PRESENTATION TO THE JAMAICAN BAR ASSOCIATION CONFERENCE NOVEMBER 16 – 19, 2017
Adjudication of Corporate/Commercial Disputes: Are the Courts Equipped? Corporations and commercial entities are central in modern society and their activities often raise a number of issues including those related to ownership, costs as well as mutual obligations. The legal profession plays a significant role in the establishment and operation of these entities and are often required to seek the court’s intervention in resolving disputes. Effective commercial dispute resolution by the courts has many benefits. To the entrepreneur the courts interpret the rules of the market and protect economic rights. Efficient and transparent courts encourage new business relationships because businesses know they can rely on the courts where for example a new customer fails to pay. In addition, speedy trials are essential for small enterprises, which may lack the resources to stay in business while awaiting the outcome of a long court dispute. Attorneys-at-Law look to the judiciary to make provision for the adjudication of complex cases involving special legal issues. At the same time Courts should recognize the need for some specialization and ensure that where this facility is provided it is justified on the basis of access, efficiency and the quality of the output. This paper looks at the facilities in the Supreme Court of Jamaica which are allocated to handle corporate and commercial matters to see whether these facilities are adequate for handling the quantity and types of cases so brought. A view is taken of the development of this arm of the court and the conditions under which it currently operates especially in light of the current national thrust to increase local and foreign investment in the country. This issue cannot be irrelevant to Attorneys-at- Law or to the organizations that represent them as a professional group. The paper goes further and comments on the correlation between the performance of the judiciary and economic activity in Jamaica as borne out in the Doing Business Reports produced and circulated by the World Bank and which rank 190 countries according to their attractiveness to business. A conclusion is drawn that the Commercial Division of the Supreme Court is providing a satisfactory level of service. However, the proposal is made that the 1
Division should be further enhanced if it is to handle the total number of commercial cases which are presented for adjudication in the Supreme Court and at the same time cope with challenges presented by new and emerging technologies. All stakeholders including Attorneys-at-Law are obliged to play their part in ensuring that Jamaica is ranked highly in the world in terms of the its attractiveness to both local and foreign investments.
HISTORY OF THE COMMERCIAL DIVISION The Commercial Division of the Supreme Court came into effect on November 3, 2000, pursuant to the exercise of the powers conferred on the Rules Committee by section 4 of the Judicature (Rules of Court) Act. These rules were duly referred to as the Judicature (Commercial Court Division) Rules 2000 and were further incorporated and expanded in part 71 of the Supreme Court of Jamaica Civil Procedure Rules 2002 (CPR) which came into effect on January 1, 2003. The main reason given for the establishment of this Division of the Court was that it should be a court of speedy trial, using simplified procedures. Prior to its establishment, any Judge of the Supreme Court heard matters of a commercial nature. The Commercial Division was operated by a Deputy Registrar who also performed duties in other Divisions. She/he was charged with routing cases filed in the Commercial Division to the assigned judge who also heard cases filed in the Civil Division (HCV). This judge sought to give some priority to the cases filed in the Commercial Division by scheduling them for hearing outside of the normal hours as far as was practicable. Despite these efforts other challenges within the court process militated against the prompt settlement of these cases. It could take two to three years to complete a commercial case and a further period to produce a written judgment.
