Legal and Judicial Institutions Ten Years into Transition

AuthorJames Anderson; David Bernstein; Cheryl Gray
ProfessionPoverty Reduction and Economic Management Department (ECSPE) in the Europe and Central Asia (ECA) Region
Pages23-56

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BY THE BEGINNING OF THE 21ST CENTURY, MOST TRANSITION countries had experienced nearly a decade of political, social, and economic reforms, often in fits and starts, in various mixes, and with varying degrees of intensity. The same is true for legal and judicial reforms. As outlined in the previous chapter, the experience of many countries emphasized passing laws over institutional reform and judicial independence over accountability and efficiency. Near the end of the decade, reformers and donors began to develop tools to analyze and evaluate the shape of the region's legal and judicial systems and the effect these systems had on economic development, whether at the level of the overall economy or at the level of an individual enterprise. This chapter draws on these data to explore the state of the judiciary 10 years into the transition process.

The "implementation gap"

As described in the previous section, the first decade of reform emphasized passing legislation to support a market economy, with relatively less attention to the institutional reform needed for effective implementation. Figure 3.1 shows indicators of the extent of commercial legislation existing in 1999 ("legal extensiveness") and the degree to which it was being implemented at that time ("legal effectiveness").

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Court performance

We turn now to assessments of the courts along the dimensions of independence, efficiency, affordability, transparency, and accountability, and the ability to enforce decisions. The ABA-CEELI JRI provides a useful tool for beginning to examine these issues. Figure 3.3 shows the average rating across all 14 countries covered by the JRI on each of the JRI's 30 different indicators.1 The JRI rates each dimension as positive, neutral, or negative. For the purposes of this analysis, these have been assigned values of +100, 0, or -100. An average score of 0, therefore, means that the number of countries with ratings of positive exactly equals the number of countries with ratings of negative.

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Independence

The judicial reforms that were the primary focus during the 1990s emphasized the structural issues needed to reinforce the judiciary's role as an equal and independent branch of government, as laid out in the new or revised constitutions adopted throughout the region. As is clear from figure 3.3, relatively more progress has been made on independence issues than on more detailed areas such as court management. Highest marks go to reforms in support of judicial immunity and guaranteed tenure, while the lowest marks are reserved for such management and transparency issues as maintaining trial records and publishing court decisions. Aspects of management of the judiciary that have been the focus of reforms elsewhere in the world, such as systems of case and court management and human resources, were not initially the center of attention in transition countries.

A hallmark of independent and impartial legal systems is the ability of people and firms to use courts to challenge government actions and decisions. During socialist times the judicial system was geared toward defending the rights of the state. At the beginning of transition, the idea of a court overturning a government decision was simply outside the realm of possibility for many people. By the late 1990s, after a decade of reforms, the idea may have seemed less extraordinary, but in many countries there was still little confidence on the part of the public in the ability of citizens or courts to challenge the government through the legal process. For a small number of countries, an indication of how firms view this issue is provided by the Executive Opinion Survey (EOS) conducted annually by the World Economic Forum, in which firms were asked about the legal framework for challenging government decisions. The questions changed somewhat from year to year, so it is difficult to identify absolute trends from these data alone. It is possible, however, to examine how countries or subsets of countries rank compared to each other in any particular year.

Figure 3.4 provides an indication of how firm responses in each country compared with those in other transition countries and the 14 EU countries included in the survey. Russia showed steady improvement in perceived independence, compared with other countries in the survey, from 1998 to 2001, and declined for the next two years. Ukraine showed the nearly opposite pattern, declining steadily through 2001, and then recovering slightly. Poland exhibited a slow but steady erosion of citizens' Page 28 perceptions of the courts' ability to challenge government actions compared to other countries, while the Czech Republic has shown a recent improvement, following a dramatic decline around 2000. Because the chart shows assessments relative to other countries, the slightly positive trend for the EU group of countries means only that the average assessments of the impartiality of the legal system for challenging government actions in those 14 countries were improving relative to the 6 non-EU2 countries shown in the chart. In other words, there is as yet no evidence of convergence or "catching up" of transition countries to EU practice along this dimension of court performance.

Given the early emphasis on establishing independent judiciaries in the transition countries, this result is a bit disappointing. Focusing on the formal structures and instruments that help to make a judiciary independent has apparently not yet been perceived as successful, at least by the firms surveyed by the World Economic Forum. Some judiciaries in transition countries still remain subject to political influence in the selection and disciplining of judges. Most have little influence over the allocation of budget to the judiciary and little control over how these funds are spent. Two types of actions are needed: (1) actions to depoliticize the recruitment, appointment, and career progress or termination of judges (which is often within the purview of judicial councils); and (2) actions to give judiciaries more influence over the use of court resources and autonomy over their administration. [For example, the former Yugoslav Republic (FYR) of Macedonia's judges received power over their budget in early 2004.] Establishing a judicial system that is free from politicization, is capable of managing and administering its own human and capital resources, and is able to minimize corruption in its ranks through self- regulation and effective prosecution will take more time, effort, and resources.

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Efficiency and affordability

The positive albeit limited progress that has been made on judicial independence stands in sharp contrast to performance with regard to efficiency. Figure 3.5 shows the average ABA-CEELI measures related to both efficiency and independence for each of 14 transition countries.3 In all but two of these countries-Kazakhstan and the Kyrgyz Republic-the average assessments related to independence exceed those related to efficiency. Kazakhstan is the only country covered by the JRI with an average positive rating for efficiency, perhaps explained by the additional human and financial resources that the Kazakh Government has put into its judicial system.4

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The scant attention paid to the efficiency of the judiciary, at least during the first decade of transition, is evident most concretely in the lack of attention paid to the issue of court records and statistics (figure 3.3). Statistics were kept and compiled in many countries, but they were often based on poorly defined or inappropriate methodologies and almost never analyzed or employed as a management tool. The old adage "what gets measured gets managed" was clearly understood in the arena of macroeconomics; for example, among the very first capacity-building exercises that the IMF undertook in transition countries in the early 1990s were the establishment of a system for generating a meaningful consumer price index and the training of staff to collect the data and calculate the index. When it comes to judicial reform, however, reformers in many countries continue to make decisions based on faulty statistics, or none at all. Fifteen years after the fall of the Berlin Wall, efforts to improve the system of court statistics are just beginning (or have yet to begin) in many countries. In Albania, Armenia, Croatia, and FYR Macedonia, for example, case management and court administration systems are now being put in place to help fill this statistical and knowledge gap.

The issue of record keeping stretches beyond statistics. Practices that are taken for granted in many countries, such as the maintenance and public availability of trial records, remain undeveloped in many transition countries. Indeed, of the 30 indices in the JRI, the only one that is rated negative in every single country where the JRI has been performed is that of the maintenance of trial records (figure 3.3).5

From the perspective of firms, the ability to adjudicate disputes in an efficient and timely manner helps reduce uncertainty in actual or potential business deals. In the BEEPS surveys, respondents were asked whether they agreed with various statements about the courts, including important aspects such as fairness, honesty, ability to enforce decisions, affordability, and speed. The statement that received the lowest marks for the transition countries as a whole was that "courts are quick," to...

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