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The Privatization of Governance: A Shift from Public Law to Contract in Structuring Social and Economic Order

The relationship between public and private authority is moving and transforming in the course of time. There are theories that argue a recent shift in power from public to private entities. However, a closer look at this argument reveals it is incomplete. This essay contends that the movement of public authority and private authority is not a linear one, from private to public and back again, but rather an intricate interplay between them, wherein their definitions and functions change over time.

Historical Shades on Modern Concepts
In the past when the modern state was non-existent, forms of private power were more dominant. Private authority structures such as feudal lords, guilds and church exerted substantial influence on economic activity, social hierarchy even legal frameworks. On the other hand, public authorities usually took form of incipient monarchy which had little impact. It was with this kind of dominance by private actors that we begin our discussion because it challenges popular "default" notion about historical trend towards public primacy.

However, the emergence of the modern state marked a turning point. This involved a lengthy process during which individual states created strong systems of public law through which they could be able to have greater control over social life as well as the economy itself (Friedrich 1991: 81-118). This would mean side-lining other centers of private power while consolidating their own legitimacy. The rise of public power that coincided with the development of legal frameworks concentrated on public interest, welfare and citizen rights.

However, the story here doesn't end still. The twentieth century witnessed a comeback of private authority in some areas. The emergence of corporations, growing influence of private actors in issues such as infrastructure development, and focus on deregulation and privatization all indicate to a shift taking place. This has led to arguments in favor of bringing back the dominance by the private sector.

Yet, however there is more than meets the eye. In most cases, growth in private power takes place within a framework set by the public sphere. For instance, privatization usually depends heavily on government approved contracts and regulations. In addition to this, the public sector continues to have significant roles in areas such as national security, protection for environment as well as social safety nets.

The important point is that one should understand that both public and private authorities have co-evolved over time. They have expanded and contracted throughout their life-spans constantly changing their definitions and functions. Contemporary world does not witness only the return to domination by privates but depends on globalisation forces or technological advancement it can be seen from this perspective that what we are going through today is not simply a reversion towards privatisation but an entirely new form of relationship between public sphere and individual interests brought about by globalisation forces or technological advancement among others.

This historical context provides a useful framework for examining modern discussions on government, the power of corporations and authority itself. It tells us that public-private divide is not a permanent dichotomy but rather a scale where powers continuously change.[1] When faced with the intricacies of this century, knowing how it came to be can help in fashioning an enlightened talk over the right balance between public and private control based on our societies.

Indian Context
Indian law has undergone a significant transformation in recent years, with a notable shift from public to private law. This evolution has had a profound impact on the legal landscape of the country, affecting everything from property rights to contract law. India has a rich legal history that predates British colonial rule. The pre-colonial legal system was based on religious texts and customary law, with disputes resolved by local councils.

However, the British colonial influence on Indian law was profound, with the introduction of common law principles and the establishment of a formal legal system. After independence, India adopted a constitution that drew on both Western and Indian legal traditions, creating a unique hybrid system. India is, when viewed from historical perspective, private power and authority framing state-based public authority and power making the purpose of power, power itself.

The distinction between public and private law is fundamental to understanding the shift in Indian law. Public law governs the relationship between the state and its citizens, while private law regulates the relationships between individuals and entities. In recent years, there has been a noticeable shift towards private law, with a greater emphasis on individual rights and private property. This shift has been driven by a number of factors, including economic liberalization, globalization, and changing social attitudes. This shift is evident in specific areas of law, such as contract law, property law, and tort law.

The appropriate example for illustration of the present scenario pointing towards "from legislation to private" can be access to justice and prominently seen in the arbitral tribunal system in India. The need for quick redressal and justice is something which the world surely desires and the arbitral tribunals are the creation of such desire. They not only save time but the money of people as well.

