Here is how trade disputes pile up, wreak havoc on businesses

Infograph: TBS

The wheels of justice turn slowly, but they grind exceedingly fine. This famous quote did not, however, go well for The Large Mate – a Swedish firm which had to eventually give up a $0.1 million lawsuit against a Bangladeshi supplier in 2011 after fighting for 23 years.

M Jahir, the lawyer for the foreign firm who filed the fraud case in 1988 with a Chattogram court, had already died. The case is now with the Appellate Division and awaiting disposal.

The history of the trade feud dates back to 1987. In that year, The Large Mate signed a deal with Chattogram-based Bangla Orbit Supper Ltd for sourcing bamboo from Bangladesh. Bangla Orbit sent the first consignment and took $0.1 million in advance for two remaining lots.

But the local company did not supply it, and allegedly embezzled the money. In 1990, a Chattogram court ruled in favour of the Swedish company, ordering Bangla Orbit to pay back the money plus $10,000 in fine.

As the local supplier challenged the order with the High Court, the HC in 2003 upheld the lower court order and added another $10,000 fine to the previous one. Subsequently, Bangla Orbit appealed with the Appellate Division against the verdict.

One of M Jahir's colleagues said The Large Mate gave up on the case in 2011, and there is no initiative for the case hearing now.

Around 2.11 lakh such commerce cases were pending with the Appellate Division, High Court and trial courts till 30 June 2022, according to the Solicitor Wing of the Ministry of Law, Justice and Parliamentary Affairs. The amount of the disputed claims skyrocketed to around Tk2.5 lakh crore.

The staggering cost

Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said businessmen are the first victims if such cases are not disposed of promptly.

"Secondly, businesses incur losses due to the prolonged trials. Many ventures have gone broke. Besides, the government loses revenue from the money stuck in the cases," he told The Business Standard.

Of the cases, there are the highest 1.15 lakh lawsuits over transaction disputes, while others are over transferring company shares, ownership disputes, breach of contracts, frauds, investment disputes and substandard supply-related issues.

According to the FBCCI president, lengthy trials in trade cases contribute to fragile confidence about the country by foreign investors and businessmen.

A disturbing upcurve

Commerce cases have been on a gradual rise since 2012, Solicitor Wing data has shown. Of the total 2.11 lakh cases, trials related to around 39,000 cases have been ongoing for more than ten years.

Despite the steady rise in cases, only 6,309 lawsuits were settled in 2019 by the Appellate Division, High Court and lower courts, according to the wing. Case settlement was 2,213 in 2020, 8,000 in 2021 and 5,203 till June this year.

Company law expert Barrister Tanjib Ul Alam points finger at the lack of dedicated courts and bench for the backlog in commerce cases. He said the lack of skilled judges is another key reason for the outstanding number of cases.

Company law expert Barrister Shah Ahsanur Rahman said the lack of a uniform law for commerce-related disputes is also responsible.

"Currently, cases are filed under 30 laws. But there should have been a uniform law, dedicated courts and benches for commerce disputes," he noted.

Barrister Ajmalul Hossain QC, another noted company law expert, called for mandating alternative dispute Regulation (ADR) before seeking legal remedy in court.

And what do the authorities say?

On the request of the Commerce Ministry in 2018, the Law Commission formulated the draft of a uniform commerce dispute law.

The draft law has been formulated by amending the Arbitration Act-2000, said former Law Commission chairman and former chief justice ABM Khairul Haque.

If enacted, the law will speed up trials in trade and commerce-related cases, he commented.

According to the Law Commission, it is now taking the opinions of various stakeholders about the draft. The draft will be submitted to the commerce ministry soon.

Law Minister Anisul Huq told The Business Standard that a 2016-study of the South Asian Association for Regional Cooperation (Saarc) countries showed that the lack of resolution of trade disputes caused a loss of about $600 billion globally every year. And only in Bangladesh, the amount is about $400 million.

He agreed that commerce cases backlog has intensified in recent years.

The minister hoped the government will be able to enact the law soon, and reduce the outstanding number of commerce cases substantially.