2. The legacy of the centrally planned economy
2.1 The legacy of the political structure
2.2 The legacy of the state-controlled economy
3. The conceptual foundation for legal counselling
3.1 Elements and consequences of the process aspect
3.4 International problem areas
4. Areas to be covered by counselling
(Revised version of a paper originally prepared for Deutsche Gesellschaft für Technische Zusammenarbeit - GTZ)
1997
Professor Dr. Dr. h.c. Rolf Knieper, Bremen
Professor Dr. Mark Boguslavski, Kiel and Moscow
General opinion in East and West among those concerned with both practice and theory in the political and economic spheres is that 1989 was the key year marking the political, economic, social and cultural collapse of the Communist system, accompanied by the disintegration of the regime's legal, judicial and administrative systems. For reasons of convenience this view may be considered correct, provided that due attention is paid - particularly where the legal system is concerned - to the historical experience that these events are pre- and succeeded by long preliminary phases. The impact of such periods extends far beyond the event itself.
This fact suggests that transformation, as a matter of course, is a long and contradictory process in which the need and desire for radical change run counter to elements of adherence to outdated systems. Such adherence to the past can be attributed to objective structures, in particular the close economic links within the former Soviet Union, as well as to specific mentalities and collective self-assessments. These are based among other things on genuine interests which perceive lack of proper service in a disintegrating system they have themselves sustained and whose final collapse they are paradoxically prepared to permit in order to salvage personal positions. Rather than disappearing fully, such positions persevere, even after the collapse of the prevailing system. Interests of this type are to be found in the political and economic spheres, as well as in the various branches of courts and judicial authorities. The smaller the extent to which powerful social groups consider their interests safeguarded and upheld following the collapse of a regime, the greater is the risk they will reject the reforms and attempt to restore the previous status quo, a step which may not prove successful if disintegration of the old system has already reached an advanced stage.
Co-operation in the field of legislative reform must take into account the existence of both attitudes. Such co-operation forms part of a complex and contradictory process which, although probably irreversible, has become more to achieve because it no longer possesses the legitimacy assumed as a matter of course during the optimistic early days. Today, attempts at reform are liable to encounter both sceptical adherence to old structures, which manifest itself even in democratic election results, as well as impatient demands for rapid elaboration of extensive legislative projects, whose implementation is unrealistically expected to bring improvements in the actual economic and political situation.
Not only did difficulties increase. Both those involved in effecting reforms in the transformation states and foreign experts have now gained valuable experience which should make it possible to avoid and correct some of the errors made during the initial phase of somewhat hectic legislative activity. Rather than being determined by process-oriented thinking, this initial phase was based on the precept that the system's collapse would be an abrupt and defined event. Where legislative reform was concerned, this assumption meant that - to put it pointedly - it might be sufficient to abolish old legal practices and replace them with a new, ready-made collection of laws from the traditionally market-oriented societies.
This explains why the first reform phase did not initially focus on designing and implementing plans for priority legislative projects. Instead, reform activities concentrated on ideologically dominated areas seen as reflecting basic differences between the capitalist and communist systems: legislation on privatisation, laws dealing with various forms of ownership as well as enterprises and entrepreneurial activity, legislation relating to competition and monopolies, and legislation aimed at encouraging private foreign investments. By contrast, little attention was paid, for example, to the elaboration of a civil code containing detailed rules on contracts and ownership. Although oriented towards the concepts of democracy and constitutional state, the actors involved in the elaboration of so-called normative acts - particularly those in newly independent states - were unfamiliar with the procedures and techniques of legislative practice. Competition for the exercise of power through legislation was on the one hand no longer curbed by the disciplining influence of the Communist Party and on the other hand not yet restricted by the discipline - albeit always reluctantly accepted - exerted by constitutional and administrative constraints. Formulation of laws consequently was, and still is, in the hands of parliaments, presidential offices, cabinets and individual ministries, as well as research institutes, university faculties and other academic institutions. These bodies often operate in a totally uncoordinated fashion, lack any clear-cut mandate and are frequently in open competition with one another.
In laying down their priorities, the governments, parliaments and other institutions engaged in legislative reform were supported by a large number of international experts from various countries and organisations. Many of these experts were likewise not members of the legal profession, but rather economists who hoped that they could use legislation to make the break-up of the system irreversible and give it legal backing. The outcome was a flood of often highly contradictory texts from a wide variety of sources and with greatly differing hierarchical status. Their content was often not so much based on traditional legislative concepts, i.e. attempts to set out the rights and obligations of the citizen and the state at a level of abstraction lending itself to classification under specific rules of law, but consisted instead of political declarations of intent pertaining to areas such as introduction of the market economy, privatisation of state-owned combines and encouragement of private investment. Moreover, advisers frequently exported the legal traditions of their own countries without giving much thought to those of the host country; to assist them in accomplishing this end, they chose as project executing agencies, from the wide range of legislators available, virtually any party expressing a verbal willingness to co-operate. They often worked on the naive assumption that the communist system had not known any concept of government based on the rule of law.
To a certain extent the elaboration of law as conducted by national politicians and supported by foreign advisers reflected the social upheavals, doing so at a highly abstract level as a form of destruction of the old system of the centralised economy, which had indeed left a vacuum to be filled. The fact that this vacuum was filled in the legislative sphere by borrowing from democratic and market-economy systems can be seen as legitimate if it is borne in mind that the vast majority of the transformation states set their sights on democracy and the market economy as alternative social models and that most of them are continuing to do so. The difficulties lie not so much in the formulation of highly abstract goals as in concrete problem levels within both systems. On the one hand, insufficient consideration was given to the fact that the old system could not be totally destroyed at one stroke and that social relationships, economic structures and political contexts cannot be dissolved overnight. The longer the uncertainties of the upheaval phase prevail, the greater the likelihood of a return to pre-revolutionary symbols of identity such as religion and race which increasingly compete with universalist principles to fill the social vacuum. On the other hand, the "law of the market economy" should not be seen as monolithic, but - although based on uniform principles - as a multi-faceted entity in which the social dimension is a crucial criterion.
In most of the transformation states the euphoria which initially prevailed has undoubtedly given way to disillusionment, especially as it has become clear that many of the "imported" laws have encountered insurmountable difficulties in their practical implementation or - as was for instance the case with Russia's anti-trust legislation - were introduced far too early to have any practical effect. The blind faith in the abilities of Western experts which was widespread during the early days is also now fortunately being replaced by growing scepticism. All in all, these can be seen as beneficial processes creating opportunities for co-operation in the field of legislative reform that is smoother, more serious and geared to the creation of a long-term framework. Those involved in this second phase of co-operation should remember the turmoil and ineffectiveness of the first phase along with its impact on the general climate for co-operation.
