Increasing Information Facilitates Codified Law: Why Statutes Have Supplanted the Common Law
North (1990) draws a distinction between institutions that are ‘created’, like a constitution or other written rules, and institutions that ‘simply evolve,’ like the common law. Eisenberg (1988), using a jurisprudential rather than institutional framework, explains in detail how informal institutions (‘social propositions’) are processed into law through litigation. Deakin and Carvalho (2010) have shown how legal concepts carry information analogous to the instructions of genetic code and how the interaction of enduring concepts with changing circumstances triggers the consistency in variation of legal evolution. Deakin (2015) further argues that disequilibria in the evolution of common law can necessitate legislative intervention, so that both the common and civil law systems are hybrids requiring both statute and case law.
Building on the above theoretical foundation, this paper offers an information-based theory of the changing balance between case and statutory law in common law systems. Growing amounts of real-time information about disputes, solutions and disequilibria increasingly allow lawmakers to self-reflectively engage in the ‘second-order observation’ (Luhmann, 1993) necessary to form the general and abstract rules composing statutes. Courts can (with a minimal framework of ‘writs’ and ‘stare decisis’) create law spontaneously despite sparse information. Evidence of this can be found in pre-Imperial Great Britain and the 19th century United States. In environments where information rapidly accumulates, ‘second order observation’ of law expands, accelerating the production cycle from informal institution to abstract statutory rule. Case law remains important (increasingly so in civil law jurisdictions) because constant social and technological change rapidly render legislation incomplete or obsolete. However, there is no reason to think increased information flows will trigger endless rapid change. Therefore, it is likely that increasing information about problems, solutions and disequilibria will continue to diminish the importance of case law for processing informal constraints into the formal institutions of law.
Brief Introduction of Prof. David C. Donald
David C. Donald is a Professor in the Law Faculty of The Chinese University of Hong Kong. David previously taught at the Institute for Law and Finance of the University of Frankfurt, Germany and worked as a commercial lawyer in the US and Europe. His publications include A Financial Centre for Two Empires: Hong Kong’s Corporate, Securities and Tax Laws in its Transition from Britain to China (Cambridge, 2014), The Hong Kong Stock and Futures Exchanges – Law and Microstructure (Sweet & Maxwell 2012), and (with Andreas Cahn), Comparative Company Law: Texts and Cases on the Laws Governing Corporations in Germany, the UK and the USA (Cambridge 2010). He is participating with scholars from other universities on a Hong Kong Research Grants Council funded project, “Enhancing the Future of Hong Kong as a Leading International Financial Centre.” David is currently a member of Hong Kong’s Standing Committee for Company Law Reform and its Financial Policy Research Committee, as well as a member of the Hong Kong Institute of Chartered Secretaries Academic Advisory Panel. He is also a member of the Higher Education Forum Core Committee.