DOING BUSINESS 2009 - JOHN J. HADDAD, Ph.D.

76 Doing Business 2009CostCost measures the fees levied on a 20-footcontainer in U.S. dollars. All the fees associatedwith completing the procedures toexport or import the goods are included.These include costs for documents, administrativefees for customs clearanceand technical control, terminal handlingcharges and inland transport. The costmeasure does not include customs tariffsand duties or costs related to ocean transport.Only official costs are recorded.The data details on trading across borderscan be found for each economy at http://www.doingbusiness.org. This methodologywas developed in Djankov, Freundand Pham (forthcoming) and is adoptedhere with minor changes.Enforcing contractsIndicators on enforcing contracts measurethe efficiency of the judicial systemin resolving a commercial dispute (table12.11). The data are built by followingthe step-by-step evolution of a commercialsale dispute before local courts. Thedata are collected through study of thecodes of civil procedure and other courtregulations as well as surveys completedby local litigation lawyers (and, in aquarter of the economies, by judges aswell). The name of the relevant court ineach economy—the court in the largestbusiness city with jurisdiction overcommercial cases worth 200% of incomeper capita—is published at http://www.doingbusiness.org.Assumptions about the case• The value of the claim equals 200% ofthe economy’s income per capita.• The dispute concerns a lawfultransaction between 2 businesses(Seller and Buyer), located in theeconomy’s largest business city.Seller sells goods worth 200% of theeconomy’s income per capita to Buyer.After Seller delivers the goods to Buyer,Buyer refuses to pay for the goods onthe grounds that the delivered goodswere not of adequate quality.• Seller sues Buyer to recover theamount under the sales agreement(that is, 200% of the economy’sincome per capita). Buyer opposesSeller’s claim, saying that the qualityof the goods is not adequate. Theclaim is disputed on the merits.• A court in the economy’s largestbusiness city with jurisdiction overcommercial cases worth 200% ofincome per capita decides the dispute.• Seller attaches Buyer’s goods priorto obtaining a judgment becauseSeller fears that Buyer may becomeinsolvent during the lawsuit.• Expert opinions are given on thequality of the delivered goods. If itis standard practice in the economyfor parties to call witnesses or expertwitnesses to give an opinion on thequality of the goods, the parties eachcall one witness or expert witness. Ifit is standard practice for the judgeto appoint an independent expert togive an expert opinion on the qualityof the goods, the judge does so. Inthis case the judge does not allowopposing expert testimony.• The judgment is 100% in favor ofSeller: the judge decides that thegoods are of adequate quality andthat Buyer must pay the agreed price(200% of income per capita).• Buyer does not appeal the judgment.The judgment becomes final.• Seller takes all required steps forprompt enforcement of the judgment.The money is successfully collectedthrough a public sale of Buyer’smovable assets (for example, officeequipment).ProceduresThe list of procedural steps compiledfor each economy traces the chronologyof a commercial dispute before therelevant court. A procedure is definedas any interaction between the parties,or between them and the judge or courtofficer. This includes steps to file the case,steps for trial and judgment and stepsnecessary to enforce the judgment.The survey allows respondents torecord procedures that exist in civil lawbut not common law jurisdictions, andvice versa. For example, in civil lawcountries the judge can appoint an independentexpert, while in common lawcountries each party submits a list ofexpert witnesses to the court. To indicatethe overall efficiency of court procedures,1 procedure is now subtracted for economiesthat have specialized commercialcourts and 1 procedure for economiesthat allow electronic filing of court cases.Procedural steps that take place simultaneouslywith or are included in otherprocedural steps are not counted in thetotal number of procedures.TimeTime is recorded in calendar days,counted from the moment Seller filesthe lawsuit in court until payment. Thisincludes both the days when actions takeplace and the waiting periods between.The average duration of different stagesof dispute resolution is recorded: thecompletion of filing and service of processand of pretrial attachment (time tofile the case), the issuance of judgment(time for the trial and obtaining thejudgment) and the moment of payment(time for enforcement of judgment).Table 12.11What does enforcing contracts measure?Procedures to enforce a contract (number)• Any interaction between the parties in acommercial dispute, or between them and thejudge or court officer• Steps to file the case• Steps for trial and judgment• Steps to enforce the judgmentTime required to complete each procedure(calendar days)• Measured in calendar days• Time to file the case• Time for trial and obtaining judgment• Time to enforce the judgmentCost required to complete each procedure(% of claim)• No bribes• Average attorney fees• Court costs, including expert fees• Enforcement costsSource: Doing Business database.(c) The International Bank for Reconstruction and Development / The World Bank