BizCLIR

Study of the seven subject-matter areas produced a series of cross-cutting themes that warrant careful attention. These themes are (1) legal education; (2) continuing legal education for lawyers and judges; (3) access to legal resources; (4) corporate governance; and (5) implementation of new commercial laws; and (6) donor coordination.

LEGAL EDUCATION

The problems with legal education in Kosovo begin in the dark, crumbling, and even foul-smelling facility of the law school at Prishtina University where most of the lawyers in Kosovo are trained. From there, the issues proliferate: The ratio of students (about 3000) to faculty (about 47), is more than 63:1. Many texts are older than the students who use them and, even where there is access to new laws and concepts, the information is not adequately understood by the faculty charged with teaching them. Law students are not taught legal writing in any meaningful way. Rumors of corruption in the typically non-anonymous examination process are rampant. Highly politicized leadership, ambivalence over outside involvement in the curriculum, and well intentioned but confusing initiatives to bring the curriculum in step with EU standards further combine to render the education offered uneven, at best. These problems are complicated by inconsistent assistance from the donor community, which has launched and abandoned various programs over the years – different clinical legal education programs have been tried, for example – with little emphasis on the relationship between skilled lawyers and economic growth, and even less on donor coordination, monitoring, evaluation, or dissemination and incorporation of lessons learned.

Bright lights exist, however, in the morass. A steady stream of visiting law faculty from the United States and Europe have taught at Prishtina University in recent years, either individually or in teams with Kosovar instructors, injecting new energy, information, and techniques into teaching and examination. Two U.S. law schools – the University of Pittsburgh and Chicago-Kent – have made particularly strong commitments to bringing contemporary practices of legal education to Prishtina. Both schools have hosted law faculty in the U.S., sent instructors to Kosovo, and, through their respective LL.M. programs, trained talented young students who committed to return and share their knowledge. In addition, ABA/CEELI has made an important contribution to the effort to train law school graduates through its sponsorship (supported by USAID) of a “Praktikant Program,” that is, a one-year on-the-job training opportunity for new lawyers who are required to obtain certain formal experience prior to taking the bar exam.

Notwithstanding these promising activities, there is an enormous need for greater coordination among donors, individual projects, and the law school itself, which underscores the relationship between a vibrant, functioning law school and a vibrant, functioning economy. In short, Kosovo’s economy will never flourish in the absence of a corps of trained lawyers who are up-to-date on market-oriented concepts and new laws; who can draft, interpret, and enforce contracts; and who can write. That corps does not exist now, and no signs point to its rapid development.

USAID/Kosovo has established a Memorandum of Understanding with the Law Faculty of Prishtina “under which training courses on commercial law targeting law students, legal professionals and business people” are envisioned. This is an important step. Given its access to well-qualified lawyers and its support of the ABA/CEELI work in this area, USAID is positioned to serve as the leader among donors in forging and supporting a coordinated effort to improve commercial legal education. In addition to providing key funding support, USAID could bring together donors and local stakeholders to develop a strategic, coordinated approach to commercial legal education.

When it comes to improving commercial legal education at the law school, evaluation of the “big picture” is warranted. To establish a baseline, the following questions need clear answers:

• What commercial law courses are currently available in the standard law school curriculum? Who is the faculty assigned to teach these courses, and to what extent are these faculty members themselves familiar with recent changes in the law?

• What is the universe of local and donor activity specifically targeted at the law school? Of this activity, which specifically pertains to commercial law? What is the current level of donor coordination with respect to commercial law-related assistance to the law school?

• What long-term reforms are necessary to allow the law school to provide a comprehensive and meaningful curriculum in commercial law? How can these reforms be prioritized? What existing structures are in place within Prishtina University and the law school to oversee and guide a long-term reform process, and what new structures might be necessary?

• What short-term methods could be used to get much-needed information and assistance to students now? How could donor and local resources be leveraged to most effectively implement these methods?

In reality, reforms to the legal education system in Kosovo will likely take a generation. Through a shared vision of long-term reform, combined with thoughtful and well executed short-term initiatives, a shift in the learning dynamic and the quality of commercial legal education may finally take place in a sustained and meaningful fashion.

