Economically responsible justice

Live Mint, April 27, 2017

By Pradeep S. Mehta

Judges need to understand the complex linkages between various areas of governance and economic and legal activity today

The judiciary is increasingly dealing with issues with economic and commercial impact.
The Supreme Court collegium has recently cleared a record 51 names for high court judge posts. Of these, 20 are judicial officers and 31 are advocates. Other than this, not much information is available in the public domain about the expertise of the selected individuals. In the rush to fill judicial vacancies, there should be no compromise in the quality of judicial decisions and ensure judges are capable of dealing with increasingly complex issues interlinking law, economics, technology, intellectual property, competition and allied fields.

An inability or unwillingness to take into account economic considerations in judicial decisions is putting a significant number of jobs at risk, and a substantial amount of investment in peril. Therefore, it is time to enable delivery of economically responsible justice by addressing the issue squarely.

Knowledge about the interfaces between law, economics, technology, cybersecurity, intellectual property and allied fields and their overlaps is increasingly becoming relevant for the higher judiciary in order for them to adjudicate fairly. A quick review of recent decisions reveals that it is unfortunately not up for the challenge.

The higher judiciary is increasingly dealing with issues which have large-scale economic and commercial impact. These include allocation of natural resources such as spectrum, coal blocks, allowing mining of sand and sandstone, use of the Aadhaar card to access essential services, data privacy and security and waiver of farm loans.
A lack of economic analysis while passing judgement has the potential to create an adverse impact on employment, growth of infrastructure, hospitality, tourism, real estate and other economically relevant sectors, revenue of state and Central governments, and balance sheets of banks and financial institutions, without having the desired positive impact on social behaviour. For instance, the Supreme Court’s recent order banning the sale of liquor near highways could adversely affect the tourism sector and result in the loss of a great many jobs. Alcohol consumption is not a social ill but irresponsible drinking is.

Perhaps the neglect of economic considerations is baggage from the past. Historically, the Indian judiciary has dealt with socially significant issues such as health, education, reservations in education and employment, priority sector lending, bank nationalization, bank branch licensing in remote locations, etc. While such issues have direct and indirect economic impact, the need for conducting economic analysis of judicial decisions was not felt, perhaps owing to our limited understanding of the linkages between judicial decisions and economic governance.

It would be foolish to repeat the mistakes made in the past. We are increasingly looking to the judiciary to balance apparently conflicting interests: the rights and obligations of sovereign and private parties; the right to privacy and economic inclusion; environmental considerations and economic equity; innovation/intellectual property and public interest. Such matters have significant economic impact. Ascertaining the correct balance even for granting interim injunctions could become complex at times.

Efforts in the past to undertake economic analysis of judicial decisions have remained half-baked. For instance, in M.L. Sharma v. Principal Secretary And Ors, the Supreme Court heard parties on the potential economic impact of cancellation of coal blocks, but was persuaded by Central government submissions that it was fully prepared to deal with the impact of cancellation and levy of additional penalty on coal block allottees. It did not provide any rationale for accepting the Central government’s contentions; nor did it take into account the economic impact of cancellation and levy of penalty on several stakeholders.

Thus, while the economic impact of decisions may often be recognized, the depth of economic analysis and the significance given to it while decision making seem to be inadequate. A comprehensive economic analysis not only aids in sound decision making, but also promotes transparency and improves the quality of decision making.
It is thus important for the judiciary to conduct sound economic analysis before arriving at decisions and efficiently communicate the rationale of its decisions. Such analysis should not be a one-off or depend on the judgement or the judge, but must follow a well laid out process, which considers different interests, and facilitates disclosure of the rationale for the decision in simple language.

It needs to be recognized that the economic impact of judicial orders could be direct, indirect, patent or latent, and different stakeholder groups could be differently affected. Accordingly, capacity building within the judiciary to balance different competing interests will be needed. With the arrival of commercial courts and benches, this becomes more necessary than ever.

The economic impact assessment of judicial decisions will aid in upholding the credibility of the judiciary and the quality of judicial decision making, which is increasingly coming under scrutiny. Judges need to understand the complex linkages between various areas of governance and economic and legal activity today to ensure delivery of economically responsible justice.

Pradeep S. Mehta is secretary general of CUTS International.

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