How To Improve The Justice System In Croatia
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- Willis Hutchinson
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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Justice Sector Support Project Report No.: AB5296 Region EUROPE AND CENTRAL ASIA Sector Law and justice (100%) Project ID P Borrower(s) MINISTRY OF FINANCE Implementing Agency Ministry of Justice Project Management Unit 41, Savska Cesta, XVI Zagreb Croatia Tel: (385-1) , Fax: (385-1) Ministry of Justice 41, Savska Cesta, XVI Zagreb Croatia Tel: (385-1) Fax: Environment Category [ ] A [X] B [ ] C [ ] FI [ ] Date PID Prepared January 28, 2010 Date of Appraisal January 13, 2010 Authorization Date of Board Approval March 30, Country and Sector Background 1. In June 2004, the European Council granted Croatia candidate status, with accession negotiations opening in October of the following year. Since then, accession aspirations inform most political, economic and public sector developments in Croatia. Notwithstanding debates on approaches to accession requirements, accession aspirations are shared broadly across the domestic political spectrum. The accession processes are well-embedded in public sector entities. In addition, the prospects and challenges of accession are having a profound effect on private sector strategies. Consequently, Croatia has undertaken wide ranging reforms and made significant strides towards meeting the requirements for accession, and the FY09-12 World Bank Group Country Partnership Strategy (CPS) focuses on assisting Croatia to prepare for its European Union (EU) accession. 2. The November 2009 Progress Report of the European Commission (EC) acknowledges the progress Croatia has made. Twenty-eight of the thirty-three negotiations chapters were opened, fifteen provisionally closed, and opening benchmarks were met for all but two of the remaining chapters (i.e., judiciary and fundamental rights, and competition policy). The national and EC authorities have targeted mid-2010 for completion of negotiations.
2 3. The Progress Report also highlighted shortfalls and areas in need of continued efforts and attention. By topic, the highlighted weaknesses include the following: a. Efficiency clearance of case backlogs; lack of evidence of the impact of reforms to the civil procedure code; capacity of the misdemeanor courts to resolve cases before the statute of limitations expires; jurisdiction the Administrative Court; ineffective case party notification system; slow implementation of the 2008 municipal court rationalization law; limited planning for the rationalization of the commercial, misdemeanor and country courts and the prosecution offices; slow electronic case management system roll-out; deficient misdemeanor court resources, including staffing and facilities; insufficient capacity of the Ministry of Justice (MOJ) judicial inspection function (court and prosecutors); growing courtbased mediation case backlog and lack of strategy to encourage out-of-court alternative dispute resolution (ADR). b. Independence capacity to implement transparent selection of judges, prosecutors and court personnel, criminal immunity for and accountability of judges. c. Professionalism lack of human and financial resources of the Judicial Academy. d. Anti-corruption incidence and societal tolerance of corruption; need for increased capacity of the various anti-corruption bodies; need for continued improvement of the interagency coordination; poor public and official understanding of conflict of interest; insufficient supervision of asset declaration. e. War crimes unprosecuted crimes (lack of evidence, unwillingness of witnesses to come forward); in absentia verdicts from the 1990s; limited use of specialized war crimes courts. f. Fundamental rights capacity to implement 2008 law on free legal aid; prison capacity; capacity to ensure judicial protection of children; capacity to ensure legal and judicial protection of workers rights; capacity to ensure judicial protection against discrimination; capacity to ensure judicial remedy for property taken under 1990s war legislation and post-world War II nationalization. 4. Although addressing many of the above concerns do not represent pre-accession requirements, the EC has emphasized the importance of resolving justice sector deficiencies in part due to perceptions of backsliding and stalling of justice sector reforms in the most recently acceded countries. Concerns regarding the performance of the Croatian justice sector are shared beyond the official entities. Business and public surveys re-iterate issues of judicial performance especially the efficiency (timeliness and cost) of case resolution. The integrity of prosecution and adjudication are also flagged in the surveys. 5. Although Croatia does not compare negatively vis-à-vis the Bank s Europe and Central Asia region (ECA) as a whole (except in some measure of resource usage), Croatian residents and foreign investors tend to benchmark their expectations and aspirations against comparators such as EU member states and/or OECD countries. Assessed against such criteria, much still needs to be done to close the implementation gap following the accession-driven reforms to the legal framework.
