Initial Project Information Document (PID) Report No: AB139

Project Name RUSSIAN FEDERATION -Judicial Reform Support Project Region Europe and Central Asia Region Public Disclosure Authorized Sector Law and justice (100%) Theme Judicial and other dispute resolution mechanisms (P); Legal institutions for a market economy (S); Access to law and justice (S) Project P076826 Borrower(s) GOVERNMENT OF RUSSIAN FEDERATION Implementing Agency(ies) RUSSIAN FOUNDATION FOR LEGAL REFORM (RFLR) Address: 6 Admirala Makarova Street, Second Floor, 125217, Contact Person: Olga Schwartz Tel: 7 095 150 1472, 150 1116, 150 3269 Fax: 7 095 150 0555 Email:

The Judicial Department of the Address: Contact Person: Anatoly Yakovlevich Perepechionov

Public Disclosure Authorized Tel: 7 095 281 1240 Fax: 284 8227 Email:

Environment Category C (Not Required) Date PID Prepared June 25, 2003 Auth Appr/Negs Date April 22, 2004 Bank Approval Date June 29, 2004

1. Country and Sector Background

The Russian system for dispute resolution relies on the courts. Alternative dispute resolution is evolving but still has a very limited application. The court system has two main branches: the courts of general

Public Disclosure Authorized jurisdiction and the arbitrazh courts, whose jurisdiction is mainly limited to commercial disputes between firms. Although the courts of general jurisdiction and the arbitrazh courts have their own supreme courts, the Council of Judges, which enjoys significant authority in court management issues, integrates representatives from both branches.

The courts of general jurisdiction represent a by far larger part of the Russian court system. They consist of the justices of the peace whose number is planned to reach 10,000, some 2,500 district courts, 89 second instance courts and the Supreme Court. The courts of general jurisdiction have 16,700 judicial positions of which about 8 percent are currently vacant. According to the latest available court statistics, the annual caseload of the courts of general jurisdiction includes 3,916,839 civil, 1,057,000 criminal and 1,879,540 administrative cases. The caseload is quickly growing. The Judicial Department of the Supreme Court of Russia provides administrative support to the courts and has offices in each region.

The arbitrazh court system consists of 81 first instance courts, 10 circuit courts and the Supreme

Public Disclosure Authorized Arbitrazh Court. They have 2,209 judicial positions. In 2001 745,626 cases were filed in the arbitrazh courts of which 352,146 were civil, 330,583 administrative, 6,973 legal fact and 55,934 insolvency cases. That year 638,287 cases were completed. The Supreme Arbitrazh Court provides administrative support to the arbitrazh courts. 2 PID

The Government is strongly committed to strengthening the mechanisms for dispute resolution. Following the creation of a legal framework for an independent and accountable judiciary, the Government is rising to the challenge of strengthening the capacity of the judicial system to administer justice fairly and efficiently. On November 20, 2001 the Cabinet adopted a federal targeted program “Development of the Russian Judicial System” for 2002-2006 (the Program). The Program's goals are: implementation of judicial reform; raising the effectiveness of the Judiciary; and creating a viable legal, organizational and technological infrastructure for the Judiciary.

The Program also specifies its main objectives, which are: (i) strengthening the authority of the Judiciary, independence and autonomy of courts and judges and improvement of the legal framework; (ii) strengthening the cadres of the judiciary; and (iii) strengthening the research potential of the Judiciary, creating the system of training and retraining for judges and other court staff. The Program provides for investing about 44.9 billion rubles (some USD 1.5 billion) into the modernization of the Russian court system in five annual installments.

The Program emphasizes the importance of the Judiciary’s ability to function efficiently as an independent and autonomous branch of government for strengthening the rule of law and economic development. The program targets the judicial infrastructure, including court premises, which are characterized as so unsatisfactory that they compromise administration of justice. The Program also points to the delays in administering justice and links them to outdated case management processes that do not take advantage of modern information and communication technology.

The Program is a framework document, which identifies some systemic issues in the operation of the Judiciary, and presents approaches to addressing them. Although the Program specifies resources for addressing specific issues, it leaves the technical detail up to the implementing agencies that include the Ministry of Economy, the Supreme Court, the Supreme Arbitrazh Court, the Judicial Department and the Ministry of Finance.

