76889 April 2013 THE STATUS OF CONTRACT ENFORCEMENT IN POLAND The World Bank Group April 2013 THE STATUS OF CONTRACT ENFORCEMENT IN POLAND THE WORLD BANK 2013 The World Bank Group 1818 H Street N.W., Washington D.C., 20433 All rights reserved. April 2013 This work is a product of the staff of the World Bank Group with external contributions. The information included in this work, while based on sources that the World Bank Group considers to be reliable, is not guaranteed as to accuracy and does not purport to be complete. The World Bank Group accepts no responsibility for any consequences of the use of such data. The information in this work is not intended to serve as legal advice. The �ndings and views published are those of the authors and should not be attributed to IFC, the World Bank, the Multi- lateral Investment Guarantee Agency (MIGA), or any other af�liated organizations. 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ANY queries on rights and licenses, including subsidiary rights, should be addressed to the Of�ce of the Publisher, the World Bank, 1818 H Street NW, Washington, DC 20433, USA; telephone: 202-522-2422; email: pubrights@worldbank.org. ii The Status of Contract Enforcement in Poland Contents Acknowledgments .........................................................................................................................................................v Executive Summary ......................................................................................................................................................vii 1. Overview .............................................................................................................................................................. vii 2. Main Findings and Recommendations ................................................................................................................... vii 1. Introduction ...............................................................................................................................................................1 2. Objective and Methodology .....................................................................................................................................3 3. Courts in Poland ........................................................................................................................................................5 3.1 Demand................................................................................................................................................................5 3.2 Budget..................................................................................................................................................................6 3.3 Workforce ............................................................................................................................................................7 3.4 Court Performance ...............................................................................................................................................8 3.5 Main Trends ........................................................................................................................................................10 4. Factors Underlying these Trends and Possible Solutions ......................................................................................13 4.1 Strategic Vision ...................................................................................................................................................13 4.2 Organization .......................................................................................................................................................15 4.3 Planning for Resources ........................................................................................................................................18 4.3.a. Budget.......................................................................................................................................................18 4.3.b. Human Resources ......................................................................................................................................20 4.4 Unintended Incentives to Litigate ........................................................................................................................22 4.4.a. Litigation Costs ..........................................................................................................................................22 4.4.b. Tax incentives.............................................................................................................................................24 4.5 Procedures ..........................................................................................................................................................26 4.5.a. Legislative Practices ....................................................................................................................................26 4.5.b. Procedural Design ......................................................................................................................................27 4.6 Access to Information .........................................................................................................................................28 References ....................................................................................................................................................................33 iii Acknowledgments The Status of Contract Enforcement in Poland was prepared Mr. Kamil Jonski, and Mr. Daniel Mankowski from the De- by a team led by Marcin Piatkowski, comprising Lubomira partment of Strategy and Deregulation. The team is also Z. Beardsley, Klaus Decker, and Fernando Monge. Richard indebted to the members of the National Judicial Council, Nash also contributed to the report. the Association of Judges, the National School for Judges and Prosecutors, the Polish Bar Association and Association The team is indebted to Xavier Devictor, Sophie Sirtaine, of Bailiffs, the president, vice president, and judges of the Aurora Ferrari, Christina Biebesheimer, and Jaroslaw Bel- courts in Warsaw and Krakow, and numerous judges, legal dowski for valuable guidance during the preparation of professionals, and businessmen, all of which provided very the report. The report greatly bene�ted from the strong valuable comments to the report. commitment, productive comments, and logistical support of a dedicated team of collaborators from the Ministry of The team would like to acknowledge the strategic leader- Justice, including in particular Ms. Monika Borowska-Mas- ship and the strong support of the Minister of Justice, Mr. salska, Ms. Anna Adamska-Gallant, Mr. Jakub Michalski, Jaroslaw Gowin. Acknowledgments v Executive Summary 1. Overview region to the next. Various efforts have been made to try to create cross-border benchmarks as a means for countries 1. This report aims to provide an assessment of the to compare their “performance� in this area. But as shown state of contract enforcement in Poland as of 2012. in this report, cross-border benchmarks have limitations and The report is not intended to be a comprehensive assess- can form the basis of policy reforms for only so long. ment of all aspects of the justice sector nor should it be utilized as such. 6. In Poland, demand for court services in general and �rst instance1 civil and commercial courts in particular 2. The report focuses on the analysis of the civil and has steadily increased since the 1990s.2 commercial courts as the main venues for contract en- forcement. It studies the most critical elements of court 7. The Polish courts are historically located in admin- functioning, highlights key issues that are worthy of further istrative centers. Polish Courts are of various sizes, and attention by policy makers, and formulates recommenda- are composed of a few layers often without apparent con- tions for immediate and mid-term reforms. nection or consideration of such factors as workload, pro- ductivity, operating costs, and population served. Recently, 3. The report’s �ndings are based on data from sev- the Ministry of Justice (MoJ) launched an organizational eral sources: the Polish government, the reports of the reform to consolidate and rationalize court organization. European Commission for the Ef�ciency of Justice (CEPEJ), The current caseload of the courts consists of large num- desk research by World Bank staff from Washington, DC, bers of smaller civil and commercial cases, mainly dealing and interviews with local experts, judges, and government with registrations (for businesses and immovable assets) of�cials conducted during the Bank’s two visits to Poland. and nondisputed uncollectible debts, which amount to more than 80 percent of the cases. This composition of the 2. Main Findings and case inflow has come about because of the expansion of Recommendations civil and commercial courts jurisdictions in the late 1990s to deal with numerous small case and registry cases. 4. The range of issues that affect the environment for contract enforcement in a particular country is usu- 8. The existing con�guration of court personnel is not ally broad. Issues include: the legal environment directly optimal for dealing with this kind of case inflow. De- related to property rights and contract law; the institutional spite the increasing number of judges in the last �ve years, environment covering dispute resolution; the general busi- the caseload of Polish judges is among the highest in the ness environment and ways in which businesses seek to region. At the same time, the number of referendarzs3 per establish, create, and maintain relationships, along with the judge is still low, and judges are involved in processing attendant services that exist to help business reduce legal, cases that can be done by nonjudicial personnel, at much regulatory, and other risks; and alternative forms of dispute lower cost. resolution that businesses may or may not seek to utilize. 9. In terms of judicial expenditure, Poland has been 5. In each country, the way these rules, institutions, and remains a front-runner among European coun- and individuals interact will be complex and different. tries. Yet despite some improvements, the performance of For example, in any country, banks involved in mass con- civil and commercial courts is below average compared to sumer lending will have different requirements and expecta- tions in terms of contract enforcement, with bank customers ranging from a high-end bespoke manufacturer operating 1 First instance courts are district and regional courts with original jurisdic- in a boutique section of the market, with only a few other tion. 2 World Bank (2005). companies able to provide the required inputs to its prod- 3 Referendarzs are court of�cers who can be compared to Rechtspfleger or ucts, to a provincial tailor. Accordingly, in most instances, similar bodies in Germany, Austria, and other countries. They have spe- when looking at the situation in a holistic sense, the policy cialized training, and can undertake certain judicial or quasi-judicial tasks recommendations are likely to differ from one country or autonomously. Their decisions can be subject to appeal. Executive Summary vii European countries. Moreover, citizens tend to be rather d. Unintended incentives to litigate disapproving in their perception of the courts.4 This sug- gests that there is room for improvement, but the current e. Procedures level of budget spending does not seem to be enough to f. Access to information. reverse these trends. The MoJ needs to be aware that the wide range of competencies of the civil and commercial g. These main issues should be addressed by the Polish gov- courts and the large inflow of small, nonlitigious, and regis- ernment. try cases require that resources allocation and management practices be designed with the speci�c characteristics of the 11. The table below summarizes the main areas for activity of Polish courts in mind. reform identi�ed to date in the system, together with core recommendations. The summary is provided for 10. There are six main issues behind the trends of per- ease of reference only and should be read in conjunction formance by the Polish civil and commercial courts: with the detailed analysis set out in this report. There is a need for additional discussion, information, and fact �nd- a. Strategic vision ing to arrive at more concrete recommendations. b. Court organization 4 Opinion survey of the Polish justice system conducted by IBC Group and c. Planning for the key resources (�nances and people) Homo Homini (the Survey). viii The Status of Contract Enforcement in Poland A Way Forward: Summary of Recommendations Area for reform Recommendation 1. Strategic vision s Advance the development of a practical strategy for the civil and commercial courts, which sets out a clear vision and benchmarked goals. s Engage all the stakeholders in the justice sector in developing this strategy. s Consider international good practices and take advantage of the available tools to design the strategy for the court system (such as tools developed by International Consortium for Court Excellence and CEPEJ). s Test “contractualization� or other consensus-based approaches to management as part of the new strategy. 2. Court organization s Continue reforms toward the consolidation of courts and specialization of courts and judges. s Involve judges and other stakeholders. s Improve monitoring and evaluation of impacts. s Take advantage of recent good practice from other countries. 3. Planning s Introduce programmatic budgeting as the main approach to budgeting in justice sector. s Strengthen planning. s Create proper links between planning and budgeting. s Introduce appropriate models for forecasting workload and staf�ng requirements. s Review and adjust the performance monitoring and evaluation system (M&E). s Extend M&E to the performance of individual judges and involve judges in the design. s Perform regular satisfaction surveys of users. s Consider conducting a Justice Sector Public Expenditure Review. s Test contractual arrangements in managing courts and relations with stakeholders. s Consider using some method for estimating staf�ng requirements, such as a weighted workload study, to inform the human resources policy and to increase the ef�ciency of the expenditures and operations of the courts. s Consider introducing human resource policies that would allow for more flexible allocation of judges and nonjudicial staff to courts. 4. Unintended incentives to litigate s Carry out an analysis to understand: (i) how litigation costs may or may not be driving the usage of the courts; (ii) whether the value of litigation is a �nancial resource for the court system; (iii) what is the cost-bene�t impact of the services provided and the resources invested and collected; and (iv) whether court operations are a potential barrier to access to justice. s Identify policy options to address current imbalances. s Consider evaluating the �lters for the e-court. s Reexamine cost-shifting practices (legal amounts, interest on unpaid costs, and use of cost shifting to punish undue behavior by litigants). s More thoroughly assess the impact of the tax system on the behavior of litigants, as well as on the state and court budgets. s Consider tax reforms such as those implemented by the Slovak and Czech governments s Evaluate whether the Corporate Income Tax Act can mitigate the unnecessarily high case inflow of the courts. s Monitor the incentive structure, as it will be the key to avoiding future imbalances. 5. Procedures s Consider creating a simple assessment system of procedural rules. The system could combine the functions of both the legislative impact assessment and enforcement/compliance monitoring and evaluation. s Introduce a stricter legislative schedule. s Increase the quality of draft amendments and reduce their volume in the MoJ by improving consultations with relevant stakeholders on key policies and legislation. s Explore the potential of a contract between judges and litigants to speed up proceedings. s Consider modernizing court experts system. 