Make tribunals the first court

The debate over tribunals and their relevance is firmly back. A draft law to wind up a few tribunals and move their appellate jurisdiction to the high courts is afoot. Policy choices seem to have come a full circle. However, this phase of change is an excellent opportunity for a sharper and more nuanced policy reform. If this chance is not taken now, an opportunity to leapfrog and build long-term institutional capacity would be lost.

Since the 1990s there has been a proliferation of appellate tribunals — and indeed, a proliferation of regulators. The principle has been: “See a market, create a regulator. See a regulator, create an appellate tribunal.” Some tribunals created in the 1990s have done remarkably well — the Securities Appellate Tribunal

(SAT) in the securities market, the Telecom Disputes Settlement Appellate Tribunal (TDSAT) for the telecom sector, are excellent examples.

The SAT’S jurisdiction has been extended over time to a wider circle of coverage in the financial sector — it is now an appellate tribunal over regulatory decisions in the insurance and pension sectors too. The TDSAT is a robust platform for resolution of disputes even among service providers. Appeals from these appellate tribunals on questions of law, typically lie in the Supreme Court as a matter of statutory right.

A few years ago, in a blanket carpet-bombing move, multiple appellate tribunals were merged into other tribunals — for example, the Competition Appellate Tribunal was merged into the National Company Law Appellate Tribunal. Strangely, members of the “transferor tribunal” were not moved to the “transferee tribunal” and a lot of intellectual bandwidth and institutional intellectual memory was wiped out overnight.

Now, four tribunals are being disbanded and their appellate powers are being moved to the high courts. In itself, retaining an appellate jurisdiction in the law and that too in the high courts is a good measure. It is important that high courts handle regulatory litigation. Today, judges of high courts could spend an entire judicial career without ever handling regulatory litigation, and have to handle appeals on these subjects when in the Supreme Court.

While tribunals’ jurisdiction may merge into the high courts, another parallel foundational reform measure is critical. The tribunals have hitherto been appellate bodies. Commentators merrily comment on their efficacy, but do not see the poor capacity in the handling of the “courts” of the first instance from which appeals lie — the regulators themselves.

The design architecture of our regulators entails a liberal intermingling of powers of the state — law-making (legislative), administration (executive) and judiciary (quasi-judicial). Each of the legislation creating regulators has given the regulators powers of a civil court but despite decades of experience, they have been substantially lacking in being judicial in their demeanour. The cognitive dissonance is inherent in the design — one cannot expect a policeman to also be an effective magistrate. The judicial function is a check and balance on the executive. If the same organisation is expected to play both roles, the very principle of separation of powers is subverted. Imagine a sport in which the same person is a player and an umpire — apart from being unfair, it would be extremely boring and not many would invest in building capacity to teach the sport or to learn the sport.

If the tribunals are converted into the courts of the first instance with their appellate powers being transferred to the high courts, a far-reaching regulatory ideal would be within striking distance. Such a measure would clean up the polluted manner of quasi-judicial ruling in the first instance. The prosecutor, investigator and the judge will cease to be the same organisation. If a regulator has to conduct trial in the tribunals and satisfy a qualified judge about the merits of the intervention it seeks, it would sharply improve the quality of investigation and regulatory enforcement. This is the model the United Kingdom has — the “Upper Tribunal” is a trial court and not an appellate court.

A real separation of powers would make the tribunals a real check and balance. Today, the check and balance is in the form of an appeal, leaving it to regulators to do as they please, with the tribunals having to invest their time and energy cleaning up after the regulators. Only those who can afford an appeal in terms of spine and money, can cause the evolution of jurisprudence. If a regulator has to satisfy an independent judge about the merits of its case in the first instance, the quality of work would dramatically improve.

Appeals from the tribunals on questions of law and fact could lie in the high courts. No statutory right to appeal from the high courts to the Supreme Court need to be provided. As a matter of constitutional law, the Supreme Court can always grant “special leave to appeal” from any decision of the high court. Since the first regulatory intervention would itself be at the instance of a judicial body, rather than handed down by an executive regulator, outcomes would be more satisfactory and would have more gravitas.

Indeed, this would be the toughest reform measure to implement — it would require regulators to cede turf.