VI. THE INSTITUTIONAL APPROACH AND PRIVATE LAW REGIMES
As discussed in chapter one, the public/private divide, in its classical sense, limits the application of the rights framework to the relationship between individuals and the state.
The set of rights that private parties possess against each other is a subject for legislation (or the common law, as the case may be). Any account of bounded direct horizontality, therefore, will necessarily create overlaps between the horizontal rights framework and existing regimes of private law. The precise nature of the overlap must then be clarified. As both Van der Walt and Thomas acknowledge, for instance, ‘the practice of constitutional review... [cannot become a] higher review of all private law disputes’.[493] This is closely linked to the separation of powers problem as well: private disputes raise the kind of granular questions that, as we saw in chapter three, are believed to be best settled by legislatures rather than courts in adversarial litigation.[494] Indeed, the broader question of how constitutional rights interact with existing regimes of private law has been a vexed issue in multiple jurisdictions. It is argued, for example, that indirect horizontality evolved in Germany precisely in order to make space for constitutional rights in private relationships, while preserving the autonomy and internal coherence of private law itself.[495]What does the institutional approach have to say about this? At the outset, it is important to note that the question becomes relevant only when the preconditions for the application of the horizontal rights (discussed above) are in existence: ie there must exist an institution in the relevant sense, and the parties to the impugned relationship must occupy different institutional locations that enable one to violate the rights of the other. This immediately shrinks the borders of possible overlap.
It would, for example, leave a significant amount (although not all) of criminal law and tort law unaffected.Where the conditions for the application of the institutional approach are in existence, it is important to reiterate - as I argued at the beginning of this chapter - that the role of the institutional approach is to complement private law, not to supplant it. In this context, there are three possible scenarios that arise. The first, and most frequent, scenario is where there does exist legislation (or common law). In this case, as noted above, the statutory scheme will be given analytical primacy. The institutional approach recognises, in the words of Webber and Yowell, that:
[W]ithin a zone demarcated, on one side, by what reason requires and, on the other, by what reason prohibits, the legislature must make choices in settling which
The Institutional Approach and Private Law Regimes 131 relationships between persons will realise the commitment [to the set of constitutionally guaranteed rights].[496]
The role of the institutional approach in this scenario is complementary to legislation, and can take the following forms. First, the existing legal regime may be patchy, fragmented or subject to multiple possible interpretations. Consider an example that I shall discuss in greater detail in the next chapter: the application of the labour law framework to platform workers. Platform work - a recent product of the digital economy - sits uneasily between the traditional binary of ‘employment’ and ‘contract work’. Employment status, however, is a key determinant of what rights platform workers have under labour law. Courts around the world have twisted themselves into knots attempting to fit platform work within the traditional labour law framework, and have often concluded their judgments by calling upon legislatures to amend the law in order to reflect the reality of this work. This, then, is a classic example of a situation where rights are at stake but the legislative framework may be patchy or yet to catch up.
Here, the institutional approach can play an important interpretive role. As I shall show in the next chapter, for example, the institutional approach provides strong reasons for courts to hold that, in many cases, platform workers are employees under existing law.Furthermore, as discussed in section IV, while it may be possible to apply an existing legal framework to the private relationship (as many courts have done in platform litigation), there may still exist a gap in terms of the remedies offered. In other words, a constitutional right to a minimum wage (derived from the institutional approach to direct horizontality) may apply to the relationship between drivers and their platforms regardless of whether ‘intermediate status’ under the relevant law (for example) provides for such a remedy or not. Such situations may often arise, for example, in cases where courts do set aside contracts of adhesion but are not able to go any further, as they are limited by remedies under contract law.
Secondly, it may be the case that the legislation in question does not take into account institutional differences in power when setting out a scheme of rights and remedies, or does so insufficiently. In such a scenario, institutional horizontality - expressed in the form of constitutional rights - can serve as a touchstone for adjudicating the constitutional validity of the legal framework that is in place. Notably, this is similar to the methods and processes of indirect horizontality. Recall, for example, the Handelsverter case, which was discussed in section III of this chapter. A non-compete clause, as part of contract legislation, was struck down as it failed to adequately take into account institutional differences in power between the bargaining parties. Handelsverter is a good
example of what can broadly be described as indirect horizontality within the institutional rights framework.
It is important to note that this does not mean that indirect horizontality and the institutional approach collapse into each other.
