June 2008
Current projects
Mongolia: Improving Secured Transactions Regime
The EBRD has launched a project aiming at advising the Ministry of Justice of Mongolia on the necessary changes to the law and institutions relating to secured transactions. EBRD assessment has shown that the current legal regime is fragmented and inadequate: there is no system for registration of pledges over movable property; users complain that enforcement process is inefficient; the type of collateral that can be offered is limited and does not allow for generally described assets (e.g. inventory, future equipment) to be charged. The establishment of an attractive legal and regulatory framework for taking security over movable assets constitutes one of the building blocks to stimulate secured lending. An advanced legal regime, properly implemented, should encourage the use of security and therefore facilitate access to credit and/or reduce borrowing cost.
Moldova Mortgage Law Reform
The EBRD is providing assistance to the Ministry of Economy and Commerce on reforming the current mortgage legislation and regulations in order to provide an attractive and coherent regime for mortgages, with proper implementing mechanisms. This assistance consists of: i) establishing a detailed set of reform measures and helping building a consensus among all key players in public and private sectors on these; ii) assisting in the drafting of new legal and regulatory provisions and gathering comments on them as the draft develops; and iii) assisting in the establishment of the required implementing measured for the new provisions to be operative and effective in practice.
Past projects
Azerbaijan: Assistance for the Development of a Secured Transactions Law (1996-1998)
At the request of the Office of the President of Azerbaijan, the EBRD prepared a report in 1996 on the provisions on secured transactions as contained in the draft Civil Code. The work was more directed at consensus building but included some support in the drafting as well. After it became clear that the Civil Code would not be enacted quickly, the EBRD provided comments to the National Bank of Azerbaijan on the existing Azeri Pledge Law and amendments proposed by the National Bank. The National Bank prepared a new draft pledge law based on the EBRD Model Law on Secured Transactions, but this law was never enacted as such. The 1994 Pledge law was finally revised in 1998, which introduced some of the features promoted by the Bank. However, the remaining problems are implementation – a unified, single registry has yet to be created, and lack of tried and tested practice. Also, the Civil Code enacted in 1999 created some uncertainty on the compatibility between its relevant provisions and the 1998 Pledge Law.
Georgia: Secured Transactions Law Reform (2004-2006)
The EBRD assisted the Georgian Ministry of Justice in the development of its secured credit system, which, in turn, should positively affect the country’s investment climate. EBRD has supported the development of new legislation for structuring an effective, reliable, and investment-oriented secured credit system. The Civil Code new provisions were adopted in July 2005 and the Ministry of Justice has embarked with their implementation, through the National Agency for Public Registry (NAPR), an agency created in 2004 responsible for the registration of all rights over immovable and movable
Hungary: Assistance in Registration System under the Law for Charges over Movable Assets (1996-2004)
Following the enactment of the new Civil Code provisions on charges in 1996, the Bank was asked to assist in setting up the registration system for charges. In 1996 the Bank produced a feasibility study for the registration system which formed the basis for designing the Hungarian registry (and subsequently registries elsewhere). Subsequently working with the Ministry of Justice and the Chamber of Notaries the Bank gave legal and computer assistance through all stages of the design and establishment of the registration system. In May 1997, the central registry entered in operation. It enables instant registration and searching facilities through all notaries offices and was the first such system for movable pledges in the Bank's countries of operations. The system has operated successfully since 1997 (it received 12,000 application in its first 18 months) and is widely seen in the region as a model to take inspiration from (see Slovakia, Czech Republic, etc).
The EBRD involvement in the establishment of the registry was more far-reaching than initially expected and further assistance was requested for the introduction of the registry, monitoring the early operation and resolving legal and computer problems that might arise. The Bank has also assisted in finding solutions to issues arising out of the amendments to the Civil Code (which were not covered by the earlier project). Subsequently there has been a long period of discussions on the amendments needed to the Civil Code to improve the efficiency of secured credit which have led to a set of amendments adopted in December 2000.
The EBRD then assisted the Ministry of Justice with the preparation of new decrees on registration (adopted in July 2001) and non-judicial enforcement following amendments to the Civil Code provisions on charges. Full review of the registration system was carried out by the IT consultant, which concluded that the system was working extremely efficiently. There is evidence that the number of registration has increased significantly in 2002. A new enforcement decree was adopted in February 2003 and entered into force on 1 March 2003. A Practical Guide destined to inform lending and borrowing communities about the practical opportunities offered by the law was published in 2004.
