In Bosnia and Herzegovina (BiH), complaints about the business climate are pervasive – and many blame the courts. Evidence suggests that poor court performance affects the economy in BiH more than almost anywhere else in Europe and Central Asia (and likely beyond).
By way of example, imagine you’re a local business and you have a dispute with a supplier worth less than 2,500 EUR. You’ll wait an average of 702 days before you hear your court decision...and that’s before the decision is even enforced!
This wait time is about 6 times longer than in the 47 countries of the Council of Europe. For many small businesses, such a delay would be unbearable and your business may fold before you get the outcome you need.
So for businesses that have administrative or judicial cases before the courts, delays and inconsistencies in court decisions cause immense frustration and uncertainty, which directly affects their business operations.
For businesses without cases before the courts, their fear of the courts deters them from doing deals. Fear also deters them from seeking justice when they have a dispute. Many businesses remain a small target – small or informal or unable to grow. And when they have a dispute, they avoid the courts and negotiate as best they can in the shadows of the law.
And in the end, it’s micro, small and medium -sized enterprises (MSMEs) who suffer the most. They are likely to have less power in any negotiation, and are vulnerable to abusive litigation by bigger players.
So what can be done?
In the Federation of Bosnia and Herzegovina (FBiH), stakeholders asked the World Bank to examine how best to improve the management of commercial cases there. There was a sense that maybe the solution lay in creating specialized commercial courts – like those that exist in the neighboring entity, Republika Srpska, or in neighboring countries like Serbia and Croatia.
But, like good policymakers do, they first wanted to examine the options and assess their feasibility before making the leap.
We’ve just finalized the Study, and it’s available here. It analyzes the performance of FBiH courts, based on statistical caseloads, finance and HR data, dozens of key informant interviews, and a small survey of business representatives. It draws on international and regional good practices and lessons from countries with different models of commercial specialization. And then it outlines a series of options and the constitutional, legal, operational, and financial implications of each.
Based on the analysis, the Bank recommends that FBiH implement a package of reforms to improve the efficiency and quality of work in courts – including:
- Strengthening existing commercial departments;
- Delivering advanced commercial training for commercial judges;
- Closing procedural loopholes;
- Fast-tracking minor cases (like those under 2,500 EUR); and
- Offering courts some performance-based incentives.
The report also offers insights and tips for other jurisdictions, including Republika Srpska as well as neighboring countries on how to speed up commercial cases to improve the business climate.
So check it out here in English and in Bosnian. And we welcome your comments!