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Threats to rule of law 'harming businesses'

29 / 12 / 2015
Threats to rule of law 'harming businesses'In 2015, the Magna Carta celebrated its 800th birthday, marking eight centuries since the first formal record of the rule of law was written in the UK.

Today, just 17 copies of the historic document survive, but the country's rule of law remains intact - or does it?

According to a recent report from law firm Linklaters, the foundations of the British rule of law are weakening, which could have significant consequences for ordinary people, as well as businesses and even the government.

But what exactly is threatening the rule of law and what does this mean for businesses throughout the country?

Why is the rule of law under threat?

As technology develops and businesses have the tools at their disposal to be more powerful than ever before, this poses potential threats to the rule of law. After all, the digital nature of today's world makes it concerningly easy for this power to be abused.

Linklaters identified five key areas where the rule of law could be threatened within the business world:
  • Excessive executive power
  • Retroactivity
  • Uncertainty
  • Unmanageability
  • Changes in the burden of proof
This is particularly worrying as the whole point of the rule of law is to make sure the country and its businesses are run in a fair manner, with clear rules and clear leadership.

Examples of these five key points in action include government ministers taking it upon themselves to change aspects of legislation without seeking the required approval from parliament first, as well as introducing laws with vague wording that could be interpreted in different ways, making them challenging to manage.

In addition, the Linklaters report explained that there have been cases where the burden of proof has been reversed to require an individual to be proved innocent rather than guilty, presenting further challenges to the justice system.

Potential consequences for businesses

But what does all of this mean for the corporate world?

Linklaters partner Richard Godden explained that UK businesses could see a decline in overseas investment if the rule of law is no longer a given, which could in turn have potentially devastating effects for the British economy.

He stated: "The fairness and certainty that the rule of law provides is one of the main reasons the UK is a destination of choice for global investors.

"We tend to take concepts like laws being public, certain and prospective for granted, as well as the notion that the government is under the law, rather than above it, yet we are increasingly seeing instances where this is not the case."

This raises a whole host of questions regarding the sustainability of business management, particularly in relation to those that are regulated by the government. If parliament itself is not following the rule of law, then companies are not necessarily being guided towards the right ways of operating, presenting even more challenges and igniting something of a vicious circle.

Linklaters' report explained that the government has provided arguments for some of its abuse of the rule of law, for instance by claiming that altering the burden of proof is sometimes necessary to catch criminals, alongside the fact that secondary legislation is often much quicker and more cost-effective to pass through parliament than standard statute laws.

In light of the Magna Carta's significant milestone birthday, Mr Godden concluded: "A renewed sense of purpose in protecting the rule of law for the benefit of this and future generations is in everyone's interests. It should not be the preserve of anniversary years, but an enduring and constant priority."

With this in mind, legal experts could see an increase in demand for their services as businesses and the government take a renewed hold of the rule of law as the new year approaches.

Our 2015 Mid-Year Report combines a review of the prevailing conditions in the in-house legal recruitment market with the results of a comprehensive compensation survey of lawyers registered with Barclay Simpson.ADNFCR-1684-ID-801808774-ADNFCR