Court Specialization or Special Courts?

 
     
 
A Toolkit for Development
  
 

By judge Dory Reiling,
2003-2007 Senior Judicial Reform Expert,
Justice Reform Practice Group (LEGJR), World Bank

  
 
comments welcome at personal email
  
     
 

Summary

Court specialization is considered an important tool in development. Setting up special courts is recommended in many assessments and diagnostics where general courts are found to be not working well. The experience with special courts is not always successful. A better understanding of the forms, reasons and risks involved can enhance effective use. Specialization can come in many forms, from simple to complex. Each form has specific benefits and risks. Generally, choosing the simplest solution will be most effective. Solutions do not have to be permanent; they can be temporary as well. This paper provides support and tools for making and implementing the right choice in different cases. The links take you directly to the section mentioned, after which you can return to the summary with the back to summary link.

We use the word court for different things, from a single judge hearing a case to a collection of multi judge units sharing a building. Courts have common standards: The international human rights conventions state that courts need to provide citizens with a fair hearing of their case within a reasonable time. Fairness and efficiency need to be balanced and proportional to the importance of the case. Courts and court systems’ structures  have some common characteristics as well as historically and politically determined differences.
There are two main reasons for specialization: expertise and efficiency. They are distinct reasons, but they are also interrelated. In many cases, the specialization will be undertaken in order to improve both expertise and efficiency. Forms of specialization can be simple like single judges, but also more complex up to separate stand alone courts or even entire specialized court systems. 
The risks of various forms of specialization are many. They tend to increase with the complexity of the form of specialization. They range from unequal treatment of parties to loss of effectiveness and risk of special interest capture and corruption.
Four checklists on diagnostics, project design and evaluation help to ask the right questions and to come up with the necessary answers with regard to court specialization. The country stories provide some illustrations. They discuss the commercial court in Tanzania, the debt recovery and other specialized tribunals in South Asia, notably Nepal, the Arbitrazh commercial courts in Russia and Kazakhstan and the small claims courts in the Netherlands.

  
     
 

Introduction

Court specialization is considered an important tool in development. It is used as an instrument to solve problems in justice systems around the world. If used properly, it can make an important contribution to the success of justice reform projects. This paper provides knowledge and tools for optimum use of the specialization of courts for development.

The World Bank’s Legal Modernization Initiative aims to develop a shared vision of the role of justice reform in development. The Legal Vice-Presidential Unit’s Justice Reform Practice Group (LEGJR) would like to contribute to this process towards a shared vision. We have researched the consistency of recommendations across different units in the Bank. [1] There is no apparent shared vision on the justice sector. Neither is there coordination across groups over specific recommendations. The country-specific recommendations did not directly contradict each other. In some reports, the recommendations are more specific than in others. Issue-specific recommendations showed some discrepancies with regard to definition and use of Alternative Dispute Resolution mechanisms, specialization of courts and judges, case management and the role of IT in judicial reform. Specialization of courts and judges is an area where recommendations diverge considerably. This paper on specialization of courts and judges is intended as one step in the process towards a shared vision.

This paper’s main theme is choosing the right form of specialized or special courts. It first provides a conceptual framework, and then it discusses reasons for and forms of specialization and risks it involves. They are followed by some lessons and four check lists to guide the choices and the project cycle. Country examples provide some practical illustrations of the use of various forms of court specialization in development. Back to summary

  
     
 

Concepts

Specialization

Organizations specialize their labor to increase productivity. They do so in two dimensions. Horizontal specialization reduces the number of different tasks contained in one job. It increases repetition and thereby facilitates standardization. Because it focuses attention, it also facilitates learning. It also allows the individual to be matched to the task. Vertical specialization separates the performance of the actual task from the administration of it. This paper discusses horizontal specialization unless indicated otherwise.

Specialization creates problems of communication and coordination. High task specialization also creates problems in balancing demand and supply. Only large organizations can afford very specialized jobs. [2]  

What is a court?

The word ‘court’ is used for different things. The Oxford Concise Dictionary defines a court as a body of people before whom judicial cases are heard, and also as the place where such a body meets. Wikipedia, the on-line encyclopedia, defines a court as an official, public forum established by lawful authority to adjudicate disputes, and to dispense civil, labor, administrative and criminal justice under the law. Black’s Law Dictionary defines a court as a governmental body consisting of one or more judges who sit to adjudicate disputes and administer justice, as well as the judge or judges who sit on such a governmental body. The term court, meaning a court of law, is used for a single judge or a multi judge chamber, as in: the court finds the defendant not guilty. Such a court may be adjudicating one specific dispute or certain categories of disputes. The word court is also used for the organization of these judges and chambers and their staff in a building, as in the New York Midtown court.  The most important distinction in the context of this paper is that between the court as a single or multi judge unit hearing cases within a larger organization, and a stand-alone, separate court. Back to summary

