Document of The World Bank Public Disclosure Authorized Report No: 20820-AM

Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 8.6 MILLION

(US$ 11. 4 MILLION EQUIVALENT)

TO THE

Public Disclosure Authorized REPUBLIC OF ARMENIA

FOR A

JUDICIAL REFORM PROJECT

August 21, 2000

Legal Department

Public Disclosure Authorized Europe and Central Asia Region CURRENCY EQUIVALENTS

(Exchange Rate Effective August 21, 2000)

Currency Unit = Dram Dram 1.0 = US$ 0.002 US$ 1.00 = 547 Drams

FISCAL YEAR January 1 - December 31

ABBREVIATIONSAND ACRONYMS

ABA- CEELI American Bar Association's Central and Eastern European Law Institute CAS Country Assistance Strategy CCC Council of Court Chairmen EU-TACIS European Union - Technical Assistance Program for the Commonwealth of the Independent States ECU European Currency Unit FMS Financial Management System FSU Former Soviet Union IDA International Development Association JTC Judicial Training Center GOA Government of Armenia. GTZ Gesellschaft fur Technische Zusammenarbeit MOJ Ministry of Justice PAC Project Administration Council PIU Project Implementation Unit PMR Project Management Report POM Project Operational Manual SA Special Account SATAC I Structural Adjustment Technical Assistance Credit SATAC II Second Structural Adjustment Technical Assistance Credit SDR Special Drawing Rights SOE Statements of Expenditures USAID United States Agency for International Development WTO World Trade Organization YSU Yerevan State University

Vice President: Johannes F. Linn Country Director: Judy O'Connor Sector Manager: Friedrich Peloschek Task Team Leader: Irina L. Kichigina ARMENIA JUDICIAL REFORM PROJECT

CONTENTS

A. ProjectDevelopment Objective Page

1. Project developmentobjective 2 2. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 11

C. Project Description Summary

1. Project components 15 2. Key policy and institutional reforms supportedby the project 16 3. Benefits and target population 17 4. Institutionaland implementationarrangements 17

D. Project Rationale

1. Project alternatives considered and reasons for rejection 19 2. Major related projects financed by the Bank and other development agencies 20 3. Lessons learned and reflected in proposed project design 21 4. Indications of borrower commitmentand ownership 23 5. Value added of Bank support in this project 24

E. Summary Project Analysis

1. Economic 24 2. Financial 24 3.Technical 24 4. Institutional 25 5. Environmental 26 6. Social 27 7. SafeguardPolicies 28

F. Sustainability and Risks

1. Sustainability 28 2. Critical risks 28 3. Possible controversial aspects 29 G. Main Credit Conditions

1. Effectiveness Condition 30 2. Other 30

H. Readiness for Implementation 31

I. Compliance with Bank Policies 31

Annexes

Annex 1: Project Design Summary 32 Annex 2: Project Description 37 Annex 3: Estimated Project Costs 46 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 47 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 48 Annex 6: Procurement and Disbursement Arrangements 49 Annex 7: Project Processing Schedule 65 Annex 8: Documents in the Project File 66 Annex 9: Statement of Loans and Credits 67 Annex 10: Country at a Glance 69

MAP(S) IBRD No. 29596 ARMENIA JudicialReform Project Project AppraisalDocument

Europe and CentralAsia Region LegalDepartment Date: August 21, 2000 Team Leader: Irna L. Kichigina Country Manager/Director: Judy M. O'Connor Sector Manager/Director: FriedrichPeloschek Project ID: P057838 Sector(s): BY - Other Public SectorManagement LendingInstrument: SpecificInvestment Loan (SIL) Theme(s): Poverty TargetedIntervention: N Project FinancingData O Loan N Credit [I Grant D Guarantee O] Other (Specify)

For LoanslCreditslOthers: Amount(US$m): SDR 8.6 million / US$11.4 million equivalent

ProposedTerms: Standard Credit Grace period (years): 10 Years to maturity: 40 Commitmentfee: 0.50% Service charge: 0.75% _FinancingPlan: Source LOC, Foreign Total GOVERNMENT 0.80 0.00 0.80 IDA 0.00 11.40 11.40 Total: 0.80 11.40 12.20 Borrower:REPUBLIC OF ARMENIA Responsibleagency: MINISTRY OF JUSTICE AND COUNCIL OF COURT CHAIRMEN Ministry of Justice Address: 8, KhorhrdaraniStr., Yerevan,375010, Republic of Armenia Contact Person: Mr. David Harutyunian, Minister Other Agency(ies): Council of CourtChairmen Address: 6, KhorhrdaraniStr., Yerevan, 375010, Republic of Armenia Contact Person: Mr. Henrik Danielian Tel: (374-2) 58-20-93 Fax: (374-2) 582-093 Email: Estimated disbursements( Bank FY/US$M): fY | 2001 2002 2003 22.4 7005 Annual 0.5 2.3 2.5 3.4 2.7 Cumulative 0.5 2.8 5.3 8.7 11.4 Project implementation period: 2000-2004 Expected effectivenessdate: 10/30/2000 Expected closing date: 12/31/2004 C0SPAD %n P, .M20,2000 A. Project Development Objective

1. Project development objective: (see Annex 1) The development objective of the proposed project is to assist in the development of an independent, accessible and efficient judiciary in the Republic of Armenia, which is essential to govemance, rule of law, and investment climate.

More specifically,the project aims at: (i) strengtheningjudicial self-governancethrough support to the Council of Court Chairmen (CCC); (ii) improvementof court administration and case managementprocedures; (iii) development of a comprehensive institutional base for continuing education for judges and court personnel; (iv) strengtheningthe service for enforcementof court decisions; (v) development of a comprehensivelegal information system accessible to judges, legal professionals, business communityand citizens; and (vi) promotion of public awarenessof laws and legal institutions.

Progress towards these objectives would be monitored using the following set of indicators: (i) development within the CCC of the capacity to manage efficiently and effectively the first-instance and appellate courts (i.e. effective governance of the judiciary by the CCC); (ii) adoption of new court administrationand case managementprocedures by courts; (iii) development of new professionals within the court system including court administrators, judicial assistants and financial officers; (iv) more consolidated and rationalized court structure (judges and other scarce judicial resources are allocated appropriately; staffing levels are determined to allow the courts to discharge their assigned functions); (v) a well-functioning Judicial Training Center (JTC) resulting in better trained and more competent judicial system professionals; (vi) improved court decisions enforcementmechanism; (vii) improved access by judges, legal professionals, business community and general public to more reliable, comprehensiveand up-to-date legal information;and (viii) establishmentof a comprehensivepublic education program to overcome the widespread distrust and suspicion of the judiciary.

2. Key performanceindicators: (see Annex 1)

B. Strategic Context 1. Sector-relatedCountry Assistance Strategy (CAS) goal supported by the project: (see Annex I) Documentnumber: 16988-AM Dateof latestCAS discussion: August 26, 1997 The objectives of the Bank Group's country assistance strategy for Armenia are to: (i) foster the rapid development of the private sector by promoting further structural reforms, strengthening the financial system and the legal and regulatory framework, and alleviating key infrastructure bottlenecks in energy, transport and water; and (ii) support social sustainability and the alleviation of poverty through the

-2 - strengtheningof the social safety net, and through improvements in the quality of and access to basic health and education services.A legal frameworksupporting a market-basedeconomy includes laws, statutes, and regulations that consistently protect the sanctity of property and contracts and the rights and obligations associated with them. Equally critical is a properly functioningjudiciary capable of resolving disputes in a timely, impartial and reliable manner. The proposed project would assist in the Government's agenda to "strengthen the legal and regulatory framework" by enhancing a judicial system that is independent, effective and accessible.

2. Main sector issues and Governmentstrategy: 1. Background

During the Soviet era, judiciaries throughout the Soviet Union were reduced to roles as obedient executors of the instructionsand policies of the Government and the CommunistParty. The Procuracy and the Ministry of Justice (MOJ) dominated the nominally separatejudicial system. Armenia is aspiring to break with the past and establish an independentjudiciary where judges would issue decisions based on the law and exercise discretionwithin its limits. Taking into account the legacy of the Soviet times, it is important to balance the power of the three branches of government.The institutional guaranteesfor the independence of the Armenian judiciary from the other branches of governmentare therefore of paramount importance.

The Government of Armenia (GOA) has recognizedthe need for a reform program that would pave the way to economic recovery. It has launched an impressive program of reform combining stabilization policies, structural adjustment and privatization. Economicreforms, however, cannot flourish and private investors and entrepreneurscannot prosper without a legal and judicial system which can effectivelyprotect private property, enforce contracts, defend economic rights against infringement and establish a secure environment for local,and foreign investments and market relations. Since 1991, Armenia has adopted a number of laws and regulations building infrastructurefor a market economy, including company law, banking law, bankruptcy law, land law, etc. The key accomplishmentwas the passage in May 1998 of the Armenian Civil Code (effective January 1, 1999). The Civil Code lays the foundation for property and other institutionalrights based on market principles and establishes key commercial law precepts. What must now follow in the economic law area is the completionof important economic/commerciallaws deriving from the Civil Code, togetherwith institutionalstrengthening of the implementingagencies, registries, courts and other bodies engaged in the implementation,administration and enforcement of those laws.

Accomplishmentof these tasks was also an important factor in the process of Armenia's accession to the World Trade Organization (WTO). It is also critical for Armenia's fulfillment of its responsibilities as a member of the Council of Europe.

2. Governmentstrategy ofjudicial reform Over the last years, the GOA has made a clear commitment to reforming its judiciary. The two documents that laid the groundwork for this reform effort are the Constitution of Armenia of 1995 and the Legal and Judicial Reform Concept Paper adopted in 1997 (The Concept Paper). These documents subscribe to the principle of the independenceof the judiciary and set as their goal the transformationof the Armenian judiciary from the old Soviet style bureaucracyto a modem functioning institution with the capacity to resolve disputes among private parties, protect property rights, enforce contracts and protect individuals against the arbitrariness of state actions.

-3 - The Concept Paper states as the main objective of the reform program the establishment of an independent judiciary that: (i) plays an important role in the state based on the rule of law and separation of powers principles;(ii) guaranteesdevelopment of a free democratic societyand protection of human rights; and (iii) supports effective market relations and private sector development.

The Concept Paper covered a broad range of reform actions in the judicial sector: (a) reorganization of the court system in Armenia; (b) reform of the Procuracy; (c) establishmentof a new legislative frameworkfor the judiciary; (d) transfer of the correctional institutions from the jurisdiction of the Interior Ministry to the Ministry of Justice; (e) reform of the service responsiblefor the enforcement of court judgments; (f) reform of the Ministry of Justice; (g) developinga new system of judicial training; and (h) launching public education and public awarenesscampaigns in the area of legal and judicial reform.

3. The new legislativeframework During 1997-1999,a number of fundamental laws has been adopted by the parliament which provide a legislativeframework for the establishmentof a new independentjudiciary, among them: the Law on the Judiciary; the Law on Status of Judges; the Law on Procuracy; the Law on Compulsory Enforcement of Judgements;the Law on the Service for the CompulsoryEnforcement of Judgments; the Criminal Procedural Code and Civil Procedural Code. These laws became effective in January 1999.

The new laws on the judiciary created a three layer court system in which the first instance courts of generaljurisdiction hear all criminal, economic and criminal cases. The three appellate courts -- the Court on Civil Cases, the Court on Economic Cases and the Court on Criminal and Military Cases -- form the second layer. The highest court within the new system is the Court of Cassation which considers appeals from the courts of the first and second instances.

Under the Law on the Procuracy the primary function of the prosecutor in criminal matters would be to defend the position of the prosecution on behalf of the state, and in civil matters, prosecutorial involvement would be limited to defending the interests of the state in civil litigation. The power of the prosecutor to appeal civil judgments entered into force has been eliminated,thus preventing the supervisory oversight over the judicial process which is incompatiblewith the principle of independenceof the judiciary.

4. Independence of the judicial branch

(a) Soviet legacy

In Soviet Armenia, as well as in other parts of the FSU, a central shortcoming in the administration of justice was the absence of judicial independence.Courts in the Soviet Union were neither regarded nor treated as an institution separate from the political regime they served.

Judges had no guarantee of professional security and private welfare, and the funding and servicing of the courts failed to shield judges from the outside world. In fact, in rendering decisions at trial judges were exposed to, rather than insulated from, external pressures, some of them coming from political officials. The local party leaders had a voice in the judge's continuationin office, including a say in their periodic renomination for "election" and the right to initiate a recall. Most judges felt sufficientlyobliged to their

- 4 - local patrons as to cooperate with their needs -- whether responding to their occasional interventionsabout a case or maintaining appropriate records.

The judiciary as a whole felt even greater dependency on its vertical master -- the MOJ. The MOJ administeredthe courts by controlling their budgets, distributing bonuses, handling complaints,monitoring delays and writing the performance evaluationson which judges' career advancementdepended.

Another sign of the lack of independenceof the judiciary was its relationship with the Procuracy. The Soviet model of Procuracy was a universal supervisorover legality in the entire society. Under the prosecutor's supervision and oversight were citizens, enterprises,municipalities and the government. Prosecutors dominated over the judicial branch in both criminal and civil process. Prosecutors had the right to overrulejudge's decisions, could initiate criminal proceedingsagainst judges without any interventionof judicial bodies, and had numerous other means to effectivelyinfluence judges' rulings and actions.

The principle of an independentjudiciary was established in the new Constitutionof the Republic of Armenia of 1995. The Constitutiondeclares that "state power shall be exercised based on the principle of the separationof the legislative, executiveand judicial powers" (Article 5) and that "justice shall be administered solely by the courts in accordancewith the Constitutionand the laws" (Article 91).

But the reallybold measures to develop and enhancejudicial independencein Armenia were adopted in 1995-1999.These measures targeted personal independenceof judges (life tenure, appointment and removal from the office, compensation,safety, and immunity from prosecution), as well as the issues of institutionalautonomy.

(b) Measures to strengthen personal independence ofjudges: The Law on the Status of Judges established the principle of life tenure for all judges: the judges serve on the bench until they reach retirementage of 65.

More importantly,the Law established the rule that removal of a judge from office could result only for serious cause and only by decision of the Council of Justice. Similarly, imposing a disciplinary action on a judge has to be based on specific grounds listed in the Law and the matter is subject to the consideration of the Council of Justice.

The appointment process for judges is specified in the Constitution and the Law on the Status of Judges. All judges are nominated by the President upon the recommendationof the Council of Justice. The Minister of Justice presents initial nominations to the Council of Justice following the results of qualificationexams and evaluation of their competence,practical experience and personal integrity.

While the appointment, disciplinaryand removalprocedures for judges conform to commonlyrecognized standardsof judicial independence,the key to developing a truly independentjudiciary now lies mainly in their implementation.The procedures and institutionalarrangements for judicial qualification exams need to be further refined and the role of the executivebranch in the nominationof judicial candidates further reduced. The grounds for initiating disciplinary actions and removal of judges from office, as stipulated in the law, are not sufficientlyclear and can be abused in the absence of well-defined ethical standards of judicial behavior.

-5 - One of the main issues which has been the subject of continuingdebate within the legal and judicial communityin Armenia is the composition and role of the Council of Justice, particularly in the process of appointmentand dismissal of judges. The President of Armenia heads the Council of Justice; the Minister of Justice and the Prosecutor General are the two Deputy Chairpersons. The Council of Justice consists of 14 other members: 9 judges, 2 academics and 3 prosecutors. In order to strengthen the representationof judges on the Council, the ConstitutionalAmendments Commission established by the President has prepared a proposal to amend the Constitutionso that the Council of Justice consists entirely of representatives of the judiciary. The Bank has been strongly supportingthis change in the course of preparation of the project.

(c) Strengthening institutional independence of thejudiciary

The CCC was established in 1998. It consists of court chairmen (20) and is chaired by the Chief Justice. The Council is assigned a wide range of managementand supervisoryresponsibilities, including administrationof courts, developing and implementinguniform court administration,personnel, budgeting, case management policies and assessing on an ongoing basis the status of administration of justice in Armenia. It is also responsible for the organizationof ongoing training for judges and other court personnel.

Establishmentof the CCC was a significantdevelopment towards strengtheningindependence of the Armenianjudiciary. It assumed most of the responsibilitiesof the MOJ in the area of court administration. However,the CCC has a number of challengingtasks to face if it wants to serve as a truly governing board of the judiciary. First of all, the CCC should have plenary authority over the administrative affairs of the judiciary which should be more clearly reflected in the statutes of the CCC. It also needs to organize a system of Working Committeeswhich would be responsiblefor developing common policies and procedures in specific areas of court administration.It needs to develop a system of interaction with individualcourts and chairmen which would ensure implementationof the CCC's decisions in the areas of court administrationby individualjudges. It also needs to develop a strategy for interacting with the public, mass media and other branches of government.

A similar program of institutionalbuilding is required for the AdministrativeOffice of the CCC which carries the main bulk of day-to-day activities deriving from the mandate of the CCC.

(d) Financing of the judiciary and working conditions ofjudges

Not only judges personally, but also the courts as institutions need protection from external pressure, and for courts to operate independentlyrequire appropriatefunding -- both sufficient and stable. During the Sovietperiod, the court system was considered as the lowest priority of the governmentin terms of spending budgetary funds. As a result, budgetary allocations for the judiciary have been extremely inadequate for proper maintenance of court buildings, provision of supplies and equipment, training, and the use of computer technology by court personnel. The salaries provided to judges and court staff were barely adequate -- causingjudges to rely upon the generosity of local officials, and occasionally to fall prey to corruption. Distribution of scarce budgetary resources among courts was the responsibility of the MOJ, and the courts had no saying in the planning of their expendituresor monitoring the use of the funds.

The reform has introduced some radical changes in the court financing system. Financing of courts, as a budgetary item, is now separated from the MOJ and law enforcement agencies. Each court has its own budget line item which is reflected in the budget law. In 1999, the CCC has received exclusive authority to prepare a budgetary proposal for the judiciary and administer the use of budgetary resources. Judges'

- 6 - salaries have been significantly increased in early 1999, although their timely payment is still not guaranteedby the Ministry of Finance and Economy (MOFE).

While these changes are significantimprovements in the financing of the judiciary, they also require serious efforts in building the capacity within self-governingjudicial bodies and individual courts to effectively plan, use and control financial resources allocated for the judiciary.

Working conditions of judges require urgent and essential improvements.This is particularly true for courthouses.The court buildings, court rooms and offices are generally dilapidated due to lack of maintenance and upgrading over several decades. During the restructuring and reorganization of the court system in 1998, newly established courts received buildings which were not constructed as courthouses.A number of courts occupy the buildings of former schools kindergardensand even apartment buildings. Hence, internal configurationand design of these courthouses are not suitable for the work of courts.

None of the courts have adequate security systems. Physical security of judges has become a serious concern which is not yet being addressed. Computer and other technology requirementsare extremely limited. Most of the operations such as writing a protocol during a trial, filing suits, and keeping records are done manually. Some of the courts do not even have typewriters. Legislative materials and other legal literature are usually acquired by individualjudges at their own expense. Courts do not have libraries or comprehensivelegal databases. Such conditions seriously impair the efficiency of judges' work, as well as the court as a whole.

S. Legal education Legal education needs significantimprovements. Armenian legal educationis still dominatedby the Soviet-styleteaching methods and techniques, i.e. heavy focus on legal theory, legal history and memorizationof rules. It does not adequately teach legal problem-solvingskills. There are few courses that deal with issues in actual law practice, such as interviewingand counseling,business planning, negotiations and pretrial and trial procedure. The curriculum and the faculty structure continue to reflect the public law priorities of a command economy and society rather than the changed realities of a market-based economy. Especially needed are courses in the private law disciplinesin general and in business-related subjects in particular, plus development of public law courses related to business regulation.

The Law Faculty of the Yerevan State University (YSU) is the only state law school. YSU law school has around 600 students (entering class of 120) in its 5-year undergraduate law program. There are between 40 and 80 various private schools that exist, but they are still in the process of development. Another private law school is the AmericanUniversity of Armenia, founded with assistance of the University of California and some internationaldonors.

The reforms in legal education will benefit, at the earliest, lawyers who go into practice in the next 3-5 years. Consequently, any serious reform of legal education must take into account and try to reach lawyers who are currently practicing. Training of lawyers in the form of continuinglegal education is especially important, given that current lawyers must learn a mass of new laws and regulations. Continuing legal education for practicing lawyers outside of the judiciary and Procuracy has little history in CIS countries. Yet, the demand for it, especially in commercial law areas, is great.

