Sri Lanka Country Profile

Judicial System

Individual Corruption

According to a survey of judges in the Transparency International Global Corruption Report 2007, the largest group of court personnel taking bribes are court clerks. Bribes are paid to influence the issuance of court summons and trial dates. Others who benefit from bribes are public prosecutors, police and lawyers.

Business Corruption

The judiciary is perceived to be the most corrupt institution in Sri Lanka. The courts are subject to political influence and they do not always render impartial verdicts. These factors combined with the knowledge that court procedures are very time-consuming because their procedures are such that one party in a dispute can prolong the cases indefinitely result in companies avoiding taking commercial disputes to court. As the court system is deemed unreliable and cannot be depended on for upholding the sanctity of contracts, companies often prefer to resolve matters out of court, such as through arbitration.

According to the US Department of State 2009, if the Sri Lankan government is one party in a business dispute it is even more difficult for a company to secure impartial judgement from the court, hence investors often seek out-of-court settlements. However, the Supreme Court made several rulings against the government in 2008.

Political Corruption

According to the Transparency International Global Corruption Report 2007, judges who do not adhere to the political line are warned, and if that does not provide the desired result, they are often dismissed on some pretext. 'Uncooperative' judges are frequently intimidated and/or transferred. On the other hand, judges who toe the political line can act with impunity, even if there is evidence of bribe-taking or soliciting sexual favours from litigants or junior staff.

The US Department of State 2009 states that the Supreme Court has demonstrated more independence from the government since 2008, and made decisions against the arbitrary actions of the executive. It has adopted a more proactive line against corruption and abuse of power. As an example, the Attorney General's Department was discredited when it was accused by the Supreme Court of presenting false charges. The Supreme Court demonstrated significant independence from the government in several decisions with regard to various actions of the executive that it deemed arbitrary, and in the public eye it was seen as making a concerted effort to clean up the government and its employees. The Supreme Court has made many orders against corrupt civil servants, and the Commission to Investigate Allegations of Bribery or Corruption has been directed by the Supreme Court to take direct action against corrupt officials.

Frequency

The World Bank & IFC: Doing Business 2009:
- In order to enforce a commercial contract, a company must on average go through 40 procedures, taking 1,318 days at an average cost of 23% of the claim (most of it being attorneys' fees).

Transparency International: Global Corruption Report 2007:
- Out of 441 litigants and professionals, 84% perceived the judiciary not always being fair and impartial, of which 20% maintained that it was never fair and impartial.

- Among judges, lawyers and court personnel, 83% claimed that the judicial system was corruptible.

Transparency International: Global Corruption Report 2005:
- The judiciary was perceived by households to be the two most corrupt institutions in Sri Lanka.

The World Bank & IFC: Investment Climate Surveys 2004:
- 33% of companies report overdue payments from buyers/suppliers/customers, but only 6% take commercial disputes to court.

- 69% of companies have confidence in the legal system to enforce contract/property rights in disputes.