Contract Law Enforcement

(CLE) Program QUARTERLY REPORT (MAY 1, 2017 – JULY 31, 2017)

August 22, 2017 This publication was produced for review by the United States Agency for International Development. It was prepared by Checchi and Company Consulting, Inc.

CONTRACT LAW ENFORCEMENT (CLE) PROGRAM Contract No.: AID-167-C-13-00001

QUARTERLY REPORT

(May 1, 2017 – July 31, 2017)

Prepared by: Checchi and Company Consulting, Inc. 1899 L St. NW, Suite 800 Washington, D.C. 20036

Delivered on August 22, 2017

DISCLAIMER The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

TABLE OF CONTENTS List of Abbreviations and Acronyms….…………………….……………………………………………………………..…i Project Overview ...... 1 Executive Summary ...... 1 Summary of Progress ...... 2 A. Component 1: Improved Systems for Enforcement of Judgments and Reduction of Backlog in Enforcement Cases ...... 2 A.I.1.1: Support KJC to improve systems for Statistics on execution caseload and assist developing sustainable mechanisms for reporting and maintaining accurate statistical data ...... 2 A.I.2.1: Establish with KJC clear goals and targets for the reduction of backlogged enforcement cases in the Kosovo court system ...... 3 A.I.2.2: Assist the KJC and other relevant actors to develop and implement mechanisms for and to complete the reduction of the backlog in enforcement cases in the Kosovo court system, effectively resolving the backlog by program end date ...... 3 Activity I.2.3: Reduce number of cases where the court is the creditor in court enforcement by supporting better management of these cases and dismissal of smaller cases ...... 5 A.1.3.1: Support the professional and effective functioning of the Private Enforcement System and CPEA ...... 6 A.I.3.2: Support the MOJ to develop and implement all the necessary mechanisms to implement the new law on enforcement procedure ...... 7 A.I.4.1: Support the MOJ to ensure the efficient functioning of the new enforcement system disciplinary system ...... 7 A.I.5.1: Support the establishment of an efficient and sustainable cooperation among all the necessary stakeholders to improve the systems for enforcement of judgments in Kosovo ...... 8 A.I.6.1: Utilizing improved methods and information resources to improve enforcement against bank accounts and earnings ...... 8 A.1.7.1: Enable the business community to receive information, provide feedback and use these reforms in their daily operations ...... 9 B. Component II: Development of the Contract and Commercial Law Framework and Systems, Improvement of Contract Enforcement Systems and Functioning of the ADR Mechanisms ...... 11 B.II.1.1: Support Implementation of the new Bankruptcy Law ...... 11

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B.II.1.2: Law on Mediation ...... 12 B.II.1.3: Amendments to the Law on Business Organizations ...... 13 B.II.1.4: Support implementation of the Law on Late Payments and drafting of the new Law on Bills of Exchange ...... 13 B.II.2.1: Improve the systems of judges assigned to the Economic Departments of the Pristina Basic Courts and the Court of Appeals ...... 14 B.II.2.2: Improve the skills and knowledge of judges assigned to the Economic Departments of the Pristina Basic Court and the Court of Appeals ...... 15 B.II.3.1: Assist in the development of necessary mechanisms and procedures to ensure the proper and efficient enforcement of arbitral awards ...... 15 B.II.3.2: Assist in the development of necessary mechanisms and procedures to ensure the proper and efficient enforcement of mediation agreements ...... 16 B.II.4.1: Support Basic Courts in establishing mediation clerk positions to assist with referral of cases to mediation ...... 16 B.II.4.2: Provide support to mediators and on mediation-related activities ...... 16 Activity II.4.3: Increase referral of commercial mediation cases to AmCham Arbitration Center ...... 17 B.II.5.1: Support the KJC to request that mediation clerk positions be continuously funded and a permanent line item in the KJC budget ...... 17 B.II.6.1: Support the training of judges, lawyers, and law students in the area of commercial law as deemed appropriate ...... 17 B.II.6.2: Support ILIRIA College in organizing the4th Annual Western Balkans Vis Pre- Moot Competition ...... 17 B.II.7.1: Encourage the promotion of contract use, arbitration, and mediation among business owners; improve the general public’s awareness of important commercial law topics and legislative changes, including those related to secured transactions and the new enforcement system ...... 18 B.II.7.2. Improve the general public’s awareness of important commercial law topics and legislative changes ...... 18 Activities Planned for Next Quarter (August 2017-October 2017) ...... 19 Miscellaneous – Consultants, Environmental Compliance and Budget ...... 20 Annex 1 – Deliverables ...... 21

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LIST OF ABBREVIATIONS AND ACRONYMS

AmCham American Chamber of Commerce in Kosovo

BRO Backlog Reduction Officer

CBK Central Bank of Kosovo CEPEJ The European Commission for the Efficiency of Justice CMIS Case Management Information System

CPEA or Chamber Chamber of Private Enforcement Agents

CSSP CSSP – Berlin Center for Integrative Mediation ESRA Enforcement Statistical Reporting Application

EU FLP Project European Union Free Legal Professions and Bar Exam Project

FAQ Frequently Asked Questions

ICC International Chamber of Commerce

IMF International Monetary Fund

JSSP Justice System Strengthening Initiative

KCC Kosovo Chamber of Commerce

KJA Kosovo Judicial Academy (formerly, Kosovo Judicial Institute

KJC Kosovo Judicial Council

KPC Kosovo Prosecutorial Council

KT Kosovo Telecom (formerly PTK)

LEP Law on Enforcement Procedure

MEI Ministry of European Integration

MOF Ministry of Finance

MOJ Ministry of Justice

MOU Memorandum of Understanding

MTI Ministry of Trade and Industry

NCQK National Council for Qualifications of Kosovo

PBC-CD Pristina Basic Court-Commercial Department

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PEA Private Enforcement Agent

PfD USAID Partnerships for Development Program

PIN Personal Identification Number

PRP USAID Property Rights Program

PSA Public Service Announcement

SAA Stabilization and Association Agreement

SCAAK Society of Certified Accountants and Auditors of Kosovo

ToR Terms of Reference

UNDP United Nations Development Programme

UP University of Pristina-Faculty of Law

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PROJECT OVERVIEW

The USAID/Kosovo Contract Law Enforcement (CLE) Program, implemented by Checchi and Company Consulting, Inc., commenced on May 7, 2013 as a 36-month project. A 22-month extension period commenced on May 7, 2016 and will conclude on March 6, 2018. The CLE Program builds on the progress achieved by USAID’s Systems for Enforcing Agreements and Decisions (SEAD) Program and other USAID and donor programs. It works to address a range of challenges, including: 1) Reduction of the judgment caseload in Kosovo’s court system; 2) Support to the Ministry of Justice (MOJ) to implement the new Private Enforcement Agent (PEA) system; 3) Training of judges, lawyers and enforcement agents on commercial law topics; 4) Expansion of mediation; 5) Improvement to commercial legislation; and 6) Work with the business community to foster increased utilization of well-drafted written contracts. The CLE Program has also been responsive to requests for assistance from both counterparts and USAID partners, as well as having identified and pursued a variety of additional opportunities not expressly within its scope of work, but in furtherance of its overall development objectives. These activities include providing support, at USAID’s direction, to the University of Pristina, the Commercial Department at the Pristina Basic Court, and the Central Bank of Kosovo (CBK). CLE has also responded to numerous ad hoc requests on legal policy and approach from the MOJ, the Ministry of Trade and Industry (MTI), the Ministry of European Integration (MEI), the Ministry of Finance (MOF), the Office of the Prime Minister, and several Assembly Committees.