6. Continuing educationforjudges The importanceof the training and education of judges is recognized in the Concept Paper. The document differentiatesbetween the "initiatingeducational" programs and specific training programs for judges. The

- 7 - issue of intensive training for judges became particularly acute in early 1999 when a new corps of judges was appointed following qualificationexams. About 60% of newly appointedjudges were new to the bench.

According to the Law on the-Judiciary,training of judges lies within the authority of the CCC. The CCC organized a number of training sessions for newly appointedjudges during 1999. In 1999, a new Judicial Training Center was established under the auspices of the CCC.

The creation of a cost effectivejudicial education resource center for use by all judges and other court personnel is an important national objective. Continuingjudicial education programs not only enhance the competency, efficiency, accountabilityand impartialityof judges, but also seek to cause attitude changes essential to supportjudicial reform.

Judicial trainingprograms in Armenia have been receiving significant support from several extemal donors, including EU TACIS, USAID, Soros Foundation, ABA CEELI, and GTZ. The EU TACIS grant program (approximatelyEuro 1.0 million) has been specificallydesigned to support the start-up activities of the JTC during the first 18 months of its existence.Despite the availabilityof donors' funds for judicial education programs, the work in this area has been primarily focused on organizingshort-term training, seminars, conferences and study tours for judges. Developmentof a comprehensivestrategy for the judicial education system has been slower than expected.

7. Enforcement of court decisions

Enforcement of judicial decisions has emerged as a particularly difficult issue for the Armenian judiciary. In the Soviet period, the judicial enforcers (or bailiffs), who were attached to the district level courts, were engaged mainly in the implementationof civil judgments from the general courts, covering such private matters as alimony payments (arranging garnishing of wages), labor disputes (ensuring payment of back wages after illegal dismissal),and conflicts over living space. Bailiffshad very limited experience with enforcing commercialjudgments since most of the judgments called for the transfer of assets from the bank account of one state enterprise to the bank account of another.

In the course of economic reforms and due to a growing volume of commercial and civil cases handled by courts, the demand on the services of enforcement agents has dramatically increased. However,the existing enforcement agencies were lagging behind in this process due to inefficient administrativestructures, shortage of funds and lack of well-trainedprofessional staff.

In an effort to address this problem, the Government undertook reorganizationof the enforcement agencies. Based on the new laws regulating the enforcementof court judgments which were adopted in 1998, a new structure -- the Service for Enforcementof Court Judgments (EnforcementService) -- was established under the supervision of the MOJ. The Service has a staff of about 300 people, which includes the central department in Yerevan and regionalbranches in the marzes.

Although the Enforcement Service only became operationalin early 1999, it has made considerable progress in enforcement of court decisions:in 1999 the number of judgments which were enforced with the involvementof the Service (this does not include voluntarycompliance cases) has increasedtwelve times compared to the previous year.

Notwithstandingthis impressive record, the newly established system requires major improvements and investments.The legislative framework has certain gaps and inconsistencies.Some efforts on drafting

- 8 - amendmentsto existing laws on the enforcement system are already under way; GTZ experts have been working with the Enforcement Service and the MOJ very actively in this area. The Enforcement Service needs assistance in completing its organizationalstructure. Training of the personnel is the greatestpriority. Technologicalneeds and other equipmentand vehicle needs are enormous, since certain functions of bailiffs can only be fulfilled if they have mobility, accessto required information, communicationdevices, etc.

8. Legal profession, advocates, prosecutors, professional associations

The main role of the bar associationsin all countries is to regulate the profession through entrance requirementsand the disciplinary system, to provide legal training for its members, and provide legal service to the community.

In Armenia,the Association of Judges is the most prominent professional organization which currently includes the majority of sittingjudges. The organizationhas been particularly effective in organizing training for newly appointedjudges, providing legal servicesto vulnerable groups of Armenian population and promoting better understandingof law and legal proceduresamong citizens.

There are three registeredUnions of Advocatesin Armenia which have been playing an increasingly importantrole in ensuring quality of legal services to the population, provision of legal aid and assisting in legislativedrafting. In December 1997, a new association of lawyers was created - Bar Association of the Republic of Armenia. The Bar Association has as its goals: preparation of the code of professional ethics; contributingto the improvementof the legislativeprocess; strengtheningthe rule of law; provision of professional support to practicing lawyers, organization of seminars and conferences and promoting of legal publications.There are other NGOs such as the Young Lawyers Association, Union for Law and Policy, etc. which have been primarily working on disseminationof legal information to the populationand provision of affordable legal services.

Many of the judicial reforms will affect the legal profession, thus it is important that they become participants and supporters of the reform process. More importantly, an active participation of non-governmentalorganizations of lawyers and judges in monitoring the legal profession as well as the judiciary through establishment of ethical standards and effective disciplinary system will eliminate the remaining supervisingrole of the executive organs over the judiciary, which would in turn strengthen the independent status of the judiciary vis-a-vis the executivebranch.

9. Legal information

One of the fundamental elementsof the rule of law is that in order to expect people to abide by certain rules contained in laws and other normative acts, the texts of these rules need to be easily accessible and available to people. This is especially important for judges whose task is to implement and enforce these rules. Unless they have access to all normative acts, they cannot be expected to properly perform their job.

There is no comprehensive system of codificationof laws, other normative and administrativeregulations in Armenia. There have been several attempts to develop a classificator for laws, but the work did not cover all the legislative and normative acts, and has never been fully completed.

Another issue that needs to be urgently addressed is the establishmentof a legal database which would facilitate systematizationand disseminationof legal informationto judges, other legal professionalsand the public, and which would facilitate legal research. Currently, there are several private "Nexus-type"legal databases, based upon a "key word search" method. These databases are used by some legal practitioners

-9- and by a very limited number of Government agencies and judges.

There is no established mechanism for disseminationof information -- such as court decisions, resolutions of the Cassation Court, the CCC, court statistics -- between courts. Resolutions of the Cassation Court and of the CCC are sporadicallyprinted in the bulletin of the Association of Judges in limited numbers, or faxed to individual courts. Court decisions are not published and are therefore not accessible to the judiciary or public at large.

10. Public trust in the judiciary, public attitude to laws and legal order

In Armenia, the respect for the judiciary among the public is critically low. People do not trust the courts system and therefore avoid it. A survey of public attitude and public awareness of laws and legal proceedings was conducted in December 1999-Janury2000. The survey was financed by the PHRD Grant and its results and conclusions have been used in designing interventionsunder the Public Awareness component of this project.

The survey results have demonstrated that courts, prosecutors' offices and tax inspections are evaluated at the lowest performance scale among the governmentalbodies. Courts and prosecutors' offices are perceived as being corrupt and partial. Even in emergency situations, 36% of respondents said, they would turn to private individuals or local officials for settling their legal disputes, and not to courts.

An overwhelmingmajority of respondentshave attributedlow quality of laws to ineffectiveness of the legal system in Armenia. 42% of respondents characterizedthe Armenian laws as protecting primarily the interests of wealthy people. Almost all focus groups believed that Armenian laws were not equally enforced for all social groups. Respondentsrepresenting government agencies and law enforcement authorities also emphasized poor quality and inconsistenciesof laws and other regulations.

Equal access to justice appears to be constrained for certain groups of the population. Although the right for legal protection is guaranteed by the Constitution for all citizens, 17% of respondents of the survey have mentioned high fees for court and legal services, particularly for private attorneys, as a barrier to using courts. Several NGOs, including legal professional organizations,have been actively involved in providing free legal aid to vulnerable groups of the population over the last five years. However, there is no state-supportedcomprehensive system of legal aid in Armenia. Neither is it customary for private lawyers to do pro bono work for the poor population.

Anothercritical problem in this area is lack of accessible information about citizens' legal rights and obligations,forms of dispute resolution mechanism,legal proceedingsand enforcement. Printed legal materials are either not accessible (e.g. government orders, ministries' ordinances and regulations) or not affordable for ordinary citizens. In the area of civil litigation, courts do not provide information to citizens or companieson procedures how to file complaints,pay court fees, involve witnesses, etc. Sample forms and blanks are not available to litigants. Instead, citizens have to make appointmentswith a judge for pre-trial meetings; as a result, judges spend way too much time on providing routine information on court procedures and discussingjurisdictional issues with litigants, tasks which should be performed by judges' assistants.

-10- 3. Sector issues to be addressed by the project and strategic choices: The preparation phase of the project has invested in sector assessment, technical studies, and coalition building in all major areas of judicial reform, and conducted surveys of public opinion and awarenessof the reform process. In early 1998, the Bank team carried out a Judicial Sector Assessment which outlined, inter alia, specific proposals on the structure of judicial institutions, court administration, status and appointment of judges, and judicial training. The work on the Judicial Sector Assessment has started an active policy dialogue between the Armenian Government and the judiciary and the Bank in the area of legal and judicial reform, with particular focus on strategic choices of the reform process, phasing of reform activities and the Bank's involvement in supportingthe reform program. Further to this, three major assessments have been conducted with financing under the PHRD Grant: (i) an assessment of the court administration and case management systems in Armenia: (ii) an assessment and feasibility study for the rehabilitation of court houses; and (iii) a public opinion survey. An assessment of the system for enforcement of court decisions and a masterplan for the JTC were completed with SATAC II funds.

Based on this preparation work and extensive consultationswith the Government and representatives of the judiciary, the following sector issues are targeted by the project: (a) strengthening of judicial self-governance and institutional capacity of the judiciary; (b) increasing efficiency of courts through improved court administration and case management procedures and court automation; (c) upgrading and rehabilitating court houses; (d) development of an institutionalbase for continuing judicial education; (e) improving enforcement mechanism for court decisions; (f) supporting systematization and codification of legislation and improving access to legal information; and (g) increasing public awareness of legal rules and proceedings, protection of citizens' legal rights and their knowledge of the ongoing reforms. The Government has submitted to the Bank a Policy Letter stating the Government's commitment to continuing the judicial reform in the country, outlining the current priorities of the reform process and the areas selected for the support through the Project (Attachment to Annex 2).

(a) Strengtheningof judicial governance and institutionalcapacity of the judiciary It is difficult for courts anywhere to have power and prestige without also possessing institutional independence and a separate corporate identity. Institutional independence calls upon the judiciary to govern and manage itself without interference from the other branches. The Armenian courts gained a structural starting point to build an effective administrative component when the CCC was established by law and when the CCC proceeded to delineate by regulation the duties of the head of the Administrative Office and the supporting office. Nevertheless, both these bodies have not yet completed developing operating structures for ongoing day-to-day administrative leadership and support that characterize successful court systems. In sum, the pressing need in the Armenian courts is to fashion a full administrative infrastructure to support the basic outline already in place.

The project will support provision of technical assistance in organizing the CCC as a governing body, training of its members and staff, and publication of the CCC newsletter. Assistance to the Administrative Office will include technical assistance for organizationaldevelopment of this body, training of its staff and automation of its main administrative functions. The project will also support enhancing the role of judges in judicial self-governance through judicial conferences and technical assistance in the development of ethical standards for the judiciary and evaluation of judicial performance models.

- 11 - (b) Increasing efficiency of courts through improved court administration and case management procedures and court automation Underdevelopment of court administration and case management system puts an additional pressure on judges and therefore reduces the efficiency of courts. Delays and backlogs are now commonplace in Armenia, especially in criminal cases. This is due to ineffective allocation of human and technological resources in the court system, absence of modem practices and techniques for case management, maintenance of records and collection of statistics. Judges spend a lot of time resolving administrative problems and performing routine clerical matters because courts do not have professional court administrators, adequately trained assistants, clerks and registrars who could and should perform these functions. Efficient use of judges' time have major fiscal implications for the judicial system: there are always attempts to deal with case overloads by increasing the number of judges which, in turn requires additional budgetary resources, space and court personnel. The program supported by the project aims at development of a modem court administration system, with a particular focus on court financing; efficient allocation and use of court resources (i.e. judges, administrators,registrars, assistants and other personnel); and design of the reliable and meaningful statisticalinformation system.

The project would also assist in the development of an effective case management system which would ensure timely and effective processing of cases by the judicial system.

Few Armenian courts are automated. The situation in courts outside of Yerevan is much worse, where even typewriters are not always available. To support court managementand enhance the flow of information to decision-makers,it is important to provide courts with some form of automation as quickly as possible. The use of computer technology would significantlyimprove access of judges to electronic legal information as well. Although the project does not aim at carrying out a complete automation program for Armenian courts, it will provide an initial investment for what will eventually become a nationwide network for Armenia's judiciary. The project will provide computer equipment, software and technology for courts of general jurisdiction for the purpose of legal research, centralized case docketing, maintaining statistical records, transmittingdecisions, providing electronicmail, and introducing case management.

(c) Court infrastructurerehabilitation The project will assist the Government with rehabilitation and reconstruction of court buildings. The court facilities currently available to many first instance courts are in deplorable condition. For a variety of reasons, these facilities received little or no maintenance and repair during the past decades. In addition, a number of court facilities were destroyed or severely damaged by the 1988 earthquake, and have not yet been replaced or adequately repaired. As it has been repeatedly emphasized by the Government and judges themselves, unless the conditions of court buildings are improved considerably, there is a risk that many initiatives of the judicial reform program would not bring visible results and credibility, and public confidencein the reform process would not be secured.

Based on a comprehensive inventory and needs assessment of courthouses carried out with the financing under the PHRD Grant, and consultationswith the CCC and the MOJ, the rehabilitation program has been designed in the following way. First, the purpose of the rehabilitation program would be not only to improve working conditions for judges and court personnel, but to reflect objectives and achievements of the judicial reform in Armenia in the design and constructionof court buildings: e.g. to enhance security of judges and users of courts, to ensure more efficient planning and configuration of court facilities; to accommodate new functions of court personnel (e.g. court administrators, judges assistants, etc.), to provide adequate space and accommodationsfor the public, etc.

- 12- Twenty courthouses have been selected for rehabilitationunder the project, based on their location,number of judges, volume of cases and required rehabilitation needs. This would represent about 50% of court buildings in Armnenia.(The list of selected courthouses is included in Annex 2). Among them, 13 courthouses would be rehabilitated in order to meet certain minimum standards for an adequate and functional courthouse. Seven courts have been selected as pilot courts which will be rehabilitated to meet enhanced standards of a courthouse. These court houses are expected to demonstrate the examples of modemized courthouses which serve the objectiveof an independent,transparent and efficient judiciary.

(d) Training of judges and court personnel

The need for training of the sitting judges as well as court personnel has been identified as a priority in the reform of the Armenian judicial system. An institutionalcapacity to cater for these training needs, however, does not exist. Only some ad hoc training has been provided (including overseas training tours), mostly with external donor support. The new Judicial Training Center still lacks an organizational and management structure, design of training courses, curriculum and faculty. Although the premises of the Cassation Court have been provided for the Center, it presently does not have any specialized equipment, library or teaching materials.

The JTC is at the very initial stage of its development. It currently has five people on staff, including a full-time Director. The Center is using the premises of the Cassation Court and it also receives some administrative and logistical support from the Administrative Office of the Cassation Court. The priority tasks faced by the JTC are the following: (i) to develop a long-term strategy for judicial education which would define objectives and standards for such education, trainingmethodology and techniques; interaction and cooperation with regional and international educational centers, performance indicators for regular assessment of the judicial education programs, etc.; (ii) to establish an organizational and management structure of the Center; (iii) to develop training curriculum; (iv) to identify trainers and lectures and organize training of trainers; (v) to design different training programs for judges, court administrators, judicial assistants, etc.; and (vi) to equip libraries, laboratories, computer classes and organize printing and distribution of teaching materials.

Thz Bank has provided initial support for accomplishing the above-stated goals through financing the preparation of a master-plan for the JTC with the funds of the Second Structural Adjustment Technical Assistance Credit (SATAC II). The plan was completed in early 2000 and has been provided to the management of the Center, the CCC and to the MOJ.

The project would assist in: (i) formulating a strategic concept of continuingjudicial education in Armenia; (ii) support in the development of the JTC's organizational and management structure; (iii) curriculum development for certain training subjects; and (iv) provision of specialized equipment for the JTC.

The design of the component has been prepared based on the analysis of a training needs assessment conductedby the ABA CEELI office in Yerevan, preparation work for the JTC financed under SATAC II, and assessment work done by the EU TACIS. The team has been closely coordinating its work with EU TACIS which has approved a grant approximately equivalent to Euro 1.0 million for the institutional support for the JTC.

(e) Enforcementof court decisions The current status of the newly established Enforcement Service has been described in Section B.2.

- 13 - Training of new bailiffs has been emphasized by the Armenian authorities as the first priority in this area. Although most of the staff of the Enforcement Service have legal education, they are lacking knowledge of current specific legal provisions, good insight into the overall legal framework in which they operate, experience and skills in the new functions imposed on the Enforcement Service, particularly in the area of enforcement of commercial judgments. The issue of specialization among bailiffs also needs to be addressed.

The project would assist a newly established structure in the areas of capacity building, training of personnel, and provision of equipment.

(f) Legal information

There are several important dimensions to the legal information framework: classification, registration/collection,dissemination to government entities, courts and the public, and publication. In Armenia, all mentioned areas need significant improvements in order to develop a new legal information regime that can supportongoing legal and judicial reform in the country.

The project will provide assistance in: (i) strengthening institutional and operational capacity of agencies responsible for maintaining authoritative texts official legal materials, their systematization and codification;(ii) developing Government strategy for facilitating competitive and effective disseminationof legal information; and (iii) improving access to essential legal information by judges and other legal professionals.

(g) Public education and public awarenesscampaign The survey results have revealed that the public has very limited knowledge of the existing laws and legal proceedingsin Arrnenia, does not trust the courts and law enforcement agencies and is barely familiar with the reform process in the legal and judicial area.

Unless this negative attitude changes and until the public trusts and respects the judiciary, it will not use the court system and could resort to extra-judicial means, often illegal, to resolve disputes. A meaningful judicial reform needs to focus, as one of its priorities, on educating the public and challenging its attitudes to the law and legal institutions. A series of interventions is designed under the Public Awareness component under this project to contribute to the above task, including development of a comprehensive public relations strategy for the judiciary, support for specialized TV and radio programs addressing the issues of legal/judicial reform, seminars and lectures for the population in marzes on legal protection of individual and property rights, and publication of popular brochures on legal issues.

The project will also address the issue of building communications skills within the judiciary. Accountability and transparency of the judiciary cannot be achieved without public access to the information on court decisions and other aspects of the courts' work. Community understanding and acceptance is at the heart of effective performance of the judicial function. For this purpose, the CCC will be provided assistance in establishment of a separate structure responsible for dealings with mass media, the government offices and interactionswith the public.

The project will also invest in journalism training. A knowledgeablepress is the primary (and perhaps only) way a community can learn what the courts are doing. Often the press faces the problem of simply understanding a court decision which is long and technical, and can be difficult even for knowledgeable lawyers. But even when the press overcomes such technical problems -- and presents a case in a comprehensive manner, it must address the fact that the community is not interested in the case's legal

- 14 - technicalitiesbut rather its political, social, economic, or other significance. To respond adequately to these issues,journalists do require some kind of specialknowledge.

C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

indicative Xank- % of f Component Sewr Cos#t % of financing Bank- ______M . T_ (U"I$) financing A. StrengtheningInstitutional Institutional 2.63 21.6 2.63 23.1 Capacity of the Judiciary Development Judicial governance Court administration Case management Court automation B. Court Infrastructure Rehabilitation Institutional 6.46 53.0 5.66 49.6 *Rehabilitation and refurbishing of Development sevenpilot courthouses(including constructionof one new building) Rehabilitationof 13 courthouses Developmentof new design and space planning standards (including security standards) for the construction and rehabilitation of courthouses C. Training of Judges and Court Institutional 0.53 4.3 0.53 4.6 Personnel Development *Institutional support to the JTC Curriculumdevelopment and provision of equipment D. Improving the Enforcement of Court Institutional 0.59 4.8 0.59 5.2 Decisions Development Institutionalstrengthening of the Enforcement Service Training of Enforcement Service staff Automationof the Enforcement Service

- 15- E. Disseminationof Legal Information Institutional 0.69 5.7 0.69 6.1 *Assistance in codification Development and systematizationof laws; . Developmentof an electronic database for maintaining authoritative text of official legal acts Developmentof a strategy for facilitatingpnvate and competitive disseminationof legal information *Provision of essential legal materials to courts F. Public awareness and public Institutional 0.75 6.1 0.75 6.6 education Development *Development of a PR strategy for the judiciary *Dissemination of legal information through television and radio programs, seminars and brochures Journalist's training Public opinion surveys G. Project Management 0.55 4.5 0.55 4.8 Total Project Costs 12.20 100.0 11.40 100.0 Total Financing Required 12.20 100.0 11.40 100.0

I/ Costs are basedon base cost plus ten percent contingencies.

