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To Sue or Not to Sue: How Afghan Merchants Strategically Choose to Use or Avoid Courts

Published online by Cambridge University Press:  12 November 2019

Haroun RAHIMI
Haroun RAHIMI*
Affiliation:
American University of Afghanistan, Afghanistanrahimi.haroun@gmail.com
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Abstract

This article explores how and why Afghan merchants choose to use courts or informal dispute resolution methods. It goes beyond the common corruption and inefficiency arguments, which maintain that Afghans do not use courts because they are corrupt and inefficient. It leverages rich, original data on variation of dispute resolution practices across provinces and types of disputes to gain insights into Afghan merchants’ dispute resolution decisions. In so doing, I reveal a more complex picture of commercial dispute resolution in Afghanistan. In this article, I demonstrate that Afghan merchants do choose courts when courts enforce the parties’ expectations and courts’ judgments are necessary and effective. Moreover, while Afghan merchants do prefer informal dispute resolution methods, they do so because informal methods hold important advantages over courts in the context of Afghanistan where the formal property rights system is a failure, and the business climate is highly volatile.

Type
Article
Information
Asian Journal of Comparative Law , Volume 14 , Issue 2 , December 2019 , pp. 211 - 244
Copyright
Copyright © National University of Singapore, 2019

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Footnotes

*

Assistant Professor of Law, American University of Afghanistan.

References

1. See eg Singh, Danny, ‘Explaining varieties of corruption in the Afghan Justice Sector’ (2015) 9(2) Journal of Intervention and Statebuilding 4CrossRefGoogle Scholar <https://core.ac.uk/download/pdf/42413120.pdf> accessed 2 Oct 2019; Asian Foundation, ‘The Growing Challenge Of Corruption In Afghanistan: Reflections on a Survey of the Afghan People, Part 3 of 4’ 6 (2012) <https://asiafoundation.org/resources/pdfs/FNLcorruptionchapterOccasionalPaperJuly30.pdf> accessed 2 Oct 2019.

2. Rahimi, Haroun, ‘Formalizing Informal Trade and Credit Institutions: Designing Effective Institutional Economic Reforms in Afghanistan and Beyond’ (Doctorate Dissertation, University of Washington 2018) 125Google Scholar.

3. The evidence of the volatility of Afghanistan's business climate can be found in the periodic reports on the attitude of business regarding the current and future status of their business. Afghanistan Chamber of Commerce & Investment, ‘Business Tendency Survey Reports of II-2014, IV-2014, I-2015, II-2015, III-2015, IV-2015, I-2016, II-2016, III-2016, IV-2016, I-2017, II-2017, and III-2017’ <http://www.acci.org.af/surveys-and-studies.html> accessed 2 Oct 2019.

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8. ibid 4.

9. ibid 27.

10. ibid 64.

11. ibid 46–47; Greif (n 5) 3.

12. ibid.

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14. ibid.

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18. ibid.

19. Haley (n 17) 365.

20. ibid 378–389.

21. ibid.

22. Hawaladar may be defined as a person or an entity which engages, amongst other things, in the transfer of funds domestically and internationally, often in different currencies.

23. Calculated by the author based on ‘Business Establishment Survey 2009’ (Afghanistan Central Statistics Organization 2010) <http://old.cso.gov.af/en/page/1500/1494/6> accessed 19 Sep 2019; ‘Business Establishment Survey 2015’ (Afghanistan Central Statistics Organization 2016) <http://old.cso.gov.af/en/page/1500/1494/6> accessed 19 Sep 2019.

24. Calculated by the author based on ‘Afghanistan Demographic Estimates for the Years of 2002/03 until 2017/18’ (Afghanistan Central Statistics Organization) <http://old.cso.gov.af/en/page/demography-and-socile-statistics/demograph-statistics/3897111> accessed 19 Sep 2019.

25. ibid.

26. ‘Quarterly Judicial Activities Reports for the Years of 2012 until 2017’ (Afghanistan Supreme Court) <http://old.supremecourt.gov.af/fa/page/court-reporting> accessed 2 Oct 2019.