WHAT IS A COMMERCIAL CLAIM? WHY SHOULD THEY RECEIVE PRIORITY BY THE JUDICIARY? A Commercial Claim is defined in Part 71 of the CPR as including “any case arising out of trade and commerce in general� and any case relating to a list of business type arrangements such as contracts, insurance, franchising 2
agreements, international markets and exchanges, banking, carriage of goods and admiralty proceedings. It is also generally accepted as involving an obligation by one party to another where this obligation arises in the conduct of a business in which goods are sold or leased, services rendered, or monies loaned for use in the conduct of a business or profession. In some matters the distinction is based on whether the subject matter is ‘personal’ or ‘business’. In a judgment delivered by the Hon. Mrs. Justice Mangatal (1) the judge stated that “at the heart of the consideration is whether the substance of the matter is of importance to commercial life”. The case concerned a dispute over an application to transfer a case from the Civil Division of the Supreme Court to the Commercial Division. The judge quoted G.T. Pagone, Judge in Charge of the Commercial Court of the Supreme Court of Victoria, Australia in his article entitled The Role of the Modern Commercial Court at pages 3 – 4: “It is ultimately the courts which facilitate ordered commercial activities by enforcing bargains and resolving disputes which arise in ongoing commercial activity. Business dealings need certainty, predictability and enforcement of deals. Commercial activity therefore needs the courts, and looks to the courts, to create an ordered environment within which to operate. “Our commercial community has come to expect, and is entitled to expect, that commercial disputes be resolved by judges who are familiar with commerce and who appreciate the commercial realities of their decisions. It also expects, and needs, commercial disputes to be resolved quickly, predictably, consistently and economically. Business needs quick, efficient, affordable and predictable outcomes for business and the economy to run smoothly. Our legal system cannot afford to fail its business community and must provide a system of dispute resolution that takes account of the context in which disputes arise and the need to resolve them as business continues to be carried on. The legal system, to that extent, is a necessary adjunct and facilitator of efficient business activities. Our system of dispute resolution must, to that extent, be moulded to business needs and exigencies”. The justification for separate facilities to handle commercial cases has long been established in other jurisdictions. In the International Journal for Court Administration, Markus B. Zimmer expressed the view that dedicated systems for commercial cases can make a big difference in the effectiveness of a judiciary (2). Mr. Zimmer states that the implementation of specialized commercial courts or divisions has the potential to reduce the number of cases pending before the main first-instance court and thus can lead to shorter resolution times within 3
the main trial court. On this basis implementation of specialized courts has been justified as a case management tool. The benefits do not end there. Commercial courts and divisions tend to promote consistency in the application of the law thereby increasing predictability for court users. In addition, judges in such courts develop expertise in their field, which is likely to lead to faster and more qualitative dispute resolution.
COURT FEES PAYABLE IN THE COMMERCIAL DIVISION Prior to January 2003 filing fees for all matters in the Supreme Court, including matters of a Commercial nature was J$150.00. However, pursuant to the Supreme Court (Commercial Division) Fees Rules 2002 which came into effect on 21st January 2003 matters filed in the Commercial Division attracted fees on the following scale: 1. Claims for 2 million dollars or less or claim for non-monetary relief 2. Claims for more than 2 Million Dollars but less than 10 million dollars 3. Claims for more than 10 million dollars but less than 50 million dollars 4. Claims for more than 50 million dollars
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$2,000.00
-
$10,000.00
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$20,000.00 $30,000.00
As of November 1, 2016 the fees were further adjusted as follows. 1. Claims for 2 million dollars or les or for nonMonetary Relief 2. Claims for more than 2 million dollars but less than 10 million dollars 2. Claims for more than 10 million dollars but less than 50 million dollars 4. Claims for 50 million dollars or more
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$ 5,000.00
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$10, 000.00
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$20,000.00 $30,000.00
DOING BUSINESS IN JAMAICA The concern has long existed that it is cumbersome and expensive to do business in Jamaica because of the complex regulatory and legal systems and that the judicial system does not facilitate speedy resolution of disputes. In general, disputing parties are dissatisfied with speed at which the court handles disputes that are placed within its jurisdiction. 4
There has been a call for a system that will provide speedy resolution of commercial disputes thereby saving time and costs to the productive sector and meeting the needs of foreign investors who need to be confident that the local justice system would play its part in protecting their investments and profits. A significant number of Attorneys-at-Law specialize in commercial law and there are law firms with highly developed commercial litigation departments to meet the needs of a significant part of the market for legal representation. On this basis many persons expected that the court would also organize itself in such a way as to provide specialized service to the commercial sector. The absence of such specialized arrangements was deemed unsatisfactory.
