Effective Judicial System – A Catalyst For Economic Growth

Introduction

It is no news that the Judiciary Staff Union of Nigeria (JUSUN) embarked on a two-month long strike action. The main grouse of JUSUN stemmed from the alleged refusal of the Executive arm of Government to comply with the provisions of Section 121 (3) the 1999 Constitution of the Federal Republic of Nigeria (as amended) which guarantees the financial independence of the judiciary. The resultant effect of the closure of the Courts has been enormous as well as tragic; accused persons in detention were unable to have their bail applications heard, suspects could not be charged to court, commercial matters are lingering in the dockets of the various Courts and new cases could not be instituted.

However, regardless of the strike action and the closure of the Courts, election related cases were still being heard and determined by the Courts and tribunals in Nigeria. Sadly, it would seem that successive governments in Nigeria do not place much importance on commercial disputes which have continued to linger in the various courts across the country despite the undeniable role an effective judiciary plays in ensuring economic growth. In other words, it appears that the different arms of the Nigerian government do not appreciate the role a quick, effective and efficient dispute resolution mechanism play in the economic development of a Country. The purpose of this article is to highlight the importance of an efficient and/or effective judicial system and the role it plays in boosting the economy of any nation.

Role of the Judiciary in the Economy

A well-functioning judicial system is indispensable to business activities and to society as a whole. Judicial efficiency measured by trial length, one of the essential factors in the effectiveness of the justice system, ensures contract enforcement, which is the basis of market transactions. Judicial efficiency is closely associated with accessibility to judicial services and the certainty of an efficient judicial system raises people’s confidence.

According to Marilene Lorizioa and Antonia Rosa Gurrieria (Department of Law, University of Foggia) in their publication titled “Efficiency of Justice and Economic Systems” published in “Procedia Economics and Finance 17 (2014) 104 – 112”, one of the factors that discourages investment, particularly foreign investment, in developing countries is the absence of an effective and reliable dispute resolution mechanism. The same view was portrayed by Lars Feld of Walter Eucken Institute and Stefan Voigt of University of Hamburg in their article “Judicial Independence and Economic Growth: Some Proposals Regarding the Judiciary”. Marilene Lorizioa and Antonia Rosa Gurrieria further stated that Italian economic growth has been and is definitely hampered by the length as well as by the civil and criminal justice processes, which reduces legal certainty and confidence, increases the risk of economic activities and therefore reduces the propensity to invest.
Whilst it is almost impossible to avoid dispute in commercial ventures, an investor is concerned about the mechanism in place for resolving any disputes that may arise in the course of his business. The popular phase “time is money” cannot be over-emphasized. No investor is willing to tie down money, capital or investment for an unascertainable period of time due to commercial disputes.  The fear is usually that the investment and/or capital would have lost its value at the time the dispute is eventually resolved. Thus, investors would be averse to investing funds in any country where dispute resolution is not reliable, effective and/or efficient. This is the case of the Nigerian judicial system. Many investors and investment have been lost over the years as a result of the failure of successive governments to pursue efficient and/or effective judicial reforms.

Court related litigation in Nigeria is majorly characterized by three (sometimes four) stages commencing from the trial Courts, then the appellate court and then the Supreme Court. The journey to the Supreme Court in a commercial dispute could last for as long as 8 to 20 years. For instance, in Bilante Intl Ltd v. N.D.I.C (2011) LPELR-781(SC), the suit was commenced in 1992 and it continued till June 2011, when the Supreme Court delivered its judgement. Also in Edilcon (Nig) Ltd v. UBA PLC (2017) LPELR-42342(SC), the decision of the trial Court was delivered in December 1997 whilst the decision of the Supreme Court was delivered in May 2017 – about 20 years after. It is quite disheartening that over the years, the heads of the various Courts have failed to enact measures geared towards decongesting the dockets of the Courts (or even where enacted, the measures have proved ineffective) thereby reducing the time span of cases and improving the confidence potential investors will have in the judicial system.

