Abstract
Effective implementation and enforcement of laws and regulations will to a large extent determine how successful the Belt and Road Initiative (BRI) turns out to be. Mutual respect and trust between trading partners is crucial. This chapter explores how the various legal and regulatory systems can be developed to encourage and enhance trustworthy behavior. The countries involved in Belt and Road (BR) are very varied in their legal and regulatory approaches, ranging from those which rely heavily on religious teachings to those with common law or civil law traditions. Each type of law takes a different approach to matters which are relevant to trustworthiness. Achieving a sustainable legal and regulatory framework for BR requires, as a matter of urgency, that attention is given to how the various legal systems interact. BR follows a long tradition whereby the Silk Road facilitated interchange between the great civilisations of China, Mesopotamia, Persia, India and Rome, and later Europe. Achieving this will require that trust between nations is established, not only at the highest levels of government, but also between individuals, companies and communities. Lack of trustworthy behaviour can adversely affect relations between governments (for example, between Greece and Europe), between companies (leading to numerous defaults and corporate failures, including those which accompanied the Global Financial Crisis (GFC)) and between individuals. In what follows, we explore the various methods whereby shared values (or at least a set of shared beliefs) can be developed, in order to ensure that the behaviour of those in authority is trustworthy. This varies from country to country, from sector to sector, and under different legal traditions. In doing this we draw on work carried out at Oxford and elsewhere on how trustworthy behaviour can be encouraged. We argue that it is the role of the Law, including in bilateral and multilateral trading arrangements, to ensure that relationships between market players and stakeholders are as fair and transparent as possible, through mechanisms that influence norms and hold those who behave in untrustworthy ways to account. Chinese law and practice is contrasted with those in other jurisdiction in order to explore the relative merits of each. Sustainability of the BR legal system requires consensus and long-term sustainable relationships.
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Notes
- 1.
Beijing Review (2015).
- 2.
For a description of the various behaviours that culminated in the Greek debt crisis, see http://www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-of-how-the-country-landed-itself-in-such-a-mess-10365798.html.
- 3.
A recent ‘Eurobarometer’ (November 2015) showed that, at that time, 8 out of 10 Greeks distrusted their Parliament, Government and political parties. See http://greece.greekreporter.com/2016/02/23/eurobarometer-8-out-of-10-greeks-distrust-parliament-government-parties/.
- 4.
The same survey showed that the percentage of the Greek people who distrusted the European Union was 81%, the European Parliament 71%, the European Commission 75% and the European Central Bank was 78%.
- 5.
Japanese Finance Minister, commenting on the Toshiba scandal, observed “If [Japan] fails to implement appropriate corporate governance, it could lose market trust… It’s very regrettable.” (Byford 2015).
- 6.
Often translated as “From the Soil”.
- 7.
There have been many attempts to define the role of an effective legal system. One of the more authoritative is that of Lord Thomas Bingham (2007), who sets out eight requirements which may be summarized as accessibility, effectiveness, equal access, protection of human rights, resolution of civil disputes, probity of those in authority, fairness and compliance with international law.
- 8.
For example, the ability of the European renaissance to benefit from the wisdom of Greek and Roman societies was facilitated by the preservation and development of documents and artifacts in Baghdad and other Islamic cities during the Islamic ‘Golden Age’.
- 9.
The business judgment rule, which has been part of the Common Law for two centuries, recognises, at its simplest, that Directors should not be held liable for honest mistakes or unpopular business decisions.
- 10.
There is considerable debate concerning ‘originalism’ in constitutional law, with many emphasizing the constitution as protection against subsequent weakening or adjustment of the Law. Goldsworthy cites Gibbs J.: “Our duty is to declare the [Australian] law as enacted in the Constitution and not to add to its provisions new doctrines which may happen to conform to our own prepossessions (AG(Cth); ex rel McKinlay v Commonwealth (1975) 135 CLR 1 at 44 per Gibbs J.).
- 11.
In Game Theory, a Nash Equilibrium is one in which no player has an incentive to change his strategy.
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Acknowledgements
I would like to thank Deborah Healey, Jeanne Huang, Yongqiang Li, Colin Picker and Rob Nicholls for helpful guidance and comments on previous versions of this chapter. Any errors or misunderstandings are entirely my own.
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Co-editor and author of Capital Failure: Rebuilding Trust in Financial Services, published in 2014 by Oxford University Press, and a contributor to China In The International Economic Order:New Directions and Changing Paradigms, published by Cambridge University Press in 2015.
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Morris, N. (2018). Developing a Sustainable Legal System for the Belt and Road Initiative. In: Shan, W., Nuotio, K., Zhang, K. (eds) Normative Readings of the Belt and Road Initiative. Springer, Cham. https://doi.org/10.1007/978-3-319-78018-4_3
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