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Strengthening Romania’s judiciary in financial matters

Seminar about knowledge in financial instruments held in Bucharest

The economic transformation of a country also poses challenges for a society’s legal and regulatory framework. To support the Romanian judiciary in the process of acquiring knowledge of new financial instruments, the European Bank for Reconstruction and Development (EBRD), in cooperation with the Panel of Recognized International Market Experts in Finance (P.R.I.M.E Finance) and the National Institute of Magistracy (NIM), organised a seminar in Bucharest this week. The event was attended by judges from various courts, including the High Court of Cassation and Justice.

Participants noted that, with EU directives transposed into national law, Romania benefits from a relatively high level of sophistication in terms of its capital markets laws. The authorities have been actively focused on supporting the development of Romania’s capital markets, including further improvement through law reform. Several important legal acts have either recently become effective or are currently being developed.

A legal and regulatory assessment of the Romanian capital market emphasised that while the country’s financial sector has experienced remarkable development over the past few years (in which the EBRD has played an important role), courts have to deal with disputes involving economic transactions which judges may not have previously encountered and been exposed to. Bridging this gap remains a challenge.

Judge Diana Ungureanu, an expert in commercial law and full time trainer with the NIM, emphasised in her opening remarks that, in response to concerns about the lack of predictability in the interpretation of the law, the judiciary uses legal and managerial measures to improve consistency of its practice and case law. The High Court of Cassation and Justice continues to publish all its case law online. Important steps have also been taken to ensure the publication and update of the decisions of all other courts.

Intensive trainings of magistrates are organised throughout the country. In addition, the Superior Council of Magistracy organises regular meetings to identify and discuss any matters generating an inconsistent jurisprudence, finalised with minutes proposing a common approach in order to unify the case law. A portion of these meetings is allocated to banking contracts and any concerns regarding the need for a deeper judicial understanding of the financial market.

André Küüsvek, EBRD Director, Local Currency and Capital Market Development, said: "We are delighted to cooperate with the National Institute of Magistracy, and to partner up with P.R.I.M.E Finance, in the matter of judicial understanding of financial instruments and dispute resolution in financial markets as we share the same commitment in terms of creating a safe and efficient framework for development of the capital market in Romania”.

In recognition of these new challenges, the seminar offered Romanian judges the opportunity of a solid theoretical and practical background for dealing with disputes involving complex financial transactions. This area is increasingly global and the disputes that courts are called on to adjudicate require a consistent, coherent and predictable response.

The seminar offered an overview of the role of law and regulation in financial markets, including recent trends, familiarising the participants with the technical aspects of derivatives, bonds and securitisation in Romania and in comparable countries. The seminar also discussed risk mitigation, dealing with legal uncertainties and interpretative issues that Romanian courts might be faced with, as well as settling disputes in the financial markets, including trends, documentation, recent cases in Romanian and international courts, arbitration, mediation and the role of expert witnesses.

The seminar’s aim was to improve the investment climate in Romania by building judicial capacity in relation to capital markets and to establish a benchmark for other EBRD countries of operations in terms of judiciary access to training on the abovementioned topics.

The event took place within the EBRD Initiative on Local Currency and Capital Markets Development (LC2) with support of EBRD’s Special Shareholders Fund (SSF). LC2 aims to identify and support sequenced reforms and policies in the EBRD’s countries of operations that contribute to local currency and local capital market development. One of the ways this can be achieved is through capacity-building activities with the participation of reputable international experts, providing participants with up-to-date information and sharing best practices.

Presenting on behalf of the EBRD were four experts from P.R.I.M.E Finance, a not-for-profit foundation that provides assistance to judicial systems in the settlement of financial market disputes – Jeffrey Golden, Governor and Honorary Fellow at the London School of Economics and Chairman of the P.R.I.M.E. Finance Foundation; Dr. Peter M. Werner, Senior Director at ISDA - International Swaps and Derivatives Association; Rick Grove, Chief Executive Officer and Partner, Rutter Associates LLC, New York; and Zoltan Lengyel, Partner, Allen & Overy, Budapest – together with Romanian counsel Andreea Toma, Partner at Leroy și Asociații, Bucharest.

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