The unfortunate menace of delay in dispensation of justice in Nigeria has been decried and condemned by many commentators at different fora. A few of such instances are worthy of mention. Justice Niki Tobi had observed that one perennial problem in the administration of justice in any legal system is the question of delay. There is so much delay in the administration of justice in Nigeria that one wonders whether the parties get value justice at the end. A situation for instance where litigation at times takes some six years or more to be completed in the High Court is not good enough. Cases of delay must be addressed if the rule of law is to have any meaning (Tobi, N, 1995:135). Special mention must go the President of the Court of Appeal, Justice Monica Dongban-Mensem who, immediately upon her confirmation, took urgent steps to decongest the docket of the Court of Appeal, Lagos which holds the record number of appeals.

More often than not, the investment at stake or money in dispute would have depreciated in value that the successful party would gain no benefit from the judgement. The effect of this is that parties become unwilling to engage in commercial disputes. Ironically, as stated above, commercial disputes are almost inevitable as they are bound to arise in any commercial endeavor which most definitely would involve more than one interest. Unfortunately, the concept of alternative dispute resolution has not solved the problem occasioned by inefficient and ineffective judiciary. Most arbitrated matters end up in the courts either for enforcement of the awards or challenging the arbitrators or their jurisdiction amongst other things. See for example the cases of Sundersons Ltd & Anor v. Cruiser Shipping Pte Ltd & Anor (2014) LPELR-22561(CA); North Pole Navigation Co. Ltd v. Milan (Nig) Ltd (2015) LPELR-25865(CA). In these situations, the arbitration or other alternative dispute resolution mechanism is also caught by the delay and malady of our inefficient judicial system.

It is quite incredulous that successive governments in Nigeria have failed to make concerted efforts to reform the Judiciary, It will be recalled that when the politicians were faced with the possibility that the period for the determination of pre-election and election matters would linger at the tribunal for a long time because of the rot in the judicial system as in the case of Ngige v Peter Obi (2006) LPELR-12920, immediate and urgent steps were taken to amend the Constitution to ensure that election matters are determined expeditiously and within a Constitutionally guaranteed time frame (See Section 285 of the Constitution). In fact, sanctions are meted out by the National Judicial Commission to judges who fail to determine election matters within the time prescribed by the Constitution.

The lethargic attitude of the government in ensuring the speedy determination of civil (commercial) cases can be seen from the failure of the Courts to enforce the provisions of Section 53 of the Asset Management Corporation Act of Nigeria (Amendment No. 2), 2019 which seeks to ensure that all AMCON related matters are determined within the time explicitly stipulated in the relevant provision of the Act. Unsurprisingly, unlike matters bordering on election matters, there has been no enthusiasm or zeal to ensure the speedy determination of AMCON matters.

The Singaporean Example

As stated earlier in this article, countries who desire economic investment and/or growth (whether local or foreign) must ensure that their judicial system is effective. After gaining independence from Malaysia on the 9th day of August, 1965, Singapore was bedeviled with an inefficient judicial system just like Nigeria. Lee Kuan Yew (the then prime minister of Singapore) demonstrated an appreciable level of understanding of the role an effective judiciary plays in boosting economic growth. He took steps to immediately reform the judiciary by appointing a visionary Chief Judge. The reforms implemented by the Chief Judge include but are not limited to;

a.           Addressing the shortage of judges and the low levels of judicial productivity. The Supreme Court bench was enlarged by the appointment of new judges and Judicial Commissioners, who exercise the powers of High Court judges but are appointed for fixed terms. Under the Judicial Commissioner scheme, senior lawyers from the Bar, Legal Service or academia may serve in a judicial capacity and return to their previous careers thereafter, allowing the judiciary to draw on the experience and knowledge of eminent members of the profession to alleviate any temporary surges in caseloads while ensuring that the quality of justice is not compromised.

b.           Amending the rules of court to include a provision for the automatic discontinuance of cases that remained dormant for over a year. Valuable judicial resources and time would not be expended on litigants who chose to conduct cases in a dilatory fashion.

c.           Case management was introduced as an integral part of the court process, with a shift in responsibility towards the judiciary in dictating the pace of litigation. Extensive use was made of pre-trial conferences (or “PTCs”), convened by the court at regular intervals, for directions to be issued to the parties on timelines and to monitor compliance. PTCs also served the additional function of providing a forum for parties to identify crucial disputed issues and to delineate the scope of evidence to be adduced, thus facilitating the expeditious conduct of the subsequent trial.

d.          Introduction of information technology to the Court to help lawyers file their processes at their offices and “on the go”.

