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The Rule of the Law in the Asian Region - Conference, 20 March 2003

Address by the Honourable J J Spigelman AC
Chief Justice of New South Wales
International Legal Services Advisory Council Conference, Sydney, Australia

20 March 2003

Writing in the prestigious international relations journal, Foreign Affairs, one author identified what he called a "Rule of Law Revival". He said:

"The concept is suddenly everywhere - a venerable part of western political philosophy enjoying a new run as a rising imperative of the era of globalisation."

A focus on the rule of law is widespread internationally, not least in Asia. Only a few years ago the concept would have been criticised as Eurocentric. We hear much less about the distinctiveness of "Asian values" these days.

There are two broad themes in recent rule of law discourse. One is governmental and the other is economic. The former is concerned with the authoritarian nature of pre-existing political systems. The latter is concerned with the emergence of a market economy. Both themes are often encompassed within a unifying concept, namely the multi-faceted process often called "globalisation". There are, however, differences of emphasis between the two themes apparent in different parts of the world.

When the rule of law revival emerged about two decades ago in Eastern Europe and the former Soviet Union, a primary focus was on governmental issues, although economic issues were never far from the main debate. In Asia the balance appears to me to have been quite different. The primary focus has been on the emergence of a market economy, with governmental issues present but not prominent and, sometimes, barely visible.

Markets in the face-to-face sense such as an Oriental bazaar or a Mediterranean rialto have always existed under all systems of government and law. A market economy is, however, a very rare phenomenon. Only certain kinds of society, governmental structure and legal system have been able to sustain a market economy.

Similarly, societies in which it can be said that the law "rules" are by no means uncommon. However, there is a fundamental distinction between "rule by law" and "rule of law".

The two ideas are frequently confused. For example, Article 5 of the Constitution of the People's Republic of China adopted in March 1999, employs the term fazhi guojia. That is sometimes translated as "socialist rule of law state". However, official translations use the terminology "socialist country ruled by law". There is a wide-ranging debate within China as to whether the recent reforms are directed to one or the other[1]. Similar confusion has arisen in Indonesia in a debate as to whether or not the words negara hokum go beyond rule by law to encompass rule of law[2]. In both nations experience with lawlessness and authoritarian rule indicates that rule by law is, itself, a substantial advance. The further development towards rule of law remains in these, as in many other cases, distinctly problematic.

A core characteristic of the rule of law is that the law must operate to constrain the arbitrary exercise of power, both private power and public power. (The significance of restraint on private power is not always emphasised in rule of law discourse.) Persons and institutions who have power, whether social, religious, political or economic, must exercise that power within, and subject to, a comprehensive framework of binding rules. The number of nations in Asia which can be said to operate under the "rule of law" in this sense are few.

In both respects, i.e. economic and governmental, there have been quite dramatic changes, not least in the Asian region, over recent decades. However, we are now engaged in the longest and most difficult part of this process: the phase of institution building. This involves the full range of governance, but my focus is on the administration of justice, particularly by courts.

The central significance of the law for economic prosperity was recognised as long ago as Adam Smith, who wrote in his The Wealth of Nations:

"Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith of contracts is not supported by law, and in which the authority of the state is not supposed to be regularly employed in forcing the payment of debts from all those who are able to pay. Commerce and manufactures in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government"[3].

Quite recently the discipline of economics stepped beyond the confines of its neo-classical economic tradition and begin to acknowledge the central significance for economic prosperity of political and legal institutions. The new institutional economists, as they came to call themselves, have proven to be particularly influential[4]. This influence is now palpable in the broad range of bilateral and multilateral programs which require and/or assist institution building of an effective legal system.

Perhaps the most influential of such requirements are those imposed by membership of the World Trade Organisation. However, the World Bank and other development banks have programmes and impose conditions on loans of a similar character. There are projects undertaken in the United Nations Development Programme. There are also a wide variety of bilateral government programmes conducted by most western nations, including Australia. Most significantly, of course is the recognition within recipient nations of the need for internal reform if they are to reap the benefits of economic prosperity and, perhaps not so widely recognised, the advantages of political freedom.

This broadly based process does not involve the simple migration of an identifiable, single set of ideas and institutions from one nation or culture to another. There is no single recipe for the rule of law.

Different nations and cultures have and, of course, will continue to have distinctive practices in relevant respects, particularly as to how to balance the requirements of personal autonomy and the preservation of social cohesion. The idea of the rule of law encompasses a mixture of ethical and political principles.