It must also be assumed that although the countries commonly referred to as "transformation states" following the collapse of the USSR are all faced with the same general problems, each exhibits its own distinctive features in terms of both economic situation and legislative procedure, which - essentially for political reasons - tend to mutually reinforce rather than weaken one another.
If legal counselling is to be successful, it is essential to know, understand and take seriously the attitude of the co-operation partners and decision-makers towards the law in the legislative and law-making process. Only in this way is it possible to establish the necessary consensus or majority, for implementing reforms and preclude dissent in the long term.
Distinctions must be made between a number of areas with varying degrees of potential for both consensus, misunderstanding and contradictions.
General agreement prevails in East and West today as to judging the unlawful nature of the dictatorial structures on which the Soviet system was based. The absence of any separation of powers and thus of an independent judiciary; the absence of constitutional structures and the related disregard of human rights and equality; the helplessness of the individual in the face of an all-powerful state machinery; the constitutionally anchored leading role of the Communist Party - among other things in economic planning and in legislation - and its totalitarian claim to embody the truth, extending as far as the physical destruction of all opposition; the existence of a structure of privileges and arbitrary use of personal power, and the reduction of justice to a form of punitive political justice: all these are elements which meet with unambiguous disapproval and whose future prevention is one of the major reform goals for the new, democratically-oriented political institutions.
This emotional condemnation frequently prevents the possibility of an analysis which should nevertheless be considered important, because concrete personal relationships have in many cases survived the upheavals and the old political and economic cadres continue to occupy key posts in most countries. It would be wrong simply to condemn this continuity in the midst of upheaval, for these cadres are virtually the only people to have received professional training. Moreover, they often possess attributes that can be of great use in a new structural and institutional setting: they are accustomed to thinking in social contexts, are familiar with the keeping of records and the principles of administrative organisation, and frequently exhibit a high degree of discipline in their work. It can nevertheless be assumed at present that past experience has discredited all legal professions in the eyes of the population and that in recent decades law has not been among the most popular fields of study for talented young people of integrity. There is also an awareness of this problem, reflected among other things in the fact that law courses are now recommended and much in demand; this development can probably be ascribed to a desire to ensure that the inadequacies of the past are not carried over into the future.
Far greater difficulties than in the foregoing areas are presented by the task of reaching a more than superficial consensus which is essential if true reforms are to be realised - for problem complexes which formed the basis of what was at all events a functioning Soviet system of production and distribution, i.e. regulatory and legal practice geared to the state in its capacity as the most important actor in the economy. It is clear that the difficulties involved in consensus-forming will increase in proportion to the length of time for which the decline of production, social hardship and political instability continue. This can be illustrated by three points of crucial importance in law-making and legal practice.
1. The centrally planned economy, based on the principle of state ownership, was a public enterprise subject to the primacy of the political decision. Economic disputes were seen not as conflicts of interests between independent individuals or companies competing to maintain their position and advantages on the market, but rather as debates on correct fulfilment of a politically motivated plan. This was reflected in a court structure and an understanding of court proceedings that had little in common with the concept of civil proceedings based on the principle of party proceedings. "Economic differences of opinion" were discussed by state courts of arbitration which, as instruments of state control within the planned economy, were attached to the Council of Ministers or other authorities. Despite professions of faith in market economy and observance of private interests, there has been little change to date in this concept of court proceedings. The state courts of arbitration have been either preserved under the constitution (cf. Article 127 of the Russian constitution dated 12 December 1993) or re-designated "commercial courts", which are now called upon to arbitrate in "economic disputes arising in connection with managerial activities in the economic sphere between enterprises, authorities and organisations having various forms of ownership or between entrepreneurs" (as specified, for example, in Article 111 of the Uzbekistan constitution dated 8 December 1992). This is not a case of established traditions being blindly continued; on the contrary, many reformers are convinced that while the courts of arbitration or commercial courts are undoubtedly relics of the old system, they ought to be retained for a transitional period in view of their considerable professional expertise - and maintaining the independence they have now acquired - before being integrated into the ordinary juridical system, for example as special commercial divisions.
2. Legislative practices in the Soviet era were dominated by the enactment of frame-laws which were too abstract to be implemented and which were consequently given more concrete form, expanded, supplemented or even amended, on a generous scale, by way of edicts and ordinances. While predictability and legal certainty are difficult to realise in this way, they were in any case not the focus of interest. With separation of powers existing only in rudimentary form, concern for the prerogatives of legislative power was of minor significance. Legislature, executive, judiciary and public prosecutor's office were in any case committed to serving the general good as defined by the Communist Party, which in conceptual terms meant that mutual control through separation of powers and clear-cut procedural authority inevitably appeared out of place.
Continuing this tradition, some states tend to formulate skeleton laws, laying down general and highly abstract principles, which are intended to be supplemented by specific legislation and by ordinances. The advice that a particular law should cover an area in as much detail as possible, in other words in terms which are as general or concrete as necessary, does not always meet with understanding, even though such a concept might appear obvious from the viewpoint of constitutional tradition. It is equally unrealistic to expect clear-cut concepts of hierarchical status or ranking of legal texts, i.e. the relationship between laws and ordinances, between recent and older laws or between specific and general legislation. One example of this situation is provided by Russia, where for instance a variety of legal instruments on the organisation of enterprises have been created alongside and without reference to one another. What is more - as in other CIS countries as well - the laws of the USSR remained in force after the state itself ceased to exist. Up to 1 January 1995, the following normative acts were all in effect simultaneously in the Russian Federation: the fundamentals of the USSR's 1991 civil legislation, various other laws and numerous ordinances left over from the USSR, the 1964 Russian civil code, new legal instruments enacted by the Russian Federation, and the above-mentioned laws on entrepreneurial activity and forms of ownership. As a result, it is still virtually impossible in Russia to obtain any binding information in this area regarding the validity, or claim to validity, of various legal texts circulating in the form of laws and ordinances issued by the central government or other institutions including large municipalities.
This situation provides the background to the Russian Civil Code, which was elaborated with a view to overcoming the legal uncertainty prevailing during the first phase of the transformation process and which came into force from January 1st 1995 on. The 453 articles making up the first part of the Civil Code comprise the following sections: general provisions, ownership and other rights in rem, and general aspects of the law of obligations. The code itself works on the basis that the complexity of the civil-law relations calls for a sizeable number of supplementary statutes; some of these are mentioned in the Civil Code itself, such as those on the registration of corporate bodies, on joint stock and limited-liability companies. The Civil Code's explicit understanding of its role is that it aims to serve as a fixed set of guidelines for such supplementary statutes (Article 3), although it is clear that neither the actions of future legislators can be restricted in this way nor the risk of instability and legal uncertainty ruled out. Moreover, Article 3 (7) of the civil code does not preclude the application of other rules to civil-law matters, insofar as provision is made for this in the Civil Code or in other legislation, presidential decrees or government ordinances. The future will show whether the civil code helps to establish the desired legal certainty.
