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Prof. Dr. Dres. h.c. Rolf Knieper

Bremen/Ferrière 2003

Abstract: Judicial Co-operation, Universality and Context

Ever since the collapse of the Soviet Union and the emergence of a fundamentally new orientation to society, politics and economy, the GTZ has been engaged in the reform of law and system of jurisdiction in the former communist states. The book provides a revealing description and analysis of this ongoing process: The planning and legitimation of co-operation projects, the work on drafting and introducing the new laws, the manifold efforts to achieve their implementation in every-day legal practice by means of publications, training, reform of university curricula, press work and conferences, the support given to establishing constitutional institutions, but also the oft tedious endeavours to co-ordinate the work of the various donors. Rolf Knieper's status report renders an account of the exacting efforts involved in the process of judicial reform that has been going on since 1993. At the same time it points to the direction in which it should be continued.

Foreword

For some ten years now the BMZ and GTZ have been aiding the newly formed south-eastern European, Caucasian and Central Asian states to build up and reform their legal and judicial systems in the wake of geo-political change brought about by their release from Soviet rule. It is now time to draw a preliminary résumé, a status report on the German involvement.

This task has been taken on by Rolf Knieper, who from the very beginning was assigned by the GTZ to lead and accompany the German program of legal and judicial counselling in the region. He, therefore, is better qualified than anyone to take stock of the program's strengths and weaknesses, and to analyse and assess its success as well as its shortcomings from a critical, also self-critical, perspective.

Although when looking back it may seem so, at the time it was by no means self-evident that the BMZ, in consultation and in dialogue with the GTZ as one of the first bilateral "donors", should have decided in the early 1990s to assume the role of regional consultant for legal and judicial reform, making it a focus of technical co-operation with the new partner states.

It is true that consultation on matters of legal and judicial policy has always been a subject of German co-operation in development matters with partner countries of the "South", and with some considerable success. As opposed to a "classical" development co-operation, however, this time the task on hand was not solely to provide the technical assistance to make up for individual gaps in existing regulations, or work on amendments to narrowly defined areas of law within an existing and basically legitimised and accepted legislative framework.

The assignment which presented itself in the new partner states was concerned more with a fundamental reform of the entire ingrained system of law inherited from Soviet times over several generations, the effect of which had not only permeated the established institutions of law, but also, and more importantly, had become deeply anchored in the minds and consciousness of the people.

It can well be said that this amounts to considerably more than just a slight departure from the customary task, or the "classical" assignment of counselling on legal and judicial affairs. And indeed it has thrown up completely new problems and issues - issues that up to the present time have lost none of their controversial nature.

Take for example the question as to the fundamental legitimacy of this type of legal and judicial consultation in the first place. Consider for a moment, that when we embark on an assignment of external consultation on legal and judicial reform we are talking about absolutely fundamental decisions that will impact on the future system of law in other sovereign nations. Lawmaking is always a most highly sensitive area of politics, one that like no other rests within the realm of national sovereignty and is subject to the will of the respective democratic sovereign.

All participants, the BMZ and GTZ as well as the experts working for the GTZ, had to be well aware of this set of issues from the outset. It was clear that this type of consultation, aiming as it does at profound legal and judicial reform, could only succeed in a process of forthright dialogue in the truest sense of the word, a process that must be shaped by unconditional respect for the sovereignty of the partners and their legal traditions, as well as the exercise of due restraint with regard to a transfer of "western" concepts of law.

On the other hand, though, all participants were equally well aware that the new partners' categorical and unanimous wish to gain quick access to the modern developments of the West by means of a rapid transformation of state and society would continue to remain pure wishful thinking unless the legal frame conditions were not step by step adapted to the needs of a state organised along lines of democracy, market economy and the rule of law.

In a nutshell: Legal counselling in such a context remains, on the one hand, a balancing act between the pressures exerted by processes of social and economic transition to perform rapid surgery on the legal and judicial system - and on the other hand, the danger not only of moving at too fast a pace for the institutions and populations of our new partners, but even of being accused of egoistic and heteronomous experimentation.

To what extent this balancing act has been successful, to what extent - despite its acknowledged shortcomings - the practice of German bilateral consultation on legal and judicial reform has actually benefited the partner states on their stony path toward comprehensive state and societal transition will be up to the reader to decide on having read Rolf Knieper's report.

Whilst acknowledging that the necessary reform processes have by no means reached completion - especially with regard to the application and implementation of new laws - the author of these lines, at any rate, sees no reason to conceal his own personal satisfaction regarding the past ten years of co-operation with the south-eastern European, Caucasian and Central Asian partner countries.

Eschborn, in July 2003

Dirk-Hartmut Hoppe
Head of GZT Department SE Europe, Caucasian and Central European States

Legal Co-operation:
Universality and Context

A. The Path to the Project

On 16th May 1992 I had the opportunity to meet Mr. Anatolij Chubais at the Bremen home of an expert on East-European affairs, who also happens to be a friend of mine. At that time Chubais was economic policy advisor to the Russian President, Yeltsin, and Minister for Privatisation - as influential as he was already known to be, he was then only at the beginning of a lightning career that a short time later would propel him into even higher government office and to the top of Russia's most powerful state enterprises. He had just arrived from Washington D.C., headquarters of the "sister organisations", the International Monetary Fund (IMF) and the World Bank. The reason for his stopover in Bremen was primarily the Vulkan shipyard, at that time a renowned shipbuilding company that - in their own eyes at least - had done much to assist the privatisation process of the East-German yards. Mr. Chubais told us with some pride that he and his closest Russian advisors had just developed a "500-day programme" for the fundamental restructuring and privatisation of the Russian economy, which a just short time beforehand had at last thrown off its Soviet yoke. In this context he talked of privatisation, credit ceilings, free convertibility for the rouble, restructuring and streamlining of the state sector, and a number of other original and shock-like measures that needed to be undertaken in order to build up a modern Russia.

Some 20 years previously I had published a study on the IMF Stand-by Arrangements[1] in which I criticised its social lopsidedness, inadequate scope of action, and in particular its utterly unrealistic time spans - the much too short time schedule of 18 months - as well as its indiscriminate application to completely different countries around the world. All these key elements were to crop up once again in the 500-day programme for the Russian Federation, which had just set out on the road to becoming a market economy. Even the time frame was the same: the 500 days referred to fall only a little short of the traditional 18 months prescribed by the IMF stand-by arrangements.

Perhaps the different name given to the programme was merely intended to obliterate any suggestion that the Russian Federation might indeed fall into the same category as the "developing" countries, who are frequently subjected to such programmes. This interpretation may not be entirely absurd. Consider, for instance, the fact that the European Union decided not to entrust its dealings with the so-called "transition" states to the General Directorate VIII, that already had considerable experience in matters of development policy. It would have been possible to draw on the vast pool of 'trial and error' experience with developing economies gathered over several decades, and could have been of valuable assistance in dealing with the often not too dissimilar problems facing so-called transformation societies. But the EU preferred to create a new General Directorate which it went on to staff with virtual newcomers to development policy. The process of trial and error had to start anew, a fact which almost certainly contributed towards the generally bemoaned inefficiency and top-heavy bureaucratisation of the billion-dollar TACIS[2] and PHARE[3] programmes. Germany, too, failed to seize the opportunity to entrust experienced development institutions unitarily with the task of co-operation with the transition states. Instead, some regions were shared out so as to avoid raising the impression that the Russian Federation, the Ukraine and Belorus were being classed as developing countries. This attitude bears witness on the one hand to a pre-theoretical, sentimental concept of the term "development" (I shall return to this point) and on the other hand - built on this preconception - to a lack of tact vis-à-vis much older and dynamic cultures with whom "development" co-operation is commonplace.

My references to these connections led to some irritation on the part of the Russians, probably due to our inability to clarify certain misunderstandings. One member of the group expressed his confusion that the Bremen Vulkan Shipyard should stand as a model partner for privatisation, since Vulkan itself had once actually been a private enterprise that in the meantime had been virtually nationalised, was managed by civil servants who seemed to be mainly engaged in administering state subsidies, and no attempt was being made to reprivatise the company. Its legal form as incorporated firm probably gave rise to misunderstandings.

As if that were not enough, a discourse then ensued concerning a statement to the effect that the Russian Federation had gained its independence in the wake of the collapse of the Soviet Union. Here, too, surprise and misunderstandings: The German participants in the dialogue were inclined to be of the opinion that the Soviet Union constituted a continuation of classical Russian imperialism. Such a concept may be summary and contentious; undoubtedly, though, it helps to explain the structures and behavioural patterns which even now (albeit less and less) confront legal and judicial co-operation, especially in the small, newly independent states.

Although the above narrative may appear purely anecdotal, it is still of significance. It was indeed true that after the Soviet Union had collapsed and the different republics set out to reshape their constitutions to include commitments to democracy, market economy and the rule of law (in so doing going even further than many "western" constitutions, at the level of proclamation, at least), we had very little knowledge which could serve as a mutual basis for co-operation on legislative and economic policy. This is not the place to expound on the various "western" opinions who thought it would suffice simply to introduce freedom of the market to a great people who had just been waiting to be released into political freedom, unleashing the dynamics of market forces and setting in motion the invisible hand which would result in increased wealth for everyone; the view that Soviet legislative space resembled a tabula rasa upon which virtually any new system of law could be built up (or even the introduction of law in the first place, for that matter). Nor shall I ponder on whether the "eastern" notions were any more realistic in their belief that market economy equates to wealth and a social net for everyone, that public as well as private capital would inevitably flow eastwards and enable rapid adjustment to the western material standard of living.

Although this may sound simplistic, it actually was the case on both sides that notions such as these resulted in levels of expectation that often stood in the way of sustained development and legal reforms. It appears to have vindicated those who favoured a short, shock-like approach to transition and were therefore unwilling to even try to understand the various specific (legislative) traditions, those who advocated a supposed legislative void be simply papered over with copies of laws "taken from the computer", no thought given to consistency of the (law) cultures. Those who blindly rely on the self-generating dynamics of market forces (the market does it all) and choose not to heed the fact that the market economy needs a firm framework of law which is built to last, and that this law must be practised dependably, that state-organised physical and social infrastructures constitute an indispensable complement to trade and industry, and that the market by no means takes care of all things.

It thus came about that alongside the many (possibly inevitable) misjudgements, mistakes were also made that were thought to have been dismissed by previous experience in development co-operation, viz. thinking and acting in thoroughly inadequate short time-spans, disregard for local traditions, neglecting to solicit acceptance. A great many misunderstandings remained unaddressed due to the failure to seek mutual ground and the "donor" institutions simply churning out their standard programmes and self-reflections; laws taken from the most variable provenience were cast onto the seemingly empty table, where they were left to lie until falling over the edge; "privatisations" took place just for the look of it, leading to the destruction of wealth and especially of social infrastructures; hopes were dashed and literally thousands of people died because they had mistakenly trusted in the state and societal organisations to weave a social net they could depend on. Due to their experience of life in the past, this was quite an understandable mistake to have made.