It is important to recognise that the rule of law is not inconsistent with the exercise of authority. It is, however, inconsistent with the exercise of authority in an arbitrary manner. Governmental authority is in fact essential to a system to the rule of law. The administration of justice emerged as a core function of government precisely in order to prevent violence, or the exercise of coercion by the strong, the powerful or the wealthy against others, less powerful or less well off, or less well organised. The proper exercise of government authority is, I repeat, an essential aspect of the rule of law, not least to prevent the arbitrary exercise of private power.

However, it is not enough to be concerned only with the systematic and consistent application of a body of general rules. That is only rule by law, not rule of law. The former is a prerequisite of the latter, but it is not a substitute for it, let alone its equivalent. What however, is required to permit a nation to assert that it enjoys the rule of law, not just rule by law?

There is no universally accepted content of the "rule of law". In the jurisprudence of some, the concept encompasses forms of government, economic systems and human rights. These kinds of matters have their own separate discourses. In my opinion, it is not appropriate to subsume them under the category of excessive breadth. The label becomes progressively less useful as its scope extends.

Experience over many generations, and in many different societies, has identified then requirements of institutional design of the judiciary for a rule of law system. The most significant of these requirements are usually discussed in terms of the need for judicial independence. At the very least, it is essential that the judiciary, as the ultimate guardians of the rule of law, has the level of competence, the integrity and the status that enables courts to act as an effective constraint on the exercise of power and as a rational and fair dispute resolution mechanism.

There is no one model appropriate for all societies. However, there is a widespread agreement on the core requirement for judicial independence. Although there has been important progress on these matters, there are many nations in Asia which have a long way to go in this course of institution building.

In most Asian nations, the easy part of rule by law has been done. There has been a substantial investment in the promulgation of laws with a reasonable degree of accessibility, in the sense of being public and ascertainable, and of certainty and coherence. Most often, the missing factor is enforcement.

All of the other values associated with the rule of law such as accessibility, certainty, stability, etc. of a little moment if the practical significance of the law is not high. There must be a narrow gap between, as it is sometimes put, 'law on the books' and 'law in action'. Unless this gap is a narrow one, then the rules contained in law will not provide a clear signal about what is permitted and what is proscribed. Persons will never acquire the requisite degree of security and predictability in their dealings with others.

A State cannot claim to be operating under the rule of law unless laws are administered fairly, rationally, predictably, consistently and impartially. Improper external influences, including inducements and pressures, are inconsistent with each of these objectives.

Fairness requires a reasonable process of consideration of the rights and duties asserted. Rationality requires a reasoned relationship between the rights and duties and an outcome. Predictability requires a process by which the outcome is directly related to the original rights and duties. Consistency requires similar cases to lead to similar results. Impartiality requires the decision-maker to be indifferent to the outcome.

Improper influence, whether political pressure or bias or corruption, distorts all of these objectives. So, of course, does incompetence and inefficiency.

Furthermore, judgments of the courts are not self-executing. Orders must be backed up by sanctions, including fines or imprisonment for contempt of court. The enforcement of court orders requires robust law enforcement institutions which have the requisite level of authority and are themselves not characterised by corruption, bias or inefficiency.

Building such institutions takes such time, as well commitment. To give only one example, on a recent calculation, there is currently 2.5 billion renminbi of unenforced court rulings in the Peoples Republic of China[5].

The significance of enforcement cannot be underestimated. Studies undertaken for the World Bank indicate that amongst global investors, the predictability of judicial enforcement is the most robust predictor of economic growth[6].

The judiciary and the legal profession are, as we know from our own experience over the centuries, interrelated in a symbiotic manner. The provision of legal services in Asia, which is the primary focus of this Council's concern, encompasses a wide range of collaborative projects between Australian lawyers and lawyers in nations which are engaged in legal institution building. I am aware that the Council contributed to the clear statement of the significance of strengthening the judiciary and the legal profession found in the Department of Foreign Affairs and Trade publication last year: "Strengthening Economic Legal Infrastructure in APEC"[7].

The principal focus of this Conference is on business opportunities. This is not a topic which is directly within my area of responsibility. I wish to observe that the interaction between the legal service providers and Asian legal systems occurs in a context which is broader than business relations. That broader context enables the thickening of the relationship between Australian lawyers and Asian lawyers in a manner which will assist development of commercial relationships.

