James Polkinghorne

James Polkinghorne, Director of Asia Civil writes about the role of the rule of law in the commercial world.

 

‘An engineering sector that does not adhere to the principles of the rule of law can cause untold harm to society and its citizens. Faulty workmanship, inadequate design, corruption and labor violations each have the potential to create catastrophic disasters and cause irreversible human damage.’

 

Evident in Aristotle’s writings which stated “law should govern”, the rule of law is not a concept or discussion limited to modern times, but an ideology that has been recognized throughout modern history as a fundamental requirement for any civilized society. However, despite its importance to the operation of our societal framework, the rule of law is often considered a legal and political philosophy of which lawyers and governments are the sole custodians. This therefore raises the question: if maintaining the rule of law is considered the responsibility of governments and the legal community, and not society as a whole, are we all guilty to some extent of “letting the tail wag the dog”?

A key issue is created when we allow this mindset to exist, and it relates to how the rule of law significantly influences the way society interacts – commerce. Through its many forms of industry, commerce creates jobs, it facilitates the trade of goods and services, it generates taxes and is the critical mechanism for populations to engage and cooperate. Accordingly the whole of society has a vested interest in ensuring that industry plays a key role in shaping and actively promoting the legal framework that underpins it, as this framework ultimately ensures society can conduct activities and pursue new opportunities in the most effective way. Connected by the rule of law, the legal community and industry therefore exhibit what is an inherently symbiotic relationship.

With this in mind, to further explore the importance in understanding the link between the rule of law and industry, let us consider it in the context of the engineering sector. The engineering sector plays a critical role in society by providing essential aspects of our lives such as shelter, drinking water, power, transport infrastructure, medical and education facilities. The engineering sector also supports many other industries’ ability to exist, to innovate, to create new products and services and to enhance the lives of citizens through new technology. However considering its essential role, the engineering sector is therefore also responsible to the societies that entrust them to implement their knowledge with respect to the rule of law.

An engineering sector that does not adhere to the principles of the rule of law can cause untold harm to a society and its citizens. Faulty workmanship, inadequate design, corruption and labour violations each have the potential to create catastrophic disasters and cause irreversible human damage. All of society suffers when the engineering sector does not adhere to the principles of the rule of law. This is no more evident than in the Rana Plaza collapse in Bangladesh earlier this year which killed over 1200 people and in addition took the essential jobs of several thousand workers who live below the poverty line. Much of the causes behind this tragedy can be traced directly to conscious decisions made within the engineering sector.

In addition to the potentially devastating human costs, there are also broader economic impacts to consider when the engineering sector does not adhere to the rule of law. It causes tremendous inefficiencies within the global economy, as the combined value of its services are critical for developing and sustaining vibrant financial systems. Ultimately it then hinders market effectiveness by deterring foreign investment and reducing productivity, anchoring an economy’s growth potential and therefore its overall competitiveness. Clearly the myriad of negative outcomes that occur as a result of the engineering industry failing to adhere to the rule of law are wide ranging and indiscriminate. Accordingly how can we continue to think of rule of law as a legal and policy issue?

Altering this mindset however is a challenge and it cannot be achieved if the issue remains considered purely as a moral imperative. Instead we need to better communicate how strong adherence to the rule of law in fact benefits industries such as the engineering sector. The reason this is important is because by its very nature industry will continuously adapt and innovate to find the most efficient means to realize opportunity. Therefore the key point which needs to be articulated more effectively is that rule of law is not a limitation to industry – rather it is the critical condition for enabling it to function better. Rule of law adds value to the way we conduct commerce by optimizing the relationships and interactions between businesses and people.

At its best, within industry the rule of law removes inequality and fosters a competitive but fair market environment, it ensures consistency in products and services, it protects business and employees, it promotes innovation and ultimately provides a stronger foundation for industry to continue to grow. The effect of this economic growth then assists the greater community by lifting populations out of poverty and providing access to justice, protecting individual liberties and fostering greater social equality.

However as shown in the example of the engineering sector, all of society is required to contribute in order to fully realize the social and economic benefits of these environments. Accordingly, forging closer ties between the legal community, policy makers and industry is critical for attaining and then maintaining the application of rule of law within our societies. Both the legal sector and industry can do more to generate this collaborative approach.

Firstly, industry has to become involved earlier. Legislative agendas and frameworks cannot be set in a vacuum, they need the input of industry participants to ensure that they are relevant, efficient, appropriate and effective. Key industry representatives must be champions for greater adherence to the rule of law in respect to their specific sectors. Offering specialized input from within industry they must all play a pivotal role in the establishment and continual evolution of those laws. These representatives must then be willing to participate in the legislative debate, then actively consider and respond to governmental consultation requests to add further value to the process.

It is also important that industry communicates its role in protecting the rule of law amongst its own members to ensure that it is understood and indoctrinated into business practice. Working to uphold the principles that support their sector functioning ethically and efficiently, industry must then continue to adapt to its own rate of evolution and technological advancements. This can then be fed back into the development of new legislation to ensure that the rule of law remains relevant. The legal sector must then play its role in supporting industry by interpreting and enforcing these dynamic initiatives.

In summary, the principles of the rule of law remain as relevant today as the time of Aristotle. However for its benefits to be fully realized, it is clear that we cannot permit key sections of society such as industry to abdicate from their responsibilities in ensuring the rule of law is respected and maintained. It is therefore fundamental that a more collaborative approach between industry, the legal community and policy makers is achieved. Everyone benefits from the rule of law – effectively communicating these benefits to a broader audience is now the challenge.

James Polkinghorne is a director and co-founder of Asia Civil, a global engineering and construction services company headquartered in Singapore. He has worked across Asia-Pacific, India and the Middle East and is a frequent commentator on the importance of anti-corruption initiatives within the global engineering sector. He holds an Honours degree in Construction Management, a MBA in Construction & Real Estate, and has completed Harvard Business School’s six-month Program for Leadership Development.