In the meantime a certain disillusionment has set in: There is talk, for example, of "the IMF and the failure of the market transition in Russia"[4], or even complete breakdown of the process. The optimists' haste has given way to the haste of pessimistic predictions. (to return to the opening encounter: Meanwhile the Vulkan shipyard has gone bankrupt amidst a sea of scandal[5]).

Prognostications of this type contribute nothing toward understanding the complexity of the real world and promoting action and cross-border co-operation, particularly in the field of legal and judicial reform. On the contrary - they constitute very real impediments and must therefore be constantly thematised so as to prove their irrelevance and be able to carry on with the business of real reform. In the wake of several ineffective codification ruins, following a process of continual statutory amendments, following the creation with foreign money and the subsequent decline of a number of state and non-state organisations and institutions, following immense personal euphoria and frustration, it may now have become a little easier to identify the fundamental postulates that will lead to the success of reforms and the conditions for their implementation. The fact that undesirable developments continue to loom along the way is partly due to the market and competition structure of international consulting services and to the interrelated, often shirt-sleeve orientation to supply.

This status report deals with a programme that covered several projects of bilateral and regional co-operation in the area of legal and judicial reform in post-communist transition societies. Its purpose is to provide accountability for events thus far by means of analysing practical steps and results as well as by theoretical reflection, and to identify remedies for further developments and hold them up for debate.

The formal legitimation for programs and projects of co-operation is by way of a government submitting a formal application and its subsequent acceptance, agreed to in regular bilateral governmental negotiations. The substantive legitimation for co-operation and consultation in the development of a legal and judicial system that accords with principles of democracy, market economy and the rule of law lies first and foremost in the political will and (constitutional) legal anchoring of these state and societal ordering principles. Even though it is true that in the different countries these highly abstract concepts are filled with life by different actors and in a different way to Germany and Western Europe, it is absolutely necessary to point out that all transition states in which the GTZ organised judicial co-operation have subscribed to underlying international declarations and conventions with regard to rights and standards. Thus, they have committed themselves to uphold political, social, economic as well as individual human and civil rights and have also included catalogues of basic rights in their national constitutions that bind the state to respect democratic and constitutional principles and individual human rights. These commitments expressly encompass not only the protection of property and business activity, but also minimum social standards in the areas of schooling and education, health, care for the aged, and equal opportunity. The observation that some states openly abuse many of these principles ought not solely give rise to cynicism and despair, but rather harden our determination to increase our efforts to co-operate - although all too often a difficult and frustrating task - and to work steadfastly toward realising these principles.

It is my view that legitimation of co-operation in the post-communist states is strengthened by virtue of a consideration at another level. These states have previously experienced another vision of law, politics, economy and society oriented to collectivity and command economy that became undermined, ruined and obsolete so that the present search for alternatives equates to an existential necessity. Flirts with the revival of feudal or religiously based social structures and/or charismatic rule may be detectable here and there, but they neither find the necessary majorities within the states, nor do they fit in with the real integration in the global economy and global community.

In this yet to be overcome situation with the simultaneous partial continuance of old structures, in this situation of social, economic and judicial vacuum and the search for new orders the realisation is beginning to take hold that in view of past experience a sustainable social balance and development oriented to individual freedom will have difficulty surviving in the absence of a stable and at the same time fair framework of law. Between these different facets of societal organisation there exist close causal, functional reciprocal links and dependencies. Law and sustainable economic development are complementary to one another, the one is not to be had without the other.

The wording underlines the instrumental character of law in a money and market economy:
The constitutional obligation of the state toward its tasks and the commitment to transparency
The legally determined duty of citizens to pay public dues and taxes to finance legally defined expenditures, especially the physical and social infrastructures
Penal and civil law to protect decentralised property
The statutory guarantee for freedom of contract and contractual obligation
The legally defined (organisation) forms and freedom of entrepreneurial activity, among many other concretisations.
Yet, the significance of law and judicial co-operation is not exhausted in these causal and functional interdependencies. The basic principles of a human life, determined by (human) rights like the prohibition of slavery, torture, the death penalty, or the precept of social protection, gender equality and equal rights for ethnic groups, are not in need of having their functionality proven case by case. The laws against child exploitation, for instance, do not need to be legitimised by means of first providing proof that they contribute to economic development.

These are the basic assumptions which determine and serve as orientation for the projects of judicial co-operation run under the auspices of the GTZ. They were valid back in the 1970s when the first consulting projects with a specific orientation to legal and judicial reform were set up in Africa, and they still hold true today - in particular for the projects of legal co-operation with the post-communist, or rather 'post-command-economy' states (to which, despite its adherence to "communism", the Peoples Republic of China also belongs).

Their implicit recognition was made explicit at an international conference on "Legal Reform in the Confederation of Independent States (CIS)" organised in Bremen by GTZ and the Stiftung für Internationale Rechtliche Zusammenarbeit (IRZ) in March 1997. The "Bremen Declaration" of 5th March 1997 approved by participants from 13 transition states and 12 bilateral, regional and multilateral organisations declares inter alia: "The participants are unanimous that the practical application of a state-guaranteed system of law is a fundamental and indispensable prerequisite for democracy and a free market economy; that private law, too, despite national peculiarities, is founded on generally recognised, universally valid principles that are consistent with national sovereignty and cultural diversity; ..."[6] On the basis of this declaration the GTZ defined a series of assignments in the area of judicial co-operation to run over a period of 5 years. This is an unusually long period to be fixed during the initial planning stage of projects, especially in view of the fact that work had already been going on in some of the participating countries for some 3 - 4 years. As it transpired, further prolongations are necessary.

For several reasons, none of this was in any way self-evident from the outset. On the one hand, there were those influential voices who believed it possible to initiate fundamental change in the newly independent states - in particular to establish a market economy - by means of a short period of shock therapy. Among their ranks was the above-mentioned "500-day programme" proposed by the Russian "Ministry of Privatisation" and the IMF, just as the widely publicised and acclaimed theories put forward by the reform group led by Prof. Sachs at Harvard University, who placed their faith in market forces - provided these were unimpeded[7] - that would bring forth an enormous, rapid and dynamic power of self-organisation (to a certain extent, of course, this implied "not impeded by legislation"). Not much is heard from these people nowadays, nor that particular school of thought - and this is not simply because of the serious allegations of corruption that have repeatedly been brought against some of their members[8].

On the other hand, specific projects aimed at legal and judicial reform were still new and unfamiliar sectors of development policy and they first had to prove their needfulness. It is true that some such projects had previously been undertaken in conjunction with several countries in Africa, and the GTZ had gained some experience from a programme to introduce and implement modern patent law in the PR China. But these constitute more of an exception to the rule. The standard repertoire of those involved in development policy certainly does not include know-how concerning systematic legal and judicial reform. In my view it was the growing acceptance of programmes of structural adjustment at the end of the 1970s and then the good-governance debate that facilitated a shift of international focus onto law and the judicature. Both orientations comprise strong legal components to begin with. In view of the different traditions it also hardly surprising, I suppose, that the Anglo-Saxon world naturally favoured the aspect of judicial reform, and the continental Europeans more that of "law reform" - whereby in the end, as so often in such confrontations, there is a broad complementarity between the two.

A breakthrough in the consciousness of students of development policy was probably brought about by two global conferences held by the World Bank on the themes Comprehensive Legal and Judicial Development in June 2000 in Washington D.C., and Empowerment, Security and Opportunity through Law and Justice in July 2001 in St. Petersburg. These conferences established a firm place for law and judicature in the Comprehensive Development Framework propagated for some years by the World Bank. The burden of proof has to some extent been shifted: in the meantime it is assumed that law constitutes a crucial component of the general development agenda, that it is equal to and interdependent with economic, political and social spheres and that it quite definitely worthy of having its own impact.

Thus, not only has the complexity of the Comprehensive Development Framework been increased, but on closer examination the complexity of internal judicial reflection as well. Due to the complexity of the subject-matter it has become a duty to provide consultation on priorities, sequences, intra-judicial dependencies and prerogatives. Such consultation is not confined to the abstract and academic sphere, but touches directly on all levels, down to and including the phase of initial project design. Is it possible to permit a chronological sequence between different activities, are there priorities to be observed when selecting the laws to be amended, will it be possible to proceed according to the adage "one step at a time", or must everything be dealt with at once?

Above all, the inclusion of legal and judicial reform in the catalogue of development policy objectives cannot avoid taking a clear stance with regard to its claim to universal validity. To my mind this must lie at the basis of any project of judicial co-operation, at least implicitly. It is better for it to be explicit, though, since this enables not only a clear - and positive - answer to the important above-mentioned question concerning the material legitimation of cross-border consultation on matters of law, but it also opens up the exceptionally difficult inquiry into (legal) universalism, which is by no means self-evident in itself, its prerequisites, content and limits of discourse.

It is not possible to elucidate this discourse here[9]. Nevertheless, I feel some points do have to be mentioned. Above all, it is to be emphasised that the assumption of a global claim of law validity should not be construed as being suprahistorical. Rather, it refers to the real world of today, to a temporally determined period of world history and to a specifically structured world society. Thus, neither has it necessarily always been valid, nor will it always remain valid. Today's period and structure is characterised by the allocation of capital and labour in the production of material as well as immaterial goods which are bought and sold on markets via the medium of money. National borders play an increasingly insignificant role in this process, although that is structurally not so important. Property is decentralised and the aspiration to profit is legitimate. A private sphere, characterised by the legitimate pursuit of individual interests, is complemented by a public or state sphere in the service of upholding the historically specific general interest of society.

Over time, this ideal-typical and highly abstract societal model has been normatively constituted via innumerable international conventions and declarations. Over time, as result of a long, as yet unfinished process of trial and error, law in different versions has been introduced to support the model and its dynamics, lending it impact and shape as well as social acceptance. Substantial and universal components of this law are some of the fundamental principles already mentioned above, such as the protection of decentralised property, freedom of contract and contractual obligation, freedom of entrepreneurial activity including the limitation of personal entrepreneurial risk by means of limiting liability via establishing legal persons, the duty to pay public dues and the corresponding duty of the state to provide public infrastructures, the commitment of the executive power to abide by the rule of law, protection from social privation.

Insofar, I feel perfectly justified in speaking of universality and of an accordingly substantiated legitimation for cross-border consultation on matters of law, and likewise I think it wrong to speak of intervention in the internal affairs of a country, not to mention the "legal imperialism" referred to from time to time[10].

It would, though, be just as wrong to suppose that the assumption of a universal validity of law implies the possibility of some kind of blueprint, directions for the content of the reform process. This would be to neglect historically grown specifics and national peculiarities, the respective societal context that ought not be underestimated with regard to the particular way the universalia asserted themselves. Consider an example taken from legal history: it remains a somewhat inexplicable historical "coincidence" that the codification movement common to continental Europe of the 19th century did not spring over to England. That led to differences, especially with regard to legal methodology. At the same time, though, both "systems" - that of common law and that of continental European law - in their substance came to broadly correspondent solutions for the protection of property, law of contract or entrepreneurial action[11].

