Colombo Telegraph

Natural Justice By The Wayside In Public-Interest Litigation?

By Rohan Samarajiva

Dr. Rohan Samarajiva

To respond to a question in your publication about whether people had spoken out against Sarath Silva‘s behavior while CJ, I looked for old pieces.  I found a piece I had written for Montage and another published in the Mirror. Sadly, no longer available on the web.

Natural justice by the wayside in public-interest litigation?

A former President was found to have abused her powers and fined. A powerful government official was drummed out of all his positions.  A conglomerate was compelled to reverse a lucrative privatization transaction.  A land deal, suspect from the start, was annulled.   Electricity prices were reduced, perhaps.  Noise pollution is stopped, maybe.

Draconian TV licensing and control regulations have been stayed.  Charging for polythene bags by supermarkets has been prohibited.  The selective extension of retirement age was reversed.  The relevant actors are being pushed to implement the 17th Amendment to the Constitution.

The recent hyper-activism of the Supreme Court has opened the floodgates of public-interest litigation.  It is seen as the one place where justice will be done; where decisions will be taken; the one element that works in a dysfunctional system.

Fumbles are rarely recalled. School admission is as broken as ever. Even the appearance of resolution was lacking when the Court tried to resolve salary anomalies so Advanced-Level exam scripts could be marked without delay.

It is not that the Supreme Court has been supremely effective, but the overall impression is highly positive.   But is justice being done?

Let us take a case seen as one of the greatest successes of the Silva Court, the ruling made on the privatization of Lanka Marine Services Limited in an application under Article 126 of the Constitution made by Mr Vasudeva Nanayakkara (SC/FR 209/2007).

The mystery of the BOI-exemption finding

The Financial Times of November 23rd , 2008 reported that “a fundamental rights petition filed by public interest activist Vasudeva Nanayakkara against John Keells Holdings (JKH) and Lanka Marine Services (LMS) on the ‘illegal’ tax concessions the company received from the Board of Investment (BOI) during privatization is due to come up before the Supreme Court on Thursday.”

It stated further and without comment that “the recent LMS Supreme Court judgment [the above cited CS/FR 209/2007] – in which the privatisation was overturned — dealt with the BOI concessions where they were revoked and LMS was ordered to pay taxes in the amount of Rs.375 million based on formal assessments by the Inland Revenue Department.”

The Court did, clearly and conclusively, rule on the tax exemption back in July:  “The tax relief granted to JKH was not permissible under the existing Regulations and JKH got an amendment tailor made for its purpose and secured the tax exemption” (pp. 60-61).

How can a matter on which a decision was made in July 21st, 2008 come up for hearing on November 27th, 2008?  This is the mystery.

No answer was provided by the FT.  The one thing it reported was that the respondents include “the current BOI Chairman Dhammika Perera, then BOI Chairman Arjuna Mahendran, [and] former Commission General of Inland Revenue A.A. Wijepala.”  These individuals, obviously essential for the determination of the legality of the exemption are not among the respondents in CS/FR 209/2007.  Was the BOI exemption framed as an issue?  In the absence of these parties, was relevant evidence obtained and tested through examination and cross examination in CS/FR 209/2007?

How could a finding have been made in a case where relevant parties, the then Chairman of the BOI in particular, had no opportunity to state their side of the case and attempt to clear their names?   How could this finding have been made in a case where the tax exemption was most likely not an issue (implied by the fact that the same Petitioner had made a separate application on that matter)?

Natural justice

Cane, An introduction to administrative law, third edition, Clarendon, p. 160, describes “a set of common law procedural rules are known collectively as ‘the rules of natural justice.’  The rules of natural justice embody two main principles:  the rule against bias, which requires that a person must not be judge in his or her own cause (nemo iudex in sua causa); and that a person must be given a fair hearing (audi alteram partem).”

