Egypt’s clogged-up courts need reform to attract investors

The Egyptian court system is overloaded with cases. Much of it is still not computerised and its procedures are opaque, inefficient and mired in bureaucracy.

Egypt’s broken legal system needs emergency repairs if the country is to attract investors, whether foreign or Egyptian.

The court system is overloaded with cases. Much of it is still not computerised and its procedures are opaque, inefficient and mired in bureaucracy. Much of the court staff is untrained. The system has a staggering backlog of 11 million cases, according to legal sources.

It is too easy to file court cases, and once filed they are not easily dismissed, even if frivolous. Businessmen tell horror stories of cases taking years to resolve.

Egypt’s civil code is based on French law, with three levels of hearings: a court of first instance, an appeals court and a court of cassation. But lawyers say that, unlike in France, there is little to hinder a party to a lawsuit from sending the case to the next level.

Parties to court cases regularly and deliberately send them to all three levels as a way to postpone final judgments against them. It can take five to seven years for an appeals court judgment.

In France, cases rarely get beyond that to the highest level, cassation, whereas in Egypt there is little additional cost, and they are sent there almost as a matter of course.

It can take four to five years even to get a date set for a cassation hearing. Some commercial cases have been known to take as long as 15 years to reach a final settlement that can be properly enforced, lawyers say.

Judges lack experience, technical knowledge and specialisation. Sometimes a judge will hold on to a case for years, only to announce that his court doesn’t have jurisdiction or competence, lawyers say.

Once a final judgment is reached, it must be enforced – a complicated and lengthy process where papers are shuffled from one office to the next as they work their way towards completion.

This opens the door to potential corruption, giving the losing party in a court case ample opportunity to pay officials along the way to delay the papers or make them disappear.

The government has been working to reform the system, but it has been slow. Pilot projects to computerise courts of first instance were begun in the late 1990s with help from the US Agency for International Development.

In about 2008, the government began putting more resources into the court system to reduce the amount of time needed to hear cases.

By that time, 1 million to 1.2 million new cases were being filed each year, and only 800,000 were being closed, so that the backlog was increasing. In 2008 the rate began improving, with 1.8 million closures a year, says Ahmed Kamal, an adviser to the minister of state for administrative development. When the revolution came along, the process slowed again.

In October 2010 the government also created specialised economic courts.

There are now eight, with one in each of Egypt’s eight appeals courts districts. The bulk of the economic cases, about 55 per cent, are heard in Cairo.

Similarly important is a project that Egypt’s Judicial Information Centre and the ministry of state for administrative development began this year to digitise the enforcements.

They officially began a pilot project in August in New Cairo, where they connected the criminal court with five police stations, the public prosecutor’s office, the forensic medical authority, the interior ministry and the border control.

Under the project, judgments are automatically sent out to the various parties. The authorities are preparing to begin a second pilot plan in Alexandria.

Training and preparation began last month, and a three-month roll-out will start next April. Egypt has been receiving support for the project from the European Union and has been studying the experiences of South Korea and Singapore.

They plan to go nationwide by end-2017, a date Mr Kamal sees as perhaps too ambitious. “It needs lots of money and a change of mindset,” he says.

While unlikely to eliminate corruption entirely, passing out the judgment to all the interested parties at once at least makes it harder for would-be bribers to reach an official.

The government aims to extend the system to the country’s economic courts by the end of 2016 if not sooner, says Mr Kamal. These courts will also be connected to commercial and real estate registries.

The new system is likely to encounter resistance from civil servants, partly because computerisation involves an entirely new mindset, partly because many are likely to lose the power they wield under the current system.

Both the current and the previous prime ministers have been pressing hard to have the new system up and running as quickly as possible.

This high-level political support is absolutely crucial if the country wants investment to surge.

Patrick Werr has worked as a financial writer in Egypt for 25 years.

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