GLOBALIZATION & COMPARATIVE LAW
By
INAAMUL HAQUE*
Shelley, the English poet had once, while commenting upon the pervasive influence of Greeks on the western thought and civilization, reportedly remarked: “We are all Greeks”. One can today, justifiably paraphrase Shelley’s words by saying: “We are all globalizers”. Globalization is indeed an all pervasive fact, a self evident reality. The question today is not whether there should be globalization or not, but the issue is how do we manage globalization. We cannot turn the wave of globalization. The challenge for us is to make globalization a vehicle of opportunity and inclusion, not of fear and insecurity.
Globalization is the defining attribute of the present world. Societies and economies are becoming more and more integrated, as a “result of reduced costs of transport, lower trade barriers, faster communication of ideas, rising capital flows, and intensifying pressure for migration.” 1 This integration is a highly complex process, affecting almost all aspects of our lives. The volume of cross border transactions is exponentially increasing and their scope and sweep are qualitatively changing. As the former World Bank President, James Wolfensohn, aptly described it:
“Globalization is about an increasingly interconnected and interdependent world; it is about international trade, investment, and finance that have been growing far faster than national incomes … It is about our global environment, communicable diseases, crime, violence, and terrorism… Globalization is about risks as well as about opportunities.” 2
Globalization is not a simple phenomenon but a multidimensional reality with a wide sweep. It is manifested in a variety of ways both positive and negative:
“The terrorist attacks on the United States on September 11 were one aspect of globalization. Rapid growth and poverty reduction in China, India and other countries that were poor 20 years ago is another. The development of the Internet and easier communication and transportation around the world is a third. The spread of AIDS is part of globalization as is the accelerated development of life-extending technologies.” 3
Even though globalization is most commonly defined through increased cross-border trade and foreign direct investment, it means far more than just economics. 4 It has acquired a much broader significance and is equally transforming the economies of nations, as well as their political system and culture. It encompasses multifaceted, multi-layered and often disjunctive processes. 5 No institution can remain insulated from the impact of this integrating deluge. In the domain of law and politics, for example, states and other legal actors, international organizations and the international community in general are actively facilitating the process of globalization, whether by legitimating or legalizing its effects on the world today or by fighting globally against its pernicious effects (such as terrorism and drug trade).
The subject of the comparative law, it would be pertinent, to recognize is no stranger to legal scholars, though there is difference of opinion on vital matters, such as its age. According to some, it is still in its infancy, while others think that it is going through a mid-life crisis. One can, however, now confidently advise that comparative law, if still an infant, should try to grow up fast, and if suffering from a mid-life crisis, should get out of self pity as there is an exciting task cut out for it in the present day world. The study of comparative law has been found rewarding by legal scholars, since it developed in the nineteenth century:
When the first learned societies dealing with cross-national legal comparisons were established in France, Germany and England in the late nineteenth century, their founders took for granted that comparative methods would advance the understanding of a broad range of legal issues. In that expectation, legal scholars were in accord with the best of their counterparts in other disciplines.” 6
The subject, however, in the advanced Western countries mainly attracted attention of jurists and academicians. In case of erstwhile British Indian Empire no attention was paid to it. Things have since then, undergone a profound change. The study of comparative law in the world of “here and now” has acquired a compulsive relevance. It is no longer a luxury for the lawyers to have sound knowledge about systems of law other than their own. It has indeed now become imperative to pay serious attention to the study of comparative law – not as an esoteric discipline, but as a pertinent source of practical knowledge – a matter of bread and butter for progressively increasing number of lawyers both in the industrial and developing countries. Pakistan with increasing number of transnational transactions is no exception in terms of its need to keep abreast of emerging trends. Indeed, the increased interest in comparative law in the recent years, clearly indicates that legal practitioners are becoming ever more closely involved with foreign law, other foreign practitioners and foreign clients. Issues of how well they know foreign laws, different legal systems and make comparisons between these ones are becoming more and more significant. 7
