Regulation

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“Ich bin ein Regulierungsanwalt”

—John Fitzgerald Kennedy, during the EMIR compulsory margin era.

“We are all Regulatory Lawyers now.”

—Milton Friedman, in the aftermath of Sarbanes-Oxley.

Laws, regulations, EU regulations, directives and so on

To what extent are regulations different to laws, such that saying “laws” in a contract doesn’t capture “regulations”, or vice versa? A sterile debate, to be sure, but one with respect to which surrender before kick-off has yielded the ghastly peppering of legal contracts with tedious expressions like “applicable laws, regulations and binding rulings of competent authorities”. Can we not just say “laws” and be done with it?

“Laws”, narrowly, are those statutory instruments directly enacted by a sovereign legislature, having binding effect on all those who stray within their purview.

“Regulations” are supplementary rules promulgated by the executive (or some other lucky punter — a local securities regulator, or stock exchange — to whom the legislature has delegated that power). In this sense, regulations tend to be more fiddly, pernickety, and liable to periodic change — they don’t need to pass through two houses and receive royal assent after all — but by the lights of an affected subject, they carry no less weight, are no less binding, and for their breach sanctions are no less severe. So, really, the distinction, in a legal contract, is fussy.

The dear old European Union

EU Regulations: Confusingly, in the European context, an EU regulation (by contrast to an EU directive) is quite a different animal: far from being some capricious executive ornamentation on a domestic law, an EU Regulation is an ur-law: it applies, directly, as a law of the land in all EEA jurisdictions, when declared by the European Council in Parliament, without the need for adoption by local law. This is partly what drove the Brexiteers mad. Those onion-munching Europeans can directly pass laws over we Brits!

EU Directives: An EU Directive does not apply in an EEA country until adopted into local law, although the local legislature may be obliged by EU rules to adopt it within a certain time frame.

See also

• MiFID II
• EMIR
• Dodd Frank