Working Paper Series ISSN 1470-2320 2005 No.05-70 The World Bank & Rule of Law Reforms Gordon Barron Published: December 2005 Development Studies Institute London School of Economics and Political Science Houghton Street Tel: +44 (020) 7955 7425/6252 London Fax: +44 (020) 7955-6844 WC2A 2AE UK Email: d.daley@lse.ac.uk Web site: www.lse.ac.uk/depts/destin Page 1 of 43 Table of Contents Chapter 1: Introduction 2 Chapter 2 5 2.1 Law and Development Part 1: The Law and Development Movement. 5 2.2 Law and Development Part 2: The “New” Law and Development Movement 9 2.3 The Bank and the NIE. 11 2.4 Two Competing Definitions 12 The ROL under Shihata. 13 The ROL under Tung. 14 2.5 The Bank’s Definitions and Politico-Legal Theory. 14 Chapter 3 19 3.1 Definitions of the ROL and Legal and Judicial Reform 19 3.2 The Bank and its Articles 19 3.3 Reforming Laws 20 3.4 Reforming Institutions 26 Chapter 4: Conclusions 32 Bibliography 37 Websites 43 1 Page 2 of 43 Chapter 1: Introduction The World Bank’s (“the Bank’s”) “discovery” of the Rule of Law (ROL) and ROL reforms in the early 1990s is often held to be the result of a convergence of external factors, not least the perceived limitations of the so-called “Washington Consensus”, the emergence of an interest in “good governance”, and the fall of Communism in Central and Eastern Europe. 1 But the role of the ROL in development – whether this is perceived instrumentally or ontologically 2 - has, in fact, a much older history than the Bank’s relatively brief experience would suggest. Theoretical interest was shown by, notably, Max Weber, who saw legal rationality as an instrumental factor accounting for the emergence of capitalism in Western Europe; while practical interest was shown by the “Law and Development Movement” (LDM) of the 1960s and 1970s, which – like the Bank is today – was dedicated to the idea that the law could be used as a tool to promote social and economic development. The LDM in particular has provided a wealth of ammunition for an academic community unconvinced of the utility of the Bank’s work, and some (many of whom took part in the original movement) have, quite rightly, expressed concerns that the “mistakes” of the past – chief among them being that the LDM lacked a theory of law and development - will simply be repeated by the Bank. A parallel concern has been that the Bank’s interest in “building” the ROL coincides with a period in which the ROL itself, as both philosophical doctrine and political theory, has been robbed of much of its analytical content. In an age when the search for “silver bullets” in development is arguably on the wane 3 , the ROL is put forward as the solution for an astonishingly wide range of problems: it poses as the link between fledgling and 1 Rose (1993); Trubek (2004). 2 Daniels and Trebilcock (2004). 3 See: Kenny and Williams (2000). 2 Page 3 of 43 consolidated democracy; it promises to entrench human rights; it promises an end to violence and corruption; and it is a sine qua non for the foundations of a market economy. 4 But with meanings as diverse as these, one could be forgiven for thinking that the ROL, in the end, means nothing at all. 5 The Bank’s interest in variously “building” or “promoting” the ROL comes up against a major practical difficulty, in that, in order to construct a reform agenda – something concrete – it has necessarily to translate the ROL as a philosophical idea into tangible legal institutions that can be reformed. 6 This is in keeping with the body of theory – the New Institutional Economics (NIE) - which underpins to a considerable extent the Bank’s work in “good governance.” In practice, for the Bank: “legal and judicial reform is a means to promote the rule of law.” 7 Tamanaha 8 has pointed out, however, that the ROL “has always consisted more of a bundle of ideals than a specific or necessary set of institutional arrangements.” Indeed, a distinction has been drawn in the literature between the ROL itself, and ROL orthodoxy: the “set of ideas, activities, and strategies geared toward bringing about the rule of law, often as a means toward ends such as economic growth, good governance, and poverty alleviation.” 9 With this in mind, this paper sets about examining the Bank’s claims that it is “building” or “promoting” the ROL via legal and judicial reform. It seeks to put the Bank’s work in historical and theoretical context, with the ultimate goal of identifying the theory or theories – so lacking in the LDM – informing the Bank’s work. The primary argument of this paper is that the ROL is a social and political ideal more than anything else. At the social level, it requires – at a minimum – that the law is 4 Carothers (2003). 5 Shklar (1987). 6 Belton (2003); Carothers (2003). 7 World Bank (2004a:3) emphasis added. 8 1995:476. 9 Golub (2003:7). 