CONTINUING LEGAL EDUCATION

The dearth of qualified commercial lawyers and judges familiar with commercial law topics is attributable to numerous factors, including the virtual exclusion from legal education of Kosovar Albanians between 1989 and 1999; the outdated skills of lawyers and judges trained prior to 1989; the poor quality of education now; and the constantly changing commercial legal and institutional environment. Since 1999, the donor community has engaged in many initiatives to train Kosovar lawyers and judges. Much of what has been done has been considered relatively successful; recent emphasis on enforcement of judgments, for example, has attracted significant interest and participation. An ad hoc and uneven approach to Continuing Legal Education (CLE) is maturing to a certain extent into more a structured system. Specifically, the Chamber of Advokats takes seriously its role to provide CLE to lawyers and the Kosovo Judicial Institute (KJI), while still surprisingly weak in light of the significant resources it has received to date, is well known among its constituents.

As one observer has commented, however, “Too much emphasis . . . is focused on human rights and criminal proceedings. Greater emphasis needs to be placed on commercial and business law and lawyering.” There remains a pressing need for comprehensive training specifically pertaining to commercial law, through which lawyers and judges may obtain in-depth understanding of concepts that, to date, have not been taught in a sustained fashion. Again, this is an area for USAID to use its vast experience and leadership role to develop a coordinated, strategic approach to reform.

CLE for Practitioners

Each of the subject-specific chapters in this Report notes a compelling need for lawyers in Kosovo to significantly improve their knowledge-base and skills. A common refrain among individuals interviewed for this Assessment was the need for a CLE initiative for lawyers who wish to work in the commercial law. But it is not enough to offer occasional seminars on an ad hoc basis for a few hours or even a full day. Rather, for certain topics, no fewer than 40 hours of training is the minimum background that would qualify a lawyer who expects to begin practicing in a certain field. Whether CLE should be mandatory was not a subject of specific discussion; however, as it was pointed out, it seems impossible that a lawyer who graduated from law school 10 or 15 years ago could be, in the absence of intensive and highly substantive training, capable in any way of representing a client in any of the emerging areas of commercial law.

The construction of a sustained, substantive and comprehensive training program for practitioners in the commercial law would be an enormous undertaking. Such a program would require coordination and consensus among the major donor and local actors. The establishment of a certificate-granting Commercial Law Institute, through which lawyers may subscribe to a respected program that will prepare them to work in the new economic environment, is worth significant consideration. A sample curriculum would include the following:

• Introduction to the Commercial Law of Kosovo (40 hours)
• Drafting for Commercial Lawyers: Correspondence, Contracts and Cases (40 hours)
• Lawyering for Companies and Investors (40 hours, including 15 hours devoted to corporate governance)
• Collateral Law: The Creation and Enforcement of Pledges (40 hours)
• Property Law in Kosovo (40 hours)
• Intellectual Property Law (40 hours)
• Bankruptcy Law (40 hours)
• Competition Law (40 hours)
• Public Procurement (40 hours)

Ideally, each program would be offered two or three times a year, commensurate with demand. Also, to underscore the importance of mastering the topic, an anonymously graded exam as a condition to pass the course would be desirable.

CLE for Judges

The Kosovo Judicial Institute was established by the Organization for Security and Cooperation in Europe (OSCE) and since 1999 has served as the chief source of training for judges and prosecutors in Kosovo. The KJI has sponsored at least 200 training programs, and most judges and prosecutors in Kosovo have attended at least one program. The KJI’s mission is currently being re-focused into service exclusively for judges, with the strong likelihood of the development of a new resource for prosecutors only. Many donors have used the KJI as a vehicle for developing and providing training for judges. For example, USAID has offered professional skills courses through the KJI. The World Bank and Germany’s Icon Institute have arranged training at the KJI for “commercial law judges.”

The KJI’s capacities remain significantly underdeveloped, particularly in the area of commercial law. The World Bank’s efforts to begin training judges in commercial law topics should be taken to the next level, that is, to a comprehensive and sustained curriculum for judges who face commercial law issues in the future.

ACCESS TO LEGAL RESOURCES

Lawyers in Kosovo lack access to commercial law resources. There is clearly a shortage of books, manuals, commentaries, case decisions, hard copies of laws, and other resources, particularly for those people who do not have access to the Internet or who do not speak English. Perhaps just as important, there is an alarming lack of awareness of how to access the universe of information pertaining to the commercial law in Kosovo.

In general, access to commercial law and information takes place through the following mechanisms:

• The UNMIK website. This resource is the most reliable for law that is actually in force. The threshold issue for a practicing lawyer, of course, is whether he or she is capable of accessing this information from the internet. In addition, complaints about this source ranged from the slowness with which enacted laws are posted, the quality of translations it provides, and its inadequate system of indexing.

• Other websites. Various institutions in Kosovo that have a direct or indirect relationship to commercial law have been created. For example, several of the Provisional Institutions of Self-Government, along with Kosovo’s Banking and Payments Authority and the Kosovo Trust Agency, have websites.