3. It had been common practice in the Soviet Union from 1924 onwards to elaborate laws as basic legislation for the USSR which the individual republics - independent only in formal terms - were expected to adopt automatically, scope being left for very minor modifications only. This applied in particular to civil and procedural legislation, while control of the economy was centralised in the hands of the state and determined by the organs of the USSR by means of ordinances and decrees. Apart from fulfilment of the plan, this control included areas such as supply of materials, general terms of delivery and building construction.
This process was facilitated by the close interlinking of personnel within the executive, by the training given in Moscow to all high-level cadres and by common ideological convictions. The practice has had mixed consequences for the present-day Commonwealth of Independent States (CIS). On the one hand, the Russian Federation is maintaining its leading role, with old friendships and relationships of respect continuing to exist despite new national frontiers. On the other hand, however, most of the new states - with an eye to their independence - are reluctant to simply continue the old practice, while at the same time being unwilling to forgo the advantages of uniform legislation.
The transformation process can be seen as more than just a process of structural change, for it is also determined by the actions of the participants and by their expectations of the new system. The actors are concerned not with realising an abstract and unfamiliar system termed "social market economy" or "democracy", but rather with creating satisfactory prospects for their future and establishing what they consider an appropriate place for themselves in the new society. This gives rise to competition for positions within the law-making process, for rights of initiation and for influence, a state of affairs which may either create momentum or cause the competing officials and institutions to obstruct one another. Foreign experts providing legal counselling must be aware of this situation and attempt to generate synergistic effects by introducing the aspect of professional rationality into this "game". They will find it all the easier to be heard the more they succeed in pursuing this aspect at least as a non-decisive factor in determining social stratification within the "new" society.
However, it is to be hoped that these three examples show that the process of legislative renewal is liable to run up against traditions which, if disregarded, may jeopardise the outcome of the counselling, however correct it might be in professional terms. All in all, they demonstrate the limited significance attached to both constitutional procedures in the legislative process and the existence of general, enforceable rules governing the economic process. This attitude may well go some way towards explaining what appears to Western experts to be sometimes desperate "mass production" of contradictory regulations in transformation states, although at first glance the strong emphasis on legal reform in connection with the economic reform appears to suggest the existence of great respect for law and order.
It may well be that the peculiar concentration on producing legal texts testifies in turn to a fundamental misunderstanding of the role played by civil and commercial law within a market economy. Where economic programmes aimed at creating competition, abolishing monopolies and encouraging private investment are embodied in the form of laws and ordinances, this may be due to a conviction that the state can dictate the nature of economic activity.
All these points could make it easier to understand why, following the collapse of the Soviet Union, so many political groupings set themselves up as editorial committees for the formulation of legal texts without endeavouring to bring in any legal expertise; why the vast majority of such texts have been produced without any attempts by the legislators to secure their implementation by courts and the legal profession; and why, in some countries, enacted laws and ordinances have seldom been published or disseminated, but kept secret in line with the traditional practice for state documents. The fact that in some countries it is easier to get hold of the new constitution in English than in the national language shows that this cannot be attributed to a lack of funds. Proof that such a state of affairs does not have to prevail is provided by the practice in Russia and some other States, where all laws and ordinances are officially published not just in collections of statutes but also in newspapers.
This situation too must be taken seriously when designing legal counselling projects aimed at bringing about changes.
As a component of economic advisory services to governments, legal counselling must adhere to a set of conceptual premises attributable above all to the nature of transformation as a process. Formulation of these premises is facilitated today by the fact that, following initially disappointing results, it is being increasingly appreciated in economic counselling that capitalism and socialism cannot be simply set against each other as dichotomous systems in which substitution of a few basic parameters in one system is sufficient to achieve spontaneous development of the other. In terms of the law, this implies that it is not enough to import legislation that has proved effective in traditional market economies in order to create market-oriented societies.
At the same time, a concept which is by no means original where traditional market-oriented societies are concerned is now also gaining ground in transformation societies. This is the realisation that economic processes cannot under any circumstances be left to the spontaneity of the market participants, but that law is a key structural element of the market economy and that an institutional framework shaped by law is just as essential as state laws which legitimise, implement, safeguard or limit market behaviour and profit calculations laid down by the individual economic actors in contractual relationships.
Such institutions and laws are bound by the universal structural conditions of market-oriented societies. Just as it is not enough to import legislation and hope that the spontaneity and momentum of a market economy will develop virtually automatically, substantive and procedural legislation for regulating the market economy is unsuitable as a means of expressing national characteristics - although this does not mean that the given features of a historical situation in a particular region ought not to be taken into account. Only this premise of commercial law's universal claim to validity permits a form of legal counselling that does not confine itself to highlighting alternatives in its role as moderator, but instead plays an effective role in the process. This attitude must not be confused with an unconditional desire to favour a specific position; on the contrary, it is the prerequisite for a genuine dialogue which can develop only if those giving and receiving the counselling each take their respective views seriously.
It follows from the foregoing that legal counselling and economic counselling must be regarded as forms of participation, enjoying equal status, in a process. This process has short-term, medium-term and long-term dimensions. Legal institutions and legislation play an important role within the various time frames, in other words not just from the long-term viewpoint. Such institutions and laws can ensure realistic expectations and gear personal behaviour to socially desirable goals if they stipulate precisely defined legal consequences for precisely defined acts; if they lay down general behaviour standards within whose scope personal decisions and contractual arrangements can be made in the certainty that they will be realised; if they provide forms of organisation for economic action; if they create freedoms and obligations applicable to all; and in particular if they impose and actually implement sanctions for infringement of general standards and permitted agreements between individuals. This applies not only from the long-term viewpoint of an established market-oriented society, but also to short-term political developments.
Taken from this standpoint, the State plays an immensely important role as an actor in the economic process, beyond the functions it traditionally performs within a non-socialist society, in its capacity as the owner of most of the productive assets. In order to initiate decentralisation as a preliminary step to privatisation, economic counselling places emphasis on splitting state-owned combines into competitive units in the form of enterprises which, on the basis of business-economics principles, can start to operate on the market. Such programmes cannot be implemented simply by banning monopolies or appealing for private investment. Instead, it is essential to create prospects for the combine workers that make the risk of launching market-oriented production appear a worthwhile undertaking. A high-risk step of this nature cannot be demanded unless a certain degree of security is guaranteed, and in this context legislation is one of the tools that can play a role in achieving this goal. The sales prospects of enterprises undergoing restructuring can be safeguarded by means of controlling legislation relating to foreign trade, foreign exchange, taxation, customs duties and pricing, whose validity can certainly be limited to a transitional period. The example of legislation on economic processes and contextual measures, as well as skeleton laws with adaptable ordinances, in many countries having a traditional market-economy structure further demonstrates that consideration of the time factor is by no means important solely in transformation states and that it has a far greater influence on legislative practices than the general absence of a period of validity might suggest.