Although the postulate of universal validity legitimises cross-border advice on matters of law, it will only succeed if it adjusts to the respective societal context. It is of utmost importance that legal assistance projects are planned with sufficiently long lives, thus enabling the possibility during the consultation period to become thoroughly acquainted with the context, to set up work groups in which foreign and local expertise can learn from each other, and especially to ensure sufficient continuity of personnel.

Neglect of this basic rule was to prove catastrophic for a great number of legal assistance projects in the transition states and lead to countries paying high (social) costs. This was tied partially to the equally disastrous false assumption of a virtual tabula rasa upon which virtually any content could built and enable a complete and rapid new start. Thirdly, it was, and still is, utterly detrimental to ignore the particularities of the state, political party, enterprise structures and tasks, and not to examine these for their inner "logic". It is a mistake to denounce the past on the basis of ideological principles and to conceive privatisation and privatisation legislation as though it is merely a matter of replacing the owners and making available the legal and organisation forms that evolved in other countries as catch basins in order to adequately allocate the assets and enterprises to new subjects and management.

One still comes across some "western" experts who are ignorant of the fact that Czarist Russia had taken an active interest in the continental European codification debate of the 19th century. Although the subsequently drafted Civil Code was never implemented in Czarist times, this central law actually was enacted in the early Soviet Union and remained intact in its basic structure until the collapse. It is also of note that other countries - especially in the southern Caucasus - can look back on a long and rich tradition of law and on codifications that are still in vivid memory. The first privatisation commandos were not inclined first to analyse the organisation structures and task structures of the state and state-owned enterprises.

Theoreticians of the state and the economy in traditional societies organised along the lines of market economy take it for granted that in face of competition entrepreneurs will strive to achieve productivity gains, cut costs, avoid unnecessary expenditure and return profits. They also assume that it is the task of the state to provide the non-profitable physical and social infrastructures necessary for the unimpaired development of social and business relations and to finance these expenditures via taxation. The precise determination of what actually constitutes the societal necessity to be financed through public dues varies over time and gives rise to political controversy (a debate currently in full swing in Germany); fundamentally, though, the scenario has undergone little change since the classical exponents of political economy of the 18th and 19th centuries.

It was a great mistake to think these theoretical deliberations and practical law policies could be transferred to the transition states as universal normality, as was the case with privatisation therapies. It ought not be overlooked that these societies upheld developed social and physical infrastructures as necessary elements of a system of production of goods based on division of labour. This system also regulated societal relations and took care of social acceptance. Its smooth functioning, though, was not necessarily left entirely up to the state as sole representative of the general interests. State-owned enterprises were not subject to the dictate of profitability and the pressure of market forces. This, on the one hand, may have been detrimental to the growth of productivity, but on the other hand it opened up the possibility for the provision and funding of social and even physical infrastructures. Kindergardens, hospitals, schools, convalescent homes, health care and care for the aged, employment policies and even the building of roads and bridges may be tasks usually allocated to the state, but they could also be taken care of by state-owned enterprises. The structurally necessary separation between the sphere of private enterprise and the public state sphere did not exist.

Privatisation tout court, by "sole" means of changing ownership relations and management was bound to destroy this net that previously had anchored the social existence of hundreds of thousands of people, albeit not in luxury. Of course, it is possible to look back and say that the operation was successful and a private sector has indeed been set up, but in view of the enormous costs in terms of the destruction of wealth and human suffering on the part of vast numbers of the population this is hardly cause for rejoicing.

The GTZ project of legal co-operation failed to be impressed by the promises of a quick transition victory being pronounced with such self-confidence. Rather, it took the line that public institutions and in particular an independent and professionally competent judicial authority could only result from a long-term and painstaking process of fair and reliable legal frameworks. The idea of promoting a private sector in the absence of a new orientation of state structures toward fulfilling those public tasks genuinely arising from market economies and without orienting the courts to the neutral and legally engineered resolution of disputes among private persons and market participants was dismissed as being incompatible with sustainable development.

A résumé of the experience gathered thus far[12] and proposals for future procedure was put together in a study produced in 1995. In the section dealing with legislation this report referred specifically to the necessity to take particular account of the transitional character of the partner states. Naturally, it pointed out that plans to establish a market economy intended to last a long time, of necessity require that from the outset there should also be plans to establish laws and corresponding institutions planned to last an equally long-term. At the same time, too, it was argued that the transition rules should consciously take into account the potentially devastating social effect that would be caused by disentangling the conglomerate of state, entrepreneurial and judicial tasks described above - and which had made a certain amount of good sense in the centrally controlled economy. The authors wanted to draw on an instrument of policy used by the French during the period of industrial planification in the 1960s, the so-called contrat-plans. A similar system could have been used to concretise the legal structure and structure of tasks between the state and state-owned enterprises for medium-term periods and simultaneously prepare the ground for a new orientation. Even though this was probably not the original intention of the contrat-plans, they did actually manage to provide an orderly framework for subsequent privatisations in France.

With hindsight, it seems a pity that these proposals were not taken up by the transition states and the development organisations, since in my opinion this would have avoided many an unnecessary upset during the chaotic period of transition. Notwithstanding, there is still an abundance of empirical evidence to justify such instruments being revived.

Furthermore, experience gained from projects undertaken as of 1992 in Central Asia and in the Caucasus reinforced a conviction at the GTZ that similar conditions of transition existed in all partner states, i.e. broadly speaking, the existence of an identical context that justified attempts at developing a regional approach to legal co-operation. The universalist basic assumption was underlined by a contextual observation. Up to the present time it has indeed been apparent that the various attempts of small groups of political elite to create their supposedly own national or ethnic identity to be used as a form of demarcation against neighbouring countries have impinged neither on their mutual legal traditions, nor on economic structures. In all the countries, identical issues are discussed with identical patterns of argumentation. Situations whereby, for instance, the legal experts of one country experience difficulty communicating with their counterparts in another country are virtually non-existent. Even in cases where individual legislative solutions may actually differ, such divergences remain within a narrow technical (and easily rectifiable) margin.

It is therefore hardly surprising that the regional approach, first laid down in the above-mentioned "Bremen Declaration" of 5th March 1997, could be pursued from the outset and with continuing success, although it is now possible to detect a tendency toward dissociation or even self-isolation on the part of politics of the day in some countries. The advice towards dealing with identical or at least comparable wording of laws - by means of reference to model laws of various provenance or direct information pertaining to existing laws in other countries - is no more difficult than the continued substantive and enduring exchange of information, or a regional agreement on the development of organisation of the judiciary and of other legal professions. Even the materials used for training and further education, which must of course exactly go into the form of the law in each individual country, can basically be utilised throughout the whole region, but for some small national amendments. Two initiatives of the German Ministry for Economic Co-operation and Development, the "Caucasus Initiative" and the "Central Asia Initiative" have also, as result of the positive experience made, done their part to reinforce the regional approach. Their aim is also to achieve an opening of the economy and ultimately the restoration of a functioning single market, a perspective which in view of the traditional ties and economic relations lies in the objective interests of the region as a whole. Despite all the political frustrations and everyday difficulties, regional legal co-operation aims at supporting this perspective.

These brief preliminary deliberations - not least the anything but uncontroversial corollary between universality and context - on a regionally oriented development policy and new national sovereignty, not to forget the pragmatic constraints of a modest funding, favoured the decision not to lead the project from any one partner country and not to install long-term experts in each of the countries concerned. Instead, it was decided to set up a co-ordination office in Germany and to link up with local jurists rooted in state structures and tightly networked with one another. The task of project management and substantive judicial work was not to be divided up. Not formalised procedures and reports were to be at the forefront of planning and extrapolation, but rather a continuous dialogue between the GTZ central office, BMZ, the project office, local co-ordinators and especially the partners. At the same time, a highly-qualified pool of short-term experts was built up in which all different forms of judicial expertise and professional experience were represented, through which in turn it would be possible to promote long-term engagement and a regular exchange of ideas. In the meantime, the project is experimenting inside some countries with additional long-term experts, each one with different tasks to perform. After some time has elapsed it will be necessary to conduct a cost-benefit analysis of these endeavours in order to plan for the future.

The dialogue is institutionalised and takes place at meetings of the co-ordinators, initially twice a year and now once a year at changing locations. Apart from the co-ordinators and persons responsible for the project, representatives of BMZ and other experts are also present at the meetings. Along with country reports on progress and the further need for reforms, each meeting also deals with different aspects of an important special topic. The course of the discussion and results of these meetings, which have been held ten times to date, are recorded and distributed to all participants. This provides a basis for future work. As a rule preparation for future regional activities is also discussed. The specialist topics dealt with to date were:

Methods for compiling legal and other judicial texts in digital form (December 1997)
International commercial arbitration (July 1998)
Participation of the State in private law transactions with special regard to the legal persons of public law (January 1999)
Protection of intellectual property (July 1999)
The independence and establishment of courts (January 2000)
The technique of legislation (also January 2000)
Civil procedure law and enforcement (July 2000)
The law concerning cross-border investment (July 2001)
The law of collateral security (June 2002)
The law on transport.

Equally important are missions to partner countries. These are undertaken on a regular basis by the permanent members of staff as well as short-term experts of the KZE pool and embrace substantive work as well as exercises in planning talks. Since 1993 I have personally been on 165 such missions. Each of these has produced reports containing results and proposals for action, thus ensuring a high degree of dissemination and transparency. The project office has recorded more than 120 mission reports handed in by permanent staff and short-term experts.

These endeavours have enabled the postulates of flexibility and perseverence, demand orientation and planning, an all-encompassing approach and permanent control of content and results, as well as transparency of activities for all participants to be met to the greatest extent. An additional important contribution to the control of content is that all texts produced on the subjects of law, contract, seminars, training, etc., are not only published in the partner country and disseminated all around the region (at the same time adding to the urgently needed special legal literature on the subject), but that they also appear in German academic journals and are thus subjected to specialist scrutiny and criticism.

All in all it may be said that up to now none of the measures requested have been discarded or abandoned as "development ruins", as is all too often the case with rigidly scheduled and precisely planned individual projects; delays do occur, but these are made up for; there is a generalised intention not merely to draft texts of law, but additionally to steer new laws through parliament and secure their implementation; not only to write training material, but also to introduce its application in measures of further education; not only to draft forms, but in a process of dialogue to instruct in their use and to regularly evaluate the adequacy and acceptance of the measures implemented and, where necessary, to make amendments.

Dialogue as well as the much extolled orientation to demand do not come about by themselves. Rather they are attached to prerequisites, the most important of which I should like to touch on here. It is vital to establish trust, and this is only possible by means of personal continuity. The experts from the "West" ought not pursue other interests which are not connected with the project - this is defeated when, as a quasi-sideline, law offices or other pursuits are maintained. Jurists from the partner countries or other transition states must be integrated in the expert pool to the greatest extent possible. Over time this leads to the formation of real teams in which the issues under consideration and their remedies can be discussed on an equal footing.