2. Key policy and institutional reforms supported by the project:

A policy dialogue initiated by the Bank during carrying out an assessment of the judicial sector in 1997-1998, and continued in the course of project preparation, has already produced a significant impact on carrying out the judicial reform in Armenia. The recommendations set forth in the Bank's assessment report have been largely incorporated in the newly adopted laws on the judicial system in Armenia. Mhe Project is expected to provide significant contributionto several areas of the judicial reform: (i) the court administrationreform; (ii) reform of court financing; (iii) development of a new strategy of continuingjudicial education; and (iv) reform of the enforcement service.

The Project also has a strong focus on strengtheningthe institutional capacity of judicial bodies, including: (i) the Council of Court Chairmen - in the area of judicial governance and court administration; (ii) the AdministrativeBody in the area of court financing and general administration; (iii) the Enforcement Service;and (iv) the Judicial Training Center

- 16- 3. Benefits and target population: The main project benefit would be a reformed judiciary which administersjustice fairly and impartiallyand which is accessible and well regarded by the government and the general public. The proper functioningof the judicial system is of immense importance for the development of private sector. Both domestic and foreign investors are looking for legal and judicial system where property rights, contractual arrangements and other lawful actives are safeguarded and respected, free from arbitrary governmental action and from pressure by special interest groups or powerful individuals. Judges are expected to benefit from the project in many respects, specifically,in terms of enhanced professional training, administrative independenceand security, improved working conditions and better access to legal information, etc. General public would benefit from a fair and professional justice which would guarantee an adequate protection of their legal rights and freedoms, promote economic development and would contribute to a stable economic and political environment in general. Legal professionals would benefit from improved court services and improved access to legal information.

4. Institutionaland implementationarrangements: The CCC and the MOJ will be the two leading entities responsiblefor project implementation. The Bank's experience in the area of judicial reform indicates that the judiciary should oversee judicial reform project managementto prevent a conflict with the principle of judicial independence and to promote ownership. In this respect, the CCC is uniquely positioned to provide such leadership in project implementation. However, the executive support is essential in judicial reform projects both to support their implementation and to provide post-project funding for their continuation. The MOJ has demonstrated an interest and active support to the proposed project. Besides, certain componentsof the project, such as enforcement of court decisions and codification/systematizationof laws fall under jurisdiction of MOJ and would be primarily implementedby it.

The project team clearly recognized during the preparation stage that implementation arrangementswould have to be carefully designed to avoid potential tension and/or competition between the two agencies. In order to address this issue, a Project Steering Committee comprising the Chairman of the CCC and the Minister of Justice was established for coordination of project preparation activities. In addition, Working Groups have been established for all six components of the project. Three Working Groups-- for the Judicial Governance, Court Rehabilitation and Training components -- are chaired by judges who are the members of the CCC. Two Working Groups -- foi the Enforcement of Court Decisions and Legal Information components -- are chaired by the representatives of the Ministry of Justice. The Working Group (Advisory Board) for the Public Awareness component is headed by the Chairman of the Constitutional Court. The established arrangements proved to be very effective. The Working Groups have actively participated in assessment activities conducted by consultants financed by the PHRD Grant, as well as in design of particular project interventions. These arrangements also ensured active involvement of individual judges in project preparation, as well as transparencyof the process (which was particularly important in the process of selection court houses for the rehabilitation program).

The implementationarrangements for project implementationwill be based and will draw on successful experience of the Working Groups. The Project Steering Committee will be transformed into Project Administration Council (PAC) which is now mandated for all World Bank projects pursuant to the recent GOA resolution. The PAC will be chaired by the Minister of Justice and consist of nine members, including one from the Ministry of Finance and Economy, one from the Prime-Minister'soffice, the head of the Enforcement Service, the PIU Director and three representatives of the judiciary, including the Chairman of the CCC. The PAC will be responsible for policy decision making, monitoring overall

- 17 - implementationof the project, final tender evaluation, annual planning. The Working Groups will provide specialized/professionalinput into implementationprocess of particular components. They will be primarily responsible for drafting and clearing TORs, as well as providing inputs and supervising the work of the consultants. This should ensure full ownership of the Project by the judiciary and the MOJ.

A Project Implementation Unit (PIU), headed by the Project Director, has been established under the PAC and will be responsible for day to day project management. The PIU consists of technical specialistsin the area of procurement, financial management, accounting,and architecture. The PIT Director is a member of the PAC.

Financial Management

Financial Management Assessment: Responsibilityfor financial management of the project will rest with the newly created Project ImplementationUnit (PIU). A financial management specialist (accountant) is employed by the PIU. During Negotiations, a time-bound financialmanagement action plan was agreed to remedy existing deficiencies.More information on the project's financial managementarrangements and the project's flow of funds is found in the Project Operational Manual (POM).

Project Management Reports (PMRs): Management-orientedPMRs will be used for project monitoring and supervision. The formats of the PMRs (Cash Model) were agreed during Negotiations and are included in the Operational Manual. The PIU will produce a full set of PMRs for every calendar quarter throughoutthe life of the project beginning with the period ending on March 1, 2002. However, the PMRs showing the project's sources and uses of funds (PMR IA) and the project's Special Account Statement (PMR 1E) will be produced from project effectivenessand the four procurement management reports (PMRs 3A, 3B, 3C and 3D) will be produced within six months of project effectiveness.

Disbursements. Project funds will be initially disbursed under the Association'sestablished procedures, including Statementsof Expenditure (SOEs). A move to PMR-based disbursementswill be made at the mutual agreement of the Government and the Association and will be considered once the PIU is familiar with the project's monitoring aspects and is considered able to produce sufficientlytimely and reliable project management information. A change to PMR-based disbursements will be consideredby September 30, 2002 (the project's mid-term review).

Audit Arrangements: External audits by independentprivate auditors acceptable to the Association and on terms of reference acceptable to the Association will be procured by the PIU through Least-Cost Selection. Annual audited financial statements of the Project will be provided to the Bank within 6 months after the end of each fiscal year and also at the closing of the project. The contract for the audit will be extended from year-to-year with the same auditor, subject to satisfactoryperformance. The cost of the audit will be financed from the proceeds of the Credit an incrementaloperating cost.

- 18 - INSTITUiTIONAL ARRANGEMENTS OF PROJECT [IMPLEMENTATION r Projree Adrtirutstration C5uosurt i

Chair- \tio:stl of tust e Me.bJeru Chairnan of rhe Cou.c I Chairman Judges Reprsucit.ve of MOJ R.pioc of MOFPE Reppresrsut=v- of G(JA Staff X~______- ltUDirector |

|ludicial Goocruanee ortiirg GrouFp | PIU

|Chair: Chairman Judges 1 t Director FMS Specralist

Infrstructure-Court Rehabititation W -orkiugGroup -`Prcit-r-notSpecialist - i Architect Chute: Ch.,rra. Judge SeRPuCirst

|Judicial Training Wurkiug Group i

LChasr Chairmau JudgeC

Enforcement of Court Decisiuns Working Group

Chair: EnforcementService Depart.euo Chief

Legal Information Working Group

Char: Deputy Minister of Justice

Poblic Awareness A&li-ory Board I

Chaie: Chairman of the Coottiti-t.o1iI C,:rr Membees: Rpeeseotatihcs of the J,dic-ars, M(JJ, Purlia-rt, and NGOD

D. Project Rationale 1. Project alternativesconsidered and reasons for rejection: The Government of Armenia requested the Bank's financial assistance for supporting its ongoing judicial reform as early as 1996. At that time, the Bank was providing technical assistance to the Government in the area of drafting new economic legislation through a number of operations, including the InstitutionBuilding Loan and Structural Adjustment Technical Assistance Credits (SATAC I and SATAC II). In response to the above request, SATAC II included a separate component for addressing the most urgent needs of the legal and judicial reform in the country, and the Bank launched a Judicial Sector Assessment in 1997. Based on the conclusions of the Judicial Sector Assessment Report and consultations with the Government and the judiciary, the Bank started the preparation of a free-standingoperation in the judicial sector.

As an alternative, assistance to the judiciary through the Public Sector Reform Project (which was initially planned for the lending program for FYO1) was explored at some point, but it was rejected for timing reasons. The Government has strongly indicated its preference for a stand-alone operation in the judicial sector given a complexity of the activities envisaged under the project, variety of beneficiaries and stakeholders and importance of the timing factor -- the reasons which were accepted by the Bank. Also, a possibility of expanding the project scope to include other areas of legal reform -- such as legal drafting, legal education, alternative dispute resolution mechanism -- was explored during the initial preparation stage. However, it was decided to keep the project focused on the urgent needs of the judiciary which were strongly supportedby the Government.

- 19- 2. Major related projects financed by the Bank and/or other development agencies(completed, ongoingand planned).

LatestSupoervision Sector Issue Project (PSR) Ratings .______j______(Bankfi4nanced projects only) Implementation Development Bank-financed Progress(IP) Objective(DO) Technical Assistance (legal institutional Institution Building Loan S S building componentprovided foreign expert assistance in drafting of commercial legislation)

Technical Assistance (judicial sector SATAC 1 S S assignments include: study tour for SATAC II MOJ officials responsible for enforcement of court decisions; provision of 250 publication packages, each includingthe newly adopted Codes, and other recently enacted legislationto the new judges; preparation of an assessment report on Structural Reforms in the Compulsory Execution of Civil Judgments; preparation of a master plan for the Judicial Training Center; assistance to the CCC and the AdministrativeOffice with their internal organizational structure, training needs and future staffing; assistance with short-term training needs of newly appointed judges; provision of equipment for the courts, CCC and the MOJ.

Public Sector Public Sector Reform Project (planned)

Other development agencies EU-TACIS Support and financing for the organization and implementationof a comprehensivejudicial training program through the establishmentof the Judicial Training Center, development of commentaries,and public awareness.

- 20 - USAID (IRIS, AMEX, ABA CEELI, Assistance in drafting of Chemonics) commerciallegislation (Civil Code, securities legislation, company laws, government procurement, etc.); assistance in drafting of judicial legislation (Laws on Advocates Services, on the Status of Judges); short-term training of judges, court administrators, and procurators; study tours for judges, court and Enforcement Service officials;assistance in the preparation of qualification examinations for judges; continuinglegal education for the Yerevan State University Law School faculty; institutionaldevelopment of the Bar Association and the Armenian Judges Association; assistance to the CCC on court administrationand case management.

GTZ (Governmentof Federal Republic Assistancein drafting the of Germany) legislationon enforcementof court decisions; preparation of a master plan for the enforcementscheme; assistance to the newly created CCC; provision of equipmentto the Appellate Court on Economic Cases.

Soros Foundation (Open Society Publication of new text books Institute, COLPI) for the Yerevan State University Law School; training of court administrators; provision of pro bono advocacy and other legal services.

IP/DORatings: HS (HighlySatisfactory), S (Satisfactory),U (Unsatisfactory),HU (HighlyUnsatisfactory)

3. Lessons learned and reflected in the project design: To date the Bank's experience in the area of judicial reform projects have shown that the project will only succeed if ownership and commitment at the highest levels of Government are in place (see below). The other important lessons include the following:

- 21 - (i) A judicial sector review should normally be a pre-requisite for any lending operation in the area of judicial reform. A comprehensive Judicial Sector Assessment for the Republic of Armenia was carried out in 1998, and the main conclusions and recommendations of the assessment are reflected in the project design. In addition, specific assessments in court administration and case management, and judicial training, have been carried out in order to design specificinterventions under the project.

(ii) Coalitions of leaders from the executive, the judiciary, legal profession, the Bar and NGOs form the most effective foundation for sustainable judicial reform. In Armenia, an initial effort of designing the judicial reform concept was supported through the State Committee for Legal and Judicial Reform which represented a wide spectrum of leaders from the executive, the Constitutional Court, the judiciary, the National Assembly, the General Prosecutor's Office, the legal scholars, and the Yerevan State University Law School. During project preparation, all major counterparts continued being involved in discussions with the Bank project team, and amongst themselves.

(iii) Judicial reform in any country is a long-term process. There is a need to prioritize judicial reform activities in order to avoid overloading the judicial capacity to absorb the necessary changes. During the preparation of the project, the Bank, the Government and the judiciary have agreed on specific priority areas of the judicial reform which would be included in the project. Also, a careful planning of the court administration reform, as the most complex and challenging component of the project has been carried under the PHRD Grant provided by the Japanese Government.

(iv) Sustainability of judicial reform is linked to developing or strengthening institutional capacity of judicial institutions. One of the main focuses of the proposed project is an institutional development of the CCC, its AdministrativeOffice, the Enforcement Service, and the Judicial Training Center.

(v) While comparative law experience is an extremely important source of guidance for legal and judicial projects, it should be adapted to national legal systems and the particular requirements of the society concerned. In addition, the benefits from foreign experts who provide a comparativeprospective should be fused with knowledge of the local legal community --knowledge of the language, social norms and the socioeconomic factors underpinning the country's political structure and legal traditions. This lesson has been taken into account in designing specific programs under the project, actively using local professionals in conducting assessments and preparatory works for the project and involvement of judges through the Working Groups in selecting, using and supervising foreign and local experts.

(vi) Coordination among all concerned development institutions,multilateral and bilateral, is critical. Such coordinationis important to avoid duplication of efforts, ensure consistent advice, and optimize the use of available resources. During the preparation of the project, the Bank has conducted regular consultations will all donors involved in the legal and judicial development work in Armenia, including USAID, ABA CEELI, EU TACIS, GTZ, Soros Foundation, etc. This practice will be continued thorough the duration of the project. In addition, through developing a new public relations office within the judiciary under the public awareness component which, among other things, will coordinate with donor agencies, the project would contribute to a more effective donor cooperation in the judicial sector.

- 22 - 4. Indicationsof borrower commitmentand ownership:

Over the last three years, the GOA has made a clear commitment to reforming its judiciary. The initial step was the preparation of a comprehensive concept which outlined the main directions and implementation timetable of the judicial reform (Concept Paper). A high-level State Committee on the Judicial Reform was established for the preparation of the Concept Paper.

In early 1998, the Bank carried out a Judicial Sector Assessment which outlined, inter alia, specific proposals on the structure of judicial institutions, court administration, status and appointment of judges, judicial training, etc. The Judicial Sector Assessment has been carried out in a truly participatory fashion, and the final report has significantly benefited from the input of various individuals and institutions.Even more important, the major recommendationsof the Banks Judicial Sector Assessment were incorporatedin the new legislation governing the judicial system which was enacted in 1998 and became effective in January 1999.

During that same period, the first blocks of a new institutional framework for the judiciary were laid down. In July 1998, the Court of Cassation, the highest body of the judiciary, was established. Around the samne time, a new entity responsible for court administration-- the Council of Court Chairmen -- was established. The courts of general jurisdiction and appellate courts were formed and staffed in January 1999. A new Enforcement Service of Court Decisions was established under the MOJ in January 1999. The Judicial Training Center was created in 1999.

The Government has also demonstrated its commitment to implement the judicial reform program by adopting a number of measures aimed at strengthening independence of the judiciary. These measures included introduction of a new appointment procedures for judges which are based on specialized qualification exams, significant increase of judges' salaries, renovation of some court buildings. The Government's commitment to further implementation of these measures and to the reform process in general is confirmed in the Policy Letter provided to the Bank.

As it has been discussed earlier in this report, some structural changes are needed in the Council of Justice which would further distance the executive branch from the judiciary, particularly in the matters of judicial appointments, disciplinary proceedings and removal from office. Such changes require amendment to Constitutionalprovisions. The ConstitutionalAmendments Commission (Commission), established by the President, has prepared elaborate amendments to Chapter 6 "Judicial System" of the Constitution. It is anticipated that these amendments will be put on the national referendum in Fall of 2000. The prevailing view is that these amendments are necessary to ensure the consistencybetween the constitutionalprovisions and the new laws on the judiciary enacted in spring of 1998, particularly, with respect to the provisions on the compositionof the Council of Justice, the role of the Procuracy in civil litigation, and on the process of appointment and removal of judges from the office. More specifically, it is anticipated that these amendmentswill change the compositionand the functions of the Council of Justice to limit its membership to judges and independent representatives(e.g. retired judges, legal scholars).

At the beginning of project preparation, the Bank team launched a broad consultation process which included judges, government officials, members of the Parliament, law professors, legal scholars, representatives of NGOs and other stakeholders. A workshop organized during the Bank's identification mission in December 1998 gathered all those representatives together and discussed the strategic goals and current priorities of the judicial reform process, the objectives and tasks which should be handled by the project and preliminary design of the project. This was followed up by the establishment of a Project Steering Committee and Working Groups for each. component for the preparation work. The Project

- 23 - Steering Committee has been co-chaired by the Chairman of the CCC and the Minister of Justice. Three Working Groups consisted of chairmen judges and two of MOJ officials. The Working Group members closely interacted with consultants, hired under the PHRD grant to prepare assessments for various components. They provided logistical and organizational assistance, as well as intellectual input. Judges were actively involved in conducting an assessment of the court administration and case management systems in Armenia. Such wide participation of judges in the project preparation strengthens the commitmentto the project by the judicial community.

5. Value added of Bank support in this project: Over the last decade, the Bank has extended its developmentalmandate to the legal and judicial area, and has responded favorably to borrowing member countries' requests for technical assistance in their legal and judicial reforn efforts. This reflects the acceptance by the international development community that an effective and efficient judiciary, impartial both in fact and reputation, is an essential element of comprehensive development. This can also be attributed to a unique position of the World Bank, as a financial institution with a developmental agenda and as a "knowledge bank", to support complex and long-term reform efforts in legal and judicial areas, to provide "coalition building" support for such reforms and coordinate assistance between other bilateral and multilateral donors.

The Armenian authorities requested the Bank's support for judicial reform over two years ago. Several operations (e.g. SATAC I and SATAC II) included small components to address the most urgent needs of the ongoing reform process. The Judicial Sector Assessment Report, which was discussed with the Govemment in early 1998 was instrumental in defmningthe priorities of the judicial reform process and identifyingthe areas of assistance for the proposed project, as well as for interventionof the other donors.

E. Summary Project Analysis (Detailed assessmentsare in the project file, see Annex 8) 1. Economic (see Annex 4): 9' Cost benefit NPV=US$ million; ERR = % (see Annex 4) C Cost effectiveness * Other (specify) Development of an independent and efficient judiciary has a direct relevance to the proper functioning of the economy and the conduct of economic activities: inability to protect property rights, to enforce contracts, high cost or unreasonabledelays in such enforcement hinder the efficiency of economic discourse and thus have a negative impact on the economic development of a country.

2. Financial (see Annex 5): NPV=US$ million; FRR= % (see Annex 4) Not applicable.

Fiscal Impact: The recurrent costs to maintain the rehabilitated buildings and information technology purchased with credit proceeds will need to be supported by a suitable Government budget allocation for the judiciary.

3. Technical: Not applicable.

- 24 - 4. Institutional:

4.1 Executing agencies: The Ministry of Justice and the Council of Court Chairmen will be the two leading executing agencies. 4.2 Project management: A PAC comprising of representatives of the Council of Court Chairmen, the Ministry of Justice, the Ministry of Finance and Economy, and GOA Staff has been established for overall project management and to provide policy guidance and oversee project implementationactivities. Day to day project management will be the responsibility of the PIU. The PIU will be responsible for the coordination of all project interventions, and for providing necessary support services (procurement of goods and services, financial control, monitoring of project activities, preparation of annual work plans, and reporting on status of project implementation).