EXECUTIVE SUMMARY

In the seventeenth quarter, CLE continued to support reduction of the tremendous backlog of enforcement cases remaining in the courts. CLE provided embedded support through its Backlog Reduction Initiative (BRI) team in all seven Basic Courts and their branches in Kosovo, including Mitrovica. The BRI team supported court personnel and the courts toward achieving functional elimination of the backlog of execution cases remaining in court enforcement. From CLE initiation through the end of the reporting period, 133,424 court enforcement cases have been cleared from the execution caseloads in the seven Basic Courts, and over 15,774,150 Euro of previously unrecovered judgment debt have been collected in court enforcement procedures. Support for development of the private enforcement profession continued. CLE continued support for the MOJ’s supervision of private enforcement agents (PEAs) and development of processes to handle complaints against PEAS. CLE also worked with the Chamber of Private Enforcement Agents (CPEA or Chamber) to develop organizational processes and templates and create a survey of PEAs that will support strategic planning activities planned for later in the year. In the commercial law area, CLE supported implementation of the new Bankruptcy Law by drafting a Regulation on Certification and Licensing of Bankruptcy Administrators, which was adopted and promulgated by the MOJ in the seventeenth quarter. CLE assisted the CBK in finalizing an implementing regulation for the Law on Late Payments for financial Institutions, and the Regulation was submitted to the CBK Board of Governors. CLE also worked with the MOJ to finalize a draft Law on Bills of Exchange.

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A draft Law on Mediation, developed with CLE support, was placed on the Assembly’s legislative agenda for a second (and final) reading on May 11, 2017. However, on May 10, 2017 a vote of no confidence was passed in the Assembly, dissolving the Assembly and deferring the draft law to be considered by the next Government. Notwithstanding the delay in consideration of the draft law, CLE succeeded in getting each of Kosovo’s seven Basic Courts to designate a court employee to manage case referrals to mediation. CLE started training of these designated court employees on case referral processes.

Finally, CLE continued assisting the Pristina Basic Court-Commercial Department, resulting in drafting of 197 notices/decisions and 50 judgments. In the Appeals Court-Commercial Department, CLE Legal Officers drafted 38 decisions during the reporting period.

SUMMARY OF PROGRESS

A. Component 1: Improved Systems for Enforcement of Judgments and Reduction of Backlog in Enforcement Cases CLE’s Component I Enforcement of Judgments activities encompass two key areas: 1) Enforcement Backlog Reduction – Functional elimination of the courts’ execution case backlog; and 2) Private Enforcement Capacity Building – Assistance to the Ministry of Justice (MOJ) to establish the Private Enforcement Agent System. A.I.1.1: Support KJC to improve systems for Statistics on execution caseload and assist developing sustainable mechanisms for reporting and maintaining accurate statistical data A key pillar of CLE’s enforcement backlog reduction support to the courts has been establishing a system that maintains an accurate count of cases and tracks them effectively. CLE undertook this in previous years by developing the Enforcement Statistical Reporting Application (ESRA), a comprehensive statistical reporting application, and entering case resolution data into it through its embedded Backlog Reduction Officers (BROs) who are working in all seven Basic Courts and their branches, including the Mitrovica Basic Court. The ESRA was intended to serve as a temporary case automation system pending development of a Norwegian Embassy-funded Case Management Information System (CMIS). Significant delay in the development and roll out of that system has led CLE to start building capacity of court officials to enter data into ESRA as a stopgap measure while the CMIS is being built. The ESRA database now contains detailed information on more than 220,000 enforcement cases (both open and closed) in Kosovo’s Basic Courts. Sub-activity I.1.1.1 – Develop capacity and transfer function and use of ESRA data entry to Basic Courts. During the reporting period CLE developed and began implementation of a plan for all court enforcement clerks to receive intensive training on direct usage of the ESRA. CLE conducted training sessions for enforcement clerks, both in the Basic Courts, as well as in certain branch courts. To date 66 training sessions were held with 34 enforcement clerks in all seven Basic Courts and four branches. The training will continue through Year Five. CLEs objective is to build sufficient capacity for enforcement clerks to continue entering data into the ESRA in the interim period between when the CLE Program concludes and the rollout of the CMIS is complete. As of the end of the reporting period, five enforcement clerks have exhibited complete capability to enter data into the ESRA without supervision from CLE Staff and have been granted full access to the database. The remaining 29 enforcement clerks currently have only limited access to the ESRA, but will continue with additional training sessions. As these enforcement clerks demonstrate capacity and capability to use the ESRA without CLE supervision, they will also be granted full access to the database.

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Sub-activity I.1.1.2 – Support migration of ESRA database into CMIS. Cognizant of KJC’s eventual deployment and use of the CMIS, the ESRA and its database were developed in programming languages that will make integration into CMIS possible. CLE is coordinating with the KJC’s IT Department Manager overseeing rollout of the CMIS with a goal to eventually incorporate the ESRA database and core functionality as part of the enforcement case module of the CMIS. To ensure a smooth migration of the data from the ESRA into CMIS, CLE has met regularly with the KJC IT Department Manager to discuss the progress of CMIS rollout. The rollout is a gradual process and CLE will continue to coordinate with the KJC IT Department Manager to develop a contingency plan for the KJC to use the CLE-developed ESRA if the CMIS is not ready for migration of enforcement data before the CLE Program concludes. As of the end of the reporting period, the KJC IT Department Manager informed CLE that there is no clear timeframe for when data on enforcement of civil judgments will be migrated. A.I.2.1: Establish with KJC clear goals and targets for the reduction of backlogged enforcement cases in the Kosovo court system CLE continued to work with KJC leadership to stress the importance of eliminating the backlog of unenforced judgments. CLE has set a goal to clear, at a minimum, 155,000 cases from the execution caseload by the end of the Program, and during Year Four, the KJC agreed to this goal. CLE’s support to the courts has resulted in the final disposition of more than 133,000 court-based enforcement cases as of the end of the seventeenth quarter. Sub-activity I.2.1.1 – Work with the KJC Leadership and Basic Court Presidents to set case removal targets and periodically track performance of case removal. Throughout the reporting period, CLE met with KJC and Basic Court Presidents to analyze the progress for clearing cases from the enforcement caseload. CLE also discussed certain issues that were identified that had an impact on the number of cases removed from the execution caseload. (Discussion of a particular issue – that of persistent new cases where the court is the creditor is discussed in further detail below, in Activity I.2.3). CLE will continue to cooperate closely with KJC officials and all Basic Court Presidents to achieve optimal results on the case removal process. A.I.2.2: Assist the KJC and other relevant actors to develop and implement mechanisms for and to complete the reduction of the backlog in enforcement cases in the Kosovo court system, effectively resolving the backlog by program end date CLE works to identify and implement innovative strategies and approaches to maximize removal of enforcement cases from the courts. One of CLE’s most powerful activities to reduce Kosovo’s tremendous backlog of court enforcement cases has been its continuous deployment of its Backlog Reduction Initiative—consisting of up to 44 law-trained Backlog Reduction Officers (BROs)—in all of Kosovo’s Basic Courts and branches. Court personnel are assisted by BROs to categorize civil enforcement cases in all Basic Courts and most of the branches, though CLE does not have embedded teams in the Gracanica branch (no cases) or the northern branches of the Mitrovica Basic Court in Zubin Potok, and Leposavic (because of the ongoing negotiation over the status of institutions in the North). Sub-activity I.2.2.1 – Continue deployment of BROs in Kosovo Basic Courts to prepare cases for enforcement and enter data into ESRA. During the seventeenth quarter, the CLE BROs continued to support enforcement clerks in the Basic Courts and branches to remove cases from the execution caseload. Following completion of enforcement backlog reduction work in the Commercial Department of the Pristina Basic Court, CLE transferred four of its BROs to the general Pristina Basic

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Court (PBC) to work on enforcement of judgments. As a result of this realignment, the rate of PBC cases removed from the execution caseload has increased. Summary of court-based enforcement case removal efforts

• Through the end of July 31, 2017, the courts receiving CLE support and assistance have cleared 133,424 cases from the execution caseload. The total claimed value of the cases removed from the execution caseload through the reporting period was 452,031,690 Euros. In 38,693 of those cases, 100% of the amount claimed was recovered, amounting to a total of 15,774,159 Euros. • In the seventeenth quarter alone, 5,338 cases were removed from the execution caseload. The claimed value of the cases removed during seventeenth quarter was 4,063,164 Euros. In 2,460 of those cases, 100% of the amount claimed was recovered, amounting to a total of 917,986 Euros.