• Courts. Judges in Kosovo are said to have access to new laws through a system in which copies of the Official Gazette and other “justice circulars” are sent to Court Presidents. This system is said to be slow and unreliable.

• Library at the Kosovo Supreme Court. This library, located in Prishtina, focuses chiefly on human rights and criminal law issues.

• Library at the Commercial Court. The World Bank has sponsored the establishment of a small library devoted to commercial law, located at the Commercial Court in Prishtina. Awareness about the library is limited, and whether and to what extent individuals other than judges and court staff may access its materials is not clear.

• Kosovo Law Center. The KLC was established by OSCE in 2000 “to cultivate the professional skills of local legal talent in order to establish a locally run, independent, and sustainable NGO that embodies, develops and promotes democratic principles, multiculturalism, high ethical standards, the rule of law and respect for human rights.” The KLC houses a library of “applicable law, decrees, regulations, jurisprudence, administrative acts and respective translations” and also offers “a variety of international materials with particular focus on the region.” The KLC's library is open to the public. In addition, the KLC publishes compendia of the law in Kosovo, along with volumes of Supreme Court Cases. The KLC’s resources, however, focus almost exclusively on criminal law and human rights law.

• Other resources, such as the Criminal Defense Resource Center and the Law School Library, are similarly focused on human rights law and criminal law and procedure.

The need for dramatically improved access to commercial law resources is clear. Lawyers and judges – particularly those who are unfamiliar with the Internet – also need targeted assistance in improving their understanding about how to access information. Such an initiative should be conceived and implemented through a process of coordination and consensus-building among the major donor and local actors.

CORPORATE GOVERNANCE

Achieving a good environment for domestic and foreign investment in Kosovo will take an enormous commitment at all levels to the foundations of a welcoming investment environment, including the rule of law, efficient judicial and regulatory systems, low corruption, and a commitment to competitiveness. Good corporate governance is a critically important part of this.

Corporate Governance is the system by which companies are directed and controlled. Good corporate governance requires both a company law and a business environment in which persons who control a company – including directors, managers and controlling owners – are fully committed and accountable to investors in the company. It requires a system in which there is adequate disclosure of financial and other information so that investors can have a meaningful voice in choosing directors and effective ability to choose and protect their investments. It also requires a court and judicial system in which investors can enforce their rights if necessary by litigation against a company or against persons who control it who abuse their positions of trust. Kosovo’s Company Law generally requires businesses to delineate the rights and responsibilities of its different participants in their founding documents – including its board(s), managers, shareholders, and other stakeholders – and to spell out the rules and procedures for making decisions on company affairs. This delineation of roles, or system of Corporate Governance, establishes the structure through which company objectives are set, the means of attaining those objectives, and how performance will be monitored. In the absence of systems that provide for corporate transparency, accountability, and responsibility, the environment for investment is diminished.

Thus, as further detailed in this Report, lawyers in Kosovo need training in how to counsel their clients in matters of Corporate Governance. Further, donor-sponsored business assistance programs, including those that assist Micro-Enterprises, Small and Medium-Sized Enterprise, State Owned Enterprises, and Publicly Owned Enterprises, should include practical components in Corporate Governance, including the purpose of and protections afforded by corporate structures that provide for limited liability; the importance of enlisting legal counsel to assist with business formation; contracts and other transactions; disclosure requirements; enforcement of debts; and, if necessary, dissolution; and additional principles and practices of Corporate Governance, such as director duties and shareholder rights.

IMPLEMENTATION

In Kosovo, the urgency of getting certain laws enacted has occurred at the expense of comprehensive, multi-donor planning for the “whole picture” of entering a new law into force. Ideally, the whole picture should begin with inviting all interested parties into the legislative drafting process – assessing their strengths, weaknesses, needs and concerns, for the purposes of both improving the draft law and for further capacity-building – followed by a carefully constructed program for introducing the new law to all affected constituencies (including judges, lawyers, businesspeople, civil servants, the media, newly created agencies, the public, educational institutions, and so forth). Implementation necessarily implicates donor support, along with a clear understanding of which donors or local authorities intend to assume tactical and financial responsibility for which aspect of implementation, with all bases covered and minimal duplication of effort.

The Bankruptcy Law is emblematic of the problems in which legislation becomes enacted without such a program for actual implementation and donors fail to cover all bases. On the one hand, judges along with some lawyers and economists received training from various donors on the topic of Bankruptcy, and at least one major commentary has been published. On the other hand, implementing bankruptcy rules, though drafted, remain unreleased to the general public; no steps have yet been taken to train or certify bankruptcy administrators; and, 15 months after its entry into force, the law remains unused.