In the previous section, I discussed some of the ways in which the institutional approach differs from indirect horizontality at the conceptual level. Difference, however, need not mean antagonism: while there are circumstances (see below) where the institutional approach will apply directly, here the institutional approach can also inform the application of indirect horizontality, in a framework where a legislative scheme that settles the rights and obligations of private parties already exists. The institutional approach to horizontality is not zero-sum, seeking to displace other approaches; rather, it seeks to complement and complete our understanding of horizontality, and the manner in which it is deployed is, therefore, context-dependent.To reiterate, the role of the institutional approach is not limited to striking down legal provisions. As pointed out above, it can play an equally significant role in interpreting private law. Consider, for example, the US Supreme Court judgment in Texas Department of Housing and Community Affairs v Inclusive Communities Project,[497] also discussed previously in this chapter. To recap, the question in this case involved statutory interpretation: whether disparate impact claims were cognisable under the Fair Housing Act. The US Supreme Court held that they were, and referred, at the beginning of its judgment, to the institutional character of the housing segregation (‘policies, prejudices, and practices’) that the Act was intended to remedy. In other words, the institutional approach necessarily entails that any discrimination law statute must recognise both direct and indirect discrimination claims. In case of ambiguity in the statutory text, it thus allows the Court to interpret it in a manner that would bring it in line with the institutional approach.
In the same context, a second possible situation arises when a private law regime exists and the private duty holder challenges it on the grounds that it impermissibly encroaches upon their constitutional rights.
For example, a housing discrimination law may be challenged on the twin grounds of the right to property and the right to privacy. This would, of course, take the form of vertical litigation against the state, as it is a law that is under challenge. In chapter three, I showed how scholars such as Barak and Kumm advocated a form of proportionality analysis in order to adjudicate such cases involving clashes of private rights and to decide on the basis of the relative intensity of the rights involved. I also identified certain problems with this analysis.The institutional approach alters the adjudicatory structure that courts may apply in cases like this. Instead of examining the case as a straightforward clash between the private rights of parties - the homebuyer (not to be discriminated against) and the homeowner (property and privacy) - who are deemed to be formally equal and in the same position, a court will have to ask, instead, whether, in imposing obligations upon a private party, the impugned legislation has identified, and sought to remedy, a rights violation arising out of institutional differences in power. If that is indeed the case, then there is a strong reason to uphold the constitutional validity of the law. Naturally, this may not always be true: the remedy might be grossly disproportionate (for example, life imprisonment for a restrictive covenant), or the violation might be de minimis. The institutional approach, to reiterate, seeks not to entirely supplant the existing structure of adjudication in such cases, but to add a crucial additional factor to it.
The final, and most straightforward, scenario is when there is a clear ‘gap’, ie when the relationship between the private parties is not covered by existing law (and where, therefore, indirect horizontality cannot, by definition, apply). This was the case in both IMA and PUDR, which were discussed in section IV of this chapter. In PUDR, there was no minimum wage law that bound the private employer.
In IMA, there was no civil rights law (along the lines of US Civil Rights Act) that imposed obligations of non-discrimination upon private service providers. In both cases, then, the Supreme Court was able to apply the constitutional provision to the private relationship (and, in the case of PUDR, fashion the relevant remedy, ie the payment of minimum wage). Another example of such gaps is the US Civil Rights Act, whose horizontal non-discrimination provisions operate only in some domains. In cases like these, the institutional approach can justify extending a legislative regime of rights protection to those excluded from it. In other words, the framework of rights and remedies already exists in legislation, and the adjudicatory process extends its ambit. Thus, even in cases where legislation does not govern the specific private relationship at issue, it does not follow that the courts will need to operate in a vacuum. Indeed, on a closer analysis, this was what happened in PUDR: there already existed a minimum wage legislation. It did not directly apply to the employers in question. The Supreme Court, thus, was not called upon to create a minimum wage from scratch (an enterprise that would have raised serious separation of powers issues when it came to questions such as quantification), but to simply direct that the employees in the case were covered by it. Note that there is no bright line between such cases, or in cases where the institutional approach plays an interpretive role: while the typology outlined here remains helpful, there will be cases that arguably fall into more than one category.To sum up: we are now in a position to appreciate how the institutional approach addresses key concerns around the overlap between direct horizontal- ity and existing private law regimes. The institutional approach is a model of bounded horizontality. Its application, in the first instance, is limited to private relationships where a rights violation flows from an institutional difference in power. Secondly, the application of direct horizontality under the institutional approach varies depending on whether and to what extent the private relationship at issue is covered under existing law. Courts will first look for an existing legal regime. Where it is present, the rights framework plays a background and complementary role, similar to (and sometimes reinforcing) indirect horizontality: it acts as a standard against which the legal structure can be measured, and interpreted or altered if the circumstances require. In this way, the institutional approach remains responsive to separation of powers-based concerns, effectively ensuring that elected bodies continue to have ‘the first bite at the cherry’. Furthermore, the institutional approach plays a role in justifying the imposition of obligations upon private parties, should these obligations be challenged on traditional constitutional grounds. And lastly, it is, of course, in the absence of law that the private relationship may be subjected directly to the constitutional horizontal rights framework (‘bounded direct horizontality’).
Finally: this remains a theoretical overview. The best way to understand the relationship between the institutional approach to bounded horizontality and the existing regimes of private law is to examine how it might play out through the practice of adjudication. That is the task of part II of this book.