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Uganda commercial laws not implemented

KAMPALA, Uganda–The Deputy Governor, Bank of Uganda, Louis Kasekende has said Uganda has a solid corpus of commercial law on its statute books, which embodies similar principles to those found in the commercial laws of other market economies but that the deficiencies of the commercial law in Uganda are to be found in its implementation and enforcement.

“The commercial courts are overwhelmed by a vast backlog of cases. Last year, the Case Backlog Reduction Committee, chaired by Hon. Justice Richard Buteera, revealed that there was a backlog, defined as a case which has not been resolved for a minimum of two years, of around 3,000 cases in the commercial courts,” Kasekende said

He said it is estimated that, on average, commercial litigation requires a minimum of four years to be completed.

Kasekende said: “Delays of this magnitude are extremely costly for financial institutions. Not only are loanable funds, which could be re-intermediated to other borrowers, tied up because commercial claims remain unresolved, but the costs incurred by financial institutions because of the delays in resolving commercial claims reduce the viability of their lending, which in turn raises the cost of credit or induces banks to curtail the volume of their lending.”

He said that it must be emphasised that the reasons for these huge delays in resolving court cases do not lie only in the weaknesses within the judicial system itself but rather claimants often clog up the judicial system with frivolous cases designed only to delay the enforcement of legitimate claims and then seek any opportunity to delay the disposal of these cases by the courts.

To address this, Kasekende said under the leadership of the current Chief Justice, Bart Katureebe, the judiciary is making strenuous efforts to reduce the case backlog, in all areas of the judicial system, through the Case Backlog Reduction Strategy.

The strategy includes filling vacant posts in the judiciary structure, improving the performance of judicial officers, better management of the court system, strengthening the inspectorate of courts and instigating a policy of zero tolerance of corruption. I want to applaud these efforts which the judiciary is making to improve the efficiency of the justice system, which will be of great benefit to all Ugandans.

He said the law plays a crucial role in a modern, market oriented economy. In such an economy Kasekende said, economic agents – firms, employees, customers, etc – freely enter into commercial transactions with one another.

He said economic self-interest provides the motive for each of these economic agents to engage in commercial transactions; for example, a firm aims to maximise its profits. With some exceptions, which economists call externalities and which justify government intervention, the pursuit of economic self-interest by all economic agents in a market economy generates outcomes which maximise the economic benefits for the society as a whole, therefore, the market, cannot operate efficiently in a vacuum. It requires an institutional framework which facilitates economic agents to enter into commercial transactions in a cost effective manner, so that all parties to transactions honour their obligations to other parties.