The elements covered by the fair-hearing rule include:  “notification of the date, time, and place of hearing, notification in more or less detail of the case to be met, adequate time to prepare one’s case in answer, access to all the material relevant to one’s case, the right to present one’s case orally or in writing or both, the right to examine and cross-examine witnesses (including one’s opponent), the right to be represented (perhaps by a qualified lawyer), the right to have one’s case decided solely on the basis of material which has been available to (and so answerable by) the parties [some authorities see this as the third rule of natural justice], the right to a reasoned decision which takes proper account of the evidence and answers one’s case.” (p. 161)

John Keells, the BOI officials and the others capable of speaking to the veracity or otherwise of the complex facts behind the statement “the tax relief granted to JKH was not permissible under the existing Regulations and JKH got an amendment tailor made for its purpose and secured the tax exemption” may have been preparing their answers for the hearing in the different case scheduled for the 26th of November, not for CS/FR 209/2007.   Indeed, some of them had not even been noticed in CS/FR 209/2007.

Even if evidence had been presented on the BOI exemption, only documents were allowed; no witnesses.   What of examination and cross-examination of witnesses?  Were those whose good names have been impugned given an opportunity to test the evidence?  Even if they had been named as respondents, would they have been allowed to cross examine under the summary procedure through which the Supreme Court hears applications under Article 126?

It appears prima facie from the facts stated above that the second rule of natural justice has been breached in CS/FR 209/2007.  John Keells, the current and past Chairmen of the BOI, and the then Commissioner General of Inland Revenue are being called to a hearing in November on a matter decided four months ago in CS/FR 209/2007.

Of course, as an adherent of natural justice, I cannot reach a final conclusion on this matter (even though I wield no formal power of any kind), until the affected parties have had an opportunity to present their sides.

The importance of how

In a different context, Dov Seidman has been quoted as arguing that “in our hyper connected and transparent world, how you do things matters more than ever, because so many more people can now see how you do things, be affected by how you do things and tell others how you do things on the Internet anytime, for no cost and without restraint.”

“In a connected world, countries, governments and companies also have character, and their character — how they do what they do, how they keep promises, how they make decisions, how things really happen inside, how they connect and collaborate, how they engender trust, how they relate to their customers, to the environment and to the communities in which they operate — is now their fate.”

When I studied law, one of the fundamental lessons drilled into me was the absolute importance of the Law of Civil Procedure, the Law of Criminal Procedure and the Law of Evidence.  This was the formalized “how,” more important than the “what” of the Laws of Property, Contracts, Persons, etc.

Now it appears that we have forgotten the importance of how in the most sacred of our public institutions.  Not even a token protest is raised when natural justice is violated, not only by the lawyers who should know better (with the honourable exception of Deshamanya R.K.W. Goonesekere), but by everyone.  No questions are raised when the Court careens through a multitude of complex public-policy issues at high speed.

We exult in the “what” of decisions being taken and the mighty being brought to their knees.  We participate in the reproduction of injustice by taking more and more cases likely to be decided under summary procedure in violation of natural justice.  By our silence and our actions we are complicit in the violation of the “how.”

What does this say about our character?  And thereby, our fate?

Judicial activism , policy paralysis

By Rohan Samarajiva –

The Supreme Court has over the past year issued several decisions that significantly change the climate for policy making and implementation in Sri Lanka.   The Court has, among other things, overturned one privatization (Nanayakkara v. Choksy, hereafter the Lanka Marine Services case) and annulled one land alienation by the Urban Development Authority (Mendis v Kumaratunge; herafter the Water’s Edge case).   In the process, the Court has rewritten the rules of policy and implementation.

In a previous article (Montage 2(10):  15-16), I described the current wave of judicial activism as a workaround.  As with all workarounds, it is a response to a dysfunctional system:  a “do nothing legislature [that] is not making the right laws . . . , [an] incompetent opposition . . . and the inept executive [that] is doing nothing or not implementing laws and policies  correctly.”

Is judicial involvement in, or indeed a judicial veto on, policy, especially at the interface of government and private enterprise a good thing?  The question can be answered in two parts.  First, the question of whether economic policymaking by the judiciary is a good thing is examined.   Second, the manner in which the evidence has been considered and decisions made in the recent cases is assessed.  Finally, the broad ramifications are discussed.

Judicial policymaking

Montesquieu was right.  Separation of powers is necessary.   Checks and balances to ensure that powers are not abused are essential.

Power in traditional monarchies was concentrated in the person of the King, except perhaps to a limited extent religious/cultural power.   It is dangerous to concentrate such power in one person.  Even if that were not a concern, it would be simply inefficient for power to be so centralized and undifferentiated in the far more complex societies of the present.