Another tool used in the past for keeping expectations at a reasonable level was the French "contrat-plan" system employed during the Gaullist "planification" era to create a stable framework of mutual obligations on the part of the State and state-owned enterprises. The aim of the "contrat-plan" was to establish the mutual demands and expectations of the two sides in the state's negotiations with the state-owned enterprises, to set these against each other and to use the results as a basis for creating a reliable framework for negotiation. In this way it became easier for the state to elaborate budget forecasts, while the enterprises were able to gain a precise idea of the limiting framework for their actions. These negotiated and binding plans paved the way in France for the transition to extensive privatisation, even though this was not what the actors had in mind at the time.
The references to legislation motivated by industrial policy for protecting newly established enterprises against competition and to the contractually agreed rights and obligations of the state towards state-owned enterprises (and vice versa), which in each case are subject to the premise of a fixed duration, are intended to demonstrate that one specific element of legal tools, namely the establishment of certainty about forms of behaviour - or at least steps towards facilitating this - in the face of what is essentially an uncertain future is appropriate not merely to major codifications created for the long term. It also applies to shorter periods limited in duration from the outset and to the "measure-oriented laws" tailored to them. It is this element of creating security that lends particular importance, above all during times of major uncertainty, to legal norms that do not confine themselves to repeating political declarations of intent. These differing time frames undoubtedly represent one reason why economic reform programmes are increasingly emphasising the importance of legislation and of institutions based on law.
This lays down another conceptual premise. The statutes of substantive law, which have largely played the dominant role in legal counselling to date, will remain ineffectual unless they are backed up by reform of procedural law, including enforcement and the court system. Of course, such reform cannot be confined to legislative acts, but must be realised within a legal infrastructure to be created. This calls for the establishment or reform-oriented reorganisation of courts, authorities, registries and notaries' and lawyers' associations, as well as the training and re-training of those professionally concerned with the law at all levels. Equally essential is the provision of suitable basic equipment, which should not be confined to supplying computers.
It has already been emphasised that substantive and procedural civil and commercial law has its foundation not in ethnic, religious or national characteristics but in the universal structural constraints and conditions of market economies. It must be emphasised in view of the widespread nationalism evident today, that societies which are not based on a subsistence economy, with direct allocation by the authorities of collectively produced goods or meeting of needs from surplus production, need to create a formal law of contract and a system of procedures for enforcing this law. These must be geared to the universal organisation and processes involved in the production and movement of goods rather than to ethnic or religious identities and characteristics. Such ideas pave the way for a pragmatic approach. Reform of commercial law should be based on socially appropriate concepts that do justice to all interests involved, with sections from available legislation being selected and if necessary modified on the basis of such criteria following comparison of potential alternatives.
Harmonisation of European law, which is being realised efficiently and smoothly despite all the national scepticism, represents a good example of such a procedure. It also demonstrates that the specific historical features of a region both necessitate and permit development of the law in a manner reflecting these characteristics. This can be illustrated by means of corporate structures. All transformation societies are faced with the problem that the (state-owned) Soviet enterprises did not focus on maximising profits and at the same time were virtually incapable of going bankrupt, concentrating instead on fulfilling socio-political functions in the broader sense. This applied in particular - but by no means solely - to co-operatives. Neither simple privatisation nor adoption of a Western code of company law is sufficient to initiate socially just reforms. Since the problems involved are more complex and are of a similar degree of complexity in all CIS states, a supranational approach should be adopted in seeking solutions. This appears all the more appropriate if it is remembered that current enterprises are the result of a deliberate policy of specialisation that covered all republics. Co-operation projects would be engaging in over-simplification if, in the face of these problems, they concentrated solely on privatisation and competition.
In this context it might be an attractive prospect to recall the - positive and negative - experiences with integrated development projects in which numerous activities, institutions and structures have indeed been combined, organised, simplified and co-ordinated. The impossibility of reducing corporate policy and corporate law in market-oriented societies to the issues of competitive practices within transitional periods having limited duration is moreover demonstrated by the de facto inability of large enterprises to go bankrupt. This too touches upon experience in social and legal terms that can be drawn upon in dealing with the real structural conditions found in market economies and with the related commercial legislation.
The reference to the structural conditions of the market and their influence on private and commercial law is thus extremely broad-based. It provides the premise and the foundation for the recommendation that the new states should not each have their own national legislation giving rise to a fragmentation of the law which, rather than helping to create national identities, is more likely to further impair the cohesion of markets that have long been interdependent. There are undoubtedly cultural and traditional features which are reflected in the law, for example in family law or the law of succession, and whose legitimacy is not subject to dispute. International legal counselling should exercise extreme caution when dealing with such areas, confining itself to highlighting the varying consequences of different legislative programmes. Such reservations do not apply to modern private law; where special traditions exist, they can be readily integrated into legislation as business practices.
It must be assumed that an advisory concept which involves international or at least regional harmonisation of commercial law will encounter resistance in the newly independent States, through recollections of an unpleasant tradition of imperial encroachment. It is one of the paradoxes of the transition era that such resistance goes hand in hand with the conviction - shared by the nationally oriented legislative commissions - that existing close links with Russia should be maintained. In this situation, legal counselling is faced with a difficult task. To make things easier, however, it is possible to justify harmonisation of the law by putting forward a factor which does not relate to legislation in transformation states and is therefore accepted as neutral. This is the indisputable fact that in recent decades major progress has been made in harmonising commercial law in particular, with moves towards establishing a form of global private law or lex mercatoria. It is this area that we find the majority of international agreements as well as pilot laws that have won extensive recognition.
One of the oldest examples of international harmonisation relating to the movement of goods and money is provided by legislation on bills of exchange and cheques. In this case it is easy to point out that all national legislation is based on international agreements which leave little scope for specific national provisions or, where they do offer such leeway, formulate and prescribe precise alternatives. It goes without saying that legislation in these two fields is of immense importance in simplifying the international payment transactions essential in an integrated world economy.
These areas in themselves concern key aspects of private contractual and property law. The relationship is still more apparent in the case of the 1980 UN Convention Relating to a Uniform Law on the International Sale of Goods, which has not only been ratified by many countries for international sales contracts, but has also influenced modern national legislation on the sale of goods, such as that contained in the new Russian Civil Code. There is little to suggest that similar efforts at harmonisation would not prove successful for other types of contract such as those pertaining to work, services or loans; indeed, such moves are now being made at the European level.