Courts and tribunals

There are three main differences between courts and other dispute resolution bodies. The first is appointment. Judges are appointed as provided in the law for all judges in a manner that ensures their independence. Deciding members of those other bodies may not be selected to be independent from the other branches of government; the body can then not be considered a court. Decisions by non judicial bodies generally do not have the power of direct enforcement. Tribunals can be a way of relieving the courts, for instance by incorporating dispute resolution in the business process of the organizations where disputes may arise. They can not take over the judicial function entirely. Regarding their legal rights and obligations and criminal accusations, citizens are accorded access to courts; therefore decisions from these tribunals must be subject to some form of court review.

Fair hearing and timeliness, quality and efficiency

The international human rights conventions are regarded as the top level legal framework for courts. They accord to citizens the right to equal access to an independent, impartial court established by law, in a fair hearing and without undue delay:  All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law, and (…) to be tried without undue delay (Article 14, International Covenant on Civil and Political Rights and likewise the European Convention on Human Rights, article 6). Procedural rules or codes prescribe the way in which a hearing should reasonably ensure fairness. The principle of hearing and trial without undue delay, also called timeliness, expresses that courts should be reasonably efficient in hearing and deciding cases. The balance between a fair hearing and timeliness or between quality and efficiency is an important consideration when discussing court organization. Procedural fairness is intended to level the playing field between parties, and thereby protect weaker parties. This will require resources: judicial attention, court staff time. Those resources are justified by the interest at stake in the dispute. If the interest is relatively small, that may justify a simpler procedure entailing fewer resources. Procedural guarantees are strictest in criminal law, and simplest in small claims or payment order procedures [3] . The courts’ primary business process is handling filed cases. It involves everything a court does to process cases through the court system, from the filing of a case to archiving decisions and ensuring their enforcement. Case management ensures that in filed cases, justice is done promptly. It deals with individual cases and also with groups of cases. Back to summary

System and structure

Fully developed court systems generally have a three tier structure.  The first tier courts decide cases on the facts and on the law. The second, or appeal, tier reviews cases decided by the first tier courts on the law, and on the facts unless legislation prohibits it. The third tier decides cases reviewed by the appeal courts, on the law. Its purpose is to guard legal unity. Court systems are always the result of complex political and historical processes. Therefore, they never fully resemble the picture above. Some systems have a fourth tier in the form of a constitutional court. Some third tier courts hear cases as a first tier court.

The court system is an open system.  In principle, anyone can take a dispute to court at any time. Types of claims will be brought to courts in varying numbers depending on changing circumstances, for instance economic trends. During recession, there will be more bankruptcies than in a time of economic growth. Therefore, flexibility to balance the changing demand for handling cases is an important characteristic of a well functioning court system. This flexibility requires that resources can be moved quickly. Generally, this is the case in relatively large organizations. However, organizations can become so large that they lose the flexibility again. An organization has the right size when it is large enough to be robust and small enough to be manageable.  Back to summary

  
     
 

Reasons for specialization: expertise and efficiency

There are two main reasons for specialization: expertise and efficiency. They are distinct reasons, but they are also interrelated. In many cases, specialization will be undertaken in order to improve both expertise and efficiency.

Expertise

The need for specific expertise is the most common reason for court specialization.  Courts have traditionally known specialization for reasons of expertise in a number of areas. Family and juvenile law, criminal law, constitutional law and administrative law are the most important general areas. The degree of specialization depends on the size of the court. The larger the court, the more it will divide up into specialized units. Economic areas for fairly widespread forms of court specialization are bankruptcy, competition, intellectual property and financial institutions. These areas are sometimes assigned to units in each court. They can also be assigned to units which exist only in places where there is a demand for this type of case, or to just one court in the country. This can be a general court or a specialized stand alone court. When new legislation is introduced, specialist knowledge may be needed to adjudicate the cases. The new law and the issues raised in connection with it are not yet stable. Safeguarding legal unity and consistency is important. Specialization can be a way of meeting these needs. The complexity of the subject can be another reason for setting up special units to adjudicate cases in that field. Many countries have specialized intellectual property courts, either as units within the ordinary court system or as separate, stand alone court organizations.In most countries, the special needs of children confronting the court system have been a reason for instituting specialized juvenile courts or judges within the ordinary court system. Public opinion sometimes demands more expert or more independent adjudication. Some form of specialization is sometimes introduced in reaction. Back to summary