• To date, 6,598 Enforcement Decisions have been prepared for enforcement against wages by all courts, reflecting an amount of 18,454,664 Euro to be recovered. Forty- eight Enforcement Decisions have been enforced, amounting to full recovery of 16,592 Euro. The following table sets out a detailed breakdown of results for case categorization and case removal by Basic Courts and branches over the life of the CLE Program through July 31, 2017:

CASES REMOVED AND VALUE CLAIMED BY BASIC COURTS AND BRANCHES THROUGH 2017-07-31 Basic Court Total Claimed Value Total Number of Cases Removed Basic Court Pristina (€) 199,441,530 23,083 Branch Podujeve (€) 12,820,225 5,349 Branch Lipjan (€) 9,332,598 3,832 Branch Gllogovc (€) 8,326,627 1,195 Departamenti Komercial (€) 35,646,076 4,282

Pristina Basic Court and Branches (€) 265,567,056 37,741

Basic Court Prizren (€) 38,487,955 16,077 Branch Suhareke (€) 7,900,983 4,115 Branch Dragash (€) 312,871 575

Prizren Basic Court and Branches (€) 46,701,810 20,767

Basic Court Gjakove (€) 23,030,738 9,374 Branch Malisheve (€) 6,409,319 3,331 Branch Rahovec (€) 4,699,327 3,334

Gjakova Basic Court and Branches (€) 34,139,384 16,039

Basic Court Peje (€) 17,599,474 11,786 Branch Decan (€) 1,239,801 1,824 Branch Istog (€) 4,683,976 2,235 Branch Kline (€) 3,848,680 2,237

Peja Basic Court and Branches (€) 27,371,932 18,082

Basic Court Ferizaj (€) 17,083,981 11,294 Branch Kacanik (€) 14,234,529 3,516 Branch Shterpce (€) 70,345 89

Ferizaj Basic Court and Branches (€) 31,388,855 14,899

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Basic Court Gjilan (€) 14,178,954 13,067 Branch Viti (€) 6,114,109 4,090 Branch Kamenice (€) 3,321,234 1,367 Branch Novoberde (€) 12,297 173

Gjilan Basic Court and Branches (€) 23,626,594 18,697

Basic Court Mitrovice (€) 11,743,852 3,660 Branch Skenderaj (€) 2,050,173 860 Branch Vushtrri (€) 9,442,035 2,679

Mitrovica Basic Court and Branches (€) 23,236,060 7,199

Total for all Basic Courts and Branches (€) 452,031,690 133,424

Sub-activity I.2.2.2 – Support transfer of court enforcement cases to private enforcement agents. As another backlog reduction strategy, CLE continues to encourage creditors to transfer court enforcement cases to private enforcement agents. During previous reporting periods CLE met with major creditors to discuss the possibility of transferring cases from the courts to PEAs. One of those creditors, Kosovo Telecom (KT, formerly PTK), had expressed tentative support for the idea so long as the PEAs would agree to waive the initial administrative fee (payment of which was mandated under the Tariff set out in an MOJ Administrative Instruction), to offset the court fees already paid when the claims were originally filed in court enforcement. Based on this agreement, CLE had undertaken an effort to amend the Administrative Instruction (AI) to remove the initial administrative fee so that old court enforcements could be more cheaply transferred to private enforcement. During the reporting period, the AI was amended to remove the initial administrative fee. Thereafter, CLE met with KT and advocated transfer of the cases, taking advantage of the lower fees under the new AI. In response, KT developed a draft tender announcement to solicit PEAs interested in receiving KT cases currently on the courts’ execution caseloads. Unfortunately, before the tender could start, KT Board Member positions expired, and the Government—a 100% shareholder of KT— fell following a no-confidence vote. KT advised CLE that a tender cannot move forward until a new Government is formed and new Board members are appointed. Activity I.2.3: Reduce number of cases where the court is the creditor in court enforcement by supporting better management of these cases and dismissal of smaller cases Although the LEP required all new enforcement cases after July 1, 2014, with some minor exceptions,1 to be handled by private enforcement agents, a significant number of new cases continue to enter the court’s enforcement caseload. The vast majority of these cases are “court as creditor” cases. These new cases are largely the result of courts in criminal cases neglecting to collect very small claims for unpaid court expenses and fees in those criminal cases. Hundreds of these new claims are pouring into the court enforcement system every week, unnecessarily diluting the benefits of CLE’s backlog reduction efforts. If courts continue having to collect these types of very small and avoidable claims through court enforcement procedures, this risks leaving a significant backlog problem following completion of CLE. As of the end of July 2017, these “court as creditor” claims comprised more than 40% percent of the total number of active cases pending in court enforcement.

1 Under the LEP, the only enforcement cases to be handled by the courts are family law cases and return to employment cases.

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Sub-activity I.2.3.1 – Support development and implementation of policies in the courts to increase collection of the expenses and fees together with fines in underlying criminal cases. Better court management and efficient procedures in handling collection of court fees and expenses can help avoid and significantly reduce the enforcement burden posed by these small claims. During the seventeenth quarter, CLE continued to meet and coordinate with judges and court administration to encourage better processes for collecting court expenses, particularly for criminal cases, by requiring satisfaction of outstanding court expenses before court fines are paid.

Sub-activity I.2.3.2 – Support development of policies to better manage small, old court- as – creditor claims. These cases are, for the most part, very small in amount and collection through court enforcement processes is simply not cost justified. More public resources would be spent collecting the claims than would be recovered. CLE continues to work with the KJC and the Basic Courts to apply a cost management limitation to either delete and close small, old cases or treat them as “inactive” and, thus, removed from consideration as active, uncollected enforcement cases. Of the “court-as-creditor” cases currently open, the ESRA shows that 59% of them are under 50 Euro in amount, and that for claims under 100 Euro this percentage rises to 80% percent. During the seventeenth quarter, CLE continued to coordinate with USAID’s Justice System Strengthening Program (JSSP) and the KJC to resolve the issue of court-as-creditor claims that effectively dilute the benefits of CLE’s backlog reduction efforts. CLE drafted and sent an Explanatory Note and draft Decision to the KJC Court Administration Committee to approve whether to close or treat as inactive court-as-creditor claims 50 Euro and under in amount. If the KJC approves and issues the Decision, approximately 20,000 small value cases are expected to be removed from the Courts’ execution caseload. A.1.3.1: Support the professional and effective functioning of the Private Enforcement System and CPEA The Chamber of Private Enforcement Agents was established in January 2015 pursuant to the LEP to serve as a self-regulating body for the profession, engaging in the development of law and policy with government partners, fostering the professionalism of private enforcement agents, and promoting the work of the profession to the public. CLE continues to support development of its institutional capacity. Sub-activity I.3.1.1 – Assist CPEA initiation of strategic planning. The CPEA does not yet operate with any clear strategic objectives or any mission statement to guide the organization. CLE is working during Year Five to help the CPEA develop strategic objectives. During the seventeenth quarter, CLE initiated assistance to support development of a mission and strategic objectives for the CPEA. Working in coordination with the EU Project – Support to Free Legal Professions and Bar Association (EU FLP Project), CLE began planning for a joint strategic planning exercise with the CPEA to take place later in the year. To prepare for this exercise, CLE worked with the EU FLP Project to begin development of a detailed online survey for all PEAs covering practical experience and expectations. Results of the survey will inform and drive discussions with the Chamber during the strategic planning exercise. The survey is expected to be conducted early during the next quarter. Sub-activity I.3.1.2 – Assist CPEA develop organizational processes and templates. CLE continues to assist the CPEA in developing key templates and processes. During the seventeenth quarter, CLE prepared and sent to the CPEA: 1) a template for the Register of Private Enforcement Agents containing basic information about each PEA as required by the LEP; 2) a draft Manual on Employment Policy for the CPEA, containing provisions for the general employment criteria, recruitment procedures, employee benefits, compensation, and evaluation of employees; and 3) a

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draft Guide for the Screening of Complaints for the CPEA that addresses how the CPEA should handle complaints filed by parties against PEAs. CLE will continue working with the CPEA toward finalization of each of these templates and processes during the eighteenth quarter. A.I.3.2: Support the MOJ to develop and implement all the necessary mechanisms to implement the new law on enforcement procedure Although the CPEA serves as a self-governance body for the PEA profession, the MOJ plays the lead governance role over the profession, promulgating regulations, setting tariffs, and carrying out inspections for legality of action. In previous reporting periods, CLE has supported the development of regulations to implement the LEP, following up on efforts taken by its predecessor project, Systems for Enforcing Agreements and Decisions (SEAD). During the seventeenth quarter, the amendment to the LEP, which had earlier passed in the Assembly and survived a request for Presidential veto made by the CPEA, was published on the Official Gazette on May 11, 2017 and entered into force on May 26, 2017.

