Commercial Courts from Success to Downfall [Archives:1999/04/Law & Diplomacy]

January 25 1999


By: Husain Al-Hubaishi,
Former Minister of Legal Affairs
for the President and Prime Minister of Yemen
A. In Search of a Model Court
For all reasons mentioned above, along with the prime cause envisaged by no response if not resistance to reform and no accountability, the Reformers seized their chance in 1976 and convinced the Authorities to promulgate a number of laws regulating commercial matters. Due to incompetence of the supreme court and Ministry of justice in administrating justice the state legal office reluctantly accepted to administer Commercial courts for a period of time. They were intended to be the milestone of all judicial reforms and a model to be copied by regular courts.
In addition other related laws were issued on court fees (law no. 116) for the first time and on civil and commercial procedure. The main law of Commercial courts (no. 40) of 1976 provided that the courts would be constituted in the center of provinces as determined by economic and judicial necessity. The law stipulated cases to be decided by the courts and since this stipulation is related to public order no party can choose otherwise. On matters of appeal there is a commercial circuit of appeal established in the capitol Sanaa acting as an immediate court.
There were reasons other than judicial for setting up commercial courts such as; the pace of economic change as determined by the transformation from subsistence agriculture to progression towards a cash economy and hence partial integration in the international economy. Yemen started reaching out for foreign participation in investment in the economy and one of those investors’ main incentive requirements was efficient and speedy litigation. This is why in certain countries commercial courts are called “Investment Judiciary”.
B. Courts: A Success and a Model
We emphasize here that the main aim behind establishing commercial courts as a separate judiciary was to set an example for regular courts to follow suit, to deter any delay tactics in due process of law and as a result enhance the performance of the judiciary as a whole. The idea of commercial courts was not against anything of good quality in the old system, whether it is the Sharia law or those judges of Sharia. The commercial law as a bill was discussed and consented to by some of the best judges equipped in Sharia and the first judge of all commercial courts was chosen from amongst those old judges versed in Sharia.
Nevertheless the resistance to reform and intrigues against any kind of judicial reform continued, but the very success of those commercial courts kept opposition dormant for a while. The apparent success was due to many factors. To mention some; firstly the judges were well-paid along with other incentives like lodging, communications, and expenses. Secondly, court buildings were well-chosen for judicial functions. Thirdly, judges were well protected from the outside and without interference, though they were accountable through inspection and reports. Judges were immune from corruption to the extent that in a few instances they reported to me cases of attempted bribery. All expenses of the courts were covered by litigation rates and dutiable charges which were collected for the first time in the country according to law. Judges of those laws were proudly rewarded when foreign courts started quoting their rules. Dr. N Omar of Alexandria University called for the establishment of courts on their model after praising their success.
C. Change of the Guards
In many developing countries, and Yemen is one of them, the main issues depend on personalities rather than institutions. Therefore when a new person takes the responsibility of a government body he has a free hand to apply his beliefs, since there are very few binding regulations and institutions to check and balance his deeds and actions.
Hence when a new government was formed at the end of the seventies, the New Guards of the judiciary saw to it that the commercial courts ended their semi-independence from the decaying judiciary. The steps taken included creating a first degree of appeal, thus killing the notion of speedy litigation in commerce matters. Secondly they decreed that the supreme court should have the last say. That court then, with due respect, was the last one equipped to deal with the worldly concept of commerce and investment. Thirdly it was the State office for legal affairs administering temporally those Commercial courts which suggested in good faith the transfer of Administration. The Ministry of justice provided that all structural work and facilities were maintained. Nothing of those provisions were fulfilled and all the goodness done was swallowed by the rotting system. Thus commercial courts were amalgamated with regular courts.
D. Segregated or Affiliated Courts?
By segregation here we mean detaching the good and much needed from the bad and can-wait courts because the latter ones need a longer time to reform. This separation of few specialized courts is meant to be temporary until a long-term plan for the reform succeeds and thus all courts to a degree are united under one judicial administration.
On the other hand we mean by affiliated courts, that all of the regular ones and the newly created courts for commercial, administrative, and constitutional purposes are united under the umbrella of one administration and one high court, be it qualified, or not qualified to deal with new concepts of law and its institutions.
The idea of a united judiciary is simple and preferable in countries where the judiciary is functioning equally well and according to law, but in Yemen when you amalgamate efficient courts with non-efficient ones the latter courts are treated as “more equal” and the modern efficient courts become infected with all the ailing of the traditional ones. On the other hand separate courts may not be a lofty idea, but as a means of gradual reform it is worth trying and after all there is no other way in sight because the overall reform is a theoretical blue-print which will take ages to achieve.
E. Slow Death of Commercial Courts
The beginning of the fall of commercial courts was manifested by deliberate, ignorant, and indifferent acts performed and not performed to undermine the functions of those courts. The last stroke was the appointment by the supreme council of judges most of whom have no knowledge whatsoever of commercial or financial or investment matters. In addition to the declaration by the court of appeal in Sanaa that all suits of commerce will be dealt with by the civil cases circuit in the fore- mentioned courts. Observers deduced from those moves that there is a fight behind the scenes to inherit commercial courts and enlarge certain circle pay-offs.
It was pointed out to those opposing men of law and Sharia that the Egyptian government which is embarking on a full drive to encourage investment, started setting up special units of commercial litigation. But in the absence of government interest which though claiming Economic reforms, those in the judiciary with vested interests will have the first say and the upper hand.
It is unfortunate that the commercial courts that once expelled their performances had been in decline since the eighties. But mostly “after darkness there is light” thus all of a sudden before the end of last year the world bank pressed the government to see that regular or special courts deal equitably and in a speedy manner with legal suits concerning investment and credits.
The government’s response through it’s central bank was to create courts for settling financial disputes, but at the last moment it was convinced to receive what remained of commercial courts since the issue concerns investment and commerce as a whole, thus new decrees were passed to give commercial courts a degree of administrative and financial independence. However, the old guards saw to it that those nominated to the restored courts were judges from their ranks, or competent judges who would not fall into the trap and thus refuse the appointment. Hence the last try to save the courts was doomed to failure, and those reformers started thinking of the second escape, but this time to arbitration.