C O N V E R G E N C E A N D P A T H - D E P E N D E N C E

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1.2.4 Social and commercial norms

Social and commercial norms are also said to cause path-dependent legal development. Gunther Teubner does not use the term ‘pathdependence’ in his work, but nevertheless propounds a view that supports the path-dependence thesis. He writes that legal rules can be understood only against the background of the society in which they were created. Rules differ according to how deeply rooted they are in the sociological, but also the political, economic, technological and cultural framework of the jurisdiction from which they originate. He gives the example of a rule requiring contractual parties to act in good faith, which originates from German law and is a function of how production is organised in German society. Teubner concludes that the rule will not generate the same results in the UK, where it has been transplanted as a result of the implementation of an EU directive, because British society organises production differently from German society. Teubner distinguishes between ‘tight’ and ‘loose’ coupling. Rules that are tightly coupled with a particular society are more difficult to transplant into another legal system than rules that are only loosely coupled with that society. If this rationale is applied to the path-dependence and convergence debate, the conclusion will be that we need to make a distinction. Convergence will be more likely to occur in an area of the law that is loosely coupled with its respective sociological background than it will in relation to rules that are tightly coupled with their sociological background.20

The idea that social and commercial norms determine the extent to which convergence occurs can also be found in David Charny’s analysis.21 Charny stresses that social and commercial standards of conduct determine corporate governance alongside legal rules. A given norm can be enforced by either a legal or a non-legal standard. Convergence of norms may be achieved despite the persistence of wide variations of the law on the books. Charny puts forward the idea that the convergence and path-dependence debate should examine more than the evolution of legal rules and take into account social and commercial norms. If social and commercial norms vary between jurisdictions, legal rules

20Gunther Teubner, ‘Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences’, [1998] MLR 11–32.

21David Charny, ‘The Politics of Corporate Governance’, in Jeffrey N. Gordon and Mark J. Roe, Convergence and Persistence in Corporate Governance (Cambridge: Cambridge University Press, 2004) 293.