The world has become a far complicated place with nearly two hundred nation states in the world, with their own specific legal system. These legal systems have been classified into broader groups, based on historical origin, general structure, particular characteristics or substantive rules, but there is no general agreement as to what the categories are. 8 Some scholars think that there are three major legal traditions or legal families in the world: the civil law system, the common law system (including legal systems in Common wealth countries like Pakistan, India and Bangladesh 9) and the socialist law. 10 These are shaped by sets of “deeply rooted, historically conditioned attitudes about the nature of law, about the role of law in the legal system, and about the way law is or should be made, applied, studied, perfected and taught.” 11 There are others who find this view overly Euro-centric and have identified other legal traditions, such as the Islamic law, the Jewish law, the laws of Far East, the African tribal laws or the Scandinavian tradition. 12 One classification tried to mix all of the above, as follows:
-Roman Law-German family, or the civil law system; 13
-Common law system; 14
- Nordic or Scandinavian systems; 15
-Socialist systems and 16
-Religious systems (Islamic, 17 Jewish and Hindu)
-Emerging European Union (EU) Law
As regards cross-border commercial and investment transactions which are being profoundly affected by the phenomenon of globalization it is possible to focus only on civil and common law systems, because most of the world in modern times have adapted core principles of one or the other of these systems, (with suitable variations). It is not proposed to deal with differences and similarities between civil and common law systems. However, in the context of increasing globalization, lawyers from both systems will have to qualitatively increase their knowledge about the system other than their own. Given the growing importance of Islamic mode of financing and its distinctive legal foundation it is also becoming useful for lawyers from both civil and common law systems to enhance their knowledge of Islamic law.
For lawyers in developed countries, it is becoming common to deal with more and more cross border commercial transactions. The volume of such transactions has been progressively increasing and their geographical sweep is constantly expanding. International trade today is not between industrial countries alone but a substantial volume is between industrial and developing countries. Both categories of these countries import and export far more goods than ever was done before, except in case of many developing countries, where trade as a proportion of GDP has gone down during the last two decades. These are the nations who are in danger of being by-passed by globalization.
However, coming to the majority of nations today, there is far greater volume of trade than ever before, which means greater quantum of cross border agreements, movement of goods and services across nations.In the case of Pakistan over a period of time it has also become more integrated with the rest of the world. This is reflected by the “trade openness indicator, i.e. the trade to GDP ratio. This has increased from 25.8% of GDP in 1999-2000 to 36% of GDP in 2007-2008. If services trade is included, the increase is higher at 42% of GDP in 2007-2008 from 28% of GDP in 1999-2000”. This increasing transactional trend, a product of globalization dictates that lawyers in each country will have to make far greater effort to know about laws of the other country. In other words, comparative law ceases to be a preserve of legal scholars, but becomes a subject of practical relevance for more and more practitioners all over every country (with exception of those which are becoming marginalized). Similarly, lawyers in developing countries including Pakistan have to become more knowledgeable about laws in industrial countries from where most of goods/services are either originating or moving to. Treaties like the United Nations Convention on Contracts for the International Sale of Goods (CISG), anchored on principles derived from comparative law, are fast becoming a focal point of study and practice by more and more lawyers everywhere.
Another aspect of globalization is rapid increase in capital flows in the intimately integrated world. However, the most dramatic increase has taken place in respect of such flows to developing countries. These flows from developed to developed countries) rose from less than $28 billion in 1987 to about $306 billion in 1997 (in real terms) when they peaked. Their composition also significantly changed as private capital flows became a major international source of capital for a number of emerging economies. Foreign Direct Investment (FDI) has become a major segment of these flows.18 This is also true of Pakistan where foreign direct investment (FDI) has emerged as an important source of private external flows. In 2001-2002 total FDI was US $ 485 million and these have grown to US $ 5,152 million.
Given the importance of these flows, developing countries are making incessant endeavors to improve their investment climate. Investment climate in turn is a function of various factors including supportive institutions and laws. Reforms in financial, legal, regulatory and judicial structures and processes have therefore assumed paramount importance. In order to help countries to bring about these reforms, lawyers of developing countries will have to study comparative law to find the best practices which can be adapted to conditions of each country. Here again, we see great incentive for legal community to be fully acquainted with the philosophy and methods of comparative law for making their professional contribution to transformation of societies.