The Competition Law and the Foreign Direct Investment law threaten to become further examples of legislation preceding institutional consensus-building, prioritizing, and forethought. Both laws anticipate new agencies being created, requiring highly trained staff that hold discrete skill sets that are vital to their success. In the case of the Competition Law, the opportunity cost of supporting an implementation program, including the development and support of a Competition Board, has not received sufficient consideration by the donor community. In its June 2004 Report entitled Kosovo’s Business Environment: Constraints to Growth, the World Bank calls for a Competition Law to combat the anti-competitive practices arising from the “gray economy.” But the relative priority of a new legal regime vis á vis the other suggestions the World Bank makes for reducing the gray economy – not to mention pursuing additional measures to promote economic competitiveness – has not received sufficient attention.

DONOR COORDINATION

There is no formal donor coordination mechanism for commercial law coordination at this time, and the need for greater coordination among donors is clear. Indeed, the ever-increasing complexity of the international development arena makes project coordination among donors more important than ever. In January 2004, USAID’s Bureau of Policy and Program Coordination (PPC), Office of Donor Coordination and Research, issued a report entitled Donor Coordination, Strategies and Perspectives, a useful resource for contemplating and planning around the issue. The report defines the key characteristics, objectives, and types of donor coordination; identifies the major actors and issues pertaining to donor coordination; and sets forth strategies and special issues pertaining to donor coordination.

Fundamentally, the report emphasizes that donor coordination is a means to an end, meaning that it is used to advance development objectives by addressing certain relational or circumstantial issues that technical design and implementation alone cannot resolve. Donor coordination is intensely process-oriented and puts a priority on relations and linkages among actors. The objectives of donor coordination include the following:

• Addressing the foreign policy context (i.e., conflict prevention)
• Reducing redundancies
• Encouraging collaboration on activities
• Forging consensus on issues, processes, and frameworks
• Supporting country leadership
• Compensating for weak host-country capacity
• Advancing best practices
• Making use of comparative advantages
• Knowledge-sharing
• Forging macro-economic linkages

It is widely agreed that the most effective donor coordination occurs where a country (or, in this instance, Kosovo) takes ownership of its own development strategy and is committed to harnessing the various competencies and strengths of the donor community. As summarized by the PPC report, the four major types of donor coordination range from the basic and often perfunctory, to quantifiable efforts to align programs that reduce transaction costs and strengthen host-country capacity. In order of relative effectiveness, they include the following:

Information exchange. The most basic type of coordination, usually involving regular meetings of donor representatives working in a particular sector. Types of information exchanged include programmatic details, economic and political analyses or forecasting, or evaluation findings. Information exchange may include representatives of the host government. Policy differences often persist with this type.

Division of Labor. Coordination moves beyond talking about programs already in place to some sense of shared planning, however ad hoc. Donors benefit from comparative advantage and specialization. The host government may be engaged. With its central goal of avoiding duplication of effort, this type of coordination is typically static and preventative.

Common Framework. The host government and donors agree on development policy and program objectives and specific activities are planned to improve aid effectiveness, not merely to avoid duplication. In the strongest instances, the host government is actively engaged in managing aid resources and coordination. A common framework allows donors to identify key constraints and gaps. (Where the host government is particularly weak or recalcitrant, the donors may devise a framework amongst themselves.)

Harmonization. Donors align their practices and procedures to reduce transaction costs and strengthen host-country capacity. Harmonization theoretically occurs at the implementation phase, and may include alignment around a common framework for development, certain procurement practices, financial management, leveraging of resources, and joint monitoring and evaluation.

Donor coordination is everyone’s responsibility, and requires sensitivity, humility, and resourcefulness among the individuals and organizations that bring different strengths, perspectives, priorities, and even cultural norms to the table. If commercial law and institutional reform is to be advanced in Kosovo, donor coordination must be improved.

Once again, USAID can take a leadership role with respect to establishing a framework for donor coordination based on the PPC Donor Coordination, Strategies and Perspectives report. Coordination would need to go beyond monthly donor meetings – although monthly meetings pertaining to commercial law reform would be a good place to begin. Involvement of PISG officials who are charged with coordinating efforts is also crucial.

As demonstrated in the remainder of this report, these cross-cutting themes permeate virtually all aspects of the specific subject matter areas discussed. Effective Commercial Legal and Institutional Reform in Kosovo will require renewed focus on the issues of legal education, CLE for practitioners and judges, legal resources, corporate governance, implementation, and donor coordination.