Sub-activity I.3.2.1- Support for amending the PEA tariff. The new LEP amendments require amendment of the Administrative Instruction on PEA Tariffs to set up a new tariff system. CLE is supporting MOJ’s development of this tariff through designing a Cost Study that would provide data on actual costs to run PEA offices. During the seventeenth quarter, CLE drafted a Terms of Reference (ToR) for the Cost Model Study for the fees for private enforcement services and initiated a search for a potential funder of this study (CLE does not have funds or a contract mechanism to conduct such a study). During the seventeenth quarter, CLE met with a representative of the Dutch embassy to discuss potential for funding. CLE will continue this funding search effort during quarter eighteen. Sub-activity I.3.2.2- Support developing initial agenda for Professional Commission. The LEP also provides for establishment of an independent Professional Commission to serve as an observer of the PEA profession and to make recommendations on improving the system. During the first two years, the Commission was formally constituted, but it took no actions and conducted no meetings. In Year Four, the Commission finally adopted a procedural regulation that CLE had previously drafted to guide its operation and decision making. During the seventeenth quarter, CLE raised the matter of the slow progress of the Professional Commission with the MOJ and learned that a principle issue has been lack of financing allocated for compensating members of the Commission to attend meetings four times per year. CLE worked with the Finance Department of the MOJ to define a process for allocation of funds for compensation on an interim basis for the current year. During the following quarter, CLE will support the Department of Free Legal Professions as it works to allocate interim funding for the current year and sets up a permanent process for budgetary appropriations going forward. A.I.4.1: Support the MOJ to ensure the efficient functioning of the new enforcement system disciplinary system Sub-activity I.4.1.1 – Continue support of PEA inspection process. The new LEP amendments provide for creation of an Inspection Unit at the MOJ. Currently, inspections are carried out by an ad hoc Inspection Committee, set up as an interim body during Year Four. CLE has been supporting this Committee by training members on inspection processes set out in the PEA Supervision Guidelines developed by CLE and adopted during Year Four. From the time of its formation during Year Four through the end of the reporting period, the Inspection Committee has inspected 25 PEAs as part of the regular inspection process; it has also carried out 3 ad hoc inspections based on complaints received from parties. After completing the

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inspections, the Committee, in accordance with the LEP, sent the results and recommendations to the Disciplinary Committee. However, the Disciplinary Committee is reported to have been slow to act on the recommendations or have rendered minimal or no sanctions against PEAs, despite the Inspection Commission finding serious violations. CLE will continue to work with the MOJ to evaluate the performance of the Disciplinary Committee going forward. Sub-activity I.4.1.2 – Support development of complaint screening procedures. In addition to the complaint mechanisms being developed for the CPEA, CLE also supported the MOJ in developing a complaint screening procedure for complaints against PEAs. During the seventeenth quarter, CLE completed a first draft of the Guide for the Screening of Complaints filed by parties to the Department of Free Professions. CLE will work with the MOJ to refine this Guide during quarter eighteen. A.I.5.1: Support the establishment of an efficient and sustainable cooperation among all the necessary stakeholders to improve the systems for enforcement of judgments in Kosovo

One key pillar of an effective enforcement regime is access to information to locate debtors and their assets. Most of the information necessary is held by other public institutions, and banks; as such, cooperation and information-sharing between public and private sector actors is necessary. Previous CLE activity has supported coordination among government and private bodies for gathering information to facilitate the location of debtors and assets. CLE continues this activity in Year Five. Sub-activity I.5.1.1 – Support CPEA to establish information exchange protocols with Civil Registry and Cadastral Agency. CLE has previously supported the Chamber in preparing written requests to the General Director of the Cadastral Agency and Civil Registry Agency to enable private enforcement agents to access their public registries for enforcement purposes. During the seventeenth quarter, the CPEA confirmed to CLE that the Civil Registry Agency agreed to share their databases with PEAs for vehicles and personal data for enforcement purposes. The agreement is set to come into effect on January 1, 2018, as the Agency is currently upgrading its software. Prior to obtaining access to the database, the CPEA will need to buy its own server to access Agency’s databases. The Agency also informed CLE that PEAs operating outside of Pristina may submit requests to the Agency via email and that the Agency will response via email, saving the PEAs outside Pristina time and money. During the reporting period, CLE continued to engage with the Cadastral Agency for PEAs to access cadastral data, however these efforts will need to continue next quarter. A.I.6.1: Utilizing improved methods and information resources to improve enforcement against bank accounts and earnings One of the most effective tools of collection is seizure of debtor bank accounts. In Year Two, CLE developed a system upgrade to the Bank Account Holder Registry (BAHR), which fully automated enforcement of judgments against bank accounts, eliminating the need for face to face meetings with banks and allowing for greater and more efficient enforcement and collection of debt. The Amendments to the LEP that came into effect during quarter seventeen incorporate mandatory use of the BAHR for bank account garnishments. CLE continues to provide technical support to the Central Bank to debug issues identified in the system as they arise. CLE is also working with the Chamber to provide guidance to PEAs on their new responsibilities under the amendments for using the BAHR.

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Through the end of July 31, 2017, courts have seized 35,071 debtors’ accounts pursuant to judgment debts, with CLE assistance, resulting in the closure and full recovery in 9,605 cases (approximately 2,441,734 Euro recovered of 17,299,671 Euro in claimed value). In the seventeenth quarter, 2,340 cases were prepared for enforcement against bank accounts and 521 Percent change of enforcement against bank accounts judgments were enforced against bank accounts. Sub-activity I.6.1.1 – Training on use of BAHR to users and banks. During the seventeenth quarter, CLE continued to support the CBK and train banks to monitor its implementation and “debug” any software or practice issues that arise. Beginning in September 2016, CLE initiated one-on-one training of PEAs, court enforcement personnel, and bank officials on use of the upgraded, fully automated, CBK Registry. During the reporting period CLE held 46 training sessions with court enforcement personnel and bank officials. During the seventeenth quarter, CLE held 13 training sessions for 46 bank officials of which 20 were female and 26 were male. During the seventeenth quarter, CLE held 33 training sessions with 80 court enforcement clerks of which 25 were female and 55 were male. All were Kosovo-Albanian. CLE will continue to train bank officials and court enforcement personnel, and Private Enforcement Agents. A.1.7.1: Enable the business community to receive information, provide feedback and use these reforms in their daily operations CLE has supported a diverse range of outreach and public education activities in order to ensure that reforms were understood by both the general public and the business community. Outreach activities included roundtables and conferences with relevant business sectors to discuss the impact of new laws affecting their operations. CLE used innovative and creative avenues to reach the target audience through traditional media such as television and radio spots and print, as well as through digital media, such as social networking. As seen in the graph below, in the seventeenth quarter, the CLE website was visited 5,643 times, while the most downloaded file was the Training Manual on Business Organizations.