3 Page 4 of 43 capable of guiding one’s behaviour. The processes that allow this are extremely complex and scarcely understood. Moreover, the evidence suggests that these processes are either impervious to reform, or respond only extremely slowly (well outside the timeframe of a typical Bank project). At the political level, the defining feature of the ROL, from its origins in natural law thought through to present-day jurisprudential writings, has been the appeal to ordinary law as a control over naked political power, and the protection of ordinary individuals from the arbitrary acts of government. 10 The Bank’s difficulty at this level of analysis is that reform is ultimately dependent on the highly unsatisfactory idea of “political will.” In order to carry out this task, the paper starts by placing the Bank’s current work within the context of the other notable attempt to build the ROL- the failed LDM – as well as its own work in governance. It then reviews the shift that has taken place in the Bank’s definition of the ROL since the early 1990s, from a rigidly formal conception, to an ambiguously substantive conception. Chapter 3 then looks at the main vehicles the Bank uses for promoting the ROL: legal and judicial reform. It details the theoretical basis on which the Bank’s work rests and highlights the inherent flaws in trying to build the ROL using these means, in line with the argument stated above. Chapter 4 concludes by reflecting on the implications of the preceding discussion for constructing a theory of the ROL. 10 Barnett (2002). 4 Page 5 of 43 Chapter 2 2.1 Law and Development Part 1: The Law and Development Movement. Ironically, whereas the fall of communism in the early 1990s, amongst other factors, signalled the beginning of the Bank’s interest in the role of law in development, it was the end of World War II and a Cold War geopolitics which started the other notable movement in law and development (LD), the LDM. 11 The LDM was an overwhelmingly American movement, heavily influenced by modernisation theory, and believed that the law could speed up the social, political and economic convergence of “The Third World” with the West. Economically, this meant a role for the law in establishing contract and property rights, and providing market incentives via the law’s predictability and stability functions 12 ; politically, the LDM saw a strong, liberal-democratic government emerging once a certain threshold level of economic growth had been achieved. 13 Over the course of its brief life, the LDM attracted the interest of the best law departments in the country 14 , drawing funds and professional support from the likes of the Ford Foundation, the Agency for International Development (AID), and the American Bar Association. The LDM was primarily concerned with “the problem of ‘the gap’” 15 : the mismatch between law “on the books” and law “in action.” It believed that “the gap” could be narrowed by changing the rules- that new legislation could induce changes in social behaviour. Moreover, “where it becomes apparent that immediate rule changes will not affect social behaviour, attention shifts to the institutional changes that will be 11 Gardner (1980). 12 Burg (1977); Trubek (1972). 13 Trubek (2004). 14 Most notably Harvard, Stanford, Yale, and the University of Wisconsin. 15 Burg (1977:511). 5 Page 6 of 43 needed to guarantee that this will occur.” 16 In practice, this meant attention shifted to a poorly educated bar and judiciary, and the LDM became a programme, first and foremost, of legal education reform 17 , the expectation being that “once the obstacle of a passive legal profession is removed, instrumental solutions will play themselves out.” 18 Training programmes were established throughout Latin America, Asia and Africa in the hope that lawyers and judges could be trained to appreciate the developmental role of the law and, in a sense, become “social engineers.” 19 The theory had an appealing logic, but it lacked an explicit, social-scientific rigour. 20 Merryman 21 saw this as a problem of the “intellectual style” of US legal scholarship, which he saw as more professional and practical, than theoretical. Consequently, the LDM lacked the social sciences’ concern with theory and theory- building. What it did have, however, was a “tacit set of assumptions” 22 which guided LDM action. Trubek and Galanter 23 (TG) – whose hugely influential 1974 article marked the beginning of the end of the movement - labelled these assumptions “liberal legalism”, and set the paradigm out in the form of seven propositions: 1) “‘[t]he state is the primary locus of supranational control in society’; 2) ‘the state exercises its control over the individual through law – bodies of rules that are addressed universally to all individuals similarly situated’; 3) ‘rules are consciously designed to achieve social purposes or effectuate basic social principles’, and these rules are made through a ‘pluralist process’; 4) these rules are ‘enforced equally for all citizens, and in a fashion that achieves the purposes for which they were consciously designed’; 5) ‘the courts have the principal responsibility for defining the effect of legal rules’; 6) the outcome of adjudication by the courts is determined not by the policies underlying those rules or by extraneous considerations, but by an ‘autonomous body of learning’; and 7) ‘the behaviour of social actors tends to conform to the rules.’” 