Effective Judicial System – A Catalyst For Economic Growth

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By Kemi Pinheiro SAN, And Ogbonna
Chukwumerije

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