The Ideology Behind B-Ready: How the World Bank Favors Common Law Jurisdictions

B-Ready, the World Bank’s new flagship report, measures the attractiveness of the business environment in various economic systems. It is the successor to the famous Doing Business Report, which was discontinued in 2021 due to manipulation and irregularities in the collection of data. The first edition of B-Ready was published in October 2024 for 50 countries. This year's edition will already cover 108 economic systems, followed by all 180 participating economies in 2026. Just as was the case with Doing Business and in line with the World Bank’s objectives, B-Ready is expected to inspire policy reform around the world. This applies in particular to countries that depend on loans from the World Bank.

The B-Ready report appears to follow a neutral approach in its assessment of the various economic systems. However, a closer analysis of the methodology shows that the World Bank favours common law legal systems over civil law jurisdictions.

Civil Law Countries and the Preventive Administration of Justice

Continental Europe and Latin America, but also large parts of Africa and Asia, adhere to the civil law tradition. This legal tradition is characterised, among other things, by a strong system of preventive administration of justice: corporate and real estate transactions are typically subject to public preventive control, which ensures the reliability of commercial and land registers. In that system, notaries not only identify the parties involved, but also ensure that contracts are drawn up in a lawful and legally secure manner and that public interests are adequately taken into account. Due to this public preventive control, companies can rely on the information published in registers without further ado. In addition, the strong preventive control ex ante avoids litigation costs ex post.

Common law, Market and Ex-Post-Control

Common law jurisdictions, which include England, the USA, large parts of Canada, and Australia in particular, regularly refrain from public preventive control. In these countries, public registers either do not exist at all or they reproduce, without verification, the information that parties provide on the basis of self-disclosure. Accordingly, economic actors do not trust the register information. However, there is a need for reliability everywhere. Therefore, in common law jurisdictions, the market demands proof of the relevant information beyond registers. For example, the existence of a company must be proven over its entire life cycle by means of a certificate of good standing, which only certifies the company’s good standing and entity status at the moment of its issuance. Therefore, parties must reapply for it again each time it is needed.  The right to represent the company or the position as shareholder regularly only result from legal due diligence and legal opinions. Even for simple real estate transactions, title insurances have to be taken out and lawyers are usually involved on both sides. There is also a need for elaborate title searches to provide proof of the property rights at stake. Finally, the lack of ex ante control also means that litigation costs are higher ex post.

B-Ready's Focus on Transparency: How Reliability Is Neglected

Despite the fact that it makes a decisive difference to market participants whether the information provided is reliable or not, B-Ready assesses the quality of regulation solely under the angle of transparency, i.e. the mere availability of information. Whether this information is also reliable is irrelevant on the basis of its methodology. Since B-Ready does not positively reward the additional effort of public preventive control, countries are incentivized to use their resources for other areas that improve their assessment by the World Bank.

B-Ready's Selective Way of Measuring Costs: How Back-End-Costs Are Ignored

One might think that strong public preventive control would have a positive impact on the B-Ready evaluation at least in terms of efficiency. After all, the costs of market transactions are avoided which compensate for the lack of reliable register information. In addition, litigation costs are greatly reduced. However, B-Ready only partially covers these costs. For example, notary and registration costs are explicitly queried, whereas title insurance costs are not, meaning that these would have to be entered under "other costs" in the questionnaires used for data collection and may therefore simply be forgotten.

What is even more important, however, is that B-Ready generally only captures the business entry costs, i.e. the costs of the incorporation process. Costs that are incurred after incorporation, when the company is doing business, are ignored. In particular, B-Ready does not include indicators to measure the costs caused by the fact that directors need to repeatedly prove the existence of the company and their powers to represent it and that shareholders need to provide evidence of their status as shareholders over and over again. Put differently, the costs of certificates of good standing, legal opinions and due diligence after incorporation are not included in the report. The same is true for other recurring costs that are typical for common law jurisdictions such as annual incorporation taxes. Finally, B-Ready ignores litigation costs, which are typically lower in countries with a strong system of public preventive control.

B-Ready's Focus on Efficiency: How Public Interests Are Not Considered

Unlike its predecessor, B-Ready aims to take into account public interests. The World Bank does no longer pursue deregulation but better regulation. However, the parameters "cost" and "time", which constitute the efficiency pillar of the report, are still weighted significantly more than other indicators. In addition, it is still disregarded that public preventive control also helps to enforce societal interests and ensures broad stakeholder participation. Combating money laundering and terrorism, enforcing sanctions, environmental protection and gender equality are achieved more successfully if they are already taken into account at the time of the conclusion of the contract and not only once the damage has occurred.

The Hope for System Neutrality by 2026

Fortunately, the World Bank wants to improve the B-Ready methodology until the end of the pilot phase in 2026. Hopefully, the idea of system neutrality will then be consistently implemented. Ultimately, a fair assessment of the different legal traditions would strengthen the legitimacy of the B-Ready report and thus its influence around the world.

About the author

Dr. Philip Maximilian Bender, LL.M. (Yale), Maître en droit (Paris II), is a notary candidate in the district of the Bavarian Notary Chamber and works as a legal advisor in the Brussels office of the German Federal Chamber of Notaries.