27. Afghanistan Chamber of Commerce & Investment (n 3).

28. Haroun (n 2) 102.

29. According to the World Bank 2016 Governance Index, the Afghan government falls within the lowest percentile and is consistently ranked as one of the worst countries across the recorded measurements which are important for the formulation and implementation of polices and regulation: Worldwide Governance Indicators, ‘Afghanistan for the Years 1996 to 2016’ (The World Bank) <http://info.worldbank.org/governance/wgi/index.aspx#reports> accessed 2 Oct 2019.

30. Afghanistan is ranked 172 out of 180 countries by Transparency International: Transparency International, ‘Corruption Perceptions Index 2018’ <https://www.transparency.org/cpi2018> accessed 2 Oct 2019.

31. Calculated by the author based on Afghanistan Central Statistics Organization, ‘Sectoral Contribution to the GDP for the Years of 2002/03 until 2016/17’ <http://old.cso.gov.af/fa/page/ict/11328/11332> accessed 19 Sep 2019.

32. Haroun (n 2) 139.

33. ibid.

34. ibid.

35. ibid 125.

36. The Holy Quran (Abdullah Yusuf Ali trans, Wordsworth Classics of World Literature 2001) 42:38Google Scholar.

37. See n 22 above.

38. Author's interview with Rahmatullah Amiri, the head of Amirian Group of Companies (Daudzai Shopping Mall, Kabul, Afghanistan, 18 Jun 2017).

39. Afghanistan Ministry of Commerce and Industries, ‘Ministry of Commerce and Industries Strategic Plan 2016–2020’ (2016) 13.

40. Qanun Tashkil va Salahiat Quva Qazaiee [Laws on Organization and Jurisdiction of Judiciary] (No 851, 1384 [2005]) art 61.

41. ibid.

42. Qanun Usul Muhakimat Madani [Law of Civil Procedure] (No 722, 1369 [1990]) art 12(2).

43. Qanun Tarz Tahsil Huquq [Law of Enforcement of Rights] (No 786, 1377 [1999]) (repealed in 2018).

44. ibid.

45. ibid.

46. ibid.

47. Law of Civil Procedure, art 12.

48. Law of Enforcement of Rights, art 2.

49. Usul Muhakimat Tijrati [Principles of Commercial Procedure] (No 1–4, 1343 [1965]).

50. ibid, art 6.

51. ibid, art 12.

52. ibid, art 11.

53. ibid, art 8.

54. Usulnameh on the Commercial Law of Afghanistan [Principles of Afghanistan Commercial Law].

55. ibid, arts 16–17.

56. ibid, arts 8 & 23; Principles of Commercial Procedure, art 1.

57. ibid.

58. ibid, art 20.

59. ibid, art 21.

60. Afghanistan Supreme Court, Judicial Seminar (1395 [2017]) 190.

61. ibid.

62. ibid.

63. ibid.

64. ibid.

65. Calculated by the author based on Afghanistan Supreme Court (n 26).

66. Calculated by the author based on Afghanistan Central Statistics Organization, ‘The National Risk and Vulnerability Assessment: Afghanistan Living Conditions Survey (2007–2008)’ <http://old.cso.gov.af/en/page/1500/1494/nrav-report> accessed 19 Sep 2019; Afghanistan Central Statistics Organization, ‘The National Risk and Vulnerability Assessment: Afghanistan Living Conditions Survey (2013–2014)’ <http://old.cso.gov.af/en/page/1500/1494/nrav-report> accessed 19 Sep 2019.

67. Calculated by the author based on Afghanistan Central Statistics Organization (n 24).

68. Principles of Commercial Procedure, art 40.

69. ibid.

70. ibid.

71. ibid.

72. ibid.

73. ibid.

74. ibid, art 37.

75. ibid, art 40.

76. ibid.

77. ibid.

78. Principles of Commercial Law, art 2.

79. Principles of Commercial Procedure, arts 131–143.

80. ibid, arts 143–155.

81. ibid, arts 156–199.

