Over the 20 years of legal transition, the legal framework for doing business in the EBRD region has improved substantially. Overall, judiciaries have shown imporvements in indepenendence and understanding of market economy, new legal mchanisms in such areas as dispute resolution have emerged as well as best practices which are being applied in EBRD's new countries of operation. However the enforcement of contracts and commercial laws is often problematic, deterring investors from participation in countries' markets for fear that their legal rights will not be protected. Accordingly, the Legal Transition Programme (LTP) has recently devoted special attention to strengthening enforcement of contracts and judicial capacity.
Capacity building of courts and tribunals
One critical dimension of effective enforcement is to ensure that judges and members of tribunals are sufficiently trained in commercial law and markets. In several Early Transition Countries, where concerns about contract and commercial law enforcement are greatest, LTP has run wide-ranging commercial law judicial training projects These have sought to train a pool of local judges who then work with international experts to deliver fundamental training to all judges hearing commercial matters in the country.
The subject matter of such training has covered areas of commercial law and practice most relevant to local and foreign investment and in which training is most needed, including interpretation of contracts, shareholder disputes, insolvency, competition law and intellectual property. Sector-based training has also been provided, such as disputes in the insurance and mining sectors. Local trainers remain available for future iterations of training run by the local authorities.
In Eastern Europe, LTP has focused on filling important gaps in judicial training and has developed training products in areas where questions of law, economics and finance intersect. These include:
accounting skills for judges hearing insolvency matters;
economic concepts in competition law matters; and
disputes over complex financial instruments.
Similarly, members of specialist tribunals must possess sufficient skills and knowledge to deal effectively with disputes in their jurisdiction. LPT has devoted particular attention to providing specialised training and capacity building for members of competition authorities and public procurement review bodies.
This factsheet highlights the competition capacity building work of the EBRD Legal Transition Team and Economics, Policy and Governance Team who have worked on a variety of successful technical cooperations projects in this sector.
Competition Technical Assistance Projects
Alternative dispute resolution
LTP seeks to promote the use of alternative dispute resolution (ADR). Business and courts alike are assisted by the availability of effective ADR mechanisms. Evidence shows that commercial mediation and arbitration can provide faster, more tailored outcomes, free-up court
LTP’s work on ADR has included advice to government on upgrading of arbitration laws to accord with the UNCITRAL model law; training of arbitrators; training of judges on enforcement of foreign arbitral awards; advice on introduction / enhancement of mediation laws; advice on providing incentives to mediate through pre-trial procedure; establishing court-annexed mediation facilities and mediation centres; and training of mediators.
Bailiffs and enforcement agents
It is critical for private sector development that businesses have confidence not only in their ability to protect their contractual and statutory rights in the courts, but also to recover judgment debt. Ineffective mechanisms to ensure compliance with court decisions have a corrosive effect on the investment climate and the rule of law. Inefficiency in the enforcement of court judgments is a substantial problem affecting the justice systems in the EBRD region. In an EBRD study of problems affecting commercial justice in the region, implementation of decisions was identified as the most problematic area – worse even than the lack of impartiality in court decisions. In the most recent Business Environment and Enterprise Performance Survey (BEEPS) conducted by the EBRD and the World Bank, business respondents in all EBRD countries of operations considered the ability of the justice system to enforce court judgments to be very low. A substantial minority of respondents to the BEEPS believed that decisions were ‘never’ enforced.
EBRD has conducted a detailed regional analysis of the law and practice surrounding enforcement of courts decisions, and has advised governments on reform of the relevant legislative framework, including on matters such as access to information on debtors’ assets, improved sale and auction procedures, the accrual of interest on judgment debt, and the role of the private sector in providing enforcement services. LTT has also conducted training and capacity building activities for bailiffs.
A number of LTP’s projects have involved reforms to court structure and jurisdiction. This entails consideration of how specialised commercial courts or chambers can improve the handling of commercial matters. It also involves examining how courts can be unburdened of the responsibility for more routine, administrative matters which clog court lists and distract judges’ attention from substantive matters. LTP projects have also provided support to government authorities to enhance the functioning of judicial training centres and other court supervisory bodies. Such work has been directed at institutional capacity building, such as management and budget skills. These have proved to be critical components for the sustainability of projects, particularly in Early Transition Countries. Another important facet of an effective court framework is the availability of easy access to court decisions. In many countries, judges and lawyers have difficulty in searching for and obtaining copies of judicial decisions. As a result, the case law lacks uniformity. Further, the inscrutability of the jurisprudence frustrates the efforts of local and foreign investors to understand and manage legal risk. LTP has advised governments on legal and practical measures to improve access to judicial decisions. This allows lawyers to present better quality arguments, and judges to benefit from reasoning in analogous cases. It also promotes greater transparency in the justice sector.