A whole number of events occur in the world every day. Some of them have an impact on a limited number of states. Other events, however, have influence on the entire global community. The latter include recognition of the rule of law at the national and international levels.
The principle of the rule of law is fundamental to the way in which international relationships are built.
The United Nations General Assembly resolution of 2012 acknowledges this principle as being essential for sustained and inclusive economic growth and sustainable development (Resolution adopted by the General Assembly of the United Nations on the Rule of Law at the National and International Levels of 24/09/12).
Recognition of the principle of supremacy of international law and the need to comply with it is one of the main objectives of the UN General Assembly and its Security Council.
According to its Foreign Policy Concept (Concept of the Foreign Policy of the Russian Federation (approved by President of the Russian Federation V. Putin on 12 February 2013), the Russian Federation also advocates the supremacy of international law, since it seeks to ensure peaceful and effective collaboration within states while observing the balance of their divergent interests, as well as to ensure the interests of the world community as a whole.
There is no difference between the essence of the rule of law at the national and international levels. In both cases, the rule of law means the need to respect the law.
The conditions necessary for the rule of law to operate in the international community are publicity, accessibility, understandability of legal norms and the regulation of the lawmaking process through clear rules.
Understanding of the principle of the rule of law ensues from the requirements for systemic character and consistency of legal norms. This means that the application of any rule, including the application of the terms and provisions of the contract, should not contradict the general legal postulates.
Only if the principle of the rule of law is respected it is possible to build a rule-of-law state and civil society with inherent features, such as equality of human and civil rights and freedoms, the state itself being under the law, the protection of individual and personal honor and dignity, the absolute nature of the right of ownership, its universal and effective protection, independent justice, and the implementation of legal rights and obligations.
It would be difficult to overestimate the practical significance of the idea of the rule of law. The experience of economically developed countries, such as the United States, Great Britain, Germany or France shows that the principle of the rule of law must be observed in order to achieve a high level of economic development.
There are a number of problems in the implementation of the principle of the supremacy of international law. First of all, they include the correlation of national and integration law, integration and international law, the nature of legal personality of the international community and its constituencies.
In this regard, one of the primary tasks of any international community is the unification of law. This is achieved through the adoption of international treaties within the framework of integration associations. Such treaties contribute to the maintenance of the supremacy of international law at the national level. With the help of the unification of international law and the implementation of its norm into the domestic legislation, the principle of the supremacy of international law is fully performed.
Implementation of the rule of law principle in relation to economics
The main problems arising from the implementation of the principle of supremacy of international law are those which exist at the interface of law and economics.
This kind of problems arises as a reaction to the fact that lawyers and economists have completely different approaches to the understanding of this principle. Economists consider the term “rule of law” as an ideal right which is not questioned in economically developed countries. As for lawyers, they consider the idea of the rule of law on a deeper level, and they foremostly pay attention to the contradictions between national and international law, as well as to the conflict between national and international law, meaning potential obstacles to the rule of law.
The rule of law is regarded as the right of equal subjects with equal rights by economists worldwide. They highlight three basic economic requirements for civilized law.
The first basic requirement is the formal equality of all subjects of law, which means removing legal restrictions in the use of human capital. In economically developed countries, there is no longer any formal legal barrier to engaging in economic activities, unlike countries where, until now, there is an inequality of subjects of law causing a significant economic effect.
The second requirement arising from the equality of subjects of economic activity is the development of competition, since its restriction is considered to be illegal and should be eliminated by legal means.
The third necessary requirement is the emergence of an ownership right altogether with equal remedies, regardless of owner status. This requirement implies the impossibility of withdrawing property without the will of the owner and without paying him a fair reward, except for limited cases of confiscation, strictly regulated by law.
This situation significantly expands the economic horizon of the participants of property turnover and provides a dynamic development that ensures the competitiveness of economic and political institutions.
One of the most serious international problems existing at the interface of law and economics is the problem of extensive application of criminal legislation for economic offences. In many countries worldwide it often leads to illegal prosecution of business and illegal redistribution of property rights.
Thus, the need to use criminal prosecution in case of economic crimes is not questioned.
