Asbanc: Commercial court extension to benefit banks, borrowers

Wednesday, March 26, 2008

Peru's commercial court system could be extended beyond Lima as part of local authority efforts to improve the business climate, a step that would benefit lenders and borrowers, banking association Asbanc head Enrique Arroyo told BNamericas.

"The creation of commercial courts has been a huge success," said Arroyo. "Enforcements of mortgages now take about six months compared to over two years [before the creation of the commercial court system]."

Contract enforcement is critical for businesses to engage with new borrowers and courts are the institutions that enforce contracts between debtors and creditors, WB has said in its yearly Doing Business reports.

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The more procedures it takes to enforce a contract, the longer the delays and the higher the cost, WB has said.

In 2005, a commercial court system was established in Peru to resolve commercial disputes more efficiently and effectively. The commercial court system project - approved in 2004 - considers the establishment of a total of 22 commercial courts.

An official from the judicial system said there are currently 12 such courts operating in Lima.

Arroyo said commercial courts have significantly increased the speed, predictability and transparency of contract dispute resolution as commercial court judges have the technical capacity to handle commercial cases.

In Peru, contract enforcement remains problematic due to the erratic functioning of the legal system.