24 16 Trubek and Galanter (1974:1079) emphasis in original. 17 Faundez (1997); Gardner (1980); Tamanaha (1995); Trubek (2004); and Trubek and Galanter (1974). 18 Burg (1977:512). 19 Messick (1999:12). 20 Friedman (1969a); Merryman (1977). 21 1977:477. 22 Trubek and Galater (1974:1070). 23 Ibid. 24 Trubek and Galanter (1974:1071-1072), in Berg (1977:513). 6 Page 7 of 43 For TG, a major failing of this liberal legalist model was its “ethnocentricity” and “naivety.” 25 When measured against the reality of developing countries, it did not correspond at all well: where the model assumed social and political pluralism, the reality in poor countries was often “social stratification and class cleavage juxtaposed with authoritarian or totalitarian political systems” 26 ; where the state was supposed to be “the primary locus of social control” 27 , it was in fact frequently overpowered by the strength of “tribe, clan, and local community.” 28 Other problems stemmed from the fact that there was no internalisation of the laws by the citizens of the countries in which reform was taking place, and thus no real observance of it 29 ; and instead of a central role in social control for an independent judiciary free from tribal, religious, political, or class interests, the courts were more often than not “neither very independent nor very important.” 30 What TG called “the most serious challenge” 31 , however, was the recognition that the law could be used in an anti-developmental way, and that the best lawyers, newly trained by LDM programmes, could be used by elites to resist change and consolidate their privileged positions. 32 Thus, while the LDM had foreseen the primary agent in change as a “strong, relatively centralized state” 33 , it had been unable to anticipate that “when the state is captured by authoritarian groups, law seen in primarily instrumental terms cannot serve as a 25 Trubek and Galanter 1080. 26 Ibid. 27 Ibid. 28 Ibid. 29 Ibid at 1080-1081. 30 Ibid. 31 Ibid at 1083. 32 Ibid. 33 Trubek (1972); Trubek and Galanter (1974:1079). 7 Page 8 of 43 restraint. Lacking its own internal values or goals, law will become an instrument of those who control and set the goals of the state.” 34 Faundez 35 has recently pointed out that while there are obvious similarities between the Bank’s conception of a fair legal system in its current ROL work, and liberal legalism, the current context is fundamentally different. Under the Bank’s approach the state is no longer “the primary locus of supranational control”, but limited to complementing the market in a very restricted way. The chance of the law’s capture by elites, he says – TG’s “most serious challenge” - is thus considerably reduced. 36 Despite the change in the role of the state, however, other issues raised by LDM scholars still appear to linger: the issue of foreign lawyers obtaining a sufficient knowledge of local culture, society, and the legal system to be able to construct the right kind of programs, and not simply resorting to transplanting laws and legal institutions from one country into another 37 ; the issue of traditional dispute settlement mechanisms 38 and attempting to formalise and professionalise what should perhaps be left alone or even de-formalised 39 ; the issue of hostility and resistance to foreign legal assistance 40 ; and the issue of the cost of program failure for the foreign legal expert, separated as he is by “geographic, political and cultural distance”, being far lower than those who actually live in the target nation. 41 34 Tamanaha (1995:474). 35 1997. 36 Ibid. 37 Merryman (1977). 38 Beckstrom (1973); Trubek and Galanter (1974). 39 Trubek and Galanter (1974:1078); More recently: Kennedy (2003); Upham (2002). 40 Gardner (1980). 41 Merryman (1977:480). 8 Page 9 of 43 2.2 Law and Development Part 2: The “New” Law and Development Movement. Despite these issues which, sparked by TG’s article, led to “The Decade of Disillusion” 42 with law and development (LD), the 1990s emerged as “The Decade of (re)-Discovery.” 43 Development practitioners from the EU, DFID, EBRD, UNDP, various Western governments, and the African, Asian, and Inter-American Development Banks identified in the 1990s two important roles for the ROL 44 : on the one hand, the ROL could be used to ensure the proper functioning of a market economy, by providing protection for property rights; third party enforcement of contracts; and a stable, crime-free investment environment. On the other, the ROL could be used to help the emergence of democracy, good governance, and the protection of basic human rights. 