by Suvrajyoti Gupta.The ongoing hearings in the NJAC matter before the Supreme Court have certainly garnered a lot of attention. Hence, now may be a good time to debate wider judicial reforms and their impact on overall national development..In India, the State has always seen the judiciary as a “moral gatekeeper” to protect the civil and political rights of the people, rather than as an “economic institution”. Indeed ever since the zamindari abolition and Bank nationalization cases, the judiciary has been seen to be impeding development through its insistence on “rights”..The nation’s economic philosophy has changed dramatically since the halcyon days of socialism, but this conflict between “sound economics” and “justice” continues. Therefore it is no coincidence that the “Development State” does not accord either sustained legislative attention or prioritize resources to address maladies of justice system. Presently, this has taken epic proportions- in 2012 according to the a report prepared by a Working Group for the Department of Justice, 3.2 crores were pending in the High Courts and trial courts across India..I submit that this entire narrative is flawed. The Court ought to be seen not as an inhibitor but actually a facilitator of economic development..To begin with judicial adjudication can itself be seen as economic activity. The global legal services market (of which the courts are an integral part) was worth USD 716 billion as of 2013 according to a Bloomberg report..The revenue generating potential of arbitration is well acknowledged even in India, with Cabinet Ministers often discussing the need to make India a hub of international arbitration. In fact the 188th Report of the Law Commission of India inter alia argues that the British and American Courts are unfairly exercising jurisdiction in cases involving Indian entities where the transaction has taken place in India because of the inherent delays in the judicial system..Such findings of “forum non-conveniens” are unfair as they are strategically applied and vastly overestimate the problems of the Indian system. This is leading to diversion of litigation and consequent loss of revenue (an unuttered premise)..The Law Commission’s report also recommended setting up of the Commercial Courts on the Anglo-Saxon model. This matter was further covered by the 253rd Report of the Law Commission earlier this year. Even though the Commercial Courts are yet to be set up, the world meanwhile has gone a step further..Singapore and Dubai have set up International Commercial Courts i.e. Commercial Divisions with special procedures, rules of evidence and rights of access by the foreign counsels. Some senior counsels of the Supreme Court have migrated to the Commercial Courts in UK[2]. The inefficient court system in India is therefore opening up the prospect of not only the loss of legal revenues but also large scale, high-end brain drain..Of course, the impact of an efficient and effective judiciary goes much beyond the legal revenue generated by high-end transactional work. Legal institutions have a vital role to play in the creation, expansion and preservation of markets. It is well understood that a modernizing nation’s economic prosperity requires at least a modest legal infrastructure centered on the protection of property and contract rights. (Richard Posner 1998; Douglas North 1990, 1991; North & Thomas 1973)..A strong judicial enforcement mechanism is an integral part of rule of law. As Kenneth W. Dam points out,.“No degree of substantive law improvement—even world “best practice” substantive law—will bring the Rule of Law to a country without effective enforcement.”.Indeed weak enforcement of laws might actually be economically more inefficient than the total absence of laws. It has a direct effect on both economic performance and general well-being. A strong judiciary allows new commercial relationships to form (Woodruff, 2000), encourage small firms through enhanced legal protection (Collier & Gunning 1999)..The efficiency of the judicial system has direct nexus with two distinct ideas that are central to the agendas of both, the Congress and the BJP..Prime Minister Modi has expressed his desire to place India at number 50 in the Ease of doing Business Index. Two primary components of the Index are Enforcing Contracts, and Resolving Insolvency. In 2014 India slipped to 142 in this index among 189 countries, primarily because of the weak performance in enforcing contracts (186 out of 189). The World Bank in a 2009 Report concluded that streamlining the judicial system would increase India’s GDP growth rates by 2% per annum..Similarly the Congress in the past ten years have invested political capital in the idea of “Adhikar Ke sarkar “i.e a system of governance where people can demand socio-economic entitlements as enforceable rights from the State..It is almost intuitive that neither a modern economy based on competitiveness nor will a Welfare- State be possible if the judicial infrastructure do not improve substantially..But is anybody listening?.To be fair, the State has always been aware of the problem even if inattentive to the solution. Beginning from the Ranking Committee in 1925 a large number of Committees and Commissions have considered the problem of the delay. By 1978, it was understood that the questions of pendency is a holistic problem that begins with the trial court, encompasses procedural law, case management , lengthy oral arguments, quality of judicial manpower etc. This theme was repeated in 245th law Commission Report which argued for “system wide judicial reform”, “performance benchmarks”, and time frames..On a parallel note the Supreme Court has taken up the question of inadequate infrastructure and service condition of the Judges in the All India Judges Association cases. The Court suggested establishing an All India Judicial Service, something that also found mention in the 116th Law Commission Report..In 2009, a national consultation held by the Department of Law and Justice adopted a Vision Statement that spoke of inter-alia.