The interrelationship between opportunities for the profession and the role of the judiciary was brought home to me on two visits I made to Hong Kong since my appointment. On both occasions I met the Chief Justice of Hong Kong, Andrew Li, who on the first occasion said he was proposing, and on the second occasion confirmed that he had carried into effect, a recommendation that ad hoc admissions for appearance in the courts of Hong Kong for Australian barristers was to occur on the same basis as had been the case for English barristers for many years. He emphasised to me that he had high regard for the quality of the Australian bar and expected more Australian barristers to appear in Hong Kong courts, particularly in the appellate courts. It was also made perfectly clear to me that, in view of the level of fees which English silk had been charging for years, Hong Kong expected to benefit from some competitive pressure.

On both of the occasions that I was in Hong Kong, the former Chief Justice of Australia, Sir Anthony Mason, was there sitting as a member of the Final Court of Appeal. Sir Anthony's contribution, together with that of Sir Gerard Brennan, to Hong Kong jurisprudence since the creation of the Special Administrative Region and the "one country two systems" policy, has been of great significance. There are many levels of contact on a personal basis between the Australian legal profession and that of Hong Kong. However, there is no doubt, however, that the influence, particularly of Sir Anthony, has led to a situation in which Hong Kong judges, and inevitably the profession, have become as accustomed to citing the Commonwealth Law Reports these days, as they traditionally were accustomed to citing the English Appeal Cases.

Service of former Australian judges in Hong Kong is unique in Asia. In the Pacific, however, current and former judges are often called on to sit as judges of courts. This is true of Vanuatu, Tonga and is of particular significance in Fiji, where Australian and New Zealand judges now regularly sit in the Court of Appeal and in the final court of the Fijian system, i.e. the Supreme Court, a practice which will soon be significantly expanded.

A particularly significant contribution of the judiciary to the provision of legal services in Asia is made by the body of former judges who have active practices as arbitrators and mediators. The ability of Australian lawyers to substantially expand their participation was an important theme of the International Bar Association's Conference on "International Commercial Arbitration" held in Sydney last month. Sir Anthony Mason, Sir Laurence Street and Mr Andrew Rogers QC all played a significant role in that conference and the promotion of Sydney as an international centre for commercial arbitration.

Australian judicial exchanges with Asian and Pacific nations is already widespread and growing. There is a continual flow of delegations from China. For example, last month I met a delegation from the Supreme Peoples Court, China's highest court, led by the Executive Vice President of the Court, in effect the Deputy Chief Justice of China, investigating our industrial relations laws. Next month there will be a delegation led by the Chief Justice of the High People's Court of Beijing, the city having provincial status.

At least once a year there are delegations of judges from Vietnam and Indonesia who come to Australia for extensive periods of training. Australian judges have visited those countries and lectured there. Over recent years the most substantial number of delegations have come from the People's Republic of China.

China has undertaken in an extraordinarily wide-ranging process of developing its legal infrastructure, particular its judiciary, over recent years. I have summarised these developments in an address I delivered last year, which is available on the Supreme Court's website[8].

My involvement in this debate was stimulated by my participation in an Australian judicial delegation which taught at the National Judges' College in Beijing in November 2001[9]. This delegation was part of a programme of exchanges on a wide range of human rights related matters, conducted by the Human Rights & Equal Opportunity Commission on behalf of the Department of Foreign Affairs & Trade. This programme is a low key form of diplomacy and international co-operation of a character much more likely to be successful than the brash triumphalism which has, on occasions, appeared to be a national characteristic of Australian involvement with foreigners.

Judicial exchange is one part of a broader human rights dialogue agreed between the Australian and Chinese governments. It has been conducted for some years. In May of this year I will be participating in this project again. Together with three Australian judges, I will return to the National Judges' College in Beijing for a further series of lectures, on this occasion focused on the process of writing judgments.

On the last occasion, the Australian delegation arrived the week after a new directive had been promulgated which, for the first time, imposed a requirement on Chinese judges to give reasons for their decisions. This new requirement was treated with some scepticism, indeed resentment, by some judges who questioned us about the process at the College. No doubt this was in part determined by the fact that the overwhelming majority of Chinese judges have been officers of the People's Liberation Army. When the Chinese came to recreate a judiciary which had, of course, been destroyed during the Cultural Revolution, the process happened to coincide with the downsizing of the Army in the early 1980's. Tens of thousands of the new judges were former army officers. Whatever other benefits this process may have had, it was not a background which established a personal predilection for explaining yourself in writing.

