STRENGTHENING LEGAL PROVISIONS FOR THE ENFORCEMENT OF CONTRACTS: REASSESSING THE QUALITY AND EFFICIENCY OF DISPUTE RESOLUTION OF COMMERCIAL MATTERS IN INDIA
About the Project:
India ranked 142nd in 2015 Ease of doing business rankings published on 29 October 2014 by the World Bank. Since then it has moved up to sixty-five places to reach its current 77th position in the 2019 ranking as published on 31 October 2018. One of the factors taken into account to calculate these rankings is the contract enforcement indicator. However on this indicator the country has not been able to register that good a performance. In 2015 rankings, India was 186th among 189 countries. In the 2019 rankings it ranked 163rd among 190 countries in relation to contract enforcement by the World Bank in its ease of doing business report of 2018.
The rankings are based on the Enforcement of Contract Score which is calculated on the basis of three criteria namely, Time Taken by the court of first instance to dispose the case, Cost (as a percentage of claim value) incurred, and the quality of Judicial process index which vary from a scale of 0-18. A comparison of India with the best performing economy Singapore and United States is reflected in the table below.
|Trial and Judgment||118||240||1095|
|Cost (% of Claim value)||25.8||30.5||31.1|
|Quality of Judicial Process Index (0-18)||15.5||13.8||10.5|
|Enforcement of Contract Rank||1||16||163|
As the table above shows India lags behind on the time factor as Legal disputes in India are very infamous for the consumption of time. Radical substantive and procedural reforms are required to reduce the time taken by courts to conclusively settle contractual disputes.
To remedy this dire situation the Parliament of India enacted the Specific Relief (Amendment) Act, 2018. The amendment brought radical changes in the area of contract enforcement. Most important were limiting the discretion of the court in granting the remedy of specific performance and injunctions in disputes related to infrastructure projects and introducing the right to substituted performance. However, more such radical adjustments are required to be made in the future to improve the contracting environment in India.
The Centre for Environmental Law Education, Research and Advocacy- National Law School of India University submitted a Proposal to the Ministry of Law and Justice to conduct research on “Strengthening Legal Provisions for the Enforcement of Contracts: Reassessing the Quality and Efficiency of Dispute Resolution of Commercial Matters in India.” The Proposal was approved by the Department of Justice under the Ministry of Law and Justice and the Sanction Letter for undertaking the project was duly received in December 2018.
The project explores the possibility of reform in various avenues of contractual enforcement. The aim of the project is to undertake a thorough review of the existing laws on contractual enforcement in India and to evaluate and ascertain the efficiency of the Indian enforcement mechanism (both substantive rights and procedure) of contractual obligations in a globalized economic environment. The ultimate aim of this project is to look into legal reforms to improve the ease of doing business ranking of India and making Indian contracting environment suitable to the needs and requirements of business and commerce in a globalized economy.
Mid-Term Report of the Project can be assessed in the link as mentioned below.