Efficiency

Efficiency refers to the relationship between input of resources and output of products. More output for the same or less input is increased efficiency. It is also understood as providing timely, cost effective service. In any organization, whether courts, insurance companies or hospitals, specialization is a way to make handling cases more efficient. The most common form of specialization is to divide courts into units dedicated to civil, criminal, family and/or administrative law cases.  All but the smallest courts can improve their efficiency with this form of specialization. Specialized staff will be more competent to handle the cases. Training them for their specialized task will enhance their competence. Specializing tracks can differentiate the services a court can provide: fast tracks can resolve disputes quickly thereby keeping disputes under control while providing easy access to courts. Specializing handling of certain types of frequently occurring types of cases can make handling those cases more efficient. A specialized track can be a quick response to problems like temporary overload of certain types of cases. Specialization, by increasing effectiveness, is an opportunity for cost reduction. Moving resources as needed is relatively easy if the resources are part of a larger organization. This is important because case load fluctuates under the influence of external factors which the court can not control. Dedicated units can handle large volumes of cases, which makes for better case management and higher speed. It is possible to introduce some competition into the court system by creating units. But this can only be effective if the playing field for those units is level. Back to summary

 		  
 

Common forms of court specialization

Court specialization comes in many different forms. It can be just a matter of organization. It can also mean a delineation of functions. The most important forms of specialization, from simple to complex forms, are listed below.

  • judges, single judges performing a special function. Many countries have special judges for minors and children. These judges usually have their own, specially trained support staff.
  • units, for instance for small claims or for bankruptcy, with designated judges and/or support staff. In both the single judge and the unit model, the judges may rotate, but the support staff usually stays in the unit. Judges from the same court can be moved in and out of these units quickly with shifting demand.
  • chambers, multiple judges in a panel for a special topic like intellectual property.
  • tracks in the courts, like a special track for summary proceedings or for deciding pretrial detention, usually with designated judges and/or support staff; civil law systems have multiple judge panels to decide complicated cases or cases with a high interest subject matter
  • appeal courts, usually dealing with appeals from specialized first instance judges. Appeal courts review decisions of so-called ‘lower’ courts; their role is also to ensure consistency in the lower courts
  • court organizations, like bankruptcy courts in some states in the US; they tend to have their own building, support staff and budget
  • court systems Courts can be organized into a single national court system performing all judicial functions.  Croatia has parallel systems of general and specialized courts integrated only in the third tier. Russia has parallel independent general and specialized court systems. Some special courts have functions which overlap with those of the general courts.  
  • agencies that perform some kind of dispute resolution function but are not courts. In Asia, there are special tribunals for financial institutions which are completely separate from the regular court system. Agencies can be distinct from courts in either of two ways. The deciding members are not selected to be independent from the other branches of government, and/or their decisions do not have the power of direct enforcement. Tribunals can be a way of relieving the courts. They can not take over the judicial function entirely because that would withhold citizens their access to court.

An aspect of specialization is geography. One regular court with general jurisdiction in a specific part of a country may be assigned all intellectual property cases in a country. Or more informally, a court in a harbor town can be expected to have a degree of expertise in disputes regarding transport by sea. This expertise is sometimes formalized by assigning all those cases to that court.

Other examples of specialized jurisdiction are the international and national post conflict war crimes tribunals. Some countries have specialized courts for targeted groups, like military courts and commercial courts.

Before drawing the conclusion that the most complex form of specialization is the right option, consider whether simpler ones would work. The rest of this paper will help make that decision. Back to summary

  
     
 

Risks

Court specialization may bring benefits, but it also entails significant risks. Awareness of those risks will help to make any specialization beneficial to development. Equality before the law is a major norm laid down in the human rights conventions. That makes inequality a major risk with special courts, and to a certain extent with more limited forms of court specialization. The other major risk is inefficiency, which may lead to overspending public funds and to backlogs. The third major risk is that of special interest capture, compromising the independence and impartiality of the courts. Risks tend to increase with the scale and complexity of the specialization mode; they are relatively small for units within one court, large for stand alone courts and even larger for specialized tribunals. Back to summary

Inequality

Having different judges, units or courts deciding cases that deal with the same subject matter carries the risk of inconsistent legal practices. Having different courts also creates a high risk of inconsistency of court decisions. If procedural rules have been streamlined to speed cases up in special tracks, this may lead to unequal treatment of parties who have the same type of dispute but find themselves in different tracks. Geographical access is limited when there is only one special court, usually in the capital. Economic access is unequal when there are different fee structures or higher fees for either general or special courts. Overlapping jurisdictions may lead to forum shopping as illustrated in the description of the Tanzania commercial court: parties try and pick their court based on their expectation that they will receive better treatment. This will damage respect for the courts. Better conditions and more ample resources for the special courts may keep resources away from the general courts if they come from the same source. This will result in increased backlogs in the general courts. If, as we will see below in both Tanzania and Nepal, the vast majority of similar commercial cases are dealt with by the general courts, this will not improve the business climate for most participants. Back to summary