4.3 Procurement issues: The capacity of the PIU to conduct procurement has been assessedand the project was given an overall high risk rating. Details of the assessment and an agreed upon plan of actions and findings are included in Annex 6. 4.4 Financial management issues: Financial Management Capacity: The financial managementcapacity within Armenia has not been the subject of a detailed review by the Association. Any weaknesses that may exist in the country's financial managementcapacity have been mitigated by the use of a specializedPIU, for project preparation and implementation,and drawing upon experienceof projects of this nature. The main risks related to the project's financial managementsystem are as follows:

(i) Capacity of staff in the PIU. The PIU currently employs a full-time financial management specialist whose responsibilities include maintaining accounts for the project preparation grant, project accounting, intemal controls and financial reporting. The PIU accounting staff will be further trained, as needed, and this training will be provided as a part of the technical assistance for the project.

(ii) Capacity of accounting system to generate the agreed Project Management Reports (PMRs). The PIU is using an accounting software which is capable of generating the agreed PMRs. The PIU will hire consultantsas required to ensure that the PMRs will be produced starting from the period ending on March 1, 2002.

(iii) Banking Arrangements/ Special Account (SA). The PIU will open and maintain a Special Account (SA) in a commercial bank, acceptable to the Association,as well as a transit account in a local commercialbank. In addition, the PIU will open an account in a local bank, where the Govemment's contributionwill be deposited. These accounts will be managed by the PIU. The total amount held in the transit account will be limited to the equivalent of $5,000. The SA and transit accounts will be audited annually and the results made available to the Bank.

The Bank will give special attention to the project financial managementrisks. The risks will be subjectto a rigorous follow-up during the supervision missions.

- 25 - 5. Environmental: EnvironmentalCategory: B (Partial Assessment) 5.1 Summarizethe steps undertaken for environmentalassessment and EMP preparation (including consultation and disclosure)and the significant issues and their treatment emerging from this analysis. No major environmental issues are anticipatedunder the project given the mostly rehabilitation nature of works to be financed. One court house in Giumri region will be newly constructed.

In order to assist in the selection of the court rehabilitationprogram, a detailed assessment of court buildings was conductedto collect informationon the existing conditions of the court buildings and on the improvementsneeded. The assessment was financed by the PIIRD Grant and was carried out by a local Armenian firm. During the assessment, no significantnegative environmentalconsequences have been identified since there are no issues of land acquisition,no areas of historic value or cultural heritage, no ecologically protected areas, no ground water pumping sites, etc. which are affected by project works.

An EnvironmentalManagement Plan is included in the Operational Manual for the Project, and addresses the issues relating to safety and health standards for construction and rehabilitation works which are consistentwith the Bank environmental assessmentguidelines and the Armenia EnvironmentalImpact Assessment Law of 1995. For the Giumri court house which is located in the earthquakearea, preliminary design and constructionplans will be submitted to the ArmeniaEarthquake Engineering Center for their review and approval.For this new construction,no environmentallyharmful materials will be used, in accordancewith Armenian law. For the rehabilitation works, it is not expected that contractors will encounter any asbestos containing materials. However,appropriate handling and disposal procedures will be described in the technical specificationsof the works, to allow safe handling and disposal in the event asbestos is encountered in the course of demolition.In addition, all contracts would contain clauses requiring the minimization of noise and dust during construction. The Bank would have the opportunityto verify the procedures throughprior review of the terms of reference of the design consultants as well as the final design documents, including the technical specifications.

The Projectwill have positive environmental impact because rehabilitationof court houses will lead to improved security, fire-life safety, accessibility and efficiency standards for court houses. 5.2 What are the main features of the EMP and are they adequate'? The main features of the EMP are: (i) mitigation measures against negative impact of rehabilitation and constructionworks, including measures relating to noise and dust during reconstruction works, minimizing vegetation damage, safe handling and disposalof waste materials, conforming to seismic standards; (ii) responsibilities for implementingmitigation measures: PIIJ staff, particularly an Architect, and individual contractors; (iii) monitoring requirements; and (iv) authoritiesresponsible for monitoring and enforcement activities.

5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: Not Applicable (see in 5.1 above on the assessment carried out for the court rehabilitation component)

5.4 How have stakeholders been consulted at the stage of (a) environmentalscreening and (b) draft EA report on the environmental impacts and proposed environmentmanagement plan? Describe mechanisms of consultationthat were used and which groups were consulted?

- 26 - The assessment for the court rehabilitation componentincluded consultationswith judges, Ministry of Justice, Ministry of Finance and Economy, the Prime Minister's office and parliamentarians.Copies of the assessmentreport have been provided to all major stakeholders. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? The PIll technical staff, who is an architect,will be responsiblefor monitoring the mitigationplan. The supervisionmissions will follow-up on the appropriatenessand success of the mitigation plan to counter negative environmentalimpacts (if any). If necessary, remedial actions will be proposed and adopted. 6. Social: 6.1 Summarizekey social issues relevant to the project objectives,and specify the project's social developmentoutcomes. It has been widely accepted that rule of law, independenceof the judiciary, due process, equality and non-discriminationare becoming central concems of "developmentdiscourse". The project, by assisting in the developmentof an independent, effective and accessiblejudiciary, would contribute to addressingthe following social issues in Armenia:

(i) better access of the population to justice: both in terms of physical accessibility (rehabilitationof some court houses in remote areas, improvedreception areas in court buildings), affordability (the project would finance a study on court fees and proposed forms of legal aid), and gender equity (through better disseminationof legal information to women, specialized training for judges on gender issues, etc.);

(ii) more effectiveprotection of citizens' rights and freedoms,including vulnerable groups of the population (through reducing the time for judicial process, achieving more transparency for the judiciary and eliminatingsources for corruption);

(iii) better access for citizens to information about their legal rights and obligations and means for their protection (several programs under the public awarenesscomponent are aimed at this objective); and

(iv) contribution to environmentallysustainable development (thejudicial system which effectivelyprotects property rights and rigorously enforce environmentallaws and regulations is critically important for environmentallysustainable development). 6.2 Participatory Approach: How are key stakeholders participating in the project? A workshop was held with key members of the judiciary, the legal profession, and the Government at the identification stage to discuss the policy objectives, design and implementation arrangements for the proposed Project. As a result, a general consensus was reached on the proposed structure and components of the project, as well as on the role of different agencies and institutions, and of the judiciary itself, in the preparationand implementationof the project. This practice was continued during further stages of project preparation through bilateral consultations with different stakeholders. Furthermore, representatives of the judiciary, the MOJ and the legal profession are represented in all implementing agencies (e.g., PAC, Working Committees, Advisory Board) and therefore will be able to actively participate and benefit from the project. 6.3 How does the project involve consultationsor collaborationwith NGOs or other civil society organizations? Main civil society organizations, involved in the judicial sector, such as the Association of Judges, Bar Association, Young Lawyers Association, Union of Lawyers and Politologists, were consulted at all stages

- 27 - of project preparation. Their input was particularly used in designing the judicial training component and public awareness component of the project. 6.4 What institutional arrangementshave been provided to ensure the project achieves its social developmentoutcomes? An Advisory Board which includes some representativesof NGOs and mass media has been established for implementinga public awarenesscomponent. The Advisory Board will be overseeing social development aspects of the project and will cooperate with other NGOs and community organizationsin performing its tasks. 6.5 How will the project monitor performancein terms of social developmentoutcomes? Several public opinion surveys and court users surveys will be conductedduring the life of the project to assess social impact of the project components.

7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? .PWIOL.y Ap0plCSbility l EnvironmentalAssessment (OP 4.01, BP 4.01,GP 4.01) O Yes El No E Natural habitats (OP 4.04, HP4.04, GP 4.04) El Yes O No l Forestry (OP 4.36,G O4.361 E Yes 1 No El Pest Management (OP4.09) O Yes N No L Cultural Property (OPN 11.03) OI Yes IZ No L IndigenousPeoples (OD 4.20) El Yes 1 No C InvoluntaryResettlement (OD 4.30) El Yes M No LI Safety of Dams (OP 4.37, BP 4.37) El Yes IZ No I Projects in International Waters (OP 7.50. BP 7.,50.GP 7.50 LI Yes M No Il Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) Li Yes M No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. The EnvironmentalManagement Plan has been included in the Operational Manual for the project. The Credit Agreement also requires the Govemment and implementingagencies to ensure that proper mitigation measures will be taken in the course of reconstruction and rehabilitation of courthouses.

F. Sustainability and Risks 1. Sustainabiity:

Key issues for sustainability of the interventions contemplated under the project include: (i) the continued public support for legal and judicial reform through a long-term program; (ii) adequate funding and procedures for operation and maintenance of court infrastructure,and (iii) improved institutional capacity of the newly established agencies (such as the CCC, the Judicial Training Center, and the Enforcement Service) which will be responsible for the continued implementationof judicial reform.

2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure |FromOutputs to Objective

- 28 - 1. The judiciary does not overcome M 1. Strengthening of the institutionalcapacity of administrative (MOJ) and financial the CCC as a judicial self-governingbody (Ministry of Finance and Economy) control of the executive branch 2. Introduction of a new budgetary planning and financial management mechanism for courts

3. Carrying out an assessment of competence and salary scale for judges and promoting recommendationson adequate financial compensationfor judges (e.g. separate salary scale from civil servants)

2. The judicial reform process does not M 1. Intensive discussionsof the reform measures enjoy consolidatedsupport from the other and proposed project activities with all key branches of government,legal players in the legislative,judicial and executive professional communityand general branches, legal professional communityand public general public

From Componentsto Outputs 1. The CCC fails to effectivelyplan and M 1. Strengthening of the institutional capacityof carry out court administrationreform the CCC

2. Preparation of a masterplan for the court administrationreform identifyingpriorities and to allocate scarce resources

2. Developmentof a functioning Judicial M 1. Assisting in the preparation of a Training Center is delayed comprehensivestrategy for the judicial training and institutional support to the JTC

2. Intensive coordination with other donors providing assistance to the Judicial Training Center

3. Reduction of budgetary allocation for M 1. Discussions and agreement with the the judiciary as a result of the proposed Government on required budgetary allocations credit for the judiciary for maintaining investmentsto be financed under the project and to ensure future sustainability of those investments

OverallRisk Rating M Risk Rating- H (High Risk),S (SubstantialRisk), M (ModestRisk), N(Negligible or Low Risk)

3. Possible Controversial Aspects: No apparent controversial aspects at this stage.

- 29 - G. MainCredit Conditions 1. Effectiveness Condition

2. Other [classify according to covenant types used in the Legal Agreements.] Disbursement Condition:

(a) Disbursement of credit funds for equipment for the JTC will be subject to receiving by the Association a satisfactory evidence that an acceptable organizational and management structure of the JTC is in place and the JTC has become fully operational.

Credit Covenants:

(b) The Government will maintain the PIU within the MOJ and the Working Groups (including an Advisory Board for the Public Awareness component)for project components during the life of the project. (c) The Government will open the Project Account by January 31, 2001 and replenish thereafter on a quarterly basis to cover project expenses from the Government counterpart funding. (d) Procurementof goods, works and services for the project will be carried out in accordance with the Bank's ProcurementGuidelines, the provisions of the Credit Agreement and as outlined in Annex 6 of the PAD. (e) Not later than November 30 of each year, the PIU will fumish to the Bank the annual program for the next year, including procurernentand financing plans, and will review these plans with the Bank before implementingthem. (f) The PIU will submit to the Bank quarterly Project Progress Reports not later than 45 days after the end of the quarter outlining progress made in the implementationof each project component, as well as the problems encountered and how they will be addressed. (g) The Government and the Bank will carry out a mid-term review by September 30, 2002, and will make necessary adjustmentsin the Project as recommendedby the review. (h) The Government will prepare, not later that 6 months after the Closing Date, a plan for the future operation of the Project activities, and the Government's input into the Implementation Completion Report, both of which will be reviewed with the Bank. (i) By June 30, 2001, the Government will submnitto the parliament an amendment to the Law on the Judiciary of 1998, providing the CCC with supervisory authority over administrative affairs of courts at all levels. (j) By December 31, 2001, the Government will submit to the parliament a draft law regulating classification, systematizationand registration procedures for Armenian laws and regulations. (k) The Government will ensure that proper mitigating measures, according to the Environmental ManagementPlan, will be taken in the course of rehabilitation and construction of court houses. (1) The Government will maintain a financial managementsystem acceptable to the Bank and have the financial records, accounts and financial statements for each fiscal year audited and submit a certified audit report to the Bank within six months after the end of each fiscal year and also at the closing of the project.

- 30 - H. Readiness for Implementation D 1. a) The engineeringdesign documents for the firstyear's activities are completeand ready for the start of projectimplementation. 1 1. b) Not applicable.

O 2. The procurementdocuments for the firstyear's activities are completeand readyfor the startof projectimplementation. 1 3. The ProjectImplementation Plan has been appraisedand foundto be realisticand of satisfactory quality. [ 4. The followingitems are lackingand are discussedunder loan conditions(Section G):

1. Compliance with Bank Policies Z 1. Thisproject complies with all applicableBank policies. O 2. The followingexceptions to Bankpolicies are recommendedfor approval. Theproject complies with all otherapplicable Bank policies.

Irina L. Kichigina. FriedrichPeloschek TeamLeader SectorManagerlDirector CountryManager/Director

- 31 - Annex1: ProjectDesign Summary ARMENIA:Judicial Reform Project

iHierarch o bfjecat ives ihtt:tw & ______Sector-relatedCAS Goal: SectorIndicators: Sector/country reports: (from Goalto BankMission) The proposed project will support the main CAS objective, i.e. to foster the rapid development of the private sector by promoting further structural reforms, strengthening the financial system and the legal and regulatory framework. Development of an independent, efficient, and effective judiciary has a direct relevance to the proper functioning of the economy and the conduct of economic activities: inability to protect property rights, to enforce private contracts or high costs or unreasonable delays in such enforcement hinder the efficiency of economic discourse and thus have a negative impact on the economic development of a country.

Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: The objective of the project is 1. Increased financial and Survey of public opinion. Continued GOA comnitment to assist in the development of administrative autonomy of Project progress reports. to market oriented reforms an independent, accessible and the judiciary Budgetary allocations for the efficient judiciary in Armenia judiciary. which is essential to 2. Extent of increase in user governance, rule of law and confidence and improved investment climate, judicial services

- 32 - Key Performance Hierarchyof Objectives Indicators Monitoring& Evaluation CriticalAssumptions Outputfrom each OutputIndicators: Projectreports: (fromOutputs to Objective) component: (1) Institutional capacity of 1.1 New organizational and Project reports and 1.1 Continued GOA and the CCC and Administrative management structure of the supervision public support to judicial office improved CCC is established, and the reforms CCC is fully operational 1.2 The judicial branch is given more authority in the appointment of judges and disciplinary matters

(2) Improvement of court 2.1 Uniform standards and Progress reports and administration and case procedures for the preparation supervision management procedures of court's budget and financial management of courts are designed and implemented 2.2 Standards for case flow are developed and adopted by the judiciary 2.3 Twenty-one courts are provided with computer equipment and technology (3) Renovated court facilities 3.1 Thirteen court buildings MOJ 3.1 Adequate budget which would improve working are rehabilitated Progress reports and allocations are provided for conditions for judges, provide 3.2 Security devices are supervision maintenance of buildings. dignified atmosphere for court installed in court buildings 3.2 Thirteen courts are hearings and enhance security and security design standards adequately refurbished for judges, witnesses and are implemented for 20 litigants buildings 3.3 Six pilot court houses are rehabilitated (and one court house is constructed) in accordance with enhanced design standards and refurbished

(4) Improved enforcement of 4.1 About 130 bailiffs are CCC, MOJ Bailiffs fulfill their functions court decisions trained Progress reports and in professional and ethical 4.2 An organizational supervision fashion structure of the Enforcement Department is finalized (5) Enhanced professional 5.1 About 110 judges and 60 Surveys Sustainable training skills and efficiency of judges court administrators are Progress reports and mechanism for judges and and court personnel trained supervision court officials is established 5.2 Training programs are successfully rated by trainees S.3 The time spent by judges on administrative and other routine matters is decreased by 30%

- 33 - (6) Improved institutional 6.1 JTC's organizational capacity of the Judicial structure is defined; trainers Training Center are trained; curriculum is developed; training evaluation system is set up

(7) Improved access to legal 7.1 Unified classification MOJ, CCC Competitive and competent information by legal system for laws and Progress reports and private sector of electronic professionals and general regulations is developed supervision legal databases is developed public 7.2 An electronic legal database of the MOJ is established 7.3 Judges have guaranteed reliable access to laws and regulations

(8) Improved image of the 8.1 Increased use of courts by Progress reports and judiciary, legally educated the population by at least 30% supervision population and trained mass 8.2 TV and radio programs on media legal and judicial issues are successfully rated 8.3 About 25 journalists are trained

Project Components I Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) (1) Strengthening US$2.6 million Supervision reports 1.1 Additional legislative Institutional Capacity of the changes are adopted to Judiciary enhance judicial governance. Judicial governance 1.2 New court administration Court adrninistration and case management Case management procedures are accepted and Court automation implemented by judges and court personnel 1.3 Adequate and reliable telephone network is in place

- 34 - (2) Court Infrastructure US$5.6 million Supervision reports 2.1 Ministry of Finance and Rehabilitation Economytimely and * Rehabilitation and adequately provides the refurbishing of seven pilot counterpart funding for the court-houses rehabilitation program * Rehabilitation of 13 2.2 Enhanced design and court-houses construction standards for * Development of new design courthouses are developed, and space planning standards endorsed and approved by the standards (including security respective authorities. standards) for construction and rehabilitation of courthouses

(3) Improving the US$0.5 million Supervision reports Legislation governing Enforcement of Court enforcement of court decisions Decisions is fully developed - Institutional strengthening of the enforcement service Training of Enforcement Service staff * Automation of the Enforcement Service

(4) Training of Judges and US$0.5 million Supervision reports 4.1 The judicial community Court Personnel consolidatesits efforts * Institutional support to the developing a comprehensive, JTC long-term strategy for the Curriculum Development judicial training * Training of Trainers 4.2 The JTC is adequately Equipment staffed and equipped

(5) Dissemination of Legal US$0.7 million Supervision reports An adequate legal framework Information for collection, classification * Assistance in codification and dissemination of legal and systematization of laws; information is established maintaining authoritative texts of official legal acts * Development of a strategy for facilitating private and competitive dissemination of legal information . Development of an electronic legal database

- 35 - (6) Public awareness and US$0.7 million Supervision reports, public Armenian National Television public education campaign opinion surveys provides prime time TV air . Development of a PR for the project strategy for the judiciary *TV/radio production and airing * Specialized training for PR staff and journalists * Seminars on legal issues for public in marzes *Publication of brochures and books on legal issues *Public opinion surveys

(7) Project Management US$0.5 million Supervision reports PIU is fully staffed and operational

-36 - Annex2: ProjectDescription ARMENIA:Judicial Reform Project

ByComponent:

ProjectComponent I - US$2.63million Strengtheningthe InstitutionalCapacity of the Judiciary

This component aims at: (i) development of self-governingbodies of the judiciary (specifically,the CCC and its Administrative Office); (ii) development of a modem court administration system: (iii) design and implementationof new case managementmodels; and (iv) automation of courts.

Sub-component A. Judicial Governance

InstitutionalStrengthening of the Council of Court Chairmen (CCC) and its Administrative Office

During the limited period of its existence, the CCC has adopted its Charter, organized a number of sessions, took a lead in providing training to newly appointed judges and engaged in other important activities. However, it still must establish itself as a fully operational, self-governingbody of the judiciary. The CCC needs to (i) fully develop its plenary authority over the administrative affairs of the judiciary; (ii) organize a system of Working Committeeswhich would be responsiblefor developing common policies and procedures in specific areas of court administration (e.g. budgeting and financing of courts, human resources development, maintaining court facilities, court automation, training of judges and court personnel, etc.); (iii) develop a system of providing and receiving reports from individual courts and chairmen; (iv) design a position of a chief executive officer of the judiciary; and (v) develop a strategy of interactingwith the public, mass media and other branches of government.

Accomplishment of these tasks will be supported by the project through the following activities: (i) provision of technical assistance in organizing the CCC as a governing body; (ii) training for heads of Working Committees and other staff of the CCC; and (iii) publication of the CCC newsletter or similar publication accessible to all judges and which covers judicial administrativematters.

At present, the Head of the Administrative Office directs employees reporting to him who are assigned to oversee the budget, personnel, and training components of the office and supervises directly several other staff members who work on the generalizationof judicial practice program. These staff members appear to perform largely ministerial functions, e.g. assemblebudget submissions or enter personnel information into a data processing system. They do not appear to have been entrusted with responsibility for suggesting policy or developing programs in any regular manner to the CCC.