Other major legislative areas featuring substantive harmonisation include transportation law and the law of intellectual and industrial property. Here again, these are fields which are characterised by their international nature and in which economic necessities have prevailed over ideological and national barriers.
Also of considerable importance are the standard terms, for example regarding letters of credit, published by the International Chamber of Commerce. Although these do not have the force of laws, conventions or even general terms of business, they are nevertheless recognised and applied world-wide. Lastly, attention should be drawn to the sharp increase in commercial arbitration over recent decades; this has contributed to the development of an international "lex mercatoria" wherever there is too much insistence on national sovereignty in law-making. One example that must be mentioned relating to arbitration and thus procedural law is the success of the UNCITRAL model law on international commercial arbitration. Russia has already adopted this law with minor modifications; although it is applied only to international disputes, it will at any rate help to provide a form of assurance for foreign business associates. The uncertainty prevailing during the transformation phase would have provided good reasons for adopting the model for national disputes also and amending existing legislation on national arbitration accordingly, as has been recommended to the Georgian government and is done in Germany.
Any attempt by legal counsellors to encourage international harmonisation of law in the face of clear political opposition from the governments in the individual countries might well be considered presumptuous and would probably be doomed to failure. In spite of all national and nationalistic sentiments, such opposition does not seem to be overly powerful. Endogenous attempts to harmonise legislation are impossible to overlook. Their clearest institutional embodiment is represented by the permanent interparliamentary conference of the CIS states, whose commission on the unification of legislation is endeavouring to curb fragmentation of the law. Legal counselling aimed at promoting harmonisation is thus not obliged to impose alien concepts against collective opposition, but must simply reinforce a trend which is in any case apparent in all CIS states. Foreign experts can at the same time reinforce the trend towards establishment of dialogue across sovereign frontiers to permit joint elaboration of texts that do justice to all interests involved.
Unfortunately, international legal counsellors do not always work with these ends in view. In some cases inspired by a form of national pride convincing them that their own country's legislation can be exported, and in other cases simply on the basis of ignorance, advisers from various countries offer various States different laws, often without any consideration for the urgent need of stability and continuity of still fragile legal systems. They may be virtually identical in terms of material results and differ more on account of historical circumstances relating to the legislative procedure rather than for structural reasons. To ensure that codification practices in the transformation states are as uniform as possible, it is urgently recommended that the organisations seconding personnel require their experts to co-ordinate their activities and that the organisations themselves co-ordinate their operations. The concept of codification practices should be taken seriously; this means that the Common law model should preferably not be used, even though it too is now moving in the direction of more systematic codification. It has been pointed out in greater detail elsewhere that this model is based on decision-making and contractual practices used in courts and law offices by legal experts of a type which do not exist in the transformation States at present and undoubtedly will not do so in the foreseeable future. Given this situation it is advisable, for pragmatic reasons, to employ detailed forms of codification, especially as this practice reflects the law-making traditions of both the Soviet Union and the pre-revolutionary era.
Such considerations were frequently disregarded during the first phase of legal reform. In the Russian Federation, for example, various laws which simply imitated American legislative acts were proposed and accepted. They had been "imported" by American experts who knew little about the history of (civil) law in Russia or ignored the peculiarities of Russian legislation. An interesting example of this approach is provided by the preparation and enforcement of legislation on trusts. Under American law the owner can entrust the management of property to another person who then acts as owner vis-à-vis third parties. This legal concept is unknown in Russian law and indeed in continental Europe as a whole. The advisers nevertheless presented the American system to the Committee on the Management of Public Property, which passed on the draft to the Russian parliament. After parliament had rejected the draft on the express grounds that it was incompatible with Russia's system of civil law, the authors of the law and the committee opted to submit the law to the President of the Russian Federation, who for his part put a sizable proportion of the draft into effect in the form of a decree. However, this by no means guarantees that the rules will actually be applied. An ordinance on joint stock companies based on the American system was enacted in a similar way and has likewise encountered major problems in its application, starting with registration of companies. Similar difficulties have occurred in other countries and with other laws such as stock-exchange legislation.
The recommendations set out here do not aim to set a debate in motion within the personnel-seconding organisations as to their role. What is essential is a frank dialogue with the project partners to discuss the problems of regional and supraregional standardisation of codification practices. It is becoming apparent that initial experience and disappointments are now causing such dialogue to be demanded more insistently than in the early days of the transformation process. One helpful aspect is the fact that during Russia's pre-revolutionary era there was always a willingness to study the experiences of other countries, to analyse their applicability to Russian conditions and to take over ideas that were clearly beneficial and did not conflict with Russian customs and traditions. The historian N. M. Karamzin points out, for example, that Ivan III, the founder of the Russian state, "was keen to take over everything that was useful from the Europeans, while at the same time retaining Russian customs." The law was just one of the areas to which this applied. It was not until the Soviet era that steps were taken - reflecting the prevailing hostility to theories of social convergence - to prevent comparison of laws either with or without normative intent.
Another likely area of conflict for co-operation projects in the legislative sphere is the introduction of special commercial law, for example in the form of a corporate code and/or commercial code. Two traditions can be distinguished as far as codification practices in continental Europe are concerned: some countries (such as Germany, Austria and France) have a separate commercial code, which originally also included company law, while others have for the most part integrated commercial law into their civil code (e.g. Italy and, more recently, the Netherlands).
There was a time in Europe when this issue was debated on the basis of ideological premises. Such a debate is familiar to most of the transformation states, where it is still likely to meet with considerable interest, as a similar debate on the existence of two categories of law was also carried on - albeit with a different orientation - in the former Soviet Union. Under the centrally controlled economy there had been great support for a concept of separate economic law, which was based on the unity of administrative-law and civil-law provisions and which thus highlighted the leading role of the State. During the transition to the market economy this tradition gave birth to the idea that entrepreneurial activity always required special provisions and that a dual system of both a Civil Code and a Commercial Code should in some way be retained. A whole series of draft commercial codes was elaborated but failed to win acceptance in countries such as Russia, Georgia and Uzbekistan. The ideological dispute in Europe has now long since been resolved. It has become apparent that individual solutions are attributable not to specific national characteristics, but rather to historical necessities. It is indeed the case that both concepts have found favour at different times with governments of varying colour, no matter whether conservative or progressive, nationalistic or inclined towards free trade.
Legal counselling should adopt a pragmatic approach. In view of the extensive need for reform, however, it is preferable to integrate the traditional aspects of commercial law into the civil code as is now the case in the Netherlands and is planned in the above-mentioned transformation states. This does not rule out the option of elaborating commercial law and other private-sector legislation at a later stage. Such a process should not be burdened by superfluous ideological disputes.
