Supporting Accelerated Investment in (SAIL) Project

Assessment of the Caseflow Process in the Commercial High of Colombo

March 29, 2018

This publication was produced by International Development Group LLC, with subcontractor Chemonics International Inc, for review by the United States Agency for International Development. i USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial of Colombo– Second Draft Supporting Accelerated Investment in Sri Lanka (SAIL) Project

Assessment of the Caseflow Process in the Commercial High Court of Colombo

Contract Number: AID-OAA-I-12-00042/AID-383-TO-17-00001

First Draft submitted on January 9, 2018 Resubmitted on March 29, 2018

Submitted by: International Development Group LLC 1100 North Glebe Road, Suite 950 Arlington, VA 22201 Phone: +1 (571) 336-7980 Fax: +1 (571) 336-7998

DISCLAIMER ii The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft Table of Contents Acronyms...... iv Summary ...... 1 I. Introduction ...... 4 II. Background ...... 5 III. Statutory Basis Of The Commercial High Court Of Colombo ...... 7 A. Commercial High In The Western Province ...... 8 B. Arbitration Award Enforcement ...... 9 C. Court Procedure Followed In The Commercial High Court ...... 10 Iv. Approach To Caseflow Management ...... 11 A. Review Of Caseflow Management Before Automation ...... 11 B. Establishing Caseflow Management ...... 11 C. Time Is Of The Essence ...... 12 V. Methodology ...... 12 VI. Current Case Flow Process ...... 13 A. Physical Condition Of Files – Part Of Poor Overall Infrastructure ...... 13 B. Presence Of Information Technology ...... 14 C. Registration Of New Cases ...... 14 D. Case Acceptance By ...... 14 E. Service Of Process ...... 15 F. Case Management By Judges ...... 15 G. Communication With ...... 15 H. Failure To Use Efficient Procedures Already In Place ...... 15 I. Transcripts And Translations ...... 15 J. Attorney Payment ...... 15 K. Constant Delays By Counsel...... 16 L. No Continuous ...... 16 M. Execution Of ...... 17 N. Cases Can Last A Decade ...... 18 VII. Summary Of Data On Pending Cases ...... 18 VIII. Amendments ...... 20 A. Pre- Hearing...... 21 B. Affidavits To Introduce And Documents ...... 21 C. Appointment Of A Representative ...... 22 D. Notifications To Counsel ...... 22 IX. Assessment ...... 22 X. Recommendations ...... 22 A. Immediate Short-Term Recommendations - 2018 ...... 23 B. Intermediate Recommendations 2018-2019 ...... 25 C. Long-Term Recommendations - 2020 ...... 27 Annexure I: Members Of The Task Force On ...... 28 Annexure II: Action Plan For Improving Sri Lanka's Regulatory Environment In Enforcing . 29 Annexure III: Key Informant Interviews ...... 32 Annexure IV: Case Information Summary Sheets ...... 33 Annexure V: Reasons For Delay In Case Processing ...... 41 Annexure VI: Contents Of Proposed Circulars ...... 44

iii USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft ACRONYMS

ADB Asian Development Bank CEPEJ European Commission for the Efficiency of CHC Commercial High Court of Colombo CSI-ROL Initiatives to Promote the Rule of DB Doing Business JSC Judicial Service Commission JTI Judges’ Training Institute KIIs Key Informant Interviewees OECD Organization for Economic Co-operation and Development Rs. Sri Lankan rupees SAIL Supporting Accelerated Investment in Sri Lanka UNCITRAL United Nations Commission on International Trade Law USAID United States Agency for International Development WB World Bank

iv USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft EXECUTIVE SUMMARY

This is an assessment of an organization whose goal is the prompt, fair and efficient resolution of commercial disputes. It is not currently meeting that goal. In analyzing what can be done to improve, three insights from the bureaucratic and organizational political science work of James Q. Wilson are relevant. First, organizational goals are not by themselves sufficient to motivate the activity needed to achieve them. Second, organizations are regularly more focused on their maintenance needs than on their goals. Third, much organizational behavior stems more from the constraints the organization faces than from the goals it embraces.1

The Commercial High Court (CHC) faces significant resource constraints that impede its performance. Some of the most basic infrastructure and human resources maintenance needs of the CHC and its staff are unmet, in spite of many reports as to its condition. The CHC therefore does not address many needed improvements in dispensing justice. It also faces significant constraints based on a prior practice of liberal adjournments. In addition, its performance in meeting its goals is not being measured.

The Doing Business (DB) indicator, specifically the sub-index on enforcing contracts, provides one external international benchmark by which to measure the courts. And by this measure, enforcing contracts in Sri Lanka is a dismal undertaking. Sri Lanka ranks 165 out of 190 countries. Cases are endlessly delayed at every stage. It is hard to serve a summons, seek repeated adjournments, arbitration awards result in another trial, there is no case management and no digital processing of cases, no publication of decisions, and poor enforcement of judgments. All observers agree on the general diagnosis.

The tools to improve are already present in Sri Lanka. They just need to be used. Sri Lankan law contains the necessary provisions, and the judicial sector can act to implement them. It needs to have adequate resources and facilities and can then be motivated to meet the goals of speedy justice and to effectuate change. Sri Lanka has introduced pre-trial procedures, as well as information technology and a law that allows it to be used by courts. There is an Arbitration Act that complies with international best practice as expressed by the United Nations Commission on International Trade Law (UNCITRAL). These tools can be used to improve the DB indicators.

This assessment of the CHC is based on case reviews and interviews. The assessment shows: • The physical condition of files is insecure and does not protect them from dust, moisture and rodents; this is but one aspect of the overall poor infrastructure of the court and the general lack of maintenance. • There is information technology in the court, but it is not used for caseflow management. • New cases are accepted, numbered and assigned rationally, but the judges have to perform administrative tasks in accepting them.

1James Q. Wilson, : What Government Agencies Do and Why They Do It (New York: Basic Books, 1989), esp. chapter 7 and Political Organizations updated edition (Princeton NJ: Princeton University Press, 1995) but originally published by Basic Books in 1973.

1 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

• Service of process is a source of great frustration. • Case management is done through handwritten notations and requires judges to engage in administrative and clerical tasks. • Communications with counsel do not use available technology. • Existing procedural improvements, such as interrogatories and pre-trial conferences, are not yet fully in use. • Transcripts and translations are not timely. • Attorney compensation stimulates attorneys to have many appearances. • Attorneys are allowed indefinite adjournments by the judges and the calendaring (scheduling) process encourages delays and postponements for “personal” reasons. • There are no continuous trials. • Executions of judgments have many steps. The SAIL team’s recommendations are divided into three categories: immediate, intermediate and long-term measures that can affect the DB indicators.

Many participants and observers of the justice sector note that none of these reforms can be implemented without some prior infrastructure improvements. There must be some infrastructure improvement to accommodate a fourth and improve the maintenance of files.

Immediate actions do not entail any significant expenditure by the court, but do require at least one more judge, and significant commitment to change, hence must be introduced with appropriate authority and gravity by the judicial leadership. The principal goal is to use the pre- trial procedure more effectively and to limit delays and adjournments of cases. Arbitration enforcement should be accelerated and limited in scope. One example of such reforms in international practice are the Woolf reforms in the United Kingdom. Proposed contents for circulars for this purpose are attached. Adoption of these immediate measures would affect the DB ranking within the first year. These actions should be taken before any automation is introduced. Otherwise, automation will simply enable an inefficient system. This point cannot be over-emphasized. If automation is introduced, for instance, without reforming the adjournments currently being allowed, there will not be an improvement in caseflow.

Intermediate measures, which require some introduction of automation, using limited resources, would start the CHC on a path to processing incoming cases through a case management system and adoption of continuous trials for incoming new cases. What is first required is a review of more cases as well as of the procedures for serving summons. These measures are described in the assessment. They would serve as pilots and preparation for long-term reform that is already planned. The SAIL team is prepared to assist the Task Force with immediate and intermediate reforms and to develop them further into an action plan in conjunction with the Task Force.

Long term reform includes automation of the entire court system (of which CHC is but one unit), automated case processing that allows all parts of the justice system to function digitally, and full-scale adoption of continuous trials. These reforms are not discussed in detail, as they are already part of an ongoing major acquisition by the MOJ.

2 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Table 1: Short Term

Action Instrument Responsible Party Limit Adjournments Circular JSC Full use of Pre-trial Procedure Circular JSC, JTI, New Judge of CHC Separate court for pre-trial New Roll-Call Judge JSC, JTI proceedings Separate court for arbitration New Roll-Call Judge JSC, JTI enforcement Publish all new CHC decisions Court Website JSC, JTI

Table 2: Intermediate

Action Instrument Responsible Party Monitor Summons process, Survey Registrar, CHC identify flaws and delays Review 10% of cases and identify Survey Registrar, CHC case management parameters Case management of new cases CHC computers Registrar, CHC on automated database Attorney access to actions on CHC computers, website Registrar, CHC new cases online Amend Civil Procedure Code MOJ, Legal Draftsman Use of discovery procedures Pre-trial awareness New Judge of CHC Additional research Court clerks MOJ

Table 3: Long-Term

Action Instrument Responsible Party Filing cases online Court website Registrar, CHC Digitizing all cases New automation system MOJ Recording all case actions for New automation system MOJ online access Continuous trials Case management system CHC Judges Translation and transcription Additional staff and equipment National Budget, MOJ improvements

These reforms will improve the DB ranking. But that is not their primary goal; the goal is a better functioning commercial court system, that leads to improved implementation of justice and will lead both to fairer outcomes and increased investment.

3 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft I. INTRODUCTION

This is an assessment of the case processing function of the Commercial High Court (CHC) of Colombo, undertaken for the purpose of improving the investment climate in Sri Lanka. The has set the objective of improving Sri Lanka’s World Bank Ease of Doing Business (DB) rankings and to thereby create a more investor friendly climate. Sri Lanka is presently ranked No. 111 out of a total of 190 economies in the 2018 Index. New Zealand tops the rankings at No. 1. Of Sri Lanka’s neighboring countries, India is currently ranked No. 100 and Nepal is ranked No. 105. The Index consists of sub-indexes, each of which provides a separate ranking. The sub-indexes are quantitative indicators on starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading a cross borders, enforcing contracts and resolving insolvency.