The issues on which the Program is focused have been echoed by the Bank's diagnostic review of the courts system in Russia. The review was carried out by West European, American and Russian experts. The review identified a number of areas where the processing of cases and organization of the court operations need improvement. In particular, the review revealed: overburdening the judges with tasks that could otherwise be delegated to non-judicial staff; deficiencies in calendaring of court hearings and service of process; dismissal proceedings and default judgements; case allocation criteria; and utilization of information and communication technology. These deficiencies lead to an excessive number of frustrated hearings, case processing delays and uneven quality of judgements.

The Government has implemented a number of practical steps aimed at strengthening the Judiciary as an institution and improving its performance. In 2001, a package of four laws sponsored by the President was adopted. The package included amendments to the laws “On the Status of Judges”, “On the Judicial System”, “On the Constitutional Court of the Russian Federation” and a new law “On the Bar and the Lawyer’s Activities”. The highlights of the laws include strengthening the independence and accountability of judges and attorneys through, among other things, reforming the Qualification Commissions through inclusion of non-judicial representatives, setting the time limits for holding the Court Chair’s position, introducing the mechanisms for the execution of the Constitutional Court’s decisions, and setting unified standards for attorney’s qualifications and ethics.

Steps have been taken to professionalize the administrative and logistical functions in the courts and to help the judges to concentrate on the tasks that only they can perform. The positions of court 3 PID administrators and judges’ assistance were recently introduced. The scope of the court administrators’ authority is, however, very limited and poorly defined.

A new Criminal Procedures Code came into force in July 2002. Among other features, this Code has transferred the authority for arrest from the investigative bodies to the courts and provides opportunities for the court appeal of decisions taken by the investigating bodies. The ongoing nation-wide introduction of trial by jury is raising the quality of trial preparation on both sides of the increasingly adversarial proceedings, and has had a positive spill-over effect on the non-jury trials. The Federal Law “On Arbitration Panels in the RF” (adopted in the summer of 2002), obliges courts to consider alternate dispute resolution as an alternative to court adjudication. In the long run, this measure should contribute to streamlining and institutionalization of alternative dispute resolution.

In addition to strengthening the Judiciary, the Government made progress in modernizing other segments of the justice system including the legislative and regulatory drafting mechanisms; improving legal awareness and education; and improving access to legal services. The has reactivated its work on two draft laws concerned with legislative development mechanisms. The first one “On the Procedure of Enactment and Coming into Force of Federal and Federal Constitutional Laws” and “On Normative Legal Acts”. As of today the legislative development mechanisms are not regulated by any law and are guided exclusively by the internal regulations of the State Duma. The introduction of these two laws is likely to make the procedures for development of laws and implementing regulations of the Executive more transparent and enforceable. These laws will apply to all institutions involved in legislative and regulatory development including the President, the Executive, and the subjects of the Federation.

NGOs, including the Russian Union of Industrialists and Entrepreneurs (RUIE) and the Russian Foundation for the Development of Parliamentarism, have intensified their efforts aimed at compensating for the lack of the regulatory impact assessment capacity within the Government and are providing analytical support to policy development and legislative drafting. They contract out studies, sponsor public discussions and lobby the Government for legislative changes in open fora. While the lack of the regulatory impact assessment capacity within the Government is alarming, the rising role of civil society in shaping public policy is an encouraging sign.

Legal education programs in the Russian secondary schools are rapidly expanding. The Government developed a strong ownership of legal education after the donor funded pilot project produced positive results. The guild of court reporters was created. The Judicial Department and its regional offices opened public information departments. A series of seminars and TV broadcasts on the issues of the WTO accession was implemented.

An All-Russia Union of Attorneys has been created. This development has potential for increasing transparency and accountability in the provision of legal services, and for facilitating the development and implementation of a legal welfare policy. However, issues related to funding mandatory representation remain unresolved. Legal clinics are developing with assistance from donor organizations, and the Government is planning to replicate the clinics under the proposed Judicial Reform Support Project.

Promising initiatives on the promotion of alternative dispute resolution have been taken by different organizations, including the Chamber of Commerce, the RUIE and the newly created Center for Dispute Resolution. The training of trainers in ADR was conducted at the regional level.

However, tremendous challenges remain. Both branches of the court system require improving case and 4 PID court management based on the redefinition of roles and informatization and enhanced transparency. The legislative and regulatory drafting mechanisms should be strengthened through development of a system for regulatory impact assessment. The successful models of strengthening legal awareness and education developed under the Legal Reform Project need to be replicated. Improving access to legal services requires the Government’s realization of the need to develop a legal welfare policy and to allocate adequate targeted funding for legal protection of the disadvantaged groups. The implementation of justice sector reform needs to be supported by mechanisms for impact monitoring and empirical research that, among other things, would strengthen the mechanisms for internal and external accountability of the judiciary.

