I have been speaking at "Doing business in Greece" programs and conferences since 1987. Look, we can present power points all we want but investors are more scared than ever to do business in Greece. A common statement in the press or in the boardroom is that "no sane person would invest in Greece."The legal system, both on the books and as applied and actually experienced is perhaps the biggest problem. Look at World Bank; IMF; OECD: World Justice Forum; State Department; recent Transparency International rankings; and international legal scholar and executive observations-putting Greece near the bottom in terms of legal system efficiency, transparency and uniform rule of law/predictability and compliance. Talk to hundreds of frustrated individuals, even Greek Americans, who have struggled to do in Greece what is done in the US easily and routinely. How do I know?
Well, as a US lawyer since 1987, I have litigated hundreds of published business and labor cases; sat as a county and local solicitor; bank and insurance counsel; had a title company; and taken a company public on the NASDAQ. I have, at the same time, been a Greek lawyer since 1990-and have observed the side across the Atlantic on similar matters. So, I have some perspective. I wish I could advise my clients on the Greek investment laws with the same confidence that I advise them of the U.S. laws. No, the U.S. system isn't perfect - don't go there! But it functions more efficiently. In any event, it is important to compare legal systems because this is how we learn and develop practical improvements. We can specifically see how each system operates in, say, litigating a partnership dispute or forming a corporation and obtaining approvals etc... and see which system better serves the well published "rule of law " /legal system efficiency factors. This is the beauty of "comparative law". It is not engaged in solely for academic reasons. With proper comparison and application, successful legal systems and processes of one country may be transplanted into another. Efficiencies in one legal system may be spotted, identified and borrowed by another. It is true that there are cultural, social, historical and other value system differences that do not allow for identical application of different legal systems. We need to identify and respect these. But these differences should not make us uncomfortable with practically comparing the outcomes of different legal systems, as encountered by investors and business people.
The Prime Minister is to be commended on stressing competitiveness and, yes he faces the maintenance of social cohesion at the same time. Even as I write, government reform programs are in the works. But, the Greek inefficient legal system, in letter and practice, is the iceberg that lies below the tip of all the financial reform talk. Following the metaphor, it creates fear of suddenly crushing and sinking the large and small daring ships of investment and entrepreneurship. These daring business captains are willing to risk the storms of the market, face competitive forces-but not the ravages of legal insecurity-often an existential risk. Do you think that legal system efficiency is a minor detail vis a vis growth and investment? The perception by an investor that a business, property, shareholder, contract, labor, investor protection or taxation dispute can be litigated quickly and with a reasonable degree of predictability is a seminal and foundational question in any business venture. The U.S. Chamber of Commerce stresses that "the rule of law, sanctity of contracts and respect for property rights are touchstones" of international investment and are "central" issues in U.S. firms investment policy. This is most important to small business which does not have the credit resources or political influence or connections of large business. Statistically, it is small firms and start-ups that fuel job creation. How can roots growth occur in this environment? We want to help Greece? How about jobs - good, private sector jobs, not more souvlaki joints and cafes. Can we even calculate the incalculable damage to Greece due to brain drain of its best and brightest? What are the practical and operational safeguards and legal safety nets that make one comfortable to sail new waters - and not cringe at the perception of legal icebergs? By way of Greek law comparison to the U.S. federal and state legal system, I can say the following: The Greek legal system, in terms of length of litigation, number of appeals and remands, lack of uniform judicial decisions, lack of out of court settlements , delay tactics, continuances---outrageous!! Business formation and registration steps, archaic notary system, tax, permit and regulation hurdles---outrageous!!
I don't want to hear the "we are a civil law jurisdiction" and can't change etc... lament. If India can change, Greece can. This is the time for bold, out of the box, thinking. Anything can be changed, and in fact, we are talking about changes consistent with EU, IMF, World Bank urgings and pronouncements. A critical mass of real structural reform. Not artificially engineered growth - i.e. more and more complicated programs, zones, development agencies, banks, subsidies, incentive regulations etc... A "critical mass" of real, structural legal reform can lead to a "critical mass" of entrepreneurship-which then is self-perpetuating.
Reform that is true means implementing rule of law in practice- not the law as written- but as actually applied and as actually experienced by investors or those who asses the risks in order to dare and venture. And yes, damn it, it means dealing with the civil law legalism the plagues Greece. There, I have said it! Maybe we cannot change the civil law system but not every issue has to be codified and regulated. This leads to lawlessness instead of clearly knowing and predicting the rules of the game. Too many internal administrative rules, processes, and regulations. While exhaustive attention is being paid to these processes, the real policy and real world desired result is lost. Justice delayed is justice denied. There is no question that this legalistic system prevents or fatally impedes predictable decisions and results (within a reasonable time) based on desired impact on the real world. There is an argument, by some, that high public distruct of government "requires" a high degree of minute regulation and procedure. This is a false remedy! Excessive bureaucracy and legalism actually creates more opportunities, and incentives for corruption. I will say it again: Excessive internal administrative processes and legal formalism cannot be carried out disconnected from the real world and without a clear perception of how they impact business and ventures on the ground.
There is a lot left to say. I will end with the fact that the Greek legal system, in my opinion as it exists and as experienced, presents an unacceptable and overly burdensome risk to many investors.
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