The lowest sub-index for Sri Lanka is for Enforcing Contracts. It is ranked 165 out of 190 countries. This sub-index measures efficiency in terms of the quality of judicial procedures, and the time and cost incurred to enforce a debt contract. In 2017, the average time (in days) in Sri Lanka was 1318 days. The regional average is 1098. The best regional performer is Singapore with 164 days with a ranking of 2. As part of its effort to improve the DB rankings, the Government of Sri Lanka, with the technical assistance of the World Bank, designed a Roadmap to improve the investment climate of Sri Lanka. The Roadmap included the establishment of Task Forces for each of the DB indicators. The Road Map also included Action Plans for the Task Forces, including an “Action Plan for Improving Sri Lanka’s Regulatory Environment in Enforcing Contracts.”2 The USAID Supporting Accelerated Investment in Sri Lanka (SAIL) project team was entrusted with the responsibility of providing technical assistance to the Task Force on Enforcing Contracts. The Task Force is headed by the Secretary to the Ministry of Justice, and its members are listed in Annexure I. The Action Plan for Enforcing Contracts identified 15 actions with initial timelines (see Annexure II). In implementing the action plan, the Task Force identified the significance of conducting a comprehensive assessment of commercial cases, as action items 1 and 3. This assessment will also provide the necessary preconditions for action items 2 (statistics to assess court delays), action item 4 (introducing case management practices), action item 5 (training on case management practices), and action item 7 (electronic payment of court fees), which depend on electronic case management. The ranking for enforcing contracts includes three indicators. First, the average time taken to dispose of a commercial case, which is 1,318 days in Sri Lanka. Second, the cost of the proceeding, which is 22.8% of the claim value. The third indicator, added in 2016, is the quality of judicial proceedings, which includes court structure and proceedings, case management, court automation, and alternative . A number of the items do not depend on court automation, such as the pre-trial procedure and the adjournment practice.

2 See A Roadmap to Improve the Investment Climate in Sri Lanka: Sri Lanka Means Business, prepared by the Ministry of Development Strategies and International Trade as a comprehensive approach to improving Sri Lanka’s ranking on the World Bank’s Ease of Doing Business Index, pages 54-57.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

The indicator measuring time for contract enforcement is based on the scenario of a commercial dispute between two domestic parties in the amount of 200% of annual income per capita or $5000, whichever is greater. Cases in the CHC presently start at 5 million Rs. The court mentioned in the DB report is explicitly the Colombo District Court. Nonetheless, since the objective of the Task Force is the improvement of the investor climate, and in particular, the environment for foreign direct investment, the Task Force considered that the caseflow of the CHC requires assessment. The Roadmap also noted that caseflow in the CHC had slowed down. One of the key objectives of the Task Force is to minimize the time taken to dispose of commercial cases by the CHC. The Task Force determined that, while caseflow management in the District Courts had been studied in recent years, the caseflow management of the CHC had not been mapped, assessed, and reviewed. It should also be noted that the Roadmap specifically refers to unexpected backlogs and delays in the last year in the CHC. As noted above, it is not only the number of days to finish a case that matters, but other qualitative factors as well. Another key aspect of the CHC is that it is the court where arbitration awards are enforced, and improvement of arbitration is part of the alternative dispute resolution and another goal of the Task Force (action item 14). This assessment has the following subsequent sections: • Background of relevant previous studies and recent reforms of the judicial sector; • Statutory basis for the of the CHC; • Desired approach to case management; • Methodology of the assessment for review of the current caseflow process; • A description of the current caseflow process; • Summary of the data on cases before the CHC; • Civil Procedure Code amendments; • Assessment; and • Recommendations.

II. BACKGROUND A. Previous Studies of the Justice Sector and Caseflow Management Several studies of courts in Sri Lanka have been undertaken in recent years, including one by the World Bank, “Sri Lanka Justice Sector Review,” June 2013, Report No. 77662-K, and an assessment by USAID, “Assessment of Caseflow Management and Court Administration in Sri Lanka: Analysis and Recommendations to Reduce Court Delays,” October 15, 2016, by the project Civil Society Initiatives to Promote the (CSI-ROL) in Sri Lanka. The World Bank study concentrates on recommendations for the justice sector as a whole, including the following measures: • Performance management of courts based on enhanced data collection; • Procedural changes to the Civil Code, including a more disciplined pre-trial procedure; • Practical directions, updated Judge’s Manual for commercial cases;

5 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

• Access to legislation, , and decisions; • Additional investment in more commercial courts with improved record keeping and infrastructure for existing commercial courts; • Automated case management system for targeted courts; • Better use of human resources, including use of assistants to judges; and • Training for commercial court judges on commercial transactions as well as for District Courts handling many money cases. It will be noted that Commercial Courts are identified as requiring additional recordkeeping and that all of the courts require automated case management. The Commercial High Courts received some attention in this report, specifically on pages 24-25 where the data on caseloads for the years 2011-2012 is tabulated. There has not been, to our knowledge, a follow up to this report. The USAID Assessment was based in part of a sampling of 350 cases from 8 courts, including ’s Courts, District Courts, and High Courts. The three Commercial High Courts were not included in the survey. In addition, a high level National Law Conference took place in Colombo in March 2016, organized by the Association of Sri Lanka and supported by the USAID CSI-ROL project. It contained a direct and detailed critique of the justice sector and recommended reforms, including: • Infrastructure improvement, such as improvement in recording and translation; • Better support to judges and more judicial management of cases; • Ending endless postponement of cases; • Introduction of a case management system; • Administrative assistance to judges; • Introduction of pre-trial procedures; • Addressing unethical conduct; and • Formation of a Presidential Task Force to address justice sector delays.

B. Recent Reforms Sri Lanka has undertaken a number of important legal reforms in recent years that would positively affect contract enforcement in the long run. The Civil Procedure Code has been amended with respect to pre-trial proceedings and other matters in June 2017, through the Civil Procedure Code (Amendment) Act, No. 8 of 2017. As these reforms are recent they have not yet been fully implemented. Implementation presents opportunities for incremental improvement in many aspects, and the reforms are discussed below in a separate section. Another important reform is the 2017 amendment of the Electronic Transactions Act Law No. 19 of 2006. Section 7 of the law as amended provides that electronic documents must be accepted by all government agencies. Where any signature is required, “notwithstanding anything to the contrary in such written law, that requirement shall be deemed to be met in relation to a data message, electronic document, electronic record, or communication” if a method is used to identify the person that is “appropriate” to the purpose intended. This means that it supersedes all other and provides that wherever a signature is needed, and electronic option can be adopted by a government agency. This applies to all materials and submissions to government agencies at all levels. The Act refers to facilitating “electronic filing of any application, petition,

6 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft plaint, answer, written submission or any other document with any court” and to the “electronic filing of any form, application, or any other document with any ministry, department, provincial council, provincial ministry and department or local authority or, office, body or agency owned or controlled by the Government or a statutory body.” Several recent court cases have interpreted this law to require courts to accept electronic evidence. For example, in Marine Star (Priv) Ltd v. Amanda Foods Lanka (Priv) Ltd, (2007) the CHC admitted a text message (SMS) as evidence another case allows the use of a flash drive as evidence. This legislation allows the CHC or any other court to introduce some electronic case management without further amendments to any laws. While it does not address e-filing of cases because the payment system still needs to be established, I t could be used to allow filing of pleadings. C. Planned Reforms Two important reform efforts are planned. Recognizing the burden on the CHC, a fourth judge for the CHC. In addition, there is a plan for introducing electronic case management for all the courts in Sri Lanka, to be funded by a loan from the Hungarian Government. While the loan has been negotiated, it has not yet been signed and the acquisition of the system has not commenced; the automation program is currently in the very initial implementation stage. This effort is being led by the Ministry of Justice. In addition to these specific reforms, a high level strategic overview of the entire justice sector, with an assessment of the tasks, necessary resources and costs, as well as an overview of the optimal configuration of the entire sector, is to be undertaken at a high level with the assistance of the Asian Development Bank (ADB). This effort will consist of high level strategic thinking for the next one to two years. The team is not yet in place. The ADB is particularly interested in enhancing commercial case efficiency as well. III. STATUTORY BASIS OF THE COMMERCIAL HIGH COURT OF COLOMBO The primary jurisdiction related to enforcing contracts is vested in the District Courts, which are established by the Judicature Act No: 37 of 1979 (as amended). The Judicature Act provides that each judicial district shall have a District Court exercising original civil jurisdiction. In terms of section 19 of the Judicature Act, District Courts enjoy unlimited original jurisdiction in all civil matters except the matters exclusively assigned to any other court or authority by written law. The objective of establishing the Commercial High Courts was to ease the caseload of the District Court and to increase the efficiency in the legal system in commercial matters. The establishment of High Courts is provided for in Article 154P of the : 154P. (1) There shall be a High Court for each Province with effect from the date on which this Chapter comes into force. Each such High Court shall be designated as the High Court of the relevant Province. (2) The Chief Justice shall nominate, from among Judges of the , such number of Judges as may be necessary to each such High Court. Every such Judge shall be transferable by the Chief Justice.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

The High Court for the Western Province was vested with exclusive jurisdiction over specified commercial matters pursuant to the High Court of the Provinces (Special Provisions) Act, No. 10 of 1996. It has jurisdiction over:

• All actions where the cause of action has arisen out of commercial transactions, including causes of action related to banking, export or import of merchandise, services affreightment, insurance, mercantile agency, mercantile usage, and the construction of any mercantile document in which the debt, damage or demand is for a sum exceeding 5 Million Rs;

• All applications and proceedings under sections 31, 51, 131, 210 and 211 of the Companies Act No. 17 of 1982:

o actions to relieve a company of the consequences of non-compliance with the conditions constituting it a private company – Sec. 31; o actions to make irregular allotments void and actions to recover loss, damage or costs incurred as a result of such irregular allotments – Sec. 51; o actions for a Court to order a meeting of a Company to be held as specified where compliance with the Articles of the Company or the provisions of the Companies Act is impracticable – Sec.131; o applications complaining against oppression in the conduct of the affairs of a company – Sec. 210; and o applications complaining of mismanagement – Sec. 211.

