National 7 (Spotlight Weekly)

Legal Tangle

Participants at a one-day seminar discuss the role of the judiciary and legal institutions in corporate governance

By A CORRESSPONDENT

The role of Nepalese legal institutions in the settlement of corporate disputes falls short of the international standard. In many cases, multinational corporate houses have seen many unusual situations. Be it the case of Kodak, Nepal Battery Company or Indo-Suez Bank, delays in the judicial process have sent a very wrong signal in the international sector.

In the changing context of globalization, every corporate entity demands legal guarantee and predictability in the legal system before making any investment. From the process of making the law to its implementation, one can see many complications in the legal system.

At a time when issues of corporate governance have become more complex in the context of globalization, the role of legal institutions has also changed drastically. The area of judicial institutions is widening in legal matters of corporate governance.

Speakers at the seminar, organized by the Center for Development and Governance and Focal Point for Financial Reforms, discussed the role of legal institutions in the changing context of corporate governance. Participated in by senior judges, lawyers, businessman and government officials, the colloquium tried to find ways of making legal institutions

more effective in settling disputes.

"The Supreme Court is considering to start a different bench just to see cases related to the corporate sector. Such process will help to produce quicker decisions," said Keshav Prasad Upadhyaya, chief justice of the Supreme Court, inaugurating the colloquium.

Other, too, agree with the urgent need to reform commercial laws. "Most people realize that the development of the private business sector is being held back by an incomplete commercial law code, weak enforcement of existing statures, and unfamiliarity with many features of financial and business laws," said Udaya Nepali, secretary at the Ministry of Law, Justice and Parliamentary Affairs. "The efficiency of the present dispute resolution system for commercial matters must be improved to expedite development of both the public and private sectors."

Strong and capable legal institutions are essential to attract foreign investment. "The colloquium is devoted to looking at the roles of legal reforms and judicial capacity building in corporate governance. Nepal's legal, judicial, and accounting professions are facing a time of rapid change," said Prof. Bishwa Keshar Maskey, chairman of Center for Development and Governance.

The donor community, too, is very much concerned with ensuring the rule of law. "The experiences of other countries strongly indicate that establishing a rule of law, implemented by able and experienced jurists, will support market transactions, will help release the energies of the private sector, and will encourage foreign investment," said Richard Vokes, country director, Asian Development Bank, Nepal Resident Mission. "We have been responsive to requests from government and the legal profession to improve key components of commercial law."

At the seminar, chaired by member of the National Assembly Dr. Roop Jyoti, three different papers were presented by Prof. John Adams, Ram Krishna Timilshina, and Rajuman Singh Malla on institution-building approach for corporate governance. Former attorney-general Badri Bahadur Karki, Pradeep M. Vaidya of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and Pramod Karki of the Ministry of Finance commented on the papers. Vice president of FNCCI Rajendra Kumar Khetan, advocate Bharat Upreti and Prabhu Ram Bhandari presented three other papers in the second session.