Legal protection: Cost to enforce contracts

As noted previously in this section, legal protection is important to all business operations, especially international outsourcing arrangements. Here we cover the costs associated with pursuing a commercial judgment. High costs can have a direct impact to a firm's bottom line if it pursues a case, but can also force companies into lower risk, suboptimal actions e.g. continue with a under performing partner to avoid risks associated with a law suit.

Summarized below is the average cost to pursue a commercial case for leading outsourcing countries. Costs include attorney, court, and enforcement costs and are expressed as a percent of claim values.

China is the least expensive country for pursuing a commercial case with costs of just over 10% of the claim value. Several other countries, including Poland, Hungary, Russia and the United States have costs less than 20%. India and Ukraine are near the bottom with costs of about 40% and Indonesia is at the bottom with average costs exceeding claim values.

Data is sourced from the World Bank Doing Business survey. The overall Ease of Doing Business survey covers 10 dimensions which include starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.