Binding or persuasive?

The question of who makes law (or what is the source of law) highlights one of the greatest differences between civil and common law systems. In civil law jurisdictions, the sole power to make law is vested in the legislature, and the role of the courts is limited to interpreting and applying legislation. In common law jurisdictions, however, the courts not only interpret and apply laws enacted by the legislature, they make new law as well.

Of course, there has been some convergence in the approaches of these two great traditions over the past half century or so. On the one hand, common law jurisdictions have moved towards codifying more law and incorporating judge-made principles into legislation. On the other, civil law jurisdictions have placed greater emphasis on judicial decisions as a means of guiding courts in the interpretation and application of law. Nonetheless, the fundamental difference remains.

If a legal system maintains that only the legislature has the power to make law, it must ensure that written laws or codes are comprehensive, containing both general principles and detailed provisions for regulating behaviour. In addition, it must allow courts to refer to a broad range of sources to determine how these general principles and detailed provisions should be interpreted and applied to the facts of a given case. This includes academic commentaries and also decisions of other courts. However, even if decisions of other courts are “persuasive”, they will never have binding force as they cannot constitute a source of law in their own right.

At the same time, a legal system that permits judges to make law must feature at least three characteristics to operate effectively. First, it must recognize that judge-made law has binding force – otherwise it would not constitute “law” in the same way as legislation constitutes law. Second, it must establish a court hierarchy whereby lower courts are bound by decisions of higher courts. Otherwise, there is a risk that judge-made law will be inconsistent, stripping the system of its most important elements, namely, certainty and predictability. Third, judges must provide detailed reasons for their decisions so that the law can be understood as clearly as possible, and this reasoning must be accurately recorded in law reports made available to the public so that other courts, lawyers and society generally can review decisions and find out about the law.

In passing, a fourth required feature should also be noted; a mechanism for resolving any inconsistency between case law and legislation. In common law jurisdictions, this is provided by the doctrine of parliamentary supremacy, according to which parliament has the power to change and amend laws and is not bound by court precedent.

A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at law.asia.