The Judiciary – The Achilles Heel of the Economy

The Judiciary – The Achilles Heel of the Economy

Judicial reform remains Georgia’s Achilles’ heel. A succession of governments has either been unwilling or unable to implement reforms in this field, despite the fact that a country which does not provide adequate protection for human rights and property rights cannot achieve high levels of development or prosperity.

Georgia has been recognized as the world’s leading reformer in the past, which shows that in the presence of the appropriate political will, the country has the potential and the ability to achieve better results and become far more attractive to local and foreign investors, as well as ordinary people. However, for one reason or another, such breakthrough reforms have never been attained within the judiciary.

Structural reform is a popular term that we have heard about frequently from donor organizations and others in Georgia for many years. These are reforms that ensure the country’s systemic development and increased competitiveness on the international stage. Needless to say, judicial reforms are at the forefront of such structural reforms.

A well-functioning judicial system has a significant bearing on the country’s competitiveness. The Global Competitiveness Index clearly shows that the judiciary is one of the weakest links in Georgia’s institutional development. According to the 2018 index, Georgia ranks 83rd among 140 countries in the judicial independence component. More importantly, the situation has gotten worse since the previous year.

The picture is likely to further change for the worse when the new Competitiveness Index is published. Similar to other rankings, it is calculated by taking into account the latest findings, which include the 2019 Index of Economic Freedom that was published by the Heritage Foundation this month. Based on these findings, Georgia’s economic freedom score for this year is 75.9, which is 0.3 points lower than in 2018. Although Georgia retained the 16th position in the rankings among 180 countries, one should bear in mind that it had already dropped three places in 2018. Therefore, Georgia is worse off today than it was in 2017.

A sharp decline in judicial effectiveness was the main reason Georgia scored lower in the 2019 Economic Freedom Index compared to the previous year. In 2018, Georgia scored 64.2 in this component, while the latest figure is 54.6. It is also interesting to note that parallel to the drop in judicial effectiveness, the country also scored lower in components such as business freedom and trade freedom.

Until recently, the subject of the judiciary was viewed mainly through the prism of local politics – more specifically, the internal conflict within the ruling Georgian Dream party. The situation changed several days ago, when Georgia’s largest business associations and international chambers of commerce released a joint statement criticizing the government’s private sector communication strategy, requesting to be more actively involved in the process of determining the criteria for selecting Supreme Court judges.

“The Supreme Court is a strategically important institution. Not only is it the highest court in the country, but it is also a symbol of the Georgian judicial system,” states the open letter, which is addressed to the Chairman of the Parliament, Irakli Kobakhidze and the Acting Chairman of the Legal Issues Committee of the Parliament, Davit Matikashvili. Copies of the letter were sent to the Prime Minister of Georgia Mamuka Bakhtadze, the Deputy Chair of the Parliament Tamar Chugoshvili and the Acting Chair of the High Council of Justice Giorgi Mikautadze.

Georgia’s largest business associations have requested that the parliament, in collaboration with civil society, quickly develop amendments to the Organic Law on the common Courts and, if necessary, the Georgian Constitution.

“We are ready to work with the government and the parliament in any way that we can to make sure that the process of selection and appointment of judges corresponds to the best international practices and the requirements of democracy and rule of law,” states the letter.

In response to the joint letter from the business associations and chambers of commerce, the Acting Chairman of the Legal Issues Committee of the Parliament, Davit Matikashvili, stated that the parliamentary group working on judicial reforms holds its doors open to all stakeholders, including the business associations and non-governmental organizations.

“Our parliamentary working group is open and transparent. It will serve the purpose of agreeing [to] the main principles and gathering all the views regarding the selection of Supreme Court judicial nominees,” Mr. Matikashvili stated.

It is also important to note that in the joint statement, Georgia’s business associations and international chambers of commerce advise the government to focus their attention on broader judicial reform.

According to the business associations, the selection of Supreme Court judicial nominees without a fair, transparent and predictable process, reinforces the negative perception of the Georgian judiciary and court system that is already held by many observers.

“This is not only bad for the country, but will undoubtedly have a negative impact on Georgia’s international reputation, the business environment and the country’s ability to attract investment,” the letter states.

The country needs an orderly court system not only for political, but also for economic purposes. The rule of law and protection of property enable a substantial increase in direct foreign investment and lower corruption levels, ensuring faster economic growth and inclusive prosperity.

Thus, the Georgian government is faced with two choices: to continue investing substantial financial resources and time in fighting poverty, debt and low economic growth with regulations, without any guarantee of success; or to tackle the root cause of these negative effects by implementing effective judicial reforms and making the business environment more attractive for local and foreign investors alike.

The main red line for Georgia’s competitiveness passes through here.


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