Inefficiency

Separate courts leave less scope for economy of scale. Not being able to shift resources from one unit to another is very inefficient. Resources will be underused. In Argentina, when the financial crisis developed, judges were moved to the bankruptcy units of the court at a moment’s notice. In California, appointing a judge to a bankruptcy court is a procedure that may take 18 months. Judges from bankruptcy courts in other locations and retired bankruptcy judges help with fluctuating case loads. Separate courts in the sense of organizations are more costly since they do not share resources like buildings and infrastructure. Courts with overlapping jurisdictions are cause for uncertainty about competence. This may lead to lengthier procedures since cases filed with the wrong courts will need to be re-filed with the right court all over again. If the stand alone special courts are funded from the general budget, funding for them is diverted from general courts. Differentiation between special and general courts is fuel for friction. The general courts may lose the respect of the users and of public opinion.

There is no empirical evidence that well working units convert the rest of the organization to better performance. There is some evidence of the opposite: a unit with poor performance may “contaminate” better performing units within an organization. Sometimes, special courts are successful out of novelty. But if they deal with only a few cases and do not improve the environment in a wider sense, they may outlive their usefulness. This risk materializes especially if they fall prey to the same risk as the general courts: lack of resources. Back to summary

Isolation and Capture

Special courts are relatively small bodies. They tend to receive the same repeat players, such as banks, and specialized legal representatives time and again. This relative isolation may result an a loss of generalist overview, as well as in undesirable familiarity. It may even lead to capture by the special interest group for whose service they were created. For this reason, special courts are sometimes viewed as special interest courts. This risk is probably greater for specialized agencies than for special courts. Where courts are perceived to provide special treatment for privileged groups, they will be viewed as serving a particular social group. How to manage this risk depends very much on the form of specialization. For stand alone, special courts or tribunals, asset disclosure is a minimum condition. A code of ethics, tailored to the system but as much like the one used by the general judiciary as possible, is another.  Back to summary

  
     
 

Lessons

We can learn some lessons about the risks and opportunities of the different approaches to court specialization. For instance, that it is essential to determine what the problem is and what needs to be done about it, on the basis of factual evidence. Or about implementation:  The job of implementation is not done until the court or tribunal has had time to establish practice. This will take anywhere from 5 to 10 years. And consider impacts: Even when they are considered successful by any standard, forms of court specialization have to be measured against the objective for which they were set up.  In the next section, these and other lessons are operationalized and then put into check lists. They are about assessing problems and about designing, implementing and evaluating reform projects involving some form of court specialization. Back to summary

What to do

Below, the main issues to be taken into consideration are discussed in more detail. There are also four check lists of questions to ask to avoid and manage the risks and hopefully maximize the potential of court specialization. They follow the process of Bank projects, from diagnostic through design to evaluation.

Diagnostic to guide choices

Before recommending or deciding to specialize, always do a diagnostic. The diagnostic should present a clear picture of the problem, the system and its workings. It may give some indication of ways to solve the problem. The most important choices to be made are:

  • Whether specialization will solve the problem in question
  • What the degree and form of specialization  should be, and
  • Whether to set up a temporary or a more permanent solution.

Those choices can be guided by the information in the diagnostic. Setting up a special court in reaction to complaints from financial institutions or other stakeholders about the inefficiency of courts seems a quick and easy solution to a perceived problem. But if, for instance, the subject matter in question is causing backlog in court because the legislation is unclear, because the administration or the financial institutions themselves are not working properly, setting up a special court is not going to solve that problem.
The subject matter to be handled by the unit or court in question needs to be defined clearly. That way, it is clear for parties which body to address with their claim. If parties can not easily decide which court to address they may be faced with unnecessary delay if they make the wrong choice. It will also avoid forum shopping. Forum shopping is considered incompatible with the principle of equal treatment. If defining the subject matter sufficiently is not possible, creating a unit in the general court may well be a solution to avoid those risks. The court can ensure the claim ends up with the right unit. The volume or potential volume of cases to be decided may indicate what form specialization may take. It is hard to give a precise indication because the work load of different types of cases is depends on a large number of factors.
The expected complexity of the cases is a factor that should also be considered. A small number of very complex cases may still make up a considerable work load. However, the smaller the number, the simpler the specialization should be. If the expected caseload is smaller than the average case load of one judge in a general court, setting up a unit in the general court in the main city is the most efficient way of using resources. If the case load turns out to be different, it will be easier to reallocate resources.
Location is a factor that needs to be considered independent of the form of specialization chosen. The small volume of cases may warrant setting up a unit in just one court, usually in the capital. That may not be a problem if the subject matter does not arise much outside the capital. Port cities tend to have a unit in their courts dealing with marine transport For subjects that can be regarded as technical legal specialties like intellectual property, the expected number of practitioners in the field is a factor for consideration. Competent trained legal assistance will develop the jurisprudence in the field. It may be necessary to plan for training of the lawyers or other legal assistance providers as part of the project. Sufficient, targeted resources are a necessity for successful specialization.
Choosing a temporary or more permanent solution is the next main choice. A unified court system generally is considered preferable because it is potentially more efficient and consistent. If the solution is sought outside the general court system, it is well worth investigating whether the special stand alone court can be integrated into the general court system later. Back to summary

