Government submits bill to establish mercantile court

The government has introduced a Mercantile Court bill to the parliament with the purpose of establishing a separate court with a separate seal and special jurisdictions to solve disputes involving business transactions in the Maldives.

Maldivian Democratic Party (MDP) MP Mohamed Musthafa submitted the bill to parliament on behalf of the government.

According to the bill, the Mercantile Court will consist of a Construction Division, Banking and Financial Division, Tourism Division, Investment Division, Goods and Services Division and Proprietary Division.

The bill also gives the Chief Judge of the Mercantile Court the powers to include any other divisions that the court finds that it lacks.

The bill will give the court jurisdiction to handle cases relating to business transactions concerning tourism, construction, international business, insurance, civil aviation, maritime, shipping, finance leasing, banking and finance, securities, fishing, company, partnership, professional liability and intellectual property rights.

The Mercantile Court will also handle contract, trade and service provision, consumer and service recipient protection in matters worth more than Rf 15 million (US$1 million).

According to the bill, the Mercantile Court has the jurisdiction to issue any sort of warrant or orders on its own initiative or upon a request made by a person to uphold justice or to prevent the judiciary from being misused.

The court’s bench will consist of seven judges, and significantly, a Muslim foreigner may be appointed as a judge at the court.

The bill comes following concerns aired recently by international organisations such as the International Committee of Jurists (ICJ) that the existing Maldivian judiciary lacked the independence and capacity to rule in cases involving complex civil proceedings.

Speaking to Minivan News in March after several weeks observing the operation of the Maldives’ Judicial Services Commission (JSC), former Australian Supreme Court Justice Professor Murray Kellam said that an impartial judicial system was a key factor in encouraging foreign investment and could have a direct and significant impact on the economy.

This was something that Singapore recognised 15 years ago, he said.

“They understood the value of a civil system that is incorruptible and competent. They spent a lot of money on their judiciary and Transparency International now rates their civil legal system as one of the best in the world.

“Singapore realised that one of the best ways to attract investment was to have a system whereby international investors knew they would get a fair go in domestic courts. If you look at the circumstances in other parts of the world where investors have no confidence in the judiciary, that deters investment and takes it offshore. They’ll go somewhere else.

Citing Adam Smith, considered one of the founders of modern capitalism, Kellam observed that “Commerce and manufacturers can seldom flourish long in any state which does not enjoy a regular administration of justice, in which people do not feel themselves secure in possession of their property, in which the faith of contracts is not supported by law.”

As a foreign investor, Kellam said, “you want to know that contact you enter into with domestic partners will be understood and enforced by courts if there is a breach. You want courts to judge you impartially – you don’t want to be discriminated against because you are a foreigner.”

“Secondly, it’s no good getting judgement if no there is enforcement – which is a major factor in developing countries. Sure you can get a judgement, but it’s not worth the paper it’s written on because there is no process for getting it enforced, and you can’t turn judgements into anything productive.”

Singapore had recognised this, and become not only a hub for foreign investment but also a regional hub for commercial arbitration, Kellam said.

“People from around the region will use Singapore as a place of law and business,” Kellam observed.


6 thoughts on “Government submits bill to establish mercantile court”

  1. Hmm.

    Can only be a good thing.

    As long as these foreign judges are mildly sentient, they should be an improvement over the existing crop.

    Can we have foreign judges in our criminal courts too? In fact, it probably wouldn't be a completely terrible idea to outsource the entire judiciary and parliament as they are.

  2. The mercantile court could subsume the related functions of the civil court altogether without prejudice towards cases involving smaller sums of money. If not then I have some concerns about;

    - Institutionalizing a system of double-standards whereby cases involving larger sums of money are guaranteed attention by "better" courts.

    - Such transactions will often involve the business elite of the Maldives as well as foreign investors. A separate court for such persons seems discriminatory.

    - Subsuming the civil court's trade and business related functions would attract some of the justices at the civil court to the mercantile court (if established) and also if the civil court is in future to adjudicate mainly over matters concerning fundamental freedoms, then better synergy and less strain on the state budget can be attained by specializing and separating both courts in terms of their function rather than the amount of cash involved.

  3. It's a very hopeful scenario if parliament pass the bill. What we are lacking most is justice provided our development grows unmatched. I urge parliament not to dribble the ball and pass the bill as soon as possible.


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