THE GROWTH AND DEVELOPMENT OF THE COMMERCIAL DIVISION Despite the existence of a Commercial Division in the Supreme Court only thirtyfive (35) cases were filed in that Division between 2003 and 2009. The average number of cases filed per annum represented approximately .1% of the total number of cases filed in the Civil Division each year. The question was whether or not all the commercial cases before the court were represented in this number. An early study conducted on a large sample of civil cases filed in the Supreme Court concluded that approximately 19% of those cases could be classified as “commercial” on the basis of the definitions given above. Where approximately 6000 cases are filed in the Supreme Court each year 1140 of them would be commercial cases. The relatively low use of the Commercial Division by corporate and commercial litigants was investigated. Firstly, it was confirmed that the CPR did not make it mandatory for all commercial cases to be filed in the Commercial Division. Part 71.4 provides that “commercial claims in the court may be entered for trial in the Commercial Division”. Secondly, Attorneys-at-Law were concerned that the level of service provided by the court in respect of commercial cases was not consistent with the fees payable and was hardly distinguishable from the service provided in the other areas of the court. Further, a few Attorneys-at-Law felt that there may be some disadvantage in having to face the same judge in all commercial cases. The relatively low level of filings in the Commercial Department continued up to 2009 when increased attention paid to the potential for improvement in the court processes relating to commercial cases. Comparisons were made between the local and foreign jurisdictions where serious variations were found. For example, in Singapore there was a definite move to align the operations of the courts with other national priorities and various specialized courts were set up in the 5
Supreme Court to respond to the increased number and complexity of commercial cases reaching the judiciary. Singapore established its first specialist commercial court, the Admiralty Court, in February 2002. This move was followed closely by the establishment of the Intellectual Property Court in February 2002 and the Arbitration Court in April 2003. Assignment of Judges was based on their expertise in specialist areas of law (3 ).
WORLD BANK STUDIES Prior to 2002 judiciaries in developing countries were not usually assessed by the standards used in developed countries. However, since 2002 the World Bank has been studying the effectiveness of the judicial system in dealing with simple cases that fill courtrooms around the world. At first two cases, typical of the cases facing every country, were designed. In each case the merits were in favour of the Plaintiff/Claimant and were overwhelming. However, the Defendants chose not to settle. Case 1: Case 2:
Action to evict a residential tenant for non-payment of rent Action to collect on an unpaid cheque
The exact factual specifications were worked out by an international association of law firms – Lex Mundi (4), to facilitate cross country comparison. A questionnaire was developed to produce data on a number of variables e.g., procedures and processes, time taken in following legal proceedings and the importance of speed and efficiency to the parties. The cases involved a fairly low level of legal complexity such that it was felt that they could have been resolved by a neighbor of the two parties without formalities. In the scenarios mentioned above the average time to disposition via the court system was found to be 254 days for the eviction case and 234 days for the cheque collection case. The World Bank studies have continued to use indicators drawn from a standardized case scenario with the objective of assessing whether the regulations in each country are efficient, accessible and simple in their implementation. Despite the simplicity of the case scenarios the following issues are expected to arise once the matters are raised before the court. -
Need for legal representation Whether evidence is to be oral or written 6
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Need for legal justification Whether the rules of evidence should be formal or informal Number of procedural stages
The World Bank Report evolved to the Doing Business Report (DBR) and includes quantitative indicators on business regulations and the protection of property rights that can be compared across economies over time. It investigates the regulations that enhance business activity and those that constrain it. The report ranks economies on the following ten (10) areas of regulation. -
Starting a business Dealing with construction permits Getting electricity Registering property Paying Taxes Trading across borders Resolving Insolvency Enforcing Contracts
“Enforcing Contracts” measures the efficiency of the court in resolving a typical commercial dispute following the step-by-step process in the local court of appropriate jurisdiction. Data are collected through a study of the Codes of Procedure (e.g., the CPR) and other court regulations and procedures as well as surveys completed by local litigation Attorneys-at-Law and other stakeholders in the court system. Three (3) equally weighted component indicators are used: -
Steps to file the claim, obtain judgment and enforce it Days to resolve a commercial sale through the courts Attorney, court and enforcement costs as a percentage of the value of the claim.
