The term legislative court was coined in 1828 by Chief Justice John Marshall, who wrote the opinion in American Insurance Co. v. Canter, 26 U.S. (1 Pet.) 516, 7 L. Ed. 242 (1828). In Canter, the High Court ruled that the U.S. Congress had the power to establish a federal court in the U.S. territory of Florida. Marshall held that Congress had this power under Article I, Section 8, Clause 9, of the U.S. Constitution. Marshall called courts created under this provision "legislative courts, created in virtue of the general right of sovereignty, which exists in the government."
On the federal level, the congressional authority to create courts is found in two parts of the U.S. Constitution. Under Article III, Section 1, "The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish." Article III, Section 1, also provides that the judges in the Supreme Court and in the inferior courts will not have their pay diminished and will hold their office during good behavior. This section establishes an independent judiciary that cannot be influenced by threats of pay cuts or of removal without cause. Article III courts are called constitutional courts.
Article I, Section 8, Clause 9, confers on Congress the power to "constitute Tribunals inferior to the supreme Court." This authority is not encumbered by a clause requiring lifetime tenure and pay protection, so judges sitting on Article I courts do not have lifetime tenure, and Congress may reduce their salaries. Article I courts are called legislative courts.
According to the U.S. Supreme Court, under Article I, the Framers of the Constitution intended to give Congress the authority to create a special forum to hear matters concerning congressional powers, and to further the congressional powers over U.S. territories under Article IV, Section 3. This authority allowed the government to create Special Courts that can quickly resolve cases that concern the government. This is considered a benefit to society at large because it facilitates the efficient functioning of government.
The distinction between legislative courts and constitutional courts lies in the degree to which those courts are controlled by the legislature. Control of the judiciary by the legislature is forbidden under the separation-of-powers doctrine. This doctrine states that the three branches of government—executive, legislative, and judicial—have separate-but-equal powers. Legislative courts challenge this doctrine because the pay rates and job security of their judges are controlled by a legislature.
The U.S. Supreme Court has identified three situations in which Congress may create legislative courts. First, Congress may create legislative courts in U.S. territories. This is because Congress has an interest in exercising the general powers of government in U.S. territories that do not have their own government. Such legislative courts exist in Guam, the U.S. Virgin Islands, and the Northern Mariana Islands. The local courts of the District of Columbia are also considered legislative courts.
Second, Congress may create legislative courts to hear military cases. This is because Congress has traditionally maintained extraordinary control over military matters. The U.S. Court of Military Appeals is such a legislative court.
Third, Congress may create legislative courts to hear cases involving public rights. Generally, these are rights that have historically been determined exclusively by the legislative or Executive Branch. The government is always a party in such cases, and such cases generally involve matters of government administration. On the federal level, the only Article I court established under the public rights doctrine is the u.s. tax court. This court hears cases involving federal taxes, brought by or against the Internal Revenue Service or another federal agency.
Some scholars maintain that the public rights category of legislative courts could pose a threat to the independence of the federal judiciary. Because Congress is involved in many facets of life, these analysts fear that Congress could create an unacceptable number of courts that are not sufficiently independent. For the most part, that fear has not been realized. Congress has not created an inordinate number of Article I courts, and the U.S. Supreme Court has at times been vigilant in protecting the independence of Article III courts.
In 1982 the U.S. Supreme Court struck down a federal statute on the ground that it gave too much power to a legislative court (Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598). At issue in Northern Pipeline was the Bankruptcy Reform Act of 1978 (11 U.S.C.A. § 101 et seq.). This act created federal bankruptcy courts to hear bankruptcy cases. Before the act bankruptcy cases were heard by U.S. district courts, which were independent Article III courts. The new bankruptcy judges were given a tenure of fourteen years, and their salaries were subject to adjustment. The new bankruptcy courts had the authority to decide contract and tort cases related to bankruptcy.
According to the Supreme Court, the bankruptcy courts had been given the authority to decide issues of private rights, which generally concern the rights of one private party in relation to another private party. Under the Supreme Court's interpretation of Article I, Section 8, Clause 9, legislative courts cannot decide issues of private rights, so the bankruptcy courts were declared unconstitutional.
Two years after the Supreme Court's decision in Northern Pipeline, Congress passed the Bankruptcy Amendments and Federal Judgeship Act of 1984 (28 U.S.C.A. § 1408 et seq.). This act created a distinction between core and noncore bankruptcy proceedings. Core proceedings were matters directly related to bankruptcy; noncore proceedings involved ancillary issues such as personal injury and Wrongful Death claims. Bankruptcy courts maintained jurisdiction in core proceedings. In noncore proceedings bankruptcy courts were limited to proposing findings of fact that could be thoroughly reviewed by a federal district court.
Braugh, Roger S., Jr. 1995. "Personal Injury and Wrongful Death Claims in Bankruptcy: The Case for Abstention." Baylor Law Review 47.
Cross, John T. 1993. "Congressional Power to Extend Federal Jurisdiction to Disputes outside Article III: A Critical Analysis from the Perspective of Bankruptcy." Northwestern University Law Review 87.
Fallon, Richard H. 1988. "Of Legislative Courts, Administrative Agencies, and Article III." Harvard Law Review 101.