دانشنامه حقوق اقتصادی
سال بیست و ششم شماره 1 (پیاپی 15، بهار و تابستان 1398)

International arbitrators to determine the law governing oil investment contracts believe in opinions and theories to explain their nature and the enforcement of the law even in cases where the parties have identified the predominant law which suggests their compliance with purely theoretical classic or academic revised opinions. Apparently one cannot bound to a fixed theory on the nature of foreign investment contracts in oil upstream sector. Each contract is created under its own terms and in a specific legal system, taking into account the needs of the parties and the prevailing economic conditions. Usually, during the pre-contract negotiations, the parties are informed of the amount of need, conditions and economic situation of the other party and, accordingly, follow the process of concluding the contract. In determining the nature, the extent of the role of each of these cases must be determined. Therefore, in this paper, in contrast to the various doctrines about the nature of these contracts, the theory of "flexible contracts" is presented. Thus, the view of oil contracts in a spectrum of nature rather than a specific nature compatible with any contract can be surveyed and explained. This flexibility is not abandoned, and it has a leg within the regulatory order of the host state. This theory can, by examining the legal and economic factors that compel the parties to conclude a contract, not only to capitalize on the legal issue based on the external realities of the market but also to reduce the impact of noneconomic factors.

The research method used in this study is the description and examination of the prevalent theories with an analytical approach along with the critique of these theories. And considering all the basic and effective elements in the nature of upstream sector of oil contracts, through a logical standpoint to the status of capital exporting countries and host countries of capital, the theory of Mokhtar or the preferred theory has become rationally investigated.

Need of oil-rich countries for capital, management and technology services and modern technology of major oil companies (For more information, see: Library of the Institute for International Studies on Energy, 2001: Vol. 3: 645-601) and the readiness of oil companies to invest in huge oil resources and contribute to those resources to reduce the seller's risk and the use of high investment benefits in energy sources, the oil-rich countries and major international oil companies have been compelled to conclude major contracts in the upstream sector of oil. These treaties have raised serious developments in international law. All of which seeks to play the role in demanding the financial rights derived from contracts concluded between the companies (transnational corporations or multinationals) and the state institutions of the host countries. In some cases, these relationships lead to differences between the parties and, consequently, refer to the official arbitration centers or issue case judgments (Mohebbi, 1995: 385-446). The judges had to determine the nature of the contracts to resolve the legal disputes so that they can find a lawsuit verdict. These legal conflicts have occurred in cases of confiscation, nationalization or unilateral termination of the contract (Mohebbi, 1996: 9-70). The contracting states, referring to principles such as "the principle of self-determination", which many lawyers consider it as the most fundamental principles of the jus cogens (Tunkin, 1957: 208) and also the famous principle of "the permanent right of nations to rely on all resources of underground wealth and economic activities"; the principles that were repeatedly expressed and emphasized in the resolutions of the General Assembly and some other United Nations organs, especially paragraph 1 of Article 2 of the Charter of the Rights and Duties of the Countries which make their works being legitimate (Alidoosti Shahraki, 1990). Large oil companies did not remain silent. In response, they put forward ideas such as the theory of the acquired rights and "the principle of pacta sunt servanda" which is more or less a theoretical basis for foreign companies to be entitled to compensation in exchange for expropriation (Sonarajah, 1986: 171). Investigating the claims of the parties and their legal reasons gave rise to different opinions about the nature of these contracts between the international arbitrators. This difference between the judges of the internal courts of the host country of the capital at the stage of consideration or execution of arbitration judgments created different opinions which also spread to academic legal circles. Some in this legal battle have tried to support the countries that own oil and gas reserves. And others who have become more popular in their views have argued for the benefit of large oil companies. Having regarded the state of the capital exporting countries and host countries of capital, the author should adopt the theory of flexible oil contracts in upstream sector of oil.

