Judicial Review of Regulatory Matters: Divergences and Boundaries between Courts and Regulatory Agencies

Regulatory agencies usually operate in complex thematic fields (e.g., telecommunications, energy, capital markets), that are often managed by a narrow circle of experts and bureaucrats who deal with them on a daily operational basis, consequently multiplying information asymmetry problems. Therefore, the knowledge and experience of judges has become a matter of concern with regard to the increased complexity of evidence and technical and scientific insights needed for an adequate understanding of increasingly evidence-based regulatory policies. Regulatory bodies develop and implement policies while continually facing the prospect that their actions might be reviewed and may be overturned by the judiciary. The paper explores the relationships between the judiciary and regulatory agencies in relation to judicial review of administrative decisions. It sheds light on how law-and-courts professionals and regulatory bodies spot potential challenges, how they handle litigation, how legal and technical-scientific rationalities interact and what meanings are given to the judicialization of regulatory decision-making. The main theoretical frameworks for the study were regulatory space and institutional logics. Divergent interpretations of organizational missions are more likely when an organizational field is characterized by multiple institutional logics, each one institutionalized to some degree (DiMaggio, 1988; Stryker, 2000). We also employ the concept of regulatory space, an approach built by organizations, people and events acting together and negotiating boundaries in a specific set of regulatory issues subject to public decisions (Hancher & Moran, 1989; Vibert, 2014), because it is difficult to fully understand the role of mutual influences from the perspective of the courts or regulators alone. Aiming at analyzing perceptions about how regulatory litigation is undertaken in Brazil, 21 interviews were carried out with law-and-courts professionals and officials of seven Brazilian regulatory agencies. Brazil is a suitable locus for exploring divergences and boundaries among prominent players in regulatory litigation. The Brazilian Constitution allows extensive judicial review of administrative acts since no threat to a right may be excluded from judicial review and any party in a relationship with the public administration enjoys the protection of due process of law. The paper discusses how key players – regulatory officials, judges and agencies’ attorneys – give meanings to the judicialization of regulatory decision-making. Different expectations were in the background for accounts offered by the respondents and their perceptions have an important impact on how the regulatory system operates and on the way in which rules are made and reviewed. By examining the boundaries and divergences among them, the study extends the literature on judicial review on regulation matters in aspects such as: highlights the relevance of the role performed by the agencies’ attorneys in bridging the gap between legal and technical rationalities; shows how powerful economic agents exploit contradictions in the regulatory arena in order to obtain the reinterpretation of rules in their favor; suggests an increasing interest by judges in weighing non-strictly legal arguments and developing standards regarding what guiding principles might be adopted to improve the quality of the regulatory authorities’ administrative decision-making process.