Dec. 2, 2015



by Marie-Anne Frison-Roche


The contract is the main natural and legal instrument of the competitive market. It seems foreign to the regulatory system which, close to the "regulation" (texts) seems more express itself in administrative unilateral acts.

But this division is fading because the contract is an effective tool because it makes gained acceptance recipient of the norm, becoming the preferred instrument of public policy. The Regulator will use it the more so as on the one hand by the contract operators bring him information and on the other hand, operators have the power to disobey him. That is why the contract is a major figure in the Regulatory system.

The self-regulation mechanism goes further, since the Regulatory system itself is built on contractual commitments, exempting exogenous rules and regulator.

The competitive market works by ordinary contracts of sale or service. These bilateral contracts produce rights and obligations for both parties and  their execution is most immediate. Other types of contracts, such as contracts involving sequential execution, or distribution framework contracts, or non-compete obligations, because they impede the flow of the competitive market, are less natural to the market and therefore are less easily admitted.

The Regulation doesn't have that same spontaneous relation to the contract. On the contrary, the Regulation is more the form of the  public intervention in the economy, as shown by the English term of  "regulation" whose literal expresses the administrative power to adopt and impose administrative orders ex ante , in an unilateral action of the State by organizing a text binding manner economic behavior of the operators. So there is a priori no place for contracts in the Regulation.

But if this opposition is accurate at first, the overall development of between the State and the economy brings nuances. Indeed took place the contractualisation of public action, built on the idea that the State cannot act effectively if its action isn't accepted by its recipients: the instrument of efficiency is more then the traditional tool of coercion but the phenomenon of acceptance, characteristic of the contract. Thus, the relation between the regulator and the operators of a sector often remains a cohercitive relation, especially when the regulator imposes sanctions against operators because they are guilty of breaches of the requirements previously adopted by the regulatory body. But precisely these requirements have not been adopted unilaterally by the Regulator who would, if too isolated, have not sufficient information to take adequate measures, then becoming a victim of its information asymmetry and suffering the failure of the orders he issued, as firms have the power to desobey it. Therefore operate in all sectors formal or informal consultations on the drafts presented to all for discussion on the website of the regulator before adoption by the regulatory body Professor Julia Black has designated this phenomenon "conversational regulation". This is a form of contract between the regulator and the industry, as the sector has to accept the regulatory texts. The personality of the regulatory body President, in whom the sector must trust becomes essential. It is close to the intuitu personae contract.

Can we go further and consider a Regulation by contract not in a sociological but in a legal sense? Proponents of self regulation believe. Indeed, without the need for exogenous regulator, companies would contract committing themselves, through rules, often ethics, so that the sector works well.

It is howadversiting and sport sectors  are organized . The advantage of a contract Regulation is that this legal instrument is not limited by the boundaries: an international sector in which international companies operate is then regulated by international agreements containing commitments worth on whole sector. This solves the handicap of public regulation, which, attached to the State, is enclosed within the borders overwhelmed by the market itself.

Then the effectiveness of these contracts is based on professions, which may constitute the "intermediate bodies" whose renewed need arises: auditors or lawyers, for example. However, it should be assured that the procedural rules of this professional regulatory system, including transparency, are preserved for that third parties can observe the right organization of the sort of Regulation and that trust can result.

Most often it is noted that within the implementation of these private contracts are part not only of private unilateral acts that remind the administrative acts such ethical charters businesses or professions and professional institutions , reminiscent of the regulatory authorities, such as professional orders which guarantee the efficient and fair operation of the whole.

It is certain that the globalization of trade, having been challenging to States by the Cross-over by the markets, has put the contract in the first tool power at the expense of the law. This promises to the contract a special place in the future to build a global Regulation. The question is whether, to achieve this, the contracts have firstly the legitimacy and also the ability to pursue anything other than the interests of the parties.




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