Having major oil companies with advanced management and technical services and their ability to explore, develop, produce and extract oil with high standards and Maximum Efficient Recovery (MER) will encourage them to conclude a contract with the host government. The high cost of doing these things is not usually either in the capacity of the host government or the host government prefers to spend its finances on infrastructure that does not encourage the private sector. The host government's strategy and its need for modern international oil companies and the acceptance of the cost of the project by them will make the host government of the capital that owns the oil reservoirs to award concessions to the opposite side. On the other hand, the host countries, by developing a legal regime that meets the needs of the country, tries to guide the foreign investor to the realization of the goals that his legal regime is based on. The realization of this goal is another factor that compels the capitalist countries to award the international contractor. The fact that these contracts are for the satisfaction of the public interest of the host country and that the government may take action to change or terminate it is accepted by the investment companies which is also accepted in international arbitration judgments; But the signing of the contract by the managing director of the state company and approval by the parliament or the Council of Ministers or without the involvement of the representatives of the government is effective in interpreting the contract and the lack of consideration of its legal effects may lead to irreparable damage. It seems that, given the degree of awarding advantage by the host country or the contracting party, which is based on the analysis of the terms of the contract, in particular the terms and conditions contained therein, and the type of contract that may be of a concession, partnership or service, the nature of the contract may be clarified. Therefore, given that each contract is in certain circumstances, it can be said that for foreign investment contracts in the upstream sector of oil, one can not give a firm view of their nature. Each contract is created under its own conditions and in a particular legal system, and the extent of the role of each of the aforementioned principles in determining its nature should be examined. Therefore, the author termed this idea as "the theory of flexible contracts", in order to examine the nature of the matter in accordance with its principles and its own context. This nature can benefit from the broad spectrum of private domestic contracts or public-to-international contracts.

From the view point of jurisprudence and civil code, and according to what has already been inferred, we have seen in the judicial procedure in the event of the deception, the deceived person (usually the plaintiff) is limited to one of two options: "termination" or "maintaining the contract". Thus, a difference in the value of the subject of transaction cannot be demanded if termination of the contract is not plausible for the deceived person. The deceiver, could not, however, prevent the termination of the contract by paying the difference in value of the disputed subject. Economic analysis while preserving justice demands a strategy that must be adopted and to be presented a new plan; formulating a rule that can impede the termination of the transaction by asking for or paying the price difference and to move on in accordance with the principles of Pact Sent Servando and retention of contract, which is rooted in economic custom and the community's desire for stability and security of contracts. This line of argument has been initiated in the judgment of the Court of Appeal of Markazi Province, where the court heard the claims of the price difference from deceived person (judgment number 9609978617000383, 22 November 2016). This is a wise view that seems to be against the established principles of Iranian law, but the economic and fair analysis of the basis of the judgment and some jurisprudence and legal trends confirms that. The innovative effort of the Court of Appeal of Markazi Province has not yet been reported in judicial procedure. Judicial procedure is even more important in the law-based legal systems, because in the face of economic developments and customary precedence, new ways are found that lead to better and more meaningful compensations, namely the maintenance of contract and the economic equilibrium of both parties. The question arises as to why the deceived person should control the termination of the contract and acquire the economic value of the subject of the date of the contract at deceiver expense? We know that the value of property in the majority of cases increases over time. In this case, if the deceived person is not able to compensate the difference between the actual price and the contract price, he will actually be losing and the Pacta Sunt Servando is also distorted. From a legal point of view and with respect to proper economic considerations, the contract should remain and prevent the revocation of documents, because compensation of the deceived person is a solution that results in more efficiency. The result that the deceiver must adhere to that. It is noted that lawyers are used to traditional systems and principles, especially procedural laws in the current century with more than a thousand years history (in jurisprudence) regarding deception and so, change is not always welcomed. In particular, the fundamentals of the right to terminate are not so much strictly linked with economic developments, whilst the courts have a little information about these developments. In this case, it is difficult to change and re-design the basic principles. The analysis of some academic lawyers is that the right to revocation of the contract is based on the implicit condition and some based on the rule of Prohibition from harm. It seems that the preference should be given to the recent rule and the provisions of civil code should be justified on this basis, because this is based on economic analysis and, for example, if the base of the deception is for the compensation of the damages, why paying the difference between the price cannot be prevented from dissolving the contract? Some jurists and legal professors answer this question positively but this time, a judicial procedure has also come into force which recognizes the right to receive money in return for payment. In economics, there is a theory of "exchange cost", which includes those unforeseen costs which are imposed on the other party due to the non-compliance of one of its obligations. In other words, the costs of the exchange are those that parties incur in the process of economic exchange to define and guarantee their property rights. It will include the cost of obtaining information about the seller and the buyer and the quality of the goods or the service that is exchanged, the costs of contract and oversight of the opposing party and, most importantly, the costs of defining property rights and ensuring the enforcement of these rights. Such analysis also affects the foundation of deception. In economic developments, instead of insisting on the technical rules of the contract and its dissolution instruments, solutions move toward balance and efficiency. However, when efficiency gains are prioritized over the rule of abuse of the right, one hopes that contracts change the way to balance and better compensate for the weaker (deceived) party and flexible and efficient rules replace those which are technical and non-flexible.