45 Although the LDM had been no stranger to the “promotion of the rule of law” 46 (the implication was that all 7 elements of TG’s paradigm of liberal legalism needed to be present in order for there to be a ROL system) 47 , the “new” law and development movement has increased the ROL rhetoric and explicitly embraced the ROL as a goal of development policy. According to Trubek 48 , the Bank alone has spent $2.9 billion dollars on some 330 projects in its pursuit of the ROL since 1990. The clearest statement of the Bank’s role in this “new” LDM is to be found in its annual review of legal and judicial reform. 49 The 2004 edition lists both the factors contributing to its interest in the law, and what it hopes to achieve via the law 50 : 42 McAuslan (2004:10). 43 Ibid. 44 Carothers (1998); Trubek (2004). 45 Rose (1998); Trubek (2004). 46 Gardner (1980:8). 47 Tamanaha (1995). 48 2004. 49 World Bank (2004a). 50 Ibid at 1-2. 9 [...]... demand nothing of the actual content of the law. 67 Substantive definitions, on the other hand – as well as insisting on the formal criteria - ask questions of the actual laws themselves.68 Laws are held to conform to the ROL only insofar as they meet certain subjective criteria as regards the morality of the legal system, such as 64 World Bank (2002a) World Bank (2002b);(2003);(2004a) 66 World Bank (2004a:2-3)... 15 of 43 whether the laws are “good” laws or “just” laws.69 Legal scholars tend to prefer formal definitions of the ROL because they allow for an element of consensus- the formal criteria are either there, or are not Substantive conceptions, in contrast, are a battleground for competing notions of justice and differing moral visions “If the rule of law is the rule of good law , says Joseph Raz70, “then... to lead back to the mistakes of the LDM and the idea of the lawyer as “social engineer.” The use of the term “legal culture” has at least encouraged the idea that laws need a kind of “glue” to work, and that a legal system is essentially static without the people (and most notably the views of the people) who inhabit it But the Bank has no real theory to account for how this feature of the legal system... the basic intuition from which the doctrine of the rule of law derives”, is that the law must be capable of guiding the behaviour of its subjects.” From this basic idea, he elicits a list of principles which should be able to be applied to any law in order that it conform to the ROL: “all laws should be prospective, open and clear; laws should be relatively stable; and the making of particular laws... which often have a legal component.52 The Bank s claims for the law have inspired voluminous literature, both supportive and contradictory, though a detailed review is outwith the scope of this study 51 52 Ibid emphasis in original http://www1.worldbank.org/publicsector/legal/worldbank.htm 10 Page 11 of 43 2.3 The Bank and the NIE While many of the above claims made on behalf of the law and the ROL... protection (of human as well as property and other economic rights)”; and that there should be “clear communication of the rules” and “punishment under the law. ”61 The following discussion will identify how the Bank defines the ROL”, and locate these definitions within existing jurisprudential and political debate The ROL under Shihata The World Bank s working definition of the ROL has tended to reflect the. .. highlighted, each of which has different implications for the Bank s work The first talks of acquiring knowledge of legal culture In theory, this is the kind of information that is – or should be – collected as part of one of the Bank s Legal and Judicial Sector Assessments The second raises the idea of changing legal culture Whereas the former suggests adapting rules to fit local cultures, the latter suggests... http://www1.worldbank.org/publicsector/legal/reforminginstitutions.htm 87 See note 61 above 86 19 Page 20 of 43 IV, section 10 of the Bank s Articles of Agreement notes: The Bank and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned.” What this means in practice, is that the Bank. .. exist to ensure the proper application of the rules and to allow for departure from them as needed according to established procedures; d) conflicts in the application of the rules can be resolved through binding decisions of an independent judicial or arbitral body; and e) there are known procedures for amending the rules when they no longer serve their purpose.63 This was the definition of the ROL which... he not apply the law in the manner the government wants it applied.133 More generally, a press release by Amnesty International in 2002 claimed that the rule of law has been weakened by the climate of impunity, extreme political polarization, the imminent risk of social upheaval, the militarization and politicization of the armed forces and police forces, and the apparent inability of the state to . Page 2 of 43 Chapter 1: Introduction The World Bank s ( the Bank s”) “discovery” of the Rule of Law (ROL) and ROL reforms in the early 1990s is often. amending the rules when they no longer serve their purpose. 63 This was the definition of the ROL which coincided with the Bank s “discovery” of the law