AGABIN CHAPTER 12
GLOBALIZATION OF THE LAW: BACK TO THE FUTURE
I. Globalization of the law
 Pattern of imposing a common code of conduct
by the dominant states on the subject states
 Viability of an international economic order
presupposes the presence of a leader nation
powerful enough to impose a common code of
conduct upon other nations
Pax Americana
 Natural that globalization of the law in our day
and time will reflect Pax Americana
 US is the sole model for shaping world
capitalism
 Legal institutions support business, that is why
it is not surprising that these would be the
model for legal development
Economic slant of law
 Only economic interest groups have the
resources and the organization to wage their
claims and demands on the legislature and in
other branches of the government
 Law is considered an instrument used to
achieve economic ends
Globalization’s overriding interest
 Establish a legal order that is:
o free from local politics and populist
nationalist pressures
o a complement of the market system
regulated only by the invisible hand – the
natural and impartial laws of economics that
operate free from the push and pull of
political forces.
 Establish a world without borders.
II.Legal Ideology of Globalization
 Our interests are most secure in a world where
the rule of law protects both political rights and
free market economies.
 Rule of law – application of known principles of
law as opposed to the influence of arbitrary
power.
Principles of Law
 Minimum government
 Sanctity of private property
 Liberty of contract
Why common law is preferred by capitalists
 Predilection for enforcement of private
contracts
 Protection of private property
 More flexible and expandable than the civil law
 Accommodate surging economic forces
 Decisions are consistent with the goal of wealth
maximization
III. Court as Referees Under Globalization
 Role of judges is to enforce the free choices,
private contracts and reasonable expectations
of the parties.
 Big players in the globalization do not want the
state to completely wither away; what they
want is to retain the state to referee the global
game to insure that the playing rules of the
market are observed.
 They look at the judiciary as one such agency of
the state to act as a formal arbiter in the
national arena.
 It is still the municipal or domestic institutions
which enforce the code of conduct.
Examples of common code of conduct
 Treaties
 Agreements
 Arrangements
4 Principal strands of economic and legal
principles that tie the common code of conduct
 free trade among nations - open the way for
the international trading and financial system
and to allow the various countries to compete
effectively in international markets.
 deregulation and liberalization – abolition of
governmental regulatory measures; free play of
market forces
 privatization – state and GOCCs will not
dominate the market
  protectionism – imposition of import and
export duties
Rules are laid down by strong players at the
expense of the weak
 transnational corporations dismantle
monopolies to gain a foothold and eventually
capture the markets of domestic monopolies
 developing countries are forced to pass anti-
trust or anti-monopoly legislation to comply
with treaty obligations
Globalization includes protectionism for the
strong
 preserve monopoly through intellectual
property laws that criminalize unauthorized use
of patents and infringement of trademarks
 these laws protect major competitors
IV. The Rebirth of Laissez Faire
 Gave rise to a jurisprudence with a free market
bias, redefining constitutional concepts of due
process, liberty of contract, property rights and
just compensation
 gave birth to the concept of substantive due
process
 gave birth to liberty of contract doctrine
Liberty of contract doctrine
 citizen’s liberty refers not only to freedom from
restraint, but also includes the right to pursue
any livelihood
 to enter into contracts which may be proper
and necessary to his livelihood
V. Back to the Future?
 Economic arena is no longer the national but
the world economy
 Economic power of the world’s economic
competitors prevails over the sovereignty of
the state
 Decisions as to what goods to produce, how
and where they are distributed, and how the
profits are to be allocated should be decided
by the invisible hand of the market, not by
the politician
Global Players Used The Judiciary To Keep The
Government Off The Backs Of The Market Players
Oil Deregulation Cases
In this decision, the Supreme Court invalidated the
Downstream Oil Deregulation Act of 1996, R.A.
8180, for being unconstitutional as in violation of
the antimonopoly provisions of the 1987
Constitution. No less than the President of the
Philippines and the rest of his administration
condemned the decision and one official called for
the impeachment of the justices for "meddling
with economic policy".
Manila Prince Hotel v GSIS
Another wanted to amend the constitution to curb
the powers of the Supreme Court. Earlier, when
the Supreme Court reversed the decision of the
Government Service Insurance System to award a
winning bid for the Manila Hotel to a Malaysian
corporation,21 this was also branded by the
President as "intrusive".
Tafada v Angara
Then the High Court, in Tafada v. Angara,22 held
that the World Trade Organization treaty, requiring
states to liberalize their economies, does not
conflict with the provisions of the Constitution
which makes it the duty of the state to develop a
reliant and independent national economy
effectively controlled by Filipinos. 23
In addition, Sec. 10, Article XII of the Constitution
was invoked, which expresses preference for
qualified Filipinos in the grant of rights, privileges
and concessions covering the national economy
and patrimony. So the Court refuted the
nationalist argument by saying that there are
enough countervailing provisions in the
Constitution to allow the Senate to ratify the
Philippine concurrence in the WTO agreement.
Under the ideology of globalization, the courts will
have to restrain their predilection to intervene in
economic decisions.
In BOI v. Garcia,24 the Court had reversed the BOI
decision which allowed the Luzon Petrochemical
 Corporation to relocate its proposed plant from
Bataan to Batangas, relying on the provision of the
Constitution mandating the state to regulate and
exercise authority over foreign investments,25 and
to develop a self-reliant and independent national
economy effectively controlled by Filipinos.26
In the Manila Hotel 7 case, suvra, the Court
reversed the decision of the GSIS to sell the Manila
Hotel to the highest bidder, which happened to be
a Malaysian corporation, and ordered the GSIS to
accept the matching bid of a losing Filipino bidder.
The Court relied on the constitutional injunction
that "in the grant of rights, privileges, and
concessions covering the national economy and
patrimony, the State shall give preference to
qualified Filipinos". 28 It was ruled that the Manila
Hotel belonged to the national patrimony and that
the GSIS failed to observe the constitutional
injunction.
VI. Problems of Globalization
 uneven distribution of benefits;
 instability of the financial system;
 incipient threat of global monopolies and
oligopolies;
 ambiguous role of the state;
 question of values and social cohesion
Uneven distribution of benefits
 zero sum game (winners and losers)
 it is the people in the poorest countries who
pay proportionately higher prices for the
resulting pollution and degradation of land,
forests, rivers and oceans that sustain the
livelihood of the poor.
Instability of the financial system
 due to concept of virtual money
 Unlike a nation's currency, this is money that
is not created by economic activity like
investment, trade, production, or
consumption.
 Highly volatile
Incipient threat of global monopolies and
oligopolies
 a transnational corporation (TNC) is one
globalized economic unit where parts,
machines, planning, research, marketing,
finance, pricing and management are
conducted all over the world depending on
the competitive advantages.
 Globalization concentrates economic power
in the TNCs, which are the big winners in
globalization.
(no discussion for the last two)
VII. Redefining the Role of Law in Globalized
Economy
 If the function of the law is to render justice,
we also have to redefime justice in economic
terms. Perhaps Dworkin's definition should
be considered: "justice ... is a matter of the
right outcome of the political system: the
right distribution of goods, opportunities, and
other resources.
 No trickle down process in globalization.
 In this context, there is need to redefine the
role of law in the present system: it is to
realize and give meaning to the economic
rights of the people.
 As globalization spreads over wider areas of
our economic life, the function of the law
should focus principally on the protection of
the economic rights of the people so that
they will not be swallowed by the big winners
of the global game. Otherwise, we will all go
back to a new age of feudalism.