Economic analysis of contractual compensation is amongst the topics, which have been paid attention by the legal and economic scholars. The root of such a serious attention is the conflict of various goals and philosophies of enactment of the contractual compensation rules. In an economic perspective, the objective of establishment of compensation rules is to compensate for the loss sustained by the injured party rather than to punish the party in breach. This approach will lead to optional performance of contract, i.e. a free choice between compensation and specific performance. The outcome of such an approach will be that any obligor in any contract may breach the contract and pay a compensation for it. Those believing in advantages of further stipulation of moral principles in the Contract Law however do not go with this view. Infringement of contract may take place for the purpose of making more profit or avoiding further loss. By studying the types of efficient breach of contract – even in a traditional view to the Contract Law – this logical conclusion can be reached that some types of infringement of contract are in no contradiction with the spirit of justice and moral principles. Founded on economic analysis, mere performance of contractual obligations is not considered as the subject of a contractual relation, but contractual obligations are considered subject to efficiency and utility. Therefore, the replacement for specific performance that is contractual compensation may be the subject of contract and a desirable one. 

Methodology of justification of the “Theory of Efficient Breach” is based on the laboratory method. The justification is carried out on the basis of some certain and evidentiary data, gathered through studies and reviews in relevant areas. It’s, however, obvious that stating a legal theory, without comprehensive knowledge of social phenomena is impossible. Therefore, for the purpose of this research, we kept our eyes on legal and economic phenomena, getting organized in front of us.