• All proceedings under the Code of Act No.52 of 1979;

• All actions seeking an injunction against the Registrar of Companies or the Securities Exchange Commission; and

• All required to be made under Section 17 of the Fair Trading Commission Act No. 1 of 1987. This Court, however, does not have jurisdiction in respect of actions instituted under the Debt Recovery (Special Provisions) Act No.2 of 1990, which deals with proceedings to recover debts owed to banks. Appeals against the orders and judgments of the Commercial High Court of Colombo can be made directly to the Supreme Court of Sri Lanka. A. Commercial High Courts in the Western Province Currently, the Sri Lankan legal system has three Courtrooms designated as the Commercial High Court of Colombo. All three are in the Western Province in Colombo. According to Section 2 of the said 1996 Act, the Commercial High Court shall have exclusive jurisdiction and shall have cognizance of and full power to hear and determine, in the manner provided for by written law, all actions, applications, and proceedings specified in the First Schedule to the Act. According to Section 9 of the Civil Procedure Code, an action may be brought where the party or parties defendant to such action resides or reside, or the cause of action has arisen, or the contract sought to be enforced was made. Thus, if parties reside and/or the contract sought to be enforced was entered into and/or the cause of action arose outside the Western province of the Commercial High Court (subject to

8 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft other pecuniary limitations such as Mediation Board Act No: 7 of 19883), the litigating parties have no option of referring the matter to the Commercial High Court, but must refer the dispute to the relevant District Court subject to choice of jurisdiction under Section 9 of the Civil Procedure Code.4 The Act does not provide an elaborated definition of what is meant by a commercial transaction, which allows the phrase to be used in a broader context. B. Arbitration Award Enforcement The Arbitration Act (No. 11) of 1995 (which is modeled on UNCITRAL and abides by the New York Convention of 1958 on the recognition and enforcement of arbitral awards) Section 31 provides for the enforcement of an arbitral award in the High Court. A party seeking to enforce an award can apply to the High Court within one year after the expiry of fourteen (14) days after the award. Section 34 of the Arbitration Act provides the only grounds for refusal of enforcement. Grounds that may be raised by an objecting party are: • The party against whom the award was made was subject to incapacity, or the award is not valid in the country where made. • There was a failure to provide notice of arbitral proceeding. • The award is beyond the scope of the agreement to arbitrate. • The composition of the arbitral was improper. • The arbitration award is not yet binding or has been suspended or set aside. The court may also determine that the subject matter of the dispute is not subject to arbitration in Sri Lanka or that the award would be contrary to the public policy of Sri Lanka. The term “public policy,” which was used in 1958 New York Convention, covered fundamental principles

3 Section 7 of the Mediation Board Act No: 7 of 1988, as amended by Act no: 9 of 2016, provides:

Where a Panel has been appointed for a Mediation Board area, subject to the provisions of subsection (2), no proceeding in respect of any dispute arising wholly or partly within that areas or an offence alleged to have been committed within that area shall be instituted in, or be entertained by any court of first instance if (a) the dispute is in relation to movable or immovable property or a debt, damage or demand, which does not exceed five hundred thousand rupees in value ; or (b) the dispute gives rise to a cause of action in a court not being an action specified in the Third Schedule to this Act.

4 Section 9 of the Civil Procedure Code (CPC) Ordinance No: 2 of 1889 (as amended from time to time) states as follows:

Subject to the pecuniary or other limitations prescribed by any law, action shall be instituted in the court within the local limits of whose jurisdiction (a) a party defendant resides; or (b) the land in respect of which the action is brought lies or is situate in whole or in part; or (c) the cause of action arises; or (d) the contract sought to be enforced was made. When it is alleged to be uncertain within the local limits of the jurisdiction of which of two or more courts any immovable property is situate, any one of those courts may, if satisfied that there is ground for the alleged uncertainty, record a statement to that effect, and thereupon proceed to entertain and dispose of any action relating to that property; and its in the action shall have the same effect as if the property were situate within the local limits of its jurisdiction: Provided that the action is one with respect to which the court is competent as regards the nature and value of the action to exercise jurisdiction.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft of law and justice in substantive as well as procedural aspects. There is no universal meaning of “public policy,” it is individually decided in each jurisdiction. This is a flexible ground, subject to judicial censure as it has been applied inconsistently. The “public policy” exception has been used in many cases, including in cases where a state agency is a party, with the assertion that it is against “public policy” for a state agency to have to pay. In Sri Lanka, this exception has been narrowed in the case of Light Weight Body Armour, Ltd. V. Sri Lanka Army (2007) 1 SLR 411, a dispute about payment of money, referred to arbitration. The dispute was about whether the quality supplied met specifications. The arbitrator ruled in favor of the firm. The Army appealed to the High Court under section 32(1) of the Arbitration Act seeking to set aside the award on the grounds of public policy and the High Court set aside the award. In further , in the Supreme Court, the company contended that 1) there was a valid award; 2) the award was not against public policy, and 3) the merits or findings of the award could not be challenged. The Court ruled in favor of the company and narrowed the application of the public policy exception.5 C. Court Procedure Followed in the Commercial High Court Although the statutory basis of the establishment and jurisdiction of the CHC is provided for by Act No: 10 of 1996, it does not specify the procedure to be followed, such as whether the applicable rules of procedure such as the Civil Procedure Code, rules of evidence, etc. should apply. The Act only provides for a few sections of the Civil Procedure Code to be applicable in the CHC. However, the SAIL team gathered from the Key Informant Interviewees (KIIs) that the procedure followed in the CHC is generally the same as provided in the Civil Procedure Code. As currently practiced, there are two main stages in the process of determining a commercial case by the CHC. 1) The process in the Registry of the Court (from filing the plaint up to the point of the matter been first called before the Judge) 2) The Court process (From the first date of calling to pronouncement of the Judgment) The present study will address both stages, and map the steps of each one, to see where there are reasons for delay. We will then attempt to shift the focus, whereby the entire case – from plaint to judgment – will be seen as part of one caseflow process, which should be optimized.

5 Judge Shiranee Tilakawardane’s opinion stated, in relevant part: “In exercising jurisdiction under section 32 Court cannot sit in appeal over the conclusions of the Arbitral Tribunal by scrutinizing and reappreciating the evidence considered by the Arbitral Tribunal. The Court cannot re-examine the mental process of the Arbitration Tribunal contemplated in its findings nor can it revisit the reasonableness of the deductions given by the arbitrator - since the arbitral tribunal is the sole judge of the quantity and quality of the mass of evidence led before it by the parties - the only issue that needs consideration is whether the purported fundamental flaws of the award in question would tantamount to a violation of public policy….Public policy is generally those moral social or economic considerations which are applied by courts as grounds for refusing enforcement of the arbitral award, another view would equate public policy with the policy of law, whatever leads to the obstruction of justice or violation of a statue or is against the good morals of a society can be deemed as being against public policy and therefore not susceptible to enforcement, further instances such as corruption, bribery and fraud.”

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft IV. APPROACH TO CASEFLOW MANAGEMENT This study seeks to accomplish the following tasks: accurately describe the flow of cases, gather overall data on the time cases take, and propose a caseflow management approach. A. Review of Caseflow Management Before Automation Establishing caseflow management should be addressed prior to automation, so that automation comes to a better business process. Automation can achieve many goals, and is optimal if used to do all of these tasks: 1. Analyze – tell the administrators what is happening, how cases are being processed, reveal previously hidden patterns; 2. Optimize – get best results by using patterns to set rules for optimal performance; 3. Prophesize – predict patterns in the future so as to plan and obtain necessary resources; 4. Customize – allow for the system to adapt to one or more unusual cases; 5. Digitize – make paper largely unnecessary; and finally 6. Automatize the whole process. Without a caseflow management system, automation cannot optimize a court or any other processing function. There is a risk that if automation is introduced without the other tasks being addressed, it will simply result in automating an inefficient paper-based process. For example, if the use of e-mail is introduced without allowing for digitization of records, e-mail will follow existing procedures for paper correspondence and will have to get printed, sorted, filed, and stored and its use may actually decrease efficiency. Likewise, unless automation is used to analyze and reveal performance, it will not meet its promise. B. Establishing Caseflow Management The necessary elements for achieving adequate effective caseflow management systems have been variously described by experts in the field.6 We identify the following essential components: 1. Judicial leadership, responsibility, and commitment – this refers to the court’s commitment to undertake a caseflow management system and to proactively manage its docket and workload. 2. Goals – there need to be clear goals concerning the time a case should take, the amount of cases a court should have, and the reduction of inventory. 3. Information – information about the caseload is essential. 4. Caseflow management policies and procedures – this refers to the systems the court will adopt and to the instructions it will issue to control caseflow and to reduce inventory. 5. Communication – the court must advise its staff, counsel, and the public of its goals and expectations. Information must be provided to the Bar Association about timelines and case management expectations. A caseflow management guide could be distributed when plaintiffs file cases or could be part of a general court handbook.