6. Access to information about the s Consider publishing court decisions and national and court statistical analysis, to increase system as a whole, courts, and transparency and access to information. individual cases s Introduce the publication of information on foreseeable timetables of proceedings either as a legal obligation or a de facto practice. Executive Summary ix 1. Introduction 12. Productive investment requires an environment 14. The MoJ has requested the World Bank’s assis- with a reasonable level of economic and political tance in analyzing contract enforcement and devel- stability, and one where property rights are reason- oping policy recommendations as to how it can be ably secure. Evidence in some countries, including Poland, strengthened. It was agreed that such assistance would show that entrepreneurs who believe that their property focus on civil and commercial courts. rights are secure reinvest between 14 and 40 percent more of their pro�ts in their businesses than those uncertain 15. This report grows out of the World Bank’s work in about whether their rights are enforceable.5 Property rights this area. After a brief description of this report’s objective are more secure and more valuable when the costs and and methodology (chapter 2), chapter 3 examines courts risks of transactions are low. Delays or uncertainties in the in Poland, analyzing the demand for court-based services; enforcement of contracts erode the value of property rights budget and court staff allocated to operate courts; and and diminish the opportunity and incentives to invest. court response. Chapter 4 focuses on some of the main factors that explain the courts’ situation in Poland, and 13. Weakness in the business environment in Po- fleshes out the main �ndings and recommendations out- land are exacerbated by unpredictable changes in lined in the executive summary. the policy and legal framework and less than opti- mal performance of legal institutions, including the judiciary, the 2004–13 World Bank Doing Business reports and the 2004 and 2010 Investment Climate Assessments suggest. This situation persists despite a number of reforms implemented by the government and the judiciary itself. 5 World Bank (2005). 1. Introduction 1 2. Objective and Methodology 16. The objective of this report is to provide an as- other (comparator) countries: Austria, the Czech Republic, sessment of the state of contract enforcement in Po- Estonia, Hungary, Germany, the Netherlands, and the Slo- land and to propose short- and mid-term reforms. vak Republic. 17. This report focuses only on critical de�ciencies of 18. It is important to note that the report does not performance of civil and commercial courts and op- assess how data are classi�ed beyond responses the portunities for measurable improvements—unlike team received from the government of Poland. The the 2005 report, Poland: Legal Barriers to Contract Enforce- term “case,� as reported in the data supplied to the team, ment, which “examined the issue of contract enforcement is utilized throughout this report to refer to a unit of mea- from beginning to end.�6 Performance is measured through surement, without undertaking an analysis of whether all responsiveness of the civil and commercial courts to de- statistics collected as being a “case� are in fact full “cases� mand for their main services: resolution of disputes, issu- or may simply be ancillary procedures as part of a wider ing writs of payments, and registering land and businesses.7 case. Similarly, no analysis is made of the ef�cacy of data The study draws on a number of complementary sources collection methods. The data supplied by Polish authorities of information and expertise, including assessments by Pol- have therefore been taken “as is.� ish and international experts, analyses of available of�cial statistics, and existing survey data. Where it is relevant and possible, the performance of the civil and commercial courts 6 World Bank (2005). is compared to the performance of the court systems of 7 In addition to dispute resolution, the Polish courts operate the immovable other European countries and/or to parallel institutions in assets register and the business register (the National Court Register). 2. Objective and Methodology 3 3. Courts in Poland 19. This chapter analyzes the de- FIGURE 1 TOTAL CASE INFLOW AND INFLOW INTO FIRST INSTANCE COURTS, mand for court-based services; 2006–11 (MILLION CASES) budget and court staff allocated to 14 operate courts; and court response. The analysis focuses on the commercial 13 and civil �rst instance courts. It mostly covers the period from 2006 to 2010.8 12 Demand for court services is measured by the inflow of cases, which include 11 both litigious and nonlitigious civil and 10 commercial cases. Performance of courts is measured by clearance rate, 9 average time of disposition, and citizen perception of courts’ performance. 8 2006 2007 2008 2009 2010 2011 The main �ndings, trends, and conclu- sions are summarized at the end of the Total incoming cases First instance cases chapter. Source: MoJ statistics. 3.1 Demand FIGURE 2 INFLOW OF COMMERCIAL, CRIMINAL, AND CIVIL CASES TO 20. Demand for court services POLISH COURTS (ALL INSTANCES) PER 100,000 INHABITANTS, 2005–11 in Poland has been steadily in- 25,000 creasing since the 1990s.9 Cases brought before courts doubled 20,000 from 12,617 cases per 100,000 inhab- itants in 1994 to 24,930 in 2003.10 By 2010, the influx of court cases had 15,000 increased by an additional 70 per- cent to the level of 33,889 cases 10,000 per 100,000 inhabitants.11 Fig- ure 1 shows the total case inflow and 5,000 the case inflow into �rst instance Pol- ish courts from 2006 to 2011. The 0 2005 2006 2007 2008 2009 2010 2011 inflow into �rst instance courts ac- counts for more than 90 percent of Commercial cases Criminal cases Civil cases the total case inflow. Source: MoJ statistics. 21. Civil cases account for the larg- est share of cases (around 70 per- cent) and commercial cases for the smallest percentage (around 10 percent) in the Pol- 8 This is mainly because relevant CEPEJ statistics were available mostly for ish courts. Civil cases per 100,000 inhabitants increased this period. from 12,770 to 21,158 (an increase of 65 percent) be- 9 World Bank (2005); MoJ statistics; and CEPEJ reports. tween 2005 and 2011. The total number of commercial cas- 10 World Bank (2005). es brought before the Polish commercial courts increased by 11 MoJ statistics. This number includes all cases (civil, criminal, commercial, about 42 percent over the six years up to 2011 (see �gure 2). and other) in all instances. 3. Courts in Poland 5 22. Inflow of civil and commercial nonlitigious12 cas- resources—both �nancial and human—and for court orga- es into �rst instance courts is close to 80 percent of nization and management. their total intake, and the amount is growing.13 In the late 1990s, Poland expanded the jurisdiction of courts to in- clude petty offences and land and business registrations.14 3.2 Budget This decision has radically altered demand for court services. 24. Annual budgets allocated to the Polish courts16 As a result of this expansion, the inflow of nonlitigious cas- have been traditionally high compared to other coun- es increased by more than 50 percent from 2008 to 2010, tries. When measured as a percentage of GDP per capita, from 5,143 to 7,865 per 100,000 inhabitants. During court spending in Poland amounts to 0.38 percent, which is the same period, the number of litigious cases increased higher than the European average of 0.24 percent and the only 10 percent.15 median of 0.20 percent17 (see �gure 4). Since 2004, Poland has been within the top eight countries in terms of annual 23. Poland is currently among the countries with the budget allocated to all courts as a percentage of GDP per highest number of nonlitigious �rst instance civil and capita, according to CEPEJ.18 commercial cases in Europe (see �gure 3). As discussed 25. The Polish judiciary has also experienced one in more detail later, the growing number of nonlitigious of the largest increases in annual public budget al- cases has serious implications in terms of allocation of locations to courts in Europe. From 2008 to 2010, the budget al- FIGURE 3 FIRST INSTANCE INCOMING AND RESOLVED CIVIL AND located to the Polish courts increased COMMERCIAL NONLITIGIOUS CASES, 2010 by 13.4 percent, one of the highest increases in Europe,19 and the second UK-England and Wales 2287 largest increase among its neighbors Denmark 80 Armenia 122 Romania 139 12 CEPEJ Report (2012, 180): The category of civil France 155 (and commercial) nonlitigious cases (including Sweden 238 nonlitigious family cases) covers all the rest of Georgia 260 cases decided under the chapter II of the Civil Norway 254 Proceedings Code that concern nonlitigious cases (such as ascertainment of the acquisition Azerbaijan 268 of an inheritance; cases connected with birth, Russian Federation 331 marriage, and death records; declaration of a Switzerland 367 person’s death; and adoption; as well a sum- Spain 399 mary and injunction proceedings in money San Marino payment cases). Poland’s response to the ques- 519 tionnaire is available online at http://www.coe. Andorra 923 int/T/dghl/cooperation/cepej/evaluation/2012/ Albania 1010 Poland_en.pdf Czech Republic 1018 13 CEPEJ Report (2012, 180). Montenegro 14 Land registries are operated by the civil Slovenia 1538 courts and include mortgage registries. Busi- Lithuania ness registries are operated by commercial Bosnia and Herzegovina 1628 courts and include pledge registries (see also Italy section 4.2 on Organization). 2076 15 CEPEJ Report (2012, 177). Serbia 2383 Slovakia 16 The report refers to budget allocations to all 2359 Monaco Polish courts. 3024 17 CEPEJ Report (2012, 28). Latvia 3435 18 CEPEJ Report (2010, 22) (Top 5); CEPEJ Estonia 3728 Hungary Report (2008a, 23) (Top 3); CEPEJ Report 4011 (2006, 23) (Top 7). Croatia 5949 19 The comparison might not be completely Finland 6272 accurate because of the variation between Poland 7865 the national currency and the euro. Accord- Austria 9321 ing to the MoJ, the 13,4% increase of the The FYROMacedonia 11834 budget allocated to the Polish courts in the 0 5000 10000 15000 20000 CEPEJ Report is mostly a result of the PLN/ EUR exchange rate changes between Janu- Resolved cases Incoming cases ary 2008 and January 2010, and taking into consideration exchange and inflation rates, the actual budgetary expenditures on courts Source: CEPEJ Report (2012, �gure 9.7). in PLN increased by 4.5%. 6 The Status of Contract Enforcement in Poland (below only the Czech Republic).20 FIGURE 4 ANNUAL PUBLIC BUDGET ALLOCATED TO ALL COURTS AS Most of Poland’s neighboring coun- PERCENTAGE OF GDP PER CAPITA, 2010 (PERCENT) tries decreased their annual public Norway 0,07% budget allocated to courts: Esto- Iceland 0,08% nia by –21.8 percent, Hungary by Denmark 0,09% Ireland 0,09% –9.2 percent, and the Slovak Repub- UK-England and Wales 0,10% lic by –4.3 percent21 (see �gure 5). Azerbaijan 0,10% Albania 0,10% 26. The largest percentage of the Malta 0,12% UK-Scotland 0,12% Polish courts’ budget is allocated Finland 0,13% to salaries of staff. In 2010, Poland Sweden 0,15% Armenia 0,16% spent 65.5 percent of its court bud- Netherlands 0,17% get on salaries. The allocations to Georgia 0,18% support innovation and reforms are Lithuania 0,19% Estonia 0,19% low (see �gure 6). Monaco 0,19% Cyprus 0,19% 27. The budget allocations Moldova 0,19% Italy 0,20% to salaries increased be- Latvia 0,20% tween 2008 and 2010, while Slovakia 0,21% Andorra 0,22% spending on computerization Switzerland 0,23% and training decreased. The bud- Czech Republic 0,23% get allocations to salaries increased UK-Northern Ireland 0,25% Ukraine 0,26% as a result of a new compensa- Russian Federation 0,26% tion system for judges (introduced Hungary 0,27% Romania 0,29% in 2009),22 and hiring additional Portugal 0,31% court personnel. According to CEPEJ, Bulgaria 0,32% Poland 0,38% the reduction in spending on com- Serbia 0,40% puterization and training was due to The FYROMacedonia 0,41% the completion of some externally Croatia 0,46% San Marino 0,49% �nanced programs (mainly by the Slovenia 0,50% European Union, EU). This indicates Bosnia and Herzegovina 0,55% Montenegro 0,64% that Poland depends largely on for- eign sources to �nance its automa- 0,00% 0,10% 0,20% 0,30% 0,40% 0,50% 0,60% 0,70% tion programs and judicial training23 Average = 0,24% Median = 0,20% (see �gure 6). Source: CEPEJ Report (2012, �gure 2.7). 3.3 Workforce 28. Poland has the third highest number of judges 20 CEPEJ Report (2012, 29). per 100,000 inhabitants among comparator countries 21 CEPEJ Report (2012, 29). Data for Austria and Germany are not provided, (27.8 judges per 100,000 inhabitants).24 Only the Czech since they are not included in CEPEJ Report 2012. The Netherlands also Republic and Hungary have a higher number of judges increased its budget by 11.4 percent between 2008 and 2010. per 100,000 inhabitants. 22 In 2008, the percentage dedicated to judge’s salaries was among the lowest in Europe (CEPEJ Report 2012, 33). 23 According to the CEPEJ Report (2012, 34 and 38): “The computeriza- 29. The number of judges and other staff has been tion budget decreased because of the ongoing programs �nancial rates increasing. The Netherlands and Poland are among deadlines….payments for the further steps of the reform will be reflected the countries with the highest increase of judges be- in the next evaluation.…The decrease in training and education budget is tween 2006 and 2010. In 2006, the number of judg- connected to the fact that since 2009 the Polish National School for Judi- ciary and Prosecution has been fully operational; this transferred the bud- es per 100,000 inhabitants in Poland was around 25. getary stress from the training performed in regional and district courts Figure 7 shows evolution of number of judges be- (as well as prosecution service) to the centralized training. Since judicial tween 2006 and 2010. training is �nanced by the National School, the courts expenditures have decreased subsequently. Moreover since 2008 many EU �nanced training programs have been implemented, which has also decreased the level of 30. The personnel ratio in the Polish courts has training and education expenditures.� changed signi�cantly, though unevenly, in the 24 This number refers to judges in general, and not to civil and commer- last few years. In addition to judges, the court cial judges. 3. Courts in Poland 7 FIGURE 5 VARIATION IN ANNUAL BUDGET ALLOCATED TO ALL COURTS, 32. Allocation of staff to Polish 2008–10 (PERCENT) courts is not aligned with the in- flow of cases. As mentioned, Pol- Sweden 39,4% Azerbaijan 33.9% ish �rst instance civil and commercial Norway 29,0% courts are overburdened by nonliti- Czech Republic 24,7% gious cases, which should be dealt Russian Federation 21,0% with by referendarzs. Figure 9 shows San Marino 18,5% Switzerland 14,4% inconsistencies between the numbers Poland 13,4% of these cases and staff specialized in Malta 13,1% their disposition. The FYROMacedonia 12,9% Moldova 12,6% Slovenia 11,7% 33. Despite the signi�cant inflow UK-Northern Ireland 11,5% of �rst instance civil and com- Netherlands 11,4% mercial nonlitigious cases, the Ireland 9,2% Georgia 8,6% number of referendarzs is one of Iceland 8,5% the lowest among comparator Armenia 7,0% countries. The number of referen- Portugal 3,0% Montenegro 1,6% darzs per 100,000 inhabitants is 4.8. Italy 1,4% Figure 10 shows the number of refer- Albania –0,6% endarzs as a percentage of all profes- UK-Scotland –3,6% sional judges in Poland and compara- Slovakia –4,3% Finland –5,2% tor countries. Denmark –5,2% Romania –6,7% Bosnia and Herzegovina –6,9% 3.4 Court Performance Andorra –8,1% Hungary –9,2% 34. Between 2006 and 2010, the Bulgaria –12,5% clearance rate for both litigious Lithuania –16,6% UK-England and Wales –17,8% and nonlitigious �rst instance Monaco –20,5% civil and commercial cases was Estonia –21,8% less than 100 percent. According to Latvia –22,3% CEPEJ, in 2010, the clearance rate for –30% –20% –10% 0% 10% 20% 30% 40% 50% litigious �rst instance civil and com- mercial cases was 95 percent, and Average = 4,0% Median = 5,0% for nonlitigious cases it was 97.4 per- cent. The clearance rate for litigious Source: CEPEJ Report (2012, �gure 2.8). 