Microeconomics, reviews the responses and reactions of the economic players to various factors and motives, and thereby determines which factors will lead to profitable and gainful outcomes. This eventually and consequently enhances the social wealth. In this regard, and in the economic attitude, there is an approach, known as “homo economic us”, on the basis of which, economic players have a stable and orderly list of preferences, which they reasonably select in order to maximize profit, and determinedly seek their personal interests. This means it’s assumed that the individuals are wise, and act in a way that will result in reduction of costs and increment of profit. And in case of increment of costs, they select – from the available options –which will cost them less. Hence, “homo economic us” approach and a logical player won’t, in the economist pattern, let the personal feelings stop a wealth-making transaction. Therefore, no specific and strong interpretation is required for “rationality” for the purpose of justification of this essential prediction of economics, which is simply saying: “the more costly, risky and difficult an option, the less will such an option be picked”.One of the legal institutions, which distinguishably offers a suitable ground for application of economic analysis, with regard to occurrence of economic and profit-seeking aspects, is contract. In economic analysis of contract law, a variety of issues of the contracts are reviewed and studied, but one of the subjects, which strongly attracted the attention of thinkers of both legal and economic areas, is ‘contractual damages’. Maybe the reason for such attention can be traced back in the answer to the question that what is the goal and philosophy of the damages in the contract law essentially.Taking into consideration the principle of necessity, the main and initial goal of all legal systems in the area of contract law, is enforcement of contract. In other words, it can be said that by formulating the rules and regulations on compensations, the legislator aimed originally at codifying a guarantee for compliance with and enforcement of contracts. Thus, since the necessity principle of contracts and liabilities has, in all legal systems, been accepted as an obvious principle, it can be stated that the initial objective of guarantees is to prevent breaking the promises and to implement the provisions of the contracts. The second function of contractual damages is that in case of violation of the contract, the promisor should recompense the promise's loss, and place the promise in the situation as if the contract has been executed.Then, from a traditional point of view, the objective of formulation of contractual damages, is to punish the party who has violated the contract, in such a manner that the promisor will be obligated to perform the contractual liabilities, because according to the moral approach, contract is a moral promise, therefore, violation of a contract is considered as a moral fault. In this respect, formulation of contractual damages can hinder the breach of contract, which by nature is considered as a moral promise. On the other hand, based on the economic analysis of the law, which assumes the contract as a means to achieve economic efficiency and to promote the wealth, the aim of contractual damages, is to compensate the damages resulting from violation of the contract, rather than to obligate the promisor to perform his/her promise. Therefore, compensation as a remedy for loss is an adequate substitute for specific performance for the damaged party. So, generally either of the parties, having been fully sure of their net profit even after full compensation of the damages to the damaged party, may find withdrawal of the contract more profitable. On this basis, violation of contract might economically be profitable, and consequently encouraged by the law. Therefore, on the basis of economic analysis, whenever breach of contract can lead to more profit or to prevent further loss in comparison with keeping the promise, it should be supported and promoted by the contract law, because it’s to the satisfaction of both promise, whose loss has fully been compensated, and promisor, who’s gaining even more profit. But this thought is unjustifiable for and rejected by a moral approach, which considers the violation of contract as breaking a promise. Therefore, there is an evident incompatibility between moral-promissory and instrumental approaches towards the contract law with respect to breach of a contract.
 

One of the conflicts of instrumental and moral approaches in relation to the contract law is that whether economic efficiency should be considered as a sole or prevailing goal in the contract law or such other goals as morality and justice – as traditional goals of law – should still be observed? In other words, which one is more desirable for the parties to a contract? Concentration on efficiency as a desire and goal in the law, has been paid attention by legal thinkers, especially the economists, and is of thorough and adequate acceptability. As a shortcut, however, it might be better to stop the arguments over whether the objective of law, particularly the law of contracts, should mostly be founded on economic efficiency or otherwise such goals as morality, justice and fairness; and instead to accept that there is no agreement in this regard. The law may, at the same time, be at the service of both: it can use the resources efficiently and serve the morality and justice as well.In this research, it was intended, while studying the contractual damages, to explain kinds of efficient breach of contract and to sort them – as a subject less gone over before; and to determine that in some cases of efficient breach, there is not necessarily any conflict between two mentioned objectives and goals; and instead in most cases, these two are compatible with each other, and what is an efficient economic solution, is in conformity with morality and justice as well.Moreover, in economic analysis of contractual damages, it is reviewed that whether the contractual liabilities are substantive in a contract solely, or such contractual liabilities may only be considered as peripheral to efficiency and desirability? Concentration on desirability and efficiency would have the advantage that instead of specific performance, a substitute i.e. contractual damages can be put in the place of the subject and substance of a contract as well.

