Process delayed is process denied

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The coming years should see India achieve a successful moon landing. But what of long-standing problems back home?

As India Business Law Journal embarks on its third year, it finds itself revisiting the Achilles’ heel of the country’s legal and jurisprudential superstructure. Lax, inconsistent or non-existent enforcement – of statutes, judgments, regulations, awards and more – cries out for urgent reform.

This is not news. As our coverage reveals (Law enforcement), what is more noteworthy is just how far-reaching that reform will have to be – often starting with legal practitioners themselves.

Taking protection of intellectual property rights as an instructive example, one of the major problems in enforcing patent rights is the acute lack of awareness of patent basics in the judiciary, and even the legal fraternity. In a society priding itself as the vanguard of the knowledge economy, the irony is stark.

Leader 0907Backlogs in the courts and antiquated administrative procedures are easily exploited by those seeking to derail the enforcement process. In addition to electronic filing systems, India’s courts need more judges, higher filing costs (to discourage frivolous litigation), improved tracking of cases, more alternative options for dispute resolution, pre-litigation measures and plea bargaining. What all this requires is a strong momentum for reform, momentum that will not be thwarted by corruption.

Specialized courts should be established to replace civil courts in the appeals process. Judges and courts that are trained in specific areas of the law would be better equipped to consistently enforce laws and judgments in specialist fields than courts that are forced to deal with widely disparate areas of law. Setting up such courts should be a joint effort of the government and the bar.

While the courts are normally blamed for the country’s enforcement failures, one qualified commentator tells us that lawyers “are to a large extent responsible for the lax enforcement regime”.

“There needs to be consensus among the executive, judiciary and legislative arms to enforce laws more effectively and lawyers can play a proactive and positive role to make this happen,” another commentator adds.

On a more optimistic note, this month’s Spotlight (Building on common values), finds flourishing trade and investment, at least until recently, between Commonwealth partners India and Canada. With affordable legal fees in comparison to the US and UK, an Indian population approaching one million, a resilient banking system and a bounty of resources tantalizing to many cash-rich Indian investors, Canada is attracting increasing levels of outbound investment from India.

Foreign investors were shocked at the recent demise of Satyam and the wholesale fraud that lay behind it. The fraud attracted worldwide interest and was quickly dubbed “India’s Enron”.

In this month’s What’s the deal?, Peter Brudenall scrutinizes the remarkable rescue of Satyam by Tech Mahindra and identifies the key lessons the transaction holds for dealmakers, legal advisers and regulators. Brudenall, a London-based partner with Hunton & Williams, investigates how the complex bidding process – especially the alterations to SEBI’s rules that facilitated it – raised questions that go beyond the company and the infamous fraud perpetrated by its promoter. In an encouraging example of how regulators and the private sector can work together, a difficult balancing act is unveiled from an insider’s perspective.

Earlier this month, India’s new finance minister, Pranab Mukherjee, unveiled the union budget, the first since the re-election in May of the Congress-led coalition government. Expectations were high, but reactions to the package were decidedly mixed (Mukherjee’s mixed bag). While observers applauded moves to streamline the country’s complex and opaque tax system through the introduction of a goods and services tax (GST), many have expressed doubts over the feasibility of introducing the system by the government’s own April 2010 deadline. Concerns have also been raised over the dual structure of the new tax. Central- and state-level GSTs were proposed in the budget, giving rise to fears that the new system will be almost as complicated as the current one.

While the government grapples with tax reform, it should also give a thought to liberalizing the regulations that govern foreign investment in partnership firms. Such is the view of Rupesh Mishra of Khaitan & Co. Writing in this month’s Vantage point, Mishra argues powerfully in favour of an investor-friendly investment policy that will facilitate the flow of foreign investment into partnership firms in India.

In this month’s Intelligence report, we are pleased to present the 2009 Directory of Indian Law Firms. The directory is accompanied by expert analysis of the challenges and opportunities facing the country’s legal profession. Our coverage finds that a drive for greater professionalism and the question of whether and how to cooperate with foreign firms are two of the key issues weighing heavily on the minds of Indian lawyers.

While some firms have used the downturn as an opportunity to restructure and refocus their practices, most are optimistic that a robust recovery is around the corner. In the words of one prominent practitioner: “In the short term, things look gloomy, but things look bright in the long term.”