(a) setting up National Arrears grid and(b) frame a National Litigation Policy. .In fact, a National Litigation Policy was introduced in 2010 to address the litigation practice of the State Agencies and PSU companies, and to make the State a “responsible litigant” by reducing frivolous litigation..The consultation also conceived significant changes in the structure of courts, the most far-reaching of which was the concept of ‘Contract judges’ envisaged to decide backlog cases. It was also proposed that 15,000 trial judges and 700 High Court judges would work in three shifts deciding the legality of contracts etc..But realization does not necessarily translate into action..Neither the Commercial Courts Bill nor the National Litigation Policy has seen light of day. The National Judicial Appointments Commission Act is sub-judice, while an All India Judicial Service is unlikely soon. No commitment to large-scale recruitment has ever been made. Most importantly I believe the State has not made any significant commitment of funds..In 2011, a Planning Commission Working Group claimed that Rs.5,000 crore (under 1 billion USD) has been allocated for the improvement of judicial infrastructure over a five-year period..The amount is too little to bring the Indian judiciary up to the standard of say Singapore or UK. Unfortunately, empirical estimates are hard to find on this point. But I can give a tentative picture of the kind of costs that shall be involved. The State will need to make investment of two kinds – (a) capital costs in terms of infrastructure, ICT support, libraries etc and (b) manpower and maintenance costs..It will not be cheap to build the courtrooms, the libraries, lawyer’s chambers and record rooms. The main cost however will be on manpower. Any increase in the number of Judges requires concomitant increase in the number of support staff. Thus we may be looking at anything between 7-10 fold increases in total manpower, including the judges..Even this basic calculation tells me that the expenses involved in this project cannot be any less than a large infrastructure project comparable to say the Delhi Metro (approx. 3 billion USD) but with recurring and running manpower expenses comparable to the Post office or the Armed Forces..The costs are to be set –off against the opportunity costs of not having an efficient and world-class judiciary and as I have demonstrated before that cost is exceptionally high. To quote Professor Richard Posner the “relative cost of the institutions that secure the rule of law is small”, no matter what the absolute costs are..I believe that whatever be the price, it will be the bargain of the century..(Suvrajyoti Gupta is an Assistant Professor at OP Jindal Global University)
by Suvrajyoti Gupta.The ongoing hearings in the NJAC matter before the Supreme Court have certainly garnered a lot of attention. Hence, now may be a good time to debate wider judicial reforms and their impact on overall national development..In India, the State has always seen the judiciary as a “moral gatekeeper” to protect the civil and political rights of the people, rather than as an “economic institution”. Indeed ever since the zamindari abolition and Bank nationalization cases, the judiciary has been seen to be impeding development through its insistence on “rights”..The nation’s economic philosophy has changed dramatically since the halcyon days of socialism, but this conflict between “sound economics” and “justice” continues. Therefore it is no coincidence that the “Development State” does not accord either sustained legislative attention or prioritize resources to address maladies of justice system. Presently, this has taken epic proportions- in 2012 according to the a report prepared by a Working Group for the Department of Justice, 3.2 crores were pending in the High Courts and trial courts across India..I submit that this entire narrative is flawed. The Court ought to be seen not as an inhibitor but actually a facilitator of economic development..To begin with judicial adjudication can itself be seen as economic activity. The global legal services market (of which the courts are an integral part) was worth USD 716 billion as of 2013 according to a Bloomberg report..The revenue generating potential of arbitration is well acknowledged even in India, with Cabinet Ministers often discussing the need to make India a hub of international arbitration. In fact the 188th Report of the Law Commission of India inter alia argues that the British and American Courts are unfairly exercising jurisdiction in cases involving Indian entities where the transaction has taken place in India because of the inherent delays in the judicial system..Such findings of “forum non-conveniens” are unfair as they are strategically applied and vastly overestimate the problems of the Indian system. This is leading to diversion of litigation and consequent loss of revenue (an unuttered premise)..The Law Commission’s report also recommended setting up of the Commercial Courts on the Anglo-Saxon model. This matter was further covered by the 253rd Report of the Law Commission earlier this year. Even though the Commercial Courts are yet to be set up, the world meanwhile has gone a step further..Singapore and Dubai have set up International Commercial Courts i.e. Commercial Divisions with special procedures, rules of evidence and rights of access by the foreign counsels. Some senior counsels of the Supreme Court have migrated to the Commercial Courts in UK[2]. The inefficient court system in India is therefore opening up the prospect of not only the loss of legal revenues but also large scale, high-end brain drain..Of course, the impact of an efficient and effective judiciary goes much beyond the legal revenue generated by high-end transactional work. Legal institutions have a vital role to play in the creation, expansion and preservation of markets. It is well understood that a modernizing nation’s economic prosperity requires at least a modest legal infrastructure centered on the protection of property and contract rights. (Richard Posner 1998; Douglas North 1990, 1991; North & Thomas 1973)..A strong judicial enforcement mechanism is an integral part of rule of law. As Kenneth W. Dam points out,.