The contract is a vehicle for the transfer of wealth, and the law of contract is the responsibility of regulating this transfer. The contractual freedom principle forms the core of contract law. The principle of the free contract is Interdisciplinary principle that derives from economic and philosophical findings .Contract freedom can be the result of economic freedom in law. Accordingly, it is the duty of governments to only protection people's freedom in formation a contract, and governments should not interfere in the contract with which they contract with each other, as they do not interfere in the economy. But over time, the concept of government, the scope of its activities and duties in the community changed, and the government, while maintaining the duty to provide order and security, was responsible for social and economic duties and prosperity, and the concept of a welfare state arose. The goal of the welfare state is to maximize efficiency and maximize wealth, based on the market economy and private property. Private law institutions are also considered as factors influencing the market economy and the contract is a vehicle for the transfer of private property. But experience has proven that free trade does not always lead to maximum efficiency and prosperity, as it became apparent to all that market agents, due to individualist interest, have limited horizons and no awareness and interest in the public interest. Economists say that the conditions that a free market cannot fulfill their goals (efficiency and optimal allocation of resources) are referred to as market failures. In this situation, the government must intervene. Economists, monopoly, information asymmetry, external effect and ... are among the most important market failures. Private law in general and the law of contracts based government non-intervention did not have the means to deal with these conditions. Therefore, public order was the most important legal instrument available to government intervention in the contract and restrictions on contract freedoms, and the courts were able to invoke it without the approval of the new law. Public order evolved along with the role and function of the state in the economy. The interventionist government has also become a regulating government to pursue the best interests of the community with the tools of public law, pursuing economic policies that are best suited to protect the proper functioning of the market. In this way, the scope of the influence of the principle of contractual freedom and the results of this principle, such as the freedom to formation contracts, the freedom to determine conditions, and the freedom to choose the transaction side, were limited and limited, to the point where some scholars spoke of the fall of this principle. Economic public order is the product of the twentieth century studies has come under the influence of new attitudes to the law, and in particular the economic look into legal rules. The economic public order is based on state interference in the economy and has two major objectives, which are, respectively, to protection the poor and regulate of economic system. The guiding public order approach is to regulate the behavior of market actors in order to achieve maximum welfare and maximize wealth. Although the goal of this approach is the welfare of the community, it does not directly act contrary to the supportive order and is directly aimed at implementing the macroeconomic policies of the state. Economics from the legal system in a monopoly situation is expecting to confront this phenomenon. The legal system must not only lead the market to competitive conditions but also eliminate the monopoly formation. To this end, competition law has emerged as one of the branches of public economic order. While justifying the involvement of the government on the economic public order, in this paper, we tried to investigate the question of what the Iranian system of law in the conflict between monopolism and the principle of freedom of contract was adopted? Efficiency and optimal allocation of resources are considered to be the goals of economics, which in some cases the market will not be able to materialize and will be in short supply. Therefore, government intervention through regulation to regulate the economy and returning to the above objectives is necessary in these cases. Therefore, in many legal systems, the legislature seeks to compensate for these shortcomings by imposing laws contrary to accepted civil rights rules. Antitrust law and laws are set up for this purpose. In Iran, the legislator has also endorsed the Law on the Implementation of General Principles of Article 44 of the Constitution, the Law on the Protection of Consumers and the Law Electronic Laws. The legislator has to make a detailed study of the economic situation of the country, and to consider the economic situation of the country and not to translate the laws of other countries and to use foreign law to implement it with domestic law. Moreover, the freedom of the contract, despite the limitation of the scope, remains the legal principle that its constraints should be regarded as exceptional and only in cases of necessity referring to the exceptions. Consequently, it should be treated with the same sanction for contracts that are detrimental to the competition, because of the opposition to the economic public order, and on the terms and conditions that are in conflict with the contractual nature of the contract which are detrimental to the competition and, as a result, compromise the contract. In contrast, if the condition is not in conflict with the nature of the contract and the ability to distinguish it from the contract, it should only cancel the condition.

The theory of Economic Analysis of law, sometimes interpreted as the theory of Law and Economics, is one of the important theories about the relationship between Law and Economic that first exposed to discuss in the United States and then in other countries in the second half of the 20th century. According to this theory, increasing economic efficiency and maximizing wealth are the basis for evaluation and the aim of the law. One of the issues increasingly has attracted economists and lawyers' attention in the information economy is privacy. Although there are different definitions of privacy, all of them are related to the boundaries between the self and the others or in fact between private and public. In this article in order to determine the optimal level of government intervention and to present a definitive economic assessment of whether more or less, privacy protection is required, we compare the aggregate values of privacy protection and disclosure of personal data (lack of privacy protection) and the economic implications of them by analyzing diverse streams of theoretical on the economics of privacy as well as privacy tradeoffs for data holder, data subjects, and third parties.
 