So, specialization and differentiation are good things.  There should be an entity to exercise legislative power, ideally representing the People.  There should be a separate executive arm to get things done.   Ideally, there would be two layers within the executive arm, a political layer that directs the other larger layer made up of bureaucrats (not here used as an epithet) or those who follow procedure.  The directive layer should be responsible for policy and be politically accountable.  The bureaucracy should be responsible for implementation and be administratively accountable.

Both layers would be governed by legislation, but, unavoidably, each would have to exercise discretion because not every exigency can be addressed in legislation, however detailed.  Therefore, checks and balances on the executive are essential.  The primary check on the executive is the control of the budget by the legislature.  In some systems there is an elaborate system of oversight by committees of the legislature.   The other check is the judiciary.

The bureaucracy has the most pervasive effect on citizens.  Without them, essential services would not be provided (directly or through others).   In a broader sense, even the core law-and-order functions of government would not be provided without the bureaucracy, which is an encompassing term that includes the military and the police.

Though they are not the most obvious or visible of the judiciary’s functions, checking the legislative and executive arms of government is paramount among them.   This is a key role even in pure Westminster models, where the legislative and executive branches are not separated.  The effective control of the legislature (by preventing it from transgressing the Constitution) and the executive are the only safeguards for a society governed by law, and not by men (or women).

Separation of powers and checks and balances are most visible in the US system of government, but the elements are found in most systems of government.  For example, the judiciary served as a check on the legislature through Article 29(2) of the Soulbury Constitution.  Through its writ jurisdiction, it also served as a check on the executive.  As evidenced by the Bracegirdle case (39 NLR 153), the courts checked the executive even in colonial times.  Despite the absence of justiciable fundamental rights, the courts limited executive actions that exceeded authority or violated natural justice.   Since 1978, under a Constitution that includes justiciable fundamental rights and embodies separation of powers, albeit muddied by the requirement of making MPs Cabinet members, the role of the judiciary has become even more important.

There is a difference between ensuring proper exercise of executive discretion (within the bounds of the authority conferred by the legislature and in accordance with the principles of natural justice) and substituting the discretion of the court for that of the executive.  In the former, the judiciary simply looks at the process, deferring to the political or bureaucratic authorities on substance.  In the latter, the judiciary engages in policy making and/or implementation, questioning the substance of decisions by individual officials, by committees including technical evaluation committees or tender boards, and even by Cabinet.  It may not stop at questioning decisions and annulling them, but it may intrude further and set out detailed guidelines for the exercise of executive power.   The most extreme form is where the Court monitors implementation.  The Lanka Marine Services and Water’s Edge cases are examples of intrusive policymaking by the judiciary.

Until recently, the 1956 dictum of the Supreme Court that “there is no authority in law for the substitution of the decision or discretion of the court in place of the decision or discretion of the Minister” (John Nadar v. Vanden Drieesen,  58 NLR 85) was the law of the land.

Walking the fine line between checking executive and legislative power and usurping those powers, especially when those branches of government are perceived to be inept or corrupt or both, is not easy.    But the temptation should be resisted, because the judiciary is not equipped either through training or resources to perform legislative or executive functions.   Furthermore, if the judiciary, especially the Supreme Court, were to perform these functions, what will check its power?  Quis custodiet ipsos custodes?

There is only one check on the judiciary:  Article 107 of the Constitution, which states, inter alia, that:

(2) Every such Judge [of the Supreme Court and the Court of Appeals] shall hold office during good behaviour, and shall not be removed except by an order of the President made after an address of Parliament, supported by a majority of the total number of Members of Parliament (including those not present) has been presented to the President for such removal on the ground of proved misbehavior or incapacity.

(3) Parliament shall by law or by Standing Orders provide for all matters relating to the presentation of such an address, including the procedure for the passing of such resolution, the investigation and proof of the alleged misbehavior or incapacity and the right of such Judge to appear and to be heard in person or by representative.

How did the Court do as a policymaker?

Unlike similarly placed courts in other countries, the Supreme Court in Sri Lanka relied on its own resources and moved at great speed even when faced with issues that were by its own admission “complex” (p. 6, Water’s Edge case ruling).  In India, the Supreme Court compelled the executive in Greater Delhi to implement a conversion to Compressed Natural Gas (CNG), engaging in intrusive policymaking and implementation.   However, it took a whole decade to do it, drawing on various expert committees and giving extensive opportunities for the executive to do the right thing.    In contrast, the entire Water’s Edge proceeding took four and a half months; arguments were heard on three days only.

