about judicial capacity building and contract enforcement

In the 15 years of transition from a centrally planned system to a market economy, the legal frameworks in Central and Eastern Europe and in CIS countries have been substantially upgraded. However, while the “laws on the books” in those countries have improved in quality and now show significant levels of compliance with international standards, the implementation of those laws remains fraught with uncertainties, deterring investors from participation in the countries’ markets out of fear that their legal rights will not be protected. Many of the implementation problems can be attributed to numerous challenges faced by the judiciary. EBRD’s judicial capacity-building programme intends to train the judiciary in EBRD’s countries of operations to facilitate the implementation of laws, specifically focusing on educating the judges on commercial law, an area insufficiently covered by other aid providers.

Market-friendly laws and an independent and competent judiciary to implement them have long been credited for fostering economic and industrial development. Therefore, adequate judicial contract enforcement procedures are crucial because they ensure equality between actors by preventing powerful actors from taking advantage of their weaker counterparts in contractual agreements.

Judicial capacity building

A review of the current situation in EBRD’s regions of operation reveals that judiciaries are faced with numerous challenges, some of which are common to all judiciaries in developing and transition countries, while others are linked to the transition from a socialist society to a market economy.

Lack of technical skills
Local judges’ lack of substantial knowledge of the law is a problem in early transition countries. Because some judges were trained under the socialist regime, understanding and utilising the legislation put in place in the recent years is a challenge.

Scarce financial resources
The general budgetary constraints facing local governments also affect judiciaries, particularly by lowering the possibility of attracting and retaining capable members. The dilapidated courthouses, insufficient resources to purchase equipment and the minimum salaries deter qualified lawyers from becoming judges.

Interference of the executive power
Another problem faced by judiciaries in some countries is their susceptibility to political pressures. Judicial independence can be compromised when judges receive instruction from government officials about how to render decisions in a case.

Corruption
The impecunious conditions in which some judges operate can make them vulnerable to unethical practices. Corruption is pervasive in a number of EBRD’s countries of operation, and it typically affects the judiciaries.

Status of judges
Because judges in EBRD countries are sometimes still regarded as civil servants and do not enjoy the same prestige as their counterparts in Western Europe and the US, the judicial career is not necessarily appealing to legal professionals.

EBRD is developing a judicial capacity-building programme with a special focus on commercial law. Commercial law is most directly relevant to the Bank’s own experience as the largest single shareholder in the region. It is also an area where the Bank’s legal department has accumulated a wealth of knowledge and expertise.

Further reading

Towards A Regional Strategy for Improving Judiciaries - Commercial Law Judicial Capacity Building in Central Asia
This conference  (1.3Mb) was organised by the EBRD in collaboration with the Kyrgyz Judicial Training Centre and with the International Development Law Organisation (IDLO). The purpose was the development and support of a regional dialogue with a view to establishing a strategy for raising the level of professional skills of judges in Central Asia, defining the common problems and defining strategic priorities to increase the quality of judicial decisions, and sharing success stories and current trends in the sector with participants.

Courts and Judges - Law in Transition  (1.3Mb), Spring 2005