However, excessive criminal prosecution of business worsens the image of the economy of the country where such a problem exists, thereby entailing an outflow of capital and a reduction of its inflow from other countries.
The Russian criminal law and its current need for modernization might serve as an example. Because of its inefficiency and excessive repressiveness, the criminal law requires changes. Legislative changes could stimulate the economic development of the country and also constitutionally guarantee the freedom of economic activity.
To adopt legislative decisions, including the change of criminal legislation, a systematic approach to the understanding of the legal problems as well as the use of economic analysis of law is necessary. Such interdisciplinary approach, internationally known as “law & economics”, began to develop since the 1960s and has gained popularity in such countries as the USA and Israel.
The understanding of legal problems through economic analysis contributes to the dynamic development of the legal system and would allow to improve the legal technique of drawing up legislative acts.
Applying the principle of the rule of law for resolution of international economic disputes
It is impossible to comply with the rule of law as one of the main requirements for prosperous business life without an independent court.
Compliance with the principle of the supremacy of international law is ensured by international courts. Some of them are working on a permanent basis: the International Court of Justice, the International Tribunal for the Law of the Sea, the International Criminal Court, the European Court of Justice, the European Court of Human Rights, the Inter-American Court of Human Rights and the African Court on Human and Peoples’ Rights.
Generally, International courts are credible with regard to the professionalism and competence of their judges. Furthermore, the independence and impartiality of these courts are not questioned.
The nature of the jurisdiction of courts is the most significant problem at the international level. Taking into consideration the rule of law, litigants shall not be entitled to decide whether the court has jurisdiction to resolve their case at the domestic law level. In this case, disputes would remain unresolved for ages.
Naturally, the compulsory jurisdiction of the courts is required for the rule of law at the national level. It means that, if the courts have the competence to review and settle disputes, they do it under the guidance of the principle of impartiality, regardless of the parties’ consent to their jurisdiction.
The heterogeneity of international economic relations results in the specific nature of the resolution of international economic disputes. Interstate economic disputes are settled under international law.
Dispute resolution between and among individuals and legal entities of different countries falls within the competence of the courts of states as well as the competence of international commercial arbitration. Participants in international economic relations tend to prefer the latter.
International commercial arbitration is established and guided by national law in its activities. The definition of “international” refers only to the nature of the disputes in question. It deals with economic disputes of an international character between private individuals.
The Arbitration Court of the International Chamber of Commerce (Paris), the London Court of International Arbitration, the American Arbitration Association (New York), the Arbitration Institute of the Stockholm Chamber of Commerce etc. are among the most credible centers for international economic disputes. As for Russia, there are the International Commercial Arbitration Court and the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation.
The main problem in resolving international commercial disputes is the contradictory nature of the norms of national and international law. In this regard, the main function of international economic law is the unification of procedural arbitration rules to ensure uniformity in the procedure for settling international disputes in arbitration of different states.
An example of unification of procedural arbitration norms is the European Convention on International Commercial Arbitration, Geneva, 1961. It contains rules for the organization of arbitration and the order of proceeding and decision making.
Various states often apply arbitration rules developed by the UN. The most popular is the UNCITRAL Arbitration Rules of 1976.
The UNCITRAL Model Law on International Commercial Arbitration of 1985 serves as a model of national law on international commercial arbitration.
Another indispensable element of ensuring the rule of law is the establishment of an international legal framework for the recognition and enforcement of foreign arbitral awards.
This problem is particularly acute if one of the parties does not follow foreign court orders.
The adoption of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1956 resolved this problem. The Convention obliges states to recognize and execute arbitral awards rendered on the territory of foreign states.
In summary
The rule of law at the national level is inextricably linked to the rule of law at the international level.
Respect for the principle of rule of law is required for prosperous business life, sustained economic development and growth, and for improving of standards of living.
Refusal to respect the principle of rule of law has a negative economic impact, including a decrease in business activity, driving out the competition, the transformation of ownership into a “right to use” which depends on the government, the absence of universal protection of property rights, power elite’s property right, and, as a result, the disappearance of general social values.