In July, CLE also participated, together with USAID Kosovo mission representatives, at an informal forum organized by AmCham for alumni of its European Integration School, discussing the

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intersection of rule of law and economic development in Kosovo. Sub-activity I.7.1.1 – Assist CPEA development of strategic communication and outreach plan: During the seventeenth quarter. CLE continued to engage in public outreach on the enforcement system through business associations and its own webpage. Outreach efforts on enforcement issues will be ultimately transitioned to the CPEA. During the seventeenth quarter, CLE agreed with the EU FLP Project to jointly support the CPEA to develop its communication and outreach plan. The EU FLP Project will develop an initial draft and CLE will provide feedback with CPEA participation. Sub-activity I.7.1.2 – CPEA Outreach Materials. During the seventeenth quarter, CLE has updated the CLE Know Your Rights brochure to inform the public and businesses on the amendments to the Law on Enforcement Procedures. CLE also compiled a consolidated version of the LEP incorporating the amendments passed in May 2017, to make the amended LEP more user friendly for PEAs and the business and legal communities. A consolidated version also minimizes risks for misapplication or misunderstanding of the Law and the amendments. Sub-activity I.7.1.3 – Support joint creditor perception survey. In Year Four, CLE conducted an informal opinion survey with creditors about the private enforcement system. The survey revealed high levels of satisfaction with the new system and opinions that the reform has had a significant impact on collection, as well as reducing the time needed for collection, but also reported mixed views on whether the system creates adequate incentives to foster voluntary payment of debts (as opposed to involuntary enforcement). During the seventeenth quarter, CLE worked with the Chamber to develop an expanded version of this survey as a tool for the Chamber to gain greater awareness of public opinion. This expanded survey is expected to be conducted during the next quarter. Sub-activity I.7.1.4 – Outreach and awareness event on passage of the amendment to the LEP. As a result of the vote of no confidence against the Government and the dissolution of the Government in May 2017, this event has been postponed until a Government is formed and a Minister of Justice is appointed. Activities under A.I. relate to the following AMEP indicators: IR1.1 (1) Number of civil enforcement cases enforced as a result of USG assistance CLE will track the number of all civil enforcement cases enforced in courts receiving CLE assistance. Target Year 5: 155,000 Actual Year 5: 133,424 Q17: 5,338 IR.1.1 (4) World Bank Doing Business Indicator on Enforcing Contracts Target Year 5: 46 Actual Year 5: 44 Q17: N/A IR.1.1.1(1) Number of USG Assisted courts with improved judgment/enforcement case management CLE assists 24 Courts: 7 Basic Courts (Pristina, Prizren, Gjakova, Peja, Ferizaj, Gjilan, and Mitrovica) and 17 branches (Podujeva, Lipjan, Gllogovc, Suhareka, Dragash, Malisheva, Rahovec, Decan, Istog, Klina, Kacanik, Strpce, Viti, Kamenica, Novoberdo, Vushtrri, and Skenderaj). Target Year 5: 24(27)2 Actual Year 5: 24 Q17: 24 IR.1.1.1 (2) Number of legal institutions and associations supported by USG Assistance

2CLE is currently not working at Zubin Potok, Leposavic. Depending on political developments, CLE will also support these two courts. CLE has also not yet provided support to the Gracanica court (Gracanica has no cases).

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Fifteen legal institutions are supported by CLE: 1) Ministry of Justice (MOJ); 2) Kosovo Judicial Council (KJC); 3) Central Bank Kosovo (CBK); 4) Ministry of Trade and Industry (MTI); 5) Agency for Business Registration of Kosovo (ABRK); 6) Kosovo Bar Association (KBA); 7) Basic Courts and Branches - and the Commercial Department at Pristina Basic Court; 8) Kosovo Judicial Academy (KJA); 9) Kosovo Banking Association (KBA); 10) Tax Administration Kosovo (TAK); 11) Association of Mediators; 12) Mediation Commission; 13) Kosovo Chamber of Commerce (KCC); 14) American Chamber of Commerce (AmCham); and 15) the Chamber of Private Enforcement Agents. Target Year 5: 15 Actual Year 5: 15 Q17: 15 IR.1.1.1 (3) Percent change of court enforcement actions against bank accounts The “percent change” means the number for the current year minus the prior year divided by the prior year x100 (delta). At the start of the CLE Program, zero (0) cases were enforced against bank accounts. A Baseline of 501 cases was established at the end of Quarter 2. During the 17th quarter, 521 cases were enforced against bank accounts, resulting in a total percentage change of -35.84 % compared on a quarterly basis. The percentage change at the conclusion of the prior reporting period was 6.86%. Target Year 5: 0% Actual Year 5: N/A Q17: -35.84 % IR.1.1.1 (4) KJC reporting on execution caseload improved The KJC continued transitioning from paper-based to the CLE designed electronic system which is more accurate and allows monitoring of individual enforcement personnel performance. This activity will be measured by two milestones: 1) Adoption of electronic system by KJC order; 2) full utilization of the electronic system. Target Year 5: Yes (1)/ Yes (2) Actual Year 5: N/A Q17: Yes (1)/ No (2) IR.1.1.3 (3) Number of cases resolved through new procedures (PEA) with USG assistance The Private Enforcement Agents report to the MOJ on an annual basis (January 1-December 31); PEAs are not obligated to report to CLE. The below data are taken from the 2016 annual PEA report to the MOJ. Target Year 5: 10,000 Actual Year 5: 5,304 Euro Q17: N/A IR.1.1.3 (4) Amounts recovered through procedures The Private Enforcement Agents report to the MOJ on an annual basis (January 1-December 31); PEAs are not obligated to report to CLE. The below data are taken from the 2016 annual PEA report to the MOJ. Target Year 5: 100,000,000 Actual Year 5: 42,092,800 Q17: N/A

B. Component II: Development of the Contract and Commercial Law Framework and Systems, Improvement of Contract Enforcement Systems and Functioning of the ADR Mechanisms CLE’s main legislative activities under Component II involve: 1) supporting implementation of the new Bankruptcy Law that passed in July 2016; 2) advocating for the passage of the draft new Law on Mediation; 3) monitoring passage of the amendments to the Law on Business Organizations; and 4) developing a Law on Bills of Exchange. The pending legislation will need to be re-submitted to the Assembly because in May 2017, new elections were triggered by a no-confidence vote, making it impossible for the Assembly to vote on and pass any laws. B.II.1.1: Support Implementation of the new Bankruptcy Law The new Law on Bankruptcy entered into effect in Year Four and during the seventeenth quarter, CLE supported implementation of the Law. As part of its activities supporting implementation of the

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new Bankruptcy Law, CLE has undertaken monitoring of the performance of the PBC-CD (the Department in which bankruptcy cases are filed) as it proceeds with an ongoing bankruptcy case that was initiated based on the previous law, but now is proceeding under the new law. During the reporting period, one new Bankruptcy case was filed, and CLE will monitor its progress to identify and advise on resolving implementation issues. CLE will continue to monitor the performance of the court as new cases are filed. As part of its coordination activities with other donors, CLE met with the EU FLP Project to jointly develop and deliver upcoming bankruptcy trainings for the new bankruptcy administrators. CLE is also facilitating the efforts of the EU FLP Project to establish an association of Bankruptcy Administrators, either as part of the Society for Certified Accountants and Auditors (SCAAK) or as an independent legal entity. Sub-activity II.1.1.1 – Support MOJ to Promulgate and Implement Regulation on Certification of Bankruptcy Administrators. CLE continued to support the MOJ in drafting an implementing regulation—the Regulation on Certification of Bankruptcy Administrators. CLE drafted the Bankruptcy Regulation in cooperation with the working group established by MOJ and supported the Ministry through the public consultation process. The Minister of Justice promulgated the Regulation on July 19, 2017. Sub-activity II.1.1.2 – Finalize Training and Certification Process for Bankruptcy Administrators. In Year Four, CLE developed a training course on the new Bankruptcy Law. Active judges who will be handling bankruptcy cases were trained this quarter. Additionally, CLE supported SCAAK in designing the Training and Certification Program for Bankruptcy Administrators. The initial curriculum and the program was sent for accreditation to the National Council for Qualifications of Kosovo (NCQK). After obtaining the accreditation from NCQK, SCAAK will begin offering of trainings and certifications for the new Bankruptcy Administrators. During the reporting period, the Kosovo Bar Association (KBA) agreed to include a training on the new Bankruptcy Law as part of the mandatory curriculum on Continuous Legal Education for licensed Attorneys in Kosovo. The first one-day training was delivered by CLE, with the participation of 33 licensed attorneys, of which 22 were male and 11 were female and all Kosovo-Albanian. The training materials and the power point presentation for future trainings have been transferred to the KBA, as it will continue to deliver the training on the new Bankruptcy Law at least once per year, with its own resources. Sub-activity II.1.1.3 – Finalize and distribute Bankruptcy Manual and use to train relevant stakeholders. The Manual is finalized and will be published on the MOJ website pending approval by the Head of the MOJ’s Department of Free Professions. B.II.1.2: Law on Mediation Sub-activity II.1.2.1 – Advocate for passage of Law on Mediation. In Year Four, CLE coordinated closely with the MOJ and other donors to draft a new Law on Mediation to replace the current Law that was adopted in 2008. In December 2016, the Law was approved by the Government and passed the first reading in the Assembly of the Republic of Kosovo in early 2017. The Committee on Legislation, Committee on Rights, Interests of Communities and Returns, the Committee on Budget and Finance, and the Committee on European Integration approved the draft Law. The draft Law was scheduled for a second reading in the plenary session of the Assembly of Kosovo for May 11, 2017. On May 10, 2017 a vote of no confidence against the Government passed and the Government dissolved. The Law still has wide support from the USG and other stakeholders,

