The law and business

The law and business
BUSINESS PAGE
Stabroek News
May 25, 2003

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Introduction

If the hallmark of a civilised society is the rule of law then Guyana would rank low on any international scale. Every sphere of activity including business, property rights, honouring contractual obligations, conformance and compliance with laws and regulations including those dealing with taxation, seems to be characterised by non-compliance. The message coming out of the recently concluded annual conference of the Guyana Bar Association is that the system of rule of law is in a state of crisis. Even if the Guyana Bar Association and the Chancellor of the Judiciary have different views on the impact of any public pronouncements on the state of the rule of law, they will have great difficulty in convincing the ordinary citizen that the situation is not getting worse. Our legal profession is learned enough to recognize that business requires a proper functioning legal system in the absence of which an unacceptable measure of uncertainty and risk in business transactions is introduced.

While the reports coming out of the conference suggest that some highly important issues were addressed, some non-lawyers would consider the conference a disappointment in terms of the failure of the legal profession to undertake a serious, introspective examination to determine ways in which the profession could contribute to stemming the descent into lawlessness and help to restore some measure of order in the administration of justice in the country. At this point it seems futile to cast blame on one side or the other when it is clear that the whole society is in crisis. The lawyers who criticise the magistracy and the judges somehow seem to ignore the fact that they all belong to the same profession and that what they should be complaining about is the quality of the training, inadequate continuing professional education, the rules of professional conduct guiding their practice and inadequate mechanisms to deal with abuse and professional misconduct. They should also be complaining about the excessive tolerance of some of the country’judges, the preference of a number of lawyers for confrontation rather than justice, inadequate preparation, unprofessional conduct in the courtroom and willingness on the part of some lawyers to encourage unlawful behaviour by their clients all ostensibly done because a person is innocent until proven guilty and everyone has a right to proper defence counsel (once they can come up with the right amount of fees).

Questions they should ask

The magistrates and judges need to ask themselves whether some, by their forbearance, encourage disrespectful behaviour in their courts, why some of them allow lawyers for the defence to intimidate witnesses and in the case of family matters treat the victims as the guilty parties, why in certain instances some of them are not better prepared and equipped to hear cases, and why it has been known to take months and perhaps even years for written decisions to be given. Collectively those who practise as well as those who administer the law must recognise the position of trust in which they are held and that any failure to live up to the expectations of the populace will make its contribution to the state of the country.

Governance

Over the years Business Page at the risk of being monotonous has emphasised the absence of good governance among companies in this country with particular emphasis on public companies. However, with the spate of business failures over the past three years the absence of the most elementary requirements of governance - compliance with the law - have been severely exposed. It seems that very few lawyers bother to advise clients of the implications of incorporating a company under the Companies Act or provide any general advice on the requirements of the Act such as the holding of Annual General Meetings, filing annual returns, maintenance of statutory records, filing of notices and the obligations companies assume when they sign debentures or give any other form of security.

While they may have separate briefs and obligations, the attorneys for the lenders do not help by constructing what sometimes appear to be heavily loaded documents under which their side has only rights but no responsibilities. The approach the lender takes in such cases is that that is what our attorneys advise leaving the borrower no choice but to sign whatever is placed before him. Like the fine print of the insurance policy, the language is foreign to the borrower and there is no requirement that they consult with their attorney before signing. Lenders would do well to simplify the language in which legal documents are written, or in addition to the legal form provide some explanatory note to the borrower so that he clearly understands the implications of his signature. Borrowers of larger amounts should be encouraged to consult with their attorneys and be given some time to study the standard forms before they are called upon to sign.

On the other hand, unless there is a valid basis for voiding a contract, the rule of law suggests that the contract must be enforced and the court must not allow itself to be used to frustrate a valid contract. Lawyers seem able to approach the courts far too easily to have valid contractual obligations delayed or set aside for the most spurious of reasons. This practice actually undermines the rule of law within the country and causes an unfortunate loss of confidence among investors. We saw recently one investor describing Guyana as not for the faint-hearted, and he was not speaking about kidnapping but more than likely about the quality of the legal system under which a contract is not really binding.

Commercial court

One banker has called for a commercial court to deal with commercial matters but whether that will be any less ineffective than what currently prevails is doubtful for a number of reasons. The first problem is to find persons who will be prepared to accept appointment to that court at the salaries now offered to our judges. Do we take them from the existing, undermanned system digging a hole elsewhere? The second would be finding a justification for the creation of a special court for business when other issues involving public law and constitutional rights are relegated to the general court. And what about a tax court to deal with stealing from the state often by those with the means to avoid taxes, including incidentally the scores of professionals including lawyers who flout the law requiring them to have a tax practice certificate?

It must indeed be very frustrating to a banker to see borrowers refuse to meet their obligations and use the court system and the lawyers to make heroes of these corporate crooks. The ability of a lender to enforce security is crucial to any lending decision but if the court system is seen as one that is unreliable and capable of manipulation, bankers would be reluctant to lend creating problems for both borrowers and depositors. Indeed we may be already seeing some evidence of this as loans by the banking system continue to decline.

There are no doubt genuine causes for legal challenges but these should surely be dealt with on their merit and promptly dismissed if there is no reasonable cause. That is what any court should do thereby establishing precedents to bind future cases.

The public trust

The legal profession can also help in bringing long-outstanding cases to a conclusion, if necessary after negotiations between the opposing parties and their attorneys. I am aware of one case involving land where one senior citizen expressed concern that he would die leaving the problem to his children. While we hear of efforts to promote Alternative Dispute Resolution (ADR) as a way to help make the system more efficient, there is little to suggest that the culture in the profession is keen on the concept.

One privately hears of cases of the file jackets going missing, the details of which are seldom made public.

With some justification, the legal profession has had a glorious past and for this it was well regarded. The profession had earned the right of self-regulation, its practitioners were highly regarded, well paid and had the public trust. It was a profession known for its erudition, technical skills and public service. To be appointed a judge was the pinnacle of one’s legal career. Lawyers as a professional group have the largest proportion of prime ministers and politicians (and that is said as a compliment to both groups), they dominate the boards of directors of profit as well as non-profit organisations and are often leaders of their communities. Yet, over the decades because of a combination of politicisation of the judiciary, harsh economic conditions, the general lowering of standards in the society and the shift from professionalism to profits, much of that public trust has been lost. The legacy of the autocratic days of yore has not been altogether erased and there remains the perception that the profession is damaged and needs to be fixed.

Conclusion

How can the profession justify the continued right to forge its own standards, rules and ethical norms when it includes some practitioners who operate with little semblance of professionalism and as though they were above the law? How can our society move forward if some of those in whom it placed its trust so blatantly squander that legacy?

The profession has a most formidable challenge but because of the persistence of the very conditions which caused the problems in the first place, there is no great optimism that the profession is either willing or able to deal with the challenge. That is not good news for business and commerce.