In his book, From Third World to First World, Lee Kwan Yew stated that by 1999, the reputation of Singaporean Courts brought judges from developing as well as developed worlds to study Singapore’s judicial reorganization. The World Bank recommended Singapore’s high Court and subordinate Court levels for other countries to learn from. Also, world rating agencies gave Singapore high marks for its effective and laudable judicial system. For example, the Hong Kong based Political and Economic Risk Consultancy rated Singapore’s judicial system as the best in Asia. These reforms carried out by the Chief Judge immensely contributed to boosting the economy by attracting massive foreign direct investment. The Singaporean economy has been performing strongly for over a decade and was ranked as the world’s most competitive by the World Economic Forum Straits in 2019.

Although, we had earlier criticized the prioritization of cases relating to elections over commercial cases in Nigeria, we are also of the view that the timely or late disposal of election related matters in Nigeria can play a huge role in either encouraging investment or scaring away potential investors. This is because uncertainty about the leadership of a country can discourage investment in view of the fact that a number of investment decisions are firmly rooted in the economic policies or manifestos of candidates. It takes about a year to dispose of election-related matters in Nigeria. In fact, by the time some election matters are determined by the tribunals/Courts, the candidate announced by the Independent National Election Commission at the conclusion of the election would have been sworn in or maybe about to be sworn. The cases of Ihedioha v Uzodinma (LOR 14/01/2020 SC) and Douye Diri v David Lyon (SC. 1/2020) are the most recent examples.

During and after the elections held in the United States of America in 2020, ex- President Trump and his allies filed over 62 law suits challenging the elections on the grounds of voter fraud and other irregularities.  One interesting fact is that all the election-related matters were dismissed almost immediately and more importantly before President Joe Biden’s inauguration as the 46th President of the United States of America.

We are of the unshakable view that the timely disposal of the election matters prior to Joe Biden’s inauguration had the effect of solidifying investor confidence in the economy of the United States as the judiciary were able to demonstrate the remarkable efficiency of the American judicial system. Investors would be convinced that any dispute relating to their investments would be determined expeditiously by the American Courts.

Recommendations

It is our belief that the following, if adopted by the Nigerian Judiciary, will reposition the Courts as catalysts for economic growth in Nigeria:

1.           Immediate declaration of a State of Emergency in the judicial sector.

2.           Robust and holistic amendments ought to be carried out on the rules of procedure for various courts to extricate provisions that facilitate the delay of court proceedings and include provisions that encourage virtual and information technology mechanisms. This has been adopted in developed countries. For example, in 2015 United Arab Emirates digitalized 95% of its judicial procedures especially service and filing of processes. Also, in 2017, His Highness Shaikh Khalifa Bin Zayed Al Nahyan, the President of the UAE, issued Federal Decree No. 10 of 2017 amending the Civil Procedures Law in the Country and introducing the use of remote communication technologies, into civil proceedings in the United Arab Emirates.

3.           Infuse more credibility into the appointment, elevation and removal of judicial officers. The suggestions of Bingham Centre for the Rule of Law in its publication titled “The Appointment, Tenure and Removal of Judges under Commonwealth Principles – A compendium and Analysis of Best Practices” are highly recommended to achieve this.

4.           Encourage and implement the appointment of senior lawyers as judicial commissioners or on ad-hoc basis at the different levels to immediately dispose of procedural and non-contentious interlocutory applications. This is one of the reforms carried out by Lee Kwan Yew that led to the decongestion of the various Courts in Singapore.