A number of initiatives were undertaken with a view to improving the country’s ranking under each indicator. A National Competitiveness Council (NCC) was set up in the Ministry of Industry Investment and Commerce to track Jamaica’s performance in all the areas studied. The Supreme Court’s representative was invited to participate in the discussions. In-house efforts to build the Commercial Division included direct contact with Attorneys-at-Law and implementation of procedures to minimize delays in processing cases filed in the Division. 7
The number of cases filed each year increased from the average of five (5) during the period up to 2009 to 130 in 2010, following early innovations, and the assignment of a full-time judge to the Division. A Commercial Registry was established in 2012 and the number of full-time judges assigned to the Division was increased to four (4) in 2015 when the Registry was moved to new accommodation. However, as commendable as these developments were seen to be, they had only a marginal effect on the country’s rating in the DBR. The number of cases filed in the Division further increased by 422 in 2016. As at October 24, the number of cases filed during 2017 was 522. Jamaica’s ranking in the DBR has generally improved. In 2011 the overall ranking of Jamaica in relation to the 183 participating countries was 88 while the ranking under the “Enforcing Contracts” indicator was 126. In the 2017 report which covers 190 countries Jamaica is ranked 67 overall and 117 under the “Enforcing Contracts” indicator. [Appendix 2]. The time and costs associated with enforcing judgment in the typical case in Jamaica are shown below and compared with the Latin America and Caribbean average. The differences are significant. Indicator __________
Jamaica _________
Latin America & Caribbean Average
Time (Days) Filing and service Trial and judgment Enforcement of judgment
550 30 450 70
749 47 503 213
Cost (% of Claim) Attorney fees Court fees Enforcement fees
45.6 35.0 .6 10.0
31.3 20.0 5 6
Insolvency and the DBR In the 2017 DBR the following was reported in reference to Jamaica. “Many economies face more insolvencies than they can reasonably handle. Jamaica has a 3-year backlog of insolvency cases. Promoting specialized courts 8
is among the most efficient ways to ensure that insolvency cases receive attention more quickly. It also improves the quality of the judicial system, because it allows judges to specialize in hearing insolvency cases and thus better equips them to make informed decisions.� As a result of the push given by the DBR Jamaica has introduced procedures to resolve insolvency and the Supreme Court recently announced the establishment of an Insolvency Registry. SHOULD ATTORNEYS-AT-LAW BE INTERESTED THE DBR? There should be no doubt that Attorneys-at-Law have the interest of their clients in the forefront of their minds when they handle their cases. No one would think that the continued filing of Commercial cases in the Civil Division could be based on anything other than the lack of information on the existence of the Commercial Division. After all, the improvements in the Division were not formally announced and growth has been mainly achieved by word-of-mouth and by repeat business from those parties who had positive experiences with the Division. What of the National interest? Should Attorneys-at-Law care? Is there a relationship between growth in the economy and the potential growth in business for the Attorneys-at-Law? If it is accepted that Commercial claims constitute approximately 19% of all the Civil claims then there are another 800 to 900 commercial claims per annum which ought to be filed in the Division. Where the required change takes place the Court and the country will be obliged to ensure that adequate resources are provided.
