1. Alternative Dispute Resolution Project in Bosnia and Herzegovina
Presented by: Lada Busevac, ADR Project Manager
Bosnia and Herzegovina
Washington D.C., April 2006

2. IFC PEP SE background
IFC: Active portfolio in the country, $106m invested
IFC PEP SE – Private Enterprise Partnership Southeast Europe
Established on July 1, 2005
IFC managed two large TA programs in the Balkans: SEED and PEPSE
Mandate: strengthen the private sectors in the Balkans (Albania, Bosnia and Herzegovina, Macedonia and Serbia and Montenegro)
PEP SE projects in the areas of:
Access to Finance
Business Enabling Environment and Access to Markets
Supply Chain Linkages
Pipeline: Housing Finance, Microfinance, Registration

3. PEP Southeast Europe: Guiding Principles
Focused and integrated approach to PSD in the region that emphasizes:
a. Facilitation
Capacity building and utilizing local resources
Local implementation and ownership
b. Mobilization
Coordinating donors, harnessing external resources
Working in partnerships
c. Sustainability
Focus on local cost recovery
Building local markets

4. IFC’s target areas: Export
Between 3 and 5 times harder to export with 9 documents and 15 signatures needed
Protecting Investors
Companies 50% less transparent than the region and shareholders amongst the weakest in the region
Contract Enforcement
It takes 36 steps and 330 days to enforce contracts and the cost of enforcing contracts is 19.6% of debt

5. ADR Project Background
Needs identified in Bosnia and Herzegovina
1 million backlogged cases in 64 courts1
430 days to collect debt through court2
21 pending cases with a cumulative value of EUR in Sarajevo region3
Project objective region wide
“Assist judicial reform underway, support introduction of commercial mediation and allow better access to justice and finance for businesses”
Alternative dispute resolution is a term encompassing a number of methods of settling disputes outside the traditional court system.
The term ADR is often used to describe a wide variety of dispute resolution mechanisms that are short of, or alternative to, full-scale court process. The term can refer to everything from facilitated settlement negotiations, where disputants are encouraged to negotiate directly with each other prior to some other legal process, to arbitration systems or minitrial that look an feel very much like a courtroom process.
In mediation mediators may simply facilitate communication, or may help direct and structure the settlement, but they do not have the authority to decide or rule the settlement.
In arbitration systems a third party is authorized to decide how a dispute should resolve.
Mediation – non-binding; Dependant of the willingness of the parties to reach voluntary agreement. Parties to a dispute reach a voluntary settlement through the assistance of a skilled facilitator.
Arbitration – binding/non-binding; Involves a resolution by neutral arbitrator , which may or may not be legally binding.
It is also important to distinguish voluntary vs. mandatory process.
Conciliation is not a new and unknown concept, as is did exist in former Yugoslavia in a form of community based conciliation councils, but it did not have its roots in the official legal structure. If mediation would be used for court disputes its results would be treated as illegal, and not admissible at court.
Therefore, the new law is recommending close links of court and mediation system especially in overall understanding what positive effects can mediation bring to existing slow and inefficient system, and also allow full transparency and clarity of relations. ADR can only support ongoing reform process by taking away burden from courts/judges that are at the moment unable to cope with heavy case load and therefore resulting in poor satisfaction of end-users, especially SMEs, and in reluctance of foreign investors to fully commit to commercial activities in BH.
Because mediation is such a new idea, it can hardly be use as a substitute, and it should not be. But, at the same time it is finding advocates in businessmen and others who find the courts too time-intensive and incredibly inefficient.
1 - High Judicial and Prosecutorial Council, Annual report 2004
2 - World Bank’s Doing Business Report 2006
3 – Finding of the Sarajevo Canton Chamber of Commerce

6. Alternative Dispute Resolution Program
Activities (region wide)
Establish legal framework for mediation
Establish regional network of 10 mediation centers
Develop a pool of well trained mediators
Support the development of local counterparts and foster their financial sustainability
Raise awareness on mediation among businesses