The Chinese have been actively striving to change the balance of their judiciary. An ever-increasing proportion of judges are law graduates. Future appointees are required to have formal qualifications.

The emergence of a sense of institutional autonomy on the part of the Chinese judiciary, is a significant advance. Neither in the millennia of the long Chinese imperial tradition nor, needless to say, in the history of the People's Republic, has there ever been an institutional model remotely like the rule of law administered by an independent judiciary. The Chinese tradition has always preferred the rule of man to the rule of law.

So many things in China have changed so quickly. I look forward to observing the development of the judiciary in the last eighteen months.

Return visits are, in my opinion, important. I expect to meet some of the same people for a second time. I refer to those responsible for the administration of the College, rather than the trainees, who will be different. On this visit I have taken up the invitations issued to me, when they led delegations to the Supreme Court of New South Wales, by both the Chief Justice of Guandong and the Chief Justice of Shanghai, to call on them. It is such repeat visits that deepen the relationship in a way which, like all forms of diplomacy and personal contact, has intangible but nevertheless real long-term benefits.

Many judges of the Supreme Court, either directly through the Court or through the Judicial Commission of New South Wales, have participated in meeting and training judges, notably from China, Indonesia and Vietnam. There is a palpable enthusiasm with which all Australian judges who are asked to participate in such judicial training and exchanges, whether in Australia or overseas, approach their tasks. There is a great deal of dedicated activity which I see no sign of flagging. I do not doubt that there would be similar degree of enthusiasm by judges if they were asked to participate in activities which are directed to general aspects of the legal system in Asia, i.e. not limited to the judiciary. I am aware that there has been such participation in the past and have no doubt that the judiciary as a whole will respond well to future requests of this character.

Economists refer to the idea of "comparative advantage" as a key concept in the development of international trade. There should be little doubt that Australia has a comparative advantage in the area of legal services.

Some of you will have heard me emphasise the significance of the longevity of our institutions. We Australians like to think of ourselves as a young country. Indeed the second line of our National Anthem is: "For we are young and free". However, when it comes to the basic mechanisms of governance, whether of parliamentary democracy or the rule of law, this is not a young country. This is an old country.

There are no nations in Asia that have legal institutions as old as ours. The Supreme Court of New South Wales was established in May of 1824. At that time the Qing Dynasty was firmly in control of China. This was twenty years before the first opium war forced the opening of treaty ports in China and the surrender of the island of Hong Kong to English jurisdiction. It was 125 years before the creation of the People's Republic of China. We have old traditions that work.

When we go to Asia as lawyers we should recognise the strength that the longevity of our legal institutions gives us. We should approach our contacts in Asia with a quiet self-confidence. This was the theme that Professor Stephen FitzGerald, our first Ambassador to China and now Chairman of the Asia Australian Institute of the University of New South Wales, adopted when he addressed the New South Wales Supreme Court Annual Conference on "Issues Facing Australia's Future in Asia". Professor FitzGerald said:

"What we have to offer the region most, beyond economic partnership, and aid to countries that need it, is not military, nor is it leadership ... It is the good governance and civil society that sustain our own rights, freedoms, accountabilities, democratic institutions and rule of law. In a range of countries across Asia, including for example China, there is increasing awareness of the place of good governance in economic performance, poverty reduction, and the capacity of societies to provide for their people generally and for the disadvantaged in particular. Because we are fortunate in these matters, our future in Asia, and the strengths of our own identity, can be secured by being a regional source and provider in governance, not simply under aid programs but across a multitude of areas of collaboration (for example between judges and courts). And not in the jingoistic way that has often informed the projection of this idea by the United States, for example, or that we have seen in Australia in the recent past, but in the tradition of another kind of Australian, who has been in Asia since the beginning, who I have called 'the quiet Australian'. And not with the message that only our tradition counts, but collaboratively, reaching back into all our traditions, including those of Asian societies, many of which are rich in ideas about good governance, ethical government and upright conduct. To do this is a contribution to humanity. It can help the region in its own terms for its own transformation. It can secure the best of what we want in the Australian identity."

I commend these thoughts to all of you who engage in the provision of legal services in Asia.

In conclusion may I congratulate the Council on the important work it does in the national interest. The thickening of our relations with Asian societies is of vital importance to our future. I declare the Conference open.