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but cannot be passed until a new Government and Assembly are formed. If the Assembly and Government are formed before CLE concludes, CLE will continue to advocate for the key changes in the draft Law including: 1) exclusion of domestic violence cases from the mediation process; 2) mandatory mediation for certain family law and property cases; and 3) placing mediation clerks within each of the seven Basic Courts who would be responsible for referring cases to mediation. Sub-activity II.1.2.2 – Assist the KJC and Courts with implementation of the new Law on Mediation. At the end of Year Four, in response to a request from the KJC Chairman, each Basic Court President designated an existing court employee to be responsible for referring cases to mediation. This is an interim measure until the permanent Mediation Clerk positions are established when the draft Mediation Law passes. Nonetheless, this measure reduces donor dependency for mediation referral and lays the foundation for self-sustainable mediation through the Kosovo courts. During the reporting period, CLE met regularly with the designated clerks in six of the seven Basic Courts3 to train them on the referral process using the step-by-step training manual that CLE finalized in the sixteenth quarter. CLE also coordinated closely with the EU FLP Project to assist with developing an Association for all mediators in Kosovo and, as well, to transfer knowledge about the current status of mediation in Kosovo in case the Government impasse continues beyond CLE’s completion. Sub-activity II.1.2.3 – Support MOJ in amending the relevant Administrative Instructions. As the draft Law on Mediation was not passed, no action was undertaken for this activity in the seventeenth quarter. After the draft Law is passed, CLE will review the relevant Administrative Instructions on Fees and Training and Certification, as well as the Mediators’ Code of Conduct. CLE will also coordinate with relevant stakeholders to discuss necessary amendments. B.II.1.3: Amendments to the Law on Business Organizations The Law on Business Organizations governs the forms a business may take and the rights and responsibilities of companies, officers, boards of directors, and shareholders or other investors or partners. With support from the MTI, CLE, and the USAID Partnerships for Development Program (PfD), the new draft Law on Business Organizations has been approved by the Government of Kosovo and submitted to the Assembly of Kosovo. Sub-activity II.1.3.1 – Monitor and support passage of the Law. The PfD Program has been and will continue to lead this initiative and monitor the draft Law’s movement through the Assembly. The law passed the first reading in the Assembly and was scheduled for approval in the second reading on May 11, 2017. However, the dissolution of the Assembly on May 10, 2017, resulted in a return of the law to the Government. CLE will continue supporting the passage of the draft Law as soon as a new Government and Assembly are established. B.II.1.4: Support implementation of the Law on Late Payments and drafting of the new Law on Bills of Exchange Sub-activity II.1.4.1 – Assist CBK with promulgating regulations to implement Law on Late Payments. The Law on Late Payments passed in late Year Four. During the seventeenth quarter, CLE supported the CBK in developing and finalizing the regulation on Late Payments for Financial Institutions, which shall be promulgated by the Board of Directors of the CBK. The regulation was

3 CLE has yet to meet with the clerk in Mitrovica, but will meet with the clerk in early September together with CSSP.

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finalized and submitted to the Board for approval. CLE expects that the Regulation will be approved and entered into force during the eighteenth quarter. Sub-activity II.1.4.2- Monitor and support passage of the Law on Bills of Exchange. Prior to the reporting period, CLE had completed an initial draft of the Law on Bills of Exchange and reached an understanding with the MOJ to present the law to the Government for submission to the Assembly. During the reporting period, the Concept Document was approved by the Government of Kosovo. CLE also finalized the draft Law on Bills of Exchange and submitted it to the Ministry of Justice. CLE does not expect any working group meetings on the draft Law until a new Government is formed. B.II.2.1: Improve the systems of judges assigned to the Economic Departments of the Pristina Basic Courts and the Court of Appeals The purposes of CLE’s Commercial Department assistance are to: 1) assist the Commercial Department to identify the volume of investment disputes that are before it; and 2) support the Commercial Department to improve its efficiency and eliminate its backlog of unresolved commercial disputes. Sub-activity II.2.1.1 – Provide embedded legal support to the Pristina Basic Court-Commercial Department. In Year Four, CLE embedded five Legal Officers in the PBC-CD, four of whom are assigned individually to a judge and one who supports the Registry in the Department. The five Legal Officers provide daily and ongoing support to the judges with: 1) legal research and preparation of preliminary drafts of decisions; 2) support for the Court Registry’s intake of new cases filed with the CD; 3) ensuring that all case information is being entered into the KJC electronic database, moving away from a manual case management system; and 4) maintaining individual spreadsheets and templates for each judge to help keep track of progress and facilitate drafting. The legal officers have also prioritized backlog cases, assisted in identifying "foreign investor disputes," and helped with archiving. The PBC-CD’s achievements over the past two years with the support from embedded Legal Officers could be significantly undermined if legal support staff for judges is discontinued after the Program concludes and before the budget to employ legal support staff is approved. During the reporting period, the team took initial or follow-up actions on pending cases, drafting 197 decisions or notices and 50 judgments. On average, one judge resolved 16.33 cases per month, exceeding the average of 12.17 new cases being assigned to each Department at the beginning of a new month. There are 992 active cases on the docket. As of the end of this reporting period, the case numbers in the Basic Court Commercial Department are as follows:

Total Active Total Resolved Active Backlog Resolved Closed Cases Sent to Archive Total Cases Cases Cases Cases Backlog Cases (Q17) (Q17)

1,393 992 398 184 274 167 0

Through the end of the reporting period, only seven cases have been deemed to meet the criteria for designation as a foreign investment case (as defined under the Law on Foreign Investment). These seven cases represent less than one percent of the overall caseload of the PBC-CD. Sub-activity II.2.1.2 – Provide embedded legal support to CoA-CD. In Year Four, CLE also commenced support for the Court of Appeals-Commercial Department (CoA-CD) and embedded three Legal Officers. The Legal Officers focused on taking inventory of all the cases in the CoA-CD, and one Legal Officer started to provide legal support to one of the judges. As of the end of the reporting period, there was only one judge in the CoA-CD as the other two vacancies remain unfilled.

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Through the end of the reporting period, the embedded legal officers in the CoA-CD drafted 85 decisions, of which 38 were drafted during the 17th quarter. The Court resolved 166 commercial cases since the support began and 55 disputes were resolved during the seventeenth quarter. The docket currently has 303 active cases. As of the end of this reporting quarter, the case numbers in the Court of Appeals Commercial Department are as follows:

Total Active Total Resolved Active Backlog Resolved Backlog Sent to Archive Total Cases Cases Cases Cases Cases (Q17) (Q17)

469 303 166 1 4 0

B.II.2.2: Improve the skills and knowledge of judges assigned to the Economic Departments of the Pristina Basic Court and the Court of Appeals Sub-activity II.2.2.1 – Commercial Law Training for Judges. During the first three years of the Program, CLE developed a curriculum of specialized courses for commercial judges to provide substantive knowledge on various commercial law topics. Such topics included Intellectual Property, how to assess notional value, appreciate the time value of money in calculating damages, basic accounting to understand balance sheets, and shareholder rights. A total of 24 courses have been delivered by CLE. In Year Four, CLE handed over the curriculum to the Kosovo Judicial Institute, now the Justice Academy, and the Institute delivered these trainings itself. During the reporting period, CLE started to develop a new commercial law training program that will also be handed over the Justice Academy. If new judges are appointed to the Commercial Departments of the Pristina Basic Court and/or the Court of Appeals, CLE will deliver the initial training curriculum. B.II.3.1: Assist in the development of necessary mechanisms and procedures to ensure the proper and efficient enforcement of arbitral awards Notwithstanding that the legal framework for arbitration and enforcement is in place and does not require amendment to meet best international practices, CLE monitors the performance of the PBC- CD, which has jurisdiction to recognize arbitral awards. Throughout the CLE Program, CLE held discussions on a monthly basis with the CLE Pristina Basic Court-Commercial Department (PBC-CD) Presiding Judge to monitor performance of the Court, which has jurisdiction to recognize arbitral awards (enforcement is under the jurisdiction of PEAs). Sub-activity II.3.1.1 – Monitor recognition and enforcement of arbitral awards. During Year Four, two foreign arbitral awards were submitted to PBC-CD, one for recognition and another for set-off. A decision rendered by the trial court on its lack of jurisdiction to decide the request for set-off was overruled by the appellate court two times. The trial court has not been able to decide on the request for recognition of a foreign arbitral award for several months. During the reporting period, a hearing on the request for set-off was scheduled by the Court for September 15, 2017. The request for recognition was withdrawn by the Claimant as the parties reached an out-of-court settlement. A request for recognition of a domestic arbitral award has been recognized by the Court and confirmed at the appellate level. As the claims related to arbitration are becoming more complex, CLE will continue monitoring the situation with PBC-CD and the Court of Appeals.