Distinguished from the lengthy litigation route, this method prevents unnecessary delays and also help lighten the overburden that the dispute resolution courts carries. The Arbitral Tribunal system provides a variety of mechanisms to deal handle dispute resolution such as via arbitration, conciliation and mediation. In India, one of the mechanism followed on is the mechanism of arbitration which is governed by the Arbitration and Conciliation Act, 1996.

The Act was established with goals of speedy disposal, cost-efficient dispute settlement vide formal award whilst permitting the use of mediation and conciliation and other such means encouraging dispute resolution but in fact such process might be costly and inaccessible for several people and furthermore, this can originate a two-tier justice service, where the ones with greater access to justice are the one with greater resources. The Act also minimizes the supervisory role played by the Courts.

So how exactly are they inclined towards being private rather than something which is part of the same old legislation. The Arbitration is considered as quasi-judicial proceeding as parties are required to appoint an arbitrator over an agreement to settle down the dispute. Although the powers vested in the Tribunal and functions performed by it are regulated vide statutes, arbitration still is obligation assumed to fall on the parties vide agreement for solving their disputes through a private tribunal.[2]

Outsourcing Contracts can yet be an another example of how the legislation is converting itself in favour of being in the hands of private personnel rather than the overwhelming public authority. Several functions such as back-office services, Information Technology services, etc., the government itself is purporting towards more hands in help, that is, in the private hands. Government is indulging in procurement processes via contracts with private suppliers. The Government even set up a stage and settlement for such process which is solely for the purpose of facilitating online procurement and contracts with private services providers over "Government e-Marketplace".

Another pattern which corroborates the statement by Kjaer is India being inclined towards Public�Private Partnerships models for infrastructure development. These are generally seen as Build-Operate-Transfer agreements and Concession agreements.

There is another factor seen where the shift from public to private law is prominent. Initially most of the banks were under private ownership but were nationalised in the year 1969. A recent proposal's been put on to privatize these banks again and therefore strategically putting them at the exact place from where it all started.

In the year 2008, Bangalore and Hyderabad replaced two public-owned airports with private greenfield airports which raised questions with regards shift from public monopoly to private monopoly.[3] The shift do raise questions with regards the role of state in regulation of such private conduct.

What is worth noting is that the contract law is more is becoming more focused on the enforcement of private agreements, with greater weight on the autonomy of parties. Even the property law has moved to recognise private property rights more with minimal role of government during land acquisition and development. The Tort law is even more emphasized towards compensating individuals for harm caused by private actors.

The shift from public to private law is something which is not unique in India and therefore, it is worth to consider how other legislatures respond to it. The evolution of Indian law from public to private law is a complex and multifaceted phenomenon and in words of Kjaer, "a shift is being observed away from public toward private authority, and with it, a shift from public to private law and from legislation to contract".[4]It has its roots both in historical and contemporary factors, and it has significant implications for the future of Indian law and society. The turn to governance has not only implied a migration of the contract tool into the state, but it has also opened the gate for an expansion of administrative law provisions into the private sphere.[5]

  • A. Claire Cutler, Private Power And Global Authority: Transnational Merchant Law In The Global Political Economy (2003) (analyzing the role international economic law plays in global governance)
  • "Alternative Dispute Resolution in India" (Department of Legal Affairs), URL:, assessed on March 22, 2024
  • George, Moses. "Public Monopoly to Private Monopoly: A Case Study of Greenfield Airport Privatization in India: Part II." (2009)
  • Poul F. Kjaer. "From the Private to the Public to the Private? Historicizing the Evolution of Public and Private Authority." Indiana Journal of Global Legal Studies, vol. 25, no. 1, 2018, pp. 13�36. JSTOR URL: Accessed 22 Mar. 2024.
  • Grahame F. Thompson, The Constitutionalisation of Everyday Life? in The Evolution Of Intermediary Institutions In Europe: From Corporatism To Governance 177 (Eva Hartmann & Poul F. Kjaer eds., 2015)

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