Civil Enforcement and the Rule of Law: Effective Enforcement and the Role of Judicial Officers under Globalization and Economic Integration

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1 Working to end extreme poverty by 2030 and boost shared prosperity Civil Enforcement and the Rule of Law: Effective Enforcement and the Role of Judicial Officers under Globalization and Economic Integration Dr. Heike Gramckow The World Bank 1

2 East Asia Economic and Trade Trends 2

3 Commercial opportunities, firms managing investment risks and choices of venue Firms assess transaction risks and litigation risks before investing Country general litigation risk = litigation venue and enforcement risks Litigation risk - dispute in an unknown or less trusted court environment, uncertain enforcement environment, judgment obtained in one court not enforceable elsewhere Risks drive up cost, determine choice of engagement Choice - International venues for arbitration and litigation, still enforcement is often local 3

4 High transaction and related litigation cost and risks of the EAP region Many countries across a vast continental stretch and across the Pacific makes travel to resolve disputes more expensive Variety of legal systems - common law, civil law and hybrid legal systems Multitude of different languages Varying levels of economic development and differences in sophistication of court and enforcement practices and procedures 4

5 How contract enforcement affects investment Essential for Effective Investment Climate, Economic Development and more Contract enforcement impacts. International investment and local business development, especially for small and mid-sized local firms Expansion of business, investing in new ventures, growth, new jobs, entrepreneurship Businesses getting credit especially for start-ups and small local business Company cash flow, size of inventory, inventory stock overturn, inventory cost Company capital allocation and adjustment cost Business risk taking, more complex investments Investment returns 5

6 Effective contract enforcement environment Effective regulatory framework Effective court processes and decisions Effective enforcement actions Business community trust in and support for courts and enforcement Private Bar support for effective and efficient processes Executive branch support for effective intra-branch collaboration, budget communications, assure government lawyer capacities and effective administrative complaint mechanisms 6

7 Doing Business- Enforcing Contracts Where Does the EAP Region Stand? Economy Name Rank DTF Time (days) Cost (% of claim) Procedures (number) East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa OECD high income South Asia , Sub-Saharan Africa

8 Country Performance Economy Name Rank DTF Time (days) Cost (% of claim) Procedures (number) Brunei Darussalam Cambodia China China - Shanghai China - Beijing Iceland Indonesia Indonesia - Jakarta Indonesia - Surabaya Japan Japan - Tokyo Japan - Osaka Korea, Rep Lao PDR Malaysia Myanmar , Philippines Singapore Thailand Vietnam

9 Enforcement challenges Outdated procedural and business codes (i.e., bankruptcy) Inefficient court and enforcement processes Lack of court and agency resources (human, financial, infrastructure) Lack of supporting systems externally (land, property and company registries, information excess rights, value estimating standards, address systems, auctioning companies) Lack of mutual legal assistance agreements 9

10 Interesting international trends and reforms for more effective civil enforcement Model code UIHJ Regional agreements (EU), conventions (The Hague Choice of Court C.) EBRD general status survey Scalable assessment tool World Bank Reengineering and ITC solutions Performance standards Privatization International collaboration UIHJ, EU examples Jurisdiction-level coordination meetings Business community outreach 10

11 European Enforcement Agent Status & Performance Standards Employment status Performance standards Source: CEPEJ 2014 European Judicial Systems 11