Kyrgyz Republic: Preparation of a Draft Law on Security Lending (1996-1997)
EBRD and others assisted the Kyrgyz government in drafting a new Pledge law. The new Pledge law entered into force in May 1997. The initial draft of the law was prepared taking into account all the Bank’s recommendations. The law in its final form was adapted following consultations between another consultant IRIS and the Kyrgyz authorities but it remains fairly comprehensive and well-drafted. The main problem came from the lack of implementation, which persists to this day: a computerised registry still needs to be established.
Latvia: Reform of Legislation on Secured Transactions (1998-1999)
EBRD assisted in the preparation of the new Law on Commercial Pledge adopted in 1998, which entered into force in March 1999. The Bank worked together with ABA-CEELI. The Law is functioning well as the implementation process took place - much work being done within the country itself.
Moldova: Assistance in Developing a Secured Transactions law and with the Establishment of a Registry for Pledges (1996-1997 / 1998-2000)
In co-operation with GtZ, the EBRD assisted the Ministry of Economy with the drafting of a new Pledge Law, which was enacted in 1996 and revised in 1997. This law drew on the EBRD Model Law on Secured Transactions and provided a basic legal framework for secured credit. Following disagreements between GtZ and the Moldovan government, the final draft of the law included some less satisfactory amendments.
In 1998, the EBRD was requested to provide legal and computer assistance for the establishment of a registry of pledges for movable assets. This entailed introducing revisions to the pledge law and preparation of regulations covering the computerised register and the registration procedure. The work was again carried out in co-operation with GtZ and led to the adoption of a new Pledge Law in July 2001. Changes in government and delays in the decision on the creation of the registry have severely hampered progress and in 2002, the project was formally abandoned. A registration system then developed independently.
Moldova: Mortgage Transactions Reform - Assessment (2004)
Access to development of a real estate market and affordable housing is becoming a serious issue in Moldova, and one that the Government of Moldova made one of its top priorities for the years 2004-2006. Preliminary assessment has shown that some of the problems may lay with the legal regime: there is currently no specific mortgage law in Moldova, and the existing provisions which could support such activities do not provide the appropriate incentives for the credit sector to develop. The EBRD launched a project to contribute to the development of a dynamic mortgage market in Moldova by preparing a comprehensive assessment of the existing legal, regulatory and institutional framework for mortgage transactions, and initiating a policy dialogue with the Ministry of Economy to examine the conclusions and recommendations of the assessment and discuss how they can be addressed as part of a government and parliamentary led process. See the published report
(1.4Mb).
Poland: The Impact of the Polish Legal System on the Secured Credit Market (2004-2005)
Poland is generally considered an advanced transition country; yet, its legal system does not always adequately support commercial activities. In the field of secured transactions, EBRD assessments had repeatedly denounced the overly lengthy perfection of the security and the uncertainty of enforcement. In 2004, the National Bank of Poland approached the EBRD for assistance to establish the precise flaws or shortcomings of the system (be it legal provisions or how they are understood, or the functioning of the implementing institutions) and express concrete and realistic recommendations. The joint report
(1.5Mb) was published in December 2005.
Regional (Balkans): Standard-setting for charges registries(2003-2004)
Launched in 2003, the project’s objectives were to prepare a set of standards which would help guiding the development of a registration system for charges granted by borrowers over their movable and intangible assets, and detailed guidelines for implementing these standards. These standards are supported by an assessment of the charges registration systems in the Balkans where registry exists (Albania, Bulgaria, FYR Macedonia, Romania, Montenegro and Kosovo). A regional workshop took place in Bucharest in June 2004 to discuss the draft principles.The Guiding Principles
(0.3Mb) were published in 2004.
Regional: Drafting and promotion of the EBRD Model Law for Secured Transactions
The project’s objective was the drafting of the EBRD Model Law on Secured Transactions, following the request made at the 1992 Annual Meeting by leading lawyers from the countries of the region. The Model Law was published in April 1994 and has since formed the basis from which EBRD secured transactions work has been developed. The drafting was supported by an advisory board of 20 eminent lawyers from 15 countries. Since publication the Model has been recognised and used by many organisations working to reform and harmonise secured transactions laws.
