Foreign businesses shun Zimbabwe courts

Source: Foreign businesses shun Zimbabwe courts | The Financial Gazette December 22, 2016

FOREIGN investors have little faith in the country’s judiciary system because of the inordinate time it takes for disputes to be settled, aspiring Chief Justice, Rita Makarau has said.
Makarau revealed this during interviews for the post of Chief Justice in Harare last week while responding to questions from a Judicial Service Commission panel on how she could improve the judiciary in the event that she lands the post.
“We need to set up a commercial court… a court that has an appreciation of the value of time in commerce. We need to make sure that disputes of commercial nature are settled expeditiously because unlike divorces, where you may have to give the parties time to think things over, time is of importance in commercial disputes,” Makarau explained.
She said it was during her time as Judge President of the High Court of Zimbabwe that she introduced divisions in the court system resulting in the setting up of different court units such as the criminal division, the civil division, the family law division, the labour court and the fiscal court. She said she was moved to the Supreme Court when she was on the verge of setting up a commercial court, and since then the idea has remained a graveyard of good intent.
Makarau said although the time it takes for commercial disputes to be settled has vastly improved, it would take time before foreigners have confidence in the Zimbabwean judiciary again.
Zimbabwe is battling perception issues, which have not been helped by the country’s land reform programme and the resultant serious violation of property rights. The country’s indigenisation law — viewed by foreign investors as a smash and grab law — has further compounded fears among foreigners.
As a result, when most foreigners enter into contracts with locals, they insist on including a clause highlighting that in the event of a dispute, that dispute should be settled in another jurisdiction.
When he opened the 2016 legal year, outgoing Chief Justice, Godfrey Chidyausiku indicated that Zimbabwe was in the process of setting up a standalone commercial court as part of the country’s moves to improve the ease of doing business.
“We believe that the setting up of this court, with judges dedicated to commercial law court matters will not only ease the doing of business in Zimbabwe, but will mark the beginning of specialisation in our High Court as a means of improving on overall efficiency. We urge all stakeholders to assist us in realising this vision for our country in the not too distant future,” said Chidyausiku.
Commercial courts are considered a competitive advantage for emerging markets desperate for foreign investment as they facilitate a speedy resolution of disputes.
Zimbabwe’s neighbours, Zambia, Lesotho, South Africa and Mozambique already have commercial courts.
According to the World Bank — which annually publishes the Arbitrating and Mediating Disputes indicators that assess the legal and institutional framework for commercial arbitration, mediation and conciliation regimes in 100 economies — an effective commercial arbitration regime is a matter of priority for foreign investors.
“Commercial contracts are increasingly complex and often require reliable, flexible dispute resolution mechanisms. Commercial arbitration and other alternative dispute resolution mechanisms give the parties the autonomy they need to create systems tailored to their disputes. In addition, foreign investors view arbitration as a way to mitigate risks by providing legal certainty on enforcement rights, due process, and access to justice,” the World Bank has noted.
“Thirty-nine economies host private institutions which offer fast-track arbitration services, i.e, time-bound arbitration for faster and less expensive resolution of the dispute, and 17 host institutions, which offer online arbitration services, allowing online arbitration proceedings to save time and expense. Globally, arbitration proceedings take 326 days on average, while recognition and enforcement proceedings of foreign arbitral awards take 557 days on average,” the Breton Woods institution has further indicated.