A distinction must be made between the harmonisation of law on the one hand and the differing treatment of national and international issues on the other hand. The more or less general reception given to the UNCITRAL model law on arbitration has already revealed the existence of diverging views on this matter, which are likewise reflected in specific investment laws for non-nationals and in other special laws on foreign trade and payments. One side adheres to the view that nationals and non-nationals should be treated equally and opts against both negative and positive discrimination in substantive and procedural law; it thus opposes special investment laws and is in favour of permitting arbitration proceedings for all issues in the same manner. By contrast, the other side firmly believes that foreign investors and business associates, in a situation which is totally unfamiliar to them, should enjoy special protection, at least during the transitional period. It must be added that this problem area is also the subject of dispute between the authors of this study, with the result that they pursue different counselling approaches in this field.
The outline of the context and the analysis of the legacy of the state-controlled economy should have made it clear that legal counselling is called upon to perform a highly complex set of functions in development projects. The elaboration of legislation demonstrates with particular clarity the political, social, economic and cultural dimensions and problems of the transformation process. The political dimension is derived from the fact that in the newly independent States the institutions and procedures of democratic legislation cannot draw upon any tradition burdening them with responsibility for the consequences of their action. The social dimension stems from the knowledge that everyone, including those involved in the reform process, must inevitably feel uncertain as to what position they will occupy in a restructured society. The existence of an economic dimension is founded on the fact that most of the population have seen their living standards fall during the initial years of the transformation process and consequently view this transition as a personal crisis. Last but not least, the cultural dimension has its origins in the fact that market-oriented civil and commercial legislation emphasises a country's integration into the global economy, a development which is accompanied by the perceived loss of specific national or regional traditions and their economic basis.
Opportunities to articulate such difficulties are essential. It is therefore important that advisory projects form working parties comprising representatives from as many different areas as possible. Such broad-based working parties have two advantages. They help to establish or reinforce the legitimacy of the cooperation and ensure that the results of the work are accepted by the legal profession and politicians alike. At the same time, the group discussions give rise to a wide variety of learning processes, ranging from familiarisation with legislative techniques and procedures to modification of the curriculum at law schools in cases where academics are involved.
Even when the counselling focuses on urgently needed reforms, it is still essential to consider the aspect of long-term institution building and long-term training reforms. This implies that development organisations, with the project purpose in view, should not react to inadequacies in counterpart agencies - in other words governments and parliaments - by setting up new institutions such as the well-equipped "Legal Reform Unit" of the type favoured by some international organisations. Instead, efforts should be made to normalise legislative procedures and strengthen the institutions which in the long run will have responsibility for law-making, namely government and parliament.
In order to counteract the dissipation of efforts currently in evidence, it is advisable to concentrate the expertise needed for technical preparation of substantive and procedural legislation in the civil and commercial spheres in one specific ministry. This ministry, rather than the cabinet, a parliamentary commission or even the president's office, should be responsible for elaborating draft bills. Once a ministry has assumed responsibility for preparing legislation, it will also develop the expertise necessary for determining what laws are needed to supplement the main codes and to what extent national laws can be expanded and standardised by ratifying international conventions and adopting model laws.
In order to eliminate at the same time the undesirable practice of having a wide variety of reform commissions and committees, the ministry should be authorised to set up such commissions, with as broad-based a membership as possible, under its own supervision and coordination. Legal counselling by foreign experts could then be integrated into these commissions.
The members of such commissions should include representatives of the legal professions, in other words not only ministerial officials but also judges, public prosecutors, lawyers and notaries (insofar as these professions exist), and representatives of the academic world, i.e. respected teachers and researchers from law schools or the Institutes for State and Law. It has become apparent that there is close personal contact between the academic world and representatives of the political sphere, particularly in smaller countries. High-ranking ministerial officials and even ministers often teach at universities; and there are almost always a number of highly respected older professors held in esteem by young politicians, now in office, whom they once taught. Formation of such broad-based commissions is thus unlikely to present any problems.
There may be a certain conflict of aims between this approach and the desire to introduce legislation as quickly as possible during the transformation period. However, experience has shown that the laws hastily drafted and enacted at the beginning have fallen short of expectations. At the same time, the working parties permit the learning processes necessary to ensure long-term stability. In addition to the elaboration of laws, they offer scope for inspiring commentaries, publications, textbooks and curriculum changes.
What is more, involving all the legal professions in legislative projects provides access to the institutions and individuals who will be required to implement the reforms. It may be the case that courts articulate training and equipment needs relating for example to registration, a field which must operate efficiently in a market economy based on decentralised ownership, the existence of commercial enterprises and a well-developed system of credit and credit securities. Such needs can range from familiarisation with new legislation to opportunities for practical training at (registry) courts in the West or designing and printing of forms.
These recommendations would remain incomplete without reference to the major problems attached to co-operation within interministerial working parties, the result of the above-mentioned competition and uncertainty prevailing during periods of radical change. The tension between individual ministries or their personnel may well be such that they are more prepared to see important legislation blocked altogether than to allow "competing" ministries to contribute to its elaboration. This can lead to serious delays, to expenditure of a disproportionate amount of time and effort on the necessary counselling, and to situations in which the conflict of aims between appropriate time frames and co-ordinated counselling is resolved by opting for the former. Such a state of affairs confronts the advisers with delicate tasks for which there exist virtually no general guidelines.
Alongside institution building and selection of the direct target groups for legal counselling projects, another key area of co-operation in this field involves establishing legislative priorities. It has already been pointed out that during the early days of market-oriented legislation, priorities in many countries were often determined by ideological preferences rather than by needs for an indispensable general framework. As indicated, laws on competition were enacted in countries which did not even possess a general law of contract or the related legislation governing procedures and the court system. Special investment laws were introduced to attract large-scale foreign investors without any form of national company law having been adopted. Some states brought in special laws on the establishment, organisation and winding-up of state-owned enterprises but not - as the generality principle demands of laws in market economies - general legislation on companies and insolvency proceedings.
It has by now probably become clear to all actors that a change of priorities is necessary. The transition from the state-controlled economy to a structure of decentralised ownership, and thus to a system in which the participants in market processes - whether independent individuals or bodies corporate - take their own decisions at their own risk be it negative or positive, perceives economic relations within the concept of contract, which governs the handling of goods as well as the credit and credit security systems. Such a structure calls for a law of contract and a law of tort which regulate and safeguard the handling of goods and services against payment, together with loan agreements and other credit agreements. It also requires a well-developed law of property which regulates and protects not only tangible property but also intangible property from movables to copyrights and inventions. Equally essential is legislation concerning persons and companies to organise the subjects of civil and commercial law, along with a general law on insolvency which lays down the rules for proper winding-up of economic entities that have failed. Finally, it must be possible to enforce all these substantive laws by way of legal proceedings, necessitating reform of not only the law of civil procedure but also court organisation and judicial execution.