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B.II.3.2: Assist in the development of necessary mechanisms and procedures to ensure the proper and efficient enforcement of mediation agreements The Laws on Mediation, on Contested Procedures, and on Enforcement Procedure already contain provisions on the recognition and enforcement of mediation agreements that reflect best international practices and largely reflect UNCITRAL standards. A provision in the draft Law on Mediation provides that an agreement reached by the parties and signed by a licensed mediator will have the same enforceability as a notarized contract. CLE will seek to ensure that this provision remains in the draft Law as it moves through the approval process. B.II.4.1: Support Basic Courts in establishing mediation clerk positions to assist with referral of cases to mediation Sub-activity II.4.1.1 – Coordinate with the KJC to create and allocate mediation clerk position. During the seventeenth quarter, CLE continued its dialogue with the KJC, Basic Court Presidents, and donors about allocating a specialized administrative position—the Mediation Clerk—in each of the seven Basic Courts. The Mediation Clerk position will manage the mediation referral process, including serving as a liaison among the judge assigned to the case, the parties and their counsel, the Mediator, and the Court Registry (to ensure that the status and outcome of the case are accurately captured in statistical reporting). The KJC agrees with establishing the Mediation Clerk positions, but informed CLE that the KJC will make the request to create a budget line for the salaries for the Mediation Clerks after the draft Law on Mediation passes. Sub-activity II.4.1.2 – Continue to support Basic Courts in Peja, Gjilan, and Prizren. As of April 2016, CLE no longer operates mediation centers in Peja, Gjilan, and Prizren. In Year Four, CLE shifted its activities to supporting individual courts in these three cities to transition the mediation center operations into the courts. In the seventeenth quarter, CLE continued to support these three Basic Courts with mediation referral, as well as the Basic Courts in Ferizaj, Pristina, and Gjakova. During the reporting period, CLE informed the Mediation Commission and other donors that CLE is training the designated clerks on mediation referral. CLE will continue to cooperate with these stakeholders to fully transition to court-based mediation referral from Mediation Centers to the courts. B.II.4.2: Provide support to mediators and on mediation-related activities As described in more detail in Sub-activity II.4.2.1, during the reporting period, CLE discussed improving the current Association of Mediators or establishing a new Association. In addition to mediators becoming more active in outreach activities, CLE, UNDP, and CSSP discussed the possibility of conducting joint awareness raising campaigns, including a “Mediation Day” in each of the seven municipalities. These campaigns would take place through the remainder of Year Five. Sub-activity II.4.2.1 – Support unification of organization inclusive of all mediators in cooperation with other donors. At the end of Year Four, mediators requested that the new draft Law on Mediation provide for a Chamber of Mediators. The MOJ objects to establishing a Chamber for a variety of reasons, namely that mediators lack the financial resources to establish and functionalize a Chamber. Rather, the MOJ and CLE support either breathing life back into the current Association or registering a new NGO that would be inclusive of all mediators in Kosovo. In the seventeenth quarter, CLE engaged with the EU FLP Project and CSSP to develop ideas on how to create such a professional organization that will satisfy the needs of all mediators in Kosovo and provide an avenue to engage in outreach activities and develop their skills.

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Activity II.4.3: Increase referral of commercial mediation cases to AmCham Arbitration Center Mediation has been contemplated as an additional service of the AmCham Arbitration Center since its inception; however, commercial mediation is still nascent. The AmCham itself and the Arbitration Center Steering Council endorse the further development of mediation services through the Arbitration Center. ADR services, arbitration and mediation, are also available to parties who are not members of the AmCham. Sub-activity II.4.3.1 – Facilitate cooperation between AmCham Arbitration Center and Commercial Department for referral of cases to mediation. During the seventeenth quarter, CLE coordinated with the AmCham to develop ideas on how to increase referral of commercial mediation cases. However, commercial judges are reluctant to refer such cases as there is a minimal backlog and parties will generally come to an agreement through a court settlement before going to mediation. Sub-activity II.4.3.2 – Assist AmCham Arbitration Center in marketing commercial mediation services. CLE discussed with the Secretary-General of the AmCham Arbitration Center strategies that AmCham and CLE can jointly execute to target business sectors, such as financial and insurance, more likely to use commercial mediation and to encourage all businesses to include mediation or mediation-arbitration clauses in their contracts. These activities will begin in the eighteenth quarter. B.II.5.1: Support the KJC to request that mediation clerk positions be continuously funded and a permanent line item in the KJC budget Sub-activity II.5.1.1 – Monitor status of funding Mediation Clerk positions. During the seventeenth quarter, no action was taken regarding this activity. Early in the eighteenth quarter, CLE will continue to work with the KJC Budget Department and JSSP on the KJC’s 2018 Budget Request that will include a budget line for the salaries for the Mediation Clerk positions. It is crucial that these positions are created, as this approach is the cornerstone to the draft Law on Mediation and to the sustainability of mediation services through the courts. B.II.6.1: Support the training of judges, lawyers, and law students in the area of commercial law as deemed appropriate CLE’s commercial training program materials, consisting of eleven general commercial law topics, have been developed for both judges and advocates. The materials were provided to both the Justice Academy and the KBA. Sub-activity II.6.1.1 – Support the training of judges, lawyers, and law students on the new Bankruptcy Law. In the seventeenth quarter, CLE developed training materials on the Law on Bankruptcy; the training will be delivered to commercial and civil judges, advocates, and law students. During the reporting period, CLE delivered a training on the new Bankruptcy Law to the Kosovo Bar Association and 33 licensed attorneys participated in the training, of which 22 were male and 11 were female and all Kosovo-Albanian. Sub-activity II.6.1.2 – Support the training of judges, lawyers, law students, mediators, and court personnel on the new Law on Mediation (after passage). As a result of the Government impasse, the Law on Mediation was not passed. As such, CLE has not delivered training on the draft Law. B.II.6.2: Support ILIRIA College in organizing the4th Annual Western Balkans Vis Pre-Moot Competition In supporting co-organized three Annual Western Balkans Vis Pre-Moot, together with ILIRIA College, AmCham, the University of Pristina, and the KCC, CLE has progressively transferred responsibility to local partners for organization and funding. The 3rd competition, held late in Year Four, was conducted entirely with locally contributed funds. ILIRIA College has expressed a desire and a