3 2. Objectives 6. The objective of the project is to improve the efficiency of Croatia s justice system. 2. Rationale for Bank Involvement 7. The CPS places support for EU accession front and center. The expressed goal is to support: the completion of Croatia s EU accession process, the rapid convergence of its income level with that of current EU member states in a fiscally, socially and environmentally sustainable fashion, and a decent quality of life for Croatia s citizens. The Croatian authorities have approached the World Bank for support to close the implementation gap in priority areas highlighted by the EC with a focus on ready interventions to help improve judicial efficiency (performance and resource usage). 8. The proposed operation would follow the case management, judicial performance, and procedural reform features of: (a) the first Bank-financed justice sector intervention in Croatia (the Court and Bankruptcy Project, ); (b) a companion US$350,000 Institutional Development Fund (IDF) Grant (2003-4); and (c) judicial sector policy actions supported by the Programmatic Adjustment Loans I and II (2006 and 2007). The proposed operation would extend and leverage the Bank s decade-long engagement in the justice sector. 9. In addition to the World Bank s experience in Croatia and the Croatian justice sector, the Bank brings substantial cross-country and cross-regional experience in supporting such reforms. The Bank would fund activities not covered by pre-accession finance (e.g., civil works, select technical support), while it would more broadly, complement EC engagement with the national authorities in the post-accession period. 3. Description 10. The JSSP is envisaged to finance the following components (activities and amounts are tentative and subject to change until approved): A. Improving the Efficiency of the Court System. Sub-components comprise: (i) consolidation of the court network (rehabilitation and renovation of three courthouses in Split, Karlovac and Pula, housing five county and municipal courts); 1 (ii) court resource management capacity-building (training court presidents and secretaries to prepare and use resource management plans); (iii) modernization of operational information technology (IT) systems for decision-making and performance monitoring in courts; (iv) refinement of case management standards, guidelines, processes and practices; and (v) improving the efficiency of enforcement of judicial decisions. The civil works locations (Pula, Split and Karlovac) were jointly 1 In Pula, the project will finance some renovations to the existing courthouse under Component A, while relocating the Pula SAO offices and the Land Registry Department to a nearby existing building to be rehabilitated under Component B. This arrangement will free up needed space for essential court functions while also providing appropriate physical facilities for a consolidated SAO to be fully functional in Pula.
4 finalized by the MOJ, the courts and the Bank, on the basis of three key criteria: significant impact, potential for efficiency gains, and readiness for implementation. B. Improving the Efficiency of the State Attorney s Office. Sub-components comprise: (i) consolidation of the State Attorney s Office (SAO) network (SAO Zagreb headquarters complex including USKOK) and rehabilitation of an existing building for the Pula SAO; (ii) institutional capacity strengthening for the SAO; and (iii) case management and IT systems including automating SAO case management and case tracking. The selection process and criteria for finalizing the civil works locations were similar to that for Component A. C. Strengthening MOJ Management Functions. Sub-components comprise: (i) strengthening justice sector resource management and performance management capacity, including the design and development of a medium-term expenditure framework for the justice sector by the MOJ and activities 2 to strengthen justice sector budgeting, resource management and performance indicators; and (ii) strengthening MOJ information systems and their use in management decisionmaking, including initial steps to modernize the inmate information system and strengthen its connectivity with the justice information system; interconnecting the information systems of key justice sector entities; implementing an integrated MOJ document management system; and strengthening ICT technical and management skills of selected MOJ personnel. D. Project Governance and Implementation. Sub-components comprise: (i) project monitoring, evaluation, change management and outreach; (ii) operating costs (including logistical, administrative and other expert technical support); (iii) user surveys; and the Preparation Advance. 4. Financing Source: (EUR m.) Borrower 1.91 International Bank for Reconstruction and Development Total Implementation 11. Partnership arrangements: The project does not envision formal partnership arrangements. However, the Bank has been closely liaising with the EC and other development partners. In particular, the Kingdom of the Netherlands has supported project preparation with a contribution of EUR0.2 million through an Externally Financed Output (EFO), and will support project supervision with another EFO of EUR0.8 million. Many project activities build on and deepen previous support from the EC and other partners. Some lay the ground for projected support (e.g. from the EC, the Netherlands, and the UK) to the MOJ, the courts and the SAO. In particular, project activities to (a) improve MOJ management functions (especially resource management) closely complement proposed capacity-building support from the Netherlands to improve 2 E.g. justice sector budget development and execution, asset management, revenue management, capital budgeting, facilities management, a financing options study for the proposed Zagreb Judicial Square, etc.
5 MOJ strategic planning capability; while (b) project activities to improve enforcement of decisions and upgrade the Integrated Case Management System (ICMS) build on EC support in these areas. Continued close coordination and substantive integration with the EC and other partners support to Croatia s justice sector is central to project design, implementation and supervision. 12. Institutional and implementation arrangements. The MOJ will implement the project, with the Minister of Justice as the project coordinator. An MOJ Project Team led by a State Secretary as the Project Manager and supported by MOJ staff, advisers and consultants, will manage project implementation. The Project Team will be responsible for project procurement; financial management; accounting; disbursement; change management and outreach; monitoring and evaluation; and reporting. 13. Project governance will be vested in a Steering Committee chaired by the Minister of Justice, which will include representatives of the MOJ, the Supreme Court, the State Attorney s Office, the participating courts and SAO offices, the Ministry of Finance, and the associations of judges and prosecutors. The Steering Committee will be supported by technical working groups. The MOJ Project Team will perform secretariat functions for the Steering Committee and working groups. Further details will be agreed during negotiations. 14. Results indicators. Project results are envisaged to be indicated by: (i) reduced case backlogs and improved case disposal ratios in project-financed courts and prosecution offices; (ii) reduced processing times, in pilot courts financed by the project, for key stages of the judicial process subject to long delays; and (iii) improved user ratings for efficiency for project-financed courts and prosecution offices. Project results indicators are envisaged to be periodically published through the project website and informational events organized by the MOJ Project Team. 6. Sustainability 15. The bulk of the project investments extend and upgrade existing capacities in civil works and information systems. These investments induce recurrent operations and maintenance expenses. They also induce significant efficiency gains (e.g., energy savings, paper costs, staff and client time consumed, etc.). Within the narrow scope of the project, it is not likely that all efficiency gains would translate into captured financial savings (especially staff and client time savings although building operations and maintenance savings are more likely to be realized financially). Nevertheless, the relatively modest scope of the project means the induced budgetary costs of US$3 million are small relative to the relevant sector budget of around US$540 million. The salience of the reforms supported by the project investments makes it rather unlikely that the individual project investments would be at risk from a lack of financial resources to sustain them. In relation to the IT investments, the sustainability issues largely arise in connection with the large publicprivate remuneration gaps for IT professionals. The Croatian authorities mitigate these risks by extensive use of contracting, including contracts with two major state-owned IT enterprises that work on a (close-to) commercial basis.
