Part I outlined the raison d’ être of this study. It addressed the significance of the concept of hybridity within the comparative debate on legal change. In doing so, it examined the theory that describes the movement of law from one country to another by using the metaphor of legal transplant. Two irreconcilable approaches were discussed. The first one suggested that the evolution of law is largely autonomous from society as it consists primarily of a function of rules being imported from another legal system. The second one established that the development of law cannot take place through borrowing because law mirrors, and is responsive to, situated linguistic, cultural and moral national frameworks. Both views were found to fall short: the first one ignores the relationship between legal comparison and sociology of law, and the second one over-simplifies the concepts of language and culture.

Chapter 1 offered a proposal to tackle the comparative conundrum. The inquiry opened with the observation that borrowing is not necessarily a legal phenomenon, but that it reflects a common trend of social life, a mechanism of culture diffusion. It applies to law because law is itself a form of culture. Building on this, it was, however, noted that the fact of borrowing per se has a mere descriptive value and says little about culture interaction and the assimilation process.

For this reason, Chapter 2 considered recent contributions on culture contact and culture change and concluded that they provide an interesting explanation for the process of borrowing and legal evolution. The analysis centred on the notion of hybridity, a fundamental theme in cultural and post colonialist studies that highlights the ‘in-betweenness’ of people and their actions in colonial situations. By complying with colonial norms and standards and at the same time maintaining the indigenous perceptions, colonial people develop new cultural norms and standards of their own. They create new traditions. The process of hybridisation was illustrated by reference to cases taken from archaeological studies. It was argued that the same dynamics can be used to explain the reception mechanism in law. As with colonial norms and standards, legal paradigms borrowed outside their original meanings become unsettled.

This final substantive chapter draws on the discussion on the general law reform developed in Chapter 6. It considers in greater depth the specific property law issue of whether the innocent purchaser for value of intermediated shares is adequately protected under English law. In line with the FMLC and the Law Commission, section 1 argues that this is not the case. Existing legal concepts do not adequately meet the practical needs of investors in intermediated shares and legislative intervention is highly desirable to keep up with changing financial practice.

Without dwelling on the possible defences against equitable personal claims, section 1 contends, in particular, that there is a disparity in the degree of protection available along the chain of indirect holding, apparently without justification. Building on this inconsistency, section 2 confronts the situation with the Italian legal framework and UCC Article 8 in order to offer a critical comparative background for the discussion on legal change addressed in section 3. It is in that context that the law reform proposals are examined and how they reflect a process of hybridisation of national models is shown. This outcome is consistent with the general analysis presented in Chapter 6 and reiterates with greater emphasis and depth the arguments of this study on the significance of comparative law to understand the pattern of legal evolution in terms of a process of cultural interaction and hybridisation.

The English Legal Framework

As stated in Chapter 6, section 1, the conventional legal characterisation of indirectly held shares in England is based on the device of trust. In the indirect holding system, account holders retain an equitable interest in the pool of shares held by the relevant intermediary. This is different from the pattern of direct holding where investors enjoy a direct relationship with the issuer and maintain an absolute right in the shares.

The distinguishing elements of holding and transfer directly held shares have been spelt out in Chapter 4. This section clarifies the significance for an account holder of having an equitable interest in shares rather than a legal title, and specifies how equitable interests circulate under English law (section 1.1). It is only against this background that the legal position of the innocent purchaser of directly held shares can be evaluated (section 1.2) and properly compared with the one available for the transferee of intermediated shares (section 1.3).

The conventional view is that the genealogy of the modern English limited liability company (and the mechanism of transfer of registered shares) has its roots in the scheme of the partnership and of the unincorporated joint stock company formed by contract or under a deed of settlement. This view identifies an important thread in explaining the history of the current legal framework and highlights the relevance of legal tradition in shaping legal change. It is suggested in this chapter that this view offers, however, a partial representation of the process of legal evolution. This is done in three steps. Section 1 presents the founding elements and characteristics underlying the modern law of registered shares. Section 2 sets out the orthodox interpretation of the immediate genealogy of the modern English company and of the techniques of transfer of membership. Building on this analysis, section 3 argues that the current legal characterisation of the circulation of registered shares has been shaped to a significant extent by legal borrowing from the Genoese model of maritime partnership (the societas maris) employed for part-ownership in ships in England starting from the seventeenth century. It also argues that the reception of that scheme did not occur in its original form, but that it was adapted through a process of hybridisation in accordance with the indigenous fellowship traditions of the guilds.

