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

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

3. I. What is EBRD?

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

8. EBRD 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

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

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

11. The virtuous circle of legal reform STANDARD SETTING ASSESSMENTWORKASSESSMENTWORK OUTREACHOUTREACH COUNTRY PROJECTS

12. Assessing compliance with international standards : EBRD Assessment of insolvency laws 2007 Very high compliance High complianceMedium compliance Low complianceVery 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

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. 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. Case Study: Slovak pledge law reform (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

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 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 Outlook

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