. Judge Fletcher explores three examples — (1) a wholly international case in which an alien sues another alien for a violation of international human rights abroad; (2) a partially international case in which an alien sues an American corporation for such a violation abroad; and (3) a wholly domestic case in which a defendant in a American court contends that a State’s death penalty violates international human rights. Judge Fletcher points out that these preemption questions are going to arise in both state and federal courts. He further points out that the federal courts may, in some cases not covered by federal common law, be required by Erie Railroad v. Tompkins to follow state courts’ decisions on questions of international human rights.
When and why do American judges enforce treaties? Today’s dominant theory of treaty enforcement is the doctrine of “self-execution,” which suggests that judicial enforcement of treaties is deduced from the nature of the treaties signed. The theory holds that some treaties are written so as to be directly enforceable, just like a statute, with full domestic effects, while other treaties are written so as to create duties only under international law. Unfortunately, as most scholars recognize, the doctrine is perplexing and of limited predictive value.
This Article, based on a new study of the history and record of treaty enforcement, provides a different theory as to when treaties are actually enforced in American courts. It finds that the question of whether a treaty is “self-executing” is acting as a proxy for questions of institutional deference. A good guide to treaty enforcement across the history of the United States is whether it is Congress, the Executive, or a State accused of breach.
The basic treaty enforcement question is, and has been, whether the alleged act of treaty breach justifies a judicial remedy. Judicial deference to Congressional action with respect to a treaty is to be expected. Conversely, the judiciary will continue to use treaty law to prevent States from putting the United States in violation of its international obligations. As to the Executive, the judiciary should begin to explain why, in terms of deference, it is or is not choosing to enforce a treaty against Executive breach.