It goes without saying that co-ordination between the donors is also a part of the dialogue. The Bremen conference in 1997, for instance, put a special focus on this aspect and managed to ensure that by inviting BMZ, Bundesministerium der Justiz (BMJ), IRZ, Deutscher Entwicklungsdienst (DED), the World Bank, the European Bank for Reconstruction and Development (EBRD), the EU Commission, the Asian Development Bank (ADB), the Center for International Legal Co-operation (CILC), the US Agency for International Development (USAID) and the Canadian International Development Agency (CIDA) the most important actors were present to sanction the results. A regular exchange of information and views takes place at the more or less formalised workshops in the partner countries, during visits to local offices or presentations at the headquarters of the various organisations involved. Notwithstanding, nobody would pretend that the exchange of information is always one hundred percent successful.

Even more difficult is co-operation. One particularly successful example is the long-standing co-operation between the Dutch CILC and GTZ, as well as to some extent the EBRD, that proved especially useful in the drafting of different model laws. Otherwise, much depends on personal contacts and trust, as often the case in concrete co-operation measures in the field with the Organisation for Security and Co-operation in Europe (OSZE), ADB, USAID and the United Nations Commission on International Trade Law (UNCITRAL) This does not equate to systematic co-operation. Where co-operation is desired it has to be worked for and nurtured consciously. This applies even to different projects of the same organisation with complementary assignments. No secret should be made of the fact that for many reasons, be they due to competition on the consultancy market, or in personal vanities, or in real or supposed competition between different legal systems, open or hidden obstruction can be the result. My personal assessment is that in recent times it has been the USA in particular that has laid considerably less store in striving for co-ordination than in asserting their claim[13] to supremacy with all means available to them. This claim is ungrounded and must therefore be criticised accordingly. I shall return to this later when I describe the concrete measures that have been taken over the years. On the whole I belong to the ranks of those who refuse to accept that world power, culture, economy and the law, too, in future will be determined exclusively by the hegemonic United States of America[14].

In the following I shall present such measures of co-operation on the basis of these preliminary considerations. The objective thereby served is to provide a status report and to put forward proposals for future developments.

B. Putting it into practice

I. Codification

1. The initial situation

More and more voices are being raised in warning not to lend codification too great an emphasis in co-operation endeavours[15]. On the one hand they point out that in the meantime a sufficient number of more or less perfect laws now exist in most transition states. On the other hand, there is the criticism that consultants only too readily seize the opportunity to concentrate on codification since this amounts to "easy stuff", considerably less demanding than the reform of institutions.

I do not share this view. In my opinion this spawns an artificial antagonism between the reform of institutions and lawmaking and tends to generalise a criticism that should really only apply to one particular type of legislative consultancy. Naturally, one should criticise the practice of foreign experts "tossing over" to the partner countries already existing formulations of law they found "at home", or even specially written ones without paying sufficient attention to the content, or at least ensuring its consistency with different legal and judicial systems. This can also happen when exceedingly short project durations, funding constraints and quantitative measures of success permit no other alternative. Such activities are "easy stuff" indeed, but they have nothing whatsoever to do with a really substantive form of legal counselling. This has to orient itself to building up a consistent body of legislation that encompasses material and procedural law as well as the organisation of the institutions and professions entrusted with enforcing the law. In this sense legal counselling constitutes an integral and a sophisticated element in the reform of judicial institutions and infrastructures, i.e. an element of a systemic reform approach.

This opinion is accommodated by the fact that in the transition states at any rate the important fractions of those participating in the process comprehended economic reform from the very outset as (economic) legal reform. This understanding came from the countries themselves, formed the basis of applications for judicial co-operation, and confronted visiting experts whose understanding was all too often a different one.

Even though the evidence may not apply to all the newly independent states to the same extent, they did not abstain. This was because the Russian stance - where this understanding was very pronounced - radiated out into all countries of the collapsed Soviet Union in the customary fashion and regardless of the new independence. To be sure, this effect does have some positive aspects, too. Notwithstanding, it still remains problematic. This is because smaller countries often found it difficult to develop their own conceptions. Not only in view of the unmitigated quantitative Russian superiority, but also because they still expected with the accustomed matter-of-factness that Russian law would be adopted. This happened even in spite of the fact that the sheer size of Russia and the laborious and inconsistent nature of the reform process there had all too frequently proven to be inhibitive for innovative moves.

Just how important economic legislation was deemed to be is illustrated by the energy with which the many new parliaments drew up priority lists for legislation, passing "laws on legislation" and a raft of laws concerning privatisation, entrepreneurial activity, consumer protection, anti-trust laws, insolvency laws, employment creation among many others. These were accompanied by Presidential and governmental decrees that fell little short of the regulations contained in actual laws. It was also shown in the setting up of a number of legislative commissions, informal as well as formal working groups and institutes with legislative assignments in most countries, often working independently of one another, if not even sometimes against each other, and sometimes supported in one way or another by foreign experts and organisations. Probably the most influential institute is the "Scientific Consultancy Centre for Private Law under the Auspices of the President of the Russian Federation" in Moscow. Its staff holds a mandate for the CIS and during the initial years of its existence it worked for the inter-parliamentary assembly of CIS in St. Petersburg. That was until sharp personal differences and insights in the leadership virtually brought an end to its fruitful endeavours.

In the meantime most of these "first generation laws" are considered to be inconsistent, unprofessionally drafted, of low codification substance and vaguely formulated - short-winded in spite of the fact that they were not consciously intended solely to provide regulation for a short transitional period. Actually, many of the legal texts and ordinances of the first generation, that have by no means been vanquished, have more in common with general (economic) political declarations: they deal with the permissibility of private property and private enterprise, respect of consumer interests, care for clear-cut market relations, liquidation of non-competitive (state-owned) enterprises, and - to a much lesser extent - the substantial or procedural regulation of social relations. In fact many of the hastily dashed-off texts written by western consultants dealing with stock corporations, bankruptcy, etc., were superficial and often had to be replaced by new ones[16] almost as soon as they were passed. There was hardly any preparatory discourse to determine priorities, so it could happen that a corporate law was pushed through dealing with limitation of liability and its piercing even before any legislative concept of general liability had been developed; or a law referring to contracts containing restrictive practices before the existence of any law of contract or Civil Code; or bankruptcy law before a general code of civil procedure. The list could be continued.

Such laws came and went without leaving behind much trace of any practical significance, with the unfortunate exception that the term "legal nihilism", the cynical attitude in Soviet times toward the then current legal system, once more began to make the rounds.

Co-operation projects that allowed themselves more time sought for a constitutionally inspired law-making technique[17] aimed at precision and clarity of language, consistency of texts, the careful editing of codification intended to last for a long time, respect for the constitutionally required hierarchy among the categories of normative acts, and uniformity and integrity of the regulation of social relations within a unitary and integral system of law.

They had to take note of the fact that no such dictates had been in the forefront of Soviet law-making practice, and they therefore could not be assumed to be self-evident. Previously it had been perfectly normal and politically correct to consciously formulate the law in a vague and indeterminate way so as to leave broad scope for either its application or non-application, to neglect the hierarchies between constitution, simple laws and ordinances, or to draw up general principles in a law to regulate something that was more precisely described in special laws or ordinances elsewhere.

In face of this it was and still is most important, before setting out to formulate the actual wording of the law, to thematise in interactive work groups the prerequisite of legal and institutional changes in the process of transition from a centrally planned, discretionary administration of the economy to a market economy based on decentralised property and decentralised entrepreneurial planning. This stretches to corresponding constitutional guidelines, with their commitments to democracy and rule of law, and ultimately to the importance of precise, clear-cut, unequivocal, long lasting and hierarchically correct laws that permit certainty of the law, predictability, and thus planning on the part of market participants. This work will remain incomplete so long as old traditions live on.

It would be foolhardy to assume that law-making traditions could be jettisoned overnight, in one all-encompassing attempt to solve all substantive, administrative and practical problems in one fell swoop. Trial and error, dialogue over time and not least the power of societal dynamics were, and still are, of utmost importance. Of course it appears to be less than optimal when in some countries the third or fourth version of company laws was passed - or bankruptcy, or bank services, on restrictive practices - rather than arriving at a more durable result by way of prioritisation and intensive debate. It would be wrong, though, out of frustration to withdraw from the long-term involvement, since this would lead to losing sight of part of the history of the origins.

It is such deliberations that have shaped the approach adopted by the GTZ project in the controversy surrounding the methods of consultation on lawmaking. On the one hand it did not retire to the not infrequently recommended role of moderator, or become merely a provider of information. It has defined its tasks more actively and more comprehensively, always offering to participate in the actual drafting of (legal) texts. It did not, however, in any way attempt to imitate the opinion of that eminent representative of the Enlightenment movement, Jeremy Bentham, who toward the end of the 18th century, particularly with the United States of America in mind, meant that "newly created nation which today is one of the most enlightened, if not the most enlightened, on the globe" was lacking in professional codification capacity[18] and that laws "should be formulated by a man who should be a foreigner and thus not involved in the local and national struggle of interests"[19]. Apart from the technical aspects of expertise, Bentham was referring especially to the need for drafting by a "neutral person" in order to exclude the possibility of collisions of interest within a given political network[20].

It is not that such considerations are completely out of place in the newly independent states of today. They do, though, build far too much on universality whilst neglecting the context, in a way reminiscent of the rational conviction common to 19th century Enlightenment. This was evidenced all too often in the recent past by way of foreign experts arbitrarily dumping their prefabricated texts onto different countries. Even when this did bear at least some semblance of professionalism - unfortunately not always the case - it invariably remained ineffective. It is the experience of the GTZ project that universality and context can only be reconciled in mixed working groups bent on long-term co-operation based on mutual respect. Although this may not constitute a 100% guarantee for neutrality and professionalism, it does at least bring it within reach, as it also provides a forum for the articulation of pressing needs, real demands and local traditions.

Although not always the result of rational decision making in favour of any particular set of priorities, at the beginning of the lawmaking co-operation with the transitional countries, the subject-matter, apart from constitutional law, almost always dealt with the reform of material and procedural civil and economic law, as well as the organisation of the courts and judicial professions (judges, notaries, lawyers, bailiffs). This is in accord with partners' wishes and their perceived urgency. The process is not yet complete, and it has to be recognised that in some countries many things have become bogged down. Increasingly, though, the process is being overlapped by the reform of general and specific administrative law as well as penal law, involving in turn material and procedural law and specific laws concerning institutions and professions.

One could argue that it may have been better to address all law simultaneously in its entirety. But with hindsight it is now clear that some kind of sequencing was inevitable. First of all, the participants in the process on both sides would have been extremely hard put to attempt the comprehensive reform of all legal and judicial subject-matter simultaneously. However, for all their complexity, civil and economic law tends to encroach less on political structures and networks that after the collapse of the Soviet Union still rested on firmer foundations than the clapped-out (state) economic sector,. To subdue the administration and executive of a country and the extremely powerful departments of public prosecution, secret services and the police left over from Soviet times by constitutional means is a highly political affair. The successful accomplishment of such a task necessitates the political will to do so in the country itself - and during the first years this was probably not so pronounced as it is today. It also takes staying power, considerable financial resources and political clout on the part of the foreign experts, some things that the GTZ at any rate does not boast.