The Current Legal Framework

The paragraphs below set the boundaries and identify the subject matter of the inquiry. The investigation focuses on the legal nature and the (possible) physical manifestation of registered shares, establishing how legal title is transferred (sections 1.1 and 1.2).

Although this necessarily involves separate studies of the law of certificated and uncertificated shares (section 1.3), the underlying legal characterisation of the nature of the transfer in terms of novation remains identical (section 1.4). Finally, some attention is dedicated to the ‘bona fide purchaser’ defence as a fundamental rule for understanding the nature of transactions related to registered shares (section 1.5). This specific issue will be discussed again in Part III when comparing it with the protection available for innocent purchasers of intermediated shares.

Legal Nature

In order to describe how registered shares are transferred it is first necessary to establish what shares are and, in particular, what their legal nature is. The Companies Act 2006 states that shares are personal property.

These conclusions review the fundamental themes discussed in the preceding Parts and draws together the findings of the investigation.

Part I dealt with the conceptual framework of this study. It examined the comparative debate on the pattern, meaning and significance of the circulation of legal paradigms across national frontiers. The discussion centred on whether it was appropriate to describe the movement of law from one country to another by using the metaphor of a ‘legal transplant’. Broadly, two approaches to this question were explored. The first one, relying on historical evidence, suggested that the evolution of law is largely autonomous from society, as it primarily consists of a function of rules being imported from another legal system driven by legal elites. The second approach was sceptical about the role of history and of comparative law as tools to detect the pattern and the drivers of legal change. It pointed out that the development of law does not take place through borrowing because law mirrors, and is responsive to, situated linguistic, cultural and moral national frameworks. The two approaches are irreconcilable with each other. And both views were found to be misleading, as they overlook the relationship between legal comparison and sociology of law and over-simplify the concepts of language and culture, respectively. To address these shortcomings an original interpretation of the pattern of legal change was offered.

The underlying theme put forward was that the practice of borrowing is not exclusively a legal phenomenon; it reflects a common trend of social life, a mechanism of culture diffusion. It applies to law because law is itself a form of culture. Building on this understanding, Part I proposed a new perspective for considering the significance of legal borrowing and for explaining legal evolution. The main argument was that the movement of legal paradigms from one country to another rarely consists of a mere transplantation of rules. Instead, it generally involves a complex and gradual process of interaction between legal and social consciousness, between imported models and indigenous traditions. From that perspective, specific attention was paid to recent studies on acculturation, colonialism and contact situations in general. The focus of the analysis was on the notion of ‘hybridity’.

Chapter 1 showed the boundaries of the current debate on the diffusion of law and explained the limits of the most influential works in the area. It also introduced the contribution of this study to the comparative discussion. The present chapter develops this. In particular, it addresses the theoretical grounds for explaining the process of legal change through the appropriation of foreign legal paradigms and ideas. In doing so, it focuses on the notion of ‘hybridity’ as shaped in postcolonial studies, and tests it against a number of possible applications, as well as in ‘pseudo-colonial’ situations outside the modern imperialist pattern. A clarification of the impact and relevance of this investigation within the specific debate on legal borrowing will be provided in the next chapter.

The Concept of Hybridity

Foundation

The term hybridity originated in the mid-nineteenth century in the context of biological and evolutionary debates to describe a cross between animal or plant species. Although it has also been occasionally used as a metaphor to indicate a lack of racial purity, the term today defines a research theme in cultural and postcolonial studies involving ‘processes of interaction that create new social spaces to which new meanings are given’.

The Theoretical Background

The concept of cultural hybridity is usually associated with the pioneering works of Homi Bhabha who attempted to overcome the rigid dualist perception of culture in the colonial contexts that neatly distinguished between colonisers and colonised. Bhabha, developing the ‘orientalist’ discourse initiated by Said, essentially criticised the conventional way of binary thinking whereby the inhabitants of a colonised region are regarded as either colonial or indigenous.