The method for collecting information is a library method. We studied statutes, regulations, cases as well as articles and books about this topic. In this comparative study, the method of thinking is the descriptive-analytical method.
 

Chicago School's scholars believe privacy protection as the source of economic inefficiencies. The reasons for these inefficiencies also has expressed as follows: hiding information from other economic agents, increased transaction costs, hiding negative features, the difficulty of transaction risk analysis and fraud encouragement. It is also said that free information sharing leads to reduced market distortion, increased social welfare, and consumer interests from positive externalities of the second market. Finally, privacy protection depends on the valuation of the parties interested in certain data not on the regulatory protection of personal information. In criticizing this theory we can say that the assumptions of rational behavior (considering the current technologies) can't take into account the complexity of consumer's decision making. First of all, the consumer sometimes cannot predict the future effects of the current information sharing (for example, the negative externality of secondary market, price discrimination, utilization of data for unsolicited marketing and the other negative consumer externality that is not internalized by the firms). Second, at the time of choosing the short term benefits and the long term costs of information disclosure, the consumers do not act properly. Privacy also has a positive effect on welfare and efficient balance in source allocation. Moreover, in rejecting the theory of efficiency in the free flow of information we can say that such a system would be inefficient in the long term. Because information about an individual is never complete or accurate. If an individual has no control over the dissemination of her personal information, does not know what facts may determine a counterparty’s decision, and he can't correct errors in her record, that may lead to economically inefficient behavior by all parties to a transaction. Finally, people may not acquire privacy protection under standard market conditions due to poverty, transaction costs and other impedimenta.Disclosed personal information (the lack of privacy protection) has economic benefits and costs for three groups of people: data holders, data subjects and third parties. disclosed personal information can bring about economic benefits for data holders (for instance, efficiency gains, price discrimination, increased revenues through consumer tracking, improved services or its redesigning with respect to consumer behavior); data subjects (for instance, discounts, personalization, sales of personal information with prophetization approach, targeted offers, reducing junk and telemarketing and increasing the reliability of gathered data, price discrimination, the advantages of secondary markets) and third parties(for instance, improve  the experiences of third parties). At the same time, such disclosures can be costly for data holder (for instance, costs associated with data collection when consumers deem gathering method too intrusive or the costs associated with the use or misuse of collected data, such as privacy violations, the cost of informing consumers of a breach, termination of relationships with a company and reducing certain transactions because of fears of future privacy costs as well as costs associated with the act of collecting data such as the investments necessary to build Customer Relationship Management systems); data subject (for instance, the psychological costs including unpleasant feelings of being observed, Being afraid of invasion, the embarrassment due to disclosing data; identity theft; price discrimination; changing the balance of power between the data subject and the data holder; time costs including time spent deleting junk mail and even criminal charges) and third parties (for instance, disclosure of third parties' information and their privacy violations).Similarly, protected personal information (privacy protection) has benefits and costs for data holders and data subjects that are often in inverse ratio to the benefits and costs of disclosed data. Privacy protection can lead to economic benefits for data holders (for instance, limiting responsibilities, gaining competitive advantage by attracting consumers who value for privacy) and data subjects (for instance, reducing the expected costs of future identity theft, the benefits arising from the seller's lack of awareness of some personal information). Also, privacy protection may include costs for data holders (for instance, opportunity costs such as the loss of opportunities for increased efficiency as well as the costs associated with the act of protecting data such as investments necessary for data encryption) and data subject (for instance, cognitive costs associated with getting informed from breach and response to a breach disclosure, opportunity costs for not using data in useful individual and social aims, as well costs associated with the act of protecting data including costs of using privacy enhancing technologies).

