1. Secured Transactions Law Reform: The EBRD Perspective Moscow, September 2009

2. Two years later September 2007: Roundtable organised by the Duma’s Committee on Credit Organisations and Financial Markets on the very same theme September 2009: Economic climate very different; some reforms have been adopted What is today’s perspective? Objective of the presentation

3. Why is EBRD concerned with pledge (secured transactions) legal reform? An investment bank … …with a development mission Direct (or indirect) experience in lending and structuring secured transactions Political status to relay concerns / views to government

4. EBRD secured transactions reform work cycle Assessing Measuring economic benefits Expression of law-based solutions Accompanying reform - Country projects

5. Basic tenets of secured transactions 1.Why a pledge/mortgage law?  Economic purpose : reduce credit risk  Legal framework to be facilitative / conducive …  …Within the context (sociological and cultural) in which it operates 2.Will the reform work? Has the reform been successful?  Aim for a legally efficient framework

6. Legal efficiency criteria to guide / assess reform Basic legal function Maximising economic benefit SimplicitySpeed Cost Certainty Fit-to-context “The extent to which a law and the way it is used provide the benefits that it was intended to achieve”

7. Main reported problems of Russian pledge law (1) Too prescriptive law – curtailing contractual specifics Too formalistic approach (law and interpretation by courts) Inefficient enforcement in case of debtor’s default (procedure and realisation) Lack of publicity on existing pledges Pledge over bank account and pledge over account receivables practically impossible

8. Main reported problems of Russian pledge law (2) No concept of security trustee Limited types of collateral Conflicting priority regime, leading to uncertainty Denounced as too debtor-friendly Problems of implementation – e.g. pledge over objects under construction

9. Thank you – for more information www.ebrd.com/st DahanF@ebrd.com