6 The CSI-ROL assessment of District Courts relies on the “Ten Common Elements” from Mahoney, Brian, How to Conduct a Caseflow Management Review: a Guide for Practitioners (National Center for State Courts, 1994). The European Commission for the Efficiency of Justice (CEPEJ) “Compendium of ‘best practices’ on time management of judicial proceedings” Strasbourg 8 December 2006 mentions similar concepts.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

6. Administrative staff involvement – administrative staff are required to undertake many of the tasks, to collect information and advise the attorneys and the public; administrative staff tasks should be distinct from and integrated with the judges’ tasks. 7. Education and training of relevant staff, including judges, administrative staff and members of the Bar. 8. Mechanisms for accountability – measurement tools are required; both internal and external accountability is important. 9. Backlog reduction – inventory control. C. Time is of the Essence As is often said, justice deferred is justice denied. With respect to backlog reduction, a specific focus on time standards as a case management tool is necessary, as follows: 1. Overall time standards for the disposition of cases; 2. Time standards for specific events in cases: a. Differentiated case management time standards for different kinds of cases that vary in complexity; for instance, enforcement of arbitration awards would not have the same discovery needs as other cases. b. Time standards for translations to be submitted. c. Realistic schedules and meaningful court events. d. Firm credible deadlines for the completion of investigations, the identification of witnesses, the disposition of all pre-trial motions, and the submission of all evidence. e. Management of the submission of evidence. f. Use of written affidavits whenever possible to avoid live witness testimony and the expense and time required. g. Management of post-judgement events, execution, motions, etc. 3. Related goals and practices: a. Goal of reduction in the size and age of the pending inventory of cases. b. Court policy on extensions or rescheduling of events must be established and relatively inflexible. c. Use of summary judgment decisions on the basis of the pleadings could be considered. V. METHODOLOGY The SAIL project team initiated this assessment by conducting a series of Key Informant Interviews. The list of KIIs are listed in Annexure III. These interviews helped the SAIL project team to determine the process followed by the Registrar of the CHC, up to the point of the matter being listed before the relevant judge, and the process followed thereafter. The team conducted interviews with experienced practitioners before the court. In the interviews the team repeatedly asked why delays take place. The SAIL team also observed proceedings of the CHC. The review of case files included the review of 29 cases in some detail, including among them several that required preliminary relief and that are quite old. We saw:

• 6 arbitration enforcement cases, which seem to be a major problem;

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

• 13 cases addressing money recovery claims; • 2 cases addressing company matters; • 4 cases addressing intellectual property claims; and • 4 cases addressing admiralty issues. The caseflow process described below is based on these reviews as well as interviews with the previous Registrar. The case review summary sheets used in this exercise are attached as Annexure IV. The review took place in October and November 2017. The SAIL team was able to validate several times from these cases in March 2018. However, the SAIL team was not given access to additional case files. The review is not conducted for the purpose of providing a statistical assessment of the cases. Rather, its purpose was to understand the sequence of steps followed. As part of its recommendations below the SAIL team recommends a review of cases in a sufficient number to constitute a statistically valid analysis. VI. CURRENT CASE FLOW PROCESS This section describes the caseflow process in the CHC. It is based on interviews with Judges, the Registrar, and on a close review of selected case files. It must be remembered that the CHC is really one court with several courtrooms and has the status of any other High Court. Arbitration was originally to be enforced in the High Court of Colombo. This is now interpreted as the CHC of Colombo. The caseflow has increased even though the limit for money recovery has been increased to 5 million Rs. (from 3 million Rs.). As noted above, courts have jurisdiction where: 1) the defendant is located; 2) the contract was signed, and 3) the action took place. In order to assure themselves of Colombo jurisdiction, creditors generally require the mailing of payment to a pay office in Colombo. Money recovery cases are the main source of commercial cases. A. Physical Condition of Files – Part of Poor Overall Infrastructure All of the case files for all three courtrooms are maintained by the Registrar on paper, in binders and folders, in dusty rooms without air-conditioning or adequate security. All observers agree that the files are stored in poor conditions. There is a container with a broken floor and staff have been bitten by rodents when retrieving a file that fell through a crack. There is one case file, on paper, per case, and it is either with the judge or with the Registrar. No file documents or information are kept online. The physical condition of the files is only one aspect of the CHC’s poor infrastructure. It is an old colonial era building. There are small courtrooms and rooms. The building has not been renovated. There is one washroom for 30 women staff. There are absolutely no washrooms or facilities for parties or witnesses. A renovation was scheduled, staff were moved out and then moved back in without the renovation having taken place. The Government changed. The previous Minister of Justice was close to the Minister of and the was going to do the renovations. Now there are no funds.

13 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft B. Presence of Information Technology While there are no procedures to automate case files, there is information technology present in the CHC. One courtroom, courtroom 1, was actually fully equipped with information technology and even made possible video conferencing. This was installed with the proceeds of a World Bank loan. However, the technology does not work. The renovated courtroom had only one case heard in it using the equipment through a teleconference. There was no maintenance contract and no person to maintain it. The Chief Judge wrote many letters, back and forth, seeking authorization to maintain and repair the recording and teleconference equipment. Special approval to buy equipment using foreign currency was required. It took two years to get a maintenance contract approved, and by then the price went up significantly. In addition, as noted above, a decision was made to renovate the building, and the court was transferred to temporary quarters. After the court left the building, it was not renovated. The judges came back to the old building without any renovation having been done. Now the equipment is ruined. It was not purchased from a local company. In spite of this sad tale, which truly is an exercise in frustration for the court personnel, there are computers in use. The Registrar uses a computer and the Judges use laptops. But those laptops are used to produce their individual documents and are neither connected to each other nor are they used to manage cases in any automated way.7 C. Registration of New Cases Plaintiff’s counsel files each new case with the Registrar. Counsel prepares all the documents: plaint, proxy (which is the equivalent of an appearance in the US), summons. There is a filing fee, of 2000 Rs. per document, up to a maximum fee of 20,000 Rs. It is paid in the form of a stamp duty and proceeds thereof are paid to the Government budget. The documents are handed to the subject clerk. That person has no right to reject the document and does not check anything. S/he assigns a number and records this number in the case book. There are Books for each category of case. There are five categories: 1. MR Money Recovery – the first case of the year would be 1/2017/MR 2. CO Company Law 3. IP Intellectual Property 4. ARB Arbitration 5. REM Admiralty The cases are then assigned to judges. Assignment is more or less random, with two judges taking odd/even numbers of cases and one judge taking most of the arbitration cases.

D. Case Acceptance by Judges Upon filing, each plaint is sent to a judge, and the judge then decides whether it is accepted or not for procedural reasons. If the plaint is rejected, it will be returned to the .

7 There was a similar frustrating experience with automation of the Civil Appeal High Court in Matara. Software was developed by a university, Cloud access was assured, and it was technically ready to be used. However, “it came to a standstill” because of a lack of resources for personnel.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft E. Service of Process Plaintiff’s counsel files the summons, provides the envelope, and stamps. There are three ways to serve: regular mail, registered post, and through the court fiscal. Registered post does provide proof of return to the plaintiff. The fiscal, if used, has to be delivered in person. Many lawyers will provide service of summons via registered post and request delivery by the fiscal all at once. The system at the post office is such that confirmation of service can be obtained upon request. But this process is rarely used as the exclusive method. This is because registered post is not good enough as a means of service to subsequently get a default, therefore service by the fiscal is required for a default. Registered post should be enough, if a letter is sent to the official registered address of the company. The last known registered address of the parties as provided in the contract should also be presumed correct and acceptable for service. However, the is not uniform on this matter and such presumption cannot be safely made. Counsel believe that this needs a change to the Civil Procedure law, because the case law on this is not uniform. There is no monitoring of the fiscal. There can be corruption among the process servers. They are not audited, and there is no performance measurement. The above observations are based on interviews. The team requested permission to interview individual fiscals, but this has not yet been granted. The service of foreign summons is even more complex. The documents must go to the Secretary for the Ministry of Foreign Affairs and then to the relevant Embassy. F. Case Management by Judges Once a case has been accepted by a judge, the file goes to the judge and the judge does all of the case management, including communications with counsel. The case management is done by handwritten notations on sheets of paper inserted into the file. That is how judges schedule hearings, write decisions, etc. G. Communication with Counsel It seems that judges generally communicate with counsel in person, and do not rely on Registrars or on e-mail. Registrars are not apprised of all steps taken, as they do not have access to the file. H. Failure to use Efficient Procedures already in place There are some procedures that could be used to shorten the length of the trial and reduce costs, such as use of interrogatories to obtain admissions or information, and pre-trial proceedings. While pre-trial proceedings are new, they are slowly being introduced, but counsel are wary of having pre-trial settlement discussions in front of the same judge as will try the case if it does not settle. Interrogatories seem to be an unknown procedure, no one uses them. I. Transcripts and Translations There are insufficient funds to hire stenographers and translators. It is often impossible to get a timely transcript. The law requires that documents be submitted in the national languages, but many contracts are in English. There is insufficient staff for translation and interpretation. J. Attorney Payment There is consensus that attorneys find it advantageous to hold many hearings as they are paid per appearance. There is also consensus that attorneys prefer not to have continuous trials since it

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft is difficult for some clients to pay for the entire trial at once. Sri Lanka is one of the countries that still has an old-fashioned anti-champerty law and prohibits contingency recovery. K. Constant Delays by Counsel Learned distinguished counsel and the Judges agree: delays are caused by requests of counsel to postpone hearings and trials. Reasons for requests for delays by counsel included: possibility of settlement, technical objections, judge on leave, counsel indisposed, another case in another court, connected case in Supreme Court, affidavit not ready, answer not ready, witnesses not ready, or “personal convenience of counsel,” which can refer to just about anything. Counsel run the case schedule for their personal convenience and are not held to any timetables by the judges. That is why cases have so many delays and last so many years. Senior distinguished lawyers agree that the current litigation process is an “embarrassment” and an “investor’s nightmare”. Lawyers know that they are part of the problem. Several distinguished lawyers explicitly remarked that current adjournment practice is similar to the Jarndyce v. Jarndyce litigation portrayed by Charles Dickens in Bleak House. The common saying “Justice Delayed is Justice Denied,” attributed variously to the Magna Carta or Gladstone, is a common enough legal maxim, but appears to have been abandoned. Instead, lawyers inform courts quite literally that “Justice Hurried is Justice Buried.” While attorneys quite rightly complain of inefficiencies in the CHC, their own practices require a concerted effort to develop a strategy for improvement. L. No Continuous Trials Hearings and trials are scheduled as follows: twenty or so cases are scheduled on any one day, with the expectation that many will not move forward due to delays. Such cases that do get called, lack allocated necessary time to complete a full trial. Trials therefore have to be rescheduled and take place over many months, even years, with a half day here and a few hours there. This wastes the time of everyone: judges, counsel, parties, and witnesses. The result of delays leads to the scheduling of many cases on one day, which in turn causes cases to have insufficient time to be heard, creating a vicious cycle that wastes everyone’s time and delays results (See Figure 1 below and also see Annexure V with detailed causes of case delays).

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Figure 1: The Vicious Cycle of Case Delays

M. Execution of Judgment When a judgement is delivered, the party who wants the judgment executed (judgment creditor) has to file what are called execution papers, also referred to as Writ documents or execution of the writ. Once the papers are filed and receive the sanction of the judge, the fiscal officer, accompanied by the court Registrar, visits the debtor's premises, and issues a Sequestration Order on the available visible properties. The fiscal cannot sequestrate a house but he can sequestrate immovable property such as land. The house and access to it will be spared, however, the remaining land is bound to be sequestrated. A sequestration order also includes movable properties such as electrical items, etc. Upon service of the order, persons other than the judgment debtor who claim ownership to properties coming within the order may file objections within fourteen (14) days. The court will consider and accordingly order the execution of the writ. The timing of this process depends on how diligent the party seeking execution acts and how well properties are identified. For instance, the party seeking execution is required to confirm the properties available with the judgment debtor. This is done to expedite the process and also to prevent the judgment debtor from alienating his properties contemplating a judgment against him. According to the Registrar, if the papers are diligently handled, the entire process could be concluded in as little as two (2) months. Usually it takes longer.