Considering the analysis presented, it was concluded that the meaning and scope of privacy, its associated trade-offs and consumer's valuations of personal data are very diverse. Furthermore, the benefits and costs arising from the protection of privacy and personal data sharing would be different depending on different circumstances, conditions and assumptions. Finally, economic theory also shows that as much as the interruption of data flows can decrease aggregate welfare, the protection of privacy can increase it. So, it would be difficult to compare the aggregate values of privacy protection and personal data and to present a final and definitive economic assessment of whether more or less, privacy protection is required. Therefore, it seems that solving the privacy problem means to find a balance between privacy and information sharing that is for the benefits of data subjects and society. Evaluating privacy from an economic perspective can help us to find this balance. Additional research is needed to find a way of creating such a balance in this area.

Non-compliance with the disclosure requirements in the securities market incurs losses to investors such as the denial of informed decision making and stock trading at artificial (inflationary) prices. In different legal systems, for compensating these losses civil liability is anticipated for issuers and their directors. Legally, it is questionable that with regard to the specific features of securities markets, basically, how can civil liability rules be applied for compensating the losses derived from non-compliance with these requirements? Economically, considering that for economic justifying civil liability there must be a specific function for civil liability, it is questionable that what is the main function of civil liability? In short, it seems that the application of civil liability rules in these cases is faced with serious legal barriers, which requires a special mechanism (such as causation presumption) for compensating these losses. Also the main purpose of civil liability in these cases is compensating the damages that have been reached to investors unduly.

the specific characteristics of the securities markets given (where there is a risk and probability with a significant role, and always a degree of uncertainty), and the particular conditions for realization Civil liability (such as the need for a certain loss and the need to establish a certain causal link between the harmful act and the harm), the possibility of applying civil liability rules for compensating the damages caused by the violation of disclosure requirements is Doubtful. In this article we want to examine the legal possibility and economic efficiency of civil liability in these actions.  
 

The research methodology of this paper is an analytical method and the subject will be studied comparatively (both in French and US law) in order to discover a logical relationship between securities law and tort law and how we can recover investors’ losses derived from non-compliance with these requirements. We will use simultaneously economic and legal analysis in order to investigate this matter.
 

The application of civil liability rules in these cases is faced with legal barriers, mainly due to the difficulty of proving certainty of losses, the collectivity of the securities market and privac of contract in secondary market transactions. In fact, what is related to civil liability is that failure to comply with information disclosure requirements has led to a loss to the investor, and in cases where the investor has suffered losses from adverse market conditions, this loss will not be recoverable. So, the main problem with civil liability is that it can’t be determined how much the damage inflicted on the investor results from a breach of the disclosure requirements and how much of this loss derives from the venture risk. This will be a serious obstacle to obtaining a causal relationship as well as the certainty of a compensable loss in these cases. The other problem is primary market, the issuer himself is a contract party, in the secondary market he is not a party of the contract. Being issuer a third party in the secondary market transactions may effect on civil liability arising from Non-compliance with the disclosure requirements.Also, from economic perspective the efficiency of compensatory and dissuasive function of civil liability in these cases is frequently questioned. It is said that issuer’s liability in these cases will result in circularity, because of the relative overlap between the wrongdoer and the victim. But the circularity is partial and relative, and regarding the independence of the legal personality of the company from shareholders, there is no logical objection to this case. Another objection raised in order to undermine the compensatory and dissuasive function in function of civil liability in these cases is that the imposition of a final liability on a shareholder who has committed no breach of the disclosure requirements is not fair. While there is no reason to impose liability on investors that are as innocent as plaintiff. However Shareholders who have the power of electing and changing managers should not considered as innocent.

For resolving legal problems against civil liability derived from violation of legal disclosure requirements in the securities market, it is necessary to anticipate certain mechanisms such as establishing the presumption of a causal relationship, to facilitate compensation of these losses. So, concerning the establishment of a causal relationship and a certain loss I will propose a presumption upon which in the event of a breach of the legal requirements of the disclosure of information, all price changes that occur on the date of disclosure of incorrect information are caused by false information.The objections raised by the advocates of economic analysis of law about the compensatory function of civil liability in the cases are not admissible, and the main purpose of civil liability in these cases can be to compensate the investors.