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4. Rational Dispute Resolution
4.1 Rule of Law
4.2 Enforcement of Contracts
4.3 Commercial Dispute Resolution
In-Country Assessment

4. Rational Dispute Resolution

Goal – An efficient institutional framework that balances the rights of the public, owners, lenders and borrowers in the event of a dispute or loan default

 

4.1 Rule of Law

Core Question: Do all market participants abide by the rule of law and have confidence in the courts and the ability of police to control crime?

Two “strong” sub-indicators weighed down by one “very weak” indicator for the judiciary. Furthermore, the sub-indicator for the impartiality of police, courts, and contract enforcement sits at the bottom of the “Strong” band (50 – 74).

Impartiality (Strong)

4.1.1   What is the confidence level of the strength and impartiality of the police, courts and contract enforcement?

Percentile Ranking 52.61 (Year 2012); Trend ↓

Source: Governance Matters 2012, World Bank
http://info.worldbank.org/governance/wgi/sc_chart.asp

Judiciary (Very Weak)

4.1.2   Can members of the judiciary be held accountable for their actions?

Score 45 out of 100

Widespread corruption in the judicial system limits any amount of impartiality on the part of judges.

 Source: Global Integrity Report 2009 – http://report.globalintegrity.org

Costs of Crime (Strong)

4.1.3   What are the business costs of crime and violence?

Rank 71 out of 148; Score 4.7 out of 7; Trend ↓

Source: The Global Competitiveness Report 2013-2014, World Economic Forum
http://www.weforum.org/issues/global-competitiveness

 

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4.2 Enforcement of Contracts (Very Weak)

Core Question:  Are systems in place for timely and efficient enforcement of contracts?

Systems exist but involve extremely time consuming processes and are prohibitively expensive.

4.2.1 Judical Enforcement (Very Weak)

Rank 186 out of 188

4.2.1.1 What is the number of procedures involved in resolving a commercial dispute?

46

4.2.1.2 What is the time between the filing of a lawsuit and resolution in judicial enforcements?

1420 days

4.2.1.3 What is the cost of judicial enforcements as a percentage of claim value?

39.6%

Source: Doing Business 2014 – http://www.doingbusiness.org

4.2.2 – Summary Proceedings (Unknown)

SQ 10  Summary proceedings are alternative dispute resolution processes where creditors can apply for a direct court order in property disputes. What is the time between notice of intent to foreclose and loan collection in summary proceedings if available to lenders?   

Not available

SQ 11  What is the cost of summary proceeding if available to lenders as a percentage of property value?  

Not available

4.2.3 – Power-of-Sale (Unknown)

SQ 12  Power-of-sale agreements give creditors the power to sell properties after notice to the borrower without court intervention. What is the time between notice of intent to sell and loan collection for power-of-sale agreements if available to lenders?

Two types of foreclosure processes exist in Mumbai – judicial sale and foreclosure by power of sale, which takes place outside of court. The ease through which a lender can pursue foreclosure by power of sale is unkown.

SQ 13  What is the cost of power-of-sale agreements if available to lenders as a percentage of property value?

Unknown

Core Question: Can commercial disputes be resolved efficiently and fairly without exorbitant expense and delay?

The absence of specialized commercial courts is balanced by the existence of several arbitration organizations and a very strong score for trade agreements. Should India’s talks with powerhouses such as the EU, Japan, and eventually the United States turn into tangible free trade agreements, this metric surely has the chance to rise to Very Strong.

Survey Questions

4.3.1 Commercial Courts (Very Weak)

SQ 14  Do specialized commercial courts exist for the handling of property disputes and foreclosures?

Specialized courts do not exist for property cases nor for commercial contract disputes.

Source: High Court of Bombay, http://bombayhighcourt.nic.in/index.html

4.3.2 Alternative Dispute Resolution (Very Strong)

SQ 15  Are alternative dispute resolution mechanisms in place including commercial arbitration, private mediation and community based processes?

India is a member of the New York Convention and multiple organizations operating in India facilitate arbitration including the Indian Council of Arbitration, London Court of International Arbitration India, and the International Chamber of Commerce India.

Source:http://www.icaindia.co.in/, http://www.lcia-india.org/, http://www.iccindiaonline.org/arbitration.htm, http://www.newyorkconvention.org/contracting-states/list-of-contracting-states

4.3.3 Commercial Treaties (Very Strong)

SQ 16  What bilateral, regional and international commercial treaties exist concerning business between countries?

India has signed limited free trade agreements with Sri Lanka (1998) and Thailand (2003), in addition to several customs tariff concession schemes with countries such as Afghanistan, Nepal, and Chile. India has what is considered a Free Trade Agreement with Singapore and ASEAN, and is expected to upgrade the limited agreement with Sri Lanka to a Free Trade Agreement. Talks with several other nations and blocs are currently underway to continue expanding trade agreements.

Source: http://www.bilaterals.org/?-India-

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