THE BLOG

What Does a One Nation Justice Policy Mean in a Global Legal Marketplace?

24/08/2015 15:42 BST | Updated 24/08/2016 10:59 BST

Politicians rarely speak with the candour of Justice Secretary Michael Gove. Soon after he took up his post following this year's general election, Mr Gove gave his One Nation speech in which he provided a blunt assessment of the England and Wales justice system. The courts, he considered, worked as a place for settlements of international dispute and yet all too often failed the disadvantaged. His observations, friends may argue, reflect an instinctively socially liberal politician who flummoxed critics by calling for the need for appropriate safeguards in the justice system to "protect the weak from the assault of the strong".

But the challenge of ensuring how the English justice works for all in society including those beyond the shores of the British Isles remains unresolved. Many international matters, as the Justice Secretary explained, are settled in London and in truth the English court system benefits from it. For Mr Gove made well the point that the court system and the provision of legal services supporting it raises £20 billion a year for the UK economy. It is, as he puts it, a matter of "enlightened economic self-interest" that the institutions which sustain and uphold the rule of law are strengthened, presumably to ensure that international legal business continues.

According to Portland Communications' annual study of corporate litigation, London is the international dispute resolution centre of choice with 63 per cent of all litigants coming from outside the UK. But it is not always a mutual choice. Increasingly businesses from emerging markets are being challenged in the English courts as part of strong-arm tactics by international banks and investment houses which make claims on disputed debts. They do so under pressure to clean up the slate of bad debts following poor investment decisions in the boom years.

Such actions hugely disadvantage African businesses when challenged by European or US corporate giants with deep pockets and legal resources to bring litigation about African investment decisions to the courts in London.

Mr Gove's speech coincided with a ruling by the High Court in London to settle a Tanzanian debt dispute. The proceedings were initiated by Standard Chartered Bank against three Tanzanian businesses. The High Court ruled the action admissible despite the fact legal proceedings are underway in Dar es Salaam. It also flew in the face of a judgment by a court in New York which, in 2013, ruled the matter was a Tanzanian dispute and should be settled in Tanzania.

The presiding judge in London asserted "the Court best able to determine the issues of law which may arise, whether English or Tanzanian, is the English Court". The Tanzanian parties were left bemused.

"Our dispute with Standard Chartered concerns a Tanzanian company. All facts in

dispute have taken place in Tanzania. The claims arose in Tanzania, and the damages

have been sustained in Tanzania. The Tanzanian courts have therefore the right,

recognised under international law, to exercise their full jurisdiction over the dispute" says businessman James Rugemalira who represents one of the parties.

Recently an action over a Ghanaian investment dispute was brought to London for settlement by French bank Société Générale. Its legal action against Ghana National Petroleum Corporation resulted in a ruling in favour of the bank and the Ghanaian government being left to settle a $40 million fine. The scale of the penalty in favour of Société Générale, which one leading commentator described as "voodoo mathematics", caused a minor political earthquake in Ghana.

It can bring little comfort to Africans that the Justice Secretary readily admits the English court system is "creaking and dysfunctional". Equally, it is questionable whether establishing London as a centre of choice for dispute resolution will provide a level justice field or, as Mr Gove aspires, serve to protect the weaker in society against the strong.

A legitimate question remains about whether London is extending its reach by judging on complex commercial matters relating to the jurisdictions of other countries. In so doing, the English courts are susceptible to accusations of being inadvertently complicit with multinational companies in aggressive or unreasonable legal actions, whose strategy is often about placing pressure to bear to achieve a settlement. When pockets are not deep, agreeing an unpalatable settlement may be preferable to extracted legal proceedings in the expensive English court system.

It is right the Justice Secretary questions what a one-nation justice policy is. But Mr Gove may wish to reflect on how such a policy serves countries in emerging markets and consider who exactly it is that benefits and at what cost.