WHAT do we mean by the rule of law? Allow me to explain this by reference to cricket.The rules of the game are the same for all when you are bowled or caught, you go back to the pavilion. You cannot stay at the crease because you are someone`s son.

Similarly, you cannot claim exemption and demand to be allowed to bowl from both ends of the pitch.

Unfortunately, the indiscriminate application of rules is anathema for our elite, which has contaminated our culture of governance.

Our ethos of governance gives the ruling elite the `power` to ride roughshod over laws, rules and regulations, facilitated by the deficiencies in the design of the legal framework and the way it works. All these affect the performance of the economy. Many laws and regulations are poorly designed and are hence complicated or even defective. Moreover, these are administered in ways contrary to their intent and spirit. Defects in laws are compounded by weak enforcement which, in part, reflects the dif ficulties of monitoring compliance. And this is the more worrying aspect.

It is, of course, reassuring that we now have a judiciary that is asserting itself and providing justice to all, by ensuring the equality of all before the law.

Since other institutions of the state, especially parliament, have failed to perform some of the functions expected of them, the courts do provide a ray of hope, having done well in recent years in gaining public trust and confidence that it will protect them from the excesses ofstatefunctionaries.

However, a judiciary upholding its independence alone is not enough. In the absence of informe d public opinion, backed by a strong civil society, it will not be possible to mobilise the resources and effort needed to ensure corrective actions. But then the bulk of the population has to deal with the subordinate judiciary, where the key areas of concern are corruption and lack of competence.

In this writer`s opinion, more important for economic development are not just the laws and their predictable application but the degree of effective-ness and efficiency of the judicial system to enforce contractual obligations and resolve commercial disputes in a timely manner. In our case, it takes on average three years to resolve a commercial dispute in the courts compared with less than half this time in most other jurisdictions.

These factors move the wheels of the economy and weaknesses restrict the scale of business transactions, and thereby growth, through reduced economic activity, with firms being forced to diversify operations into activities not their core competence. This lowers the efficiency of, and the return on, investment.

Since it takes years to get disputes resolved through the courts, contract violators gain simply by getting a case stuck in the court queue. The courts oblige, especially by liberally granting stay orders, which facilitate, if not actively encourage, the illegal occupation of property testing the fundamental principle/ right of security of one`s property. Not surprisingly, business transactions get restricted among parties having trust in each other`s business ethics.

Development of trust requires long-term stable interactions. If trust cannot be established, contracting remains restrained, the cost of conducting transactions remain high, discouraging business development and growth. Both economic actors and the economy remain small. The ease of contract repudiation increases the costs and uncertainty of investment.

Pakistan, therefore, finds itself constrained by a culture of low trust, in which neither the regulatory environment nor the unregulated market is conducive to dynamic change.

The solution is not what is most widely propagated `more judges`. The judicial system needs judges with a better understanding of commercial regulations and practices. The lack of an adequate skill set/ skill mix is a major issue. To illustrate, the Islamabad high court, which has been given original jurisdiction, would be adjudicating important commercial and economic cases, especially since a key institution, the Federal Board of Revenue, is also locatedthere. But this court seemingly has no judge with experience/background of commercial law/practices on its bench.

We also need to look at the judicial system which permits conflicting judgements does not overrule one as would be expected in other common law jurisdictions. Coordination between courts or benches of the same court needs improvement for clear guidelines to flow to the subordinate courts.

The resulting confusion incentivises corrupt practices. Moreover, what is one to make of a system in which 15pc of the cases filed in the apex court are on matters like `rent`? And what about a system that fails to discourage frivolous litigation and permits liberal double-digit adjournments, etc? All these factors result in low disposal rates and are costly for the economy.

Through the recent use of suo motu jurisdiction the courts rendered some far-reaching decisions but as the Supreme Court leadership now realises itself, all this has come at a price. Judicial activism through stay orders, or worse still, the overturning of economic decisions (eg rulings on the privatisation of the Steel Mills, the LNG projee t and the domestic price of sugar) that essentially lie in the domain of the executive has added litigation risk to the already high-risk profile of the country from the poor law and order situation and political uncertainty to the unpredictability of policy decisions.

These judgements ended up contributing to policy paralysis and postponement of urgent economic decisions, which drove away potential investors, while the country spent millions of scarce dollars to defend such actions in international courts. Mercifully, steps are now being taken by the apex court to check its activism and intrusiveness in areas that cross its institutional mandate although in recent months the perception of it having the stomach to take on the executive has suffered significantly.• The writer is a former governor of the State Bank of Pakistan.