Enhancing the rule of law in Asia: the Australian role
Just as the New Columbo Plan has emphasised learning from Asia, so our development of the rule of law can also stimulate our own learning - learning how to better read and engage with Asia.
International development spending is a core part of Australia’s soft power. With a myriad of worthy calls on this pool of funding, a difficult question for every government is the prioritisation of how best this budget should be spent.
Of course, the primary aim of such spending should be to honour our moral duty to help those in greatest need in our neighbourhood. From areas such as improving governance, to promoting and supporting gender equality and opportunities for women and girls, to providing relief in times of humanitarian crises or natural disasters, Australia helps our closest neighbours and works with small organisations, foreign governments, and international bodies such as the World Bank above all because it is right to do so.
However, there is also a significant portion of the budget where the choices are less clear cut. In the context of ever increasing pressure on the available funding for international development, consideration of the results such expenditure delivers – not just for the recipient region or country but in terms of the impact it can have more broadly, including delivery of tangible benefits back to Australia – may help preserve that budget against competing domestic demands. Through this prism, this essay sets out some observations on the importance of Australian investment in the rule of law in Asia, the direct benefits which such investment would bring to Australia, and considers whether progress on the rule of law in Asia also requires a shift in mindset and perceptions within Australia.
Barriers to doing business in Asia: the law thing
There are many reasons why Australian business shies from Asia, ranging from the good (the strength of our domestic economy and market), through the bad (fear of Bali belly), to the ugly, but one of the most frequently cited – and perhaps best founded – is a mistrust of other countries’ rule of law. In part this stems from the definitional vagueness as to what the rule of law specifically entails. For clarity, let’s proceed on the basis of Walker’s observations that the rule of law is the system that requires all people (including government) to be ruled by and obey the law, and that such a law is capable of being known and understood and able to be followed.
It would be a gross generalisation to say that this mistrust applies uniformly across Asia or uniformly across the minds of Australian business. However there does seem to be a directly proportionate relationship between the extent of the growth opportunities in a jurisdiction and the wariness we have of being subject to its legal regime. This is not a uniquely western perspective – it is, for example, very common for Indonesian-owned businesses within Indonesia to opt for Singapore arbitration rather than their own more mercurial domestic courts. If even domestic players mitigate against a deficit in the rule of law, foreign businesses must inevitably be equally wary.
There are several aspects to the strengthening of the rule of law in which Australia has played and must continue to play a key role and which have direct benefits for business back home: legislative and regulatory development, strengthening the legal profession, and business ethics and anti-corruption.
Legal theorists spend tremendous energy in defining and questioning the very existence of international law, but a system of legal norms and standards with near universal application have quietly grown up by necessity. These include not only the high profile body of customary international humanitarian and human rights law but also the more quotidian body of rules and norms which make global trade and commerce a reality. The recent implementation across our region of the Basel standards in the fallout of the global financial crisis – an implementation that has become essential to building confidence in a nation’s banking system – is a good example of a global ‘law’ which countries have rushed to adopt. Such regulatory regimes apply to all aspects of global commerce and Australia’s foreign aid and technical assistance is crucial to ensuring their consistent and ongoing domestic adoption across Asia.
Technical cooperation is also central to the improvement of a country’s body of laws. Rapidly developing economies suffer from laws attempting a hasty marriage of domestic and international rules, the drafters of which too often find they must repent at lengthy leisure. Foreign-sponsored technical assistance in this area can ensure that a coherent, comprehensible and predictable set of laws emerges.
Another trend in legal reform which must be encouraged and supported is the long-overdue overhaul of legal regimes left behind by departing colonial powers. Archaic laws which have been long-superseded in the ‘mother’ country often remain current in post-independence states with bigger fish to fry. Australia, as a regional example of a well-developed legal regime, can play a significant role in showing the relative ease, and importance, of frying these fish too. A good example is Myanmar’s recent overhaul of its insolvency regime (an overhaul in which Norton Rose Fulbright Australia has played a part).
Beyond the laws: the legal profession needs attention too
Department of Foreign Affairs and Trade figures show that development assistance for legal and judicial development in the Asia Pacific increased to a recent high around 2010-12, but has since mostly fallen back (though is notably still significantly larger than a decade ago). This area has been a focus on international development in the region over the decade, and rightly so given the immense reach its benefits can deliver – to individuals, to local businesses, international businesses, and the overall attractiveness of a jurisdiction for private sector investment and development.