In the following I shall illustrate the areas of consultation dealing with central matters of law with a focus on civil and economic law. This consultation process is either not completed, subsequent to unsatisfactory results, has had to enter a new round. That some results are unsatisfactory from the consultancy point of view is partially due to the fact that the partner countries are far from being monolithic blocks, which not infrequently insinuates a choice of words that sets "they" against "us". The results of counselling are not always adopted or held to be of priority, and if so, only by a relatively restricted number of persons and not always in their entirety. This inevitably results in the need to repeatedly help them on their way along the path through the processes leading to adoption of legislation. It often happens that along this path, either due to lack of insight, differing convictions, or as result of competing consultancy, they are subjected to amendment and, not infrequently, even falsification. Such situations have to be expected and dealt with accordingly.

The review begins with substantive law. For procedural and substantive grounds I shall first focus on the emergence of the Civil Codes. This is not because they are considered to be more important, since from the outset it was clear to the GTZ project that in the absence of a correspondingly reformed law governing the organisation of the courts, the judicial professions and processes of adjudication it would hardly be possible to practice material law. In reality our counselling regards all these subjects to be of equal importance and they were dealt with simultaneously.

Reform of a legal and judicial system cannot be restricted solely to the sectors of civil and economic law. Not to make changes in administrative and penal law, and in particular the reform of institutions connected with this, would very likely impinge on those reforms which had already successfully been put in place. Islands of reform are not self-sufficient. They must simultaneously serve as the starting point for the spread and intensification of the transition. This is also necessary in order for them to become consolidated. The content of co-operation and the called-for expertise change over time. Notwithstanding, it seems to make good sense to make use of the project's existing infrastructure and connections in the field of economic law as a sort of logistical base for future co-operation, particularly as the methodology employed has proven to be successful and needs little adaptation.

2. The Civil Codes

I have already referred to19th century jurisprudence in Russia with regard to civil law, its orientation to pandectism and the serious efforts to compile an all-embracing Civil Code in the continental European tradition of codification[21], and likewise to the continuation of this tradition in the law of Soviet times. It should also be mentioned that many East Asian countries, especially Japan and then China, also have pursued the codification of civil law, a circumstance that lends additional weight to the concept of codification from the perspective of comparative Asian jurisprudence.

It is thus hardly surprising that the compilation of a new system of civil law more suited to the changed economic relations quickly became the focus of codification endeavours in all the newly independent states. The following opinion voiced by two Kazakh authors reflects the widely held view. "Like its Russian counterpart, the Civil Code of Kazakhstan is known as the Csecond constitution', or 'economic constitution'. Those are fine words, but the reality is that the Civil Code has become the essential item around which economic legislation is formed"[22]. The struggle surrounding its passage, enactment and embedment in the respective national legal orders reflected its real as well as its symbolic significance. It contains central and problematic aspects of international co-operation on codification, the transitional and process character of reforms, the stubbornness and pushiness of the various participants in the process in the different countries, the perpetuation and collapse of connections left over from Soviet times, the relationship between universality and context, and many other points mentioned in the theoretical preamble at the beginning of this report. In the meantime, following enactment by Ukraine in 2003 of the draft which had been put forward in 1997, in a first passage the codification process has been broadly completed. In the CIS countries a few small refinements still have to be made. Nevertheless, several profound and persistent inadequacies that still exist necessitate a further (partial) revision. The debate on this has already begun and the GTZ should accompany this process.

That inadequacies have appeared is hardly surprising in view of the extremely short time in which the Codes were formulated. Simply compare the three to four years it took with the thirteen years needed for the draft of the German Civil Code, not to mention the 42 years of effort that went into the Dutch Wetboek.

Just how thwart with conflict the process of elaboration proved to be, and how bitter the struggle over its central spheres, is immediately apparent from the fact that the Russian Civil Code had to be enacted in three steps separated by more than six years and that an important area covered by the first part, namely the regulation of land ownership, was likewise exempted from enactment for more than six years. Notwithstanding, in the interim period it was practised more or less underhand by some regions. The situation was similarly difficult in Ukraine, where a draft of the Civil Code was put to parliament year after year. Then, having eventually been passed, it failed to be put into force by the President for a further number of years until finally being combined with a second law inspired by the communist era, the so-called Economic Codex. In part this addresses identical issues as the Civil Code, but regulates them in a different way. Finally, in Moldova a Civil Code was passed by parliament. Between the first and second reading, though, and with no prior notice, the house was inspired to partially replace the original draft put on the agenda with another. This resulted in important amendments being called for before it could be put into force by the President of the Republic.

In point of fact, the preparation and enactment of the Civil Code confronted the newly independent states and their parliaments with a totally unfamiliar task. The traditional Soviet mechanism whereby the Civil Code and other laws were prepared centrally in Moscow and then passed 1 : 1 by the socialist republics could no longer function due to the absence of such a central power. The last codification attempt by the USSR to push through a unitary law accommodating elements of market economy via the "foundations of civil legislation" failed, with the consequence that in 1991 this law was only enacted in the Russian Federation, remaining in force for the short period of four years. The USSR had collapsed.

In view of the long common (legal) history of the new states it is hardly surprising that many states, supported by some of the international organisations, undertook earnest endeavours to fill the vacuum with a model law prepared by the Scientific Consultation Centre for CIS Private Law in Moscow led by Professor Makowski and passed as a recommendation by the Interparliamentary Assembly of the CIS in St. Petersburg.

The project began full of promise and many things seemed to point to it becoming a success: the common legal tradition, personnel entwinements, the authority of Moscow and the mutual search for the assertion of universal principles of law in an identical context of transition.

On the other hand, though, a number of hindrances also stood in the way. First of all, in several of the new states, and especially during the initial years of independence, one could detect a clear aversion to the continuing long arm of Moscow, particularly in countries like Azerbaijan and Georgia where the independence movements had been so brutally suppressed by "Moscow's" troops and where public opinion suspected Russian power interests behind secessionist attempts. At the same time, following initial years of procrastination, US foreign policy swung clearly against CIS cohesion, turning in the direction of independence. The Americans called for a similar change in policy from their western allies, a circumstance which left its mark on the legal co-operation with the CIS. It soon became clear that the Russian drafters of the CIS model Civil Code were not only unwilling to follow the advice provided by their Dutch and German colleagues to work on a Civil Code clearly oriented to a market economy, but that they understandably insisted on their traditional leading role, putting up resistance to any far reaching reform proposed by experts from smaller countries. At the international conference in Bremen held in 1997 the Chairman of the Scientific Consultation Centre for CIS Private Law reported with some pride that almost three-fifths of the Articles contained in the Civil Code of 1964 (the so-called Breschnew Civil Code) had been kept in the new law. He was referring to both the CIS model Code and the Russian Code, since the two were - being influenced by the same persons - virtually identical. He then went on to report on the abortive attempt of the USA to boycott the drafting process and the new initiative to draw up a counter draft with the support of high-level funding: "And just as work on the first part of a Civil Code for Russia was practically completed we suddenly found out that an alternative project existed. This project was being funded by the same body (USAID - R.K.), and with much more money than had been spent on our work. This project ended in failure. None of the great leading Russian jurists took part. Unhappily though, some quite reputable jurists from France, Germany and even the Netherlands did participate. It would be interesting to inquire today into how much this project cost. What was the cost to the American taxpayer? Nobody is talking about that today. And that was money thrown away. And I can tell you about other projects, too."[23]

A great deal of effort went into attempts at rescuing the traditional Soviet law-making discipline at the beginning of the transition process. This went off successfully in Kazakhstan, Kirgizstan and Belorus. Even in Tajikistan, where the legislative process of the 1990s became bogged down as result of the civil war there, where USAID and the GTZ had been providing intensive consultation and where the inner-Russian criticism and renewed calls for reform with regard to some of the more inadequate relics in the Civil Code were already being heard, the Russian Civil Code was copied almost without amendment.

The most important criticisms, not only voiced by experts belonging to the GTZ project and other "western" experts, included:
the retention of some forms of ownership defined by the person of the owner (e.g. state, communal, private),
the retention of state enterprises in particular as legal persons and their systems of administration and liability, which in effect had led to plundering of the state coffers,
the imputation of risk with rigorous liability rules at the expense of commercial enterprises,
the makeup and content of the law of obligations, in particular the retention of types of contract which make little sense in a market economy and a lack of consistency in their demarcation,
the retention of a legislative method that anchors general principles in the Civil Code and refers detailed regulation to other (future) specific laws,
the introduction of excessive requirements concerning written form, certification and registration,
the general methodology of the law, e.g. its presumed priority over other laws,
the exclusion of family law and the inclusion of industrial property rights,
the abundance of text-book-like instructions, etc.

In the course of intensive counselling in the different countries in which the GTZ project office played an active part - via external funding or, as in Ukraine, in Uzbekistan and Turkmenistan, via German or European funding - it became clear that there was a growing uneasiness with regard to the solutions contained in the CIS model and the Russian Civil Code, with currently different results. However, the signs are increasing that this may only be a temporary phase.

Following intensive consultation with the group working on drafting the Civil Code of Uzbekistan, 1994 and 1995, in which the head of the GTZ project office in Bremen was appointed member, doubts were raised concerning the forms of ownership contained in the draft. These doubts were intensified, especially among younger members of the group, following publication of a comparative study of ownership rights in 11 countries[24]. In April 1995 a conference was held at the Ministry of Justice in Uzbekistan. One of the participants was Prof. Grigori Sverdlyk from the Academy of the Russian Ministry of the Interior. He obviously had the task of keeping Uzbekistan on course. His contribution was limited to just a few sentences on the close relations between the two countries and to the transitional character of the different societies. He insisted that, for all his country's willingness to adopt universal legal principles, the conference recommendations should emphasise the transitional character of Uzbekistan's economy and the peculiarities of the country, which he left unspecified. These statements were not released for publication in the documentation material of the conference[25]. The consequences were that the drafters of Uzbekistan's Civil Code remained faithful to the Russian model, although in the meantime they have come to share the doubts that also exist in Russia.

In Ukraine and Armenia, on the other hand, where for various reasons the legislative process was slower than in other countries and where the GTZ project was also involved in intensive consultation, the parliaments decided in principle to adhere to the CIS and Russian model, but to eliminate the two particularly inadequate institutions of forms of ownership and state enterprise along with their special administrative types. In Ukraine this positive result has been somewhat diluted by the fact that the Economic Codex also passed at that time retained the Soviet legal institutions. This confused state of affairs will cause some considerable difficulty to those who have to apply the Code in future. In August 2002 the Armenian Minister of Justice commissioned the GTZ project to conduct a critical appraisal of the first few years' experience with a view to making further modifications. Meanwhile our analysis has been submitted and appears to have met with a positive response. It remains to be seen how its recommendations will be implemented.

