Commercial Court’s Impact on Saint Lucia’s Competitiveness

The establishment of an efficient and effective Commercial Court will mark an important step in enhancing the business climate and thus competitiveness of Saint Lucia. In the 2013/2014 Budget Address, the Honourable Prime Minister endorsed the establishment of a Commercial Division of the Court with the subsequent hiring of a resident judge to hear commercial disputes.  As such, the Government of Saint Lucia has partnered with the Compete Caribbean Program in the design and establishment of a Commercial Division of the Court.

The World Economic Forum Define Competitiveness as 'the set of institutions, policies and factors that determine the level of productivity of a country'.This is an ongoing project spearheaded by the National Competitiveness & Productivity Council Technical Secretariat and the Ministry of Legal Affairs. The overall objective of this project is to reduce the burden on the court system and to enhance the business environment as it relates to the enforcement of commercial contracts. Therefore, the Commercial Court will be established to provide an efficient and cost effective mechanism to rule on commercial matters in Saint Lucia.

During her address at the opening of law year in 2013, Chief Justice, Dame Janice Pereira stated “….The reality is that economic and social development depends on an effective legal system, which is just as pivotal to a country’s growth and development as any financial institution.”  The Chief Justice has understood the advantages that a Commercial Court has provided for the British Virgin Islands (BVI). The BVI has been cited for having an internationally well known Commercial Court. The Chief justice further indicated that there is a link between economic well being and the justice system.

The Government of Saint Lucia has therefore identified the establishment of a Commercial Division of the Court as a high priority reform as it is likely to impact on Saint Lucia’s overall development.  The driving force behind the creation of the Court is to facilitate the resolution of business disputes in a quick and effective manner that ensures economic growth. The Commercial Court is expected to deliver an expeditious and cost effective mode of resolving disputes that directly affect the commercial and financial sector in Saint Lucia.

The establishment of this mechanism will increase Saint Lucia’s competitiveness in the regional and international market. The World Economic Forum defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country.” Therefore, the establishment of a set of institutions in a country to support businesses and help increase their productivity levels can increase the competitiveness of businesses and the country as a whole. Thus, the operations of a Commercial Court can impact the competitiveness of a country through the promotion of business and investment prospects. For example, officials at the Uganda Investment Authority state that the Commercial Court has assisted in marketing Uganda as an investment destination. Therefore, a commercial court contributes to a healthy investment climate which encourages investment into the country thus leading to economic growth.

A healthy investment climate is essential in increasing investor confidence as well as business opportunities into a country. While it may seem that the business and legal sectors are two different entities, a weak commercial justice system cripples investors’ willingness to bestow funds into a country. Furthermore, when there are difficulties in obtaining commercial justice, this dissuades business opportunities from coming into a country. Moreover, this ongoing economic slowdown accompanied by high financial uncertainty has reinforced the need to establish efficient processes for commercial dispute resolution and the recovery of losses.

Additionally, banks are less willing to lend to the private sector in the absence of an efficient legal system to settle commercial matters. This is the case as, there is no assurance of the ability to collect on debts or obtain property which was pledged as collateral to secure loans. This has the potential to limit the funding available for business expansion. This means that fewer businesses are able to expand and reach overseas markets and thus slows down trade and the competitiveness of businesses. This prevents increased private sector participation in the local economy as fewer businesses will be established as a result of the inability to access credit. This can hamper the economic development and competitiveness of a country.

The establishment of an efficient and cost effective Commercial Court and the associated commercial laws is expected to improve Saint Lucia’s performance on the World Bank’s Ease of Doing Business Ranking. The Enforcement of Contracts indicator has been the worst performing indicator in the last five years. The establishment of a Court without bureaucratic procedures that resolves commercial matters in a fast and cost effective way will impact on this indicator. In Rwanda for example, the implementation of a Commercial Court in 2008 resulted in a decrease in case backlog and contributed to a reduction in time to solve commercial cases by nearly three months.

To conclude, in the absence of a Commercial Court small businesses struggle to survive, disputes are settled through unofficial means and in the worse scenario investors take their business elsewhere. The establishment of a Commercial Court will make it easier, faster and less expensive to conduct business in Saint Lucia. The Court and the associated commercial laws should improve the enforcement of commercial contracts making it more efficient. This will impact the competitiveness of businesses in Saint Lucia as there will be greater access to credit. This means that businesses are more likely to engage in new business ventures, new customers and borrowers which ultimately impacts on their level of competitiveness.

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