6 16. In the broader context, the sustainability of the project investment are envisaged to be achieved through some system-wide efficiency gains which the supported reforms expect to yield. Thus, over the longer term, the investments in facilities, information systems, procedures, and resource management capacities allow future efficiency improvements to be realized to the budget especially once these can be technically and politically translated into human resource savings. In this regard, there are significant potential savings to be realized as, vis-à-vis European/OECD country benchmarks, Croatia s justice sector consumes high levels of financial and personnel resources. 7. Lessons Learned from Past Operations in the Country/Sector 17. Justice sector operations are inherently difficult and slow-moving, for a number of reasons. First, they tend to be institutional development operations and, thus, face the challenge of orchestrating legal/regulatory change; technical capacity building; changes in roles and responsibilities (organizational and individual); and stakeholder buy-in and behavioral change. Second, the justice sector spans the executive and judicial branches of government, and interacts closely with the legislative branch as well. Consequently, fundamental issues of independence and accountability constantly play out both at the strategic and technical level. Third, the judiciary is inherently conservative reflecting its role as a check on state and private actions. Fourth, large procurements (e.g. information systems, civil works) tend to take time to start up and implement. 18. Justice sector investment operations have a better track record in capacity-building than as reform-leading instruments. In part, this reflects the factors noted above (i.e., judicial conservatism and the challenge of reconciling reform imperatives across the executive and judicial branches). In transition countries, decades of under-resourcing of the justice sector tends to leave the authorities thoroughly preoccupied with closing large implementation gaps in skills, physical facilities, information systems, etc. Moreover, these gaps also show up in authorities own capacity to manage capacity-building initiatives including difficulty in building evidence-based cases for investments, as well as for reforms more generally. 19. Lessons learned from the Bank s engagement in the justice sector include the need to: (i) formulate humbler, narrower and more achievable objectives; (ii) place more stress on operational independence rather than on structural independence (including human resources selection and evaluation, budget formulation and implementation, M&E systems etc); (iii) increase focus on accountability and delivery of services (e.g. effective and efficient court processes); and (iv) ensure more effective use of complementary instruments to reduce risks and increase impact (e.g. a mix of loans/grants, analytics and technical support). 20. The project design reflects these lessons-learned by being: (i) modest in scope and objectives, and conservative in timing; (ii) focused on closing the implementation gaps associated with recent legal reforms; (iii) focused on ready-to-implement investments that should have visible demonstration effects for the reforms; and (iv) supportive of selected resource management and procedural innovations.
7 8. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [ ] [X] Physical Cultural Resources (OP/BP 4.11) [X] [ ] Involuntary Resettlement (OP/BP 4.12) [ ] [X] Indigenous Peoples (OP/BP 4.10) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [ ] [X] Projects in Disputed Areas (OP/BP 7.60) * [ ] [X] Projects on International Waterways (OP/BP 7.50) [ ] [X] 9. List of Factual Technical Documents 1. World Bank (2008), Country Partnership Strategy for the Republic of Croatia (Report No HR) 2. Commission of European Communities (2009), Croatia 2009 Progress Report, Brussels: The European Union 3. European Commission for the Efficiency of Justice (2008), European Judicial Systems, Efficiency and Quality of Justice, Belgium: The Council of Europe 4. Ministry of Justice of the Republic of Croatia (2008), Action Plan of the Judicial Reform Strategy, 2008 Revision, Republic of Croatia: Government of Republic of Croatia 5. Mission of the Republic of Croatia to the EU (2007), State of play in Croatia s Judiciary Reform, Brussels: The European Union 6. Republic of Croatia, Central Bureau of Statistics (2008) Statistical Yearbook 10. Contact point Contact: Amitabha Mukherjee Title: Lead Public Sector Specialist Tel: +1 (202) Fax: +1 (202) Amukherjee@worldbank.org 11. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) pic@worldbank.org Web: * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties claims on the disputed areas
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