Following some initial hesitation, a few intermediary steps and partial involvement in work on the CIS model Civil Code, the legislatures of Georgia, Azerbaijan, Moldova, Turkmenistan and Mongolia eventually decided to tread their own path in the codification of their respective Civil Codes. To be sure, the motivations for this vary from country to country. The GTZ project has closely accompanied the consultation and drafting process in all these countries, although in Azerbaijan the consultation began later and not until the start of a bilateral GTZ project in 1998 and after a draft Civil Code produced by a European funded project had been abandoned. Just how unexpected this break away from the (post) Soviet codification discipline was is illustrated by the numerous attempts at intervention on the part of Russian scholars, politicians and diplomats at a number of levels. It seems that when the colleagues from the ex-Soviet Union criticise the impermissibility of foreign influence[26] they fail to comprehend that in the meantime their advice, too, has come to be included within the category of foreign influence. In the context of modifying the legal and judicial systems of the respective guest countries, Russia now also has to compete with western European counselling. In the countries themselves voices have been raised in caution of leaning too heavily on the CIS model. For instance, in 1995 the Georgian. Professor Tshikvashvili described the Georgian Civil Code as "fundamentally flawed" and expressed his opinion that it would have a "particularly damaging effect"[27]. The Law Faculty at Baku State University has long expressed the opinion that under international law Azerbaijan is committed to following the CIS model Civil Code passed by the Inter-Parliamentary Assembly in St. Petersburg. And this in spite of the fact that the IPA itself makes express reference to the model's purely recommendatory character (Art. 4) and simply refused from the outset to include the new self-contained Civil Code in its curriculum.

The most grotesque course of events took place in Moldova, though. The parliament there had set up a work group comprising predominantly Moldovian jurists and adjudicators, in which the GTZ was also represented, that from time to time also called on consultants from the Netherlands, Rumania, Russia and Ukraine. The result of several years of work was submitted to parliament in 2001. The parliament decided to adopt the group's recommendations following its first reading, subsequently rejecting all other drafts. Following the communist party's election victory, USAID, not normally known for seeking co-operation with communist politicians, somehow managed to gain influence over the new communist Minister of Justice, who in complete defiance of parliamentary procedure succeeded in bringing a new draft before parliament. This draft had been shaped by an American professor who by incorporating parts of the Armenian Civil Code came up with a version in the Russian tradition. This chaotic process led to considerable loss of consistency. Doubts were expressed by the European Council and some time passed before the law was actually enacted. In spite of the fact that some 70% of the original Moldovian draft survived the parliamentary process and that the law was not finally passed until June 2003, in October 2002 a Moldovian scholar found the following advertisement with photograph on the web site of the University of Illinois: "Professor Peter Maggs was the principle drafter of the new Civil Code enacted in Moldova in June, 2002". The advertisement had to be withdrawn following official protests and the threat of legal action.

All in all, one could be led to believe that what I refer to as dissident laws vis à vis the Russian model constitute a complete break. This is not the case, however. And it would indeed be surprising, since all Civil Codes originating in continental Europe share a common basis. They also have in common that, in keeping with the modern tendency and opposed to the old laws of France, Austria and Germany, for instance, so-called commercial contracts have everywhere been integrated in the Civil Code without this resulting in any difficulty, as is already the case in Italy and most recently in the Netherlands.

It is therefore important that all countries take care neither to create commercial codes under the misguided influence of inadequately informed international experts. Nor should they resort to any "German" or "French" tradition, nor pass laws governing individual types of contract. Unhappily, the leasing statutes passed in some countries as a consequence of USAID counselling clearly show that this danger is a very real one.

With regard to the central criticisms of the CIS model mentioned earlier, it has to be seen that some laws have been passed that I refer to here as dissident laws, with the exception of the integration of family law that was only passed in Georgia and the adoption of "general rules" concerning legal persons in the Civil Code of Azerbaijan. It is interesting to point out that the contract law passed in the Peoples' Republic of China on 15th March 1999 has jettisoned the "Sovietisms" that once existed there, too.

In the Civil Codes of Azerbaijan, Georgia, Turkmenistan, Mongolia and Moldova one can no longer find ownership forms defined by subject, nor is there any reference to unitary and fiscal state enterprises. The law of obligations has taken leave of the epic long-windedness of Soviet times; text-book expositions in the form of legal articles devoid of any codification content have been broadly avoided; commercial enterprises have not been subjected to unreasonably strict measures of liability and the types of contract common to the command economy have been eliminated along with the excessively stringent requirements of written form and registration of contracts that place constraints on the dynamics of market relations.

However, there still exist differences between the Civil Codes, especially between those of Azerbaijan and Georgia and as a consequence, those of Turkmenistan and Mongolia. To some extent these can be traced to the dissimilarity of contexts, and most certainly also to the dissimilarity of the consultation provided by foreign organisations and experts. It is worthwhile comparing the two approaches in order to draw conclusions for future projects.

The draft for the Civil Code of Azerbaijan was produced as one result of an independent project funded by the European Union. The scope was described precisely, as were the operation plans and time schedule. The (generous) funding was to be allocated according to a clear schedule starting in 1994. The experts involved had very little time and no opportunity to explore the societal environment. Nor were they able to research in any depth into possibly conflicting opinions concerning the path of legislation, let alone make any attempt at forming a drafting group to take account of different views. According to plan, the project was successfully terminated and a finished draft accepted by the Azerbaijan partners in 1996.

When at the beginning of 1998 a bilateral GTZ project of legal co-operation began concrete counselling measures, i.e. two whole years later, the draft was still hung up in the Presidential administration whilst the law faculty at the state university continued to insist on the CIS model Civil Code. During a seminar organised in Baku by the GTZ in April 1998 the adversaries clashed together inexorably, blocking further progress. It was no different at subsequent meetings. Possibly, one reason for this rather passive attitude was that the specific forms of contract peculiar to the oil euphoria which was at its height at that time had little to do with the internal legal order of the country and priorities moved away from the Civil Code. Later, in April 1999, the GTZ project organised a high-level regional conference in Bremen to debate the progress of civil legislation in the Caucasus. During this conference the representative from Azerbaijan had to take note that the legislative process was far more advanced in neighbouring countries of Armenia and Georgia. This observation quite likely reactivated the process in Azerbaijan, with the result that the law passed through parliament in December 1999 and was signed by the President in April 2000.

Quite obviously, this bore little resemblance to any rational, consistent and successful procedure, despite - or better, due to the original meticulous planning. Apart from anything else, it prevented achieving a broad acceptance of the result. I include it here because it is no unique occurrence. The same thing could have happened in Turkmenistan, for instance, if not for the fact that the original project funded by the European Union had not been picked up and continued by the GTZ with an identical project team which was able to forcefully accompany the paralysed half-finished process of Civil Code consultation to a successful end.

It is therefore hardly surprising that, despite the positive basic attitude, a number of contradictions and unsatisfactory rules found their way into the Azerbaijan Civil Code during this clumsy legislative process. In the meantime, the GTZ project has been asked by the President to identify these inconsistencies and propose amendments.

The legislative process in Georgia was quite a different one. In the foreground here was the preparedness to a longer-term commitment to a comprehensive project to reform civil and economic law, to which the compilation of a Civil Code also belongs. There was no rigid time schedule or operations planning (nor any oil euphoria) and there were no special budgets for specific laws. When the project took up its assignment it was possible to identify 18 different commissions that were in some way or another at various levels engaged in the reform of civil and economic laws. The Minister of Justice decided to accept the advice to reduce the number of these commissions to just two - one for material and one for procedural law. He was also successful in winning over the majority of those initially opposed to the idea. It was also extremely useful that the groups were led by persons of national renown, not only as jurists - these were Professors Sergo Djorbenadse and Surab Achwlediani for the Civil Code - soon to be joined by Professor Lado Chanturia, a young scholar trained in Germany who quickly commanded everyone's respect.

Over a period of about three years between 1993 and 1996 the work group comprising Georgian and GTZ experts held a series of very intensive discussions, accompanied by interim drafts and written statements that resulted in production of a final draft. A core group comprising six-members regularly presented progress reports to a larger plenum. At the beginning two important decisions were made by majority decision,
not simply to follow the CIS model Civil Code, rather to treat it by way of comparison with other texts, and
due to the urgency, to concentrate on drafting a statute for commercial enterprises and in particular company law; this entailed not including general principles on this subject matter in the Civil Code. This law could already be passed in 1994. In contrast to the repeatedly new versions of (capital) company law in other countries, the law is still in place and has successfully proven itself in practice.

Later, following intensive consultation in 1999, the law governing intellectual property rights, which was originally integrated as the 4th book in the Civil Code, was transferred completely into special law - once again, without being divided according to general principles and special rules.

The result has been the creation of a consistent work that has met with a high degree of acceptance, especially from the judiciary and jurisprudence. This version has managed to ward off most reform proposals and supplementary laws that are regularly put forward by changing trends and foreign consulting firms coming to Georgia.

In my opinion it realises a variant of universality within the context of transition and permits the improvement by interpretation and analogy which is led by law within an unfolding legal practice. It is therefore no mere coincidence that is has served as model, either completely or in part, for the Civil Codes of Moldavia, Turkmenistan and Mongolia. In all three countries there had also been prior long-term consultation with the GTZ project before the Codes were passed. This was important, among other things, for its acceptance, which suffered a little in the end from the unexpected broadside from USAID and in Turkmenistan from officialdom which gave the good law an inappropriate name, viz. Saparmurat Turkmenbaschi.

It was with considerable reluctance on the part of everyone that it was decided to depart from the CIS model Civil Code, since in principle the notion of retaining a uniform legal space to the greatest extent possible and thus compatibility with the different national Codes was to be seen as a most valuable asset. It proved to be necessary, though, as it became apparent that the model fell unnecessarily short of the degree of modernity that could otherwise be achieved. Meanwhile it is becoming increasingly evident that in the end it may still come to some degree of convergence, whereby this time for a change the boost is coming not from the old metropolis, but from the traditionally perceived periphery of South Caucasus. From the arena of judicial practice, but also from individual authors of the Russian Civil Code themselves, criticism is now being voiced that basically confirms my criticism above, leading to a break away from the model process now visible in several countries. For instance, in 1999 the Russian constitutional court ruled that the supposed priority of the Civil Code over other laws as laid down in Article 3 of the Russian Civil Code is not in keeping with the Russian constitution[28]. In a decree issued by the Russian government in 1999 concerning "the conception of administering state property and privatisation in the Russian Federation" it is stated that "the number of unitary enterprises is too high and that their activities for the most part do not correspond with the state interest". It goes on to say that their foundations in the Civil Code legislation "reveal a number of negative characteristics", that they are of low efficacy and profitability and that they should therefore be radically changed or liquidated. The renowned Russian professor of property law and co-author of the Russian Civil Code, E. Suchanov, has underscored the "provisional nature" of state enterprises and sees "reason to hope that they will be abolished in the not too distant future"[29]. On the subject of ownership forms, Suchanov has said: "Moreover, in the literature on civil legislation it is often held that the term 'ownership forms' is not a legal term, rather a terminology belonging to political economy. In point of fact, there are no 'ownership forms', rather one single law of property with a standardised, uniform range of rights that different subjects may have - citizens, legal persons, the state and other public institutions"[30].

