Building legal and judicial capacity

Source: The post  “Building legal and judicial capacity’’ has been created, based on “Building legal and judicial capacity” published in “BusinessLine” on 10th January 2026.

UPSC Syllabus: GS Paper-2- Governance

Context: India has emerged as the world’s fourth-largest economy with a GDP of about $4.18 trillion and is projected to reach $7.3 trillion by 2030. As India’s role in the global economy expands, strengthening legal and judicial capacity has become a critical component of economic governance.

Changing Nature of Economic Governance

The economic reforms of 1991 marked a shift from a state-controlled economy to a market-driven model with greater private sector participation. This transition led to a surge in foreign direct investment, infrastructure development, corporate restructuring, banking disputes, and the growth of the digital economy. However, the judiciary remains largely structured around a 20th-century dispute resolution model, while facing complex 21st-century commercial realities.

Judicial Pendency and Economic Impact

1. There are approximately 4.78 crore cases pending across all levels of the Indian judiciary.
2. Government entities are involved in nearly 50 per cent of litigation, much of which relates to taxation, regulation, infrastructure, and contractual disputes.
3. More than one crore cases are civil in nature, and over 57 per cent of these have been pending for more than one year.
4. Such delays increase uncertainty in the corporate and commercial environment.

Rise in Commercial and Regulatory Litigation

1. Institutional reforms such as the Insolvency and Bankruptcy Code (IBC) have led to exponential growth in specialised commercial litigation.
2. As of March 31, 2025, the National Company Law Tribunal (NCLT) alone had over 14,961 pending cases.
3. This reflects the growing burden of complex economic adjudication on courts.

Global Rankings and Enforcement of Contracts

1. India significantly improved its Ease of Doing Business ranking to 63 in 2020 due to policy reforms. However, India ranks poorly at 163rd in enforcing contracts.
2. On average, it takes nearly 1,500 days to resolve a standard commercial dispute at the trial court level. This undermines investor confidence and hampers economic growth.
3. Need for Judicial Capacity Building: Judges must be intellectually and institutionally equipped to handle complex economic and regulatory disputes. Long-term, structured judicial education is essential to improve the quality, speed, and consistency of adjudication.

Key Areas Requiring Judicial Training

1. Corporate Governance and Company Law: Judges need training in board structures, fiduciary duties, shareholder agreements, mergers and acquisitions, and related-party transactions. Emerging areas such as ESG norms, shareholder activism, and digital corporate governance must be included in judicial education. Judicial academies should collaborate with academics, industry experts, regulators, and law firms.
2. Commercial Contracts and Complex Transactions: Judges must understand infrastructure contracts, public–private partnership models, project finance, and construction contracts. Knowledge of risk allocation, indemnities, warranties, and financial covenants must be strengthened. Exposure to international and cross-border commercial disputes is increasingly necessary.
3. Financial, Banking, Insurance, and Insolvency Law: Judges should be trained in insolvency frameworks, restructuring mechanisms, and valuation methodologies. Law-and-economics-based analysis is critical for effective adjudication in financial disputes.Global best practices, such as specialised judicial education programmes in US bankruptcy courts, provide useful models.
4. Competition Law and Market Economics: Judges need foundational understanding of market definition, dominance, cartel behaviour, and economic assessment tools. Training in industrial economics and competition analysis is essential for adjudicating antitrust matters.
5. Technology, Digital Economy, and Data Governance: Rapid technological change requires judges to understand IT contracts, intellectual property, fintech, crypto-assets, and data protection. Issues of cyber security, artificial intelligence, and algorithmic accountability are becoming central to commercial disputes. International examples such as Singapore and Estonia highlight the importance of structured judicial training in AI and technology law.

Way Forward

1. Judicial capacity building must be treated as an institutional reform linked to India’s economic ambitions.
2. Specialisation, continuous training, and interdisciplinary learning should be integrated into judicial education.
3. Reimagining court processes for commercial and economic disputes will help reduce pendency and improve contract enforcement.
4. Addressing judicial delays will strengthen investor confidence and support sustainable economic growth.

Conclusion: As India transitions into a major global economic power, the effectiveness of its judiciary in handling complex economic matters will be decisive. Building legal and judicial capacity is not merely a judicial reform but an economic necessity.

Question: “India’s growing economic complexity requires a corresponding strengthening of legal and judicial capacity.” Discuss the challenges faced by the Indian judiciary in adjudicating commercial and economic disputes and suggest measures to address them.