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demonstrated capacity to take the lead in organizing the 4th Annual Pre-Moot. CLE is now supporting final transfer of organizational knowledge to ILIRIA College for next year’s competition. Sub-activity II.6.2.1 – Transfer institutional knowledge to ILIRIA College faculty and law students. During the reporting period, CLE met regularly with ILIRIA College to provide guidance on organization of the 4th Annual Western Balkans Vis Pre-Moot and provided ILIRIA with the organizational checklist for the Pre-Moot. Sub-activity II.6.2.2 – Assist with identifying potential contributors for the Pre-Moot. ILIRIA College started to identify potential sponsors for the Pre-Moot and is currently contacting the Chambers of Commerce in Kosovo. CLE has expressed availability to assist ILIRIA in drafting Requests for funding and setting up meetings with members of the business and legal communities. B.II.7.1: Encourage the promotion of contract use, arbitration, and mediation among business owners; improve the general public’s awareness of important commercial law topics and legislative changes, including those related to secured transactions and the new enforcement system CLE continued to distribute USBs at all events with six standard form contracts developed by CLE. CLE, in cooperation with the KJC, wrote a Press Release addressing the recent measure undertaken by the KJC and Basic Court Presidents to assign individuals within each Basic Court to be responsible for referring cases to mediation. This measure brings Kosovo a step closer to self-sustainable mediation through the Kosovo courts. In addition to being published on the KJC website, the press release was published by online media outlets, including Telegrafi, Koha.net, Kosova.info, and Ekonomikaonline. During the reporting period, CLE developed a short video about the successes and challenges of the private enforcement system. The video is comprised of a series of testimonials from representatives from the private sector discussing their experiences with the enforcement system. The video will be finalized in the eighteenth quarter. Sub-activity II.7.1.1 – Deliver roundtables on the importance of written contracts and ADR awareness. During the seventeenth quarter, CLE, in cooperation with USAID Empower Private Sector Program, organized a "Put it on Paper" roundtable with EMPOWER’s beneficiaries. There were 12 participants, out of which 10 were male and 2 female. All participants were Kosovo Albanian. CLE and EMPOWER agreed to conduct additional roundtables with the latter Program’s other beneficiaries. B.II.7.2. Improve the general public’s awareness of important commercial law topics and legislative changes Since Year Four, CLE does not have a distinct outreach component or budget. However, CLE has continued to engage in outreach through its website and in cooperation with other USAID programs, Chambers of Commerce, and professional organizations Sub-activity II.7.2.1- Develop CLE Newsletter. CLE finalized the first Quarterly Newsletter which informs the public on the most recent legal reforms and CLE’s support for these activities. This Newsletter will be published on the CLE website and distributed to AmCham member businesses early in the eighteenth quarter. Sub-activity II.7.2.2- Engage in digital outreach. Even though, CLE doesn’t have its own Facebook page, after every program activity, CLE sends a paragraph to the Mission to be published on its Facebook page to inform the public about CLE’s activities.

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Activities under B.I. relate to the following AMEP indicators: IR 1.1 (2) Percentage of pending civil cases over 24 months old (Pristina Basic Court Department Only) CLE will track on a dynamic basis the percentage of cases heard and resolved within 24 months in the Pristina Basic Court Commercial Department. Target Year 5: 15% Actual Year 5: N/A Q17: 17.21% IR 1.1 (3) Percentage of pending civil cases over 24 months old (Appeals Court Commercial Department Only) CLE will track on a dynamic basis the percentage of cases heard and resolved within 24 months in the Appeals Court Commercial Department. Target Year 5: 17 Actual Year 5: N/A Q17: .3% IR1.1 (5) World Bank Doing Business Indicator on resolving Insolvency Target Year 5: 163 Actual Year 5: 163 Q17: N/A IR.1.1.2 (1) Number of person days of training delivered to justice sector professionals4 Target Year 5: 10 Actual Year 5: 33 Q17: 33 IR.1.1.3 (1) Number of new laws and secondary legislation finalized and adopted to improve contract law and property rights using USG assistance Target Year 5: 2 Actual Year 5: 2 Q17: 2 IR.1.1.3 (2) New Law on Bankruptcy/ Insolvency adopted and Promulgated, as well as secondary legislation Sub-level milestones: 1) Draft Law complete; 2) Law adopted and promulgated; 3) secondary regulations implemented; 4) Bankruptcy Administrators licensed; 5) Manual on Rules and Procedures for Bankruptcy promulgated and adopted. Target Year 5: 5 Actual Year 5: 3 Q17: 3 ACTIVITIES PLANNED FOR NEXT QUARTER (AUGUST 2017-OCTOBER 2017)

A. Component 1: Improved Systems for Enforcement of Judgments and Reduction of Backlog in Enforcement Cases Court-based enforcement backlog reduction In the next quarter, and through Year Five, CLE will continue to reduce the execution caseload and assist the courts in the enforcement of judgments against bank accounts and wages. CLE will also: • Continue working with KT on announcement to PEAs interested in receiving cases that will be transferred from the courts • Meet with KJC to take a decision to treat as closed or inactive court-as-creditor claims with a value of 50 Euro or less Private enforcement Next quarter, CLE will engage in the following activities related to the private enforcement system: • Organize the event for the passage of the amendments to the LEP, assuming a Government is formed prior to when CLE concludes • Finalize and obtain funds for the cost model study to be conducted for the PEA fees

4 Note—Despite the broader scope suggested by the name of this indicator, the precise definition for this indicator in the AMEP is more restrictive – “Training of newly appointed commercial judges, bankruptcy administrators, and licensed attorneys, in coordination with KJI and KBA on the new Law on Bankruptcy only.”

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• Conduct the Surveys with PEAs and creditors • Draft Policy Guidance to PEAs for use of Bank Account Holder Registry (BAHR) • Support the Professional Committee to reform how PEAs report to the MOJ • Assist the CPEA to develop strategic communications and outreach plan • Continue to monitor MOJ inspections of PEAs

B. Component 2: Development of the Contract and Commercial Law Framework and Systems, improvement of contract enforcement systems and functioning of the ADR mechanisms In the next quarter, CLE will engage in the following activities related to Commercial Law, Mediation, and Outreach: Commercial Law • Support CBK in promulgation of the Regulation on Late Payments for Financial Institutions • Begin the process of certification of new Bankruptcy Administrators in cooperation with MOJ and the EU FLP Project • Organize public lecture for law students on Bankruptcy, with a focus on Masters Degree students in Pristina. Mediation • Advocate for passage of draft Law on Mediation, assuming a Government is formed prior to when CLE concludes • Organize meeting with designated mediation clerks and judges to receive feedback on the step- by-step practice guide used to train the mediation clerks. Outreach • Assist and mentor ILIRIA College on organizing 4th Annual Western Balkans Vis Pre-Moot • Implement outreach strategy targeting business sectors more likely to use commercial mediation • Coordinate with donors on mediation-related outreach and awareness raising campaigns • Finalize video on private enforcement system

MISCELLANEOUS – CONSULTANTS, ENVIRONMENTAL COMPLIANCE AND BUDGET

Short-term consultants this quarter Under subsection F.7.A.3 of the CLE program contract (Contract No. AID-167-C-13-00001), a statement is required on any short-term consultants, including progress and observations, significant issues, and a description of follow-on activities and plans. CLE did not engage any short-term consultants in Quarter 17. Environmental Compliance Statement Under subsection F.7.A.3 of the CLE program contract (Contract No. AID-167-C-13-00001), a quarterly statement is required on actions taken related to environmental regulation compliance. Due to the nature of the CLE program’s work, its activities are not likely to implicate environmental regulations. Nevertheless, the Program has appointed an Environmental Compliance Officer who continuously reviews Program activities to ensure compliance with relevant environmental regulations. No issues arose in quarter seventeen. Status of Budget Expenditures Under subsection F.7.A.3 of the CLE program contract (Contract No. AID-167-C-13-00001), a quarterly statement is required on the status of budget expenditures. As of July 31, 2017, CLE had expended $7,906,843.26. During Q17, spending was $337,614.50. CLE anticipates the monthly burn rate to continue to be approximately $173,485.35 per month over the next quarter.

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ANNEX 1 – DELIVERABLES

Concluded during the reporting period were: Component 1: Improved Systems for Enforcement of Judgments and Reduction of Backlog in Enforcement Cases • Law amending Law on Enforcement Procedure (Presidential Decree) • Administrative Instruction MoJ No. 01/2017 on amending and supplementing the Administrative Instruction MoJ No. 06/2014 on fees for rewards and compensation of expenses for Private Enforcement Agents (signed by Minister of Justice on May 15, 2017) Component 2: Development of the Contract and Commercial Law Framework and Systems, improvement of contract enforcement systems and functioning of the ADR mechanisms • KJC Press Release on Mediation Clerks • Training Materials on the new Bankruptcy Law • Regulation on Licensing and Certification of Bankruptcy Administrators • CLE Quarterly Newsletter • “Know Your Rights Brochure” on amendments to the LEP

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U.S. Agency for International Development Kosovo Arberia, Ismail Qemali Street, House No. 1 10000 Pristina Tel: 011 (038) 5959-2000; Fax: 381(0) 38-249-493 kosovo.usaid.gov