Rule of law erosion threatens UK’s investor appeal

The very foundations of the rule of law in the UK, which has traditionally made it a destination of choice for international capital, are weakening, and could threaten the country’s investment appeal, according to a report launched today by global law firm Linklaters.

The report identifies five key threats to the rule of law within a business context:  excessive executive power; retroactivity; uncertainty; unmanageability; and changes in the burden of proof.

Richard Godden, partner at Linklaters commented: ‘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.’

‘Whether it’s ministers changing primary legislation without Parliamentary approval; regulators imposing huge financial penalties with no understandable scale; retrospective legislation; laws which rely on undefined concepts like “fairness” or “adequate procedures”; reversing the burden of proof to require innocence rather than guilt to be proven, more and more we are seeing uncertainty and unfairness challenging the very principles of the rule of law.’

While the Government may argue that there are reasons for the changes – unpredictable powers are needed to cope with unforeseen problems; secondary legislation is quicker and cheaper than statute law; retroactive legislation is needed to cope with fast moving situations; principles and guidelines are more useful than rigid tramlines; and changing the burden of proof is necessary to catch crooks and raise standards – today’s report seeks to ensure that every inroad into the rule of law is challenged and debated.

‘If it cannot be justified, it must not be permitted,’ says Godden.

As the 800th anniversary year of the Magna Carta draws to a close, Linklaters believes that we should hold on to the sense of purpose that debates around Magna Carta and its legacy have rekindled.

‘As sponsors of the British Library’s Magna Carta exhibition, we have participated in the debates about Magna Carta and its legacy. Now is a good time to take stock of the integrity, fairness and certainty that the rule of law brings to the UK and to those who choose to invest or live in this country. 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,’ concluded Godden.

For more information, please contact: 
Christian Marroni

Head of Global Corporate Communications
(+44) 20 7456 2729

Notes to editors:

Linklaters LLP is a leading global law firm, supporting clients in achieving their strategies wherever they do business. With more than 2,600 lawyers spread across 20 countries, the firm uses its expertise and resources to help clients pursue opportunities and manage risk across emerging and developed markets around the world.