25 CEPEJ Report (2006, 84); (2008a, 118); (2010, 128); (2012, 158). 26 These numbers refer to the categorization by the CEPEJ Questionnaire: (i) Referendarzs (category 1–Rechtspfleger, or similar bodies, with judicial workforce includes referendarzs, court clerks, and or quasi-judicial tasks having autonomous competence and whose deci- other support staff. Poland has a total of 35,946 non- sions could be subject to appeal); (ii) Court clerks (category 2–Nonjudge judicial staff, of which 5.2 percent are referendarzs. staff whose task is to assist the judges: preparing case �les, providing assistance during the hearing, recording court proceedings, and helping Between 2004 and 2010,25 the number of referenda- to draft the decisions, such as registrars); and (iii) Other support staff rzs increased from 1,175 to 1,865, the number of court (category 3–Staff in charge of different administrative tasks and of the clerks increased from 19,189 to 20,283, and the number management of the courts: human resources management, material and equipment management, including computer systems, �nancial and bud- of other support staff from 12,481 to 13,798.26 getary management, training management; and category 4–Technical staff). In CEPEJ Report 2012, there is a break down for another category 31. Polish judges carry high caseloads compared to (5): Other Judge Staff. According to the MoJ, this category includes as- their peers in other countries. The caseload of an average sistants of judges, whose role is strictly connected with the judge’s judicial function (such as preparation of judgment and justi�cation drafts); they Polish judge in a �rst instance court is close to 1,500 cases do not perform any administrative tasks. As there is no such category 5 in per year. This compares unfavorably to judges from other previous CEPEJ reports, for 2010, this number has been included under comparator countries, except for Austria. In Estonia and “other support staff.� 27 The numbers must be treated with caution because of differences in Hungary, the annual caseload per judge is close to 500 cas- determining “case� and “judge.� In Poland and Austria, for instance, es. In Austria, on the other hand, it is about 2,800 cases27 case category includes registrations. Also, these numbers include all �rst (see �gure 8). instance cases, and not only civil and commercial cases. 8 The Status of Contract Enforcement in Poland FIGURE 6 COURTS’ BUDGET ALLOCATIONS IN COMPARATOR COUNTRIES, 35. The land and business reg- 2006–10 (PERCENT) istries outperform other sec- 100% tions of civil and commercial courts. Their clearance rate is above 100 percent. The clear- 80% ance rate for the land and business registries in 2010 were 105.2 per- 60% cent and 100.7 percent, respec- tively. They both improved be- 40% tween 2006 and 2010.29 20% 36. The average disposition time30 for non-litigious cases im- 0% proved between 2006 and 2010, Austria 2006 Austria 2008 Austria 2010 Czech Rep. 2006 Czech Rep. 2008 Czech Rep. 2010 Estonia 2006 Estonia 2008 Estonia 2010 Hungary 2006 Hungary 2008 Hungary 2010 Netherlands 2006 Netherlands 2008 Netherlands 2010 Poland 2006 Poland 2008 Poland 2010 Slovakia 2006 Slovakia 2008 Slovakia 2010 from 74 days to 33 days. Ac- cording to the Doing Business reports, the time it takes to en- force a contract was reduced in Poland from 980 to 685 days be- Other Training and education tween 2006 and 2012.31 The aver- Investment in new buildings Court building O&M age disposition time for �rst instance Annual public budget for justice expenses Annual budget allocated to computerization civil and commercial litigious cases, Annual budget to salaries (gross) however, increased from 143 days Source: Authors’ compilations based on CEPEJ Reports (2008a, 2010, 2012). in 2006 to 180 days in 2010, accord- ing to CEPEJ.32 The difference be- tween the Doing Business and CEPEJ FIGURE 7 NUMBER OF JUDGES PER 100,000 INHABITANTS, 2006, 2008, measures is a result of distinct meth- AND 2010 odologies they use to measure dispo- 35 sition time.33 30 37. Public opinion regarding the 25 Polish courts is not very positive. In February 2009, the MoJ commis- 20 sioned the IBC Group and Homo 15 Homini to conduct an opinion survey 10 of the Polish justice system (the Sur- vey). According to the Survey, 44 per- 5 cent of participants regarded the 0 justice system in Poland in negative Czech Rep. Hungary Poland Slovak Rep. Germany Austria Estonia Netherlands or rather negative terms, compared to 37 percent who had a positive or rather positive opinion on the justice 2006 2008 2010 28 CEPEJ Report (2008a, 137); (2010, 147); (2012, 182). 29 CEPEJ Report (2012, 186). Source: Authors’ compilations based on CEPEJ Report (2008a, 2010, 2012). 30 The calculated average disposition time measures how quickly the judicial system (or a court) disposes of received cases. It determines the number of days that are necessary to resolve the cases pending in �rst instance courts. For a detailed explanation of the methodology to calculate dispo- cases has decreased by 2 percent since 2006. During the sition time, see CEPEJ Report (2012, 169). 31 same period, the clearance rate for nonlitigious cases has Doing Business, Poland: Economy Pro�le 2013 (World Bank 2012). 32 CEPEJ Report (2012, 183); and CEPEJ Report (2008a, 148). improved by 2.6 percent.28 Poland is the only country 33 A complete description of Doing Business methodology is available at among the comparator countries that has a clearance rate http://www.doingbusiness.org/methodology. A description of the CEPEJ for both litigious and nonlitigious cases below 100 percent methodology can be found at http://www.coe.int/t/dghl/cooperation/ (see �gure 11). cepej/evaluation/default_en.asp. 3. Courts in Poland 9 FIGURE 8 CASES PER FIRST INSTANCE JUDGES IN POLAND AND system.34 The key determinants of COMPARATOR COUNTRIES, 2010 the respondents’ perception includ- 3,500 ed: (i) incompetence (69.3 percent of respondents); (ii) bias/lack of impar- 3,000 tiality (65 percent of respondents); 2,500 (iii) low ef�ciency (63.7 percent of re- 2,000 spondents); (iv) high costs (63.5 per- cent of respondents); and (v) slow 1,500 process (57.2 percent of respon- 1,000 dents).35 The Survey shows that less 500 than 10 percent of participants have 0 full con�dence in courts, while more Austria Czech Rep. Estonia Germany Hungary Netherlands Poland Slovak Rep. than 20 percent of participants do not trust the courts (see �gure 12).36 However, despite the less than per- fect performance of Polish courts, Source: Authors’ compilations based on CEPEJ Report (2012). Polish businesses do use the courts to resolve disputes. These patterns sug- gest that the courts do not lack legiti- FIGURE 9 NUMBER OF REFERENDARZS AND FIRST INSTANCE NONLITIGIOUS macy, and furthermore, that there is CIVIL AND COMMERCIAL CASES, 2006–10 a great demand for the rule of law 2,000 10,000 and great societal pressure to reform the judiciary in Poland. 1,800 8,000 1,600 6,000 3.5 Main Trends 1,400 38. Poland remains a frontrun- 1,200 4,000 ner among European countries in 1,000 terms of judicial expenditure. 2,000 800 39. The pattern of �rst instance 600 0 civil and commercial courts con- 2004 2006 2008 2010 2006 2008 2010 tinues to be one of large numbers Number of Referendarzs Number of civil and commercial non litigous of smaller mostly nonlitigious first instance cases per 100,000 inhabitants cases (80 percent), most of which Source: Authors’ compilations based on CEPEJ Report (2006, 2008a, 2010, 2012). involve uncollectible debts. In ad- dition, the system deals with a huge number of registration cas- FIGURE 10 NUMBER OF REFERENDARZS AS PERCENTAGE OF PROFESSIONAL es. While the number of incoming JUDGES (PERCENT) criminal cases has remained relatively 80 constant, the volume of commercial 70 and especially civil cases has been 60 steadily growing. Nonlitigious cases 50 have outpaced litigious ones and are 40 slowly pushing the courts’ traditional business—resolution of disputes—to 30 the system’s periphery. 20 10 0 Austria Czech Rep. Estonia Germany Hungary Poland Slovak Rep. 34 2009 survey conducted by IBC Group and Homo Homini, and commissioned by the MoJ (the Survey), 10. 35 The Survey, 11. Source: Authors’ compilations based on CEPEJ Report (2012). 36 The Survey, 18. 10 The Status of Contract Enforcement in Poland 40. The composition of court FIGURE 11 CLEARANCE RATES FOR LITIGIOUS AND NONLITIGIOUS FIRST workforce—a higher number of INSTANCE CIVIL AND COMMERCIAL CASES, 2010 (PERCENT) judges and very low number of 120 referendarzs—adds to the prob- lem. Judges process cases and carry 100 tasks that can and should, be dealt with by nonjudicial personnel at 80 much lower cost. Therefore, it should not come as a surprise that Polish 60 judges carry one of the highest casel- oads in the region. 40 41. Only limited resources (from 20 the budget) are spent to develop 0 the courts. In last few years, Poland Austria Czech Rep. Estonia Germany Hungary Poland Slovak Rep. has had one of the lowest budget allocations for computerization and training. These reforms seem to de- pend on foreign (mainly EU) �nanc- Litigious cases Nonlitigious cases ing, which complicates planning, co- ordination, and sustainability. Source: Authors’ compilations based on CEPEJ Report (2012). 42. The performance of the Pol- ish �rst instance civil and com- FIGURE 12 CONFIDENCE IN THE POLISH JUSTICE SYSTEM, 2009 (PERCENT OF mercial courts is medium at best, RESPONDENTS) if compared to the performance 35 of courts in other countries (see �gure 13). Clearance rate has been 30 below 100 percent for some time; consequently, the case backlog has 25 been growing. The average time for disposing of litigious cases has been 20 increasing. This also appears to be negatively affecting citizens’ percep- 15 tion of the justice system. 43. Increased budget spending 10 does not seem to be enough to reverse negative trends. The Pol- 5 ish judicial system has a big inflow of smaller and registry cases, mainly 0 Lack of 2 3 4 Full because of the wide competences Confidence Confidence (original as well as derivative) of the civil and commercial courts. This re- Source: 2009 survey conducted by IBC Group and Homo Homini, and commissioned by the MoJ (the Survey). quires that resources allocation, the composition of budget expenditures, and management practices are de- signed acknowledging the speci�c characteristics of Polish courts activity. 3. Courts in Poland 11 FIGURE 13 DISPOSITION TIME AND CLEARANCE RATES OF LITIGIOUS CASES IN FIRST INSTANCE CIVIL AND COMMERCIAL COURTS, 2010 Source: CEPEJ Report (2012, �gure 9.13). 12 The Status of Contract Enforcement in Poland 4. Factors Underlying these Trends and Possible Solutions 44. This chapter analyzes in further detail some of the main competitive merit-based recruitment in the judiciary was causes behind the decline in performance of civil and com- introduced. This system invites judges and professionals mercial courts in Poland, as identi�ed through data analy- other than judges to apply and compete for judge posi- sis and discussions with stakeholders. The report reviews tions. The new system is a positive change, as it expands a matters of strategic vision; planning for and allocation of pool of candidates for a judgeship and brings more diver- resources; organization of courts; the incentives to litigate; sity in terms of knowledge and experience to the Polish ju- litigation procedures; and access to information. In addition diciary. However, the introduction of the intensive (lengthy to describing the issues that may need improvement, the and costly) sequence of training of law graduates37 in par- report presents recommendations to guide some reforms in allel to the above reform could undermine the purpose of the court system, pointing out to examples of practices and the new recruitment system. New training is designated reforms that have worked in other countries. for new law school graduates only. The exclusivity of new training imposes an access barrier to a career as a judge for other legal professionals. In addition, by increasing the 4.1 Strategic Vision length of the mandatory judicial training to 60 months, 45. There is no clear and participatory strategy for es- the new system reduces the flexibility of hiring judges. tablishing the sector’s objectives and directing effec- Some observers already argue that the new recruitment tive and ef�cient use of resources to achieve them. system has not worked as expected, pointing mostly to The MoJ and stakeholders acknowledged a lack of strategy the length of the overall recruitment process and the and the negative impact it has on the Polish justice sector. In unequal chances for success of legal professionals who March 2012, the MoJ created a Department of Strategy and do not participate in the state-subsidized comprehensive Deregulation. Since its creation, the Department has held training organized by the judiciary (see section 4.3.b on a workshop (in July 2012) with stakeholders to discuss the human resources). approach to the strategy, and created working groups for various topics such as structure of courts, judicial careers, 48. The high numbers of civil procedure law amend- court management, and the scope of jurisdiction to carry ments signals an absence of strategy and a lack of out analytical work. However, more must be done. Judges alignment of policy and legislative work concerning who were interviewed for the report and/or who partici- certain critical goals and policies. Other examples are pated in a related workshop in October 2012 had little or no the perpetual and piecemeal reforms of the commercial and knowledge about this MoJ plan. Judges stressed the impor- civil procedures, with dubious results. Since 2002, the Civil tance of their involvement in preparing the strategy. Procedural Code (the Code) has been amended 118 times (close to one change per month). Most of the reforms claim 46. The absence of a strategy has not stopped vari- to support the business environment by speeding up and ous actors from pursuing or advocating reforms they simplifying the process. Legal concepts and solutions intro- consider necessary or useful. Various reforms have been duced in these amendments, however, often have an op- implemented in the last few years, but the reforms do not posite effect. For instance, in 2002, businesses complained reflect a process that is driven by a clear direction toward about the rigidity of formal prerequisites for initiating shared objectives, an analysis of the impact or compre- hensiveness of the reforms, and an assessment of support 37 Recent law graduates join the National Judiciary School for 60 months of by stakeholders. Even more importantly, they are not fully training: 12 months for the general internship; 30 months for a judicial aligned with key societal objectives and programs. internship; and 18 months for practice as a referendarz. After success- fully completing this �ve-year program, candidates can be nominated as 47. The absence of an overarching strategy could judges. If candidates decide to stop the training and leave the school, lead individual programs and projects to waste in- however, they are required to repay the costs incurred by the school. The extent to which such mechanism is being implemented has not been vested resources. For instance, in 2009, a new system of assessed. 