The relationship between the state and transnational regulatory systems

If one wishes to determine in greater detail the relationship between state and transnational regulatory systems discussed in the literature, three roles of the state come into consideration (Ipsen 2008, 204 ff):

  • • The state as model
  • • The state as beneficiary
  • • The state as guarantor

The reference to the state as model is suggested by the observation that

the state or state law provides a model for the private regulatory systems in two respects. First, they base their material content on existing state regula- tions—either voluntarily or as a result of pressure from the state—and second, the procedures for the creation of norms or arbitration procedures are often based on state processes. This observation is also applicable to the area of international standard-setting, which will be examined later.

Referring to the state as beneficiary is justified by the idea that in the transnational arena, in particular, the state is forced to experience the limitations of its own national regulatory options and must, therefore, explore other regulatory options. In the absence of a global state or other international regulatory bodies, one such option is the respect of private self-regulation and hence the use of the lawmaking competency of societal subsystems for the compensation of its own excessive regulatory demands.

The second variant—the role of the state as beneficiary—is even more interesting, as it involves the use of the private regulatory systems as a substitute for state law. Ipsen (2008, 207-208) accounts for this structure with the pace of society’s continuing development: lawmaking is unable to keep up with this pace and regulatory lags arise wherever new societal or technical developments cannot immediately be covered by law. These lags can be filled by private regulatory systems, albeit in many cases only temporarily. In the two cases of sports and the Internet, participants initially had to regulate their relationships themselves. At the outset, leisure-related sports activity did not seem to require any state intervention and the success of the Internet could not be foreseen. Private regulatory systems have to initially take the place of state regulatory systems since public law making cannot and could never attempt to regulate all relevant issues in a field in advance.

However, if these regulatory areas assume increasing public and political relevance, the state must ask itself whether and to what extent independent regulatory intervention is necessary. Thus, it is unsurprising that attempts to impose state regulation in the area of the Internet are increasing and that an increasing exertion of influence by the state can also be observed in the area of sports, mainly because of the out-of-control doping problem.

The third role of the state vis-a-vis transnational regulatory systems is that of the guarantor. It guarantees to citizens that their essential rights will also be recognized in such transnational regulatory systems. The image of the state as guarantor requires it to be ready to use its legal system as a kind of safety net (on this point, cf. Kirchhof 1987, 5226.). Technically, the state fulfils these expectations through the “ordre public” caveat, which ensures in the case of both national and international rulings that they may not be recognized or implemented if the outcome would contravene the public order. According to a definition of the German Federal Court of Justice (Bundes- gerichtshof BGHZ 27:249, 254) such a contravention of the “ordre public” arises if an arbitration ruling “ignores a core area of norms of mandatory law which affect the bases of state and economic life (in a free society) and were enacted on the basis of certain state, social or economic policy objectives.”

This completes my exploration of the state’s trinity of roles in relation to private transnational regulatory systems.

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