A thoughtful reader suggested that I comment on how Mary Bilder’s article The Corporate Origins of Judicial Review (posted below) relates to the themes of this Blog. This seemed like a good idea as corporate scholars might wonder how an article on the “origins of judicial review” might be relevant to understanding modern corporate law. So here goes:
Corporate scholars have long debated the extent to which the internal governance structure of corporations should reflect modern democratic ideals. This debate focuses mainly on the extent corporate shareholders should enjoy meaningful voting rights or exert control over major corporate decisions. For examples of the current instantiation of this debate see Lucian Bebchuk, The Myth of the Shareholder Franchise and Lynn Stout, Democracy by Proxy – WSJ.com.
Professor Bilder’s article shows that in many ways the modern debate has it backward. Bilder shows that rather than corporate governance structures simply mirroring (to a greater or lesser extent) political democracies, some of the core features of our constitutional structure emerged from practices related to corporate law.
Bilder argues that the tradition of judicial review originated in the early English practice of reviewing corporate bylaws for “repugnancy,” or conflict, with the law of the land. The rule that corporate bylaws not be repugnant to the law of England also applied to the laws of the American colonies. With the adoption of the Constitution the practice of review of legislation for “repugnancy” continued, with the Constitution substitituted for the law of England as the “law of the land.”
Bilder’s original analysis thus shows that we can look to the history of corporate law to better understand modern democracies, and not simply draw on modern democratic practices as a template for improving corporate governance.