17 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft N. Cases Can Last a Decade Counsel with cases pending before the CHC told the SAIL team that an ordinary case can take six years but that many cases take significantly longer. There are different procedures for different cases, but we can break out the following steps and approximate lengths of time from the selection of cases reviewed: Table 6.1: Approximate Length of Case Steps for Money Recovery

Action Time from Case Filing Filing Case, opening file, approval of Judge 1 - 4 weeks Serving Summons 2 weeks - 1 year Answer 3 months – 4 years Enjoining Order Can be immediate Interim Injunctive Relief Can be immediate or up to 3 years Issues Hearing 9 months to 4 years Settlement Hearing Up to 13 years Trial 3 to 10 years Execution of Judgment 4 to 10 years Arbitration cases should proceed faster. There is no trial of fact. There should be no witnesses to hear. The CHC should just determine if the award can be enforced. It is therefore disappointing that arbitration cases also languish, subject to adjournments and delays of various kinds. One arbitration enforcement case has been pending since 2002 and has been called 29 times as the plaintiffs have been unable to locate the respondents for execution of the writ. The results of case reviews of all five types of cases are presented in more detail in Annexure IV. The reasons for delay are listed in some detail in Annexure V. Annexure V then forms the basis for recommendations. VII. SUMMARY OF DATA ON PENDING CASES For good caseflow management, there are three kinds of statistical information needed: 1. Number of cases pending: a) by major case type, and b) by age; 2. Age of cases at disposition: a) by case type b) by type of disposition; 3. System rates (per annum or other time frame): • Filings of new cases; • Disposition of cases; • Number of trials scheduled; • Number of trials started/completed; • Length of trials (Range/Average/Median). Once the court is somewhat automated, generating this data can be automatic and regular. It is currently collected by the Registrar onto an Excel sheet. We have collected the data as was available. The WB 2013 assessment separated data for all three courtrooms.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

The following statistics as to the Commercial High Court were provided to SAIL by the Ministry of Justice in October 2017. The data is kept by the CHC Registrar on an Excel spreadsheet and updated. Table 7.1: Case Statistics - 2016

No. of cases No. of cases No. of cases B/F No. of cases Type of Case concluded in pending at from 2015 filed in 2016 2016 31.12.2016 Commercial Transactions (Money 1,893 467 101 2,259 Recovery) Arbitration 581 740 209 1,112 Intellectual Property 123 50 10 163 Companies 171 50 20 201 Maritime 15 8 - 23 TOTAL 2,783 1,315 340 3,758 Table 7.2: Pending Cases in the Commercial High Court (Years 2014-2016) Pending Cases Type of Case 2014 2015 2016 Commercial Transactions 2,139 1,893 2,259 Arbitration 1,367 581 1,112 Intellectual Property 138 123 163 Companies 200 171 201 Maritime 15 15 23 TOTAL 3,859 2,783 3,758

Table 7.3: Cases filed in the Commercial High Court (Years 2014 to 2016) Filed Cases Type of Case 2014 2015 2016 Commercial Transactions 317 303 620 Arbitration 433 317 807 Intellectual Property 17 09 63 Companies 39 23 78 Maritime 07 09 22 TOTAL 813 661 1,590 SAIL was also given statistics prepared by the High Court of Colombo on a quarterly basis for 2017, which present a somewhat different picture. Table 7.4: First Quarter 2017 No. of No. of No. of Cases No. of cases No. of Cases Cases B/F Cases Type of concluded withdrawn remaining at from Filed Case within the within the the end of the previous within the quarter quarter quarter quarter quarter Commercial 2,943 270 98 17 3,098 Arbitration 2,564 76 73 23 2,544

19 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

No. of No. of No. of Cases No. of cases No. of Cases Cases B/F Cases Type of concluded withdrawn remaining at from Filed Case within the within the the end of the previous within the quarter quarter quarter quarter quarter Intellectual 161 10 05 08 158 Property Companies 195 14 10 06 193 Maritime 19 04 - 01 22 TOTAL 5,882 374 186 55 6,015 Table 7.5: Second Quarter 2017 No. of No. of No. of No. of No. of Cases Cases Cases Cases cases B/F from remaining Type of Case Filed concluded withdrawn previous at the end within the within the within the quarter of the quarter quarter quarter quarter Commercial 3,098 116 110 21 3,083 Arbitration 2,544 178 57 08 2,657 Intellectual Property 158 11 02 02 165 Companies 193 12 05 03 197 Maritime 22 04 - 02 24 TOTAL 6,015 321 174 36 6,126

As can be readily observed, the methodology used by the Ministry in Tables 2, 3, and 4 differs from the one used by the CHC in Tables 5 and 6. The CHC quarterly data have almost twice as many cases as reported by the Ministry. We have asked for clarification and have not been advised how the Ministry views this. We have reviewed the 2013 study done by the World Bank, which reports on the CHC in Table 4, page 25, for the year 2012. The table reports about 4000 pending cases, and an additional 3000 cases which have not been listed due to “procedural matters which must be rectified.” The SAIL team asked the Registrar to explain this discrepancy and he indicated in general terms that those procedurally defective cases are cases where service of summons has not yet been accomplished. It is possible that the discrepancy in between Tables 2, 3, and 4 and Tables 5 and 6 is caused by a similar factor.8 It appears that the CHC methodology is what is relied upon when there are public speeches given and articles written about “more than 5000 cases pending.”9 VIII. CIVIL PROCEDURE AMENDMENTS The Civil Procedure Code (Amendments) Act, No. 8 of 2017 as of 07 June, 2017, has the potential to improve several procedures that could affect case disposition delays, including: pre-trial

8 The SAIL team requested an explanation from the Ministry of Justice for the discrepancy. The Ministry is investigating the issue. However, at the time of writing this report, the Ministry has not yet provided an explanation. 9 For example, see Lanka Business Online, October 2, 2017 reporting on the speech by the Minister of Justice.

20 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft hearings; use of affidavits to introduce evidence and documents; providing for appointment of a representative in case of death of one of the litigants; and notification to counsel. A. Pre-Trial Hearing A pre-trial proceeding is to be scheduled by the court (with notice to all parties) not earlier than three weeks and not exceeding two months after the time for filings by the parties has expired (Section 79A). The judge’s tasks at the pre-trial hearing can be grouped into two categories: seeking settlement and organizing the trial. With respect to seeking settlement, the judge has the power to question or call upon the parties with a view to “assisting the parties to arrive at an adjustment, settlement, compromise or other agreement, with regard to the matter in issue in such action and may, for that purpose, suggest terms of settlement which in his view is reasonable, having regard to all the circumstances of the case.” The authorization to suggest a settlement places the judge in the role of a mediator. The parties are to tender their proposed admissions and issues in writing to the court registry fourteen days before the pre-trial hearing (Section 142A). This allows the judge to dispose of many matters. With respect to organizing the trial, the judge may determine jurisdictional issues, elucidate matters in dispute, obtain admissions of fact and documents, consolidate cases, identify witnesses based on relevance and admissibility, appoint experts, and do anything “necessary or desirable, for the expeditious and inexpensive disposal of the action” (Section 142D). The judge may also issue orders about any question of fact determined by a report, and order to public offices to issue certified documents (Section 142E). These are broad powers indeed. Pre-trial hearings are to be concluded within three months, with adjournments not to exceed four weeks (Section 142B) and failure by a party to appear can lead to default (Section 142C). The judge has to record any agreements of the parties. The pre-trial is meant to consolidate and clarify all issues for trial, and steps after the trial date is set are to be limited “unless a grave and irremediable injustice would be caused” (Section 80A). Pre-trial hearings are now being conducted and some trainings have taken place, but there has not been any further circular or instruction issued about them to the Commercial High Court. In addition, there is some discomfort among private practitioners about the dual role of the judge. There is fear that if a judge suggests settlement and a party rejects it, the judge will be prejudiced against that party. Conversely, there is concern that if a party offers a generous settlement, that is not accepted, the judge will then view that party’s case as weak. As a result of these concerns, some parties may not really take advantage of the mediation opportunity. Various suggestions have been made on how to address the new pre-trial-trial hearing. There is skepticism expressed and a suggestion that this hearing is just yet another bottleneck in the system. Others have suggested that a different judge hear the pre-trial (a Roll-Call judge). The Judges’ Training Institute (JTI) has done training on pre-trial procedure. We have requested copies of the materials but were told that they are not available. Some describe the pre-trial process as a “complete failure.” B. Affidavits to Introduce Evidence and Documents The use of affidavits both to introduce facts and documents is very efficient. This mechanism needs to be used more.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft C. Appointment of a Representative This change addresses the challenge of continuity when one of the parties to the proceeding dies. D. Notifications to Counsel Courts are authorized to send notifications to counsel who have appeared on behalf of a party using e-mails. This has not been attempted. Counsel receive notice by going to the Registrar or the court and asking. IX. ASSESSMENT The case processing system in place in the CHC leaves a great deal to be desired but does have some strengths. • The physical condition of files is insecure and does not protect them from dust, moisture and rodents; it is not possible for staff to easily access the files; this is part of the overall poor infrastructure of the CHC. • There is information technology currently in the court buildings, but it is not used for caseflow management. • New cases are accepted, numbered and assigned rationally, but the judges have to perform administrative tasks in accepting them. • Service of process is a source of great frustration. • Case management is done through handwritten notations and requires the judges to engage in administrative and clerical tasks that could be better addressed by administrative staff and improved procedures. • Communications with counsel do not use available technology. • Existing procedural improvements, such as interrogatories and pre-trial conferences, are not yet fully in use. • Transcripts and translations are not timely. • Attorney compensation stimulates attorneys to have many appearances. • Attorneys are allowed indefinite adjournments by the judges and the calendaring (scheduling) process encourages delays and postponements for “personal” reasons. • There are no continuous trials. • Executions of judgment have many steps. The more specific reasons that cases are delayed, step by step as a case proceeds through the CHC, are specified in Annexure V. X. RECOMMENDATIONS In this section we describe the recommended short-term solutions to the delays that could affect the DB index for Enforcing Contracts. We divide the caseflow recommendations into immediate and intermediate actions We would like to develop them further into an action plan in conjunction with the Task Force. Immediate, in this instance, means within a year, whereas intermediate means two years.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Before even listing immediate recommendations for the caseflow process, however, we must note that the poor condition of the building is such that there is no facility for a fourth judge, the files of current cases are endangered and the staff are not adequately maintained. The CHC judges and staff are simply not adequately resourced. Any serious effort to reform the caseflow process must look at the physical infrastructure of the CHC to a very significant extent. Long-term remedies are important, of course, and depend on significant amounts of financing, in particular for automation of the entire justice sector. However, the immediate and intermediate remedies can significantly improve caseflow and are indeed preparatory to the long-term remedies now being considered. The procedural recommendations for immediate action are based on the conviction that “people don’t fail, processes do,”10 and that continuous incremental improvements in the inefficiencies of the caseflow process can accomplish measurable reduction in delays. In addition, these recommendations are meant to be implemented in the short term, for the CHC, and do not depend on the national automation effort now underway. They also do not depend on the amendment of laws, which while possibly necessary, takes a long time. The objective is to use as much of the existing infrastructure as possible, and to introduce elements of automation as a pilot. Since there are three courtrooms, all in one place, and since there are only about 2000 new cases each year, the volume of cases to be improved is not so extensive as to preclude the efficacy of targeted, small intervention. As measures are introduced targeted training can also be provided on agreed interim measures. We would like to recommend the use of a Roll-Call judge and here is general agreement that this is an immediate need and would have immediate benefit. However, there is not an apparent infrastructure in the CHC to provide another courtroom. A. Immediate Short-Term Recommendations - 2018 Table 10.1: Short Term Recommendations Action Instrument Responsible Party