4. Factors Underlying these Trends and Possible Solutions 13 accelerated procedures because these prerequisites result- s European Commission for the Ef�ciency of Justice: ed in an endless circle of �ling and re�lling applications.38 CEPEJ’s tool to analyze the quality of justice systems de- Driven by the needs of the judiciary, but ignoring business- veloped by the Working Group on the quality of justice es’ potential to respond ef�ciently, the prerequisites failed (CEPEJ-GT-QUAL).44 to meet the original objective of the reforms, which was to simplify procedures for businesses.39 s International best practice: The International Framework for Court Excellence developed by the International Con- sortium for Court Excellence (see box 1).45 A Way Forward 49. A clear strategy would allow the court system to 52. The MoJ should consider introducing “contractu- contribute to the overall improvement of the country. alization� as part of the new strategy. The process of The �rst step for developing a strategy is to set goals for drafting a new strategy can be a timely opportunity to the court system that address two main questions. First, introduce this concept, which has the potential to reshape how will courts contribute to the overall economic and so- the way the justice system operates. The term “contrac- cietal goals in the country, such as supporting business and tualization� refers to a process for exchanging views to encouraging growth: for example, by supporting a more achieve common objectives: to a new style of relations ef�cient and less costly process of resolving disputes; by based on dialogue, trust, and consensus, rather than au- reducing the costs of collecting unpaid debts; by speeding thority. On the one hand, players in the judicial system up the operation of registries, and/or by improving citizen’s (those in charge of the courts and the registry, and profes- perceptions of public institutions? Second, how will the sionals—lawyers, bailiffs, and solicitors—as well as users’ performance targets necessary to achieve those goals be associations) should be engaged in the dialogue regard- established: for example, through a x percent improvement ing the targets and standards of the court.46 On the other in the clearance rates of registries, litigious and nonlitigious hand, courts can conclude target-based contracts with cases, a y percent reduction in average disposition time, MoJ, aimed at obtaining resources in exchange for a com- and a z percent increase of citizens/users that have a posi- mitment to achieve certain objectives. The goal is to en- tive opinion of the courts? able the courts to improve their performance while meet- ing certain ef�ciency standards by adapting the resources 50. It is essential that this strategy engage all the allocated to them.47 stakeholders in the justice sector. In particular, in the case of civil and commercial courts, commercial judges, 53. Mechanisms such as target-based contracts will in- lawyers, and users (businesses) should be consulted, and troduce accountability mechanisms, while preserving their recommendations should be taken into account. Ex- judges’ independence through the negotiation of such periences from other countries have shown that ownership agreements. It will also increase ownership of the actors in- of and support for the reform process among stakeholders volved in the court system, leading to better performance. is essential for the success and sustainability of any reforms. This will imply a signi�cant structural change, shifting from For example, ownership of reforms in the Dutch judiciary a pyramid-like administration to one based on networks, in the late 1990s and early 2000s was key to building trust and from a supervisory to a participatory approach.48 There- among stakeholders. This trust was critical for the success fore, starting by implementing pilot programs conducted and sustainability of those reforms.40 38 World Bank (2005, 61). 51. The MoJ should consider international good practic- 39 Conference on the Future of the Polish Judiciary, the Institute of Public es and take advantage of available tools to design the Affairs, Warsaw, September 2002. strategy for the court system. Here are a few examples: 40 Decker, Mohlen, and Varela (2011). 41 More information is available at http://www.justice.gov.uk/downloads/ s United Kingdom: Justice for Business, Ministry of Justice publications/corporate-reports/MoJ/2012/justice-for-business.pdf. Supporting Business and Encouraging Growth, 2012 (UK 42 More information is available at www.justice.gov/jmd/ps/mission�rst.pdf. Ministry of Justice).41 43 More information is available at www.jud.ct.gov. 44 More information is available online at https://wcd.coe.int/com.instranet. s United States: Mission First…..Linking Strategy to Suc- InstraServlet?command=com.instranet.CmdBlobGet&InstranetImage=1 cess, Human Capital Strategic Plan 2007–2012 (U.S. De- 702393&SecMode=1&DocId=1281474&Usage=2. 45 partment of Justice).42 More information is available online at http://www.courtexcellence.com. The International Consortium consist of groups and organizations from Europe, Asia, Australia, and the United States. s United States (state of Connecticut): Strategic Plan for 46 Gaboriau (2003) the Connecticut Judicial Branch, Public Service and Trust 47 Lhuillier (2010). Commission.43 48 Gaboriau (2003). 14 The Status of Contract Enforcement in Poland by motivated court presidents and BOX 1 THE INTERNATIONAL FRAMEWORK FOR COURT EXCELLENCE staff would be essential for success. (IFCE) Target-based contracts between au- thorities have been used in Belgium, The �rst step in the journey toward court excellence involves an assessment England, France, the Netherlands, of how the court is currently performing. Undertaking an assessment allows and Wales (see box 2 for an example the court to identify those areas where attention may be required and to set a benchmark against which the court itself can measure its subsequent from France).49 progress. The International Consortium for Court Excellence incorporates a self- assessment tool, which allows a court to undertake its own assessment of its 4.2 Organization performance against the seven areas for court excellence.a Having completed the self-assessment questionnaire, the court will have identi�ed the areas where 54. This section is concerned with improvement is required. Some courts may choose to concentrate their efforts in the Polish court map,50 particularly discrete areas, while others may proceed with a full court review and reform. In commercial courts. Issues discussed either case, prioritizing court issues is highly recommended. This will allow the include number, locations, and size reform process to focus on speci�c performance areas over a period of time. of the commercial courts. The discus- It is essential for court leadership to ensure that the process for planning for sion concentrates on the European improvement provides ample opportunity for judicial of�cers, court employees, context and trends and impacts of and the court’s professional partners to be consulted and involved. The assessment the recent organizational reforms on will have identi�ed a range of issues for the court to address in developing an the performance of the commercial improvement or action plan, such as: courts. s Does the court have a vision statement and/or a mission statement expressing 55. Poland has 365 �rst instance the court’s fundamental values and purposes? If not, this is the place to start because implementation of the Framework depends upon the court having ar- courts of general jurisdiction ticulated values. and 28 specialized courts sited in 705 geographical locations.51 s What are the de�ciencies in the court’s management, operations, and services The number of �rst instance courts and why do they need to be improved? has not changed much since 2006, s What issues can and must be addressed quickly and in the short term? What while the number of physical lo- issues call for more intermediate or long-term planning? cations has increased by 15. This s What changes in procedures or practices does the court plan to institute? places Poland among the 15 Euro- pean countries with a rate between s Whose support and cooperation is most relevant in making these potential one to two �rst instance courts changes (such as attorneys, prosecutor’s of�ce, and other government agen- per 100,000 inhabitants. The major- cies)? ity of European countries (19 coun- s What resources will be needed to successfully institute those changes (such as tries) have less than one court funding for additional personnel or equipment; cooperation of attorneys who practice in the court; cooperation of the other judges in the court; effective com- 49 For a further explanation of the concept and munication with other components of the judicial system)? How will the court obtain those resources? What sources of support can the court draw on? implementation in these countries see Lhuil- lier (2010). s What resistance to the plan or obstacles may be encountered? How might this 50 A diagrammatic representation of a coun- resistance or these obstacles best be overcome? try showing jurisdiction, size, and location of courts. s What is the time schedule for instituting the changes? 51 Overall, Poland has a three-tier common court system: there are 321 district courts, s How will the court evaluate the success of the changes? What information will 45 regional courts, and 11 courts of appeal. the court need for this evaluation? Who will collect the information and how will Within the courts, there are separate divisions it be analyzed? Will an outside consultant be needed to develop measurement for particular types of disputes. Each court tools and analyze results? has criminal and civil division. Some courts also have family, labor, social, mortgage, and commercial divisions. The commercial Source: International Consortium for Court Excellence. courts can be territorially detached from a (1) Court Management and Leadership; (2) Court Policies; (3) Human, Material and Financial Resources; their “mother courts.� Currently, there are (4) Court Proceedings; (5) Client Needs and Satisfaction; (6) Affordable and Accessible Court Services; and about 120 district commercial courts operat- (7) Public Trust and Con�dence. See http://www.courtexcellence.com/pdf/IFCE-Framework-v12. ing within the jurisdiction of 321 district com- mon courts. Poland has 347 land and mort- gage registration courts, 21 business register courts, and 10 pledge register courts. 4. Factors Underlying these Trends and Possible Solutions 15 results. As of 2008, the court map BOX 2 PERFORMANCE CONTRACTS IN FRENCH was complex and dif�cult to navi- ADMINISTRATIVE COURTS gate or manage. The structure of the smaller courts was too frag- The supreme administrative court in France—the Council of State (Conseil mented. Often specialized units, d’Etat)—and other administrative jurisdictions developed New Public Management (NPM)-based approaches earlier than other courts and had been implementing including commercial divisions, a performance-based system since 2002. One of the tools used was contract were not justi�ed by a suf�cient management between the administrative appellate courts and the Council: that workload. is, agreements on performance and resource targets (contrats d’objectifs et de 58. Since 2008, the Polish courts moyens). have embraced this organization- The overall work program of this jurisdiction was broken down at the appellate al challenge through consolida- court level and the speci�c objectives were agreed between these courts and tion of commercial departments. the Council of State. With minimal increases in the number of judges and Consolidation was meant to allow staff, the objectives of reducing delay and controlling the caseload have been for the higher inflow of cases, which largely achieved, together with clear ef�ciency gains. In addition, after 2000 the in turn would justify specialized divi- French administrative jurisdiction has reduced the average delay to more sions and judges. Furthermore, Po- than 13 months by 2007 in the case of the appellate courts and slightly more land opted for a concentration of for �rst instance courts. The agreed backlog targets were reached in 2007, accelerated proceedings in one while the structure of the backlog also improved. Indeed, the number of cases court (an e-court). pending for two or more years decreased from 44 percent in 2002 to 10 percent at the end of 2007. The productivity per judge has also increased. The baseline 59. The 2001 design of the Polish was 88 cases disposed of per judge in 2002. The objective for 2007 was 98, and court map led to the creation of the actual result was 106. very small and very big courts.53 But international experience is Source: Decker, Mohlen, and Varela (2011). that the size of courts influences their performance. Although small- er courts operate at higher cost than courts with more staff, they normally have better case resolution times. There is no universal formula for the optimal size per 100 000 inhabitants.52 Figure 14 compares the number of a court.54 Countries adopt different of �rst instance courts (legal entities) in European countries. strategies. Two unrelated projects looking into the optimal size of courts done in very different countries (Sweden and 56. Between 2008 and 2011, the MoJ reduced the the Slovak Republic), using different approaches and ad- number of commercial divisions in the smallest dressing different problems, came to the same conclusion: courts, from 33 to 21. As a result, the number of com- the court should not be smaller than nine or ten judges55 to mercial judges dropped from about 218 to 197. By be able to work effectively. The Swedish project also con- the end of 2011, 12 regional and 14 district commercial cludes that there are no limits as to how large the courts divisions were merged with their parallels in neighbor- ing courts. There are also plans to consolidate the com- mercial divisions of two Warsaw �rst instance courts into 52 CEPEJ Report (2012, 100). First instance courts of general jurisdiction (le- one commercial justice center, which will house both dis- gal entities): “These courts deal with all issues that are not attributed to specialized courts based on the nature of the case. All courts considered trict commercial courts (with 86 judges, 88 referendarzs, as geographical locations: These are premises or court buildings where and 283 support staff) and regional commercial courts judicial hearings take place. If there are several court buildings in the (with 64 judges, 1 referendarz, and 83 support staff). It is same city, they must be taken into account. The �gures include the loca- tions for �rst instance courts of general jurisdiction and �rst instance spe- estimated that 10 percent of the district and 20 percent of cialized courts, as well as the locations for High Courts and/or Supreme the regional case load will flow into the center. Courts. The term “geographical location� can be misleading, as these data count, for example, courts based in the same street as being in dif- 57. The Polish court map was drafted in 2001, mir- ferent geographical locations.� 53 The smallest �rst instance courts have four judge positions; the biggest roring the administrative and territorial organiza- one has 137. tion of the country. Since then, Poland has been 54 For models of determining court size, see Noam (1980). trying to appropriate its court map following in- 55 In the Slovak Republic, the numbers were later increased to 13–15 judges flow of cases. Many ad hoc changes have been made in the �rst instance court and 40 judges in the second instance courts. to achieve this objective, but have yielded rather mixed World Bank (2005). 