The World Bank's initiatives in the area of judicial reforms is linked to its 'discovery' of Rule of Law Reforms in the early 1990s which is related to a variety of factors including the fall of Communist regimes in the erstwhile Soviet Union and Eastern Europe. In keeping with the body of theory called New Institutional Economics (NIE) that underpins to a large extent the Bank's work in 'good governance', the Bank sought to translate the Rule of Law from a philosophical idea into tangible institutions that could be reformed. NIE explicitly identifies Rule of Law as a factor contributing to economic growth and stresses the importance of positive law and legal institutions for protecting property rights and enforcing contracts, two important constituents of the Bank's understanding of the Rule of Law. Motivated by this, multilateral institutions have invested tremendous amounts of resources in efforts to reform legal institutions in developing countries. Over the past few years the World Bank and Asian Development Bank (ADB) have made significant investments in funding these types of reforms.

The World Bank's internal think-tank enumerates what it thinks are reforms needed for actuating the Rule of Law . These are 'reforming laws' (i.e. drafting substantive laws, often categorized into five main headers- property, contract, company, bankruptcy and competition) and 'reforming institutions' (including courts, legislative bodies, property registries, ombudsmen, law schools, judicial training centres, bar associations and enforcement agencies). For the bank, 'legal and judicial reform' was a means to promote the Rule of Law. Between 1990 and 2003, the Bank has spent $2.9 billion dollars on around 330 projects in its pursuit of Rule of Law.

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