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There are a number of different legal traditions in the world. Belgium, France, Italy, the Netherlands, Portugal, Spain, and much of Latin America, as well as the state of Louisiana, have legal systems based on the Napoleonic Code, the French civil code. The Bürgerliches Gesetzbuch (BGB), the civil code of Germany, is the basis for the civil law in Greece, Japan, Portugal, and South Korea. In a number of other countries, however, the legal tradition is based on the common law tradition that originated in England. These countries may be called common law countries.
Common law is law based on tradition, rather than law arising from legislation, and it can change over time. It is based on the precedent provided by case law as cases are decided in areas not covered by statutes. Countries that rely on this type of law include England and other countries that were England’s former colonies at one time or another. This includes Australia, Barbados, Brunei, Canada, Hong Kong, India, Malaysia, New Zealand, Northern Ireland, Pakistan, the Republic of Ireland, Scotland, Singapore, South Africa, Sri Lanka, and the United States of America.
Although the common law countries have something common in their history, the implementation of common law is different in different nations. One element that can have an impact is the existence of a body of a native legal system or body of law. For example, in Australia, common law coexists with Aboriginal customary law, as affirmed by the case Mabo v Queensland (No 2). In the United States, on the other hand, common law coexists with the Tribal legal system in the matter of reservation-based claims, as affirmed by Williams v Lee.
Even within a country, the common law system may be variously applied. As noted, the state of Louisiana follows a legal system based on the Napoleonic code at the state level, while other US states follow a common law system. Should a federal issue not addressed by a federal statute arise in Louisiana, federal common law would still apply, however.
Research has found some other commonalities in common law countries besides their legal systems. For example, research has shown that these nations also have stronger capital markets than countries with legal systems based on the Napoleonic Code or BGB. The study also concluded that the access of smaller companies to raising money is more dependent on the country’s legal system than is the case for larger companies.
I find it interesting that countries who practice common law tend to have stronger capital markets than countries who practice other forms of law.
Perhaps its because countries with common law have more regulations against monopolies, making it easier for small businesses to become successful.
Capitalism seems to be directly tied to a strong legal system.