Limit Adjournments Circular JSC, all CHC judges

Full use of Pre-trial Procedure Circular, New Roll-Call Judge JSC, JTI, New Judge of CHC

Separate court for pre-trial New Roll-Call Judge JSC, JTI proceedings

Separate court for arbitration New Roll-Call Judge JSC, JTI enforcement

Publish all new CHC decisions Court Website JSC, JTI

Limit Adjournments Adjournments need to be limited in number and to situations that are unforeseen and extraordinary. Adjournments should no longer be routine and granted simply because agreed

10 https://www.lean.org/LeanPost/Posting.cfm?LeanPostId=480.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft upon by opposing counsel. The CHC needs to establish realistic and measurable timeframes for actions by parties, including answers, pre-trial hearings, and trials, as a transition to continuous scheduled trials. Timetables should be introduced in a phased way, first through scheduling new cases and cross-examination scheduling. Timeframes can vary by the nature of case, but the court has discretion to impose shorter timeframes for answers, interrogatories, etc. The contents of a draft circular limiting adjournments are attached. This could be part of a judicial manual, or a handbook for the CHC in particular. This should be prepared first in draft form and discussed with all court staff in an interactive process. In addition, there should be training on new procedures. After such internal consultation it could be put out for review and discussion by the Bar. The Bar should be made aware that continuous trials are the goal, and this should be started through gradual improvement in the calendaring of cases. For instance, as a start, parties should be required to arrange the case so that a single witness would give continuous testimony. Full Use of Pre-Trial Procedure through Roll Call Judge The pre-trial procedure should include: • Settlement efforts • The specific matters that are in dispute between the parties • Scheduling of trial – setting a specific date when the case will be heard • Length of Trial – how many days required for each party • Witness lists of the parties • A list of all the items of evidence • Any procedural issues still remaining to be resolved There is concern that a settlement process will prejudice a judge at trial; use of a Roll Call judge for pre-trial conferences (including settlement efforts) could address this. There is a lack of understanding as to how pre-trial and settlement conferences should work. Training in these areas is needed. See Annexure VI. There can be other benefits of a Roll Call judge: to the extent some aspects of case registration and management have to be handled by judges (according to law such as verification of adequacy of a plaint) use of a Roll Call judge for this purpose should be explored when a fourth judge is added. Accelerated Arbitration Enforcement through Roll-Call Judge If applied robustly and expeditiously the arbitration law in Sri Lanka should advance arbitration. The CHC has no jurisdiction over the dispute if the parties have agreed to arbitrate. Arbitration Act Section 4. While the public policy exception was abused in the past, a court interpretation has restricted it. It cannot be something that is “contrary to the national interest” in a narrow sense, such as payment of money by the state. It must be contrary to morality or somehow criminal.

Accelerated enforcement should determine whether there is an agreement to arbitrate and a valid award and promptly reject frivolous objections. Setting aside Roll-Call time to address new arbitration enforcement cases is recommended.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Webpage for the Court We recommend the soft introduction of a webpage for the CHC with publication of new decisions as a first step. We understand that the JTI is selectively publishing some CHC decisions. They should all be published as a matter of routine. This would serve many purposes: transparency, better use of , and also improvement of the DB ranking. Eventually, with basic instructions, this could be developed into a page where attorneys can access information on cases. This website should also accurately report on the caseload, the length of time that cases have been in the system, and other information. B. Intermediate Recommendations 2018-2019 Table 10.2: Intermediate Recommendations Action Instrument Responsible Party

Monitor Summons process, Survey Registrar, CHC identify flaws and delays

Review 10% of cases and identify Survey Registrar, CHC case management parameters

Case management of new cases CHC computers Registrar, CHC on automated database

Attorney access to actions on CHC computers, website Registrar, CHC new cases online

Use of discovery procedures Pre-trial awareness New Judge of CHC

Amend Civil Procedure Code Legislation MOJ, Legal Draftsman

Additional research Court clerks MOJ

Translation and transcription Additional staff and equipment MOJ improvements

Detailed Monitoring of the Summons Process While the summons process is not the greatest problem, it is the reason that some cases can never be tried and debts remain uncollected. Transparency in how this process is working is the first step. All staff who take steps to serve process should be required to record their actions online. The process should be monitored by the Registrar and should be visible to counsel online. It is also important to determine how such cases are counted before they are served. SAIL was not given access to this process. We understand that this needs to be authorized by the JSC.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Detailed Review of a Statistically Significant Number of Cases A very limited number of cases was reviewed for this assessment. The SAIL team was not given access to more cases. A review of a more significant number of cases is recommended so as to present an accurate statistical picture and also develop the necessary items to be captured as data (fields) for automated case management. This will need to be done by a team in a systematic way, with full access to the files and the staff of the Registrar. We understand that this needs to be authorized by the JSC. New case management procedures using technology already in place in the CHC There are computers in use in the CHC; they are not being used to optimize case processing. Active case management, enabled through a soft introduction of automation through document sharing for the CHC only, using existing equipment as much as possible, could be tried. A small, brief assessment by a local expert should explore how existing technology can be used to create a system in the court so that judges can enter case scheduling and other dispositions into a shared site and the registrars can access the information. This would in effect pilot electronic case management. Once registrars have access to case records through information systems, they can manage routine administrative aspects of cases, freeing judges for other work. They should not need to get a physical case file to know what is happening to a case. Registrars can then send notices to counsel. Use of e-mail with counsel can be introduced. The law has already authorized this. CHC judges should start communicating by e-mail with counsel, and counsel should be able to serve pleadings by e-mail. Attorney Access to Case Action Online While eventually full digitization of all files is necessary, it would be best to start incrementally, perhaps by digitizing new case pleadings and making them available to attorneys via the website. There may be concern about the security of such digitized materials. Given the insecure manner in which current files are kept, this should not be a serious obstacle. In addition, none of the information the CHC has should be secret or private. All pleadings should be publicly available. Better use of existing procedures: Interrogatories, Pre-Trial, Settlement Not one case reviewed used interrogatories; they can save time at trial. The use of affidavits should be encouraged. In addition, the CHC could facilitate use of such methods if there were sample standard documents provided. Amend Civil Procedure Code There have been recent amendments to the Civil Procedure Code but these have not been fully implemented. Additional amendments would be desirable to introduce firm deadlines for certain trial actions. For example, there should be a firm deadline expressed as the number of days for providing an answer. A party seeking leave to be granted extra time to file an answer would have to request that time and explain it. Additional amendments are needed for judges to have authority to impose more severe costs on parties who delay. To the extent that amendments are needed for full automation of cases, this should also be done.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Additional Research The judges of the CHC have requested additional assistance to research cases and write opinions. This is pending as a budgetary matter. Transcript and translation timeframes and resources Continuous trials require timely transcripts and translations. This is of course a problem of resources. However, the resources required for some additional staff are not comparable to renovation of the building, changes to information technology and the like. This would require proper compensation for several technical highly qualified staff. C. Long-term Recommendations - 2020 Table 10.3: Long-Term Action Instrument Responsible Party

Filing cases online Court website Registrar, CHC

Digitizing all cases New automation system MOJ

Recording all case actions for New automation system MOJ online access

Continuous trials Case management system CHC Judges

Similar recommendations have been made by different observers. MOJ is engaged in procuring an automation system for all of the courts. It will not be operational until 2020. That makes it all the more urgent to undertake the immediate and intermediate steps that can be taken.

27 USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft ANNEXURE I: Members of the Task Force on Contract

Enforcement

Agency Position Name Responsibility Ministry of Justice Secretary Ms. Mangalika Head of Task Force Adikari Board of Investments (BOI) Chairman Mr. Upul Jayasuriya, TF Member * Mr. Kolitha Ministry of Finance Director General, Legal TF Member Dharmawardena,

Ministry of Industry Mr. Chinthaka Secretary TF Member and Commerce Lokuhetti

Judge A. Marikar Judicial Service CHC Judge Secretary TF Members (recent Commission H.S. Somaratne nominations)

Attorney General's TBD TBC TF Member Department

Legal Draftsman TBD TBC TF Member

Private Sector TBD TBC TF Member Representation

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft ANNEXURE II: Action Plan for Improving Sri Lanka's Regulatory Environment in Enforcing Contracts

As set forth in A Roadmap to Improve the Investment Climate in Sri Lanka: Sri Lanka Means Business, approved by the Cabinet on 23 May 2017.

