Workshop on "Legal Aspects of Regulation in South Asia"

Dhaka, Bangladesh

3 - 4 August 2002

Proceedings in PDF | Photo coverage

Background | Objectives | Methodology | Programme

Background

The South Asian countries have all embarked on reform of their infrastructure sectors: key components of this reform are the introduction of competition, privatization of existing public sector service providers, and the creation of specialized regulatory agencies. The region has more than twenty five independent regulatory bodies already in place in the infrastructure sectors ( India 21 , Pakistan 3, Sri Lanka 1, Bangladesh 1 (proposed), Nepal 2, Bhutan 1). Prices for infrastructure services have long been regulated in the region. However, economic regulation by independent bodies, separated from government departments and operating on principles of transparency and cost reflective pricing, is relatively new in South Asia. In this, the region is following a path which many countries in Europe, Latin America, and East Asia have pursued over the last few decades.

These regulatory bodies are neither administrative bodies nor judicial authorities. In many aspects, they differ from the latter authorities. For instance, the normal judicial bodies deal with bipolar centric interests, and in general, apply laws to facts. The regulatory bodies, on the other hand, are required to balance interests of multiple groups in the overall development of the sector. Naturally, the procedure and processes that these bodies are required to follow, would have to be different, and accordingly, the legislation in different countries have addressed these issues in a different manner
( a comparative picture in the case of select South Asian countries in select infrastructure sectors are placed at annex A).

The key aspects of judicial process are: a passive judge who rules on the basis of the record; the law of evidence that governs what may and may not go into the record; parties adopting adversarial positions and so on. The conventional regulatory approach mimics this to some extent, with deviation being seen primarily with regard to the evidentiary rules. The alternative process seeks to get away from the adversarial model and try to build consensus and "buy-in" from the start. The intention is to improve the quality of information coming into the decision-making process; recognize the multipolar nature of the disputes that come before regulators; and keep down the levels of antagonisms that lead to endless appeals. In fact, in US, there are different ways of doing rule making: the formal way as mandated by the original Admin Procedures Act(APA) of 1945 (and still followed); and the alternative procedures that have recently been introduced into the APA as options.

Further, in the normal judicial process, the issues are defined at the start, notice given to the parties, all parties are heard, and impartial judge decides on the basis of the record. In fact, adversarial mode does not lead to complete view of disputes, and thus, not appropriate for technical subjects that are not limited to ascertaining the facts. The process is also not efficacious in getting long term behaviors among various parties. In this context, the alternative regulatory instruments used for rule making proceedings, interalia, include workshops, advisory committee, public hearings, and negotiated rule making, and for dispute resolution, mediation and arbitration.

There is a growing tendency in the context of regulatory governance that many regulated entities, either the private or public, are moving to the appeal courts even on technical areas which are supposed to have been decided following alternative rule making procedures. The courts are also entertaining them, and no priority has been given for disposal of these cases. This has resulted in delays in many cases in decision making, and consequent loss on the part of regulated entities. Secondly, there are many regulatory agencies which are also following adversarial mode of rule making, and naturally, they often face with number of court cases even on technical issues. For instance, till recently, the CERC's (India) order on ABT (availability based tariff that would ensure grid discipline ) is subjected to appeal to judicial bodies, resulting in the delay in the implementation of a very important order of the central regulator, passed in 2000. The central electricity regulator of India adopted the quasi-judicial approach in arriving at this decision, which is in effect a formal procedure along the lines of a trial court. The decision making process being adopted in the region in select sectors have been compiled at annex A.

Against this background, there is a need to understand the dynamics of alternative regulatory practices, and the various available instruments in this regard. The lessons learnt across the world in this regard should be disseminated, and shared among the fledgling regulators in the region. It is also important that dispute resolution mechanism to be adopted by the infrastructure regulators should be effective, and timely.

While independent regulation is a new type governance in infrastructure sectors, the concept of private provisioning of infrastructure services ( so long public in nature) is also new to the judicial authorities in the region. That the sectoral development would require a different kind of understanding is not yet been ingrained in the judicial set up. Thus, we see delay in deciding the cases, and also see frequent entertainment of cases even on facts which have been extensively discussed and decided by the regulators. A different kind of sensitisation of these judicial bodies is also called for.

Objectives

A two day workshop in Bangladesh will be organised by SAFIR with the following objectives:

a) to understand various legal aspects of regulation
b) to examine the alternative regulatory processes (ARP)
c) to examine the relevance of alternate disputes resolution (ADR) mechanism in infrastructure regulation
d) to draw lessons at sl (a) & (b) in the South Asia context.
e) To disseminate the workshop proceedings/findings.

The participants in the workshop would be the regulators in infrastructure sectors ( such as telecom, electricity, etc), members of judiciary, and practising lawyers. There is need for these groups to understand independent regulation, and to dispel apprehension that they are working at cross purposes.

Methodology

Lectures, case studies, and group discussions would be used during the workshop. Day 1 should be devoted to developing concepts, and in day 2, there would be group discussion, and case study presentation on various aspects of ADR/ARP. At the end of Day 1, there will be informal interaction with the select judicial members over dinner. During the workshop, participants would be drawn from Bhutan, India, Nepal, Pakistan, Sri Lanka, Bangladesh.

Programme