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The Origins of Equity and Fairness

Ever since university where I studied commercial law as one of my major subjects, I have been interested in the legal aspects of business, regulations that guide and control commerce, and cultural impacts and effects on the development and implementation of such laws and principles. It does not harm that one of our ancestors, Sir James Balfour of Pittendreich, was a Scottish judge and politician. He was the greatest lawyer of his day (Source: Encyclopedia Britannica 1911), and part-author of Balfour's Practicks, the earliest text-book of Scottish law. He had six sons, the eldest of whom was created Baron Balfour of Burleigh in 1607, and the youngest, John, who was our earliest Scottish ancestor in Holland, where he joined the Scottish regiments to fight the Spanish forces under Duke Alva.

Many employment issues in Kuwait evolve substantially around law, equity, fairness, and values. The terms ethics, equity and fairness are usually linked together and often interposed. The term equity is much used in legal and business circles, with connotations that suggest or invoke ideals of justice, fairness, equality, mercy, and proper judgment, in addition to any written laws. The term equity is also considered a judgment that transcends formal laws in the interest of human conscience, humanity, natural law, or natural justice. In summary, equity is related to the action of judging according to the spirit, rather than the letter, of the law or contract.

Equity is needed at all times, but especially where the legal framework and systems are not transparent, such as is apparently the case in Kuwait. For example, when discussing existing Employment legislation with a client in Kuwait, I found that the existing law No 38 is dated from 1964, before I was born, and has, in spite of many attempts, not been updated since adraft update was introduced 10 years ago. The updated version of the Employment Law is therefore languishing in Kuwait parliament which has been suspended once again recently. The existing Employment Law (Private sector) is deficient in a number of areas, specifically related to the protection of employee's rights, a fact which may be misused by Kuwaiti employers and unscrupulous businessmen. The necessity for the additional and substantial application of equity by the Kuwaiti courts is clear in this case. It may well be difficult to have equity applied by courts which are currently awash in legal cases and a major backlog, which, according to one lawyer, stretches as far back as 4 years.

Hence, the term equity suggests that the law may not always be perfect and that the enforcement of legal rights and duties may fall short of legal justice. A demand for equity may also suggest that there is a conflict between the requirements of law and natural justice or justice according to conscience or reason.

In one example, a professional well known to me was terminated. When his termination was first proposed the employer, a well known professional services firm in Kuwait, invoked an immediate termination without clarity on settlement or any specific reasons, in spite of my excellent performance, while expecting the professional to serve out the 23 days remaining (the Notice Period) between the termination notice and the actual termination date. During a meeting with the regional Managing Director of that firm it was claimed by the professional in question that the actions of the Firm were unconscionable. The professional subsequently wrote formally to the Firm, using the term in a legal sense, whereby, in legal circles, an unconscionable contract or deal is a contract or deal which "no man in his senses, not under delusion, would make, on the one hand, and which no fair and honest man would accept, on the other". 4 Bouv. Inst. n. 3848. (Source: Bouviers Law Dictionary 1856 Edition). This definition refers to fairness, which by implication, includes the notion of equity. The lack of fairness is in addition to the breach of contract by the Firm as no formal reason or justification was given, on top of a number of other breaches of the employment contract.

Courts will actually set aside unconscionable contracts as was the case in Hume vs United States, 132 US 406 (1889) where the judges held, on page 132, "That an agreement to pay $1,200 a ton for shucks, actually worth not more than $35 a ton, is a grossly unconscionable bargain as defined in Bouvier's Law Dictionary …………… Such a contract, whether founded on fraud, accident, mistake, folly, or ignorance, is void at common law. It is not necessary to invoke the aid of a court of equity to reform it. Courts of law will always refuse to enforce such a bargain as against the public policy of honesty, fair dealing, and good morals."

Origins of equity, fairness and justice can be found in the Middle East where demands for ethical behaviour are found in all the major theological books, the Quran, the Bible and the Torah. This ethical tradition is repeated time and time again by prophets such as Moses, Jesus, Mohammed (PBUH) and the Persian prophet Zoroaster, who all called for moral actions, rather than the application of law, legal responses and adjudication, to cleanse the world of its evils (read "Disorder" and "Chaos"). They addressed themselves to the basic conscience of humanity and asserted that individuals have a moral obligation to uphold the order of society and the cosmos. (Source: Ira Lapidus, Professor Emeritus History, University of California, Berkeley)

In addition to the Prophets, classical Greek philosophy also fully recognized this duality of claims, both under law and under equity. Plato, ever sensitive of the impossibility of ideals fulfilling themselves by written laws, saw the necessity of counterweights to the law and expressed the essence of the idea of Equity in his book the Statesman (or Politicus). (Source: Milton Konvitz)

Cicero quoted as a saying familiar in his time, Summum jus summa injuria. Through subtle and even fraudulent construction of law, he said, much wrong was committed (De officiis I. X. 33). Indeed, in De legibus, Cicero goes so far as to say that it is only "the crowd's definition of law" which identifies law with written decrees in which the people issue commands and prohibitions as they please (I. vi. 19). Law for Cicero is the voice of reason and of nature; action according to virtue is action according to the law; an enactment which commands an injustice is not truly a law. The most foolish notion of all, he says, is the belief that everything in the customs or laws of nations is just. "For Justice is one; it binds all human society, and is based on one Law, which is right reason applied to command and prohibition. "Whoever knows not this Law, whether it has been recorded in writing anywhere or not, is without Justice" (De legibus I. xv. 42). (Source: Milton Konvitz)

In Halsbury's Laws of England, the Courts of Equity, also known as the Courts Chancery, are stated to have been established during the reign of Edward I, in about 1300, and originated through petitions to the King, around one century after the Magna Carta was signed as a formal "Bill of Rights" by King John in 1215 to redress the imbalance between the absolute rule of monarchs and the rights of citizens. It is no surprise that this development happened in the 14th century, which was towards the end of the crusades, a great period of exchange of ideas and philosophies between the Middle East and Europe. Equity Courts dealt with complaints concerning injustices created by orders of the King or by parties to litigation in the King's courts. The complaints included those where jurors had been intimidated by a powerful, wealthy or well-connected party to the litigation.

I quote the Merriam Webster definition of an unconscionable act as "An act committed without conscience". As bland as this definition may be, considering the rich historical and philosophical heritage of the term, it well sums up the way the aforementioned professional services firm manages its affairs on a day to day basis, that is, without any conscience.