16 The Status of Contract Enforcement in Poland FIGURE 14 NUMBER OF FIRST INSTANCE COURTS OF GENERAL JURISDICTION (LEGAL ENTITIES) PER 100,000 INHABITANTS, EUROPE, 2010 Source: CEPEJ Report (2012, �gure 5.2). should be.56 In both instances, the chief reason for the min- countries with one to two courts per 100,000 inhabitants imal size of courts was securing suf�cient case inflow to (15 countries in 2010, compared to 24 countries in 2008). justify the specialization of judges and court staff, at least During the same period, 23 European countries decreased in the basic legal �elds such as criminal, administrative, and the number of geographic locations of courts. The highest civil law.57 decrease was observed in Serbia and Finland (more than a 30 percent reduction).58 It is safe to conclude that Eu- A Way Forward ropean countries are on a trajectory toward more consoli- dated courts. 60. The analysis of the most recent trend in Europe shows a shift from court organizations focused on geographic location to court organizations focused on functionality—mostly judicial specialization. The spe- 56 This conclusion, however, should be treated with caution as other re- cialization may involve specialization among courts and search argue that there are limits to how big courts should be. See, for judges, but also division of responsibilities between judges example, Van der Torre et al. (2007). and nonjudicial staff. The precondition of specialization is 57 In the Slovak Republic, the reform relates also to the new case man- suf�cient volume of cases. agement and internal organization of the courts. Internal organization is based on case management teams and random assignment of cases. 61. The CEPEJ Report 2012 indicates an increase in 58 CEPEJ Report (2012). The countries that reduced geographic locations of courts include: Armenia, Azerbaijan, Belgium, Croatia, Cyprus, Czech the number of countries with less than one court Republic, Denmark, Finland, France, Georgia, Iceland, Ireland, Italy, Lux- per 100,000 inhabitants (19 countries in 2010, compared emburg, Malta, the Netherlands, Norway, Portugal, Serbia, Slovenia, to 11 countries in 2008) and a decrease in the number of Sweden, Switzerland, and the United Kingdom. 4. Factors Underlying these Trends and Possible Solutions 17 62. A number of factors may ex- FIGURE 15 TYPICAL PLANNING AND BUDGETING CYCLE plain and influence this trend, among them the scope, type, and 1. Review or previous complexity of cases; litigation pat- plannning and implementation period terns; and availability of technol- 6. Evaluation and 2. Planning ogy. There are many approaches for audit of activities and Activities dealing with the new organizational results challenges. The Netherlands, France, and Germany, are following three dif- ferent approaches: (i) concentration 5. Monitoring of 3. Mobilization & activities and accounting allocation of resources of cases in one or more courts, on the for resources (budges) basis of legal provision or a contract among courts regarding exclusive 4. Implementation competence to deal with a special category of cases; (ii) allocation of specialized judges to different courts; Source: Lister (1996). and (iii) cooperation among courts.59 63. Polish reforms are congru- sustainable performance. They are a part of court man- ent with European trends. Future reforms in Poland agement and responsibility of MoJ, the National Judicial should continue to build on the results and bene�ts Council,60 and courts. Figure 15 shows a typical planning of past reform efforts. They should take advantage of and budgeting cycle. recent methodologies and international experience. They also should be based on a comprehensive research of 66. In Poland, the judicial budget is protected through reforms impacts. Consultations with stakeholders—judges, a budgetary law and influenced by rules on judicial legal professionals, and businesses—should take place from remuneration. The budget includes four separate budget the beginning to the end of reforms, and should extend to envelopes: one for the MoJ and the common and military a monitoring and evaluation phase. This should become courts; one for the Supreme Court; one for the Constitu- the norm. Justice leaders should also remember that “more tional Court; and one for the administrative courts. In this may not be better� and choose their interventions as to model, the MoJ is responsible for preparing a general bud- organization of the judiciary carefully. “Back and forth� get framework and providing necessary inputs for its own reforms—such as reversing changes before realizing their expenditures and the expenditures for the centrally man- bene�ts—should be avoided, as these reforms are costly, aged projects.61 often counterproductive, dif�cult for court staff to absorb, and a challenging adjustment for court users. 67. The MoJ prepares two budget frameworks.62 The �rst framework is based on inputs, the budget history, and sometimes, anticipated developments. The second frame- 4.3 Planning for Resources work includes performance targets.63 The basic idea of this 64. This section analyses budgeting and manage- ment of human resources (HR). This analysis is not ex- haustive; it centers on those aspects of budgeting and HR 59 Mak (2008). 60 management that underline the challenges identi�ed in The National Judicial Council (NJC), together with the MoJ, is the gov- erning body of the courts (the NJC’s duty is personnel management of the chapter 3, “Courts in Poland.� The section on budget judges). More speci�cally, the NCJC nominates, appoints and reassigns is concerned with the relationship between planning and judges to the courts, and it comments on the policies pertaining to pro- budgeting and preconditions for and potential bene�ts of fessional conduct, training, and examination of apprentices. 61 World Bank (2005); and MoJ. programmatic budgeting. The section on HR management 62 Interviews with the members of the Budget Division of MoJ. tackles the flexibility to deploy court staff according to de- 63 The targets for the 2011 budget for Common Courts were: (i) achiev- mand for court services. ing the level of bene�ts for judges de�ned by the law (remunerations); (ii) ensuring access to justice (justice services); (iii) delivering judgments in 4.3.a. Budget criminal, civil, and commercial matters in a timely manner (sentencing); (iv) creating conditions and infrastructure conducive to performance of courts 65. Good planning for budget and personnel (and (organizational and technical conditions for courts); (v) securing payments other inputs, outputs, and outcomes) is critical in of state liabilities (state liabilities); (vi) modernizing court organization and improving access to justice (computerization); (vii) operating the informa- face of restricted resources and ambitious reforms tion system and improving access to justice (O&M costs of information necessary to put the system on the path of a solid systems); and (viii) improving access to justice (computerization). 18 The Status of Contract Enforcement in Poland approach is to combine the informa- tion inputs with data about system BOX 3 PERFORMANCE BUDGETING IN THE NETHERLANDS performance. If fully implemented, A performance budgeting approach was introduced in the Dutch judiciary it allows the outputs and the impact in 2005. The aim was to improve ef�ciency and equity of resource allocation achieved through the input provided among courts, and enhance the transparency and accountability of the judicial to be measured, and thus address system. The new approach is based on a workload analysis and requires a robust any mismatch between resource al- monitoring system in place in all courts. During budget negotiations, the Judicial location and performance. Council and the Ministry of Justice agree on an annual caseload for the next budget year, on which basis the allocations for the court system are made. The 68. In reality, the MoJ and courts budgeting model is based on estimates of average time for groups of cases in use the �rst approach, historic categories and estimated cost of processing each group of cases. budgeting. The reason is quite obvi- ous. The implementation of program The “price� per case is agreed every three years between the Ministry of Justice and the Council and covers the cost of operations and maintenance, including budgeting requires: a solid and clear personnel. The average time to process each case is estimated on the basis of a planning process; a system for mea- detailed time measurement survey conducted every three years. Information on surement of output of the courts; the number of cases is produced every quarter. An equalization account covers and a change in mentality and shift the difference between the agreed and actual number of cases at the end of the of focus toward performance. Ideally, year. For example, courts that have processed more cases than planned can access program budgeting links forecasted additional funds from the equalization account up to a certain limit, while courts demand for services (such as case that “underproduce� in terms of number of cases must transfer the “unused� or inflow), performance goals, mea- “excess� funds to this account. surable targets, and budgeting. It The new performance budgeting system provides incentives for improved also is connected with the individual performance in terms of speed of completion of cases. Its prerequisites are a performance management goals, so robust benchmarking system, a detailed monitoring system, and an overall public human resources management is �nancial management system based on program budgeting underpinned by aligned with the system’s overall ob- agreed and monitorable indicators of performance. However, some observers, jectives.64 Finally, program budgeting especially judges, have expressed reservations that this system’s emphasis on cost requires a relatively robust indicator and speed could compromise the quality of decisions. set and reliable performance data. 69. None of the above systems Source: World Bank (2008). are fully operational in Poland. From interviews with those who are involved in the budgeting process, other MoJ staff, and judges, it appears that forecasting of workload and work- force is a sporadic and unreliable exercise; A Way Forward the performance system is weak and does not extend to 71. Programmatic budgeting should become the main individual performance; and the information base for both approach to budgeting in the justice sector. Members forecasting and performance monitoring and evaluation is of the judiciary at different levels could be more actively insuf�cient. It also appears that the indicators/targets are 65 involved in the planning and budgeting process to increase developed without an active involvement of the judiciary. ownership. Although consensus-building between the MoJ The potential lack of ownership of those being measured, and the judiciary on performance measurements may con- however, bears the risk of them “gaming� the system stitute a signi�cant upfront investment, Poland should con- when the measuring takes place, which is then likely to sider this option to ensure successful implementation of the undermine the reliability of data and ultimately the effec- program budgeting approach. tiveness of implementation. 70. Other countries in the region and around the world have developed workload and workforce mea- surements that provide a more objective basis for re- 64 Gramckow (2012). 65 source allocations.66 The example from the Netherlands For examples of indicators, see Webber (2005). 66 For example, in Austria, Germany or New Zealand. For more details on described in box 3 is an effective budgeting system that workload forecasting, see New Zealand Ministry of Justice (2012); on includes the prerequisites described in this section. workforce forecasting, see Justizministerium Baden-Württemberg (2002). 4. Factors Underlying these Trends and Possible Solutions 19 72. Planning should be improved and linked with who would handle them.68 The crisis in Polish courts in budgeting. It should include forecasting future work- the 1990s exposed the inflexibility of the system, which still load and the need for workforce. This would allow persists. These inflexibilities include: (i) the time it takes to Poland to overcome several problems: (i) the inability of a become a full-fledged judge (recently training for judges one-year budget horizon to address strategic resource allo- was expanded to a sixty-month intensive training program); cations effectively; (ii) fragmentation of the budget process (ii) the length of selection and appointment process for be- in ways that prevent discussion on trade-offs; and (iii) lack coming a judge; and (iii) the fact that the judges and the of discipline and credibility in budget implementation.67 In support staff (at least some of them) cannot be moved as addition, it will help the MoJ in the effective implementa- needed among the courts. tion of program budgeting. 78. Poland does not have a consistent instrument to 73. The MoJ should review and adjust its performance estimate court staf�ng needs. Its estimates rely on inflow monitoring and evaluation system. The new system of cases. However, Poland has not conducted a weighted should extend to individual performance and should be case load assessment, which would take into consideration based on consensus of stakeholders, particularly judges. It the tasks and time required to dispose of cases. These as- should also include regular satisfaction surveys of users. sessments normally inform decision makers about how much court staff time is required to handle each type of 74. The MoJ should consider conducting a Justice Sec- case to disposition, and the amount of time available to tor Public Expenditure Review. The review would help court personnel to handle cases.69 In combination with an the MoJ understand what areas are “under-resourced� or estimate of case inflow, weighted case load assessments “over- resourced,� linking planning and budgeting in the provide a basis on which staf�ng needs can be analyzed in justice sector to allocate and use available resources in a an accurate and balanced manner. way that promotes better performance of the courts and makes better use of public resources. The analysis would 79. Forecasting future case workload and staf�ng also cover the revenue structure of the system through needs should not be based only on current proce- court fees and other sources. It should identify clear policy dures and staf�ng arrangements; it should factor in options for improving resource allocation throughout the assumptions about future reforms and their impact judicial system in order to achieve set goals. on both case workload and staf�ng needs. The 2008– 11 consolidation of commercial divisions in the district and 75. Contractualized initiatives at various levels may regional courts can be used to explain why. As discussed in contribute to better implementation of program section 4.2 on organization, between 2008 and 2011, the budgeting. In order for the various actors in the judicial MoJ dissolved 12 commercial divisions in regional courts system to get used to the spirit of the program budgeting and 14 in district courts. The purpose of the consolidation and the measurement of results, it may be an option for was to secure a higher inflow of commercial cases in order the MoJ to launch a small competition for initiatives aimed for the courts to capitalize on economies of scale and spe- at improvements, where additional budget is provided for cialization. One of the unintended outcomes of the reform, the achievement of results based on innovative ideas de- however, was the decline in the number of commercial veloped and implemented at the local level. judges from 221 to 197 during that period. Many judges and staff simply refused to be transferred to their “new� 76. At the project level, the planning process should courts and instead opted to change their specialization. be improved, and stakeholders should be involved This occurred during the considerable increase in the num- in the planning process, leveraging their skills and ber of commercial cases. Figure 16 shows that during this knowledge. This will entail clearly de�ning the goals of time, the clearance rate of commercial courts (including the the project, as well as their implications in terms of cost, e-court) decreased, while case backlog of commercial cases schedule, and scope for the entire completion of the proj- increased. Though, the e-court appears to have driven this ect. A detailed plan for how and by whom the project will development since its introduction in 2009, according to be supported during the maintenance and operations pe- riod will also need to be developed. 