Frequently Asked Questions
- What does the Enforcing Contracts indicator measure?
- What is new in the Enforcing Contracts indicator?
- What type of case is used to measure the time and cost of resolving a commercial dispute?
- What does the Enforcing Contracts indicator not measure?
- How are attorney fees calculated?
- What is a specialized commercial court, division or section according to the Enforcing Contracts methodology?
- What is the court of reference for the quality of judicial processes index?
- For the court automation component of the quality of judicial processes index, does the feature need to be used by the majority of court users for the economy to receive a point?
- What type of ADR mechanisms are covered by the quality of judicial processes index?
- Does the Enforcing Contracts indicator record the law or the practice?
WHAT DOES THE ENFORCING CONTRACTS INDICATOR MEASURE?
Doing Business measures the time and cost for resolving a commercial dispute through a local first-instance court and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system in the areas of court organization, case management, court automation and alternative dispute resolution.
WHAT IS NEW IN THE ENFORCING CONTRACTS INDICATOR?
In the Doing Business 2017 report, the court structure and proceedings index was expanded to measure whether a woman’s testimony carries the same evidentiary weight in court as a man’s. A score of -1 is assigned if the law differentiates between the evidentiary value of a woman’s testimony and that of a man in all civil cases; 0 if it does not.
WHAT TYPE OF CASE IS USED TO MEASURE THE TIME AND COST OF RESOLVING A COMMERCIAL DISPUTE?
The assumptions of the standardized case study are the following:
- The value of the claim is equal to 200% of the economy’s income per capita or $5,000, whichever is greater.
- The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Pursuant to a contract between the businesses, Seller sells some custom-made furniture to Buyer worth 200% of the economy’s income per capita or $5,000, whichever is greater. After Seller delivers the goods to Buyer, Buyer refuses to pay the contract price, alleging that the goods are not of adequate quality. Because they were custom-made, Seller is unable to sell them to anyone else.
- Seller (the plaintiff) sues Buyer (the defendant) to recover the amount under the sales agreement. The dispute is brought before the court located in the economy’s largest business city with jurisdiction over commercial cases worth 200% of income per capita or $5,000, whichever is greater. As noted, for 11 economies the data are also collected for the second largest business city.
- At the outset of the dispute, Seller decides to attach Buyer’s movable assets (for example, office equipment and vehicles) because Seller fears that Buyer may hide its assets or otherwise become insolvent.
- The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods was not adequate. Because the court cannot decide the case on the basis of documentary evidence or legal title alone, an expert opinion is given on the quality of the goods. If it is standard practice in the economy for each party to call its own expert witness, the parties each call one expert witness. If it is standard practice for the judge to appoint an independent expert, the judge does so. In this case the judge does not allow opposing expert testimony.
- Following the expert opinion, the judge decides that the goods delivered by Seller were of adequate quality and that Buyer must pay the contract price. The judge thus renders a final judgment that is 100% in favor of Seller.
- Buyer does not appeal the judgment. Seller decides to start enforcing the judgment as soon as the time allocated by law for appeal lapses.
- Seller takes all required steps for prompt enforcement of the judgment. The money is successfully collected through a public sale of Buyer’s movable assets (for example, office equipment and vehicles).
- It is assumed that Buyer does not have any money in his bank account, making it impossible for the judgment to be enforced through a seizure of the Buyer’s accounts.
WHAT DOES THE ENFORCING CONTRACTS INDICATOR NOT MEASURE?
- Cases other than the standardized case study.
- Courts other than the competent court.
- Time and cost of the alternative dispute resolution mechanisms.
- Due process standards.
- The appeal process.
- Procedures for resolving the standardized dispute.
HOW ARE ATTORNEY FEES CALCULATED?
Average attorney fees are the fees that Seller (plaintiff) must advance to a local attorney to represent Seller in the standardized case, regardless of final reimbursement. Although it is assumed that judgment will be 100% in favor of the plaintiff, and that the plaintiff is likely to be entitled to an award of legal cost along with the judgment, the methodology takes into account all the attorney fees that the plaintiff needs to advance, which includes: (i) the fees to handle the case up to judgment, including pre-trial attachment of the defendant's movable assets, (ii) the fees for enforcement if a lawyer is commonly retained for this purpose, and (iii) if applicable, the value added tax or other taxes.
WHAT IS A SPECIALIZED COMMERCIAL COURT, DIVISION OR SECTION ACCORDING TO THE ENFORCING CONTRACTS METHODOLOGY?
A specialized commercial court, division or section can be established by setting up a dedicated standalone court, a specialized commercial division or section within existing courts or specialized judges within a general civil court. Specialized judges hear only commercial cases and do not hear other types of civil cases.
WHAT IS THE COURT OF REFERENCE FOR THE QUALITY OF JUDICIAL PROCESSES INDEX?
Most components of the quality of judicial processes index are measured independently from any court. All information concerning commercial courts, small claims courts, ADR, etc. is collected looking at the main business city and not necessarily at the competent court. In other instances, however, it was necessary to narrow it down to one specific court, since in some areas differences may arise between courts. In these cases, the team used the court with jurisdiction over the Enforcing Contracts standardized case study as the court of reference. Examples of these instances are the questions examining the availability of electronic case management, electronic filing or electronic service of process.
FOR THE COURT AUTOMATION COMPONENT OF THE QUALITY OF JUDICIAL PROCESSES INDEX, DOES THE FEATURE NEED TO BE USED BY THE MAJORITY OF COURT USERS FOR THE ECONOMY TO RECEIVE A POINT?
No, a point is awarded regardless of the percentage of users, as long as no additional in-person interactions are required, and local experts have used it enough to be able to confirm that it is fully functional.
WHAT TYPES OF ADR MECHANISMS ARE COVERED BY THE QUALITY OF JUDICIAL PROCESSES INDEX?
The index covers arbitration and mediation/conciliation. For the purposes of this index, arbitration is defined as a process in which the parties agree to submit their dispute to an independent arbitrator or arbitral tribunal, which issues a final and binding decision. Mediation and conciliation are terms used interchangeably and refer to a process in which the parties ask a third person to assist them in reaching an amicable settlement of their dispute.
DOES THE ENFORCING CONTRACTS INDICATOR RECORD THE LAW OR THE PRACTICE?
Both. The sub-indicators on time and cost measure the practice on the ground. Essentially, they measure how long it will take and how much it will cost, in practice, to resolve a dispute comparable to the standardized case study. The team also looks at the applicable rules of civil procedure to see if there are any time limits mandated by law, but the practice will be kept into consideration if the two differ. As to the quality of judicial processes index, both law and practice are taken into account. For example, the law is used to determine whether there are any mandated time limits or rules on adjournments, but the practice is used to determine whether such rules are respected in more than 50% of cases.