The European Commission's Recommendation of 2008 on auditor liability relies heavily on the assumption that auditors are over-deterred. The economic rationale that underpins this assumption is entirely focused on liability towards investors and the US narrative concerning securities class actions. This approach oversimplifies the issue, because it does not consider why auditors really exist and what the different interests served by them are. Accordingly, it neglects that auditors' liability is multidimensional. This article analyses auditor liability's multi-layered regimes. It investigates who the auditor's principals are; whether the auditor and those principals are in a position to negotiate in order to design the optimal liability regime; whether and at what stage market failures prevent contractual negotiation; what kind of positive (or negative) interferences stem from multiple negotiations and a multi-layered liability regime; and how such a multi-layered regime might be designed. In doing so, the article makes reference to some existent legal regimes and comments on them. However, its analysis is functional, not comparative. The article argues that the auditor liability case is much more complex than the economic and the law & economics literatures suggest, and concludes that a generalised, uniform, worldwide approach in favour of liability reduction has no scientific grounds, at least at the current stage of our knowledge.

The controversial and long-awaited Commission Proposals to revise the cornerstone Markets in Financial Instruments Directive 2004 (MiFID I) were presented in October 2011. The Proposals are currently going through the Council and Parliament negotiation process, and final agreement is expected sometime in 2013. This article places these important reforms (together, MiFID II) in context by examining the impact of MiFID I since its application to EU financial markets in November 2007, and by considering what MiFID I's impact suggests for the design of MiFID II. It considers how MiFID I reshaped the EU share trading marketplace and how the dominant interests which shaped MiFID I's regulatory design fared. It also examines how those interest groups are seeking to shape MiFID II, and the implications. It suggests that the influence of interest groups may have led to overly ambitious MiFID II Proposals which are excessively concerned with investment firm and trading platform interests, and not sufficiently focused on the overall efficiency and effectiveness of EU share trading markets. It calls for a more modest approach to reform, based on fine-tuning MiFID I.

This article examines the regulation of directors' remuneration in EU, UK and Belgian law. The author argues that there are two categorises of norms for the regulatory framework of directors' remuneration: one is market-based, market efficiency norms of agency costs; the other is socio-legal norms. The paper argues that agency costs – a responsive mode of governance – alone cannot adequately address the problems of directors' remuneration. On the other hand, socio-legal norms – which are value and ethics-focused – can better construct a paradigm capable of addressing a broader issue of directors' remuneration in the EU context. Agency costs-based regulation has been used by the EU whereas socio-legal matters have been left to Member States. The article shows how socio-legal norms could form the underlying basis of the regulatory regime by examining the laws in the UK and Belgium. It is concluded that the European Court of Justice will need to carry out the role of negative integration by harmonising these social values in developing EU company law.

The aim to develop transnational principles for the regulation of Alternative Dispute Resolution (ADR), which deal, inter alia, with whether and how the use of ADR should be promoted by the state and how ADR should be regulated, brought leading experts from different European countries, the USA and Japan to the University of Bayreuth from 14-16 September 2012. ADR refers to dispute resolution mechanisms outside the state court system. It includes procedures such as negotiation, mediation, conciliation, (binding) expert opinion, arbitration and ombudsman proceedings. In suitable cases, ADR offers solutions which are faster and cheaper than court procedures, especially for cross-border conflicts. The parties have greater control over the conflict resolution procedure. They can arrive at a sustainable compromise adapted to their interests. The procedures are conducted in private; the parties can agree to keep the result confidential.