Business Removing

62 DOING BUSINESS IN 2005
In Lithuania the parties are encouraged to go into a
summary proceeding, which takes a third of the regular
procedure’s time. The full evidence is presented at the
beginning of the trial. The old practice was to keep some
evidence to the end, and use it if things went wrong. Fees
for appealing the court’s judgment were increased substantially,
to discourage abuse.
Summary proceedings
The most popular reform in 2003 was introducing summary
proceedings, especially for the collection of small
debt. 5 For example, in Israel the new civil procedure
code incorporates a swift proceeding. Debt cases under
NIS50,000 (about $12,000) are filed at the magistrate’s
court. Within 45 days the debtor has to enter his defense.
The court then schedules a hearing within the next 135
days. The hearing cannot be postponed by anyone but
the presiding judge of the court. This is rare. After the
hearing the court has 14 days to issue judgment. In total
the process takes less than 200 days.
In Norway a similar summary procedure, previously
available only for returned checks and promissory notes,
is now available for debt under NOK100,000 ($15,000).
In Portugal the new code allows summary proceedings:
the creditor need only present the judge with evidence of
the transaction and nonpayment. In the Philippines the
rules for summary proceedings cover cases like a bounced
check or nonpayment of a promissory note. So, debt
cases no longer go through preliminary investigation before
the city prosecutor, as was the case before. This cuts
nearly 4 months off the debt recovery time.
Two other countries sped up debt enforcement by
moving it to a lower jurisdiction or out of court. In Lao
PDR debt collection cases below $2,500 are now handled
in the district courts. In Bangladesh the new law encourages
settlement before a case enters the regular proceedings.
The judge helps mediate such settlements.
Enforcing judgments
FIGURE 8.4
Lengthy delays in enforcement
Days between judgment and enforcement
162
Poor
countries
75
Rich
countries
Source: Doing Business database.
The second most popular reform in 2003 focused on enforcing
judgments. In rich countries the average duration
from the time the judge hands down a decision
to the time the creditor gets her money back is 75 days.
In middle income countries it takes 134 days. In poor
countries, 162 days. In India, Jordan and Mexico enforcement
accounts for more than half the debt recovery
process (figure 8.4). Reforms in Austria, Colombia, Estonia
and Portugal introduced stricter time limits on enforcement
procedures, or allowed professionals other
than court officials to do it.
Setting deadlines
Enforcement as a percentage
of the entire debt recovery process
Jordan
Mexico
India
55%
57%
72%
Enforcement
Filing and
judgement
The third main type of reform—seen in Finland, Lithuania,
Norway and Slovakia—puts emphasis on imposing
and adhering to deadlines for filing documents and presenting
arguments through case management. The
Finnish experience illustrates the benefits. 6 An electronic
case management system keeps track of deadlines for contesting
claims or appealing judgments. If the deadline has
passed, the system automatically notifies the court clerk
and the plaintiff, and the case moves to the next stage. It
also sets dates for court hearings. Case management in
Finland has yielded other benefits as well. For cases that
have remained dormant over a prescribed limit—typically
9 months—the case management system sends a reminder
to the presiding judge. Frequently the case has
been settled out of court or the plaintiff has decided not
to pursue it further. Either way, the judge can close it.
In Slovakia the main reduction in delays due to case
management has come from the random assignment of
cases as they enter the courts. Cases are sent to whichever
judge has the lightest load, ensuring faster service. Case
management has reduced corruption: it makes it more
difficult to know which judge to bribe for a favorable ruling.
In 2002 a poll indicated that 79% of Slovaks saw judicial
corruption as a major problem. In early 2004 only
42% did—huge progress, even if there is a lot of room
for further improvement. 7