ADR-A CATALTST IN COMMERCIAL DEVELOPMENT(A CASE STUDY FROM UGANDA) BY JUSTICE GEOFFREY KIRYABWIRE
Introduction• Vibrant commercial sector is critical to
overall development of a nation• There is need for an effective commercial
legal system to enforce contracts• Uganda economic indicators-average annual growth in GDP 6.9%-overall private investment as a share of
GDP 76.8%
Poor contract enforcement mechanisms as a disincentive to commercial development1. Few judicial officers to handle disputes- Delays- Case backlog- Self help techniques by disputants
2. Bureaucratic Judicial Procedures
Poor contract enforcement mechanisms as a disincentive to commercial developmentTable 1
5855
1411
0
10
20
30
40
50
60
70
Sierra Leone Egypt Norway Australia
Countries
Proc
edur
es
(Source doing business in 2005)
Poor contract enforcement mechanisms as a disincentive to commercial development
Table 2 421 Poor countries
417 Middle Income countries 280 Rich countries
Days from filing case to enforcement (Source doing business in 2005)
3. Delays/Time
Poor contract enforcement mechanisms as a disincentive to commercial development
Table 3
1999 UJSS Study
Respondents with experiences of commercial cases in Court
Those who rated delay as a serious problem
Business - Magistrates Courts
- Commercial Court
62
30
66%
50%
Professional
- Magistrates Courts
- Commercial Court
40
37
53%
46% (Source DFID Uganda Commercial Sector Study 1999)
Poor contract enforcement mechanisms as a disincentive to commercial development4. Lack of awareness of commercial law
and practice by Judges and Magistrates
5. Problems of enforcement of Judgments.
6. corruption/corrupt Practices.
7. High Costs.
Poor contract enforcement mechanisms as a disincentive to commercial development
Table 4
Country
Debt US$
Cost of Court and Attorney fees US$
Venezuela
Philippines
Indonesia
5,000
2,000
2,000
2,500
1,000
2,000 (plus)
(Source doing business in 2005)
Effects of poor enforcement and dispute resolution mechanisms• Leads to fewer investment and business
transactions resulting in
- loss of confidence in the system
- Escalation of under hand business practices
- Retardation of county’s growth and development
Effects of poor enforcement and dispute resolution mechanismsTable 5
Investment as a percent of GDP
19
19.5
20
20.5
21
21.5
22
22.5
23
23.5
Shortest Longest
Countries ranked by days to enforce a contract, quintiles (Source: Doing business in 2005)
Effects of poor enforcement and dispute resolution mechanismsTable 6
Trade as a percent of GDP
92.5
84 82
72
53.2
0
10
20
30
40
50
60
70
80
90
100
Least Most
Countries ranked by days to enforce a contract, quintiles (Source Doing Business in 2005)
Traditional approach to dispute resolution
• The traditional approach is to resolve a dispute by going to court and suing
• However private sector perceptions of suing in the courts have not always been good though they have now greatly improved
(review two studies in Uganda one in 1999 and the other in 2004)
Traditional approach to dispute resolution
Table 7 Private Sector Perceptions of accessibility to Commercial Justice Institutions
Perceptions of Accessibility Nationwide
Perception of Accessibility (Kampala)
Commercial Dispute Resolution
No. of Institutions in Uganda
Informal Sector % N=607
Formal Sector %=488
Informal Sector %N=314
Formal Sector %=264
LC Court 4000 67 59 69 55 Mag. Courts 508 43 59 56 76 Comm.Court 1 19 27 44 52 High Court 1 18 23 36 44 Court of Appeal 8 17 22 52 67 Supreme Court 1 15 17 30 49 Industrial Court 1 9 14 27 42 Tax Appeals Tribunal
1 9 17 26 31
CADER 1 8 12 19 26
What possible solutions exist?• There is need to develop other dispute
resolution mechanisms that are
- efficient and accessible
- Faster
- cheaper
What possible solutions exist?1. This where ADR comes inADR can be defined as“That ADR is a structured negotiation
process whereby the parties to a dispute themselves negotiate their own settlement with the help of help of an independent intermediary who is a neutral and trained in the techniques of ADR”
What possible solutions exist?There are various types of ADR i.e.
- Negotiation- Conciliation- Mediation- Mini-trial/early neutral evaluation- Court annexed ADR- Arbitration
What possible solutions exist?2. Enactment of a comprehensive and
modern legal framework for the use of ADR outside court.
- The Arbitration and Conciliation Act (Cap 4)
. Based on the UNCITRAL MODEL LAW
. Centre for Arbitration and Dispute Resolution (CADER)
What possible solutions exist?3. The enactment of a legal framework to
allow for Court annexed ADR.- The Constitutional Commercial Division
(Mediation Pilot Project Rules) Practice Direction legal Notice 7 of 2003.
- The Commercial Court Division (Mediation Pilot Project) Rules Statutory Instrument No 71 Of 2003
What possible solutions exist?Characteristics of the mediation pilot projecti. It makes mediation compulsory before
litigation (with strict time frames)ii. Mediation is managed by CADER under
a strict code of conductiii. Has CADER staff mediators who are
freeiv. Allows for enforcement as a consent
judgment of the court.
Results of using ADR1. Of cases that go straight to court- 80% were settled by the Judges through
ADR techniques leading to consent Judgments
- Shows increased willingness of parties to settle disputes out of court even after filling a case.
2. Of cases that go to The pilot project
Results of using ADRTable 8
CADER Mediation Case Settlement Rate
Media cases settled (Part settled cases included)
Mediation cases complete but unsuccessful
% Success Rate
Oct-03 to Dec 03 17 12 58% Jan-04 to Dec 04 88 149 37% Jan-05 to June 05 47 67 41% TOTAL 152 228
(Source CADER)
Results of using ADRTable 9
Judgments recorded by Court
Mediation cases complete but unsuccessful
Cases discontinued
Settlement recorded by Court from MUS cases
Settlements recorded by Court from DC cases MUC DC
(MUS) (DC) Oct-03 to Dec 03 12 22 0 Jan-04 to Dec 04 149 114 82 3 29 1 Jan-05 to June 05 67 86 40 1 6 1 TOTAL 228 222
(Source CADER)
Results of using ADR
Table 10 Private cases filed in CADER
Year Cases filed Completed Pending 2001 (up to August)
99
99
0
2002
293
293
0
2003
140
240
0 (Source: CADER)
3. Of Cases that go to CADER as a Private ADR provider
Existing challenges and possible solutions.1. Strong perceptions that Litigation is better
than ADR
Verner V Gen and Commercial invest. Trust(1894) 2 CH 239 at 264
Lord Justice Lindley“A proceeding may be perfectly legal and yet
opposed to sound commercial principles”
Existing challenges and possible solutions.2. ADR used as a time wasting fishing
expedition.
- Dunnett V Rail Track [2002] 2 All ER 850
3. Inadequate ADR training
4. Sustainability and self-Funding
Conclusion
With appropriate training and a good legal framework ADR can be a catalyst for commercial development by providing an efficient, expeditious and cost effective alternative mode of dispute resolution
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