These statements are in line with the view of the Civil Codes in Azerbaijan, Georgia, Moldavia, Mongolia and Turkmenistan. It is to be hoped that such an understanding will lead to a consolidation of the CIS model Civil Code and the laws derived from this in Russia, Belorus, Kazakhstan, Uzbekistan, Kirgizstan and Tajikistan, resulting in the end in the idea of one uniform legal space and model. One can well imagine that the representatives of Russia, especially, will not find it easy to agree to such a deviation via the inspiration of smaller countries.

Meanwhile another danger has to be dealt with. Occasionally there have been attempts to do away with socio-political and other orientations contained in the Civil Codes by means of special laws, leading not only to a change in content, but also and especially to a loss of uniformity and clarity. This is illustrated by the following.

Georgian banks criticise Article 303 of the Georgian Civil Code that allows the mortgagers and previous owners of auctioned land, as well as their families, the right of abode in a building or apartment as tenants, naturally under the assumption that they pay rent. The banks have carried this complaint to donor organisations, who want to achieve the free play of market forces to the greatest possible extent. Of course, Article 303 constitutes an evaluation of interests that parliament ruled in favour of the debtor. The attempt to override this ruling by means of a special law has been warded off. However, it is quite possible that further attempts will be made and as consequence of weak procedural parliamentary tradition and a political party landscape far removed from programmatic objectives they may even one day be successful.

A similar case is that of the law governing ownership in a freehold apartment (Article 208 Georgian Civil Code) that was introduced in the face of bitter opposition from the communal housing administration, who saw their power being diminished[31]. The opposition continues periodically to submit drafts of an alternative special law. Once again, it has been possible thus far to ward off such attempts and once again there can be no guarantee that they will not one day succeed, even if due to the simple reason that the GTZ project fails to receive prior notice of such a new draft. To receive information of such an event is more often than not pure coincidence, on the basis of personal contact rather than result of any planned process.

Another example is the right of leasing contracts that is regulated in all the new Civil Codes. In all cases where the GTZ project has been consulted it is theprotection of the lessee which stands in the forefront - incidentally this is broadly conform with the rulings of the German Federal Supreme Court of Justice. This is due to the realistic assumption that persons in the transition states will typically be the lessees, confronted by large transnational leasing companies and obviously in need of some degree of social protection. Other consulting firms favour a different sharing of risks and another legal conception they have cast in the model of a leasing law which has already been introduced in several countries in clear contradiction to the rights of leasing contracts contained in the Civil Code, but superceding these due to general principles of hierarchy and prevalence of laws. An example for this procedure is the leasing laws of Georgia. This was passed by parliament as result of a joint effort on the part of USAID and the World Bank (IFC) against the advice of the GTZ project and in face of resistance from one of the Georgian drafters of the Civil Code and present-day President of the Supreme Court, a highly respected jurist[32].

A third source of danger is typified by the way land law was dealt with in Kazakhstan. In 2002 the GTZ project responded to a request from parliament and submitted comparative legal material. The GTZ project was prepared to accompany the draft through the parliamentary procedure with written expert opinions and the organisation of a "round-table" discussion. In February 2003 a German version of the draft was already available and a "round table" had been planned for May 2003. It was perceived too late that the decisive parliamentary reading had taken place at the end of April 2003. The reason for why the government exhibited such unaccustomed fervour is unknown. It may well be connected with the passing of a land law in the Russian Federation, with whom Kazakhstan still maintains close relations. Meanwhile, it is widely held that the law is less than optimal, and not only in Germany and Kazakhstan. It may well soon need to be revised.

On the basis of these experiences, three main dangers have emerged which affect the legal continuity and stability of reform laws - by no means restricted to the Civil Code. These stem from the incessant attempts of lobby groups to force through a different allocation of risks, the efforts of consulting firms to reutilize pre-drafted (model) statutes, and in the traditional reflex of many newly independent states vis à vis the development of law in Russia. Within this constellation the GTZ is just one player among many. Up to now there is no real answer to the question as to how a long-term legal assistance project can cope with these dangers, other than by means of further deepening personal contacts in the countries concerned and with other (GTZ) co-operation projects, by means of continuing dialogue and the resulting increased hope of receiving information updates within good time. Indeed, one wonders if it is possible to protect a legal assistance project from becoming diluted at all (as resigned as this may sound). Certainly, there is no systematic answer, especially in view of the fact that the dialogue partners of GTZ, who are as a rule well implanted in the political system, may just as easily be taken by surprise by the events surrounding codification processes.

3. Law on entrepreneurial activity, company legislation, law governing capital markets

The laws governing entrepreneurial activity, business associations and capital markets have developed in spates and in different ways among the various CIS states.

At the beginning we often saw regulations in the form of decrees proclaiming the right to found an enterprise. These were more like political declarations of intent than actual regulation. They entailed a mixture of business law and rudimentary company law. Conform with the tendency of modern codification technique there then began a move to integrate company law and joint stock company law in the Civil Codes, as had already successfully been accomplished in Italy in 1942, and in particular in the Netherlands in 1995. These intentions had to be abandoned, not least due to the practical consideration that there simply was not enough time to wait for the completion of a complex law like a Civil Code; organisation forms and commercial activities had to be determined as quickly as possible. This clear necessity did not, however, apply to the law governing capital markets, since in most countries capital markets were not yet in existence.

The various countries reacted differently to this diagnosis. In Georgia, for instance, the drafters decided to keep this subject out of their Civil Code entirely and to create a comprehensive "Law on Commercial Enterprises". Within this law they incorporated comprehensive rules for individual entrepreneurs, partnerships and joint stock companies, as well as for a unitary type of co-operative, thus breaking with Soviet practice. This law also contains the accounting rules. These lean more towards the German concept of conservatism and maintenance of net worth, rather than towards the US American priorities of transparency for (potential) market participants.

Since nothing like this had ever been attempted before the authors submitted the draft that had been put together between 1993 and 1994 to a conference to take place in Bremen. Renowned German, Austrian and Georgian specialists on company law participated in the conference. On the whole, the verdict they delivered was positive. In 1995 the law came into force. It quickly drew criticism, especially from US American experts. In order to canalise this criticism and to make use of its more justified points, the Georgian partners called a two-day conference in October 1998, which was chaired by the Minister for Justice and attended by members of parliament, officials from various ministries, USAID contractors and GTZ experts. It is interesting to note that the conference ended with a unanimous recommendation to retain the law under inclusion of but a few important amendments, in particular improvement of protection for minorities and the rights of associated companies. It was also recommended to introduce more flexibility into the accounting rules. Hearkening back to the initial harsh criticism of the bias to German accounting rules, it now seems that the recent accounting scandals associated with US American auditing firms and joint stock corporations have meanwhile dampened much of the enthusiasm for US law. It remains to be seen which proves to be the more stable.

In 2000 the GTZ organised a first international symposium on its part of joint-stock company law. The results have been published in a collection of papers. The symposia, the second of which took place in June 2003, are intended to become a regular institution whose task will be to consolidate legal practice rather than to initiate changes to law.

The Georgian conception of a unitary law governing commercial enterprises could not be asserted in the Inter Parliamentary Assembly at St. Petersburg, nor in other countries. In all other cases the less-convincing path of codification was elected, choosing to include just general provisions in the model Civil Code, and to create special laws for the rest. The first of these laws appeared as early as 1993 in the Russian federation. They were quick to circulate in other countries, too, and not infrequently constituted "merely poor translations of various American technical terms", as one Russian colleague put it[33].

It is clear that neither such texts nor the methods applied could be of any permanence. In the meanwhile a theoretical discourse on legal policy has unfolded that has legislative activities as its focus. The USA participates with significant staffing and financial resources, compared to which the GTZ funding appears very modest. This is dramatically underscored by the fact that USAID actually intervened to fund a workshop held in Bremen on the joint stock company law in Tajikistan because the Tajik partners had insisted on the participation of German experts. This may be cost-effective, but in the long term it must result inevitably in an unequal partnership.

One of the most important results of US American consultation has been the compilation of a model joint stock company law[34], the very existence of which has been harshly criticised, especially in Russia. Notwithstanding, it continues to exercise considerable practical influence.

Following other countries' non-acceptance of the Georgian law governing commercial enterprises as a 'model', the GTZ project has participated in different ways in the formulation of company law and laws governing capital markets. It accompanied the legislative process in Uzbekistan with a series of seminars and publications on the law governing legal entities, joint-stock company law and the company law. Meanwhile, a law on limited liability was passed in 2002. This contained a significant improvement over the previous legal situation, even though it would have been better if the legislation had incorporated more of the recommendations. A new law governing joint stock companies is still to come.

In a process of international consultation with American and Dutch experts, the GTZ project provided counselling to Armenia on the 1996 law governing joint stock companies. We were however unable to exercise any great influence on the final text. The law was soon to be replaced by another one in 2001.

Following a comprehensive expert opinion submitted by the GTZ project, the Kazakh parliament accepted a new law governing joint stock companies in May 2003. It replaces the 1998 law, which in turn had replaced earlier regulations. The 1998 law was based on the CIS model law and during its existence it had already been amended four times.

In Kirgizstan a law dating from 1996 is still in force. Belonging to the "first generation", this law deals somewhat inadequately with both partnerships as well as joint stock companies. In this country the GTZ project has only succeeded in counselling in favour of a modern and unitary association law for co-operatives.

Azerbaijan still lives with the rudimentary joint stock company law it passed in 1994, but does have a more modern limited liability company law dating from 1998.

This review documents the fact that in some countries, like economically important Azerbaijan for instance, undue delays have occurred and that a conclusive and consistent company legislation has yet to be found. It also shows that in other countries a certain degree modernisation has taken place. Such progress as has been made, however, has been within a hectic rhythm of passing laws, amendments and new laws, like in Kazakhstan, so that here, too, although for different reasons, it is not possible to speak of a consistent company law.

So as to implant some stability and calm in the process, as well as to reconcile universality and context, the GTZ project co-operated with the Dutch CILC in drawing up a model company law under the leadership of the Inter-Parliamentary Assembly. In order to complete the legislative circle, the two institutions also collaborated with EBRD on a CIS model law regulating equities trading, although well aware of the fact that for many countries such a law is of low priority at present. Of these drafts, only the model law for joint stock companies (11.02.1996) and for the equities market (23.11.2001) have been formally accepted as a recommendation by the Inter-Parliamentary Assembly, but not the company law.

The review also reveals that the models stop short of being a sweeping success. Many things are still unfinished. Although in the meantime it has been accepted virtually everywhere that (not only) German types of partnership and joint stock company should exist with the inclusion of limited liability companies (which was not at all self-evident at the start), uncertainty still persists about the relationship between the limited liability company to the closed joint stock company that in effect fulfils the same function, and about a unitary type of co-operative, politically denaturalised in the Soviet Union. A whole range of individual issues remains unresolved. These are often attributable to different conceptions of US American and European/German law and range from accounting principles and management accounting, to the form, nominal value and the registration of shares, the structure and objectives of company management, to the organisation of protection of minorities and good corporate governance - the necessity of which enjoys broad consensus.

