A proposed new court where bankers could pursue uncooperative corporate clients is not the best way to proceeed with reform.
No quick fixes to banking law reform
It would be unreasonable to blame the country's banks for their request, announced this week, for a special court to speed up their legal disputes with customers. But any such reform should be part of a comprehensive set of changes.
The UAE Banks Federation has asked the Ministry of Justice to establish special courts "to consider the cases raised by banks and financial institutions", the federation said this week.
On one level the idea has merit. Numerous countries around the world have set up or are considering specialised courts focused on, to name some examples, drug charges, intellectual property issues, labour law or criminal cases involving mental-health considerations. Many jurisdictions have divorce courts. Sometimes called problem-solving courts, these tribunals are intended to apply expertise, efficiency and sufficient resources to problems that call for special attention.
The idea of a comparable court where banks can pursue customers they deem to be in the wrong is, however, a little different.
The first and most obvious question this notion creates is "don't we need a court in which customers can pursue the banks"? There is an answer to that: the Central Bank, which regulates banking, has a robust customer complaint centre, with online access. Still, special courts for the banks alone to use will strike a discordant note in many ears.
The banks' argument is that many of their lawsuits are bogged down in civil and commercial courts, in part because judges are not specialists in the laws governing bank transactions.
Artfully, the federation's proposed new court would exclude personal-finance matters. Yet the group argues that if the court existed, banks might be slower to seek criminal penalties against debtors who default.
This non-sequitur is a strong hint that banking reform should be pursued in a comprehensive way across the country, rather than piece-by-piece. The country is still waiting for a new bankruptcy law for corporations, and for reforms to end the antiquated notion of debtors' prisons for individuals.
The temptation of quick-fix solutions such as this bankers' court is precisely that they are quick; the danger is that they Balkanise administration and justice, creating both areas of overlapping jurisdiction and under-regulated patches. Banking law is too important to be improvised.