Reforming the judiciary
system
By JOSÉ MIGUEL
FABBRI
April 29 - May 05, 2002
Dadabhoy University is
extending all efforts in defining the New Pakistan
School of Public Policy
George Mason University
A democratic state cannot long survive without a
legitimate rule of law, enforced and protected by an independent and
credible judiciary. In the United States, the judiciary also serves
the function of creating a balance of powers between the legislative
and the executive. However, too often in Latin America one of the
branches is excessively strong, resulting in an unbalanced state
where, usually the executive, imposes its will. The unfortunate result
is inefficient accountability and the discretionary use of public
goods, both of which foster corruption.
Citizens in developing nations witness outrageous
acts of corruption with no one being held accountable, resulting in a
loss of faith in democratic institutions. In Bolivia, the judiciary is
endemically corrupted, condemning most of the commercial, civil and
public activities to be corrupted too. When those with the legal
obligation to guard the legality and rightfulness of civic and
official activities are corrupted, economic recovery will take a long
time because of the effect corruption has on increasing transaction
costs.
The need for reform is clear. Investors will not
consider a country where there is no guaranteed standard for judicial
procedure or reliable process. To attract investors, a country must at
least offer some degree of fairness and judicial certainty within a
reasonable timeframe. Supreme Court Justice, Eduardo Rodriguez found
that the average resolution of a commercial dispute — considered an
executive process under Bolivian law — takes more than 6 years,
while civil cases take between 12 to 15 years to be resolved. When the
resolution of conflicts takes so many years, business ventures become
less profitable and risky in that particular country.
Foreign, as well as, domestic investors are
reluctant to do business in Bolivia due to the excessive time and
unpredictable outcome of judicial proceedings. A study by Mitchell
Seligson of the University of Pittsburgh found that the perceived
levels of corruption in the judiciary have doubled since 19981. In
fact, according to the Corruption Perception Index of Transparency
International, Bolivia has actually become more corrupt since 1996. In
that year Bolivia ranked 36, in 1998 it was number 69, and in 2001 it
was number 852. Not surprisingly there has been a period of economic
stagnation for the past four years.
Corruption depresses economic growth by directly
increasing transaction costs, defined by the dictionary of modern
economics as "[t]hose costs other than price which are incurred
in trading of goods and services."3 These include expenses not
related to factor inputs, but rather the costs of using the mechanisms
of production and exchange. In this sense, transaction costs can be
viewed as a friction in the economic system, some of which are a
necessary result of the market process and cannot be entirely
eliminated. Transaction costs can be reduced with mechanisms such as
enforceable contracts, which require courts, police and alternative
dispute resolution procedures.
Francis Fukuyama has also written that societies
with higher levels of trust among constituencies can facilitate the
reduction of transaction costs.4 When the costs of transacting are
high, the result is significant friction within the economy, limiting
development and slowing the growth of private businesses. Hernando De
Soto believes that transaction costs are higher in developing
economies because property rights are not properly protected by the
state.5 Where legal rules and mechanisms of enforcement are lacking,
property rights are not secure and determining the ownership and means
of transfer of goods and services becomes nearly impossible. To be
efficient, property rights must be universal and exclusive.
A corrupted judiciary makes it impossible to combat
corruption in other government agencies. But, the executive and
legislative branches have systematically de-powered the judiciary;
especially since the former dictator Hugo Banzer Suarez restructured
the legal system. It is this reality that has caused the government of
Bolivia to seek to address the problem of corruption in the judiciary.
However, internal and external pressures for quick reform are meeting
with resistance and have not achieved the desired effects. Alternative
solutions are needed to reduce corruption in the judiciary that have
not been considered by legislators and reformers. Legitimate and
effective reforms often meet resistance from the Bolivian congress
itself, which has for many years been protecting of their own interest
as a political class, modifying and altering the laws at their own
interest and benefits.
The consequence is that laws are promulgated with
defects, creating and consolidating an unpredictable legal system. The
political elite can be expected to continue accommodating the law to
its own benefit without intense pressure from reformers in the
business community.
RECOMMENDATIONS FOR REFORM
1. Election of
Justices: The legislative and the executive branches have the
constitutional right to elect members of the judiciary, allowing them
to politicize judicial selections. The Constitution and the Law of the
Judicature need to give more independence to and remove the political
influence from the election of members of the judiciary. A meritocracy
should be used to elect and members of the judiciary, promoting
judicial careers.
2. Reform the
Criminal Code. It is important to reform the Criminal Code (Codigo
Penal) to punish corruption inside the judiciary. In cases where a
member of the judiciary is accused of corruption the burden of proof
should shift so that they must prove their innocence. This is an
approach that has been advocated by organizations such as Transparency
International but only in cases where corruption is endemic, as the
case in Bolivia. The penalties for corruption should also be harsh
enough to influence the behaviour of the judiciary.
3. Increase
salaries. It is important to increase the levels of salaries in the
judicial branch as a way to dignify the judicial profession and reduce
corruption.
4. Declaration
of Assets. It is worthwhile to enforce the declaration of assets to
members of the judicial branch and relatives and family. It is too
easy to cheat when disclosure applies only to the members of the
judiciary and not to relatives and family.
5. Proactive
Media. One way to make members of the judiciary more accountable and
socially responsible is to promote efficient and proactive mass media.
The media is important because it has the ability to investigate and
expose corruption and corrupt practices. However, journalists need
more legal protection because in some cases journalists who discover
acts of corruption are victimized.
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