 

  
     
 

Check lists

These four check lists help to facilitate the choices. The first list will guide in identifying and verifying the problem. Designing an adequate solution is the topic of the second list. The third one ask those questions needed to appraise whether the proposed solution is viable. Finally, there is a list of questions to guide evaluation.

1. Identifying the problem

What is the context?

  • What are the broader country goals?
  • What is the function of this jurisdiction in those broader goals?
  • Who are all the stakeholders?
  • What, if anything, are all the donors doing in this field?

What, if any, are the problems? [4]

  • Have there been inconsistent judgments or decisions in this area?
  • Have there been complaints about the approach of the courts to a particular type of legislation from the general public, from the relevant advocates’ associations and/or any relevant organizations of lobbying groups?
  • Are the general courts experiencing a backlog in regard to this particular area of law?
  • Is there any important legislation prompting an increase in the number of cases being litigated in the problem area over a period of time?
  • Do any of the stakeholders raise any other problem in this area?
  • How have the problems been dealt with so far?
  • Does the judge in this particular area have wide discretion? Does this make consistency of judgment in this area especially important?

What do we know about the problem?

  • What is the map of the entire process from the dispute’s arising to enforcement of the court decision?
  • Where in the process are the problems?
  • Are those problems temporary or permanent?

Back to summary

2. Designing the solution

  • What should a solution accomplish?
  • How can the stakeholders be involved?
  • Can the problem be addressed by other means, like training, creating another form of tribunal, legislation, or adjustments within the existing legal or court structure?
  • If not, is a temporary specialized court a possibility?
  • Will the regular procedural rules apply? And if not:
  • What will be the procedure for the court?
  • What rules of evidence will apply?
  • What case management procedures will be helpful?
  • What are the economic factors, cost and gains, involved in this decision?
  • Where is the balance between benefits, risks and costs?

Back to summary

3.   Appraising the solution

  • Can the subject matter be defined adequately for the purpose of creating a specialized court?
  • Is avoidance of delay more crucial in this area of the law than in most others? If so, why?
  • Is the volume or potential volume of work in the area sufficient to justify the creation of a specialized court?
  • Will there be sufficient numbers of practicing advocates and specialists in the field to support the creation of a specialized court?
  • Are there sufficient resources to fund and maintain such a court, including trained court administrative staff and equipment etc?
  • Is the subject matter compatible with the specialized court system?
  • How will the location of a specialized court affect the practicalities of litigation?
  • How will the creation of a specialized court affect the quality of justice in general courts?
  • How does the proposed solution help build respect for the justice system?
  • How can overlaps with the general court system be avoided?
  • Can a special court be integrated into the regular court system at a later date?
  • How and where can a pilot scheme be set up to test the findings and proposed solutions? 
  • How will consistency of application of the law be ensured?
  • Are the proposed solutions sustainable?

Back to summary

4.   Evaluating the result

  • What has been the performance of the new structure?
  • What do all the stakeholders say about the issues?
  • Has implementation been successful?
  • What has been the performance of the general courts?
  • Has the solution accomplished its goal as formulated?
  • Have the problems been solved?
  • Have the broader country goals been served?

Back to summary

  
     
  Some illustrations  
     
 
 The stories below are illustrations. They give some idea of what can happen in practice. These illustrations all stem from World Bank research work. They have been chosen because they are reasonably well documented, the information provided is factual and the descriptions provide enough material to understand how specialization, special courts and tribunals may work in practice. However, there is not enough hard information to draw general conclusions. LEGJR would like to study court specialization more thoroughly. To allow well founded conclusions, the material would have to include: a diagnosis prompting a recommendation for court specialization, a baseline of data enabling measurement of change including statistics and user survey and data tracking developments over a number of years, again providing statistics and a user survey. Drawing solid conclusions about the effectiveness of a given form of court specialization is possible only with this base of data to draw on. We welcome suggestions for appropriate material and data to be studied [5].
 
