Business Removing

64 DOING BUSINESS IN 2005
FIGURE 8.5
Active case management cuts time
Days between filing and enforcement
Judges do not
actively
manage
Judges
actively
manage
469
278
Poor
countries
Source: Doing Business database.
Middle income
countries
529 521
Rich
countries
the case—and nearly 18 months in rich countries where
judges don’t. The same pattern is seen elsewhere (figure
8.5). The reduction in time does not come at higher cost.
Quite the opposite: fees in countries with case management
tend to be lower because attorney costs are lower. 16
Case management involves 2 changes. First, judges
take the responsibility to follow cases from start to finish.
In most countries a debt collection case typically comes
to the judge a dozen times. Without case management
the judge is not aware of how the case is progressing,
depending on other court officials to move the case
along. The second is introducing an electronic system of
recording and following cases from the time they are
filed to the time judgment is issued or the case is withdrawn,
as in Finland. With greater incentives to reach
resolution and better technology, the judge can follow
each case at any moment.
It doesn’t take much time or money to develop a case
management system. Slovakia’s reform started in 1999 as
a pilot in the Banska Bystrica court. 17 Within 6 months
the average time between filing and the first hearing was
cut from 73 days to 27 and the average number of procedures
from 23 to 5, as judges were randomly assigned and
could schedule the hearings without the need for consultation
with court clerks and other judges. The pilot was
scaled up to all district courts in 2002–03. 18 The cost was
minimal: $2 million. Similar case management systems
are now being introduced in Albania and Armenia, with
World Bank support. Progress is benchmarked in the Judicial
Reform Index developed by the American Bar Association
for its work in Central and Eastern Europe. 19
Bosnia and Herzegovina, Macedonia FYR, Moldova, Romania
and Ukraine are assessed as the least advanced in
developing case management.
330
151
Reducing abuse of appeals
When the Portuguese set up courts in Brazil in the
1700s, they brought their civil procedure code, with one
change—appeals were allowed at any point during the
proceedings and an additional level of appeal was introduced.
The ultimate decision lay with the King. The reason
was simple: should a Portuguese be accused of robbing,
killing, defrauding or otherwise damaging the
property of a local, the possibility for “home-bias” of the
judge was greatly reduced if his judgment could be easily
overturned.
Three centuries later, much has changed in Brazil.
But the rules on appeals remain the same. Debtors frequently
abuse their rights of appeal, using it for stalling
enforcement: 88% of judgments in commercial cases are
appealed. 20 And where the judge awards the full request
of compensation to the creditor, appeal is universal
(100%). If this number doesn’t look high, consider this:
in Argentina 13% of judgments are appealed, in Peru
17%, in Mexico 30%.
Appeals on legal issues, a necessary feature of a fair
justice system, are allowed in every country. But they
needn’t suspend the judicial process. It is better to allow
an appeal on all alleged errors but to allow the trial and
enforcement to continue while the appeal is resolved.
This is what Botswana, Chile, France, Greece and 30
other countries do. In countries where appeals suspend
the enforcement of judgment, it takes twice the time to
collect on overdue debt—160 days instead of 80. Yet
users do not consider the procedure fairer, as reported in
Doing Business in 2004.
Several countries have reformed their appeals
process. Benin barred appeals during small-claims cases.
Estonia and Finland do not allow appeal during the
summary proceedings. If the debtor wants to dispute
the judgment in these three countries, he would have to
open a new case. Lithuania tripled the fee for appeals,
obliging the debtor to pay all legal costs of the creditor
when the appeal fails. This has reduced appeals considerably.
Other countries, such as Japan, Mexico, Slovakia
and Thailand, allow appeal of the final judgment but do
not allow interlocutory appeal (appeals during the proceedings).
This is associated with a 20% reduction in the
average court delay.
Improving enforcement
In many countries, courts not only deliver judgments,
they try to enforce them. This generally doesn’t work.
Specialized public collection agencies or private enforcers
are usually in a better position to collect debt (figure 8.6).