82. ibid, arts 200–203.

83. Principles of Commercial Law, art 79.

84. Laws on Organization and Jurisdiction of Judiciary, art 6(3)(1).

85. ibid, art 6(3)(2).

86. ibid, art 35.

87. ibid, art 6(3)(3).

88. ibid, arts 26–27.

89. ibid.

90. Law of Civil Procedure, art 13.

91. Author's interview with the Chief Judge of Kabul Primary Commercial Court (Kabul, Afghanistan, Jun 2017).

92. Calculated by the author based on Afghanistan Supreme Court (n 26).

93. Law of Enforcement of Rights (repealed in 2018) (n 43).

94. Author's interview with a Judgment Enforcement Specialist at Herat Huquq Department (Apr 2017).

95. See Law of Enforcement of Rights (repealed in 2018) (n 43).

96. Author's interview with a Judgment Enforcement Specialist at Herat Huquq Department (Apr 2017).

97. The facts concerning the different possible enforcement outcomes are based on the author's interview with a Judgment Enforcement Specialist at Herat Huquq Department (Apr 2017).

98. Afghanistan Supreme Court (2017) (n 60) 129.

99. Author's interview with a Judgment Enforcement Specialist at Herat Huquq Department (Apr 2017). The interviewee is referring to the Law of Enforcement of Rights (repealed in 2018) (n 43), art 18.1.

100. ibid; Afghanistan Supreme Court (2017) (n 60) 190.

101. Author's interview with a Judgment Enforcement Specialist at Herat Huquq Department (Apr 2017).

102. Afghanistan Supreme Court, Mutahadulmal [Decision] (No 307–369, 1385 [2007]).

103. ibid.

104. ibid.

105. ibid.

106. ibid.

107. Constructed by the author based on written answers to the author's questionnaire by the Judgment Enforcement Specialists at Huquq Departments of Herat, Kabul, Balkh, Kabul, Nangarhar, and Kandahar (Sept–Dec 2017).

108. Calculated by the author based on Afghanistan Supreme Court (n 26).

109. ‘Business Registry Data for the Years of 2014/15 until 2016/17 For Kabul, Herat, Kandahar, Balkh, and Nangarhar’, original document received by the author from Afghanistan Central Business Registry's Directory through the Head of Office of Business Registry at the Afghanistan Ministry of Commerce on 23 Sep 2017.

110. ibid.

111. ibid.

112. ibid.

113. The facts reported in this paragraph is based on the author's interview with the Head of Kabul's Primary Commercial Court (Jun 2017).

114. For example, a Primary Commercial Court judge in Balkh said, ‘We do not enforce oral contracts because it is very difficult to determine its terms and content’: Author's interview with a Primary Commercial Court judge in Balkh (May 2017).

115. Afghanistan Chamber of Commerce & Investment (n 3).

116. Liz Alden Wily, ‘Afghanistan Research and Evaluation Unit, Land, People and The State of Afghanistan: 2002–2012’ (Afghanistan Research and Evolution Unit 2013) 22 <https://areu.org.af/publication/1303/> accessed 2 Oct 2019.

117. Author's interview with a Judgment Enforcement Specialist at Herat Huquq Department (Apr 2017).

118. This is why increased use of commercial courts in Afghanistan is correlated with worsening macroeconomic conditions. This finding is based on the author's interviews with Afghan merchants in five major provinces of Afghanistan (Kabul, Herat, Nangarhar, Balkh, and Kandahar) between March and August 2017, as well as the author's personal observations over several years of his work as an accountant in Afghanistan's private sector between 2008–2013.

119. Afghanistan Supreme Court (n 60) 173.

120. ibid.

121. Author's interview with the Chief Judge of Balkh's Primary Commercial Court (May 2017).

122. ibid.

123. ibid.

124. See Qanun Rahn Amwal Manqul dar Mua'amalat Banki [Law on Use of Movable Properties as Collateral in Banking Transactions] (No 990, 1387 [2009]); Qanun Rahn Amwal Qair-Manqul dar Mua'amalat Banki [Law on Use of immovable Properties as Collateral in Banking Transactions] (No 990, 1387 [2009]).