2. Objectives The project development objective is the improvement of the selected priority areas of the justice system. The justice system is defined as the institutions responsible for creating and implementing law including those concerned with dispute resolution.

3. Rationale for Bank's Involvement While the judiciary received significant additional funding under the Federal Targeted Program, the diagnostic reports indicate that both judicial branches are in dire need of institutional reform that cannot be efficiently attained without intensive capacity building and access to judicial reform experiences of other countries.

4. Description

1. The Courts of General Jurisdiction Component aims at strengthening the capacity of the courts of general jurisdiction to resolve cases fairly and efficiently. The component has four subcomponents: 1.1 The Modernization of Case Management Subcomponent will promote strengthening selected aspects of case management through: (1.1.a) optimizing case management processes within the framework of applicable procedural codes; (1.1.b) preparation of recommendations to amend the procedural codes to allow implementation of case management efficiency improvements; and (1.1.c) upgrading the technological infrastructure, including both hardware and software, at the court level to facilitate the implementation of the new case management procedures. 1.2 The Modernization of Court Administration Subcomponent will promote strengthening selected aspects of court administration through: (1.2.a) optimizing court administration within the courts, including justices of the peace, and the Judicial Department in the areas of human resources, finance, physical infrastructure and information management including statistics and forms; (1.2.b) definition of new roles of court staff in case management (chancellery staff, judicial assistants, court administrators, consultants and court secretaries); (1.2.c) system-wide implementation of the court recording and records management systems. 1.3 The Modernization of the Infrastructure for Skills and Information Management Subcomponent will support: (1.3.a) the development and implementation of training programs and supporting infrastructure, including trainers and technology, to develop the necessary skills and facilitate behavioral change of the judges and courts staff; (1.3.b) strengthening the central advisory capacity to support the implementation of the new case management and court administration procedures and to provide the judges and other courts staff with advice e.g. best practice on resolving difficult issues and improving performance; (1.3.c) creating the infrastructure for a unified information environment for the court system. 1.4 The Public Education in Support of the Judiciary Subcomponent will support a better understanding 5 PID by the public of the judges' authority and responsibilities and develop a more constructive relationship between the judges and the public.

2. The Arbitrazh Courts Component aims at strengthening the capacity of the arbitrazh courts to resolve cases fairly and efficiently. The component has three subcomponents: 2.1 The Modernization of Case Management Subcomponent will promote strengthening selected aspects of case management through: (2.1.a) optimizing case management processes within the framework of applicable procedural codes; (2.1.b) preparation of recommendations to amend the procedural codes to allow implementation of case management efficiency improvements; and (2.1.c) upgrading the technological infrastructure, including both hardware and software, at the court level to facilitate the implementation of the new case management procedures. 2.2 The Modernization of Court Administration Subcomponent will promote strengthening selected aspects of court administration through: (2.2.a) optimizing court administration within the courts in the areas of human resources, finance, physical infrastructure and information management including statistics and forms; (2.2.b) definition of new roles of court staff in case management (chancellery staff, judicial assistants, court administrators, consultants and court secretaries); (2.2.c) system-wide implementation of the court recording and records management systems. 2.3 The Modernization of the Infrastructure for Skills and Information Management Subcomponent will support: (2.3.a) the development and implementation of training programs and supporting infrastructure, including trainers and technology, to develop the necessary skills and facilitate behavioral change of the judges and courts staff; (2.3.b) strengthening the central advisory capacity to support the implementation of the new case management and court administration procedures and to provide the judges and other courts staff with advice e.g. best practice on resolving difficult issues and improving performance; (2.3.c) creating the infrastructure for a unified information environment for the court system.

3. The Public Education in Law at the Secondary Schools Component aims at improving the legal knowledge of the younger generation. It will build on the positive experience generated by the Legal Reform Project and support efforts to mainstream law as a high school course across Russia.

4. The Access to Legal Services Component aims at strengthening the mechanisms for providing access to essential legal services and has two subcomponents: 4.1 The Promotion of Sustainable Legal Clinics Subcomponent will help to establish and strengthen, in a sustainable way, thirty to fifty legal clinics, primarily in the geographical areas with concentration of low-income population. 4.2 Developing a Comprehensive Public Policy on Access to Legal Services Subcomponent will make available for policymakers the international experience in analyzing the legal, social and economic aspects of the provision of legal services provision and in assessing the effectiveness of alternative policies aimed at ensuring adequate access to essential legal services for all citizens.