No Reform Actions Responsible Agencies

Conduct an assessment of how commercial cases are processed at the courts from filing through final enforcement and review Ministry of Justice (MoJ to the procedural framework for handling commercial cases to 1 coordinate JSC identify and address underlying causes of delays. Also review the involvement) processes in place at enforcement stage to identify if any problems exist. Develop comprehensive and verifiable court statistics to assist in the identification of causes for delays in commercial cases Ministry of Justice (MoJ to 2 and to measure improvements when innovations are coordinate JSC introduced and ensure that statistics are made available to involvement) public in an easily accessible manner (e.g. JSC website) 11 Develop and introduce electronic case management system at Ministry of Justice courts including e- filing, e-service of process Introduce performance management reports for courts available from JSC showing key indicators once electronic case management has been established. Reports should show: 12 Ministry of Justice (a) clearance rate; (b) length of cases; (c) age of pending cases; (d) ability to report on status of single case (on anonymized basis?) Promote awareness of the new electronic case management tools through training events and seminars. Once the new 13 Ministry of Justice system is functional, take stock of its implementation and identify opportunities to improved it and increase its uptake Examine Civil Procedures to consider where 3 Ministry of Justice improvements can be made to current procedures a)inc nludewin Pgr bue-Tt rnotial hliemaritiendg toto : be amended to include setting of dispute length and hearing days and use of a standardized case management form; b) introduction of stricter time standards in Civil Procedures; c) updates to cost tables and increased authority for judges so that costs order may be used to encourage settlement and deter vexatious behavior by litigants; (d) introduction of fast track with time limited process for non-complex commercial cases

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

No Reform Actions Responsible Agencies

e) use of affidavit evidence instead of examination in chief as prima facie position in all cases except where judge deems examination in chief necessary. Ministry of Introduce case management practices to address delays caused Justice(Taskforce to by adjournments including (a) increased authority for judges to 4 raise proposed change reject adjournments and/or a limit on number of adjournments to Chief Justice in especially in fast track cases; bilateral meeting) (b) authority for judges to require interim court costs payments from parties if they wish to adjourn Ensure judges, court staff and lawyers are Ministry of Justice (MoJ to made aware of new procedures and training is provided 5 coordinate Judges Institute through Judge's Institute both on new procedures and best involvement) practice in case management Publish PDF copies of all judgments for commercial cases (initially in language of judgment but develop plan to translate all 6 Ministry of Justice non-English judgments to English and eventually English judgments to National Languages) Introduce electronic payments for court fees and production of 7 receipts (by developing new courts portal under government e- Ministry of Justice Payments system) Assess the availability of funding and establishment of process for distribution of recording equipment (and training if 8 Ministry of Justice necessary) to all court stenographers so as to remove delays in record of proceedings being produced

Assess the availability of funding for judicial clerk/research Ministry of Justice assistant programme (based on current plan for (Taskforce to raise 9 proposed change to Supreme Court) for the Court of Appeal, all High Courts and selected District Courts) Chief Justice in bilateral meeting) Assess the availability of funding for increased administrative Ministry of Justice (MoJ to support to courts and registries (hiring extra court clerical staff 10 coordinate with Non- and providing training to reduce administrative workload of Judicial Training Institute) judges) Strengthen efforts to promote arbitration - provide training (a) (a) Ministry of Justice (b) 14 to High Court judges on interaction of arbitration and courts (b) to current domestic arbitrators on arbitration best practice MODSIT

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

No Reform Actions Responsible Agencies

Strengthen efforts to promote commercial mediation - provide 15 training for commercial mediators (to be determined if Ministry of Justice mediators should legal or non-legal professionals)

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft ANNEXURE III: Key Informant Interviews

1. Hon. Mahinda Samayawardena – Judge of the Commercial High Court 2. Hon. Pradeep Jayathilake – Secretary of the Judicial Service Commission (former) 3. Hon. E. A. G. R. Amarasekara – Director, Sri Lanka Judge’s Institute 4. Padmasiri Jayamanne, Secretary, Ministry of Justice (former) 5. Mangalika Adikari, Secretary, Ministry of Justice 6. Mr. Niranjan Abeyratne - Independent Practitioner 7. Mr. S. Cader – Managing Partner, Julius and Creasy 8. Mr. Mayadunne Corea – Senior State Counsel 9. Mr Kushan D’ Alwis, Presidents Council – Independent Practitioner 10. Mr. Harsha Fernando, Attorney – at – Law, ADB Representative in Sri Lanka and Independent Practitioner 11. Mrs. M.N.B. Fernando, Presidents Council – Additional General 12. Mr. Suren Gnanaraj – State Counsel 13. Dr. Asanga Gunawansa, Attorney – at – Law, Independent Practitioner, Chairman Sri Lanka International Arbitration Center 14. Mr. Arjuna Obeysekara – Senior State General 15. Mr. Ali Sabri, Presidents Council – Independent Practitioner 16. Mr. Premasiri Waduge - Chef Registrar of the Commercial High Court (former) 17. Mr. John Wilson, Attorney-at-Law and 18. Chief Fiscal officer of the Commercial High Court 19. Chief Record Keeper – Commercial High Court 20. Relevant subject court clerks

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

ANNEXURE IV: Case Information Summary Sheets

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft Procedure of Case for MR (Money Recovery)

Filing the Responsible Party Action Usual Time Case Plaintiff’s Counsel Files plaint, proxy and summons and pays Whenever case is stamp duty ready

Registrar Issues court number, assigns case, starts 2 weeks case file

Judge Confirms that the pleading is legally sufficient 2 weeks for filing

Serving Responsible Party Action Time in Cases the Reviewed Summons Plaintiff’s Counsel Provides address When case is filed

Registered Post Delivers mail 1-2 weeks

Fiscal Personally serve summons 2 weeks-11 months

Respondent Seeks to avoid service

Answer Responsible Party Action Time in cases (not reviewed always applicable Judge Sets date for answer Usually 45 days for ex from the time parte summons received trials) Respondent’s Requests extensions and files Answer on 3 months to 4 years Counsel paper with Registrar; serves Answer on from the time paper to Plaintiff’s counsel summons received

Enjoining Responsible Party Action Time in cases Order reviewed Granted Judge Reviews case Can be immediate if Plaintiff’s Counsel Files Request ex parte

Interim Responsible Party Action Time in cases Injunctive reviewed Relief Judge Conduct hearing, decide Same day possible – Granted Plaintiff’s Counsel Files Request or as long as 3 years

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Issues Responsible Party Action Time in cases hearing reviewed Judge Schedule and reschedule hearing, decide 9 months to 4 years Plaintiff’s Counsel Files Statement of Issues, attend hearing Respondent’s Files Statement of Issues, attend hearing Counsel

Settlement Responsible Party Action Time in cases hearing reviewed Judge Schedule and reschedule, one case had 11 Up to 13 years Plaintiff’s Counsel Identify options, attend hearing Respondent’s Identify options, attend hearing Counsel

Trial Responsible Party Action Time in cases reviewed

Judge Schedule trial 3-10 years

Many dates set, 5-6 typical

Plaintiff’s Counsel Prepare witnesses, affidavits, exhibits

Respondent’s Prepare witnesses, affidavits, exhibits Counsel

Almost no judgments yet in cases reviewed. Extensions requested: as many as 10 Reasons for requests for delays by counsel included: possibility of settlement, technical objections, judge on leave, counsel indisposed, another case in another court, connected case in Supreme Court, affidavit not ready, answer not ready, witnesses not ready. No replications filed, no interrogatories used in any cases reviewed

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft Procedure of Case for ARB (Arbitration)

Filing the Responsible Party Action Usual Time Case Plaintiff’s Counsel Files plaint, proxy and summons and pays Whenever case is stamp duty ready Registrar Issues court number, assigns case, starts 2 weeks case file Judge Confirms that the pleading is legally sufficient 2 weeks for filing

Serving Responsible Party Action Time in Cases the Reviewed Summons Plaintiff’s Counsel Provides address When case is filed Registered Post Delivers mail 1-2 weeks Fiscal Personally serve summons 2-6 months Respondent Seeks to avoid service

Answer Responsible Party Action Time in cases reviewed Judge Sets date for answer Usually 45 days from the time summons received Respondent’s Requests extensions and files Answer on 3 months to 2 years Counsel paper with Registrar; serves Answer on from the time paper to Plaintiff’s counsel summons received

Hearing Responsible Party Action Time in cases reviewed Judge Schedule trial 3-15 years Many dates set, 5-6 typical Plaintiff’s Counsel Prepare witnesses, affidavits, exhibits Respondent’s Prepare witnesses, affidavits, exhibits Counsel

Trial Responsible Party Action Time in Cases Reviewed Judge Award 0 – 2.5 years

Judgment Responsible Party Action Time I n Cases Reviewed Judge Award 4-5 years

The longest case was filed in 2002 and has been called 29 times.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft Procedure of Case for IP (Intellectual Property)

Filing the Responsible Party Action Usual Time Case Plaintiff’s Counsel Files plaint, proxy and summons and pays Whenever case is stamp duty ready Registrar Issues court number, assigns case, starts 2 weeks case file Judge Confirms that the pleading is legally sufficient 2 weeks for filing

Serving Responsible Party Action Time in Cases the Reviewed Summons Plaintiff’s Counsel Provides address When case is filed Registered Post Delivers mail 1-2 weeks Fiscal Personally serve summons 1-3 months Respondent Seeks to avoid service

Answer Responsible Party Action Time in cases reviewed Judge Sets date for answer Usually 45 days from the time summons received Respondent’s Requests extensions and files Answer on 5 months to 2 years Counsel paper with Registrar; serves Answer on from the time paper to Plaintiff’s counsel summons received

Issues Responsible Party Action Time in cases hearing reviewed Judge Schedule and reschedule hearing, decide 2 to 5 years Plaintiff’s Counsel Files Statement of Issues, attend hearing Respondent’s Files Statement of Issues, attend hearing Counsel

Settlement Responsible Party Action Time in cases hearing reviewed Judge Schedule and reschedule, one case had 11 Up to 10 years Plaintiff’s Counsel Identify options, attend hearing Respondent’s Identify options, attend hearing Counsel

Trial Responsible Party Action Time in cases reviewed Judge Schedule trial Up to 14 trial dates Many dates set, 5-6 typical set in 5 years Plaintiff’s Counsel Prepare witnesses, affidavits, exhibits