Once again it is urgently recommended that we remain active in the future resolution of these issues and further development of the laws in the partner countries and that the GTZ continues its involvement. In the long term, though, it will not be possible to maintain the existing and reconstructed orientations to continental-European law in the absence of sufficient financial funds.

4. Other substantive civil and economic law
a) Labour legislation

In Soviet times labour law was characterised by the fact that enterprises, who were not in competition with each other, were also allocated the task of employment and social policies. This resulted in a general guarantee of employment and a high degree of entitlement to social welfare. Although this has to a great extent de facto resulted in a state of collapse, it remains de jure an exceedingly delicate operation to introduce change and adaptation in accordance with the dictates of a market economy. This would effectively mean to provide written confirmation that the welfare state has disintegrated - albeit an actual reality for some time already. In spite of such difficulties, the GTZ project collaborated with the Dutch CILC to put together a CIS model labour code under the leadership of the IPA. This has, however, not yet been passed. Within the context of a bilateral agreement, the GTZ also provides Georgia and Armenia with counselling on an ongoing basis. These complex issues are the subject of a recent doctoral dissertation to which the interested reader is referred[35].

b) Legislation governing intellectual property

The law of intellectual property was to have been integrated in the Civil Codes. This was the original intent of many modern law makers (the Dutch, among others). Despite a certain degree of scepticism, the GTZ project did not exclude such a possibility and proceeded to render an expert opinion on the corresponding parts of the Georgian and Tajik Civil Codes. In particular, the GTZ project, also outside TRIPS, actively encouraged ratification of the various multilateral agreements in this area and the submission of applications for WIPO membership. For its part, WIPO had adopted a very firm stand opposed to integration in the Civil Codes and for the separate development of special laws to govern patents, utility and design patents, trade marks and copyright. Much speaks in favour of this approach, in particular the need for administration structures and statutory offices to be created. It was this aspect that was decisive in withdrawing from the legislative process in this area, even though it is still far from complete in most countries. Adequate counselling would in any case not be possible without an increase in the budget, since legislation would be senseless unless the statutory offices were set up simultaneously. The withdrawal is regrettable, especially since the GTZ enjoys good relations with the German patent office and has contact to a number of renowned specialists in the field.

c) Law on bills of exchange, promissory notes and negotiable instruments

Laws on bills of exchange, promissory notes and negotiable instruments have been incorporated in the Civil Codes of several countries, albeit in rudimentary form. The GTZ project has always voted against such a course and recommended the drafting of special laws on bills of exchange, promissory notes and negotiable instruments so as to enable uniformity of cross-border transactions, of particular importance in this area. This solution would have been especially opportune, since the USSR had ratified the 1931 Geneva conventions on bills of exchange, promissory notes and negotiable instruments. This is still in force in the newly independent states and thus a good basis exists for adopting internationally accepted model law in this area. To date, only Georgia has decided to accept this advice, but only in part. Amendments still have to be made in order to approach the convention more completely. There is still a general need for consultation.

d) International private law

In view of the splitting-up into different laws characteristic of German law and the more convincing modern solution found in Switzerland and Turkey, the GTZ project collaborated with the partners to create a model that combines material and procedural parts of the subject-matter within one law. This model was developed in Georgia, where a team of experts worked on unifying the two parts initially isolated as chapters of the Civil Code and the Code of Civil Procedure. The law was developed further for Azerbaijan, additionally refined and brought to a level that the GTZ project considers worthy of being called a "model" that can be proffered to other partner countries as a basis for discussion. This has already happened in Uzbekistan, Tajikistan and Turkmenistan, but has not yet been brought to a legislative conclusion.

In Turkmenistan the draft was lent some notoriety following a decree issued by the President on 4th June 2001 requiring that marriage between foreigners and nationals of Turkmenistan would be subject to payment of 50,000 US dollars. In protest against this decree, which was later confirmed by parliament, the accredited foreign ambassadors in Aschghabad lodged a diplomatic complaint, maintaining it constituted a violation of human rights in force in Turkmenistan. It was agreed with the President that the GTZ project should work on an alternative proposal in line with human rights and for the protection of women and children. This was subsequently done, laying special emphasis on (yet to be ratified) conventions in the area of family law together with parent and child legislation, the necessary reform of national family law and in particular on the draft of international private law. However, the increased political repression following an assassination attempt (real or supposed) has made it more difficult to deal with the subject. At the beginning of 2003 the GTZ project, together with OSCE and the Ambassador of Turkmenistan to the OSCE started a new initiative to have the decree lifted and force through the act on international private law.

e) Law governing investment

The law governing investment, passed almost exclusively with regard to foreign investment, still hovers between privilege and control. On the one hand it promises tax advantages and other rights that on closer inspection are often no more than the conditions which (ought to) apply to any investor, regardless of nationality, and on the other hand it often deals only with specific reporting and registration duties. Such bureaucratic obligations are singularly unattractive and often merely serve to aggravate arbitrary behaviour. The GTZ project has submitted several expert opinions on draft laws produced in Georgia, Kazakhstan and Uzbekistan in which it has pleaded for the creation of a more investment friendly system of law with the inclusion of commercial arbitration, rather than causing irritation with constantly changing national laws of less than convincing stability. Bilateral and regional investment agreements would certainly remain important.

5. Laws on organisation of the courts

In the meantime it has become established practice in partner countries to combine the issue of the position of judges and the organisation of the courts within one single law. There can be no fundamental objection to this, provided it can be ensured that the addressee and beneficiary of judicial independence is not only the court as an organisation in the sense of an institutional separation of powers, but the individual judges themselves. Up to now it has been far from matter-of-fact that the judges must be personally and objectively independent in how they arrive at decisions: not only that neither the legislative nor the executive branch of power should be allowed to exercise control, but also not the president of the court, nor a higher court. This embraces the impermissibility of criticism or even orientation to decision criteria, conduct of the proceedings, allocation of funds, assigning or withdrawing of cases, and disciplinary action.

These aspects are as fundamental and constitutionally indispensable as they are new. This helps explain why matters in most countries up to now are characterised by high instability and perpetual experimentation. It is typical that the last comprehensive amendment to the law on organisation of the courts in Kazakhstan dated 2000 is now once again up for review, and that in Kirgizstan in February 2003 a referendum on the constitution also turned the provisions in the constitution concerning the structure of the courts inside out. This of course entails that simple law must now be adapted, although according to legal experts the orientation to new provisions is not quite conform with constitutional principles. And naturally, the "law on the supreme court and local courts" passed in Kirgizstan in June 2003 drags along with it the problematic provisions of the constitution (cf. Article 79 ff), in part serving to aggravate them further and sowing the seed of a new amendment - something that will be made more difficult by the unnecessary detailing in the constitution.

This also helps explain why time and again, even after more than ten years of experimentation, queries continue to be made regarding the fundamental nature of the problems of organisation and function of the courts, of the independence and role-model of judges, as well as requests from partners to attend court hearings in Germany (certainly in other countries, too) in order to gain practical experience. Alone in the last two years the GTZ project has run such conferences for Armenia, Azerbaijan, Georgia, Kazakhstan, Kirgizstan, Uzbekistan as well as for the whole Caucasus region, and high-ranking delegations of judges from Kazakhstan, Uzbekistan, Georgia Tajikistan and Azerbaijan have visited the courts in Karlsruhe and Bremen. It is precisely in this field that existing and planned partnerships can be nurtured and make an essential contribution to the exchange of ideas and the stabilisation of legitimate expectations; for instance, between the judicial authorities of Hessen and Armenia, Lower Saxony and Kirgizstan, Bremen and Georgia. It also serves to draw politicians and policy-makers into the dialogue, as in the case of the foreign visits of the Bremen Bürgermeister and Senator for Justice, or the Presidents of the Constitutional Court of Germany and the German Supreme Court in the partner countries.

Such exchanges prepare the ground for further reforms of law and organisation, whereby it has to be emphasised that the reforms still have to be completed first. Too strong is still the influence of Soviet tradition; too low the expertise of many of the judges.

This is illustrated by the following:

State arbitration
In the USSR there were so-called state arbitration courts, which existed alongside the general forms of jurisdiction and were responsible for dealing with disputes between (state-run) enterprises. Basically this had more to do with the responsibility for fulfilling economic plans (the predominant instrument being contractual penalties and not monetary compensation for damages) rather than the contractual obligation of business partners in competition with one another. The Russian Federation, not least due to the firm convictions held by the President of the Supreme Arbitration Court, decided to retain the dual system, with the inevitable effect of drawing other countries along with it.

Georgia was the first CIS member to introduce a unitary general form of jurisdiction, and has maintained it to this day. So far, Tajikistan and Uzbekistan have followed the Russian example. Other countries have attempted interim solutions. Kazakhstan initially abandoned the dual system, and has now reintroduced it in the lower instances. Kirgizstan has retained the dual system, and now in a referendum on the constitution decided that there should also be a unitary Supreme Court. Because they are anchored in the constitution, in Armenia as well as in Azerbaijan the arbitration courts (now called economic courts) continue to exist under the unifying umbrella of a single Supreme Court. In Armenia, though, there are now calls for a special economic court, whereby quite obviously this is due to personal rivalry, rather than objective reasons.

The GTZ project has consistently pleaded for the concept of a unitary general jurisdiction and the need to strive for professional specialisation among colleagues, chambers and senates within such a jurisdiction. So far this call has only been completely heeded in Georgia.

It has tried to achieve a second-best solution, whereby the sharing of competencies among the courts be decided according to legal subject-matter on hand and not the identity of the parties concerned; this was an attempt to avoid that the same legal issue being decided on the one part from this court, and on the other part from another court, depending on whether or not the parties were physical or legal persons. It additionally paid great attention to assure that at any rate there would be one unitary last instance, a unitary supreme court. Up to now that has been successful in the partner countries mentioned above.

Of course, we had to learn that the high German appreciation of unitary legal practice as the source of preciseness, uniform and consistent interpretation and the evolution of law in practice is not shared spontaneously by everyone. This is partly because in Soviet times, and afterwards in many countries, the courts were forbidden to reach an interpretation over and above the wording of the law and left precious little room for "judge-made law"[36]. In the meantime preconceptions are beginning to change. For the GTZ project this means to remain present and contribute toward a stabilisation, without which it will not be possible to build up the "merited" independence based on professionalism.

A similar perspective puts a focus on the important issue of specialised jurisdiction, especially and for some time now in the field of administrative and tax disputes. Once again, the GTZ has constantly called for a concentration of specialised knowledge by means of setting up chambers of specialists in the ordinary courts, and not by the creation of several instances. Georgia chose to follow this advice, evidently with good results. It would appear that in other countries the resistance to consultation in this important point is lower than in the case of the economic courts, whereby the complexity of the German system of specialised courts with their raft of directors, presidents, administrations and resources may well be seen as a deterrent.

Administration of the judiciary
Another difficulty that is a highly controversial topic in the partner countries, between the various consulting organisations and in Germany, too, concerns the administration of the judiciary. At an early stage especially the World Bank and USAID pressed for removal