The Administrative Office, in order to fulfill its functions of providing administrative support to the CCC and continued monitoring of implementationof the CCC's decisions, needs reorganization and training. For this purpose, the project will finance: (i) provision of technical assistance for organizational development of the Administrative Office (establishingdivisional responsibilities,clear job descriptions, a strategic plan for the development of the Administrative Office, etc.); (ii) training for the Administrative Office staff in specific areas, e.g. court financing, court procurement, facilities, case recording, as well as training in general judicial administrationtopics; and (iii) provision of necessary equipment and software to automate the main functions of the Administrative Office.

Enhancingthe role of judges in judicial self-governance

- 37 - The corps of judges now has little to do with the governance of the judiciary. The project would supportthe expansion of the role of judges and judges' active involvementin developing accountabilitymechanisms for the judiciary. This would be achieved through: (i) conducting a study on evaluation of judicial perfornance models; and (ii) provision of technical assistancein the developmentof the Code of Ethics for Judges.

Improvementof the legislative frameworkfor the judiciary

The laws that have provided a legislative foundation for the establishment of the new court system require further improvement. Active work is underway on the preparation and discussion of certain constitutional amendments relating to the judicial branch. nd disadvantages demonstratedduring the last five-year period, the role of the ConstitutionalCourt and the Council of Justice in the overall legal system and other systemic issues. In order to support legislative activities in the area of judicial reform and provide the Armenian drafters with the advantages of comparative legislative analysis, the project will finance advisory services and study tours for this sub-component.

Sub-component B. Court Administration

With the reorganization of the Armenian court system in 1997, appointment of new judges in January 1999, and growing demand for judicial remedies over the last couple of years, the judiciary has become overwhelmedby the new demand for its services.Delays and backlogs are now commonplace,especially in criminal cases.

The program supportedby the project aims at development of a modern court administration system, with a particular focus on court financing; efficient allocation and use of court resources (i.e. judges, administrators, registrars, assistants and other personnel); and design of the reliable and meaningful statistical information system.

The following activities will be financed under this sub-component:

Court financing: (i) design of uniform financial management procedures in courts (budgeting, accounting, auditing) and design and publication of standard forms and guidelines; and (ii) training of court financial officers, court chairmen and staff of the AdministrativeOffice in court financing.

Efficient organization of judges and court personnel work: (i) development of job descriptions, standard recruitment procedures and performance evaluation forms for court staff, including court administrators, judicial assistants and registrars; (ii) training of court administrators and judicial assistants, particularly in new areas of their responsibilities; (iii) carrying out a time utilization study; (iv) development of the AdministrativeOffice' capacity in general managementanalysis and planning in the judicial system.

Statistics: (i) assistance in re-designing data collection strategies and instruments (under the CCC leadership); (ii) establishment of the Office of Court Statistics under the CCC; (iii) development of written instructions for data collection, auditing and reporting; (iv) redesigning docket numbering system and development of a new classification of cases; and (v) seminars for Chiefs of Staff, registrars and other court staff in court statistics.

Sub-component C. Case management

The case management system existing in Armenia, while generally adequate at the present caseload volume

- 38 - and level of complexity, would not conform to the increasing demand for judicial services. Recent court data shows that expansion of the case volume is already underway. Some courts are beginning to operate at the margins of their capacity under the present case managementsystem. The number of complex cases will almost certainly rise as the market economy takes hold and will require a different case management approach since the present system cannot deal with them adequately.

The project would assist in the development of an effective case management system which would ensure timely and effectiveprocessing of cases by the judicial system.The following activitieswill be financed: (i) assistance in developing new civil case management procedures and publication of case processing manuals; (ii) training of judges and other court personnel in case management; and (iii) designing special systems and procedures for criminal cases (e.g. case numbering system, expedited issuing arrest and search warrant, issuing sentencing orders, pre-sentencing reports, information on pre-trial detention, bail policies, etc.) and publishing of case processingmanuals.

Sub-component D. Court automation

A few Armenian courts currently have some automation,especially in Yerevan. For the most part, it is used to support word processing needs, but in at least two courts, it is being used to do limited case management.

Assistance in the development of an automation program for the court system would be provided in the following areas: (i) provision of computer equipment, software and technology to 21 courts of general jurisdiction, three Appellate Courts and the Cassation Court for the purpose of maintaining statistical records, transmitting decisions, providing electronicmail, and introducing case management; (ii) computer training for judges and court personnel; and (iii) carrying out an assessment for the use of other technology in courts (e.g. audio and voice recording and computer-aidedtranscription in making courts records; use of video and telecommunicationsfor video records of court proceedings, depositions).

ProjectComponent 2 - US$5.66million InfrastructureRehabilitation

Successful implementation of judicial reform cannot be achieved unless the court facilities reflect the requirementsof the new judicial procedures being introducedby reform, and unless the court buildings are in a condition that would contribute to respect for the judiciary.

The objective of the component is not to assist in minimal rehabilitation of all court buildings in Armenia but rather to ensure rehabilitation of court facilities in a way that would make a sound contribution to overall judicial reform. The task is not only to improve working conditions for judges and court personnel, but to enhance security, ensure efficient planning of the facilities, provide better access to the courts, ensure energy efficient use of the building systems, etc.

Currently, the existing court buildings in Armenia are in deplorable condition due to lack of maintenance during the past decades. In addition, a number of court facilities were destroyed or severely damaged during the 1988 earthquake. In order to assist in the selection of the court rehabilitation program, a survey was conducted to collect information on the existing condition of the court buildings and to provide an assessment of the improvements needed. The results of the study indicate that in most courts, rehabilitation is essential simply for the courts to function. In others, court rehabilitation has started but works have ceased due to of lack of funds. In addition, several court buildings share space with the Police and Prosecutor's function, one of the constraints on judicial independence that the project seeks to end. Based

- 39 - on this information and taking into account the caseload of the respective courts and the objective of this component, 7 pilot courts and 13 other regional courts and the Court of Cassation were selected for inclusion in the Infrastructure RehabilitationComponent.

The component will finance:

(i) Rehabilitation of 6 (six) pilot courts and construction of 1 (one) new pilot court building, both to meet enhanced standards of security, fire-life safety, accessibilityand efficiency. These courts are expected to demonstrate the functioning of modem courthouses followinginternational standards. They will serve the objective of the independent, transparent and efficient judiciary. The court buildings included in the pilots are:

1. Appellate Court on Criminal and Military Cases in Yerevan 2. Appellate Court on Civil Cases in Yerevan 3. Appellate Court on Economic Cases in Yerevan 4. First Instance Court of Malatia-Sebastia Communities of Yerevan 5. First Instance Court of Center and Nork-Marash Communities of Yerevan 6. Shirak Marz First Instance Court - Giumri Court House (new construction) 7. Lori Marz First Instance Court - Vanadzor Court House

(ii) Rehabilitationof 13 (thirteen) other non-pilot courts to meet minimum standards for an adequately functioningcourthouse. The other courts are:

1. Court of Cassation 2. First Instance Court of ShangavitCommunity in Yerevan 3. First Instance Court of Ajapnyak and Davtashen Communities of Yerevan 4. First Instance Court of Ereboni and Noubarashen Communities of Yerevan 5. First Instance Court of Arabkir and Kanaker-ZeytunCommunities of Yerevan 6. First Instance Court of Avan and Nor-Nork Communities of Yerevan 7. Lori Marz First Instance Court -- Stepanavan Court House 8. Gherkounik Marz First Instance Court -- Sevan Court House 9. Aragatsotni Marz First Instance Court -- Ashtarak Court House 10. Ararat Marz First Instance Court -- Artashat Court House 11. Ararat Marz First Instance Court -- Masis Court House 12. Tavush First Instance Court -- Ijevan Court House 13. Armavir First Instance Court -- Echmiadzin Court House

Design, engineering and supervision costs are to be covered under the project. The work will be carried out by local architects and engineers assisted by international court infrastructure consultants. The existing designs of the courts for which works have stopped due to lack of funds will be reviewed and improved if necessary.

(iii) Supply of modem court equipment and furniture for the seven pilot courts, in order to ensure that rehabilitated courts are fully operational and are used to their full potential. This component includes purchasing of goods, including but not limited to, audio, security and fire-life safety devices, bullet proof glass, metal detectors, modem court room furniture,etc.

(iv) Development of design standards and comparative analysis of international and Armenian (according to SNIP) space planning standards. Based on this analysis, a list of Armenian standards for

-40 - court designs will be proposed. The standards will be based on a clear set of programmatic instructions in accordance with the new concepts of judicial reform in Armenia. The activity will produce prototype schematic plans for the various court types in the Armenian system, it will indicate functional relationships and basic design guidelines and area requirements. This information will constitute a "SchematicDesign Manual" that can be revised based on the experiencegained from use of the courts. The Working Group on Court Rehabilitationwill develop clear programmatic instructions for the translation of judicial reform into physical form.

ProjectComponent 3 - US$ 0.53 million Training of Judges and Court Personnel

This component focuses on providing assistance to the Judicial Training Center (JTC) which was established in 1999. In this area, the Bank is closely coordinating with other donors, particularly the program of EU-TACIS. Although the TACIS program is not yet at the implementation stage, it foresees assistance in: (i) defining training subjects for judges and court personnel; (ii) developing training techniques and methodologies; (iii) curriculum development; (iv) design of monitoring and evaluation processes for judicial training; (v) conducting training of trainers program; and (vi) provision of a modest amount of equipment and teaching materials for the Center.

The project will assist in establishingthe JTC tbrough: (i) provision of technical assistance and training for developing the management structure of the JTC; (ii) organization of a conference with participation of judges, governmentofficials and representativesof the legal community for the discussion and endorsement of a strategic approach for the development of continuingjudicial education in Armenia; (iii) assistance in curriculum development (since the TACIS program would not cover all the training subjects within its curricula development component, the project would focus on selective subjects, e.g. court administration and case management, communication skills, ethical standards, etc.); (iv) provision of required equipment for the Center.

ProjectComponent 4 - US$0.59million ImprovingEnforcement of Court Decisions

Without proper and timely enforcement of rendered court decisions due process cannot be ensured. The previous enforcement system was inefficient;contributing to the low image of the judiciary as a whole. In the course of the judicial reform, a new system for enforcement of civil judgments has been introducedin Armenia: a new Enforcement Service was established under the MOJ; the legislative framework governing the activities of the new service and enforcement mechanism has been radically changed; new staff have been hired.

This component aims at: (i) institutional strengthening of the Enforcement Service; (ii) professional development of the Enforcement Service staff; and (iii) automation of the Enforcement Service.

Sub-component A. Institutional Strengthening of the Enforcement Service

Currently the Enforcement Service is a centralized system with Headquarters, Yerevan and Marz offices. An assessment of the new legislative framework,organizational structure and functions of the new agency has been carried out with the assistance of German experts financed from SATAC I. The design of the component takes into account conclusionsand recommendationsof the assessment report.

The project will support: (i) provision of technical assistance for the organizational development of the

- 41 - Enforcement Service; (ii) development of case processing techniques; (iii) establishment of the public relations department and training of its staff; and (iv) advisory services to support necessary drafting.

Sub-component B. Training of Staff of the Enforcement Service

Currently the Enforcement Service employs some 300 bailiffs. The majority of the staff joined the Service in 1999. Even though most of the new appointees have basic legal education, they lack knowledge and experiencerequired for carrying out new tasks imposed on the Enforcement Service. Moreover, specialized training in areas such as financial managementor banking is completely lacking. The project will finance: (i) training of the Enforcement Service staff on issues of substantive law, as well as on ethics and disciplinary regulations; and (ii) specialized training of selected Enforcement Service staff and managers in accounting and financial management,banking and finance, international transactions.

Sub-component C. Automation of the Enforcement Service

The Enforcement Service lacks necessary equipment to improve work efficiency. The available computers are used for simple word processing. The project will finance: (i) provision of computer equipment, software and technology to the 10 Marz offices, Yerevan office and the Enforcement Service Headquarters; and (ii) provision of copying, scanning and facsimile equipment to the 10 Marz offices, Yerevan office and the Enforcement Service Headquarters.

ProjectComponent 5 - US$0.69million Legal Information

There are several important dimensions to the legal information framework: classification, registration/collection, dissemination to government entities, courts and public dissemination and publication. In Armenia, all the mentioned areas need significant improvements in order to develop a new legal information regime that can support ongoing legal and judicial reform in the country. The project will provide assistance in: (i) strengtheningthe institutional and operational capacity of agencies responsible for maintaining authoritative texts of official legal materials, their systematization and codification; (ii) developing an electronic legal database; (iii) developing a Government strategy for facilitating competitive and effective disseminationof legal information;and (iv) improving access to essential legal informationby judges and other legal professionals.

Sub-component A. Strengthening of institutional and operational capacity of the Ministry of Justice in classification, systematization and collection/registrationof legal information

By law, the MOJ is entrusted with registering all legislative and normative acts in the Republic of Armenia. The Department of Systematizationof Legislation of the MOJ is responsible for this function. Presently, the registration of laws and other legal acts is carried out manually by means of collecting printed texts of laws and regulations by the Department staff. There is no unified electronic database of laws and regulations used for registration purposes. The need of such electronic database is obvious: while privately-developed databases may, over time, emerge as major suppliers of particular types of legal information to the public or business community, it is important for the government and citizens to have a complete, accurate, and stable registry of official legal acts as verified by a legally-sanctionedagency such as the MOJ.

Furthermore, there is no unified classification system operative in Armenia at present. Several different classificationsystems are in use by various government agencies and private legal databases, some of them

-42 - based on the former Soviet-em classificationregime. Therefore, large numbers of normative acts in new files of law (e.g., bankruptcy, securities law, etc.) become increasingly hard for paper-based indexing systems to absorb. The lack of unified classification for legislation also infringes comparative analysis of legal acts, and updating of the existing laws and regulations to make them consistent with the newly adopted ones.

The project will address the above deficiencies through assistance in the following areas: (i) institutional strengthening and automation of the Department of Systematization of Legislation of the MOJ and assistance to the MOJ in developing a unified classificationsystem for laws and regulations; (ii) provision of equipment, software and training for development of an electronic database of all legal and normative acts operated by the MOJ; and (iii) assistance in the development of an effective legal framework for classification, systematizationand registrationof laws in the Republic of Armenia.

Sub-component B. Development of a comprehensive strategy for effective and competitive dissemination of information

In order to significantly improve the accuracy and uniformity of legal information and its timely accessibility to all users -- public and private -- it is important for the Government to develop a comprehensive strategy of dissemination of legal infornation to specific users and the public in general. There is a wide range of options concerning the transmission of legal information by the government to various users -- in both electronic and paper form. The developmentof a strategy should analyze the role of information in society, the role of government in fosteringthe disseminationof such information in society, the nature and pace of technologicaland economic changes occurring in the country, and how public and private organizations and individuals will react to various policy and technical solutions. Such analysis should also include current financial realities, including government and private sources of investment, as well as donor funds.

The project will support technical assistance to the Government for the development of such strategy and its broad discussion with the judicial and legal communityin the country.

Sub-component C. Improving access to legal information by courts

The courts are in great need for legal information -- both substantive laws and court decisions. The explosion of new legal acts in the context of a transition economy has placed severe information demands on the courts, which is dangerously reliant on paper information that is often quite out-of-date. The situation is even more aggravated in distant regions where printed information about new laws and regulations comes very slowly.The courts lack funds for obtaining published codes, commentaries,or even Official Bulletins published by the government print house. Access to private legal databases is hampered by huge deficiencies in technology equipmentavailable to courts.

Once a unified electronic database is developed in the MOJ, courts would receive guaranteed and reliable access to such database. In the meantime, the project will finance provision of essential legal texts to courts.

ProjectComponent 6 - US$0.75million Public Awareness and Public Education Campaign

A survey of public awareness and public attitude towards the legal and judicial system in Armenia was conducted for the preparation of this component. The findingsof the survey served as the basis for refining

-43 - messages and setting priorities in choosing the programmaticactivities for the component. The component should accomplish a qualitative breakthrough in public attitudestoward the rule of law in Armenia. Among the objectives of the public awareness component is the information flow to the public at large about positive new developmentsand explanationwhy they are beneficial, or why people should get involved in the reform process.

The public awarenesscomponent will include the following activities to be financed by the credit:

Sub-component A. Development of a comprehensive public relations (PR) strategy for the judiciary and establishment of a PR office within the CCC

The judicial reform program in Armenia puts a great emphasis on transparency, openness and accountability of the judiciary. While many governmental agencies (including the MOJ) and law-enforcementagencies have their own public relations departments, the Armenian judiciary is lagging behind in this respect. Courts traditionally have very limited interactions with other government agencies, mass media, professional organizations or the public. Court decisions or court statistics are not published, and little information is available about individualjudges and their service in the office.

The Project will assist in developing a comprehensive public relations strategy for the judiciary and building up PR institutional capacity within the CCC as a "designatedspokesman" of the judiciary.

Sub-component B. Journalism training

Despite their critical role, Armenia's journalists are not adequately trained in legal issues. As a result, media coverage of the courts and legal issues is inadequate. The project will finance organization of journalism training in the following areas: training on specific legal topics; seminar meetings and topical briefings with leaders of the legal reform process, members of the parliament, politicians, and lawyers to cover policy related issues; professional skills training; share knowledge and resources in the field of media coverage of legal affairs; lobby for better access to sources of information and wider coverage of legal issues in media; conduct discussionsof direct problems affectingthe coverage of legal issues.

Sub-component C. Dissemination of legal information to the population

The project will support improved access of the population to legal information (including the work of courts) through the following channels: (i) TV and radio programs; (ii) seminars in local communities covering such topics as citizens' rights and obligations, means of legal protection, the work of courts, access to legal aid, etc.; and (iii) publication of popular brochures on legal issues.

Sub-component D. Judicial surveys

The survey conducted during project preparation primarily sought to evaluate the present level of public awareness and public attitude towards laws and legal institutions in the country, and to design specific programs under the project. At least two similar sociological surveys will be conducted during implementation of the project which will include broader coverage of respondents and focus groups, particularly, the court users. These follow-up surveys will also be used for monitoring the effectiveness of the project interventionsduring its implementation.

Project Component 7 - US$0.53 million Project Management

- 44 - Day-to-day project implementation will be carried out by a Project Implementation Unit (PIU) located within the MOJ. The PIU comprises a Director, procurement specialist(s), an FMS specialist, an accountant, an architect, public awareness component coordinator and some administrative personnel (e.g. a secretary/translator,driver, etc.). In performing its functions, the PIU will:

- provide technical assistance and support to the Working Groups and other agencies involved in project implementation; - carry out procurement for the project activities; - maintain project accounts and project financialmanagement system; - disseminate project-relatedinformation; - conduct the project's mid-term review and completionreviews; - report directly to the PAC on a regular basis; and - provide information on project implementationand interact with other govemment agencies, NGOs and the public.

The project will finance operational and logistical assistance to the PIU.

- 45 - AUG 21 '0O 05:e9PM WORLDBANK ARMENIA P 3Z3

Attachment

,3R";.JEMIN&tS1ER

Deai Ms O'C onnor

The attachld letter describes the Government of Armenia's program of-actions, objectives asnd policies designed to refbrm thc judicial system of the Rcpublic of Armenia. We are lookiing forward to IDA's approval of the proposed Judicial Reform Project in an amount of USO) t 1,4 millioinwhich would supporr the implemnentation of said piograln.

Sinc-c-ely,

A. MARGARYAJNI

Ms Judy Q'Con3or CouuntryDirector for Armenia. Europe and Central AiiaRkegion Tnternationatl Deyelopment Association

Yoevr.ra, Rpt4>:ic _x &nvlxn REPUBLIC OF ARMENIA

Statement of Policy and Objectives of the Judicial Reform June 2000

A. Background: Vision and Objectives of the Judicial Reform

1. In mid 1997, under the leadership of the State Commission on Judicial and Legal Reforrns co-chaired by the Prime Minister and the Chairman of the Constitutional Court, a Concept Paper of the Legal and Judicial Reform of the Republic of Armenia was developed (hereinafter the Concept Paper). The Concept Paper stated that the main objective of the judicial/legal reform program is the establishment of an independent judiciary that:

(a) plays an important role in the state based on the rule of law and separation of powers principles; (b) guarantees development of a free democratic society and protection of human rights; and (c) supports effective market relations and private sector development.

