India is the fastest-growing major economy in the world with significant Government investments in infrastructure. According to estimates by WTO and OECD, as quoted in a report from the United Nations Office on Drugs and Crime, India: Probity in Public Procurement, the estimated public procurement in India is between 20 and 30 percent of GDP.
This translates to Indian government agencies issuing contracts worth an estimated US$ 419 billion to US$ 628 billion each year for various aspects of infrastructure projects. Ideally, in contractual agreements no disputes would arise and both sides would benefit from the outcome. However, unexpected events occur and many contracts end in dispute. Contractual legal disputes devoid project benefits to the public as time and resources are spent in expensive arbitration and litigation. As a result, India’s development goals are impacted.
A significant percentage of government spending in India goes towards the creation of new infrastructure like the construction of roads, ports, railways and power plants. Construction contracts, however, often have a reputation for disputes and conflicts between contractors and governments. Such disputes ultimately delay implementation of the contracts and increase total costs, adversely impacting development outcomes of the projects.
Many countries have found that Dispute Boards offer an effective mechanism for resolving these issues in a timely and cost-effective manner. These boards, composed of one to three members, are set up upon commencement of a contract and help the involved parties avoid or overcome disagreements or disputes that arise during the contract’s implementation. The boards are less legalistic, less adversarial, less time consuming and less costly than options for resolving disputes within the legal system, including arbitration and litigation.
A 2004 study (PDF) shows that with an almost 99% success rate. The savings in using these boards are enormous: another study indicates that in almost 10% of projects, between 8% and 10% of the total project cost was legal cost.
Among many tools that enable gathering of project beneficiaries’ concerns and solving them are Grievance Redress Mechanisms (GRMs). Although the mechanisms themselves are not new, World Bank teams are increasingly encouraged to systematically include GRMs in their projects to increase beneficiaries’ participation, solve project-related disputes and ensure that projects achieve their intended results. As such, GRMs have been a topic of debate among World Bank staff. GRMs are also called dispute resolution and conflict management/resolution mechanisms and they are considered to be one of several social accountability mechanisms. The topic is, therefore, not only timely at the World Bank but should also be of interest to development practitioners generally.
In my previous entry, I asked what role the World Bank and other donors might be able to play in exploring whether hybrid courts might help enhance access to justice. I believe there are three key areas where we in the international community might be able to support country discussions of whether and how to incorporate community justice systems through hybrid courts.
|Daru Village Court in Papua New Guinea|
What accounts for whether hybrid courts stick as relevant and useful institutions, as opposed to withering as a ‘neither-nor’ – neither regarded as a familiar community mechanism, nor as having the full backing of the state? In my previous blog entry, “History of Hybrid Courts in East Asia & Pacific: A ‘best fit’ approach to justice reform?”, I discussed the emergence of hybrid courts. In this post, I’ll raise three elements which seem to be essential characteristics of successful hybrid court systems: legitimacy, effectiveness, and flexibility.
It took 41 years for the fastest developing 20 countries in the 20th century to achieve basic transformations in the rule of law. However, the World Development Report 2011 suggests that fragile countries cannot afford to wait that long. Instead, in managing disputes, it is imperative for governments and the international community to support arrangements that fit each country context, take into account capacity constraints in government and the local level, and respond to the needs of users. Justice reform should be measured accordingly from a functional perspective—based on the needs of users—rather than abstract modeling of institutions on western approaches.