“No degree of substantive law improvement—even world “best practice” substantive law—will bring the Rule of Law to a country without effective enforcement.”.Indeed weak enforcement of laws might actually be economically more inefficient than the total absence of laws. It has a direct effect on both economic performance and general well-being. A strong judiciary allows new commercial relationships to form (Woodruff, 2000), encourage small firms through enhanced legal protection (Collier & Gunning 1999)..The efficiency of the judicial system has direct nexus with two distinct ideas that are central to the agendas of both, the Congress and the BJP..Prime Minister Modi has expressed his desire to place India at number 50 in the Ease of doing Business Index. Two primary components of the Index are Enforcing Contracts, and Resolving Insolvency. In 2014 India slipped to 142 in this index among 189 countries, primarily because of the weak performance in enforcing contracts (186 out of 189). The World Bank in a 2009 Report concluded that streamlining the judicial system would increase India’s GDP growth rates by 2% per annum..Similarly the Congress in the past ten years have invested political capital in the idea of “Adhikar Ke sarkar “i.e a system of governance where people can demand socio-economic entitlements as enforceable rights from the State..It is almost intuitive that neither a modern economy based on competitiveness nor will a Welfare- State be possible if the judicial infrastructure do not improve substantially..But is anybody listening?.To be fair, the State has always been aware of the problem even if inattentive to the solution. Beginning from the Ranking Committee in 1925 a large number of Committees and Commissions have considered the problem of the delay. By 1978, it was understood that the questions of pendency is a holistic problem that begins with the trial court, encompasses procedural law, case management , lengthy oral arguments, quality of judicial manpower etc. This theme was repeated in 245th law Commission Report which argued for “system wide judicial reform”, “performance benchmarks”, and time frames..On a parallel note the Supreme Court has taken up the question of inadequate infrastructure and service condition of the Judges in the All India Judges Association cases. The Court suggested establishing an All India Judicial Service, something that also found mention in the 116th Law Commission Report..In 2009, a national consultation held by the Department of Law and Justice adopted a Vision Statement that spoke of inter-alia.(a) setting up National Arrears grid and(b) frame a National Litigation Policy. .In fact, a National Litigation Policy was introduced in 2010 to address the litigation practice of the State Agencies and PSU companies, and to make the State a “responsible litigant” by reducing frivolous litigation..The consultation also conceived significant changes in the structure of courts, the most far-reaching of which was the concept of ‘Contract judges’ envisaged to decide backlog cases. It was also proposed that 15,000 trial judges and 700 High Court judges would work in three shifts deciding the legality of contracts etc..But realization does not necessarily translate into action..Neither the Commercial Courts Bill nor the National Litigation Policy has seen light of day. The National Judicial Appointments Commission Act is sub-judice, while an All India Judicial Service is unlikely soon. No commitment to large-scale recruitment has ever been made. Most importantly I believe the State has not made any significant commitment of funds..In 2011, a Planning Commission Working Group claimed that Rs.5,000 crore (under 1 billion USD) has been allocated for the improvement of judicial infrastructure over a five-year period..The amount is too little to bring the Indian judiciary up to the standard of say Singapore or UK. Unfortunately, empirical estimates are hard to find on this point. But I can give a tentative picture of the kind of costs that shall be involved. The State will need to make investment of two kinds – (a) capital costs in terms of infrastructure, ICT support, libraries etc and (b) manpower and maintenance costs..It will not be cheap to build the courtrooms, the libraries, lawyer’s chambers and record rooms. The main cost however will be on manpower. Any increase in the number of Judges requires concomitant increase in the number of support staff. Thus we may be looking at anything between 7-10 fold increases in total manpower, including the judges..Even this basic calculation tells me that the expenses involved in this project cannot be any less than a large infrastructure project comparable to say the Delhi Metro (approx. 3 billion USD) but with recurring and running manpower expenses comparable to the Post office or the Armed Forces..The costs are to be set –off against the opportunity costs of not having an efficient and world-class judiciary and as I have demonstrated before that cost is exceptionally high. To quote Professor Richard Posner the “relative cost of the institutions that secure the rule of law is small”, no matter what the absolute costs are..I believe that whatever be the price, it will be the bargain of the century..(Suvrajyoti Gupta is an Assistant Professor at OP Jindal Global University)