     
  Tanzania commercial court: efficient but no impact on the business environment
The Tanzania commercial division of the High Court was created in 1999 [6]. Its purpose was to improve the efficiency and fairness of commercial dispute resolution in the country. The government believed that a speedy and reliable vehicle for commercial dispute resolution would facilitate private sector development and improve investor confidence. There was a widespread perception among Tanzanian lawyers and business people that even routine commercial debt recovery cases take four of five years on average. Factors cited include: a casual attitude of judges towards adjournments and temporary injunctions, poor case management practices, corruption, low levels of remuneration within the judiciary, lack of adequate physical infrastructure, and inadequately funded operating budgets. The general perception was that members of the judiciary lack a sound understanding of applicable commercial laws and legal principles, a problem that specialization is designed to address. There was considerable case backlog and significant delay in the administration of justice. Newly privatized enterprises held a sizable amount of debt. Training of staff, refurbishment of a permanent commercial court building and office equipment and supplies for the new commercial court, were supported by Danish development agency Danida.

Operation began in September 1999. Formally, the court is a specialized division of the High Court of Tanzania, but in practice it is a distinct, stand-alone court. It does not share facilities with other divisions. There is a separate registry and case management system.  Management and operating staff are not shared with other divisions. There are three judges on the court. There is a single registry in Dar es Salaam only. Originally, cases involving at least Tsh.10 mln (about USD 9,425) could be brought before the court. This threshold was raised in 2002/2003 to Tsh.100 mln (USD 94,250). Raising the threshold has considerably reduced the number of cases filed. Subject matter jurisdiction is not exclusive. It is shared with the general division of the High Court. Under certain conditions, cases may be transferred from the general division to the commercial court. Under this arrangement, there is some forum shopping. Debtors hurry to preemptively file their case with the general division to keep the creditor from filing it with the more efficient commercial court. Creditors now pre-empt by filing cases with the commercial court. Back to summary

The court has a fee structure which differs from that of the general court. Fees are higher, there is no maximum fee. And unlike the general courts, the commercial court is allowed to retain the fees it collects.

So far, the case load has been:

1999-2000                   116 cases filed and 66 resolved,
2001                            301 filed and 227 resolved,
2002                            351 filed 242 resolved,
2003 (Jan-Nov)            158 filed and 242 resolved.

Most cases are debt recovery claims and other types of contract disputes. Banks and financial institutions are plaintiffs in 37% of the cases. The three judges on the court receive an average of 231 new cases per year. After the threshold was raised, the case load dropped from 334 to 160 on average per year. The nine judges in the general division receive between 350 and 400 new civil cases per year. In addition, they receive the new criminal and miscellaneous matters filed, plus 110 or so pending from previous year.

The commercial court judges have imposed and enforced strict time limits. They are more proactive in case management. The court has an effective case management system. It is well funded: There is funding from the Danish International Development Agency (Danida). The court retains the fees it receives. There is sufficient office space, no sharing of chambers by judges is necessary.

To date, the Tanzania commercial court has had little impact on business decision making or the investment climate. A survey showed the existence of the court is simply not very important to business decision-making. Within the financial sector there is no evidence that the existence of the court has positively affected the credit process. Other deficiencies need to be addressed to make the court a success: inefficient government administration of regulations, poor enforcement of judgments, inefficient appellate review. Back to summary

  
     
 
Nepal special courts and tribunals: not immune to backlogs
Nepal has a number of special courts and tribunals. The ordinary courts handle more than 130.000 cases each year; the specialized courts put together handle less than 1.000 cases per year. Statistics show that special courts are not of themselves immune to running up backlogs [7] .
 
 
  • Revenue Tribunal: The four Revenue Tribunals review decisions by the tax office concerning income tax, VAT, and customs office decisions. Tribunal decisions can be appealed, after approval of a request for appeal to the Supreme Court. The tribunals have 3 deciding members. The caseload is 500-600 pending cases, most of them in the Kathmandu tribunal. Income tax cases are the large majority. Case disposal times are sometimes 4 years or more.
  
 
  • Debt Recovery Tribunal: Since July 2003 a Debt Recovery Tribunal (DRT) handles cases regarding bank loans. Cases are initiated by a petition filed by a bank or other financial institution. The DRT cannot entertain claims by debtors; they are free to approach any District Court for any claim of money or damages against creditors. There is an appellate tribunal which reviews tribunal decisions. The tribunal has an executive wing, the Debt Recovery Officer. The Debt Recovery Tribunal has a law member who is also the chair, a banking member and an accounts member. The members are appointed by the Government. Tenure is a renewable five years. The members of the tribunal earn a salary amounting to a District court judge salary plus 60 %. The Tribunal intends to proclaim its decisions within 150 days of the note of defense. For the year 2003/2004, 94 cases were filed. 30 were decided or settled, 64 remained at the year’s end.There are many areas where the DRT can be strengthened, such as budget and resources. DRT has been following traditional and lengthy processes, like that of the existing courts. For instance, after the decision, the judgment is not enforced immediately. The law permits the losing party to appeal within 35 days. In case an appeal is filed, a DRT judgment is not implemented until the Appellate Tribunal decides on the appeal. Furthermore, a bank has to file a separate application at the DRT to implement the DRT’s judgment. Instituting the DRT has not speeded case disposition up [8].
 