The claim for a hierarchical purity of cultures is untenable in colonial situations. So is the picture of a rigid process of acculturation where one group becomes more like another by borrowing discrete cultural traits. Rather, there are areas of ‘in-betweenness’ of people and their actions, and it is the ‘in-between’ space that carries the burden and meaning of culture.

The Contents and the Effects

Building on the above-mentioned findings, Bhabha suggested that the notion of cultural hybridity expresses the result of cross-cultural exchange or ‘the effect of an ambivalence produced within the rules of recognition of dominating discourses as they articulate the signs of cultural difference’.

Understanding the pattern, meaning and significance of the circulation of legal paradigms and ideas across national frontiers is a central theme in comparative law. Recently, this has attracted a great deal of academic interest especially under the impetus of studies on globalisation, convergence among legal systems and the unification of private law.

Many themes and views have emerged, but, for the most part, the debate has centred on the appropriateness of describing and explaining the phenomenon in terms of legal transplants. There is concern both over this mode of innovation in law and over the conceptual framework suggested by the terminology. It is said in particular that borrowing and imitation are not relevant in understanding the pattern of legal evolution and that ‘since a transplanted institution continues to live on its old habitat as well as having been moved to a new one, the choice of the word transplant is inappropriate’.

A critical overview of the theory of legal transplants and a discussion of its major criticisms are presented below.

The Terms of the Debate

Legal Transplants

Orthodoxy

The notion of ‘legal transplant’ as metaphor for the movement of law from one country to another belongs to Alan Watson's pioneering works on legal change. It was later adopted by many and today it represents the predominant terminology.

Observing the historical and comparative pattern of the reception of Roman law in most countries of medieval, renaissance, and nineteenth century continental Europe, Watson suggested that borrowing had been the most fertile source of legal growth. Legal evolution, he maintained with a variety of accents, rarely stems from isolated national innovation (creatio ex nihilo), but is rather the result of borrowing from other jurisdictions, or the ‘moving of a rule […] from one country to another, or from one people to another’. More fundamentally, by contrast to one of the most established preconceptions of modern legal thought, according to which legal development is a rational response to existing social, economic and political circumstances, Watson argued that the scale of the empirical evidence of legal transplants shows that law has a vitality of its own and does not necessarily progress in a rational way. In other words, he rejected the postulate that law is a mirror of society, that there must be a close relationship between law and the society in which it operates.

This is a book on comparative law and legal change. With a focus on corporate law and the law of personal property, it reviews the current state of the comparative debate on the evolution of law.

It takes as a starting point the similarities and differences between legal systems as a means to understand the factors that shape legal growth and tests the well-established thesis according to which law tends to develop as a consequence of the movement of legal rules from one country to another. The analysis carried out in the first part of the book finds this thesis perplexing, as, above all, it does not put forward a persuasive account of the mechanisms of legal reception. In attempting to fill that gap, this study contends that recent contributions on culture contact and culture change offer an interesting explanation for the circulation of juridical models across national boundaries.

In brief, this book suggests that the notion of ‘hybridity’, as originated in postcolonial theory, provides a valid conceptual means to examine the intricacies of legal evolution, to refine and to give content to the observation of the reception of law. The notion of hybridity overcomes the rigid dualist perception of culture in the colonial contexts that neatly distinguished between colonisers and colonised and promotes the view that cultural norms in colonial contexts are more than the result of the fusion of features of colonial and indigenous background. They are neither colonial, nor indigenous ‘in disguise’, but they occupy a ‘third space’ between colonial and indigenous cultures. In this light, hybridity is a powerful tool in explaining the pattern of cultural change in social sciences in general and in law in particular. Borrowing reflects a general trend of social life, a mechanism of culture diffusion. It applies to law too because law is itself a form of culture. As with colonial norms and standards, borrowed legal paradigms outside their original meanings become unsettled. They interact at different levels with local traditions, with certain indigenous perceptions, and do not survive in their original identities. A new legal tradition, a hybrid space that is peculiar to the specific contact situation is therefore created. Borrowed legal paradigms become almost the same as the original ones, but not quite.