ENFORCING CONTRACTS
Effective commercial dispute resolution has many benefits. Courts are essential for entrepreneurs because they interpret the rules of the market and protect economic rights. Efficient and transparent courts encourage new business relationships because businesses know they can rely on the courts if a new customer fails to pay. Speedy trials are essential for small enterprises, which may lack the resources to stay in business while awaiting the outcome of a long court dispute.
What do the indicators cover?
Doing Business measures, the time and cost for resolving a standardized commercial dispute through a local first-instance court. In addition, Doing Business measures the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The ranking of economies on the ease of enforcing contracts is determined by sorting their distance to frontier scores. These scores are the simple average of the distance to frontier scores for each of the component indicators.
WHAT THE ENFORCING CONTRACTS INDICATORS MEASURE
Time required to enforce a contract through the courts (calendar days) Time to file and serve the case Time for trial and to obtain the judgment Time to enforce the judgment Cost required to enforce a contract through the courts (% of claim) Attorney fees Court fees Enforcement fees Quality of judicial processes index (0-18) Court structure and proceedings (0-5) Case management (0-6) Court automation (0-4) Alternative dispute resolution (0-3)
– The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000.
– The seller requests a pretrial attachment to secure the claim.
– The dispute on the quality of the goods requires an expert opinion.
– The judge decides in favor of the seller; there is no appeal.
– The seller enforces the judgment through a public sale of the buyer’s movable assets.
Where does the economy stand today?
According to data collected by Doing Business, contract enforcement takes 505.0 days and costs 17.0% of the value of the claim. Most indicator sets refer to the largest business city of an economy, except for 11 economies for which the data are a population-weighted average of the 2 largest business cities.
Globally, Iran, Islamic Rep. stands at 70 in the ranking of 190 economies on the ease of enforcing contracts The rankings for comparator economies and the regional average provide other useful benchmarks for assessing the efficiency of contract enforcement in Iran.
What are the details?
The data on time and cost reported here for Iran, Islamic Rep. are built by following the step-by-step evolution of a commercial sale dispute within the court, under the assumptions about the case described above. The time and cost of resolving the standardized dispute are identified through study of the codes of civil procedure and other court regulations, as well as through questionnaires completed by local litigation lawyers (and, in a quarter of the economies covered by Doing Business, by judges as well).
Source: Doing Business database.
Quality of judicial processes index
The quality of judicial processes index measures whether each economy has adopted a series of good practices in its court system in four areas: court structure and proceedings, case management, court automation and alternative dispute resolution. The score on the quality of judicial processes index is the sum of the scores on these 4 sub-components. The index ranges from 0 to 18, with higher values indicating more efficient judicial processes.
The scores reported here show which of these good practices are available in Iran, Islamic Rep.
Source: Doing Business database.
