The Importance of Commercial Law in the Legal Architecture of Post-Conflict New States

In the era of international relations ushered in by the end of the Cold War, nation-building has become all the rage. In a burst of Wilsonian optimism, Western countries have sought to recreate failed states in their own image, fashioning new governmental institutions from the ashes of violent conflict or civil collapse. These projects became possible in a fresh environment of international consensus that has prevailed since the middle of the 1990s. Developing improved legal institutions has been considered a particularly important component of any state-building project and has been a primary focus of almost all such efforts. A new label has been created to describe exercises in developing legal institutions, with the general rubric describing them alternately as “rule of law” or “legal and judicial reform” projects. The aim of these exercises is to fashion the legal system of the target country along principles found in the legal systems of developed Western states, that is, to promote judicial independence, legal transparency, civil rights, and market freedoms. This, it is said, will promote economic development, political stability, and reconciliation. To date, these efforts have been driven by legions of international experts employed by multilateral and bilateral development institutions, from the World Bank and the United States Agency for International Development (USAID) to a myriad array of U.N. agencies and private contractors. When nation-building is conducted in a post-conflict context, it is easier of course to find a willing client state counterpart with whom to cooperate. If the international community decides to intervene in a failed or new state, then its role is inevitably far more comprehensive than for a project in an otherwise developing economy. It may come into the country after a war or after foreign military intervention. As in Iraq or Afghanistan, the country’s new rulers may be hand-picked by the international community. Similarly, compliance with a state-building agenda, including practical application of the lessons of neo-institutional economics, may be a condition of holding office. U.N. agencies may have formal powers in international law (as in Bosnia and Kosovo), and the level of post-war reconstruction funds and tangible foreign military presence might give the international community formidable lobbying powers. These projects have been pursued in the context of peace operations and the construction of new states, and some significant attempts to re-craft commercial law have taken place. In order to discuss the relative merits of past attempts at legal reform in post-conflict “new” states, it is necessary to understand more generally the relationship between economic development and the rule of law. The overarching theme of this Essay is that state-building in general, and development of an effective commercial law in particular, is a science in its infancy and is one about which we know remarkably little. Vastly more needs to be learned and committed in resources. Until that happens, the exercise of trying to create effective commercial law, and thus promote economic development in new states, will be a tricky and elusive goal