The Americanization of Whistleblowing? A Legal-Economic Comparison of Whistleblowing Regulation in the U.S. and Germany Against the Backdrop of the New EU Whistleblowing Directive
Vol. 27
June 2021
Page 149
While it is only a side-issue in Germany, whistleblowing may well be considered a common phenomenon in the U.S.. Why is that? This article provides an answer to this question by unraveling the different cultures associated with whistleblowing. This article will attempt to answer the question of whether a legal system employs whistleblowers, first, depends on the different understanding of the employer/employee relationship, and, second, on the respective system’s approach of how the law is in principle enforced. Is it a rather loose and foreseeable relationship, or does it have the appearance of permanency entailing relatively strong ancillary obligations? Is the law preponderantly enforced by authorities or do private persons play an important role as well? With respect to the latter, it is far from surprising that from the perspective of the U.S. legal system this question has to be answered in the affirmative while Germany is traditionally reluctant in capitalizing private persons for public ends. However, with regard to Germany, this approach is subject to a change coming both from within the German legal system, and from the outside. The increasing influence of the E.U. on Germany has especially begun to elicit changes in the traditional employment relationship, introducing a public policy dimension and thereby an element of private law enforcement. In that respect, by juxtaposing the IRS and SEC whistleblower programs, as well as the new E.U. Whistleblowing Directive, this article demonstrates the transition that the existing German legal system is undergoing. After the analysis in this article, it will become safe to say that the German approach will not merely result in a copy-paste of the “American model.” Beyond that, a new economic theory—the belief model—is used to explain when and why the law changes people’s behavior. This gives room for a both convergence of law and economics and the concept of legal transplants, and for insightful recommendations for both the U.S. and the prospective German whistleblowing framework.
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Vol. 27
June 2021
Page 149
While it is only a side-issue in Germany, whistleblowing may well be considered a common phenomenon in the U.S.. Why is that? This article provides an answer to this question by unraveling the different cultures associated with whistleblowing. This article will attempt to answer the question of whether a legal system employs whistleblowers, first, depends on the different understanding of the employer/employee relationship, and, second, on the respective system’s approach of how the law is in principle enforced. Is it a rather loose and foreseeable relationship, or does it have the appearance of permanency entailing relatively strong ancillary obligations? Is the law preponderantly enforced by authorities or do private persons play an important role as well? With respect to the latter, it is far from surprising that from the perspective of the U.S. legal system this question has to be answered in the affirmative while Germany is traditionally reluctant in capitalizing private persons for public ends. However, with regard to Germany, this approach is subject to a change coming both from within the German legal system, and from the outside. The increasing influence of the E.U. on Germany has especially begun to elicit changes in the traditional employment relationship, introducing a public policy dimension and thereby an element of private law enforcement. In that respect, by juxtaposing the IRS and SEC whistleblower programs, as well as the new E.U. Whistleblowing Directive, this article demonstrates the transition that the existing German legal system is undergoing. After the analysis in this article, it will become safe to say that the German approach will not merely result in a copy-paste of the “American model.” Beyond that, a new economic theory—the belief model—is used to explain when and why the law changes people’s behavior. This gives room for a both convergence of law and economics and the concept of legal transplants, and for insightful recommendations for both the U.S. and the prospective German whistleblowing framework.