125. ibid.

126. Afghanistan Supreme Court (n 60) 185.

127. Law on Use of Movable Properties as Collateral in Banking Transactions; Law on Use of immovable Properties as Collateral in Banking Transactions.

128. Qanun Tarz Tahsil Huquq [Law of Enforcement of Rights] (No 1309, 1397 [2018]) (the law now in force).

129. ibid, arts 22(2), 28(2), 28(4), 29(2).

130. ibid, art 30.

131. ibid, art 18(3).

132. ibid, art 42.

133. The creation of a new Directorate of Land (Arazi) is one those reforms. For a review of the programs undertaken by the Arazi, see Islamic Republic of Afghanistan, Afghanistan Land Authority (Araz), ‘Home’ <https://arazi.gov.af/english/index> accessed 2 Oct 2019.

134. The stated facts about the Center are based on the author's interview with the Head of Afghanistan Commercial Dispute Resolution Center at Afghanistan Chamber of Commerce and Industries (Kabul, Jun 2017).

135. The stated facts concerning the Herat Chamber of Commerce are based on the author's interview with the President of Herat's Chamber of Commerce and Industries (Herat, Apr 2017).

136. ‘The Afghan mindset is more arbitration oriented, but people in Kabul clearly want to explore more formalized mediation. The interest for formal mediation in the province [Balkh] the consultant visited was not as high’: Pete Swanson, ‘United States Agency for International Development Report on Assessment of Potential for Commercial Mediation’ (USAID 17 Mar 2010) 6 (emphasis added).

137. Author's interview with a hygienic products manufacturer in Herat (Apr 2017).

138. ibid.

139. ibid.

140. See eg Fafchamps (n 6) 10.

141. Author's interview with the Vice President of Kandahar Chamber of Commerce and Industries (Jul 2017).

142. Author's interview with Rahmatullah Amiri, the head of Amirian Group of Companies (Daudzai Shopping Mall, Kabul, Afghanistan, 18 Jun 2017).

143. The description of informal dispute resolution in Afghanistan presented here is based on typical facts reported by the interviewees in the author's interviews with Afghan merchants in five major provinces of Afghanistan (Kabul, Herat, Nangarhar, Balkh, and Kandahar) between March and August 2017.

144. Author's interview with the Vice President of Kandahar Chamber of Commerce and Industries (Jul 2017).

145. ibid.

146. In 2017, 62% of the 3,773 people polled across thirty-four provinces of Afghanistan said that magistrates and judges are either all or mostly corrupt. The perceived corruption of this category is the highest among the five institutions that respondents were polled on. National Government officers, Members of Parliament, Local Government officers, and the Police were all perceived as less corrupt: World Justice Program, ‘The Rule of Law in Afghanistan’ (World Justice Program 2017), 10 <https://worldjusticeproject.org/sites/default/files/documents/WJP_Afghanistan_Report_2017_Final_Online-Edition-Reduced.pdf> accessed 2 Oct 2019.

147. Da Afghanistan Bank, Muqarrara Tanzim Fa'aliat hai Sarrafan va Fraham Konandagan Khadamat Puli [Regulation of Sarrafs and Money Service Providers’ Activities] 1395 [2016], art 4.8(j).

148. Author's interview with a Kandahari merchant (July 2017).

149. Author's interview with two dried fruits merchants in Kandahar (Jul 2017).

150. ibid.

151. ibid.

152. Newell, Richard S, The Politics of Afghanistan (Cornell University Press 1972) 34Google Scholar.

153. ibid 78.

154. Author's interview with a merchant in Nangarhar (May 2017).

155. Author's interviews with merchants in Kabul (Jun 2017).

156. ibid.

157. This statement is based on author's interview with the owner of a construction company in Kabul (May 2017).

158. Author's interviews with merchants in Kandahar (Jul 2017).

159. ibid.

160. See Afghanistan Central Statistics Organization (n 24).