67 Lister (1996). 68 In 1996, because of the inflexible rules, the court leaders were un- 4.3.b. Human Resources able to �ll 10 percent of judges’ positions in the appellate courts, and 77. Court productivity depends in part on the flex- about 12 percent in the regional courts. In 1999, these numbers in- creased to 44 percent and more than 32 percent. Chamber of Audit of ibility to deploy judges and court staff. The history Poland (2001). of the Polish judiciary offers several example of crisis due 69 For a more comprehensive discussion and explanation of this and other to sudden increases of cases and inability to deploy staff methods, see Gramckow, (2012). 20 The Status of Contract Enforcement in Poland �gure 17, it is also evident that the FIGURE 16 NUMBERS OF COMMERCIAL JUDGES, COMMERCIAL CASE INFLOW, decrease in the number of judges AND PERFORMANCE OF COMMERCIAL COURTS IN POLAND, 2005–11 due to reorganization of courts was Commercial judges Commercial Case Inflow also contributing factor. 960 1,400,000 940 1,300,000 80. Staf�ng needs assessment could be the basis for a future HR 920 1,200,000 Strategy. The HR strategy should 900 articulate immediate and medi- 1,100,000 um-term staf�ng goals (including 880 consideration of a sector strategy) 1,000,000 860 and practical steps for achieving 840 900,000 them. Both documents should help the MoJ and courts address such is- 820 800,000 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 sues as the imbalance between cases and staff allocated across instances to process them (see �gure 18), and the dif�culty in hiring and retention of 1,400,000 judges and staff in bigger cities. 1,200,000 Way Forward 1,000,000 81. The MoJ could consider us- 800,000 ing some method for estimating 600,000 staf�ng requirements, such as a weighted workload study, to in- 400,000 form its human resources policy 200,000 and to increase the ef�ciency in the expenditures and opera- 0 2006 2007 2008 2009 2010 2011 tions of the courts. Informed by Incoming cases Resolved cases Backlog such reviews, the MoJ should then consider preparing HR policies and Source: MoJ statistics. an HR strategy that would help the MoJ balance the distribution of cases and HR needs.70 A more strategic and FIGURE 17 BREAKDOWN OF CASE BACKLOG IN COMMERCIAL COURTS, 2010 AND 2011 120,000 70 A hypothetical calculation of costs associ- ated for the use of judges for nonjudicial tasks could be made, as follows. Assume 100,000 that judges and court staff work 220 days and 1,760 hours per year (which is the case in the United States; see Gramckow 2012). 80,000 Gross annual salary of �rst instance judges is €20,736 (according to CEPEJ Report 2012), which is €11.78 per hour. Assume that the 60,000 salary of court administrative staff is one- third that of judges, or €3.9 per hour. If these hourly rates are multiplied over half 40,000 of the annual working hours (those that would have been dedicated by judges to deal with administrative tasks), that results 20,000 in 880 hours, or €10,366 per judge and €3,432 per court staff. This means that the difference, €6,934, is the amount that is 0 “lost� annually per judge if judges spend 2010 2011 half their time carrying out administrative tasks. If that amount is multiplied by the e-court Courts “involved� with reform Other courts number of judges in Poland (10,625, ac- cording to CEPEJ Report 2012), the Polish Source: MoJ statistics. 4. Factors Underlying these Trends and Possible Solutions 21 FIGURE 18 CASE INFLOWS PER JUDGE BY INSTANCES IN POLAND, 2005–11 a dispute or obtain the payment of a debt. These factors are relatively 2,000 low litigation costs and certain tax 1,800 incentives, and are analyzed in the 1,600 sections below. 1,400 1,200 4.4.a. Litigation Costs 1,000 800 84. In Poland, litigation costs are 600 relatively low. According to the 400 annual Doing Business reports, the 200 cost of contract enforcement (com- 0 posed of court costs, enforcement 2005 2006 2007 2008 2009 2010 2011 costs, and average attorney fees)74 in Poland is one of the lowest among First instance Second instance Third instance the comparator countries75 (see �g- Source: MoJ statistics. ure 19). In 2011, it was 12 percent of the claims. By 2012, however, the costs of enforcing contracts had in- systemic approach to HRM is necessary in order for the ju- creased by 58 percent to 19 percent diciary to be able to overcome the organizational and man- of the claim. In fact, Poland is the only country to have agement challenges that arise from the principle of immov- experienced such an increase among comparator coun- ability71 and unwillingness of judges to relocate stemming tries. However, court fees in particular have not increased from a principle of immovability of judges. (the increase has occurred in attorneys’ fees). Poland is still among the countries where the costs of using the court 82. The MoJ and courts should consider HR policies system are cheapest. and laws that would allow for more flexible alloca- tion of judges and nonjudicial staff to courts. In its 85. The low cost of litigation is likely to be one of quest for more elastic rules for managing court staff, the the reasons for the relatively high volume of court MoJ can draw on good practice from other countries. For �lings, of some appeals, and ultimately for lengthier example, in the Netherlands, judges are substitute judges proceedings. Court fees depend on the value of the dis- in all the other courts of the same level of that to which pute; court fees, however, cannot exceed the maximum they have been appointed. If there is a need due to high cap (Zl100,000). For instance, interviewed lawyers reported caseload, the head of a court with a high caseload can ar- an increased number of appeals in cases involving high val- range with the head of one with low caseload to receive ue claims where court fees reach the maximum threshold. judges to hear cases in his/her court. Several courts have agreements for such exchange of judges among courts.72 court system could save €73,673,750 per year through a more ef�- In the Netherlands, a so-called “flying brigade� consists cient distribution of tasks among personnel. of a group of lawyers working as court clerks. Similar sys- 71 The principle of immovability guarantees judges’ impartiality and inde- tems of flying brigades have been put in place in Italy and pendence by limiting possibilities of their removal from cases or courts. 72 Fabri and Langbroek (2007). Portugal. In Austria, the newly appointed judges working 73 World Bank (2005). for the superior appeals court can be temporarily assigned 74 The Doing Business reports record cost as a percentage of the claim, as- to the district courts in their jurisdiction when and where sumed to be equivalent to 200 percent of income per capita. No bribes needed. Two percent of judges are under such arrange- are recorded. Three types of costs are recorded: court costs, enforcement ment. In Quebec, Canada, judges regularly travel from costs, and average attorney fees. Court costs include all court costs and expert fees that the seller (plaintiff) must advance to the court, regardless court to court to alleviate caseload.73 of the �nal cost to seller. Expert fees, if required by law or commonly used in practice, are included in court costs. Enforcement costs are all costs that the seller (plaintiff) must advance to enforce the judgment through a pub- 4.4 Unintended Incentives to Litigate lic sale of the buyer’s (defendant’s) movable assets, regardless of the �nal cost to seller. Average attorney fees are the fees that the seller (plaintiff) 83. The inflow of cases could be managed more ef- must advance to a local attorney to represent the seller in the standard- fectively to enable the system to focus on cases it ized case. More detailed information available online at Doing Business ought to deal with. It seems that in Poland two impor- web site at http://www.doingbusiness.org. 75 The comparator countries includes, arranged from low to high: Germa- tant factors are incentivizing people to use the courts, ny (14.4 percent); Hungary (15 percent); Austria (18 percent); Estonia even when the use of the courts may seem either dis- (22.3 percent); the Netherlands (23.9 percent); Czech Republic (33 per- proportionate or not the most effective way to resolve cent) and the Slovak Republic (34 percent). 22 The Status of Contract Enforcement in Poland Judges reported that lawyers and FIGURE 19 CONTRACT ENFORCEMENT COSTS AMONG COMPARATOR litigants tended to �le competing/ COUNTRIES, 2011–12 (PERCENT OF THE CLAIM) counter claims of high value to avoid 16 payment of court fees and therefore 14 delaying the court proceeding. 12 86. The new e-court further re- 10 duces the costs of �ling certain 8 types of cases. The e-court was es- 6 tablished in 2009 to deal with writs 4 of payment and speed up the pro- 2 cess of debt collection claims. Since 0 its establishment, the e-court has Austria Czech Rep. Estonia Germany Hungary Netherlands Poland Slovak Rep. processed millions of claims—small and big, since there is no amount cap on the cases that can be �led before the e-court—through an ac- Attorney 2011 Court 2011 Enforcement 2011 celerated and simpli�ed process. If contested by the debtor or rejected 16 by the e-court, a case �led in the e- 14 court is redirected to a conventional 12 court (see �gure 20). 10 87. The low cost of �ling sets 8 strong incentives for the use of 6 the e-court. The cost of �ling a writ 4 of payment in the e-court is 25 per- 2 cent that of �ling it in the conventional 0 court.76 Initially, this measure may have Austria Czech Rep. Estonia Germany Hungary Netherlands Poland Slovak Rep. been designed to promote the use of the e-court in its start-up phase. Today, the reason why the fees of the e-court are much lower than that of conven- Attorney 2012 Court 2012 Enforcement 2012 tional courts may be less obvious. Liti- Source: Doing Business 2012, 2013. gants have become aware of the exist- ing incentives. As there is no cap in the value of the cases that can be �led in FIGURE 20 FLOWCHART OF THE E-COURT the e-court, while opposing and redi- recting a case to a conventional court No opposition: does not result into an additional court issuance of enforcement clause fee, there is an incentive for litigants Issuance of to �le their case in the e-court, even electronic writ of payment if the claimant knows that the defen- dant is going to oppose77 and that the Lawsuit filled Examination electronically by by Opposition by the claimant referendarz the defendant 76 Lawsuit found Art. 19 of the Law on Costs of Civil Cases groundless stipulates that the cost of �ling a writ of pay- ment in the e-court is 25 percent that of �ling it in the conventional courts. There is no pro- vision that would impose on any party a duty Transfer to to pay the additional 75 percent of the fee competent court if case is transferred to conventional courts. 77 The e-court was not designed for these cas- es, but to process the high amount of uncon- tested debt collection. Source: World Bank analysis. 4. Factors Underlying these Trends and Possible Solutions 23 FIGURE 21 INCOMING, RESOLVED, AND BACKLOG CASES IN THE E-COURT, settlement of the case. Yet the val- 2010, 2011, AND MID-2012 ue of the recoverable fees must not exceed the value of the claim itself. 2,000,000 According to interviewed lawyers, at- 1,800,000 torney costs incurred by the parties 1,600,000 are much higher than the minimum 1,400,000 fees stipulated by these ordinances; 1,200,000 therefore, the losing party will never 1,000,000 reimburse the full costs of litigation. 800,000 600,000 90. Moreover, unpaid litigation 400,000 costs do not accrue interests in 200,000 Poland. It is one of only three coun- 0 tries in Europe (the Czech Republic 2010 2011 2012 and Ukraine are the others), where Incoming cases Resolved cases Backlog cases unpaid litigation costs do not accrue interest.79 The losing party will not be Source: MoJ statistics (data for 2012 are limited to the period from January to June). charged any interest for late payment Note: The �gure does not disaggregate by types of jurisdiction. of any, already low, costs. At the same time, the team was told that judges do not seem to suf�ciently case will be directed to the conventional court. The claimant sanction dilatory behavior during saves 75 percent of the costs.78 court proceedings. This is not due to a lack of legal provi- sions, because the law would allow them to do that. The 88. As a consequence, the case inflow in the e-court combination of these two factors can therefore incentivize is increasing steadily and steeply (see �gure 21). Inter- certain actors to litigate while they know perfectly that they views with debt collection companies and other stakehold- have little chances to win the case. ers suggest that there are many cases processed by the e-court that remain unopposed, although the claims are actually not founded or subject to the statute of limitations. 4.4.b. Tax Incentives When it comes to utility bills and the like, a signi�cant 91. The 2005 Report found that tax incentives were a number of people tend to comply with payment orders signi�cant driver for creditors to �le cases.80 Indeed, they receive from the e-court, although they may not owe more than half of the Polish small and medium enterprises anything. At the same time, it appears that this outlet is (SMEs) in the 2005 National Bank of Poland survey said that hugely popular with banks, and factoring, debt collection, tax incentives were a key reason for �ling cases in court. and utility companies. Access to justice considerations may therefore not adequately justify the incentives set by the low costs to use the e-court. 78 According to the information received from judges, nowadays, any claim “for a monetary payment� can be �led in the e-court. Art. 498 of the 89. The impact of a recent increase in attorney fees Code of Civil Procedure is directly applied for electronic procedure and on case inflow remains uncertain. As the increase re- stipulates that “writ of payment may be issued if the plaintiff indicates a ferred to in the most recent Doing Business report (World claim for a monetary payment.� This de�nition is too broad, and allows a claimant to �le, for example, a claim regarding a breach of contract Bank 2012) refers to 2012, it is impossible to assess at this that translates into a pecuniary payment. Such case is not supposed to point if this will have an impact on case inflow. Yet tak- be �led before the e-court (designed for debt collections) so it will be ing into account Polish cost shifting rules and practices, it redirected to the conventional court. Yet the claimant would have saved three-quarters of court fees. does not seem likely that such an increase will signi�cantly 79 Lovells (2010, 6). reduce litigation rates. In Poland, the minimum attorneys’ 80 The 2005 Report (text box 5, 40) noted: “Among the millions of cases legal fees for which a successful party is entitled to reim- handled by the Polish courts every year are some that do not even involve bursement from the losing party are regulated by the ordi- a dispute. In many cases, it may be evident to the creditor that the debt nance on advocates’ fees and the ordinance on legal Coun- will never be collected. The costs to the creditor in such a situation exceed the value of the debt, since the creditor may have already paid pro�t sels’ fees (Zl60 if the amount in dispute is below Zl500, to taxes on revenue that was never received. The creditor can get a refund Zl7, 200 if the amount in dispute is Zl200, 000 or above). on the taxes, but not without proof that the debt is uncollectible. With The fees may be increased by up to six times depending a pro�t tax rate of 19 percent, the value to the creditor of being able to get a refund on the taxes paid can be considerable. More than half of the on the complexity of the matter, as well as the workload Polish �rms in the spring 2005 National Bank of Poland survey said that required of the lawyer and his or her contribution to the this tax incentive is a key reason for �ling cases in court.