LSE Law Review

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  • The Regulation of Islamic Finance in the UK: A call for change

    For decades, the UK has been the leading nation in the Western world when it comes to Islamic finance. Despite this fact, the Islamic banking industry within the UK is still far behind conventional finance in terms of growth and development. This article argues that a major obstacle in the path of this industry's growth is the regulatory framework which it is currently subject to. As it stands, Islamic banking is regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the same way as its conventional counterpart. This represents an obstacle for the growth of the industry since it subjects Islamic finance to rules created with only conventional banking in mind. This article posits that the current regulatory framework should change so that it accounts for the unique features of Islamic banking. Chapter 1 of this article contextualises the debate by describing the operation of Islamic banking before going on to highlight how the risks involved in this type of banking differ from those inherent in conventional banking. Chapter 2 builds on this analysis by examining the interplay between Islamic banking and two regulated aspects of banking: capital adequacy ratios ('CARs') and guaranteed deposits. Chapter 3 concludes the discussion by pointing out a number of issues which could undermine the adoption of a more industry-specific approach by the UK regulators and offers starting points from which these issues could be resolved

  • Too Little, Too Late: Facebook, GIFs, and the CMA

    The legal mechanisms dealing with mergers, until recent developments, have lost sight of the principles of competition law. The CMA's ruling on the Meta–Giphy acquisition is very telling of the approach to come, but it is submitted that so much has passed through the weak sieve provided by competition law that to ring the alarm bells now would be unfortunate

  • When Are States (Not) Obliged to Save Citizens' Lives? Discovering the 'Restrictive Triage' which Undermines the Operational Duty under Article 2 ECHR

    According to Article 2 of the European Convention on Human Rights, when states do or should know that an individual is at a real and immediate risk of death, the state has an operational duty to take reasonable steps that might be expected to avoid that risk from materialising. This article explains and analyses interpretations of that duty, both by the European Court of Human Rights and by UK courts. A persistent inconsistency is found. On the one hand, judges in both fora have repeatedly championed Article 2 as a fundamental right enshrining a basic value of democratic societies. However, at the same time, a highly restrictive approach to the operational obligation has been favoured; calibrated first by the European Court of Human Rights and intensified by UK judges. Consequently, and by analysing a wide range of European and domestic case law, this article relates that for UK litigants the obligation's legal tests now comprise a materially compounding 'restrictive triage' of: (1) 'identifiability', (2) 'state knowledge', and (3) 'institutional deference'. Accordingly, and notwithstanding judicial rhetoric, the operational obligation is enforceable in the UK only in vanishingly few circumstances. This reality is criticised, and three reform suggestions are proposed to enable the obligation to most effectively minimise avoidable deaths

  • Principle, Pragmatism, and Policy in Determining the Scope of the Duty of Care and Extent of Liability for Consequences

    Manchester Building Society v Grant Thornton UK LLP and Meadows v Khan are twin Supreme Court judgments concerning what is often termed the scope of the duty of care in negligence. This controversial principle seeks to determine whether a loss (or part thereof) factually caused by the defendant's negligence is attributable to the defendant, or whether the defendant is not liable because the loss is outside the scope of their duty of care. In both cases, the decisions were unanimous but their Lordships disagreed as to how the principle should be formulated and addressed. This note critically analyses three issues arising from the judgment. First, it evaluates the conceptual propriety of treating the principle as involving two separate issues, namely the scope of the defendant's duty and whether the claimant's loss falls within it (i.e., the extent of liability for consequences) and concludes that keeping the issues apart, as the majority did, is preferable. Second, however, it argues that the majority's treatment of the second issue was somewhat cursory and suggests two possible approaches, extrapolated from the majority's reasoning and Lord Leggatt's concurring judgments respectively, to determine whether the defendant's extent of liability encompasses a particular loss. Finally, it considers the role of policy-based reasoning in determining the scope of the defendant's duty. It argues that policy-based reasoning remains a useful tool to supplement the majority's focus on the purpose for which the duty existed, which in itself may occasionally lead to confusion

  • Addressing the Inadequacies: A New Multi-Faceted Solution to Double Hatting in ISDS

    In Investor-State Dispute Settlement (ISDS), 'double hatting', or the playing of multiple roles by arbitrators in different ISDS proceedings as counsels, expert witnesses, or tribunal secretaries, is a problematic phenomenon. This regrettable practice results in the monopolisation of power and builds up suspicions regarding such arbitrators' impartiality which, in turn, threatens the legitimacy of the whole ISDS regime itself. Therefore, to sustain the current ISDS system as a viable dispute resolution option for investors and states, there is a need to regulate double hatting at the earliest. To that end, numerous solutions have been forwarded by scholars and international bodies alike. The recently proposed Draft Code of Conduct for Adjudicators in ISDS is a significant development in this field. However, all these solutions are either unviable or inadequate as they fail to account for the variations in the forms and intensities of double hatting. To remedy this lacuna, this article analyses the existing proposals, including the Draft Code of Conduct, and, thereafter, develops a more comprehensive solution by inculcating measures such as compulsory disclosure requirements and temporary bans. Further, it adapts these measures to regulate, and minimise, concurrent and successive double hatting across different classes of arbitral proceedings. By doing so, this article adopts a novel, multi-faceted approach to overcome the problem on a case-by-case basis, serving its aim of bringing to the table a viable and effective solution—one that ticks the maximum number of boxes—to resolve the risks posed by double hatting

  • Resolving Investor State Dispute Settlement's Legitimacy Crisis: The Case for Reinstating the Requirement to Exhaust Local Remedies

