Kenya leads its East African neighbours in the race to reform national judicial systems and make them friendlier to business community, a new report shows.
The report by the World Bank and International Finance Corporation, its private arm titled, Doing Business in EAC (East Africa Community) 2012, released on Wednesday cites the “case track” system introduced by the Judiciary last year among the outstanding improvements in the region.
The system categorises cases as ‘small claims’, ‘fast track’ or ‘multi-track’ with each group being allocated resources strategically to avoid delays in commercial disputes.
“Courts are essential for entrepreneurs because they interpret the rules of the market and protect economic rights,” the report says. “Efficient and transparent courts encourage new relationships because businesses know they can rely on the courts if a new customer fails to pay.”
Under these changes, cases with complex facts and legal issues get ‘multi-track’ treatment as those that involve undisputed facts and legal issues — and are likely to be concluded within 180 days after pre-trial directions — get ‘fast track’ treatment.
In a bid to reduce congestion in courts, Chief Justice Willy Mutunga raised the limit of the value of cases that resident magistrate’s courts could preside over last December.
The changes published in the Kenya Gazette allows resident magistrates serving in Kiambu, Makadara, Kibera, Mombasa, Wajir, Moyale, Lamu, Marsabit, Kilifi, Runyenjes, Eldama Ravine, and Nakuru to handle commercial disputes of up to Sh500,000.
Vetting of serving judges and magistrates to weed out tainted officials and recruiting new ones to increase their numbers also form part of the ongoing reforms in the Judiciary.
Slow, costly and often conflicting legal services within the East African region has slowed down trade in the nascent common market.
On average, it takes 37 procedures, 496 days and cost equivalent to 44.7 per cent of a claim in dispute to enforce a contract through national courts, the report shows.
It recommends electronic filing of complaints — a project that Rwanda is pursuing at the moment – as the long-term solution to courts’ inefficiencies.
“Speedy trials are essential for small enterprises, which may lack the resources to stay in business while awaiting the outcome of long court disputes,” it says.
The trials are some of the most expensive globally, more than twice the 20 per cent of the value of the claim among the developed countries.
It takes 389 days on average to enforce a contract through the courts in eastern Europe and central Asia where disputes resolution are fastest globally. Even though the five EAC states have introduced specialised courts since 2005 to handle commercial disputes, the impact varies from one state to the other.
Rwanda’s courts, which are ranked sixth fastest in the world, enforce contracts in an average of 230 days from filing to enforcement. On the other hand, Burundi’s courts, the slowest in East Africa, take 832 days to settle a similar dispute.