Recent “policymaking” cases have been heard under summary procedure, which does not allow for verifying the evidence and for the mounting of adequate defenses in complex cases, let alone the vigorous testing of contending viewpoints essential for policy formulation.  The evidence was in the form of affidavits and documents, with little attention paid to the provenance of documents.  The option of getting a lower court to use the regular procedure to make findings on facts has not been employed.

In several instances findings have been made contrary to natural justice.    The alienation of land in Narahenpita to “Lifestyle Health Services (Private) Limited” as well as the former President’s actions in that regard, described in the Water’s Edge judgment (pp. 44-45; p. 61) do appear malodorous.  But, how can a case about land in Battaramulla include a decision on land alienated to other people in Narahenpita?

The principles of natural justice require that the parties with interests be given a fair hearing and that decisions should be made on the material before the unbiased decision-maker.   Lifestyle Health was not a party to the Water’s Edge case.  It does not appear that the former President was given an opportunity to state her side of the Narahenpita alienation story.

Similarly, a main finding of the Lanka Marine Services case (p. 56) was that its tax exemption had been obtained in a “false and illegal manner.”  With regard to the Narahenpita land, it could at least be claimed that the Supreme Court did not make a final decision, merely ordering the Bribery Commission to fully investigate the transaction.  Lifestyle Health and the former President had a forum left in which to present their sides of the case.

In the Lanka Marine Services case, the decision was final; it ordered the payment of at least LKR 375 million to the government (Financial Times, 23 Nov 2008: p. 1) and impugned the good names of several individuals and companies.  The case did not include the present and past Chairmen of the Board of Investment (BOI), which was alleged to have granted the unlawful tax exemption and the Commissioner General of Inland Revenue as respondents.  All parties, including the petitioner, appear to have implicitly agreed that the BOI matter would be dealt with in a separate case initiated by the same petitioner where the appropriate parties were listed as respondents.

The dramatic decisions issued in rapid succession have understandably attracted many litigants to the Supreme Court, which continues to churn out decisions on all sorts of complex issues every few weeks.   The spike in the Court’s productivity raises two questions, at least.  If all these complex cases can be disposed of so quickly, why does the larger legal system that comes under the stewardship of the Chief Justice take so long to decide simpler cases?  Alternatively, has the speed of decision making compromised their quality?   Justice delayed, people are fond of saying, is justice denied.  Can the same also be said of high-speed justice?

Broad ramifications

Injustice has been done to companies, officials, agencies and politicians by the recent overbroad decisions, taken in some cases in violation of the principles of natural justice.    But that is not all.

The broad sweep of judicial activism has signalled to all who make economic policies and implement them that it is no longer enough to follow procedure, but to act in ways that would be acceptable to a future Court (among other things, the Court has annulled Article 126(2) of the Constitution that required fundamental rights cases to be brought within one month of the alleged infringement) or to ensure that no one will be offended by the decision, thereby precluding a fundamental-rights challenge.   These being impossible, the best course of action is inaction.

This is worse than what happened with government-personnel decisions a decade or so ago.   As a result of the strict jurisprudence of the then Court, it became almost impossible to give promotions and increments in government service on grounds other than seniority.   In the face of admittedly arbitrary actions by government officials and driven by the ideology that government service was a right not a job, the courts threw out the baby with the bathwater, leaving only the scum of the seniority criterion.   But at least, people in government knew what the rule was and what it applied to:  personnel decisions.   Now, there is no such certainty or delimitation.  All executive actions are fair game.  The rule is that there is no rule; one has to guess what the Supreme Court would find acceptable.

Is it worthwhile trying to figure out what the present judges would decide?  No, because the time limit on instituting cases has been thrown out.   So the decision maker has to guess what would be acceptable to any court in the present and in the future.

So what is the end result?  Policy paralysis, something we can ill afford in a fast changing world.  We have come full circle.  The workaround for inept and/or corrupt policymaking and implementation was judicial activism.   Judicial overreach exacerbated the problems of the policy process, paralysing it.   Attempting to treat the patient, the Supreme Court has aggravated the disease.

What is the workaround for this?  Moderation would be a good place to start.

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