    This article dissects a variety of structural issues that contribute to the 'legitimacy crisis' currently faced by Investor State Dispute Settlement (ISDS) and in particular, treaty-based Investor-State Arbitration (ISA). Primarily, it addresses issues of jurisdictional overlap with domestic courts, and the inability of ISA to engender 'good governance' norms and the rule of law in respondent states. By examining these structural issues and their relationship with the difficult, and at times inflammatory relationship between the international investment protection regime and domestic governments and judiciaries, it contends that further internationalization, or 'systemic reform' in lieu of the proposals made by the European Union is not adequate for resolving the legitimacy crisis. Rather, it proposes that a more radical, reintegration of domestic courts is necessary through the reinstatement of a traditional requirement of customary international law, the requirement to exhaust local remedies before commencing arbitral proceedings

  • Self-Defence Against Non-State Actors: Reconceptualising the Legality of the 'Unwilling or Unable' Test in Light of the Doctrine of Necessity in International Law

    The 'unwilling or unable' test is a real-world challenge that has the potential to make a mockery of the cornerstone of modern international law in Article 2(4) of the UN Charter. The increasing prevalence of unattributable armed attacks by NSAs provides an opportunity for powerful victim States to expand the notion of the inherent right of self-defence through the 'unwilling or unable' test, without any real thorough basis to their reasoning. To complicate matters further, the dangers of State silence in the face of the unwilling or unable justification from primarily powerful Western States seeking to invoke self-defence, may end up playing into the hands of proponents of the 'unwilling or unable' test. This potentially contributes to 'norm entrepreneurship' and the shaping of international law in their favour through the expansion of the law of self-defence to incorporate the test itself. Despite the uncertainty surrounding the legality of the test, the fact remains that the legitimation of predatory force against primarily weaker host States in the Global South by primarily powerful victim States in the Global North cannot continue and has to be addressed in order to avoid the abuse of the test in the name of self-defence. The principle of necessity provides this foundation and is the key to engaging States in a discourse that seeks to bring the 'unwilling or unable' test into greater compliance with the jus ad bellum regime. This paper refines Deeks' test, using the notions of reasonableness and objectivity under the principle of necessity, and aims to contribute to the debate on the 'unwilling or unable' doctrine by clarifying the possible practical application of the test in order to strike as close a balance between the inherent right of self-defence on one hand, and State sovereignty and territorial integrity on the other

  • State Jurisdiction and the Permissiveness of International Law: Is the Lotus Still Blooming?

    The Lotus rule has traditionally stipulated that, in international law, any conduct not specifically prohibited is allowed. However, there now is considerable disagreement as to whether this principle is still valid. This article argues that one should distinguish between the Lotus principle's conceptual origins and its core content. It will be shown that, given the evolution of international law, the positivist assumptions on which Lotus was initially based are no longer tenable. On the other hand, the basic Lotus presumption, which requires state action to be deemed lawful unless it violates an international prohibition, is still viable and can be reconciled with the structure of modern international law. This 'enlightened reading of the Lotus rule' will subsequently serve as a lens for examining the international rules on state jurisdiction. The conclusion will be that this area of international law demonstrates that the presumption of lawfulness still applies, but that the sources from which relevant international prohibitions can be derived have diversified

  • Around the Black Box: Applying the Carltona Principle to Challenge Machine Learning Algorithms in Public Sector Decision-Making

    For the first time, important public sector decisions are being taken in the absence of an accountable and identifiable human being. Instead, they are increasingly outsourced to machine learning algorithms (MLAs) to cut costs, save time, and, in theory, improve the quality of decisions made. However, MLAs also pose new risks to fair and legitimate decision making such as bias and rigidity. These risks are often obfuscated by 'intrinsic opacity’: the complex interplay between extremely large datasets and code which makes it impossible to trace the decision pathway of an MLA. This 'black box problem’ frustrates the review of a public sector decision made by an MLA, as the court is unable to trace the decision-making process and so determine its lawfulness in judicial review. In such cases, it is proposed that the principles of non-devolution surrounding the Carltona principle - the doctrine that allows department officials to exercise powers vested in a minister - offer a promising way of 'getting around’ the issue of intrinsic opacity. By conceptualising the outsourcing of a decision to an MLA as an act of devolution, the law can effectively regulate the slippage of democratic accountability that the use of an MLA necessarily entails

  • The Case for Eco-Liability: Post Okpabi Justifications for the Imposition of Liability on Parent Companies for Damage caused to the Environment by their Subsidiaries

    This article seeks to argue for the imposition of liability onto parent companies for the damage to the environment caused by their subsidiaries. 'Eco-liability' will be suggested to be an appropriate means through which firms can be encouraged to engage in sustainable practices. This argument will be made in reference to the recent decision in Okpabi v Royal Dutch Shell,1 which, although somewhat positive in light of the facts of the case, was too limited in scope to take adequate account of the needs of the environment as a stakeholder. It will be posited that the environment must be recognised as a stakeholder due to its considerable and growing influence over corporate governance and practice. The environment will be considered a secondary stakeholder due to this influence. The independence of the environment as a stakeholder shall be demonstrated through an examination of the legal, social and commercial emphasis that is placed on its status within the corporate environment. Subsequently, this article submits that the environment has needs that should be recognised through an appropriate legal framework. It will be contended that this legal framework cannot be achieved through case law, with the Okpabi judgement representing the limitations on a case-based approach to environmental accountability. It will thus be proposed that statutory eco-liability be introduced, to ensure sufficient accountability exists for corporations that do not operate in a sustainable manner

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