Governance and Law: lessons from the UK and EU

By GENN

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There is an enormous row in the UK about whether the country that gave the world Magna Carta, and whose most important export is arguably the rule of law, can now be said to comply with international law. The row relates to the UK internal market bill which provides certain clarifications about the Northern Ireland Protocol (the “NIP”), the mechanism by which the current porous border can be continued on the island of Ireland.

Without going into the Internal Market bill in detail, the issue is whether the UK can be relied on to keep its word in matters of international law. Most commentators in the UK tend to portray this as a violation of trust by the UK, with the EU maintaining the moral high ground as a rules based organisation. So, which is closer to a government of laws and not of men, as John Adams once said?

The row is a bit of a fuss over nothing. The Internal Market bill clarifies some internal inconsistencies in the NIP, for example on the negotiating point that the EU conceded which is that NI is in the UK customs territory, and not the EU’s. Similarly, the precise processes which are necessary to determine how goods move from GB to NI, and from NI to GB are not clear, and not consistent with the de jure position of NI in the UK customs territory.  It cannot have been the intention of the parties to cover the whole of the UK with EU state aids rules through the back door of the NIP, and would render the current debate about state aids otiose. If the EU was confident that was the intention of the parties they need not worry about state aids coverage in the UK-EU FTA, as they would know that it would be covered by the NIP anyway.

For some reason, best known to themselves, the UK government has said through its ministers that this is a violation of international law. Since international law is a matter of interpretation, it does not make much sense for a party to willingly confess to a violation it does not need to. But the UK government’s statements do not make this a violation. I regard the Internal Market bill as a necessary clarification of some key issues in order that parties can implement the NIP properly, which is vital for the business community.

Of course, countries are frequently in violation of international rules when they want to be and the big players often are the biggest culprits. The EU for example is currently in violation of SPS rules of the WTO (having lost cases on GM, and beef hormones) and has no intention of bringing itself into compliance.  Indeed in the area of food and agriculture, the EU’s future plans on “farm to fork” will certainly trigger more WTO complaints, and more retaliation from the US and others.

But the row, confected as it might be does raise an interesting point relevant to GENN about governance. 

The issue is derived from the different approaches of the common law and civil law traditions.  The common law tradition is to develop law on a precedential basis, the approach is that the best law is out there somewhere and the job of lawmakers and the courts is to go through a process of discovery, rather like an archaeologist discovering an ancient fossil. The civil law focuses more on the specific language of the law itself. A common lawyer would read the NIP in the wider context of its fundamental purposes and goals, and try to answer the question of how the NIP delivers on those goals. A civil lawyer is more guided by the plain language of the text, however inconsistent it might be and however it flies in the face of the problem it is purporting to solve. This dramatic difference in approach is often understated in international relations.

Speaking of British exports, perhaps the least talked about, but most important one is the export of the common law itself.  Some of the most successful countries in the world have built their regulatory frameworks on it – the US, Australia, New Zealand, Singapore, the wider Commonwealth and some of the Gulf states. Some inherited from the UK – some willingly adopted it because enterprising leaders recognised its power – Singapore and the UAE are examples. The Commonwealth effect is particularly striking. Commonwealth countries usually outperform their peer groups (developed countries versus the Western European cohort, Commonwealth African countries versus their African peer group).

Because the common law approach is to seek answers to the question “what is the problem the [law/agreement/treaty] is trying to solve?”, it is able to incorporate other disciplines much more easily and in the appropriate manner. One example of the difficulty civil law has with other disciplines is Mexico’s first introduction of its new competition law, where many of the early cases involved lawyers arguing about dictionary definitions of the word “relevant” in the context of the question “what is the relevant market?”.  But that question is one to which the economist not the lawyer has a ready answer.  In the area of competition, common law systems have an easier time of integrating the economic field into their thinking.  For a long time in the world of antitrust, the US had a much more economically integrated vision, and it has taken the EU considerable time to catch up (and some would say that it has not caught up yet).

Fundamental to being well governed is an adherence to the rule of law. However that adherence is to a concept not to the specific text of a particular law or rule. As Martin Luther King once observed from his Birmingham jail, “One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws.”  The concept of equity is a deeply embedded common law concept. 

The economic governance of a place (be it a country, a city, a region or an economic zone) turns on three key principles as we note in our forthcoming GENN Report.  These are an open and liberal trading environment (lowering barriers to imports of goods and services), a market governed by competition on the merits, not incumbent power, and the protection of property rights.  These core principles are those from which all the laws and economic governance structure should flow.  Empirical evidence suggests that they flow best in a common law context.  Certainly those countries who have been free to make a choice about what sort of legal system they want to embed, such as Singapore, and the UAE have chosen the common law system, and the governance mechanisms that flow from that.

So, coming back to the row brewing in the UK on its internal market bill, it is certainly true that the NIP can be interpreted in a number of different ways.  This is common for international law.  Whether you see the clarifications of the Internal Market bill as precisely that – clarifications, or whether you see them as deviations from the black letter of the law turns on your legal tradition.  Ultimately, it is perhaps this conflict that lies at the heart of the UK’s desire to leave the EU in the first place.  At the heart is the fundamental concept that common law systems are dualist as opposed to monist –  that laws are set by parliaments (and treaties must be implemented by parliamentary actions). But the EU’s system is monist.  Regulations promulgated by the European Commission have direct effect in member states. Gradually the UK was moving towards a monist system because of the European acquis (or body of laws) and this set up a fundamental tension between the UK’s own legal tradition stretching back to and even further back than Magna Carta, and that of its continental partners. Subject to this increasing tension, the relationship finally broke.

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