Justice for growth: the new buzz phrase

Countries have often targeted growth as a top priority. What is new is to see the justice sector used as one of its drivers.

The attorney general gave a speech at the beginning of this year in which he emphasised that economic growth – a central part of the prime minister’s ‘Plan for Change’ – was not possible without the rule of law, including adherence to the international rule of law.

The Law Society said more or less the same thing in its three key asks of the new government when it was first elected last year. The Society said: ‘This commitment to the rule of law is… a key reason why the UK is a magnet for international business and investment. Businesses tend to invest where the legal framework is secure and predictable and where they know that, should things go wrong, they can access courts or other forms of dispute resolution to protect their interests. This reputation cannot be taken for granted, and requires continued commitment from politicians and governments of all persuasions.’

We are witnessing an experiment in real time as to whether this statement is true. Given the US administration’s behaviour towards lawyers and the courts – menacing executive orders against law firms, with some firms seeking protection by offering up millions in pro bono to causes favoured by the administration; verbal attacks against judges by the administration and its supporters; an as yet uncertain commitment to complying with court orders; and (probably) also unpredictable border security, with innocent foreigners detained and deported at random – will this conduct affect growth in the US, which is also a key priority for the Trump administration?

We understand that the unpredictable implementation of the tariffs policy may affect US growth, but will its unpredictable attitude towards the justice sector do the same? Will the UK legal sector, for instance, benefit from a flight from the US for those seeking stability and order in the settlement of international disputes? Given that the US is our closest competitor in the provision of international legal services, should the UK government highlight even further its commitment to stability and the rule of law by way of contrast, to take advantage of the attacks on justice in the US?

The UK is not alone in openly using justice as a growth driver. The EU has just held its first High-Level Forum on Justice for Growth. It was opened by the commissioner for justice, who began by inviting participants from member states, parliament, council, and European umbrella organisations to discuss how justice policies can contribute to European competitiveness and growth.

He again highlighted how companies invest more in countries where the rule of law is consistently upheld (US take note).

I have written before about how the EU is beginning to deregulate company law. The commissioner once more mentioned how EU corporate governance rules will be revisited – through digitalisation, simplification and harmonisation – to make the EU more attractive to investors.

However, with more focus on the justice system itself, he highlighted the digitalisation of justice. The commission is already offering resources to member states in its drive to digitalisation and is considering further options like the sharing of IT tools (such as assistance in the automation of proceedings or in AI tools in interpretation) to avoid the wheel being reinvented over and over again in member states.

Another commission proposal is the revival of what is called the 28th regime. Those with long memories may remember the Common European Sales Law, which aimed to offer cross-border contract law for the sale of goods and digital services. It was a favourite for the commission about 15 years ago before such grand projects for the harmonisation of parts of European law, even for a European Civil Code, became distinctly unfashionable. But they have now reappeared under the ‘justice for growth’ banner. The resurrected 28th regime aims to be a parallel, elective legal framework that businesses such as start-ups and scale-ups can choose, thus bypassing national legal frameworks.

Also on the menu is the modernisation of civil judicial cooperation instruments, such as the Brussels Ia and Rome II regulations, to enhance cross-border legal certainty; and the need for EU legislation on third-party litigation funding.

We can learn from what the EU is doing. Much is irrelevant to us now post-Brexit, but two elements – the rule of law, and, to a lesser degree, digitalisation – are universal growth requirements. We in the UK can position ourselves strongly against our competitors.

I would like to travel to the future and read academic studies of if and how the attacks on the legal system and the rule of law in the opening months of the second Trump presidency affected growth. It would help us plan now.

Jonathan Goldsmith is Law Society Council member for EU & International, chair of the Law Society’s Policy & Regulatory Affairs Committee and a member of its board. All views expressed are personal and are not made in his capacity as a Law Society Council member, nor on behalf of the Law Society