Another factor which is germane in the context of FDI is the mechanism of project financing which requires sustained exposure to the comparative law. While designing project finance structures, the lawyers of developed countries as well as those in the host countries have to show, for very practical reasons great awareness and sensitivity of different legal systems. The impact of globalization is again, very much evident here.
It would be, thus, observed that it is important for both practitioners and law teachers in our countries to enhance their knowledge of comparative law, its analytical techniques in general, and a grasp of different legal systems, in particular. The task, however, is not without precedent. In mixed jurisdictions lawyers and teachers of law have always been successfully learning about more than one system of law, comparing legal traditions and tracing down the origin of procedural and substantive laws to one or the other systems co-existing in that particular jurisdiction. The same has to be done now by lawyers everywhere. In a manner of speaking, the process of globalization has made us all live under a system of mixed jurisdiction: The world is no longer to be perceived a multitude of distinct national systems of law, but a large mixed jurisdictions, where the national systems of law and the different families of law influence one another.
Regulations travel fast in the twenty first century, the model laws have no boundaries and clients are less connected to one jurisdiction alone. They are becoming, consequently, less national and more international or transnational. This phenomenon is making acquisition of knowledge of civil law, common law, and of other legal systems, a basic requirement, inter alia, for lawyers, as well as for drafters of domestic laws or international conventions.
1. World Bank, Globalization, Growth and Poverty (2002) at 1.
2. World Bank, The Challenge of Globalization (Speech by James Wolfensohn, April 20, 2001).
3. Supera note 1 at ix.
4. It may also involve the discourse on human rights or the territorial notion of state sovereignty. Of course, the gains from trade (between nations, and between firms), are exceedingly significant and result in an increase in global welfare, by having products made where they can be produces most cheaply and allocating them to the people who want them more. See Mark A.A. Warner, Globalization and Human Rights: An economic model, 25 Brooklyn J. Int’l L. (1999) 99.
5. A. Blackett, Globalization and its Ambiguities, 37 Columbia Journal of Transnational Law (1998) at 57.
6. M. A. Glendon et. Al., Comparative Legal Traditions, West Group St. Paul, Minn., 2nd ed., 1999, at 1.
7. David J. Gerber, Globalization and legal knowledge; Implications for comparative law, 75 Tul. L. Rev. (March, 2001) 949. The author expresses the view that globalization brings laws and legal cultures into more direct, frequent, intimate, and often complicated and stressed contact. It influences what legal professionals want and need to know about foreign legislations and other legal systems than their own, how they transfer, acquire, and process information, and how decisions are made.
8. M. Pryles, Jeff Waincymer, M. Davies, International Trade Law, LBC Information Services, 1996, Sydney, at 27.
9. Legal System of Pakistan essentially remains a part of the Common Law system despite the importance of Statutes and introduction of Islamic Law provisions.
10. W. Tetley, Mixed jurisdictions: common law v. civil law (codified and uncodified), 60 La. L. Rev. 677.
11. Id at 781.
12. Id.
13. J. H. Merryman, The Civil Law Tradition: An Introduction to the Legal Systems of western Europe and latin America 1, 2nd ed., Stanford University Press, 1985 cited at 782.
14. The common law developed in England, against a completely different political background as the one existing in the Continental Europe.
15. This system differs from the classic German-Roman group, in a number of respects: Roman law playing a smaller role, there are no Civil Codes like the ones existing in France or Germany, etc.
16. The legal system based on the doctrine of Marxism-Leninism initially grated on a civil law system. Now it is on its way out as the countries have opted for a free market system. Civil law, in a manner of speaking is coming out of eclipse.
17. The Islamic Law, for example, is based mainly on the Holy Koran & Sunnah.
18. The share of developing countries in global FDI flows reached 3 to 38 in 1997 but came down to 24% in 1999. However despite these fluctuations, the amount of FDI has increased almost three fold from US$ 58 billion in 1993 to $ 163 billion in 2001. This indicates the manifest importance of such flows for the developing world and the consequential importance for lawyers in developing countries to get adequate knowledge of comparative law of these transactions for making their contribution to the emerging field of business.
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