  • The Tribunal for Corruption cases: The Special Court for corruption and drug trafficking cases is competent for - among other things - cases resulting from investigations by the Commission on the Investigation of Abuse of Authority, CIAA. A reason given for instituting this tribunal was the long delay in enforcing decisions of the ordinary courts, which may take up to ten years. About 190 of its 212 cases have resulted from CIAA investigations. Most are cases of unexplained property and false certificates and diplomas. Cases are judged by a 3-judge chamber. A single judge can take a statement from a witness. Summoning defendants can be done by publication in the press, and at a shorter term than in the ordinary courts. Police can be warranted and witnesses can be ordered to appear by the tribunal. The tribunal has the power to employ experts, and it can also order the CIAA to produce evidence or conduct investigations. The tribunal has the power to confiscate passports. Ordinary courts have most of these powers as well, but they are considered less effective since things allegedly take much longer there.Back to summary
 

Debt recovery tribunals in South Asia: how to solve backlog
Debt Recovery Tribunals (DRTs) were set up in a number of SAARC (South Asia Association for Regional Cooperation) countries. The general goal was to speed up recovery of debts. The general courts were perceived to be slow. Some of the instruments used were streamlining cased handling and Alternative Dispute Resolution, mostly mediation and simplified enforcement procedures. Since each country had its own variations on those themes, we can learn much from comparing experiences in those countries. That will require studying more empirical material. Backlog is perceived as a major problm in debt recovery in SAARC countries. Some sources maintain that insufficient funding frustrates the objectives of debt recovery legislation. Solving problems with backlog requires more than adapting laws. Sufficient resources are needed in the courts, for training of judges and court staff, simplifying procedures, resources for enforcement. Others say the backlog is the result of lack of judicial control over procedures. Lawyers control the flow of the process, and debt recovery tribunals equally suffer from this problem. Therefore, specialized tribunals will not solve the backlog problem. More work is needed to find a better answer to the questions this debate is raising.   Back to summary

Russia and Kazakhstan: commercial courts in transition economies
At independence, the states of the former Soviet Union inherited a specialized set of administrative tribunals, distinctive from the Soviet legal and economic system: the arbitrazh system. The arbitrazh tribunals had jurisdiction over disputes between state enterprises in the context of meeting the requirements of the State Economic Plan. In Russia, this specialization continued to function. In Kazakhstan, it was gradually abolished [9]

Russia: more than ten years of specialization
In 1991, the modernized Arbitrazh court system was introduced in the then Russian Soviet Republic. The Higher Arbitrazh Court in Moscow is the apex court for a network of lower arbitrazh courts. Their competence was to hear commercial disputes involving both public and private legal entities. The courts were included in the judicial power in article 127 of the constitution of the Russian Federation. They form a fully autonomous constitutional organ of equivalent status as the general courts. They are completely separate from the general Russian court system.Civil and arbitrazh courts apply the same statutory provisions. There is no higher judicial authority capable of resolving divergent interpretation. Training is conducted separately for the Arbitrazh courts and the general courts. There are no common standards for hiring and promotion. There is no common basis for performance evaluation. After ten years of experience, the arbitrazh courts appear to be reasonably successful. The arbitrazh court system has a manageable size. It has been able to develop and maintain a certain level of performance and productivity. A substantial body of practice and procedure was built up. Expertise has been developed in both bench and bar. The new commercial bar has been significant in the development of commercial law, jurisprudential and structurally. Keeping a specialized set of courts has proven to be rather expensive. This is offset by the value to the overall economy of a reliable and consistent mechanism for dispute resolution. The Higher Arbitrazh Court in Moscow has become a relatively professional organization with training, a web site, and published decisions. The court, at least the apex court in Moscow, has enhanced its prestige. Back to summary

