Commercial litigation: chaos and cure

January 08,2017

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The process of civil litigation, particularly in matters involving huge amounts, is dysfunctional in Punjab. Much of it can be traced back to the fact that all civil cases, including major ones involving immense financial stakes, are left up to the lowest-tiered courts of the province – the civil courts. This is because the Lahore High Court lacks original civil jurisdiction or, to put it in plainspeak, no ordinary civil case can come to the Lahore High Court directly.

In contrast, commercial matters are more efficiently dealt with in Karachi where matters involving more than Rs1.5 crores are filed at and dealt with directly by the Sindh High Court. As a result, commercial activity in Karachi thrives with relative assurance of proper and appropriate adjudication of commercial disputes, while in Lahore, comparatively, resolution of commercial disputes, and resultantly commercial activity, suffer.

The overall reasons for such failure include a huge backlog of cases, lack of facilities and even capacity. This piece, though, will deal with the one systemic flaw regarding jurisdiction pointed out supra. Admittedly, the ordinary citizen suffers immensely and to each his individual case is the most important case there is. However, vital commercial matters are of possibly greater concern because they involve the overall economic well-being of all. That the system of commercial adjudication in Punjab is failing is particularly true at the interim stage ie stays and what the judge holds will happen between parties while the case proceeds: for the businessmen driven to litigation, their most immediate is this discretionary relief. In this regard, our civil courts are broken.

Most practising lawyers would agree that these days a civil judge would be loath to grant a stay in a matter involving huge amounts, regardless of the merits of the case. Many civil judges openly confess that granting such a stay would not look good for them personally, so they either linger on the matter or do not grant a stay at all.

A litigator is faced with a strange Catch-22 situation at the civil court. With the general perception that corruption is rife in the lower courts, an honest civil judge would take the safe option and not decide a matter, or regardless of merits, never decide against the state. A similar sort of reluctance is being seen in cases for grant of bail on the criminal side for dishonour of cheques involving huge amounts. In effect, the corruption of some has led to a chilling effect on all in the administration of justice at the civil courts.

This state of affairs unfortunately leads to further corruption: people engage bar officeholders often unpractised in commercial law and not experienced lawyers. When the judge will not decide on law and merits, the only option left to the misguided litigant is to pressurise him through officeholders. This is the fundamental reason why one believes that complex high-stakes commercial litigation cannot be effectively undertaken at the civil court level. High courts are less likely to be beholden to officeholders or their reprisals in the form of strikes and threats.

There are other reasons too: Often times it is seen that some civil judges take half a day on a high-stakes case, all the while not dealing with the rest of their huge cause list. At times such cases require such attention; at other times, one has felt it just happens because high-priced legal luminaries appear to contest such high stakes cases. In such instances relief is more of a negotiation between the parties and the civil judge, as he struggles to keep well-connected lawyers of both sides relatively pleased, instead of strictly applying the law. There are others who, for this and other reasons, just don’t decide at all and keep them pending. Overall, the fact is that major cases require significant amounts of time, time which is at a premium for an overworked civil judge.

Complex commercial litigation also requires expertise and experience. Often times civil judges lack the experience and expertise to deal with intricate commercial matters. On this count as well, the high court would be an appropriate level to try such complex lis.

On a deeper level there are reasons why on the legal side in dealing with commercial disputes, law and legal literature in Punjab has not developed. The judgements of the lower courts are never reported and as such we are likely to next to never examine or scrutinise the same, at least until they are taken up on limited point at the high court or higher levels. This is why law as an academic field has also not developed in Pakistan. For example, in the exceptional cases of banking matters, where the high court acts as the court of first instance for larger amounts, banking law is developing apace.

In addition to the above, from a policy standpoint, increasing corruption in the lower courts possibly itself recommends that high-stakes cases should be taken away from such courts and placed before courts which are generally acknowledged to be less approachable, ie high courts.

The legal system has previously sought to offer arbitration and alternate dispute resolution as alternatives to litigation, but even that fails in Pakistan as all such matters end up before the civil courts for implementation and face the same problems as the ones already discussed.

My argument thus is simple: if civil judges state, almost across-the-board, that in high-stakes cases one should get such relief in appeal from higher courts, why should such cases not be taken up at the higher forum in the first place? One can be unrealistic and propose that this is all the more reason that one should work to improve the civil courts. A few decades ago, the civil courts competently and effectively dealt with all matters including those with high stakes. In fact, it used to be said with pride that the lowest court in the land can pass orders of quality which were as forceful of those of the highest. Lately, however, for reasons too many to go into here, the level of civil judges has shockingly declined.

Much has been made of the efforts to improve civil courts but the fact is that we need an effective forum for commercial adjudication now. At least until the civil courts are fixed, commercial activity should not be stultified by failure to provide a better forum.

The remedy to my mind is quite simply to follow what was done in the 1950s at the Karachi bench of the Sindh High Court: all high courts should be granted original civil jurisdiction to adjudicate on civil matters involving quantums that exceed a certain amount. What is being proposed here is not too different from what has already occurred for banking cases, where in high-stakes matters the high courts are functioning adequately as courts of first instance.

Given the burden faced by the civil courts in the sheer number of cases, any help in its reduction would also be welcome. The Lahore High Court would be up to the task as well, as there have never in history been so many judges at the high court as right now.

In conclusion, it is imperative that the Lahore High Court, and indeed other provincial high courts lacking original civil jurisdiction, be given such jurisdiction at the earliest. If Pakistan and Punjab require foreign commercial investment, providing such a forum is a sine qua non. Failing this, the dream of investment and increased commercial activity will remain just that – a pipedream.

The writer is an advocate of the Supreme Court of Pakistan and the managing partner of Qayyum & Associates at Lahore.

Email: maqqayyums.com


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