Legal reform in transition countries -Legal reform in transition countries -the EBRD approachthe EBRD approach

Presentation to World Bank

25 February 200825 February 2008

Michel NussbaumerFrederique Dahan

Presentation planPresentation plan

I. What is EBRD?

II. The EBRD Legal Transition Programme

III. Outlook

I. What is EBRD?

What is the EBRD? What is the EBRD?

Founded in 1991Founded in 1991 Financial institution with €20 Financial institution with €20

billion capitalbillion capital Operates in 29 countries in Operates in 29 countries in

Central and Eastern Europe, Central and Eastern Europe, including the former Soviet including the former Soviet UnionUnion

Multinational shareholding: Multinational shareholding: 60 countries, EIB and EU 60 countries, EIB and EU

More than 1000 regular staff More than 1000 regular staff from 52 countries, More than from 52 countries, More than 250 locally hired staff in 33 250 locally hired staff in 33 resident officesresident offices

Largest investor in the regionLargest investor in the region

+ Mongolia(July 2006)

What are the EBRD’s objectives?What are the EBRD’s objectives?

To promote transition to market economies by investing mainly in the private sector

To mobilise significant foreign direct investment

To support privatisation, restructuring and better municipal services to improve people’s lives

To encourage environmentally sound and sustainable development

II. EBRD Legal Transition Programme

EBRD Office of the General CounselEBRD Office of the General Counsel

General Counsel

Assistant General Counsel

Deputy General Counsel

LEGAL TRANSITION TEAM 7 LAWYERS

FOUR

TEAMS

FOUR

TEAMS

Deputy General Counsel

THREE

TEAMS

EBRD Legal Transition Programme focuses on EBRD Legal Transition Programme focuses on areas relevant to investorsareas relevant to investors

Securedtransactions

Infrastructure regulation

Concessions

Insolvency

Corporate governance

Investment

Securities markets

Judicialcapacity

In-house expertiseIn-house expertise

Gian Piero CignaCorporate Governance &Capital Markets Specialist

Alexei ZverevConcessions Specialist

Paul MoffattInfrastructure RegulationSpecialist

Frederique DahanSecured TransactionsSpecialist

? INSOLVENCY COUNSEL TO BE ADVISED

The virtuous circle of legal reformThe virtuous circle of legal reform

STANDARD STANDARD SETTINGSETTINGSTANDARD STANDARD SETTINGSETTING

ASSESSMENTASSESSMENTWORKWORKASSESSMENTASSESSMENT

WORKWORK

OUTREACHOUTREACHOUTREACHOUTREACH COUNTRY COUNTRY PROJECTSPROJECTS

COUNTRY COUNTRY PROJECTSPROJECTS

Assessing compliance with international Assessing compliance with international standardsstandards: EBRD Assessment of insolvency laws 2007: EBRD Assessment of insolvency laws 2007

Very high compliance

High compliance Medium compliance

Low compliance Very low compliance

Albania

Bosnia and Herzegovina

Bulgaria

Croatia

Moldova

Montenegro

Romania

Serbia

Armenia

Belarus

Czech Republic

Estonia

Hungary

Kazakhstan

Kyrgyz Republic

FYR Macedonia

Poland

Russian Republic

Slovak Republic

Azerbaijan

Georgia

Latvia

Mongolia

Slovenia

Lithuania

Tajikistan

Turkmenistan

Ukraine

Uzbekistan

LTP assessments pinpoint strengths LTP assessments pinpoint strengths and weaknesses in laws:and weaknesses in laws:

the example of insolvency laws in Lithuania and Romaniathe example of insolvency laws in Lithuania and Romania

Source: EBRD Assessment of Concession Laws, 2007100 represents full approximation with international standards

0

20

40

60

80

100Commencment

Assets of the Estate

CreditorsReorganisation proceedings

Terminal proceedings

LithuaniaRomaniaInternational standards

Measuring the effectiveness of concessions legal Measuring the effectiveness of concessions legal

frameworks – 2006 Legal Indicator Surveyframeworks – 2006 Legal Indicator Survey

Effectiveness of concessions legal framework

0

10

20

30

40

50

60

70

80

90

100

*Uzb

ekis

tan

*Taj

ikis

tan

*Bel

arus

*Kyr

gyz R

ep.

*Aze

rbai

jan

Mold

ova

Monte

negro

Russia

*Mongolia

*Arm

enia

Poland

Ukrai

ne

Bosnia

and H

erz.

*Est

onia

*Alb

ania

Latvi

a

Georg

ia

Serbia

*Slo

vak

Rep.

FYR Mac

edonia

Croat

ia

Kazak

hstan

Hungary

Lithuan

ia

Roman

ia

*Slo

venia

Bulgar

ia

*Cze

ch R

ep.

Per

cen

t

Existence of Concessions Selection Process Project Agreement Termination

* Countries without a concession as defined at the time of assessment

Veryefficient

Notefficient

Dissemination of assessment work – Dissemination of assessment work – Law in Law in transitiontransition

Available in English and in Russian

  

         

LiT 07.jpg (124 KB)

LiT 07.jpg (124 KB)

Dissemination of assessment work – Legal Dissemination of assessment work – Legal Transition Programme web pagesTransition Programme web pages

www.ebrd.com/law

Case Study: Slovak pledge law reform Case Study: Slovak pledge law reform (2000-2006)(2000-2006)

A wide-ranking project with three phases:

Consensus-building: objective is to create situation favourable to introduction of effective security laws

Drafting: most visible but only a small part of the process

Implementing: help identifying means for comprehensive and sustainable implementation of reform

1. Consensus building1. Consensus building

1999: favourable political climate calling for reforms (support of government and private sector)

EU membership – transposition of acquis (BUT secured transactions not concerned)

World Bank conditionality (Financial Sector Adjustment Loan)

Separation from the complex Civil Code reform project

Country happy to learn from others’ experience

2. 2. DraftingDrafting

Consistent with existing regime applicable to movable and immovable property

Readiness to embrace concepts unfamiliar to Civil Law tradition, e.g. specificity

Ministry of Finance ready to waive its priority privilege

Fully flexible mode of enforcement

3. 3. ImplementingImplementing

Collateral register with no burden for the State budget -> Chamber of Notaries

Development of supporting materials (practical guide, FAQ, legal commentary)

Dissemination and training (esp. judiciary)

Review of functioning of register against initial objectives and specifications

Current technical assistance projects Current technical assistance projects (selection):(selection):

Mongolia Telecoms– Providing assistance to the Mongolian government in both the

privatisation and regulatory development areas

CIS Model Company Law– Helping the CIS Inter-parliamentary Assembly prepare a model law

for joint-stock companies

Kyrgyz Judicial Capacity Building– Implementing action plan to increase judicial capacity in the

commercial law sector

Serbia Insolvency– Assisting the government of Serbia to improve capacity of its

Bankruptcy Supervisory Agency

Coordination with other aid providersCoordination with other aid providers

Mainly on the ground:

– Via counterpart

– EBRD resident offices

– Local working groups or investor councils

New tools: IDLO database

III. Outlook

The futureThe future

Gradual shift of technical assistance to countries further south and east (Western Balkans, Early Transition Countries)

Finding niches where EBRD can be additional (e.g., insolvency administrators)

Controlled growth of programme to respond to current demands

OutlookOutlook

Legal reform in transition countries -Legal reform in transition countries -the EBRD approachthe EBRD approach

Presentation to World Bank

25 February 200825 February 2008

Michel NussbaumerFrederique Dahan