7. IFC’s Alternative Dispute Resolution Program
Duration
Three years (2005 –2008)
Continuation of SEED’s ADR project started in 2003
Budget
$ 3,1 million
Donors
Government of Canada through the Canadian International Development Agency
September March 2006
Government of the Netherlands
January 2006 – June 2008

8. Legal framework Code on Civil procedure allows use of mediation
Law on Mediation enacted in Bosnia and Herzegovina in August 2004
Law on transfer of mediation competencies to the Association of Mediators in BH enacted in July 2005
By-laws enacted in March 2006
Laws harmonized with EU recommendations and UNCITRAL model law
Mediation Law allows for legal and non-legal professionals to become mediators
Mediation agreement – executive title

9. Court-Referred Mediation Pilot Projects
Aim to test effectiveness of mediation in terms of:
reducing backlog,
improving courts’ performance and
allowing businesses better access to justice and finance
Mediations taking place in mediation centers co-managed by IFC and Association of Mediators
Working towards mediation self-sustainability by charging (subsidized) fees for mediation services
Custom-made monitoring and evaluation methods used to measure effectivnes facilitate use of lessons learned

10. Why Court Referred Mediation?
Moving cases out of the court - reducing backlog – creating pipeline
Positive judicial attitude towards mediation ensuring buy-in from parties
Does not put additional burden on the judges
Retaining legal protection offered by court decision/enforceable document
Minimizing lawyers’ opposition
Can eventually lead to a norm or culture of resolving disputes out-of-the-court

11. Integrated approach and sustainability
IFC
Mediation Center
Partnership Agreement
Memorandum of understanding
Civil Society Institution
(e.g. Association of Mediators)
Partner Court
ADVISORY BOARD
Selection of cases
Inviting parties and mediating cases

12. Mediation center financing model
Month 22 – Mediation center reaching its full financial sustainability

13. Overview Bosnia - Herzegovina Results March ’04 – March ‘06
2 Mediations Centers in cooperation with Sarajevo Municipal Court and Banja Luka Basic Court
16 judges referring cases to mediation
12 fully trained mediators (lawyers and others)
254 mediations completed successfully (35% B2B)
57% success rate
€ 7,6 million released - average € 30,197 per case

14. Public Awareness Campaign
Objectives
Improve awareness of mediation as an alternative to the formal court system among legal professionals and business community and create demand
Increase visibility of the Association of Mediators in front of key target audiences (legal community and potential corporate customers) on the market
Variety of communication channels used: newsletter, web page, custom made presentations with professional BMOs, workshops, seminars, conferences, editorials, PR materials, etc.

15. Work with the Association of Mediators in Bosnia and Herzegovina
In BH Association of Mediators beneficiary of IFC’s technical and financial assistance
Positive management practices being put in place
Association’s work promoted through an extensive public awareness campaign facilitated by IFC
Financial sustainability being developed – offering commercially own training and consulting services
A broad network of dedicated mediators is a guarantee for long term commitment to mediation development

16. Mediation and integration
MEDIATORS
COURTS/LAWYERS
Success requires well-trained mediators working within an established legal framework with carefully drafted procedural rules and enforcement mechanisms. We then need to find a way to stimulate the use of ADR and to increase its acceptance among lawyers and judges, as well as the general public.
GOVERNMENT
GENERAL PUBLIC

17. In Conclusion
Businesses understanding mediation benefits and creating demand
“I have resolved the total of 3 million KM disputes through mediation in just 180 minutes , 81 KM per minute.
My personal opinion is that it is better to have KM today than KM in a year because you can invest this in equipment and production materials today and earn even more money than KM.”
Banja Luka Focus Group participant

18. However, there are still many issues…
Low acceptance rate
Lawyers and mediation
Low judicial motivation to promote use of mediation
Really assisting judicial reform?
Lack of respect for the legal norm
Short project timeline jeoperdizing project effectivenes

19. Thank you.
Lada Busevac, IFC PEP SE
Sarajevo, Bosnia and Herzegovina