5.           Appropriate legislation and amendment or alteration of the Constitution to discourage and discontinue time wasting interlocutory applications.

6.           Expand the numerical strength of judicial officers and overhaul the entire compensation package. The judiciary could adopt the concept of judicial emergencies as it is applicable in the United States when the number of cases in the docket of a particular court surpasses a set threshold. Every judge should be assigned a threshold of cases in its docket. Once the docket surpasses the threshold, the Judicial Service Commission must immediately commence the procedure for the appointment of a new judge to take up the spill over cases.

7.           Massive human & infrastructural investment in the Court system. During court proceedings, it was observed that the Nigerian Courts’ support staff clearly have little or no knowledge of the use of information technology.  For example, in some instances where proceedings were conducted via Zoom, issues of bad network, failure of the host (the court) to mute the application stalled proceedings in several instances. Also, proceedings were interrupted because the Registrars of the Court were not aware that the free zoom meetings lasted for a period of 40-minutes as against the premium membership which is for an unlimited period.  Thus, there is a need to invest both in the human and infrastructure of the Judiciary. The Canadian Forum for Civil Justice reported in its 2019 publication titled “Investing in Justice: A Literature Review in Support of the Case for Improved Access” the economic impact of investment in the justice system of the Florida in 2015 was 7.19 times the funds invested. Also, in the United Kingdom, in a bid to better improve justice delivery, Her Majesty’s Courts and Tribunals Services, in 2019, commenced on a £1 billion reform of the judiciary which is to be completed in 2023.

8.  Re-invigorate the judicial institute at the Federal level and encourage states to create judicial institutes for lower and mid-level judicial staff as is the case in developed countries.

9.  The Arbitration and Conciliation Act should be repealed and or amended.

10.  Encourage mediation and conciliation mechanisms for dispute resolutions.

Conclusion

It is crystal clear that a working and functional judicial system plays a major role in the society in maintaining not just law and order but boosting the economy. The Government must as a matter of great importance take active steps towards reforming the judiciary with a view to ensuring the expeditious and fair administration of justice. No serious nation prioritizes matters relating to the elections over the economy. An efficient judicial system provides the framework for stability and economic development.

About the Authors:

Kemi Pinheiro SAN, FCIArb., FIoD is the Founding partner of Pinheiro LP, a law firm with offices in Lagos, Abuja and Rivers State, Portharcourt.

Ogbonna Chukwumerije is a team lead at Pinheiro LP, his core areas of practice and interests are Intellectual Property Law and Technology Law.

Sodiq A. Lawal is an Associate at Pinheiro LP, his core areas of practice include Insolvency and Maritime.

References

1.                                                                                             China-ASEAN-Justice Forum – Judicial Reform and Improvement of the
Investment Environment.

2.                                                                                             Efficiency of Justice and Economic Systems – Marilene Lorizioa and Antonia Rosa Gurrieria

3.                                                                                             Judicial Independence and Economic Growth: Some Proposals Regarding the Judiciary
Marilene Lorizioa and Antonia Rosa Gurrieria

4.                                                                                             Bilante Intl Ltd v. N.D.I.C (2011) LPELR-781(SC)

5.                                                                                             Edilcon (Nig) Ltd v. UBA PLC (2017) LPELR-42342(SC)

6.                                                                                             Sundersons Ltd & Anor v. Cruiser Shipping Pte Ltd & Anor (2014) LPELR-22561(CA)

7.                                                                                             North Pole Navigation Co. Ltd v. Milan (Nig) Ltd (2015) LPELR-25865(CA

8.                                                                                             Ngige v Peter Obi (2006) LPELR-12920(CA)

9.                                                                                             1999 Constitution

10.                                                                                          Asset Management Corporation Act of Nigeria (Amendment No. 2), 2019

11.                                                                                          From Third World to First World – Lee Kuan Yew

Ogbonna Chukwumerije

Kemi Pinheiro SAN