Economic analysis of costs and benefits – Are minor value disputes cost effective?

The Center for legal research and analyses (CLRA) on 22th of March promoted the Economic analysis of costs and benefits of minor value disputes.

At the event, the program manager of CLRA Zharko Hadzi-Zafirov adressed together with the legal expert Ivica Pepovski and the State advisor in the Ministry of Justice of RNM Ljubica Karamandi Popchevski.

The analysis includes the data regarding the minor value disputes for which the courts have proceeded during the period from 2015-2017 and comprises the data for 27.002 minor value disputes. The total amount of unresolved minor value disputes is 967 and the maximum average value of the minor value disputes in the three-year period is around 90.000 MKD. The average number of hearings of minor value disputes is equal to 2.5 hearings, pointed put Ivica Pepovski. 

Most of the minor value disputes were between civilians and trade entities and the maximum number of hearings, during the period of 2015-2017 is 26 in the Basic Court Skopje II.

Ivica Pepovski added that all cases with more than ten hearings are considered to be of extremely high costs. In 18 of 25 Courts, 72 % have situation of more than ten hearings held. Six hundred and forty-three cases have held ten or more than ten hearings by case. The major part of these cases are in Basic Court Skopje II i.e. more than 70%, and after them follow the Courts of Tetovo, Gostivar and Kichevo. In this direction a recommendation was given that the total number of hearings held should be reduced and together with that the total costs would be reduced too. In the analysis are incorporated concrete data and information regarding the expenses of the judicial budget in minor value disputes and regarding the costs of the involved parties. The budget costs for resolving of 26.038 minor value disputes in the three-year period (2015-2017) are estimated around 90.419.555 MKD or 1.469.520 EUR which could represent huge saving if other methods for resolving disputes are used (example: mediation). In other means, the rough estimation is that in average 500.000 EUR could be saved yearly if other options for resolving disputes are applied, as set forth in the analysis.

In the analysis, the estimations for the total costs, including the court taxes and the attorney costs in cases with three court hearings held, are exceeding the benefits of the minor value disputes where the value of the case is less than 12.700 MKD (206 EUR). For values above 13.700 MKD (more than 206 EUR) the benefits are exceeding the total estimated costs.

In the primary assessment its supposed that the major part of the cases in Basic Court Skopje II are resolved with three hearings. The gathered data showed that the average number of hearings in Basic Court Skopje in 2017 is 2.7, which represents fall of 4.0% for case compared with 2015. Regarding that, there is no economic sense for lodging a case at the Basic Court Skopje for minor value disputes whose value is less than 12.700 MKD (206 EUR).

Ljubica Karamandi Popcheska, advisor in the Ministry of Justice, referred to the strategic aspirations of the Ministry of Justice in regard of the strengthening of the efficiency in the justice sector. She stressed out that there is an initiative for changes of the litigation law of and reduction of the maximum number of hearings held. She added that the findings of the analysis will be applied by the Ministry of Justice with an aim for incorporation of good practices for increasing the efficiency in the court procedures.

The event took place in hotel Solun as part of the program ,,Strengthening the transparency, legal certainty and efficiency of the judicial system in Republic of North Macedonia’’, implemented by CLRA, supported by the British Embassy in Skopje.

Gorica Nadjinska