Legal reform in transition countries - the EBRD approach Presentation to World Bank

1. Legal reform in transition countries -the EBRD approachPresentation to World Bank 25 February 2008 Michel Nussbaumer Frederique Dahan

2. Presentation plan What is EBRD? The EBRD Legal Transition Programme Outlook

3. What is EBRD?

4. What is the EBRD? • Founded in 1991 • Financial institution with €20 billion capital • Operates in 29 countries in Central and Eastern Europe, including the former Soviet Union • Multinational shareholding: 60 countries, EIB and EU • More than 1000 regular staff from 52 countries, More than 250 locally hired staff in 33 resident offices • Largest investor in the region

5. + Mongolia (July 2006)

6. 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

7. EBRD Legal Transition Programme

8. EBRD Office of the General Counsel General Counsel Deputy General Counsel Deputy General Counsel Assistant General Counsel FOUR TEAMS FOUR TEAMS LEGAL TRANSITION TEAM 7 LAWYERS THREE TEAMS

9. EBRD Legal Transition Programme focuses on areas relevant to investors Secured transactions Judicial capacity Corporate governance Investment Infrastructure regulation Insolvency Concessions Securities markets

10. Alexei Zverev Concessions Specialist Gian Piero Cigna Corporate Governance & Capital Markets Specialist Paul Moffatt Infrastructure Regulation Specialist In-house expertise ? INSOLVENCY COUNSEL TO BE ADVISED Frederique Dahan Secured Transactions Specialist

11. STANDARD SETTING ASSESSMENT WORK OUTREACH COUNTRY PROJECTS The virtuous circle of legal reform

12. Assessing compliance with international standards: EBRD Assessment of insolvency laws 2007

13. LTP assessments pinpoint strengths and weaknesses in laws: the example of insolvency laws in Lithuania and Romania Source: EBRD Assessment of Concession Laws, 2007 100 represents full approximation with international standards

14. Effectiveness of concessions legal framework Very 100 efficient 90 80 70 60 Per cent 50 40 30 20 Not 10 efficient 0 Latvia Serbia Russia Poland Croatia Ukraine Georgia *Estonia *Albania Hungary Bulgaria *Belarus Moldova Romania *Armenia Lithuania *Slovenia *Mongolia *Tajikistan *Azerbaijan Kazakhstan *Uzbekistan Montenegro *Czech Rep. *Slovak Rep. *Kyrgyz Rep. FYR Macedonia Bosnia and Herz. Existence of Concessions Selection Process Project Agreement Termination * Countries without a concession as defined at the time of assessment Measuring the effectiveness of concessions legal frameworks – 2006 Legal Indicator Survey

15. Dissemination of assessment work – Law in transition Available in English and in Russian

16. Dissemination of assessment work – Legal Transition Programme web pages www.ebrd.com/law

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

18. 1. 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

19. 2. Drafting • 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

20. 3. Implementing • 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

21. Current technical assistance projects (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

22. Coordination with other aid providers • Mainly on the ground: • Via counterpart • EBRD resident offices • Local working groups or investor councils • New tools: IDLO database

23. III. Outlook

24. The future Outlook • 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

25. Legal reform in transition countries -the EBRD approachPresentation to World Bank 25 February 2008 Michel Nussbaumer Frederique Dahan