Kazakhstan: gradual de-specialization
In early 1992, the arbitrazh courts in Kazakhstan were established along the lines of the Russian system. In 1995, the decision was taken to merge the arbitrazh courts with the general court system. They were converted into the Economic Collegium of the provincial courts and the Supreme Court. The Economic Collegium in the Supreme Court continued to review decisions of the lower courts. Ultimately, its decisions were subordinate to general jurisdiction in the Plenum of the Supreme Court. In the 1999 Civil Procedural Code, the rules for commercial and other civil disputes were unified apart from some special provisions regarding business disputes, mainly dealing with mandatory pre trial settlement negotiations. In 2001, the Economic Collegium was merged into the Civil Collegium at the provincial and Supreme Court levels. The arbitrazh courts have shared in the general courts’ fate of under funding and neglect, which has led to a lowering of quality, consistency and cogency of decisions in commercial disputes generally. The development of the commercial bar suggests that the degree of specialization, though diminishing, has been sufficient for the purpose of facilitating the growth of expertise. The marginal efficiency gain through economies of scale was displaced by the efficiency losses due to chronic under funding of the judiciary of which the arbitrazh courts became increasingly a part. The training system has ceased to function. The judiciary was de-professionalized and “Kazakhstanified” relatively quickly. Back to summary>

Small claims courts in the Netherlands: some problems solved, but not others
Until 2002, the Netherlands had separate courts for everyday issues called kantongerechten. They have been in existence since the beginning of the 19th century, and are similar to the German Amtsgerichte and the French Cour d’Instance. Their jurisdiction comprises rent and labor cases, small money claims, traffic violations and a group of non controversial family and corporate cases. There is no mandatory legal representation. The judges in these courts generally were either district court judges promoted because of their skill in doing large amounts of small cases, or lawyers who entered the small courts directly. The courts were generally considered to be efficient and user friendly. Competence thresholds for the money claims were raised again and again to transfer more and more money claims to the small courts where they were handled more efficiently, that is, at lower cost and in greater quantity. On the other hand, the smaller courts had only one judge, and sometimes not even a full time judge. That made them vulnerable. There was forum shopping: Bailiffs would reduce a claim in order to keep it below the maximum amount for small courts’ competence, to get a quick decision, but also to avoid having to transfer the case to a lawyer to be pursued in the district court where representation is mandatory. There was some uncertainty about competence, which led to cases having to be transferred from the small court to the district court or vice versa at a late stage in the procedure, leading to major delays. From at least the middle of the 1970s, there has been debate about making the small courts part of the district courts. It would make them less vulnerable and solve the competence problem. The judges in the small courts themselves generally, and very effectively, opposed the idea. They maintained they needed their freedom and independence to keep up their performance and level of efficiency. They feared the effect of becoming part of a larger, less efficient body and they ware afraid they would lose their resources but not their workload. In 1999, a compromise was reached that was implemented in new legislation that went into effect in 2002. The small courts became a unit in the district courts, but they retained some of their independence in terms of staffing and budgeting. Although this looked like a workable solution, the debate was reopened because relative independence regarding staffing and budgeting are considered inefficient by the boards that govern the courts. Back to summary

  
     
  notes  
   

[1] In 2004, 78 World Bank assessments on justice reform were analyzed specifically with regard to the recommendations they make. The scope of the analysis was: 18 Legal and Judicial Assessments by the then Legal Reform practice group, 4 Legal and Judicial Assessments by other practice groups in the Legal Vice Presidential Unit (LEGVP), 18 Foreign Investment Advisory Service (FIAS) Investment Climate Assessments, 5 Reports on Observance of Standards and Codes (ROSC) Assessments on Insolvency, 22 Financial Sector Assessment Program (FSAP) Reports and 11 Anti Money Laundering and Combating the Financing of Terrorism (AML/CFT) Assessments.

[2] Henry Mintzberg, The structuring of organizations,  chapter 4, Job specialization, Prentice-Hall, 1979

[3] Small claims courts can be a valuable tool in development.  For a discussion about small claims courts, see Building Institutions for Markets, the World Development Report 2002, World Bank, 2002.

[4] This section draws on the list of questions included in E. Cazalet, Specialized Courts, are they a “Quick fix or a Long Term Improvement in the quality of judges, background paper for the World Bank Conference on Empowerment, Security and Opportunity through Law and Justice, St Petersburg, July 2001

[5] LEGJR welcomes material with regard to these courts and tribunals for future study.
Our email address is ljr@worldbank.org.

[6] 2005 David L. Finnegan, Observations on Tanzania’s Commercial court, A Case Study, paper for World Bank Conference on Empowerment, Security and Opportunity Through Law and Justice

[7] NEPAL The Legal and Judicial Environment For Financial Sector Development, A Review,  World Bank South Asia Region,

[8] The statistics come from the annual report on the Tribunal’s web site. The site, http://www.drtribunal.gov.np/ offers information about its work, including case descriptions and statistics.

[9] Scott Newton, A Comparison of Commercial Adjudication in the Russian Federation and the Republic of Kazakhstan, 1991-2000, background paper, World Bank Conference on Empowerment, Security and Opportunity through Law and Justice, St Petersburg, July 2001