2. The Concept Paper covered a broad range of reform actions in the judicial sector, including:

(a) reorganization of the court system in Armenia; (b) reform of the Procuracy; (c) establishment of a new legislative framework for the judiciary; (d) transfer of the correctional and penitentiary institutions from the jurisdiction of the Interior Ministry to the Ministry of Justice; (e) reform of the service responsible for the enforcement of court judgments; (f) reform of the Ministry of Justice; (g) developing a new system ofjudicial training; and (h) launching public education and public awareness campaigns in the area of legal and judicial reform.

3. The Concept Paper has also outlined a phased approach towards implementation of the reform program: the first phase focusing primarily on enacting new legislation, and the second phase - creation of new judicial institutions and reorganization of courts.

4. Since 1997, a considerable progress has already been made in reforming the judicial system of Armenia. First, a number of fundamental laws have been adopted and came into force which provided a legislative framework for the establishment of a new independent judiciary. These laws include the Law on the Council of Justice; the Law on the Judiciary; the Law on Status of Judges; the Law on Procuracy; the Law on Advocacy; the Law on Mediation Courts; the Law on Compulsory Enforcement of Judgements; the 2

Law on the Service for the Compulsory Enforcement of Judgments; the Criminal Procedural Code and Civil Procedural Code. The Law on the Judiciary and the Law on the Status of Judges introduced a life tenure for judges, adopted new principles of appointment, disciplining procedures and removal of judges, provided for the creation of self-governing judicial bodies and secured other important rights and immunities for judges protecting them from undue influence.

5. In accordance with the above laws, a new institutional framework for the judiciary was established:

(a) The Council of Justice (was established pursuant to the Armenian Constitution of 1995) is the body which is entrusted with the appointment and removal of judges and prosecutors, as well as the disciplinary actions against judges and prosecutors. The Council of Justice is headed by the President of Armenia with the Minister of Justice and the Prosecutor General as the two Deputy Chairpersons. It also consists of 14 other members: 9 judges, 2 academics and 3 prosecutors.

(b) A new three layer court system in which the first instance courts of general jurisdiction hear all criminal, economic and criminal cases was created. The three appellate courts - the Court on Civil Cases, the Court on Economic Cases and the Court on Criminal and Military Cases - form the second layer. The highest court within the new system is the Court of Cassation that considers appeals from the courts of the first and second instances. The Court of Cassation consists of two chambers - the Chamber on Criminal and Military Cases and the Chamber on Civil Cases.

(c) Council of Court Chairmenwas established to deal with a wide range of management and supervisory responsibilities, including administration of courts, developing and implementing uniform court administration, personnel, budgeting, case management policies, judicial training, and assessing on an ongoing basis the status of administration of justice in Armenia. Transfer of these functions from the Ministry of Justice to this new body which consists of court chairmen and chaired by the Chief Justice of the Republic of Armenia, demonstrated a true commitment of the Government to promoting independence of the judiciary.

(d) The new Enforcement Department was established under the Ministry of Justice in order to improve enforcement of court decisions. The Department has a staff about 300 people, which includes the central department in Yerevan and the regional branches in marzes. The Government has undertaken a set of serious measures to provide adequate staffing, necessary equipment and support to the new Department. Over the last year, a number of enforced court decisions has already rose sharply.

6. The main challenge over the next few years will be to implement the new laws and strengthen the capacity of newly established institutions.

B. Current Phase of the Reform Program 3

The following key elements constitute the current phase of the judicial reform program in Armenia:

1. New principles and procedures for selection of judges, conducting disciplinary proceedings and removal of judges from the office.

The new procedures have been established in the Law on the Status of Judges. In order to further strengthen independence of judges and transparency in the process of their appointment and approval, the Government recognizes the need to reduce the role of the executive branch in the process of nomination of judges, initiating disciplinary proceedings against them and removal from the office. For this purpose, it is proposed to change the composition of the Council of Justice to ensure fair representation of judges and legal scholars in the Council of Justice and elimination of any supervision/overseeing functions of the Council over courts. The process of conducting qualification exams for judges will also be further improved to ensure full transparency and professionalism.

2. Development of new forms of judicial self-governance.

Institutional strengthening of the Council of Court Chairnen (CCC) is seen as one of the priority measures of the current phase of the judicial reform. In order to fulfill its functions of administration of the judicial system, the CCC and its Administrative Office have to become well-organized, sufficiently staffed and equipped structures.

Another important task of strengthening judicial independence is elimination of influence of prosecutors' offices on courts. The legacy of the past, when prosecutors had the right to overrule judges' decisions, could initiate criminal proceedings against judges without any intervention of judicial bodies, and had numerous other means to effectively influence judges' rulings and actions, has to be overcome. The role of the Prosecutor's Office in civil litigation has already been significantly reduced and will be eventually eliminated. The proposed amendments to the Constitution of 1995 also contemplate elimination of the Prosecutor's Office representation in the Council of Justice. The Law on the Status of Judges provides that judges cannot be arrested or prosecuted without consent of the Council of Justice.

3. Financial independence of courts.

The Government recognizes that the judicial reform program cannot be successfully implemented if the proposed reform measures are not supported by adequate funding. The reform has already introduced some radical changes in the court financing system. Financing of courts is now separated from the Ministry of Justice and law enforcement agencies. Each court has its budget item which is reflected in the budget law. In 1999, the CCC has received exclusive authority to prepare a budgetary proposal for the judiciary and administer the use of budgetary resources. Judges' salaries were increased in 1999.

However, consistent and reliable financing of the judiciary remains to be a problem. Recognizing that the reform efforts might fail if the judiciary continues to face constant budgetary constraints, the Government confirns its commitment to make all 4

possible efforts to ensure sufficient allocations for courts within the state budget which could realistically satisfy growing needs of the judiciary, including upgrading courts infrastructure, provision of necessary equipment, financing maintenance costs, supporting training programs for court personnel, etc.

4. Accessibility to justice.

An important element of the judicial reform program in Armenia is an improved access to justice for all groups of the population. Since living standards of the population have decreased during the transitional period, for many people court fees and high fees for legal services, particularly for private attorneys, became a barrier to use of courts. The Government attaches great importance to ensuring equal access of all citizens to justice, including an establishment of legal aid system in the country. Improvement of public access to justice should also be ensured through improved court facilities; simplified filing and registration of cases procedures; improvement in provisions of legal services; reduction of processing delays; better dissemination of legal information and public education, facilitated access to justice for vulnerable groups, etc.

5. High professionalism of judges and court personnel.

The new judiciary cannot be established without a radical change in the level of professionalism and integrity of judges and other court personnel. A new Judicial Training Center has been established under the auspices of the CCC to provide continued education to judges and court personnel. Development of a comprehensive judicial training program which would become a basis for the work of the Judicial Training Center is of critical importance. The Govermnent also recognizes that primary legal education ( at the university level) needs significant improvement. In this respect, it is equally important to improve and upgrade the curricula and teaching methods and practices in the Law Faculty of the Yerevan State University, as the only state law school in the country, as well as to ensure that newly emerging private law schools provide adequate, i.e. up to the approved standards, education to their graduates.

C. Bank-financed Judicial Reform Project

1. To support the on going judicial reform in the country, the Government of Armenia has requested World Bank's assistance through a stand-alone operation. The preparation of the Judicial Reform Project (hereinafter Project) started in late 1998 and the Project was appraised in May 2000. The Government of Armenia received a PHRD Grant from the Government of Japan which was used for conducting technical studies, analytical assessments, and surveys of public opinion for the preparation of the project.

2. The Project consists of seven components:

(i) Strengthening institutional capacity of the judiciary and increasing efficiency of courts through improved court administration and case management procedures and court automation; 5

(ii) Court infrastructure rehabilitation; (iii) Training of judges and court personnel (particularly, development of an institutional base for continuingjudicial education); (iv) Improving the enforcement of court decisions; (v) Systematization, codification and dissemination of legal information; (vi) Public awareness and public education campaign; and (vii) Project Management.

3. The project enjoys full support of the Government and the President's Office, representatives of the judiciary, law faculty, and legal professionals. The design of the project has been extensively discussed by all the stakeholders and has been prepared-with very active participation of judges.

4. The Ministry of Justice and the CCC will be the two leading entities responsible for project implementation. Project Administration Council (hereinafter PAC) which is now mandated for all World Bank projects has been established. The PAC will be chaired by the Minister of Justice and consist of eight members, including one from the Ministry of Finance and Economy, one from the Prime-Minister's office, the Head of the Enforcement Service, the PIU Director, and three representatives of the judiciary, including the Chairman of the CCC. The PAC will be responsible for policy decision making, monitoring overall implementation of the project, final tender evaluation, and annual planning.

5. The Working Groups, chaired by judges and MOJ officials, will provide specialized/professional input into implementation process of particular components. They will be primarily responsible for drafting and clearing TORs, as well as providing inputs and supervising the work of the consultants. This should ensure full ownership of the Project by the judiciary and the MOJ.

6. A Project Implementation Unit, headed by the Project Director, would be established under the PAC and would be responsible for day to day project management.

D. Other support

1. The Government of Armenia has engaged other international donors in supporting its program for legal and judicial reform:

(a) USAID (through IRIS, AMEX, ABA CEELI, Chemonics) has provided assistance in drafting of commercial legislation (Civil Code, securities legislation, company laws, public procurement, etc.); assistance in drafting of judicial legislation (Laws on Advocates Services, on the Status of Judges); short-term training of judges, court administrators, and procurators; study tours for judges, court and Enforcement Service officials; assistance in the preparation of qualification examinations for judges; continuing legal education for the Yerevan State University Law School faculty; institutional development of the Bar Association and the Armenian Judges Association; assistance to the CCC on court administration and case management. 6

(b) EU-TA CIS has provided grant funding to support and financing for the organization and implementation of a comprehensive judicial training program through the establishment of the Judicial Training Center, development of commentaries, and public awareness.

(c) The Government of Federal Republic of Germany has provided assistance in drafting the legislation on enforcement of court decisions; preparation of a master plan for the enforcement scheme; assistance to the newly created CCC; provision of equipment to the Appellate Court on Economic Cases.

(d) Soros Foundation (Open Society Institute, COLPI) has supported publication of new textbooks for the Yerevan State University Law School; training of court administrators; provision ofpro bono advocacy and other legal services.

(e) The UK Department for International Development is providing support for provision of pro bono advocacy and other legal services.

The Bank-financed Judicial Reform Project has been designed in close cooperation with the above donor organizations, in order to maximize the use of donor funds for implementation of core reform measures. Annex 3: Estimated Project Costs ARMENIA: Judicial Reform Project

Local Foreign Total Projet CostBy Component US $million US $million US$mihon A. Judicial Governance 0.06 2.40 2.46 B. Infrastructure Rehabilitation 2.90 2.10 5.00 C. Judicial Training 0.10 0.40 0.50 D. Improving Enforcement of Court Decisions 0.05 0.50 0.55 E. Legal Information 0.00 0.64 0.64 F. Public Awareness Campaign 0.24 0.47 0.71 G. Project Management (PIU) 0.40 0.15 0.55 Total BaselineCost 3.75 6.66 10.41 PhysicalContingencies 0.00 PriceContingencies 0.15 0.84 0.99 Total ProjectCosts 3.90 7.50 11.40 Total FinancingRequired 3.90 7.50 11.40

-46 - Annex 4 ARMENIA: Judicial Reform Project NOTAPPLICABLE

-47 - Annex 5: Financial Summary ARMENIA: Judicial Reform Project Years Ending 12131

Year I Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total Financing Required Project Costs InvestmentCosts 0.0 0.0 0.0 0.0 0.0 0.0 0.0 RecurrentCosts 0.0 0.1 0.2 0.2 0.2 0.0 0.0 Total Project Costs 0.0 0.1 0.2 0.2 0.2 0.0 0.0 Total Financing 0.0 0.1 0.2 0.2 0.2 0.0 0.0 Financing IBRD/IDA 0.0 1.8 2.2 3.8 3.5 0.0 0.0 Government 0.2 0.1 0.1 0.1 0.1 0.0 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 UserFees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 0.2 1.9 2.3 3.9 3.6 0.0 0.0

Main assumptions:

-48 - Annex 6: Procurement and DisbursementArrangements ARMENIA: Judicial Reform Project

Procurement

Civil works and goods under IDA-financed components shall be procured in accordance with the Bank's Guidelines: "Procurementunder IBRD Loans and IDA Credits",dated January 1995, revised in January and August 1996, September 1997 and January 1999. Consultants' Services financed from the proceeds of the credit shall be procured in accordance with the Bank's Guidelines: "Selection and Employment of Consultants by World Bank Borrowers", dated January 1997, revised September 1997 and January 1999. The World Bank's Standard Bidding Documents and StandardRequest for Proposal will be used. A project launch workshop will be held in November 2000.

1. Civil Works Civil works for two of the pilot courthouses (Yerevan Appeals Court and Giumri) estimated to cost US$600,000 equivalent or more will be procured using International Competitive Bidding (ICB). The approximate aggregate amount is US$1.35 million. National Competitive Bidding (NCB) will be used for the remainder of the courthouse infrastructurerehabilitation, estimated to cost less than US$600,000 up to an aggregate amount of US$2.94 million. Four of the eleven NCB procurements will be comprised of lots in order to capitalize on timing and geographic proximity. Since there are no large or complex work contracts in this project the qualificationmethod will be post qualification.

2. Goods Goods (approximatelyUS$2.7 million) consisting of courtroom and office fumiture, computer and office equipment,as well as training materials and supplies will be grouped to the extent possible and considering project objectives, in package sizes that will encourage competitive bidding. The following methods of procurement will be followed:

(i) International Competitive Bidding (ICB) procedures will be used for contracts above $100,000 equivalent for a total amount of approximatelyUS$2,189,000 million.

(ii) International Shopping (IS) procedures will be used for the procurement of courtroom and office furniture equipment and software for an aggregate amount of approximately US$407,000. The PIU will obtain at least three quotations from two different countries.

(iii) National Shopping (NS). These procedures, by obtaining at least three quotations from national firms, will be used for contracts estimated to cost less than US$50,000 equivalent up to an aggregate amount of approximately US$126,000.

3. Selection Proceduresfor ConsultingServices Contracts for Consulting Services and Training (including study tours) will be packaged to combine related skills and services, in order to make them attractive and increase competition as well as to reduce the number of contracts to be managed by the PIU. The following methods of procurement will be followed:

(i) Quality and Cost-Based Selection (QCBS) procedures will be used for contracting consultant services relating to design and technical specification preparation for pilot courthouses, design and implementation of a new court administration system and large assignments related to the public awareness. Approximateaggregate amount US$2.14 million equivalent.

-49 - (ii) Consultant Qualification (CQ) (below US$100,000) procedures will be used for contracting services related mostly to the infrastructurerehabilitation component (expertise, design and technical specifications) and also for development of legal brochures and radio program production and assistance in curiculum development and training in computers and financial systems and legal informationcomponents. Approximateaggregate amount US$1.27 million equivalent.

(iii) Individual Consultants (IC) will be hired in accordance with Section V of the Guidelines. Individual consultants will be used for specialized technical assistance in legal drafting, construction supervision, and other small assignments. Consultants will be selected based on individual's qualifications and with the Bank's prior approval. Approximate aggregate amount US$150,000 equivalent.

(iv) Least-Cost Selection is envisioned for only one package for international construction supervision for all the courts. The value of the contract is approximatelyUS$210,000.

(v) Two Architectural Design Competitions will be held for the "Center" and "Giumri" courthouses owing to the fact that they are in historic locations and of great importance. It has been agreed that the Bank would review the RFP's used for conducting both design competitions to bring them in line with the principles of the Bank Guidelines and with widely used procedures for architectural design competitions by such institutions as the ALAand UNESCO. It has been agreed that the Bank would pay the prize money of the winning architectural firm. The Government will be responsible for funding any other costs that may be associatedwith organizingthe competition

4. IncrementalOperating Costs The PIU staff salaries, office materials and supplies, communication and fuel expenses will be financed under the Credit for the duration of the project (US$530,250) while office space will be provided by the Government as a contribution to overall operating expenses.

5. Notificationof Business Opportunities A General Procurement Notice (GPN) will be published in Development Business by October 31, 2000 at the latest and will be annually updated. For large-value consultant contracts, invitation for bids will be advertised in DevelopmentBusiness and a national newspaper, and in the case of NCB procurements, in a major local newspaper.

Procurementmethods (Table A)

TableA: ProjectCosts by ProcurementArrangements (US$million equivalent)

ProcurementMethod_ ExpenditureCategory ICBCB B Mehd N.B.F. TotalCost

1. Works 1.49 3.27 0.00 0.00 4.76 (1.35) (2.94) (0.00) (0.00) (4.29) 2. Goods 2.20 0.00 0.53 0.32 3.05 (2.20) (0.00) (0.52) (0.00) (2.72)

- 50 - 3. Services 0.00 0.00 3.86 0.00 3.86 ______(0.00) (0.00) (3.86) (0.00) (3.86) 4. ProjectManagement 0.00 0.00 0.53 0.00 0.53 (0.00) (0.00) (0.53) (0.00) (0.53) Total 3.69 3.27 4.92 0.32 12.20 (3.55) (2.94) (4.91) (0.00) (11.40) Figuresin parenthesisare the amountsto be financedby the IDA Credit. All costs includecontingencies

2 Includescivil works and goodsto be procuredthrough national competitive bidding and international and nationalshopping; consulting services, training and studytours to be contractedthrough selection proceduresof QCBS,CQ, LC, and IC; and incrementaloperating costs related to managingthe project, includingPlU staff salaries,office supplies, communication costs and office maintenanceand utilities.

- 51 - Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent)

Consultant Selection Method Services Expenditure QcS Q8S SF8 LCS Co Other N.B.F. Total Cost* Category .______A. Firms 2.14 0.00 0.00 0.21 1.26 0.00 0.00 3.61 (2.14) (0.00) (0.00) (0.21) (1.26) (0.00) (0.00) (3.61) B. Individuals 0.00 0.00 0.00 0.00 0.00 0.25 0.00 0.25

_ (0.00) (0.00) (0.00) (0.00) (0.00) (0.25) (0.00) (0.25) Total 2.14 0.00 0.00 0.21 1.26 0.25 0.00 3.86 (2.14) (0.00) (0.00) (0.21) (1.26) (0.25) (0.00) (3.86) 1\ Including contingencies

Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc.

N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Credit.

- 52 - Prior reviewthresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review

Contract V:lue 'Cftrat Suet Wto Threshold ~~Procuremenit PriorRevIw Expenditure Category ( tonds) Methodl (U$$ Smilions) 1. Works > 600,000 ICB All / $1.34 <600,000 NCB First 2 contracts / $0.75 2. Goods > 100,000 ICB All / $2.18 <100,000 IS First Two <50,000 NS None 3. Services Firms QCBS/LCS >$100,000/$2.14 Firms CQ TOR only

Individuals Section V. TOR only

Total value of contracts subject to prior review: $5,259,375

Overall Procurement Risk Assessment

High

Frequency of procurement supervision missions proposed: One every 3 months (includes special procurement supervision for post-review/audits)

- 53 - ARMENIA JUDICLL REFORM PROJECT Procurement Capacity Assessment Summary of Findings and Actions

-Asses . . .ti-

Item Assessed Null Po PFair i .i W Av Hij E d D (a) Legal

A spects I ______(i) Laws & X The new draft X Bank Review of the Under review. Regulations Procurement Law new draft CPAR in (which has passed Procurement Law 2001. the first reading by and Parliament) omits recommendations for the inclusion of appropriate appropriate amendments; full mechanisms for CPAR complaint resolution. (ii) NCB X No standard bidding X These deficiencies Under review. Procedures documents; no clear can be addressed qualification through amendments criteria; no clear to the new draft guidance on the Procurement law amount of bid and which is currently performance with Armenian securities. Lack of Parliament. understanding of For Bank-financed Conflict of Interest projects, the PIU will aspects use the ECA Region's sample NCB bidding documents and evaluation report ______formats. (iii) Intemal X The Project X The Operational By effective- codes and Operational Manual Manual will be ness. manuals will include a Code reviewed by the of Ethics and other Bank and comments regulations on incorporated into the conduct of final version.