5. Promotion of Alternative Dispute Resolution Component aims at improving conditions for the development of ADR and includes three subcomponents: 5.1 The Development of Private ADR Subcomponent will support: (5.1.a) developing proposals for continuing improvement of the policy and regulatory framework for private ADR; and (5.1.c) targeted capacity building and training in ADR. 5.2 The Development of ADR within the Judicial System Subcomponent will support developing proposals for continuing improvement of the policy and regulatory framework for ADR within the judicial system; 6 PID

5.3. The Public Awareness Campaign on ADR Subcomponent will promote raising public awareness in the opportunities and benefits of ADR both within and outside the judicial system.

6. The Applied Research Component aims at strengthening the capacity to conduct multidisciplinary applied research in support of justice sector modernization.

7. The Strengthening Regulatory Capacity of the Ministry of Economic Development and Trade Component aims at improving the MoEDT's capacity in the areas of creation and implementation of laws and regulations and includes two subcomponents: 7.1. The Regulatory Drafting Capacity will support strengthening the capacity of the MoEDT to achieve a greater integration of policies and regulations including both laws and sublaws and to better assess the likely impacts of proposed regulatory actions 7.2. The WTO Regime Implementation Subcomponent will support creating selected elements of institutional infrastructure for implementing the WTO regime in Russia. 8. The Project Management Component aims at providing organizational and expert support to project implementation.

5. Financing Source (Total ( US$m)) BORROWER ($20.00) IBRD ($100.00) Total Project Cost : $120.00

6. Implementation The estimated period of implementation is 5.5 years. The implementing agency for the Project will be the Russian Foundation for Legal Reform (RFLR). The RFLR is a state-public non-commercial organization with a mandate to assist the government and NGOs in reforming the justice system. It was created in 1996 by a presidential decree. The RFLR's founders include the President's Administration, the Ministry of Finance, the Ministry of Justice, the Federal Securities Commission and the Russian Academy of Science. RFLR has been designated by the Russian Government as the implementing agency for the ongoing Legal Reform Project. The RFLR reports to the Board of Trustees, which was created by its founders in order to set strategic priorities for and oversee RFLR activities. The indicative project implementation arrangements are as follows:

Project Component Implementing Agency Project Oversight 1. Courts of General Jurisdiction Russian Foundation for Legal Judicial Department of the Reform Supreme Court; Board of Trustees 2. Arbitrazh Courts Russian Foundation for Legal Supreme Arbitrazh Court; Board Reform of Trustees 3. Public Education in Law in Russian Foundation for Legal Ministry of Education, Board of Secondary Schools Reform Trustees 4. Access to Legal Services Russian Foundation for Legal Ministry of Justice, Board of Reform Trustees 5. Promotion of ADR Russian Foundation for Legal Board of Trustees Reform 6. Applied Research Russian Foundation for Legal Board of Trustees Reform 7. Strengthening Regulatory Russian Foundation for Legal Ministry of Economic 7 PID

Capacity of the MoEDT Reform Development and Trade

The project implementation arrangements developed under the Legal Reform Project have proved their effectiveness. The RFLR has developed sound procurement and financial management systems which have been by regular audits. In addition, the RFLR is uniquely qualified for implementing justice system reform activities.

7. Sustainability The transformation of the Russian judiciary into a modern, transparent and effective institution compliant with international and, in particular, the standards of the Council of Europe is a historical challenge. Therefore, the judicial reform process in Russia needs to be recognized as a long-term process that requires careful sequencing. While the JRSP will address some of the most crucial institutional development issues, progress will be critically dependent upon high-level political support from both the Executive and the Legislative branches. Furthermore, sustainability will depend upon adequate leadership of and coordination amongst all judicial institutions.

8. Lessons learned from past operations in the country/sector The LRP included eight rather distinct activities allocated roughly equal amounts without a perceivable overall strategic focus. While this was an adequate approach at the time of the preparation of the LRP, the JRSP has made dispute resolution a clear strategic priority.

9. Environment Aspects (including any public consultation) Issues : The Project is not expected to have any measurable environmental impact.

10. List of factual technical documents: Aspects of Compliance with the International Standards, a Diagnostic Review Issues of Effectiveness and Performance of the Court System in Russia, a Diagnostic Review Recommendations on Improving the Functioning of the Russian Courts

11. Contact Point:

Task Manager Friedrich Peloschek The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone : 202 458 1774 Fax: 202 522 1591

12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop 8 PID

Note: This is information on an evolving project. Certain components may not be necessarily included in the final project.