Australian legal and justice development spending (in $’000)
The most immaculate set of laws and regulations is useless without the right practitioners to administer it. Aid spending is regularly, and necessarily, made on training judiciaries and has been a focus of the recent legal aid spending. A fear of judicial outcomes – a lack of predictability of how judicial interpretation will be applied to a set of facts – is crippling for the rule of law and for investor (and individual) sentiment and confidence, and we must continue to support such training across the region. Indeed, this is really the other side of the coin of legislative reform: where we have experience of how certain new rules and regimes play out in the real world it would be derelict of us to drop a set of laws, no matter how perfectly formed, and walk away.
But there is more to strengthening the legal profession than merely training judges. For most, interaction with the system of justice is experienced through the medium of registry clerks and administrators, though public access (or lack thereof) and ultimately through lawyers. Looking at it from the domestic perspective of countries in our region, the asymmetry of arms between international fly-in lawyers and their domestic counterparts breeds mistrust of contracts and forms, which can lead to misunderstandings, that makes for bad business. The rule of law requires development in all those points at which the public intersect with the law. Indeed, it requires perhaps above all development on the part of the international lawyers to work in closer partnership and with greater humility with their local brethren. This is something that transcends the provision of financial assistance for domestic professional training, but can have a similarly substantial impact.
Indeed, this is something that a number of Australia’s statutory bodies have engaged with throughout the region (separate to the Government’s formal international development program but providing similar tangible benefits). For example, the Australian Government Solicitor (AGS) has delivered legal training for government lawyers and public servants in Papua New Guinea as part of their international pro bono efforts. AGS have also delivered legal education and training alongside the Bridges Across Borders South-East Asia Community Legal Education Initiative Australia in Vietnam. On a wider policy issue of great importance to business both at home and overseas, the Australian Competition & Consumer Commission oversees the Competition Law Implementation Program targeting the building of capacity of ASEAN states to fight anti-competitive activities in their respective markets, helping to deliver tangible outcomes not just for the consumers in those countries but those in the region through fairer business practices and delivery of goods and services. Such efforts complement the formal international development program, and are key ways international lawyers and experts from Australia contribute to strengthening local legal professionals beyond the bench.
The need for development in the area of ethics and anti-corruption needs scant further elaboration. It is worth noting, however, the current, and correct, trend of speaking of business ethics and anti-corruption together in the same breath: without businesses willing to entertain corruption (the supply side, if you will) the corruption business would soon suffer financial – to add to its moral – bankruptcy.
A shift within Australia?
This brings us to the issue of the role Australia – and its government and businesses – have played and must play going forward. It is important to recognise that there is need for development not only by “them”, but also by “us” as well.
My own experience of working with Australian businesses in “difficult” Asia is that they fall into two categories: those who engage with, and try to grow in, Asia (while correctly refusing to bribe or compromise with their ethics); and those who are put off by the complexities and stay removed from the more challenging parts of the region. Mercifully, I can report that instances of a willingness on the part of Australian business to violate their ethics or domestic laws are non-existent.
However, the list of those staying removed is unnecessarily long, and shortening it requires for a program of education at both ends. For example, we note in the above paragraphs that local businesses in these jurisdictions share many of the challenges felt by foreigners examining the local market – a reluctance to use domestic courts being a good case study which illustrates the importance of looking to the solutions those local players have adopted. In the case of an aversion to local courts, international arbitration is one solution.
Allied to this is the Tarantino-esque “Mexican standoff” theory of dispute resolution: local businesses have so many cross-cutting deals and ventures with a small pool of counterparts that they know that pulling a trigger on one will inevitably result in another being fired right back at them. Similarly, when you cannot rely on your courts, you learn to concentrate due diligence not on crossed-t’s and dotted i’s but rather on the reputation of your partner and counterparts: can this handshake be trusted? We may not traditionally recognise these elements as being part of the rule of law but in function (if not in form) they serve exactly as such.
Similarly, domestic businesses often find that rules and regulations unhelpfully and contradictorily overlap – and so they look to established practice and market behaviour. This may not be as satisfying perhaps as the dusty law reports from our jurisprudential studies as sources of authority but, in those markets, is authoritative nonetheless.
All of which is to say that the process of education works in both directions. Just as the New Columbo Plan has emphasised learning from Asia, so our development of the rule of law can also stimulate our own learning – learning how to better read Asia, and how to better understand a burgeoning rule of law which may not match ours identically but which is working to deliver the same adherence to fairness though requiring further development. We can always improve the rule of law, and our aid spending should continue to try to do so, but we can also improve our own understanding, and we can do that only by engaging with more enthusiasm, with more creativity, and with more humility, with our Asian neighbourhood.
Such an approach, and focus on the benefits that international development spending in this area can bring not just for our partners in the Pacific but for Australia, can deliver an outcome that is beneficial to all and – importantly – be a positive bulwark in broader discussions about the value of such work.