______employees. (b) Proc. Cycle Mgmt. (i) General X X handling (ii) X X The PIU will follow Procurement the Procurement Plan planning agreed at Appraisal (May 2000) and will also prepare detailed action plans for each procurement ______package.

-54 - (ii) Legal _X Sincethe PIUwill X assistance be underthe auspicesof the Ministryof Justice,it will have accessto legal advice. (iii) Technical X X and administrative controls ______(iv) Codeof X A Codeof Ethics X The PIU will By ethics will be includedin preparea Codeof Effective- the Operational Ethicsfor its staff. ness. Manual.

(v) Anti- X Neitherthe current X Sameremarks as See corruption Procurement for public comments initiatives Decreenor the procurement against new draft againstitem (iv) item l.a ProcurementLaw above. above. containany provisionson anti- corruptionaspects. (e) Record keeping (i) Public X X notices (ii) Bidding X X documents (iii) Bid X X opening information (iv) Bid X X evaluation reports (v) Formal X X appealsand outcomes (vi) Signed X X contract documents (vii)Claims X X and dispute resolution records (viii) - X X Comprehensive disbursement data _

- 55 - ItemAssessed Null Poor 1Aair Mj 1 . k . A. i .

(1) Staffing X X If needed as project As needed. undergoes implementation, add one more qualified and experienced Procurement Specialist and provide training (g) General X X Procurement Environment (i) Promoting a X The existing X Make specific Same culture of legislation and the provisions regarding remarks as accountability new draft accountability in the against Procurement Law new draft item a.I do not contain any Procurement Law above. specific provisions on accountability of individuals for procurement .______decisions. (ii) Reputation X No procurement X of procurement corps exists in corps Armenia. (iii) Salary X PIU salary X Armenia should This is a structure structures are initiate steps to long term mandated by the create a program. Government and procurement cadre However are non- under the civil the training competitive with service; initiate of procure- the private sector. training courses in ment staff It is difficult to international in the Govt. recruit and keep procurement at the Ministries capable staff. national universities and Depart- and also prepare a ments training program for could be existing undertaken procurement staff in immediate- various ministries. Iv (iv) Freedom X The proposed X Introduce conflict of from political Judicial Reform interest laws and interference Project is a very ethical standards for political, high public service. visibility project Strictly follow all and many parties World Bank will be interested Guidelines related in using the project to procurement. for their own ______._ _ purposes.

- 56 - tetoor Assessed Nullltar Nhit M*WC1k.S..., ;w Ave. A P sd

(v) Existence of X Capable X See remarks against Same experienced individuals are item (iii) above remarks as and capable choosing against staff employment in the item (iii) private sector due above to the lack of an interesting remuneration package offered by PIUs. (vi) Clear X X written standards and delegation of authority (vii) Sound X Generally Armenia X Financial 1999-2000 budget/ still follows the management financial FSU financial specialists should systems structure and review the system practices which are and suggest not acceptable financial reforms. under Bank projects.. The PIU is however required to follow the financial and accounting requirements of the Bank for Bank- financed projects. (h) Private X Sector Assessment (i) General X X There is a general efficiency and lack of management predictability skills in engineering consulting industry. (ii) X X Transparency (iii) Quality of X X contract mgmt. (iv) General X X reputation

- 57 - Prior Review Thresholds Proposed for Normal Investment Projects Overall Risk Assessment Goods US$ Above $100,000(equivalent) Aveage Works US$ Above $600,000(equivalent) High X Consulting Above $100,000 for firms and US $50,000 for individuals Low (equivalent) Post Review Ratio: One in five contracts Frequency of procurement supervision missions proposed: Once every 3 Form prepared by: FrancesRosenthal, months. The supervision missions should include a procurement specialist Operations Analyst, LEGLR especially during the first two years of the Judicial Refonn Project Signature: signed by Els Hinderdael, Senior implementation. The procurement specialist should conduct thorough ex-post Procurement Specialist, ECSIN/PAS Accredited reviews and should continue providing guidance and support to the procurement Staff Assigned to the project unit in the PIU. The PIU plans to establish a computerized project procurement Date: June 12, 2000 system. Comments: See General Infornation and Summary

6. Action Plan for Strengthening Agency's Capacity to Implement Project Procurement

Based on the analysis of both the agency's procurement capacity and the information gathered, the following recommendations are made to continue improving their capacity to undertake procurement:

(i) Procurement Specialist - the individual who is already hired by the PIU has undergone training on goods procurement in Turin, Italy, and has attended the World Bank Procurement Seminar in Yerevan. However, he still requires additional training in civil works which will be a priority as soon as the project becomes effective.

(ii) Additional Procurement Specialist: The PIU may appoint an additional procurement specialist if warranted by the volume of work. The procurement specialist should be thoroughly familiar with the Bank's Procurement Guidelines and procedures and should preferably have 2-3 years experience in Bank-financed procurement, especially in civil works of similar nature, and consulting services.

(iii) Procurement Training of Existing Staff: The Procurement Unit has a Technical Specialist (Architect) who should be provided basic procurement related training to assist in the increased volume of procurement activities related to the Judicial Reform Project as well as in the long term interests of the PIU.

(iv) Project Launch Workshop: The project launch workshop for the new project should be conducted before project effectiveness.

(v) As a first task, have the PIU prepare the Operational Manual.

Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance.

- 58 - Disbursement

Allocationof creditproceeds (Table C)

Table C: Allocation of Credit Proceeds

Expenditure Cateory AmrountriinUS$million FinancingPercentgle Civil Works 4.29 90% Goods 2.72 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 90% of expendituresof other items procured locally

Consultant Services and training 3.86 100% including study tours and workshops Incremental Operating Cost of the 0.53 100% PIU, including audit costs

Total Project Costs 11.40

Total 11.40

Use of statements of expenditures (SOEs): Project funds will be initially disbursed under the Bank's establishedprocedures, including Statementsof Expenditure (SOEs). A move to PMR-based disbursementswill be made at the mutual agreement of the Government and the Bank, and will be considered once the PIU is familiar with the project's monitoring aspects and is considered able to produce sufficientlytimely and reliable project managementinformation. A change to PMR-based disbursementswill be considered by September 30, 2002 (the project's mid-term review).

Withdrawal applicationswould be fully documented, except for expendituresunder: (a) civil works under contracts not exceeding US$600,000equivalent; (b) goods under contracts not exceeding US$100,000equivalent; (c) services of consulting firms under contracts not exceeding US$100,000 equivalent; (d) services of individual consultantsunder contracts not exceeding $50,000 equivalent; (e) training (f) operating costs of the PIU.

Documentation supporting the SOEs will be retained by the PIU and will be made available for review by Bank supervision missions and auditors.

Special account: To expedite disbursements, the Borrower would establish, maintain and operate, under terms and conditions acceptable to IDA, a Special Account for the PIU, in US Dollars, in a commercial bank acceptable to IDA. Arrangements for the opening of the Special Account have been discussed with the Borrower during Negotiations. Payment of eligible expenditures (civil works, goods, services, operating costs and the refinancing of the PPF) may be made by the PIU out of the Special Account. The authorized allocation is $500,000. The initial deposit into the Special Account will be $350,000, until the aggregate

- 59 - amount of withdrawals from the Credit Account plus the total amount of all outstanding special commitments entered into by IDA shall be equal to or exceed the equivalent of US$2.0 million. The Special Account would be replenished at least on a quarterly basis or when the undisbursed balance falls below an amount equal to 50 percent or less of the initial deposit, whichever occurs first. Replenishment applications will be submitted on a monthly basis and will be accompanied by full documentation, including monthly bank statements of the Special Account, for all items except those eligible for disbursement on the basis of SOEs. These applicationswould be fully documented, except in the case where disbursements on the basis of Statements of Expenditure (SOEs) or Project Management Reports (PMRs) are permitted, and would be supported by a reconciliation statement and bank statements.All other applications for direct payment or issuance of Special Commitments must be for an amount not less than 20 percent of the Special Account allocation.

The PIU will also open a project account into which a share of the Government's contributions will be deposited every year. An initial deposit of the Government's counterpart funds in the amount of US$ 75,000 will be made on January 31, 2001. Thereafter, the amount deposited by the Government shall not be less than US$ 75,000 for each semi-annualperiod. This amount shall be deposited no later than June 15 and December 15 of each year.

Project FinancialManagement

Financial Management; Responsibilityfor financial managementof the project will rest with the newly created Project ImplementationUnit (PIU). A financial managementspecialist (accountant) is employed by the PIU. During Negotiations, a time-bound financialmanagement action plan was agreed to remedy existing deficiencies. More informationon the project's financial management arrangementsand the project's flow of funds is found in the Project Operational Manual (POM).

Financial Management Capacity - Financial Management Risks: The financialmanagement capacity withinArmenia has not been the subject of a detailed review by the Association. Any weaknessesthat may exist in the country's financialmanagement capacity have been mitigated by the use of a specializedProject ImplementingUnit (PIU), for project preparation and implementation,and drawing upon experience of projects of this nature. The main risks related to the project's financialmanagement system are as follows:

(i) Capacityof staff in the PIU. The PIU currently employs a full-time financial management specialist whose responsibilities include maintaining accounts for the project preparation grant, project accounting, internal controls and financial reporting. The PIU accounting staff will be further trained, as needed, and this training will be provided as a part of the technical assistance for the project.

(ii) Capacity of accounting system to generate the agreed Project Management Reports (PMRs). The PIU is using an accounting software which capable of generatingthe agreed PMRs. The PIU will hire consultants as required to ensure that the PMRs will be produced starting from the period ending on March 1, 2002.

(iii) Banking Arrangements/ Special Account (SA). The PIU will open and maintain a Special Account (SA) in a commercial bank, acceptable to the Association, as well as a transit account in a local commercialbank. In addition, the PIU will open an account in a local bank, where the Government's contributionwill be deposited. These accountswill be managed by the PIU. The total amount held in the transit account will be limited to the equivalent of $5,000. The SA and transit accounts will be audited annually and the results made available to the Bank.

- 60 - The Bank will give special attention to the project financialmanagement risks. The risks will be subject to a rigorous follow-up during the supervisionmissions.

Project Management Reports (PMRs): Management-orientedPMRs will be used for project monitoring and supervision. The formats of the PMRs (Cash Model) were agreed during Negotiations and are included in the Operational Manual. The PIU will produce a full set of PMRs for every calendar quarter throughout the life of the project beginning with the period ending on March 1, 2002. However, the PMvRs showing the project's sources and uses of funds (PMR 1A) and the project's Special Account Statement (PMR 1E) will be produced from project effectivenessand the four procurement management reports (PMRs 3A, 3B, 3C and 3D) will be produced within six months of project effectiveness.

Disbursements: Project funds will be initially disbursedunder the Association's established procedures, including Statements of Expenditure (SOEs). A move to PMR-based disbursements will be made at the mutual agreementof the Government and the Association and will be considered once the PIU is familiar with the project's monitoring aspects and is considered able to produce sufficientlytimely and reliable project managementinformation. A change to PMR-based disbursements will be considered by September 30, 2002 (the project's mid-term review).

Audit Arrangements: External audits by independent private auditors acceptable to the Association and on terms of reference acceptable to the Association will be procuredby the PIU through Least-Cost Selection. Annual audited financial statementsof the Project will be provided to the Bank within 6 months after the end of each fiscal year and also at the closing of the project. The contract for the audit will be extended from year-to-year with the same auditor, subject to satisfactory performance. The cost of the audit will be financed from the proceeds of the Credit an incremental operating cost.

- 61 - Procurement Plan______

PI,OT COURSTS 3aS-50,1 D.02(002 Rd,Oka,fApp.0 -ofY -oo, I cm) ICB F0i. I 57i 650,370 15,A7.01 154 -01 15-Moy-O130.26-00 31Jol I 31-Ag-01 I5.0oy131

Rd326ofApp11( ,2Coot fo (20 1cmo 8975

SiN I,ooo Coo ofMgM~-26001Io,os81o (digo do) I CW52 NCB P500 27SD 310,550 I-N-NO0 I 1D-0 I-.13-CO 15-2.01 15-100.01 15-M-k-Os31-M.-t 15I-AP-OI O~0 C-OS(Ho I (7(3 NCB 15- 1 2W5,I0 32775 1 Os.-ES a 26.05 5W-0I 15-Pds-015I-Mb-OS I5-Ap,-01 30.04005 15-MoOI N-v2001 Los 5-Is Fos Im-~s (5-so- VOSOS0 p20 Cos -0745N CoNMsoiloC - - Yoroo 2 IWO NCB P-0 I I 250,000 287,500 I1J0.11 I-Fds.I 1.5000 15-M.fra 5-A040a 15-Moy-Ol31-M501"I-JoDol 5- 3Osko1- F17-Sh-oos Cool- G-, CoosH00 2 CV5 ICB P-o I 600,00 60000 .5,0001 1 OP-OS 15-Ap-01 31-M*1I 3W01bO 31-181-015 15-MoOs-y-l Ap,2003

NON-PILOTCOURTS 15-20-11 25-05,0 Ao-2901 IsO fio0s Coo.fl . "As8NO-Nsk C(0oo03i. - Y-sss (d.-igs d-5) I (V/b NCB Pr,- I 300 345,00 15.5,03 13-Od-00 15.00.0 30.N-00, 31-D.03 31-18-11

I CW71 NCR P00. I 350,0100 40200 15.Ocs-EO15-Nw-EO 1S.,b-N-O 31-Oso-E 31 1-01 28-03,01 15-5,0001 314A-2,5- 505.2001

4~~~s,5,i 04000kMOO13001 Coo, o~~~~00Coo(- lAos, __LI'I___0_00

N-ov.0 Coi Ms F/s h-oos Coos -&0oNs'o CIoo hoso I (75- NCB P00 I 600,00 06900015-1 00-E15-Oso-l 15-D-ME 31-J.001 28-k"t-0 31-M.-Ol S 13-A0o 30-AOp,-Il

15-1-ssE 30-0010 13-2001 ,-MoM10 FOsSh(,oosOCh -5S- Coo H.-h 2 00( NCR P58 5 92,00 155-1001 15-5005,155-00.05 314A-1,0- 30.Ap0-OS 31-Moy-01

2 CWOI NCR P00 1 230,00 264,0D0 M5-PR"! 31-M.5-01 31-M.5-OS 15-Moy01 155-20001 15-Ju-l.01 31-W]-O 15-A.00I Sp,-2R5

A0-- NbOlAo 0000- Coo - A.o,io Coo HMooIsMOO 15,D

5- 2 CWII NCR 000 250,000 207,500 1 Op-OS 15-M,oy01 1S5-M~0 30-los-0S 31-J61-01 35-0510 153.50, 30-So Apo-32D02 Rd.boSiho0-ofCuo-s CooS0.00 80 I-o 1,000Cm,doESSI-g'0 150(OuyOfYOL2.050 27,D

3 CW,8-1 NCR P00 I 400, OP I3SJs-US 15-500-M1 15-000 314-NbS 30-Ap-0C23I-M.s-112 15-100-11 3W-()sl APo-20032 Fi-boSosCos -. A,sokooSD2600CooNouO fY -oo LaSI 58030 23Q0300 F/so kNoosoCosos losoonO(A.-2650081K Cooosoosos ~~~~ ~~Los2200,500 230-307

T-osOFsohs,,ao Coos-5 I soS b-OsH 3 CW13 NCR Ps. I 83000 92,000 15-Nb-O2 15-Ap,-12 15-AI,-OS 31-My.y-O 30A-0,o12 31-J.1-012 15,-A,1 31A-Ao11 M.y-200 SUBTOTALNON-PILO COURS 1,750,000 2,012,500 1532TALALL SNIRASTRUSCI7JRKFSAR0LTTAflON: 3,732400 4.2M237

15-5.-01 1A -15 2001 (lR.)Oir-RFosiso, 5-o psl Pa. Coo s)boloos 1.05,030) 3 1S PM-s I 5(1000 551000 I 3(I30.0 30-00-E 30-IJsoE 304.-01 55-505,0 OIR)OIRdo F-odo fiCF300hW8.oPfiN Cos b, I.Jodo081h55 3 1s 15(0 I 50.0( 55,301 -10 14 -Jul-03 15-261-0 15- N/A 1~5- 13-1W130-31-130-3 Fd~050- NVA I5-0.y0 15(260-O2 31-00-03 D-203 /3R) J00ls doslo .si d-o 21100h) 2 70 550 45400 49,5W0 ij,-.M0 I.26412 15-26403 15-5.50 15-So'0 15-00, 35-0,0 1s-2102 OIR)Cosoos roso fo P6 Coos 3 IS 05-S 1 05,53W 00450 1-1,m0 IW-MuE 15-M6-1131&tW N/A 15-00-OS 31--0 F8s20 111R)O0ss F50iso- fi P1ooColo (Neqos &Ms osSo bosulo 2 50/ 154 5 45.00 49.503 1.2s.0 I-265-O 1s-A.l-O S -A..- N/A l5-Sq-0 30Ss 5-13,.11544PO,-2(004 (SRI 0ssio ,,J-psoO OCoosSooo , 545500/0. 3 1(33 P-dos S 410,000 I-Ap-ES 15-N*-ES 31-MopES, 15-38103 15-AWT03 (PA) F03los OfI7SICoo10lS. 401156108o I 34q505 1 40000 4,4X N/A N/A N/A I N/A N/A N/A N/A N/VA N/A (JG) rF a0pooo .iN OS.wooSo AosooOf/20p4P. )- is Pd.s- I 0 0 599000 1I-MOS 15-03001 15.500301 ,,0 15-1*-os15-6 30.26-011 31-265-01 00-2001 1D05 sOsoooOosf. 4 -u g-9 y,ss.ho 3 ICR 55-os I 5(1140 9910500 I-Mb-oS 15-Op41 I-ooO 15-A 26.2 15-261-02 15-A..o.0 31-Aug-S 15-Sq,-0 /1)MrrFq04o,oho 5- 3 n03A.50Oisf0u,. &*,oboSosio I ICR P551 I 3110-0 33(103 1-N-00-E 15--13/E 104so.0 55-50,0 15-5-0-01 15-Aq.-01 3)-ApWI 5 sN-S Sop.S (11 -t A uo- oo kofoid ksg.108 Obsov,s&co.0 3 CRI P5-o I 250,OO 575,00(0 I-M,00.3 15-Ap-OS 15fpl I 5-Jsp03 15h-3803 55-Ag5003 31A0g03 1-,03i5S .o-2034 5000-004 (LI)Eloss O26i.s -3 IS 152 I 91/103 950.00 1-0.03 1-W01E I55-26-E 15,-AqoE N/A 1-50-315- 0003 31 -03.0 F20,5304 1110)551.-50t .0 115,50 So 15 2 Oil Ps/so 1 16 1764500 30.API-42 30-0*O 15-2.0 15-Au0 305-40 31-6002 15-SOs-2S 35/Mo-02 j(IOWo0010s.-PP0 I 71 500 I 77000 7,700 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A I(p T0osOS5oPPF I 00 003 2 M0OW 11050 N/ NAI NA - N/A N/A N/A l(ORsoOss -NPF I 00 05 I 3,000 3,30 N/A N/A N/A N/A N/A N/A N-A N/ NA TOTAl. 02,075,500~~~~~~~~~~~~~~Z112,750,50_ _

- 62- (JR)Intemssun tmInsEfhtoprepare technircal desig gud, I Cl CQ TO cny I 35,00 36,750 l ~ 15-Sep-0 15-Oct02 N/A 31-Oct02 30-Noo-00 15-Dec-00 Mar-2001

(ER)Degi adtechnical seficaono for5pilot courts IC2 QB io 124000_1_-0 1-JIn-0l ISe 0 31-Oct01 15-Dec-01 15-Jan-02 15-Feb-02 20-Feb-02 Ag20

(IR)Arciuncs to prepareTORs for 2desigp comopetitions IC IC TRol 2 00 _____ I-ug0 N/A NA NSA N/A N/A I -pW 1-e- Dec=2500 OReincomop finaldesgn and techspecs for Gytomn C4 DesignC' Prior 1 69/00 72,450 nio coo I__ ___ 1-Aug-00 I SeM 15-Sep-02 31-Oct-02 N/A 15-Nov-02 15-Dec-00 28-De-00 Mar-2001 OIR)Design corap. fina designand techspecs for Center Pilot coon I C5 Dei CITR l 29,000 30,450 I 1eW-Oct-00 15-Oct02 30-Nov-02, N/-A 15-Dec-0 15-Jan-01 28-Jan-01 Mar-2001 OIR)Design and itechticalspecifications for anon-pilot coarnsinoErebent,Sepaoanan d Ashnok I IC6. C TORol 1 3 34,650 1-Oct-02 1-Nnv-00 15-Nov-02 31-Dec-02 N/A 15-Feb-01 15-Mar-0l 31-Mar-0l Ma-20

