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Abstract

The doctrine of public policy is a channel through which public law enters private law and bars it from actualizing its normal legal consequences. Although public policy is an old doctrine in common law and other legal systems, it is not clear which aspects of public law can enter the arena of contract (private) law and make it unenforceable. The phrase public policy is used and pled in various national and international tribunals on a daily basis. Despite its importance, the literature surrounding the doctrine of public policy is extremely limited. This Article first briefly traces the genealogy and paradigm shifts of the doctrine of public policy in the history of common law. Subsequently, it scrutinizes the ramifications emanating from developments of legal theory as well as the emergence of the welfare state in transformation of the notion of public policy. It then explains the doctrine of public policy from the law and economics perspective and shows its shortcomings. In the last section, the Article argues that the concept of public policy is a not a single concept but consists of three distinct strands—public interest, public morality, public security—each with a separate pedigree and logic requiring a separate method for its analysis. The public interest category refers to instances where the public policy exception can be determined employing cost-benefit analysis by weighing the interests of private parties versus societal interest. The second strand, public morality, attempts to safeguard the communal values by allowing the judiciary to lend its enforcement apparatus to private legal arrangements that are injurious to common morality. Lastly, public security is structured around the exceptionalist logic of modern statehood, which aims to protect states’ survival interests. This Article argues that in instances where public morality and public security are seriously at stake, private law is subsumed by the mandate of public policy. However, in the majority of cases falling under the category of public interest, courts should follow the balancing approach with the single test of avoiding negative externalities.

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