WINIR Symposium Abstract Accepted

On 4th-6th April 2016 the second annual WINIR symposium will take place at Bristol University. The event symposium is focusing on 'Property Rights' of the corporation.

Property rights are a central institutional feature of all politico-economic systems where markets play a major role, and a key item of political controversy between liberal and socialist positions. The role of property rights in matters ranging from interpersonal exchange, power and innovation to corporate governance, privatisation and economic development is debated across several academic disciplines, including economics, history, law, philosophy, politics and sociology. The growing importance of intellectual and other intangible property in modern capitalism has further provoked important ongoing theoretical and policy discussions, part of which revolve around the very meaning of property as opposed to possession.

Together with Derek Whayman at Newcastle University we have had our abstract accepted on 'Property Rights and Equitable Principles: Understanding Fiduciary Loyalty in an Organisational Context'
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The abstract follows:

The property rights of an organisation are subject to equitable principles, namely fiduciary loyalty, that affect those property rights. Yet uncertainty over fiduciary loyalty persists. For example, it is unclear how a director’s fiduciary duty operates to a company and third parties, so if the director were to engage in a private enterprise, can any gains be retained by the organisation to become their property or are they  subject to the ownership rights of others? Cobbe v Yeoman’s Row stated that a ‘court should be very slow to introduce uncertainty in to commercial transactions by the over-ready use of equitable concepts’ but did not set down a test for when it would do so, meaning property rights of an organisation can be affected by the arbitrary introduction of fiduciary loyalty and does not clearly solve our private enterprise problem.

This paper builds on Graveson’s work on ‘from status to contract’. Previously, fiduciaries were defined by status, e.g. directors, agents and trustees. Loyalty is now said to arise via agreement, argued to varying degrees by Edelman, Finn and Lord Millett. However, we consider full contractualisation too simple to be accurate in determining the scope of fiduciary loyalty. This paper goes further to reduce the danger and uncertainty in organisational property rights by demonstrating its true basis: (i) first, loyalty is a non-contractual duty presumed in to a relationship where one undertakes responsibility for another’s interests in response to prophylactic concerns; (ii) this determines the scope of the duty of loyalty and status is wholly secondary; then (iii) the duty of loyalty is fine-grained to the specific contractual terms insofar as they permit what would otherwise be disloyalty. Loyalty is then not defined by contractual terms, it is subject to them.

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Whilst the paper has moved on slightly and our collaborative work focuses on understanding fiduciary loyalty more generally than in the organisational context, our core aim is to show the duty as fine grained to the intentions of the parties rather than positively implied in to the agreement. Thus we are critical of Edelman's approach that duties are effectively implied terms based on the reasonable expectations of the parties.

Thus for the purposes of our presentation we show when the organisation's property rights would be subject to a competing proprietary right or vice versa based on a clearer explanation of when the duty of loyalty is owed.