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Respondent’s Prepare witnesses, affidavits, exhibits Counsel

Judgment Responsible Party Action Time in Cases Reviewed Judge Award Over 10 years without judgment

No interrogatories used in any cases reviewed

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft Procedure of Case for REM (Maritime)

Filing the Responsible Party Action Usual Time Case Plaintiff’s Counsel Files plaint, proxy and summons and pays Whenever case is stamp duty ready Registrar Issues court number, assigns case, starts 2 weeks case file Judge Confirms that the pleading is legally sufficient 2 weeks for filing

Serving Responsible Party Action Time in Cases the Reviewed Summons Plaintiff’s Counsel Provides address When case is filed Registered Post Delivers mail 1-2 weeks Fiscal Personally serve summons Not available Respondent Seeks to avoid service

Answer Responsible Party Action Time in cases reviewed Judge Sets date for answer Usually 45 days from the time summons received Respondent’s Requests extensions and files Answer on 5 months to 2 years Counsel paper with Registrar; serves Answer on from the time paper to Plaintiff’s counsel summons received

Trial Responsible Party Action Time in cases reviewed Judge Schedule trial Up to 3 trial dates Many dates set, 5-6 typical set in 5 years Plaintiff’s Counsel Prepare witnesses, affidavits, exhibits Respondent’s Prepare witnesses, affidavits, exhibits Counsel

Judgment Responsible Party Action Time in Cases Reviewed Judge Award 5 years

No interrogatories used in any cases reviewed

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft Procedure of Case for CO (Company Law)

Filing the Responsible Party Action Usual Time Case Plaintiff’s Counsel Files plaint, proxy and summons and pays Whenever case is stamp duty ready Registrar Issues court number, assigns case, starts 2 weeks case file Judge Confirms that the pleading is legally sufficient 2 weeks for filing

Serving Responsible Party Action Time in Cases the Reviewed Summons Plaintiff’s Counsel Provides address When case is filed Registered Post Delivers mail 1-2 weeks Fiscal Personally serve summons Not available Respondent Seeks to avoid service

Answer Responsible Party Action Time in cases reviewed Judge Sets date for answer Usually 45 days from the time summons received Respondent’s Requests extensions and files Answer on 5 months to 2 years Counsel paper with Registrar; serves Answer on from the time paper to Plaintiff’s counsel summons received

Trial Responsible Party Action Time in cases reviewed Judge Schedule trial Several dates in the Many dates set, 5-6 typical course of 2 years, Plaintiff’s Counsel Prepare witnesses, affidavits, exhibits one case called 14 Respondent’s Prepare witnesses, affidavits, exhibits times Counsel

Judgment Responsible Party Action Time in Cases Reviewed Judge Award none

No interrogatories used in any cases reviewed

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft ANNEXURE V: Reasons for Delay in Case Processing

Long Term Reason Source Short Term Remedy Remedy

1 Summons Delay Even though post Need to start monitoring For corporations, office does give the process of fiscal; require receipt by e- receipts for consider it part of case mail as part of registered mail, record and monitor; corporate court fiscal staff determine whether cases registration. have to be used are counted or not For individual before service has been contract, provide done address in contract and that address should be presumed adequate 2 Judges do Law requires this Start using a Roll Call Change some legal administrative tasks approval to be judge to review provisions to allow such as review done by a judge; documents; introduce Registrars to review adequacy of the forms judges do some small local network with adequacy of pleadings of plaints other tasks that existing equipment so are not required that judges can interact by law with Registrar 3 Pre-Trial Procedure It has not been Issuance of circular with not fully in place introduced; there new procedures; Roll Call are no written judge to schedule and court procedures conduct pre-trial 4 No firm deadlines for Rules of Impose deadlines through Amend Civil answers, replications, procedure lack court circular Procedure to have discovery actions deadlines deadlines 5 Counsel do not use Interrogatories, Encourage through the Amend Civil discovery requests for introduction of Procedure to permit production of timeframes and interrogatories documents are standardized documents without court available in a court circular; Roll approval Call judge to approve interrogatories 6 No continuous cross- Court Issuance of circular with examination of procedures, better procedures; start witnesses customs of with new cases, gradually attorneys with full dockets; Court schedules many cases for one day 7 No continuous trials Court As an interim measure, Schedule trials day-to- procedures and start with several fixed day customs of dates.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Long Term Reason Source Short Term Remedy Remedy

attorneys, with Issuance of circular with very full dockets better procedure, gradual Court introduction to change defensively behavior of attorneys. schedules many cases in one day Financing of litigation 8 Frivolous evidentiary Lack of Encourage speedy Amendments to rules objections “subject to appropriate decisions through court of evidence and to proof,” followed by penalty; circular and electronic schedule of costs in court requirement of Rules of evidence case management at the applicable laws written submissions interpreted very bench, recording liberally; counsel decisions right away cause deliberate delay, especially if there are written submissions 9 Constant requests for Attorneys delay Gradual introduction of Impose penalties in delays by attorneys “for personal stricter rules to change applicable laws reasons” behavior of attorneys regularly and this through circular is granted as a courtesy by courts 10 Court schedules This is a Issuance of circular with Impose penalties for many cases in one day defensive better procedure, gradual missing dates measure to introduction to change address counsel behavior of attorneys delays 11 Counsel have Compensation Issuance of circular with Change financing of incentives to prolong for each better procedure, gradual cases; allow cases appearance; introduction to change contingency recovery parties lack funds behavior of attorneys and long term for continuous payment (this is a trial; delay to very long process of avoid evictions change) 12 Communicating with Civil procedure Introduce small local Large-scale counsel in person allows for e-mail network for court automation of all but this is not (existing equipment); e- courts in one system used mail communication with counsel; filing of submissions by e-mail to the Registrar and opposing counsel

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Long Term Reason Source Short Term Remedy Remedy

13 Difficulty in No scanning or Soft introduction of Full automation, as is processing and digitization of automation of new court planned accessing files court files files through small local network 14 Lack of English Low pay Incremental improvement Resources to pay staff Stenographers in pay and new staff Use of recording devices 15 Translation delays Requirement of Court circular to allow Resources to pay translation of immediate filing of plaint translators documents to in English with translation Sinhala; later documents in English, proceedings in Sinhala 16 No transparency; Court decisions Gradual development of a Large-scale decisions not not available to small court website automation of all available; inconsistent the public and to publishing court courts in one system decisions counsel decisions; transition to publishing all decisions 17 Delay in Execution of Need further Monitor and keep data on Judgments study to clarify process causes

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft Annexure VI: Contents of Proposed Circulars Contents of Draft Circular On Adjournment of Hearings and Trials in the Commercial High Court of Colombo The Judicial Service Commission, taking into consideration the need to assure that there will not be frequent and unsubstantiated adjournments of cases pending before the Commercial High Court of Colombo, and that cases will get to trial and judgment expeditiously, decided that the Judges of the Commercial High Court should follow the procedures set forth below. 1. Adjournments only for Extraordinary and Unforeseen Circumstances Adjournment should be granted by the Judges of the Commercial High Court only in case of extraordinary and unforeseen circumstances affecting the ability of one or both of the parties to appear. Extraordinary and unforeseen circumstances include severe illness, death, natural disasters or similar events. 2. Making a request for Adjournment Counsel making a request for adjournment must do so as soon as the circumstance necessitating it has been identified and must do so in writing. 3. Timing of Request Requests for adjournment may not be made at the time of the hearing or trial but must be made at least a full business day in advance. A court may grant an exception to this rule and entertain a late request only in case of a documented emergency arising upon the day of the hearing or trial. 4. First Request on the basis of Submissions by counsel The first request for adjournment by counsel shall be granted if the court deems it appropriate on the basis of submissions by counsel. 5. Additional Requests to be substantiated Any subsequent requests for adjournment must be substantiated by detailed documentation of the specifics of the circumstances necessitating the adjournment, such as medical certificates as to illness, death certificate as to death in the family, etc. 6. No Adjournments for Appearances in other Courts or other obligations of counsel Adjournments may not be granted on a routine basis on the grounds of appearances in other courts or other professional or personal scheduling conflicts. Counsel must arrange their schedules accordingly. 7. Rescheduling at time of Adjournment Any matter adjourned should be rescheduled for prompt consideration at the earliest possible time.

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USAID SAIL Project Draft Assessment of the Caseflow Process in the Commercial High Court of Colombo– Second Draft

Contents of Draft Circular Pre-Trial Conference

The Judicial Service Commission, taking into consideration the need to assure that there will be optimal use of pre-trial conferences by the Commercial High Court of Colombo, and that cases will be settled, and if necessary, tried, expeditiously, decided that the Judges of the Commercial High Court should follow the procedures set forth below for pre-trial conferences provided for in Civil Procedure Code Chapter XVIIA, Of the Pre-Trial, Sections 142 A to 142 1. Scheduling Pre-Trial Hearing

The pre-trial hearing shall be automatically scheduled by the Registrar within XXX days of the service of summons.

2. Proposed Admissions and Submissions by The Parties

Parties shall, pursuant to Civil Procedure Section 142B, submit written proof of service of process as well as proposed admissions and issues to the court and to all parties at least fourteen days in advance of the scheduled pre-trial hearing.

3. Scheduling of a Single Day Pre-Trial Hearing A single day hearing is to be preferred in all cases. The court may subject to Section 142B rescheduled the hearing to conclude it within three months. Such adjournments shall be the exception and to be granted in case of unforeseen and exceptional circumstances only. 4. Subjects to be Covered in Pre-Trial Hearing The Court shall first determine whether there is a possibility of settlement or resolution of the dispute. If not, the following shall be determined at the conclusion of the pre-trial: a) The specific matters that are in dispute between the parties b) Scheduling of trial – specific date when the case will be heard c) Length of Trial – how many days required for each party99 d) Witness lists of the parties e) A list of all the items of evidence f) Any procedural issues still remaining to be resolved g) Any other matters that appear necessary and desirable, as set forth in Civil Procedure Section 142D((i) for expeditious and inexpensive disposal of the dispute. 5. Scheduling of Continuous Trials Trials should be scheduled so as to allow sufficient time for continuous trials. 6. Case Journal Entries The court shall enter its decisions in the form of a pre-trial order to the Case Journal.

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