IMPLICATIONS OF FILING COMMERCIAL CLAIMS IN THE CIVIL DIVISION One of the concerns which is often raised in relation to matters filed in the court system relates to backlog. A backlog in the court system, however defined, relates to delays in the expected case disposition time and leads to lack of public confidence in the country’s judiciary. The issue of backlog and its impact on the timely disposal of cases rarely arises in relation to matters filed in the Commercial Division. This does not appear to be the case when it comes to commercial cases filed in the Civil Division. A simple test may help to demonstrate the situation relating to backlog in both Divisions. 9
Look at a typical list of cases set for Case Management or trial. How often do you see cases with suit numbers such as 2004HCVxxxxx, 2005HCVxxxxx, 2006HCVxxxxx, 2011HCVxxxxx or 2013HCVxxxxx listed for action in 2017? Is one of them your commercial case which was filed in the Civil Division? Is your commercial client waiting four, six, nine, eleven or more years for the settlement of a dispute that has caused his business to be closed for some time? Did our country lose millions of dollars in potential revenue from a foreign investor who had planned to build factories or assist a number of small businesses? Now look at the judgments delivered in the Commercial Division during 2017. Note that many of the cases bear case number such as 2015CDxxxxx and 2016CDxxxxx.
WHAT FURTHER IMPROVEMENTS COMMERCIAL DIVISION?
MAY
BE
IMPLEMENTED
IN
THE
The Commercial Division of the Supreme Court has potential to improve and increase the services currently provided. The following should be considered. -
Increase the use of technology, e.g., implement E-Filing, E-Payments, video-conferencing and electronic routing of cases within the court and between the court and the DRF; Improve office automation, e.g., facilities for scanning documents Provide a 24-hour service for filing claims or applications Provide support facilities to serve Customers, e.g., printers and scanners Improve the training of Customer Service Representatives Implement Performance Management Establish standards to govern each stage of the court process Set standards for the production of Notes of Evidence or implement electronic recording systems to support judges in keeping their promise concerning delivery of decisions including judgments Provide judges with remote access to court systems Improve the administrative aspects of Case Management Improve the Mediation process including the introduction of a special track for Commercial cases or the introduction of court-annexed mediation Establish a system for handling urgent applications and introduce new fees as appropriate Encourage specialization of Judges, providing them with appropriate resources including adequate physical facilities, functional libraries, qualified support staff and modern equipment.
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Strengthen the role of the court in the enforcement of judgments by improving the associated process and assigning a higher priority to applications for enforcement orders Decentralize the service of the commercial court, arranging hearings in at least the Western Region
In addition to the above the court could provide separate arrangements within the Division for claims valuing between $1,000,000.00 and at $2,000,000.00. (It has been estimated that 40% of the claims which are currently filed in the Commercial Division fall in this category). Consideration could then be given to adjusting the Rules to mandate that all Commercial claims be filed in the Commercial Division/Court. There may be need for further specialization within the Court. A current view is that the assignment of judges to resolve technology disputes should further improve the legal system. This is the position taken by Lawrence M. Sung, PhD, a Professor of Law and Intellectual Property Law Program Director at the University of Maryland School of Law in an article entitled “Strangers in a Strange Land”. Dr. Sung is of the view that a more informed and fair approach to resolving intellectual property cases may be to recognize judges who have experience in the business aspects of technology disputes (5). The need for further specialization in handling issues arising from the use of social media is also topical. (Can a judge who has never “tweeted” or who does not have a presence on Facebook handle cases where these applications are dominant?)
ATTORNEYS-AT-LAW ARE AFFECTED The importance of this topic to stakeholders including Attorneys-at-Law is highlighted by the inclusion of this topic in the agenda of the conference. This act is commendable.
Prepared by JEMELIA DAVIS ATTORNEY-AT-LAW
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APPENDICES
1. Summary – Ease of Doing Business in Jamaica - 2016 to 2017 2. Full 2017 DB Report 3. Rankings 2017 DB Report
REFERENCES
(1) 2012HCV 06723 – Supreme Ventures Ltd. v Bisseney, Camiele (t/a Camiele’s One Stop) (2) Zimmer, Markus. 2009. “Overview of Specialized Courts.” International Journal for Court Administration 2 (1): 46–60. (3) Singapore International Commercial Court (SICC) (4) Lex Mundi is a professional services network and the largest law firm network. It was established in 1989. As of 2015 it had over 160 member firms with more than 21,000 attorneys. The network provides information to its members about developments in local and global law. (5) Business Law Today, Volume 17 No 4 March/April 2008
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