� 24 The Status of Contract Enforcement in Poland Based on the available statistics, it was not possible to accu- as possible. Costs can be used to incentivize potential liti- rately assess the extent to which these tax incentives impact gants to make use of other dispute resolution mechanisms. the inflow of cases. However, interviews with tax of�ces and When setting incentives through the cost of accessing the businesses con�rm that these �ndings remain valid today. system, the monetary value of a claim can be one consid- eration, but it should not be the only one. Certain types of 92. Creditors �le a petition in court knowing perfectly cases of low monetary value may have signi�cant societal that the debt they seemingly try to enforce through implications. The decision may therefore be justi�ed to keep the courts will never be collected. The reason for this be- them within the courts instead of diverting them to other havior—which at �rst sight may appear irrational—is a provi- dispute resolution mechanisms. Also, costs affect potential sion in the Corporate Income Tax Law81 that allows obtaining court users differently depending on their income level. The a refund of pro�t taxes paid on revenues that do not materi- inflow should be managed in a way that ensures that those alize, such as a receivable that will never be paid. In principle, cases and those users that need to go to court can reach the the creditor needs to prove that the debt is not collectible. court, while other cases are diverted from the court system. Based on interviews, it is safe to say that this provision seems to be well known to businesses that end up �ling cases just 97. Regarding litigation costs, the MoJ and courts to obtain this proof.82 However, it is dif�cult to ascertain the should consider carrying out an analysis of the incen- exact number of cases �led due to this tax incentive. tive structure. This analysis should distinguish between different types of litigation, categories of claims, the value 93. A little known legal provision remains ineffective of the claim, and so forth, and should be combined with a in addressing this practice. In fact, an exception to the survey of court users and legal service providers. It should general rule that the creditor needs to prove that the debt is thus provide an empirically based understanding of the fol- not collectible is provided for in the same article.83 In order lowing aspects: (i) how litigation costs may or may not be to document that a receivable is not collectible, it would be driving the usage of the courts; (ii) their value as a �nancial suf�cient for the taxpayer to substantiate in a report to the resource for the court system; (iii) the cost-bene�t of the tax authorities “that the expected costs of proceedings and services provided and the resources invested and collected; enforcement of receivables are equal to or higher than the and (iv) the role of the cost structure as a potential barrier to amount of receivables.� access to justice. 94. The reasons for this provision to apparently re- 98. Clear policy options should be identi�ed based main unused are somewhat uncertain. Interviews with on this analysis to address current imbalances. In par- the bar association and judges seem to indicate that this ticular, the MoJ and courts should reconsider the rationale exception may not be widely known. Another reason may behind the reduced court fee of the e-court, and review be that the application in practice by the tax authorities the requirements for certain types of cases to be �led in makes it dif�cult for businesses to claim this exception, and the e-court to avoid that it is just used as a detour before that the transaction costs of �ling a case may therefore be the case reaches the conventional court for the sole reason lower than those of claiming the exception. It is possible of saving court fees. Also, the minimum amounts regulat- that the requirements are too strict or that practice is incon- ing cost shifting may bene�t from a review. Establishing sistent among different tax authorities, so that businesses interest on unpaid court fees and promoting the effective go the safer way of �ling.84 sanctioning of dilatory behavior of litigants may be other venues worth exploring. A Way Forward 95. Low litigation costs in Poland seem to create an im- balance between access to justice, on the one hand, and the need for the system to make the best possible 81 Article 16 of the Corporate Income Tax Law. use of public resources, on the other hand. The good 82 With a pro�t tax rate of 19 percent, the value to the creditor of being thing about low litigation costs is that they make it easier to able to get a refund on the taxes paid can be considerable. Additional costs of litigation are at least 12 percent. access the courts. However, this access comes at a cost to ev- 83 Article 16, Section 2, Nr. 3 of the Corporate Income Tax Law. erybody when the system is clogged by a signi�cant number 84 The Ministry of Finance explained that there is no obligation for taxpay- of cases that can better be dealt with by other mechanisms. ers to report the amount of such write-offs in a tax form and that it is Cases of lower value typically absorb a disproportionate therefore impossible for them to answer the question about application amount of public resources compared to what is at stake.85 of the exception in practice. 85 The reforms under Lord Woolf in the United Kingdom identi�ed the prin- 96. In terms of inflow management, the goal there- ciple of proportionality as useful guidance to strike an appropriate bal- ance between access to justice and the need to make good use of public fore should not be to make access to justice as cheap resources. For details, see Decker, Möhlen, and Varela (2011, 58–59). 4. Factors Underlying these Trends and Possible Solutions 25 99. Regarding tax incentives, it is advisable to assess 4.5 Procedures more thoroughly the impact of the tax system on the 104. This section analyzes two issues: legislative practices behavior of litigants and the state and court budgets. regarding civil procedural code; and the current design of In addition to an empirical analysis of the actual practice, commercial proceedings. This analysis is important because the implications for the state and court budgets could be of the relevance and signi�cance of these procedures for part of a judicial public expenditure and institutional review fair and ef�cient litigations, and because of a shared senti- to identify clear policy options and forecast their potential ment among legal professionals that frequent changes of impact. procedures create an environment of uncertainty in their 100. Tax reforms such as the ones implemented by operations. the Slovak and Czech Republics may inspire solutions for Poland. In the Slovak Republic, receivables six to nine 4.5.a. Legislative Practices months overdue are 50 percent tax-deductible, and in the 105. In Poland, frequent changes to the Civil Proce- Czech Republic tax on that revenue is not paid until cash dural Code have created an environment of uncer- is received. tainty for legal professionals. As one of the experienced litigators who was interviewed for this report stated: “From 101. A proper use of the Corporate Income Tax Act a practical point of view, the most important thing is that provision could unload the courts from an unneces- the decision makers stick to their legal doctrine and subse- sarily high case inflow. In particular, it may be worth con- quent rules long enough to learn whether it works or not.� sidering disseminating the existence and description of the As noted, since 2002 the Polish Civil Procedural Code (the tax mechanism provided by Article 16, Section 2, Point 3 of Code) has been amended 118 times (close to 1 change per the Corporate Income Tax Law among the legal and busi- month). During the same period, the Constitutional Tribu- ness community. In addition, its implementation by the tax nal has ruled 65 times on issues regarding the constitution- authorities needs to be analyzed and monitored. The right ality of the Code. In 25 cases, the Code has been changed incentives to encourage use of this provision as an alterna- as a result of these decisions. tive to �ling claims to obtain the declaration of a debt as uncollectible has the potential to save creditors time and 106. Procedural uncertainty has a negative effect on money. It can also help unburden the courts from this type the performance of the courts. While at times legislative of case and enable them to focus their resources on other changes can be a boon to legal professionals, changes that types of cases. are too frequent make legal professionals’ roles quite dif- �cult. An unpredictable legal environment makes it prob- 102. Monitoring the incentive structure will be key lematic to formulate and pursue good litigation strategies. to avoiding future imbalances. Such a monitoring Judges complain that as a result of frequent changes, they mechanism, with indicators and regularly updated sta- must apply different procedural regulations to concurrent tistical data, can be established based on the in-depth cases. This, of course, raises the overall costs of litigation analysis. This mechanism should be focusing on the key and time of disposition, and may contribute to case inflow aspects of the incentive structure driving litigation and and case backlog. be actively used by those in charge of taking corrective action. 107. Two observations about the legislative process could be made based on the discussions with stake- 103. Regulatory impact assessments of legal and holders. One is that the impacts of amendments are regulatory changes potentially affecting the cost not suf�ciently analyzed before and monitored af- structure and other incentives driving litigation ter enactment. The second is that the consultative should complement the monitoring mechanism. process does not involve all important stakehold- Since the monitoring mechanism and its data are by na- ers. The discussions with legal professionals on the lat- ture somewhat backward-looking, it is useful to combine est amendment of the Code, which became effective in it with forward-looking mechanisms. They could be part May 2012, revealed that while judges were well informed of regular forecasts, such as of caseload development, about the changes and their potential impact, lawyers, but should also be integrated in the process of legal and with some exceptions, were not. Some judges (such as in regulatory drafting. The empirically based evaluation of the Warsaw court) expressed high expectations that the the impact of changes to the incentive structure should amendment will improve the speed and quality of pro- be an integrated part of this drafting process whenever cesses, while others (such as in the Krakow court) were possible. convinced that these changes are likely to have negative impacts on their work. Both assumptions could be correct 26 The Status of Contract Enforcement in Poland because the changes may have different impacts on these be fast and cheap. In Poland, a plaintiff, by reason of legal courts. Also, some judges acknowledged the lack of di- prerequisites, makes the initial choice in the process. The rection and consistency of some legal changes and the defendant has some means to reverse the plaintiff’s choice, absence of comprehensive consultations during the legis- but ultimately, especially in admonition cases, the judge lative process. Judges and legal practitioners stressed that decides the type of trial to be undertaken, depending on they have the most comprehensive knowledge about how its anticipated complexity. This is somehow different from laws work in real life and therefore their participation in countries such as Austria and the Netherlands, where the the process is essential. choice belongs strictly to the plaintiff.86 110. Poland is one of the countries with higher num- A Way Forward ber of procedures to enforce a contract among com- 108. In Poland, there is a tendency to produce a leg- parative countries. This seems to be having an impact islative draft without thorough consideration of poli- on the length of proceedings. Formal procedures matter cies the law should implement, the impacts and their for the length of contract enforcement. According to the distribution among stakeholders, and how enforce- latest Doing Business report, Poland, Estonia, and Hungary ment of the draft law can be monitored and evaluat- were the countries with a higher number of procedures to ed. Although these considerations may not fall completely enforce a contract in 2012 (table 1). Despite a remarkable under the MoJ’s prerogative, the MoJ could consider some improvement in this indicator in 2012, Poland is still the policies to overcome these pitfalls. country with lengthiest contract enforcement among com- parator countries.87 s The MoJ could consider creating a simple assess- ment system of court-related civil procedures. The 111. Poland has the highest number of procedures and system could combine both functions: legislative as- lengthiest times in the trial and judgment stage of the sessment and enforcement/compliance monitoring and proceedings of the comparator countries. The Doing evaluation. Courts obviously should play a critical role in Business report groups the procedures of the contract en- designing and operating the system. forcement in three major stages: “�ling and service,� “trial and judgment,� and “enforcement of judgment.�88 Poland, s The MoJ could also consider introducing a stricter with 19 procedures, has the highest number of procedures legislative schedule. A possible solution to avoid con- for the “trial and judgment� stage, followed by Estonia (see stant legislative changes of procedures could be to agree table 2).89 This stage in Poland is also the lengthiest among on setting up one speci�c date in the year when amend- comparative countries (480 days), which suggests that “trial ments can enter into force. and judgment� is one of the stages where Poland is under- performing when compared to other countries. s Finally, the MoJ should improve consultations with relevant stakeholders on key policies and legisla- 112. Court experts seem to be one of the elements tion in order to increase the quality of draft amendments that are contributing to delays in the “trial and judg- and reduce their volume. ment� stage in Poland. According to the 2005 report, 4.5.b. Procedural Design 86 World Bank (2005, 59). 109. In Poland, around 80 percent of cases are pro- 87 World Bank (2012). cessed through accelerated procedures. There are two 88 A complete description of the methodology is available online at http:// basic types of commercial procedures in Poland. Trials, www.doingbusiness.org/methodology. 89 In some cases, Doing Business reduces the total number of procedures whether regular or simpli�ed, are reserved for disputed if certain conditions exist (for example, if specialized courts exist). There- claims. Accelerated proceedings (admonition and writ of fore, the addition of the number of these procedures may be somewhat payment) serve for undisputed claims, and are designed to higher than the number shown in table 1. Table 1 Contract Enforcement (Procedures, Time and Cost) in Comparator Countries, 2012 Austria Czech Rep. Estonia Germany Hungary Netherlands Poland Slovak Rep. Number of 25 27 35 30 35 26 33 32 procedures Time (days) 397 611 425 394 395 514 685 545 Cost (% of debt) 18 33 22.3 14.4 15 23.9 19 30 Source: Doing Business 2013. 