Analysis 12/2017: Without independent courts, the economy is developing slower and civil liberties are at risk
Synhesis
Attempts by the executive authorities to take over control of the courts are often justified by the concern for the economy or the rights of citizens. However in the light of available research, the opposite is true – limiting independence of the courts has a negative impact on both economic growth and civil liberties.
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The role of independent courts is to resolve disputes between private individuals, and private individuals and state and state bodies. In order to function effectively, the courts must be independent of other authorities, political parties, prosecutors or various interest groups. Lack of judicial independence means that courts do not perform their functions effectively, which discourages contracting (as contracts are not effectively enforced) and reduces the size of the legal market. Also, without independent courts, individuals and businesses are not sufficiently protected against abuse by the state, which undermines incentives to invest. Consequently, the economy is developing slower.
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Research also shows that the more limited the independence of courts, the weaker the protection of civil liberties and human rights, and thus the possibility of their violation by the authorities of the state increases.
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There is a number of indices that measure the independence of courts, both formal and factual. Formal-only provisions in the constitution or laws do not guarantee the actual independence of the courts. By amending the law, the government can, for example, remove judges who are unfavorable to it. Although none of the methodologies of measuring the degree of independence of courts is perfect, various indices of actual judicial independence provide together a similar picture in what countries jurisdictions operate impartially. An important factor affecting independence is the protection of judges against an arbitrary shortening of their term by politicians.
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Various factors influence economic growth. Econometric studies allow to study their joint impact as well as assess the relative role of each of them, including the independence of the courts. Basing on the results of Voigt et al. (2015), it can be estimated that if the level of independence of courts in Poland were lower - such as in Russia - our economy would grow slower by 0.3 percentage points per year. In extreme cases such as Sierra Leone, Rwanda, Argentina or Pakistan, the lack of independent courts cost these states a loss of more than 10 percent of GDP in the years 1990-2008. The negative impact of the lack of independent justice on modern economies is also supported by studies using other measures (Ríos-Figueroa and Staton, 2014). Historical experience also points to the importance of "third power" independence. For example, in the 18th century Great Britain, further reforms, increasing the separation of judges from the monarchy, contributed to improved economic sentiment and stock market gains (Klerman and Mahoney, 2005).
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The changes proposed by the PiS to the Acts on the Supreme Court, the National Council of Judiciary, and the system of common courts have constituted and continue to pose a threat to the real independence of the judiciary, and thus to economic growth and protection of civil rights and freedoms. Presidential vetoes of two of the above acts have prevented the greatest dangers to the independence of the courts but have not removed the extensive interference of the Minister of Justice (who is the Prosecutor General at the same time) into the common court system.
Full analysis aviliable in Polish.
See also: FOR press conference: Without independent courts, the economy is developing slower, and civil liberties are at risk
Contact with authors:
Aleksander Łaszek, Chief Economist
aleksander.laszek@for.org.pl
Marek Tatała, Economist
marek.tatala@for.org.pl
Jan Toczyński, Economist
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