The laws referred to above are all extremely complex. Apart from their technical aspects, they also touch upon highly sensitive political issues such as the relationship between the state and the private sphere, the organisation and extent of private ownership, and the relationship between freedom of contract and protection of the socially weaker party in areas such as consumer protection. The considerable demands which this situation imposes on the content of the draft legislation and on the counselling methods used will now be highlighted by way of a number of examples.
The economic and legal uncertainties prevailing in the transformation states have made the existence of a comprehensive civil code a vital prerequisite to the development of market-economy relations. The Russian Federation's new Civil Code, for example, is based on continental European models but does not totally abandon traditional concepts. Under the latter, civil law too was oriented towards the interests of the state. As a result, state-owned enterprises and co-operatives enjoyed a status under the law concerning persons that cannot easily be reconciled with the structural principles of civil law in this field; moreover, special provisions covering the administration of special types of property existed alongside the normal civil law of ownership and contract. Although aware of the specific administrative nature of these legal entities, both parliament and the legislative commissions felt that Russia's economic situation made it necessary to retain provisions on ownership and special forms of administration for state-owned, governmental and municipally owned enterprises. This view is not shared by experts outside Russia. They believe that constructions like governmental enterprises and operational or full economic management are relics of an economic system which is from the outset incompatible with market-economy structures and the organisation of enterprises (still) in state ownership. They recommend that such constructions be eliminated and replaced by forms of organisation and types of contract generally found in civil and company law, particularly as the special provisions involved privileges but did not safeguard public finances in general.
This is an open controversy which, notwithstanding basic support for the idea of legal uniformity, should prompt, at least in problem areas of this type, a variety of legislative initiatives creating wide-ranging experience that can contribute to renewed attempts at harmonisation in the medium term. The model Civil Code for the CIS is based on Russian concepts. With regard to these hotly debated areas, however, it should be clear that differences in approach of the kind currently being pursued in some countries cannot be interpreted as opposed to the basic desire for legal uniformity.
Modernisation of land law is one of the key problems and politically most controversial areas in the reform of civil law in all former communist States. Remarkably, land has retained the position of high regard and outstanding importance assigned to it in traditional societies. Apart from being a direct source of food, it serves to support the family and forms the foundation of the people's history. It was not freely available in either feudal (i.e. pre-revolutionary) or communist societies, albeit for totally different reasons in each case. It is thus quite understandable that it should be considered unreasonable from the emotional viewpoint for land to be suddenly relegated to the status of a normal economic asset - in line with the structural necessities of modern commerce - and become subject to private ownership, with the result that it can in principle be used as the owner thinks fit.
Given the difficulties in abandoning traditional relationships with land in favour of division of land into plots, reform of legislation in this field has to date been hesitant and full of contradictions. However, the urgently required creation of a comprehensive Civil Code which is now imminent does not permit further delay in resolving the land-ownership issue. Provisions on land ownership form an essential part of the law of property; the large-scale privatisation of housing must take into account the ownership of the land on which the houses are built; and modern law on credit securities is inconceivable without the possibility of charges on real property.
Experts involved in elaborating a civil code can regard these key issues as technical problems and seek to resolve them in a manner which deliberately resorts to professional instrumentality by presenting alternatives derived from comparisons with various relevant laws. In so doing, however, they must draw attention to the empirical facts that the fabric of apartment buildings cannot be preserved in any country unless the apartment owners have a material interest in the building and thus also in the land; that investors courted in abstract political terms insist on having secure rights of disposal in respect of their durable assets and this can be permanently achieved only through land ownership; and that charges on real property are essential to permit the full development of private construction activity, consumer demand and a credit and banking system, all of which are vital for economic revival and development. The expert's advice may help eliminate ideological aspects from the land-ownership issue by reducing it from a politically sensitive area to a normal legal concept. There are obvious clear risks attached to the question of land ownership. Privatisation can lead to a loss of power on the part of traditional state bureaucracies which previously had the authority to administer and dispose of land. This applies to bodies such as agricultural authorities, management councils in the agro-industrial sector, the management boards of the remaining collective farms and housing offices. The latter are responsible for construction, allocation and maintenance of housing and would cease to have any justification for their existence, should systematic privatisation that included the land on which the houses were built, take place. Within the context of legal counselling it must be expected that, rather than basing their arguments on their own specific interests, such bureaucracies will draw attention to the traditional special position of land, pursuing the type of political and emotional debate which restores ideological status to the problem of private land ownership and has many supporters among parliamentarians in the transformation states. This creates the risk that a key element of civil legislation may be blocked or at least delayed. As this would inevitably obstruct the reform process, such a development would have serious social consequences and lead to impairment and dissipation of assets.
The reasons backing the recommendation that legal counselling projects be not designed as simply legislative projects, but be used instead for institution building, professional training and encouraging university curriculum reforms, have already been exposed in this paper.
Given the lack of confidence in the law in transformation states, efforts should be made beyond this current close professional co-operation to reach broad sectors of the population and to inform them as to both the existence and the enforceability of rights and obligations in particular laid down in universally applicable laws. This can take place immediately in relation to the development of laws by ensuring that projects important to the public are presented and commented on by the media in a generally accessible manner. Another possibility would be to circulate simple descriptions, designed for the layman, of the type distributed after the German Civil Code came into force 100 years ago. Such material could be used to initiate awareness-raising campaigns and educational measures in schools and adult education institutions; these should be conducted by trade unions, political parties, churches and other organisations with the support by current projects.
A further level is represented by efforts to encourage the public to avail itself of its rights. Recourse to the courts is the traditional approach, preceded by consultation with lawyers. In view of the shortage of persons capable of giving legal advice, one option would be to have projects support legal advice services, which could be independent or attached to courts or state authorities and which could focus on crucial everyday problems. This would enable even advisers lacking full legal training to offer valuable assistance. Such a system could be based on concepts from the USA (legal aid clinics), Germany (tenants' and consumers' advisory services) or Third World countries (services de parajuristes). Finally, reform laws could provide for conciliation mechanisms which appeal to people's public spirit and sense of community and which, while not replacing formal resolution of disputes in court proceedings, could at least relegate this to a position of secondary importance. For example, under Georgia's law on housing ownership, owners must first of all attempt, by way of formal proceedings, to settle disputes on matters of common interest relating to the building; only if this proves unsuccessful are they allowed to have recourse to the courts. Such methods for amicable resolution of conflicts, which could take the form of legal action based on formal criteria, are no doubt suitable for use on a broad scale, although experience indicates that they would have to be limited to everyday problems.