4. Factors Underlying these Trends and Possible Solutions 27 Table 2 Contract Enforcement by Stages (Procedures/Time) in Comparator Countries, 2012 Austria Czech. Rep Estonia Germany Hungary Netherlands Poland Slovak Rep. Filing and 5/30 5/88 9/30 7/29 5/60 5/10 5/60 6/70 service Trial and 11/277 14/410 18/320 17/310 15/245 13/442 19/480 15/365 judgment Enforcement of 11/90 9/113 8/75 8/55 16/90 8/62 10/145 12/110 judgment Source: Doing Business 2013. judges and lawyers reported that the use of experts by the resolving differences. Other mechanisms to improve the courts in Poland was excessive, too costly, and time-con- performance of court experts could also be considered. suming. Interviews with stakeholders conducted for this For example, in Austria, experts are obliged to notify the report con�rmed that this continues to be an issue. The court two weeks before the deadline if they feel they may length of the “trial and judgment� stage in Poland, where not meet the deadline. The court then has the authority one of the stages concerns court experts, seems to con�rm to dismiss the expert and designate another expert who that the problem with court experts is negatively affecting would be able to deliver the opinion at an earlier time.93 the performance of courts in Poland. Interviews also con- Another measure is to set up a follow-up service of court �rm the validity of the �nding presented in 2005: “The un- experts. Such mechanism, established by the Regional derlying cause of the problem can be found in regulation, Court of Antwerp, won the Crystal Scales of Justice Prize including the obsolete selection rules; strictly regulated fees for innovative court practices in 2012, organized by the which do not correspond to market prices; and the judges’ Council of Europe and the European Commission (see complete discretion in managing this institution. In some box 4). This follow-up service centralizes the coordination instances, unhealthy practices of judges exacerbate the and control of the court expert procedure (dealing with problem� (World Bank 2005, 66). All these factors suggest correspondence, controlling for delays in the issuance of that Poland needs to reform the regulation and manage- reports, centralizing data about experts, and the like), ment of courts experts. which has led to better quality and higher satisfaction with courts experts’ work. A Way Forward 113. The application of contractualization can also be 4.6 Access to Information explored in the context of the proceedings. The con- cept of contractualization within the proceeding refers to a 115. This section focuses on access to information within shift from the authority-based approach in favor of one aim- the court system in Poland. This element is analyzed be- ing for consensus in the relations of the parties and court cause it has an impact on the performance of the courts, personnel during the proceeding.90 To our knowledge, the but also on their legitimacy and perception by the citizenry. approach has been used in Poland as well, in addition to 116. There seems to be a weak knowledge about the Bosnia and Herzegovina, France, Germany, Sweden, and justice sector in Poland (see �gure 22). As noted (in sec- Switzerland.91 It is a very flexible concept, which may not tion 3.4 on court performance), a majority of respondents necessarily require legislative changes of proceedings. One participating in the 2009 Survey expressed a negative example of this is the “contract in Limine litis.� It consists opinion about courts and the justice system more broadly. of the practice whereby, before the hearing, judges pres- About 47 percent of the participants of the Survey also ent their understanding of the case to the lawyers so that said that their knowledge about the justice system is the lawyers may draw attention to any possible dif�culties. weak. When asked what kind of information would be Through the use of this mechanism, the proceeding can useful for improving their ability to navigate the system, be less formal, more ef�cient, and smoother, as it allows the Survey participants pointed to the following: (i) clearly the proceedings to be focused on points that really pose a problem and assures the parties that the hearing will be meaningful from their standpoint.92 90 The context here is very different from that of the dialogue described in Section 4i, where various bodies acting in the public interest agree on the 114. The MoJ should consider modernizing the court judicial service’s public management. experts system. As suggested in 2005, a radical alter- 91 Lhuillier (2010, 30). native of reform would be to allow parties to introduce 92 Lhuillier (2010, 30). their experts and reserve court-appointed experts only for 93 World Bank (2005). 28 The Status of Contract Enforcement in Poland written laws; (ii) legal and practical legal advice and legal forms; and BOX 4 BELGIUM: FOLLOW-UP SERVICE OF COURT EXPERTS IN (iii) practical information about the THE REGIONAL COURT OF ANTWERP functioning/organization of the ju- The follow-up service of court experts (Service de Suivi des Expertises, SSE) was diciary, such as location, jurisdiction, established in the Regional Court of Antwerp to improve the quality of court and/or responsibilities and working experts and reduce potential delays during the proceedings. schedule.94 The follow-up service of court experts is formed by a judge, a court clerk (Gref�er), 117. Surveys of users or legal and two members of the civil clerkship. The service: professionals are a rarity in Po- s Offers a personalized service to court experts and parties land and, if conducted, their re- s Deals regularly with the correspondence regarding experts sults do not inform policy deci- s Controls the delays in the issuance of the expert reports sions. Information regarding the s Enters data in the electronic system extent of court users’ satisfaction s Centralizes data regarding court experts. (and trust) in the courts and court Among other successes, the service so far has achieved: personnel (judges and staff) are s More strict oversight of courts experts work relevant tools for the assessment s A limited duration—no more than 5 to 7 years (no �le out of control) of the quality of judicial systems. s More expeditious payment of experts According to CEPEJ Report 2012, s Uniformity in the proceeding and the judgments 33 countries indicated that they use s Increase in the inflow of cases regarding construction in the Court of Antwerp such surveys aimed at court users s Increased satisfaction of experts and legal professionals or legal professionals. Fifteen coun- s Increased legal certainty regarding expert statements. tries do not.95 To our knowledge, the MoJ of Poland has conducted Source: CEPEJ website. one users’ satisfaction survey (in Note: More information is available at http://www.coe.int/t/dghl/cooperation/cepej/events/EDCJ/cristal/ February 2009) in the last �ve years. default_en.asp. Poland is among the 21 European countries that conduct surveys only occasionally, while 19 coun- tries conduct surveys on a regular basis. Austria conducts regular and occasional surveys at the national FIGURE 22 KNOWLEDGE ABOUT THE POLISH JUSTICE SYSTEM (PERCENT OF and court levels, and Estonia, Hun- RESPONDENTS) gary, and the Netherlands conduct 50 surveys regularly. The remaining 45 comparator countries (the Czech 40 Republic and the Slovak Republic) 35 did not perform users’ surveys be- 30 tween 2008 and 2010. 25 118. Communication between 20 the MoJ and the courts is spo- 15 radic and partial, at best. Users’ 10 understanding of the system and its 5 performance is a precondition for 0 I have a Good, Enough, I know I have a I do not know, their trust, which in turn is the key very good I have some this in general poor knowledge, not interested guarantor of judicial independence. understanding knowledge or selected not interested in it It is also a key element of the court of the topic on the subject aspects in this accountability structure, which moti- vates better performance of courts. Source: The Survey. The government, including the MoJ, has established databases, where some information is available about 94 The Survey, p. 19. the system, its functions and organization, laws, legal 95 CEPEJ Report (2012, 93). 4. Factors Underlying these Trends and Possible Solutions 29 documents, and case law.96 Court statistics (clearance 123. The MoJ should consider introducing informa- rates, number of court personnel, case inflow, number of tion about foreseeable time frames of proceedings, appeals, and the like) are not published, however. Most as a legal obligation or as a de facto practice. Introduc- courts do not publish their decisions. tion of this obligation would dramatically expand litigants’ rights and would directly increase con�dence in the courts. 119. Information about foreseeable timetables for Other countries have already implemented such reforms. proceedings (regarding speci�c cases), which would For example, Latvia has an electronic service called “track allow users to adjust their expectations is not yet court proceedings,� which is free of charge and available available. The Polish courts do not have an obligation online. One can follow any Latvian legal procedure online, to provide such information to litigants or other users. and information is provided, notably on the scheduled By 2010, the courts of 12 European countries did have hearings.101 this obligation, including Hungary and Latvia (for criminal cases). At least two other European countries provide this 124. The reform would require the introduction of information without being legally required to do so. In ad- time standards. Countries such as Denmark, Finland (the dition, Romania and Serbia have ongoing reforms that will Rovaniemi Court Quality Project), the Netherlands (Court include this obligation.97 Quality Project), and the United States (the American Bar Association and the Conference of State Court Administra- 120. Poland does not follow international good prac- tors) have put in place time standard practices. A successful tices on time management, which includes important approach requires: (i) an assessment of the current situation access to information elements.98 CEPEJ’s Guidelines for with respect to time frames; (ii) some consensus as to a rea- Judicial Time Management include the following guide- sonable time standard; (iii) the setting of a goal (percentage lines: (i) the users of the justice system should be involved of procedures in compliance with the standard); and (iv) a in the time management of judicial proceedings; (ii) the us- monitoring mechanism to assess to what extent the objec- ers should be informed and, where appropriate, consulted tive is achieved. This kind of initiative would be a very im- on every relevant aspect that influences the length of pro- portant motivator for effective and speedier proceedings. ceedings; (iii) the length of proceedings should be foresee- able as much as possible; and (iv) the general statistical and 125. The improvement of the transparency of the other data on the length of proceedings, in particular types justice system and likelihood of time frames can of cases, should be available to the general public.99 achieved through different initiatives and instru- ments. The Turkish example of text messaging about judi- A Way Forward cial inquiries is one example of the many judiciaries across the globe that are innovating in their communications with 121. The MoJ and courts should provide users and the public (see box 6). public with more timely information about the jus- tice system that is easier to understand. In addition to laws, legal texts, and forms, which are already available, information, should include statistics illustrating court per- 96 See the Legal Texts Database website at www.sejm.gov.pl, and the Case formance. Law of Higher Courts website at www.sn.pl. Other documents and legal forms are available online at www.ms.gov.pl. 122. In addition, the legal information system should 97 CEPEJ Report (2012, 84). allow public access to court rulings. For example, the 98 The hierarchical system that functions in many courts in Poland does not Slovak Republic made all court rulings accessible on the favor this method of administering justice. Judges are often bound to follow written suggestions of courts’ presidents on how to manage the Internet in May 2012. The objective of this radical step case (such as how many witnesses to summon, how many hearings to was to improve the quality of service by increasing ac- schedule for one day, and how often they should be planned). countability of courts and judges. Court decisions that are 99 CEPEJ (2008b). available on the Internet do not include personal informa- 100 Slovak court decisions are available online at http://www.rozhodnutia.sk. tion about litigants, defendants, or other participants.100 101 CEPEJ Report (2012, 84). 30 The Status of Contract Enforcement in Poland BOX 5 USERS AND STAFF SURVEYS AS A COURT MANAGEMENT TOOL IN THE DUTCH JUDICIARY “The Judiciary in the 21st Century� project in the Netherlands covered a number of small initiatives, pilot projects, and experiments, including structural analysis, initiated and �nanced by the Dutch national government. Two principles drove this process: safeguarding judicial independence, and assuring judicial quality. The strategies included focusing on knowledge management, training programs, improvement of internal and external communications, and application of the latest ICT technologies. The reform process aimed at changing all levels of the judiciary through the introduction of a performance- oriented funding system and the redesign of the organizational structure of the Dutch judicial administration. As part of this reform process, a comprehensive quality control system for all courts in the Netherlands (Rechtspraa) was developed. The system is designed to outline the judicial functions at the court and circuit level and can be used to compare quality between various courts and circuits. Every other year, each court is required to conduct a court-wide review based upon the INK (Instituut Nederlandse Kwaliteit) procedure, the Dutch equivalent of the European Foundation for Quality Management (EFQM). The court’s management team analyzes the progress of improvements based on the INK-standards. Once every four years, the courts are also obliged to conduct a survey on how users perceive the court’s services. Within the same four-year cycle, the courts must evaluate staff satisfaction with their workplace, which includes their jobs, the court’s organization, and the management team. The ground-breaking elements of this system are peer reviews. Peer review, a professional consultation among colleagues, is designed for individuals and intended to create a more open culture of exchange within the court system. Judges can use this instrument to evaluate, discuss, and improve their own performance. The process focuses on the judge’s interactions with the parties to the procedures, behavioral aspects, and the quality of the judge’s decisions. Source: World Bank (2011). BOX 6 THE UYAP SHORT MESSAGE SERVICE (SMS) INFORMATION SYSTEM INTURKEY The SMS messages judicial information system provides an outstanding service for citizens and lawyers that enables them to receive SMS messages containing legal information such as ongoing cases, dates of court hearings, the last change in the case, and suits or department claims against them. They can be instantly informed by SMS about any kind of legal event related to them, without going to courts. A cooperation agreement that makes it possible to send SMS to the concerning parties’ mobile phones has been signed with the GSMa operators establishing this system. This system aims to automatically inform all related parties of cases when any legal event, data, or announcement (which has to be sent to parties) is issued by the judicial units, such as courts, public prosecutor of�ces, and enforcement of�ces. Sending a SMS does not replace of�cial noti�cation. 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