Between 1994 and 1996, the Bank set up a programme publicising the Model and promoting reform of secured transactions laws throughout countries of operations. This led to:
• Translations of the Model into Russian, Latvian, German and Japanese.
• Publication of General Principles for a Secured Transactions Law.
• Conferences on Secured Commercial Lending in the CIS (Moscow 1994) and on Emerging Financial Markets and Secured Transactions (EBRD 1995, papers published by Kluwer).
• Co-operation with international organisations including UNCITRAL, UNIDROIT, World Bank, IMF, ADB and national co-operation agencies.
The EBRD also provided ad hoc support and assistance in secured transactions reform in Albania, Bosnia and Herzegovina, Bulgaria, Poland and Ukraine.
Regional: Regional Survey of Secured Transactions
The Bank has developed a country-by-country assessment of pledge laws in the region. The Regional Survey covering all the Bank's countries has been published and has already become a reference point where law reform organisations (World Bank, USAID, etc) find selected and accurate information. The Survey also serves as an encouragement and incentive to countries of the region to undertake reform or pursue the work. A number of Practical Guides (in Hungary, Slovakia, etc) to assist in the effective use of pledge laws and encourage practice.
Regional: New Legal Indicator Survey 2003 on Charges Enforcement
The EBRD prepared detailed analytical assessment of charges enforcement in the Bank’s countries of operations based on a case study developed in cooperation with local law firms, and published analysis and results in conjunction with its own internal assessment (EBRD Regional Survey of Secured Transactions). The Survey’s results were published in the EBRD Transition Report 2003, in the EBRD legal journal Law in transition and in a number of prominent journals. It attracted a lot of attention from other technical assistance providers.
Russian Federation: Mortgage Law Reform Project (1995-1998)
In 1995, the EBRD reviewed the draft Mortgage Law and issued a report with comments and recommendations. In 1997, the Bank prepared an analysis of the final text. The law entered into force in July 1998. The EBRD also assessed the law’s functioning and explored how such a similarly successful work could be undertaken for movable property.
Serbia and Montenegro: Secured Transactions Law Reform and Implementation (2001-2003)
The project consisted in providing technical assistance to the Serbian Ministry for International Economic Relations for the reform of secured transactions law and its implementation in the Republic of Serbia, so that the country is equipped with a modern, enabling legal framework on secured transactions and appropriate implementing institutions that would support sophisticated credit transactions. The Law on Registered Charges over Movable Property
(0.2Mb) was adopted by the Serbian parliament in May 2003. A commentary of the law was also prepared in both Serbian and English.
Slovak Republic: Secured Transactions Law Reform (1996-1998 / 2000-2006)
In 1996 EBRD assisted the local drafters in drafting the section on pledges which was to form part of the new Slovak Civil Code. A lot of preparation work was carried out but the lack of political had prevented the project to progress further until 1999 where agreement on the objectives of the law and identification of committed counterparts and experts was achieved. In 2000, the EBRD provided assistance to the Office of the Deputy Prime Minister (Economy) and Ministry of Justice to develop new legal provisions on secured transactions adapted to a modern market economy in the Slovak Republic based on the EBRD Core Principles for Secured Transactions Law, to successfully implement them by taking the apposite measures, including the development of a centralised pledge registry, and to encourage the wide use of them by raising public awareness. Complete new Civil Code provisions were drafted, approved by the government, and voted by parliament in August 2002. The registry started operating as planned on 1 January 2003. A number of materials were produced to inform potential users of the changes (Practical guide, legal commentary of the law).
Between 2003 and 2006, the EBRD monitored the initial operation of the charges registry and use of the law. A report has been published.
Tajikistan: Assistance in Developing a Secured Transactions Law (1996-2000)
In 1996, the EBRD began to help Tajikistan develop a secured transactions law. The Bank produced an extensive analysis of existing laws in order to assist in identifying the reforms that are necessary and the best ways of implementing them. The Project was brought to a standstill because of the lack of commitment from the Tajik authority. The Bank worked with other organisations (GtZ and ADB) to re-establish contact, without success. It was decided appropriate to abandon the project late 2000.
