Business Removing

ENFORCING CONTRACTS 63
What to reform?
Doing Business in 2004 identified 4 types of reform that
have improved dispute resolution:
• Establishing information systems in the courts.
• Taking transactions that are not disputes, such as
business registration, out of the judges’ hands.
• Reducing procedural complexity.
• Establishing small-claims courts and specialized
commercial courts.
TABLE 8.2
Popular reforms in 2003
Establish judicial statistics
systems
Remove nondisputes from
judges’ hands
Introduce summary proceedings
Establish small claims courts
Source: Doing Business database.
Argentina, Bulgaria, Finland,
Germany, Mexico, Slovakia
Germany, Honduras, Nicaragua,
Serbia and Montenegro, Slovakia
Bosnia and Herzegovina, Finland,
Lithuania, Portugal, Philippines
Israel, Lao PDR, Norway
Some of these reforms have a long history. In England
the first comprehensive report on caseloads and
judicial statistics came out in 1851. Sixty reports have
followed since. 8 More countries have taken up reforms
recently (table 8.2). Germany developed a case tracking
system for staff planning in the judiciary. 9 Bulgaria also
introduced such a system in all of its district courts. Serbia
and Montenegro recently took business registration
out of the courts. In Germany and Slovakia registration
is still in the courts, but court clerks rather than judges
are now responsible for it. Bosnia and Herzegovina, Finland
and Lithuania simplified proceedings by making
the rules on presenting evidence more flexible. Streamlined
procedures for small claims were established in Israel,
Lao PDR and Norway.
Russia illustrates the benefits of reform. Within a year
after the introduction of the summary procedure in late
2002, 60% of debt collection cases in Moscow used the
new procedure, and about a third of cases in Novosibirsk
and Saratov. A summary procedure typically takes 2
months from start to finish, 9 months less than the general
procedure. 10 The head of the commercial court in
Moscow notes that “the procedure is shorter and simpler,
and can take place without holding a judicial hearing,
only on the basis of written documents. This procedure is
permitted when the parties have no objections to it. For
example, an energy supplier isn’t paid. The business says it
has no money. Where is the dispute? Everything is clear.
But before [the reform] we handled such cases according
to the general procedure which is complicated. Now the
time of judge is freed up to resolve more difficult cases.” 11
The federal district court of Mexico City analyzed
judicial statistics before introducing reform. The judiciary
had complained of a shortage of judges to handle
the ever-increasing number of cases and asked for additional
resources. In 2002 the Secretaria de Hacienda
Credito y Publico commissioned a study on the profile
of users of commercial dispute resolution, the typical
duration and cost of debt recovery cases and the likely
outcome. 12 The results surprised everyone: 60% of cases
never moved beyond the initial filing: of those that did
half were abandoned before reaching judgment. So while
Mexican judges claimed overload, in reality they dealt
with only 1 in 5 cases. 13 Once this adjustment is made,
the data show that the average Mexican judge handles
fewer cases than judges in Colombia and Ecuador. Instead
of hiring more judges, the government can spare
money for other uses.
Three other reforms have proven successful in the
past year:
• Introducing case management.
• Reducing abuse of appeals.
• Providing better incentives for enforcement.
Introducing case management
Case management—when the judge follows the case
from start to end—received international attention after
Lord Woolf’s Access to Justice in England and Wales report
came out in 1995, though reforms to introduce it in Australia,
Canada and Hong Kong (China) were already ongoing.
14 The report was concerned with the rapidly rising
expenditures on legal aid. At the same time, surveys of
users consistently indicated a high level of dissatisfaction
with the courts. After reviewing several thousand cases,
Lord Woolf recommended judicial case management as
the main way to increase access to justice. British courts
reformed accordingly. The idea has also sparked reforms
in India, Malaysia, New Zealand and Uganda. 15
By now there is ample evidence to show that case
management in the courts reduces delays and increases
user satisfaction in rich, middle income and poor countries
alike. The average duration of debt collection is 5
months in rich countries where judges actively manage