OIR)Design and technical specifications for nonv-pilot comins Sevan,Artashat, MassisanddcEiesiadzin 1IC71 CQ TOR Iry 25,000 26,250 1-Nov-02 1-Dec-0 15-Dec-02 31-Jan-01 N/A 15-Mar-0l15I-A -01l ApIL Jan-2001 (IR) Designaid SElncal specificaotisufor rai-priot coorts.Cassain. Shengait,Ajapnyak Arabkwi and ___e__a____ I C8ICS I OR 2& 1 6052 63,000 1-Dec-0 I-Jarn-01 15-Jan-01 31-Jan-01, N/A 15Apr-1 15-M4y-l 1 Mz-0 Jal-2001 2 (ER)Expertise for pilotcourts 2 CS1 C8Q I TR10 1 23,310 24,476 I-MWy0 1-Jun-2 15-Jan-02 30-Jun-02 N/A 15-May-02 15-Jan-02 30-Jan-02 Sp20022 ()Expesise for ann-pilotcoasrs 21CIOI CQ IT-OR I 12,390 13,010 1-Jan-0 1-Jul-02 15-Jul-02 31-Jul-02 N/A 15-Aug-02 31-Aug-02 Oct-2002

(1R)l[ntemaOnmaConsxdonosupervision for allcourr 3 CIII CC TO Il 202,000 210,000 Iep-3 1-Oct-03 15-Oct-03- 31-Oct03 30-Nov-03 I5-Dec-03 15-Jan-Oil 15-Feb04 Aug-2024 SUBTCYTALMINFASfRLUCrUE REHIAB SERVICE61R01 62

(IG)Design and insplonenidn of new cosTts admintsrhaonosysets I C121 QCB20 Prior I 502,502 525,000 1-Jan-01 1-Feb-01 15-Feb-01 15-Mar-01, 5-Apr,01 31ApO 15-May-0131-May4J1 Aug-2002

publicasignof financialmgmtPoca d m ing co 2 C131 1,62S PMn I 135200 141,750 1-Jan-2 1-Feb-02 15-Feb-02 15-Mar-0231-Mar-02 . 5Ap~ 15-May-0231AW0 Nov-2002 (JO)TA for legaldrafling 2 C14 IC Fast I 50,502 -52,502 1-art-02 1-Feb-02 -15-Feb-02 15-Mar-02 N/A 15Ar0 15-May-0231MW0 Sep.2022 (JG) Datacollection, establishment of-Slatisaics Office and naising 2 CI5 -CB Fria I 15Z,201 150,602 1-Jan-,02 1-Feb-02 15-Feb-02 15-Mar-02 31-Mar-02 15 1prMay-02y- (JO)Assisoance fin developing sew canemanagement procedures& org. IC1C CBS Fr-a I 370,020 388,30211-Jan-01 1-Feb-01 15-Fe01 15-Mar-01 31-Mar-01 15-Apr-Ol115-May-01 31-May-01 Ma-20 11G)Assessmenetof scof technologyinconets 3 C17 IC TRcd 1 15,503 15,750 I-Jan-03 I-Feb-O 15-Feb-05 15-Mar-O3 N/A 15-Apr-S 1-a-03 31-May-03 Sep-2003 SUBTOTAL.JUDICSALGOVERNANCE SERVICER $I,22001 $8W,2000

(ES)Org. developmentof tIreEnoforcemenet Seivic, inxL PRoffice & tg. I CIC 181 2BS5 T-O ony 110,000 115,502 1-Jan-01 1-Feb-01 15-Feb-01 -31-Mar-01 N/A 1 5ArO 15-Ma-0l 3-ay-01 Nov-2001 (ES)Development of caseprocessing techniques, statisticsand mgnrl 21 C19 CQ TO l 1 60,000 63,000 I-Fd-0I 1-Mar-01 15-Mar-01 30-Apr-01 N/A 15My0 31-4ay-01 15-Jan-01 Dec-2001 0 - (ES)Adviory scdistosupyportdraffig 2 020 IC TO ol 1 25,000 26,250 1-Mar-01 I-A-01 15-Ap-01 31-May-01 N/A 15-Jun-01 3 Jtn-0 15-Jul-01 Sep.2001 SUBTUrALEN'kORCElsIlTSERVCEE

SERVICES. $19,0 $30,780 ___ __

(A)Corrununicaotionconsudtant:and -am I C21 QCS Pfier I 175,000 183,750 I-Apr-01 I-May-01 15-5la-01 30-Jan-0 N/A 15-Jul-01 31-Jul-01 15-Aug-01 Aug-2002 (PA)TV pg producrion 2C022 CB Prior 1 320,030 336,030 I-Ap-01 1 L-01 154 -01 30-Jan-01 31-J"l-0 15-Jul-01 31-Jul-01 15-Aagk01 Aug-2004 (PA) Radio iren 2C0231 C Post I 35,020 36,750 1-Mar-01 I1-Ap-01 15-Apr-01 31-May-01 N/A 15-Jun-01 30-Jian-0l 15-Jul-01 Jul-2004 (PA) Developmentof legalblonuelsamnd banks an legal issoesdi printing I0241 C Post 1 30,003 31,500 1-Jan-01 1-Jul-01 15-Jul-01 31-Jul-01 N/A 31Ag0 15S" 3aep0 Se20022 (PA) PsdilicOpotma research -judcial sirvey _ IC251 C Faos 2 403000 42,030 1-Jul-01 I-Aug-01 15-Aug-01 31-Aug-01 N/A 3-e01 15-Oct-01 31-Oct01 Oct-2024

SUBTOALPUBLC AWARENEE% SERVICES: - 8$M",Xt __

(LI) Devrnelopetofaoncept IC026 QCB0S Friar 1 -50,002 52,502 1-Mar-01 I-Apr-01 15-Apr-01 4,WJ0 30-Jan-0l 15-Jul-0 31-Jul-0l 15-Jul-01 Aug-2003

(U)Developmentofa classificatoc/systemataizahlo IC0271 FCSrior I 80(830 84,000 I-Apr-01 1-May-01 15-ay-01 30-Jan-01 31-Jul-01 15-Jul-01 31-JulIl 15-ALag-01 a-22 (Lo Developmentsofasanlware 1_028 QCBS Prior I 9502, 8925 lAMay~011-Ja-01 15-Jai-01 30-Jiur,01 N/A 15-My-0 15-Jan-01 30-Jun-01 Jul-2001 (Lt)Irnplernentatin 1_029 IQCBS Prior I 05,200 8925 1-Feb-02 1 -Mar-02 15-Mar-02 15-Apr-01 15-Mvay-0215-Juan-0 15-Jul-02 31-Jul-02 Jan-2023

SJUTOTALLEGAL MINOMAtIONSERVICES.R1,0

(FTC)Anssisance in canficulsurdevelopment 2C030 QCBS Pcn 2 1510200 157,50 1-Feb-02 1-Mar-02 15-Mr0 5-Apr-01 I--ay0 15-Jan-,02 15-Jul-02 31-Jul-02 Jan-2023 (ITC)Asnsncc in developmsentofJTC 2C31 CO post I 102,00 102,00 1-Feb0 I-Mar-02 15-Mar-02 15-Apr-01 15-May-02 15-Juns-0 15-Jufl-02 31-Jul-02 Jan-2003 SUrOTrALJUDICIALTRANIG CENTIER SERVICES - $262,500

TOTALSERVKS I I I$ 3,370,700 $3,37,6351 ______I__

- 63 - (JG)T ofWaiorgofhads Camilue and o_. DW20M staffof theCCC 2 C32 CQ 1 I 6 63,_ 14-an2 14d-2 15-Jul-2 IS-AE NA IS9p02 30642 ISOC42 (JG)Sau ustfor manbos ofthe OCCcn saecific Occ-2002 topics I C33 c* TCo* 2 60.60 63,W 1M4w-01 1-Apr41 153Apr-l 1 1 NA IS-An4- 30-3 n.01 IS-Jul

(JG)Cmnfaceccost bsr1 23j u (2Cmn s) 2C34 TO 2 30,o 31 01-Fe2 -4Mw- 15Mw-02S01 11-A2 NWA - IS215-M 31-Ju142 Ocf-2002 (JG)Training of oam a&inisual & dev.Of AO cagsy inm BaL 2 C35 fl2 Pt I I 50,0 525 I-F 2 I-Mw-Cl IS-t- 15-A-01 N/A 1S-1 IS-Ju14 31-Jlu4 1 O-20

_ I 2__4 (JI)CCompAueb-ginin fgawa tperactl sdandjudes 3 C36 f P60 2 -X 0 31A I1-hn03 1-IJu0 153-J-03A IS ISNov43 3Nov03BScp( (JG)Taming forcourt irnacialoffxs 3 C37 CQ IPoe 2 2-000l 21,C11 -J" 1A2 135-Asl _ISSM4 WA l t-0- 150w-De2 31-D4c-03 Mr-0204 (ES)C puernocmnidng 2. C35 Q POO 3 2M 21M 1-Jm0 2-F&M0 2$J*0 1S-MwwCl N/A 15*~ 15-J..02 30-Jun2 Oct-M (ES) Salaymtus for hey Enfosarn lServicenaff 2 C35 Q ITORr r 3OA01 31j I-Feb1 I-Mw-l 1541w-C ISA W4OA I1Mwy2 15-Ju2 31-Jl02 O-2002 (PA) PRtrais forjudciasyand eafcrns vi. _ _s. staff 2 040 OQ TORall 2 5 50 I-Jr4-2 1-F-Cl IS-eb,02 1SMw4C NA ISAvr02 ISM402 31-M AW0 (PA)Regiornl semniars 2 041 Q ITORa r 10 IC0 I-Ju- 1-b02 15-FebI02 1S6W N/AAA02 I4 3 (PA) Jrnaism maining 3 C42 IC I-TORJu tSiple 4O 1-JFs43 15-Feb03 IS3-Mw- NA ISA341-3 i3-MWO 3 Dec-2003 2003 (ITC) Trai:ingfor lTC stff 2 C43 O TOR oil I 63 I-Jmi-4Cl -4iJu202 ISJul4-Cl Aw4 NA 15

TOTALSMV0FAM TRAiNw $3.670 K

mPIU)Salams A 22 231,0_____ (PIU)Asidit 73,500 ___7_ (PRU)Tramin inA = 84,000 (P1EMS Sysen _ IC is 15,750 (PM13Opaaong expenses nkaf. few,gmrons cxSses etc.) NA _ _ 1000 126,0C0 1TAL IN4MOPER COMIQ __5f S

wnpilotscrn _ 325,00 I

- 64 - Annex7: ProjectProcessing Schedule ARMENIA:Judicial Reform Project

ProjectSchedule P Aitual Time taken to prepare the project (months) 18 FirstBank mission (identification) 12/15/98 12/15/98 Appraisalmission departure 05/09/2000 05/12/2000 Negotiations 06/12/2000 07/19/2000 Planned Date of Effectiveness 11/30/2000

Preparedby: Ministry of Justice, Council of Court Chairmen

Preparationassistance: PHRD Grant No. 25794 for $281,000, SATAC I and II Credits

Bankstaff who workedon the projectincluded: Name Speciality Irna Kichigina Senior Counsel / Task Team Leader Els Hinderdael Architect / Senior Procurement Specialist Brenda Morata Program Assistant Frances Rosenthal Operations Analyst Vigen Sargsyan External Affairs Officer David Shahzadeyan Public Sector Management Specialist Anna D. Staszewicz Financial ManagernentOfficer

- 65 - Annex8: Documentsin the ProjectFile* ARMENIA:Judicial Reform Project

A. ProjectImplementation Plan

B. BankStaff Assessments Judicial Sector Assessment for the Republic of Armenia, April 1998

C. Other 1. Inventory of Court Buildings and Needs Assessment in the Republic of Armenia, March 2000 2. Assessment of Court Administration and Case Managementin the Judiciary of Armenia, March 2000 3. Structural Reforms in the Enforcement of Civil Judgments System of Armenia, January 2000 4. A Masterplan for the Judicial Training Center, January 2000 5. Social Awareness of the Judicial Reforms Survey, February 2000 *Includingelectronic files

- 66 - Annex 9: Statementof Loans and Credits ARMENIA:Judicial Reform Project

Diffeencebetween expected andactual OriginalAmount in US$Millions disbursements ProjectID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frn ReVd

P035806 1998 Armenia AGRI.REFORM SUPPORT 0.00 14.50 0.00 7.51 3.74 0.00 P008281 1998 Armenia EDUCATION 0.00 15.00 0.00 8.46 2.31 0.00 P008276 1999 Armenia ELECTRANSM& DISTR 0.00 21.00 0.00 19.18 3.34 -0.53 P008279 1997 Armenia ENTERPRtSEDEVELOP. 0.00 16.75 0.00 2.92 3.23 0.00 P050140 1998 Armenia HEALTH 000 1000 0.00 7.34 4.79 0.00 P035765 1996 Armenia HIGHWAY 0.00 31.00 0.00 0.64 -13.04 3.21 P064879 1999 Armenia IRRIGATIONDAM SAFETY 0.00 26.60 0.00 24.85 1.91 0.00 P008277 1995 Armenia IRRIGATIONREHAB. 0.00 43.00 0.00 4.39 6.38 5.14 P035805 1998 Armenia MUNICIPALDEVELOP. 0.00 30.00 0.00 22.99 3.22 0.00 P051171 1999 Armenia SAC3 0.00 65.00 0.00 5.58 7.08 0.00 P051026 1998 Armenia SATAC2 0.00 5.00 0.00 2.43 2.55 0.00 P035768 1996 Armenia SIF 0.00 12.00 0.00 0.21 0.99 0.00 P057952 2000 Armenia SIF II 0.00 20.00 0.00 19.87 0.00 0.00 P057560 1999 Armenia TITLEREGISTRATION 0.00 8.00 0.00 6.80 2.00 0.00 P044829 2000 Armenia TRANSPORT 0.00 40.00 0.00 39.49 0.00 0.00

Total: 0.00 357.85 0.00 172.66 28.50 7.82

-67 - ARMENIA STATEMENT OF IFC's Held and Disbursed Portfolio

In Millions US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

Total Portfolio: 0.00 0.00 0.00 0.00 0.00 0:00 0.00 0.00

ApprovalsPending Commitment FY Approval Company Loan Equity Quasi Partic 2000 HotelAnnenia 0.00 3600.00 0.00 0.00 TotalPending Commitmnent: 0.00 3600.00 0.00 0.00

- 68 - Annex 10: Countryat a Glance ARMENIA:Judicial Reform Project Etirope& POVERTYand SOCIAL Central Low. Armenia A"la income i I5 9n 1998 Population, mid-year (mAtions, 3.8 473 3.515 GNP per capita (Atlas nmethtod, US$) 480 21190 520 GNP (Atlas method, US$ billions) t.8 1,039 1.844 Averaae annual rowth. 1992-98 PopulationI(%J 0~3 0.1 1.7 Labor force (%)-1.2 0.6ti 1.9 Most recent estimite (tae"t year available 19''248)

Poverty l% of population below national pove ftline) .. Urban population ( of total population) 69 68 3i1 Life expectancyat birth (years) 75 2 9 63 Infant mortality (per 1,000 live births) 15 23 89 Child malnutrition(% of childrenurider 5) . : AccasstQe.1ew8t r Access to safe water (% of onufaton) as85 .. 74 Illiteracv (% of population age 15+) 1 4 32 Gross primarv enrollment (%of sctoot-aoe Do00u1tiOn) 87 100 108 iti Male .. 101 113 Female 103199

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 197 1987 1997 1993

GDP (US$ bil lions) . , 1.6 1.9

Gross domestic investmentUGDP Z7 ,, 1390 14.7 Exports of 9oods and services/GOP . 20.3 19. Gross domestic savings/Gop . . -25.2 -19.2 Gross nationalsavinqsIGDP ,, .. 2.68 -12.8

Currenttaccount balance/GDP . . -15,8 -17,4 Interest pavmentslGDP .. .. 0.8 0.8 Total debtGDP . 49.0 43.5 + Total debt service/exports . .. 5.8 7.7 Present value of debt/GOP . .. 27.7 Presentvalue of debt/exports 92.0 . 1977-87 1988-28 1997 1996 1999i-03 (average annual growth)

GOP .. -7.7 3I1 7.2 ,. GNP per caoita -1,.5 8.3 - Exports of coods and services , 2.3 1.2

STRUCTURE of the ECONOMY 1977 1987 1997 1998 (% of GOP) Aoriculture . .. 33.3 34.2 Industryv. 26.2 24.0 Manufacturing .. 25.1 Services - 40.5 41.7 no Private consumption .. .. 112.3 107.3 General oovernment consumption .. .. 12.9 11.9 Irmports of aoods and services . .. 58.S 53.0

1977-87 1988-98 1997 1998 (average annualgrowth) Agriculture .. 1.6 0.5 21.3 Industrv . -14.1 3.7 12.1 Z Manufacturin. -13.1 3.3 .. 3Z Services .. -10.8 4.5 .. 20 Private consumption -8.6 1.7 .. /s General qovernment consumption . -2.1 4.4 -i Gross domestic investment .. -10.9 24.3 Zi Imports of aoods and services . 2.7 2.3 .. s " . .r- im,wts Gross national Product .. -9.9 8.6

Note: 1998 data are preliminary estimates.

The diamonds show four kev indicators in the countrv (in bold) compared with its income-group averace. If data are missina. the diamond wilt be incomplete.

- 69 - Armenia

PRICES and GOVERNMENTFINANCE 1977 1987 1997 1998 o-%_ Domestic prices (% change) Consumer prices .. .. 13.8 8.7 ImplicitGDP deflator .. .. 17.3 11.2 Governmentfinance 2,00 v (% of GDP. includes current grants) Current revenue . .. 19.8 20.8 03 9t r, " s Current budget balance .. .. -1.7 1.5 P r Overall surplusldeficil .. .. -5.9 4.3

TRADE

(USSmillions) 1977 1987 1997 1998 (US5 AIans) Total exports (fob) .. .. 233 251 t Gold, jewelry, and other precious stones .. .. 102 . Machineryand mechanical .. .. 36 . Manufactures .. .. 19 Total imports (cifl .. .. 793 802 Food . .. 270 .. _ Fuel and energy 235 Capital goods .. .. 34 .. _ U2 #8 4 98 se 07 # Export prce index (1995=100) .. Import price index (1995=100, ...... *Es Srk Terms of trade (1995=100J ..

BALANCE of PAYMENTS

(US$millions) 1977 1987 1997 1998 Exports of goods and services .. .. 330 357 - Imports of goods and services .. .. 952 948 Resource balance .. .. -622 -591 o Net income .. .. 123 75 4 _ Net current transfers .. .. 242 188 t- Current account balance .. .. -257 -328 Financing items (net) .. .. 316 331 Changes in net reserves -59 -3 Memo: Reserves including gold (US$ millions) . .. 255 298 Conversionrate (DEC,loca/lUS$) .. .. 490.6 504.5

EXTERNAL DEBT and RESOURCE FLOWS 1977 1987 1997 1998 (USSmillionsJ 4o _e ofuQWa d 109lw s$ mUIons) Total debt outstandingand disbursed .. .. 798 820 e4 ,1 I BRO . .. 11 10 IDA 254 293

Total debt service .. .. 28 37 :9 IBRD . . 1 1 IDA . 1 2 22*

Compositionof net resource flows Official grants .. .. 35 Official creditors . .. 98 18 Private creditors 0 0 Foreigndirectinvestmenl 51 221 TO:7. Portfolio equity .. .. 0 0 C¢174 World Bank program A-SiN Commitments .. .. 107 125 e OA D-oti swa ti F -Prte Disbursements .. .. 77 43 C W G J&Wt84r Principal repayments .. .. 0 0 Net flows .. .. 77 43 Interest payments .. .. 2 2 Net transfers .. .. 76 41

9122199 Development Economics

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