A co-operation project seeking to implement the ideas put forward here in reforming civil and commercial law has been in progress since early 1993 in Georgia, which is one of the smaller CIS states, faced with immense political and economic problems. Various elements of this project have been highlighted as examples elsewhere in this paper. The project has confined itself to the assignment of short-term experts supported by a Georgian project co-ordinator. The importance attached to legislative reforms by the Georgian leadership is reflected in the fact that such reforms have been made the subject of Georgia's first major co-operation project with Germany. There is indeed a growing awareness that radical reform of legal institutions and commercial law is essential to halt the decline in production and the increase in illicit economic activity and to permit the politically desired transition to a social market economy.
Once the necessary framework had been laid down and co-ordination established in Georgia, the participants drew up a co-operation schedule setting out a list of priority legislative projects, the names of those responsible for drafting the legislation, the periods of time allowed for the work and other project components (training, conferences, publications, production of forms). Save for minor amendments to details, it has on the whole been possible to keep to this schedule, including the time frames.
Selection of the persons responsible for initial drafts of the various laws was based on criteria relating to experience, access to material permitting legal comparison, and familiarity with specific traditions and cultural factors. The Georgian experts were thus assigned the law of contract, the law concerning persons, family law and the law of succession, while the German experts assumed responsibility for drafting the laws on bills of exchange, cheques, housing ownership, companies, property, copyright, chambers of commerce, competition, insolvency, court organisation and civil procedure, along with private international law. In each case the side not responsible for elaborating a particular law undertook to produce a written appraisal of the draft, after discussion of which the definitive draft was to be submitted to the Cabinet of Ministers.
The co-operation schedule demonstrates that legislative priorities focus on laws providing a framework for trade and movement of goods as well as on organisation of the market participants, and that substantive and procedural law have enjoyed equal status from the outset.
The emphasis was on a pragmatic approach based on comparison of laws. In order to arrive at modern and equilibrated concepts, inspiration was drawn from various national laws as well as from moves towards European harmonisation. This helped counter mistrust towards the "export" of legislation from Germany.
Efforts have been made at all times to set out the basic orientation and individual legislative projects to both experts and the general public. The technical content of the work has been explained in the course of discussions with parliamentary commissions, ministers, the head of state and even the Patriarch of the Georgian Church, as well as in newspaper articles and interviews and on radio and television.
In addition, international conferences focusing on a variety of issues have been organised with assistance from the project. Several conferences, which included Russian, Dutch, American and Italian participants, were essentially designed to set out the project's work and gave the members of the commissions extensive opportunities to describe their activities. Their papers have been published and thus remain accessible to experts.
Finally, those with political responsibility for the legislation (Minister of Justice, chairman of the parliamentary legislative committee, chairmen of the legislative commissions) are invited by colleagues to visit Germany for practical exchanges of experience. Visits have been made to the Ministries of Justice and Land parliaments in Bremen and Hesse; visits to courts have also given the Georgian Minister of Justice the opportunity to gather information about land registers and registration in general.
In preparation for implementation of the laws, the project organises training measures. Judges spend from two weeks to six months at the Bremen local courts familiarising themselves with the commercial register and work of the land registry, while lawyers as well as office clerks have spent periods of several months in law firms. Scholarships were and are provided to allow for in-depth-analysis and publication of books in Georgian on problems of civil, insolvency and civil procedure law. The project plans to implement further training measures of a highly practical nature.
One tangible result of the Georgian judges' time in Bremen was the designing of forms for the commercial register and land register, which merely had to be adapted to Georgian circumstances. The Georgian Ministry of Justice has in any case decided to locate responsibility for registration with the local courts, with a view to making the courts less intimidating and transforming them, at least in part, into institutions geared to meeting the public's interests.
While publications to date have been confined to the results of the conferences and articles in the daily press, the laws elaborated by the project are now being published, disseminated and commented upon as widely as possible, a first commentary on the Law of Entrepreneurship having been published in 1996, followed by commentaries and textbooks on the Civil Code and other pieces of legislation.
1. Transformation States are currently witnessing a process involving numerous actors and a large variety of time dimensions. Its general direction and results have as yet by no means been definitely fixed. The overall goals, such as creation of a market economy and a constitutional state, are in many cases too abstract to be operational, especially as there is or was no spontaneous movement towards these goals.
In a process characterised by a high degree of uncertainty, statutory law - which has the specific quality of determining reasonable expectations in the short, medium and long term - can make a positive and indeed indispensable contribution to creating a framework for macroeconomic and macropolitical changes. However, the law-makers must keep the intended time frames in mind with the aid of appropriate regulations. It has often been the case that the initial phase of hectic law production has focused on long-term aspects, no attention being paid to active stabilisation of the transformation process in the short and medium term through creation of legal structures.
A different approach must be adopted in the next phases. Statutory law geared from the outset to a limited time frame should be introduced to back up the transformation processes, while at the same time the long-term aspect of creating sustainable conditions for a developed, socially- just market economy should be tackled slowly and deliberately. This would make it easier to encourage research in the field of comparative law, which is the most effective way of gaining information on the expediency of various forms of legislation in individual countries.
This recommendation is addressed not only to national legislators but also to bilateral and multilateral institutions which organise legal counselling. Two fundamental mistakes of conventional development aid are again apparent in this field: the unrealistically short time frames for project planning and implementation, which are starting to be modified once again, and the lack of co-ordination, which can even take the form of undesirable competition and futile "wars of influence" of contractors. In some countries a variety of donors are engaged in reforming civil and commercial law, despite the fact that pooling their resources would release funds for sustainable institution building (courts, authorities, professions). Realistic time frames and co-ordination are essential, even though such a recommendation may appear as naive and trite taking into account the history of development co-operation.
The difficulty of finding the right balance between expedient implementation and perfection when selecting a piece of legislation from among a variety of alternatives can be highlighted by a quote from the renowned German legal expert Franz von Liszt, who in 1889 sharply criticised the draft civil code in existence at that time and concluded his comments as follows: "I nevertheless wish with all my heart that the draft becomes law, and the sooner the better. Legal misgivings are of no significance where the legal unity of the German people is concerned. I would support any draft of a uniform civil code. We must teach our sons and grandsons to make a better job of things than we have done." It should also be remembered that more than a few German judges took retirement when the Civil Code was enacted because they were not prepared to support reforms that were far less dramatic than those which the transformation states are undergoing today.
2. Only during the relatively short era of European nationalism in the nineteenth and early twentieth centuries was there a general - albeit disputed - view that private law should be subject solely to national provisions. Given their universalist orientation, neither the past systems of (natural) law nor the current trends towards supranational harmonisation of law at a wide variety of levels correspond to this view. Indeed, such an opinion cannot be upheld in an integrated world economy which makes it clear that risk distribution and balance of interests embodied in law are derived from the structure of globally integrated movement of goods and that the rationale on which this is based calls for harmonisation and standardisation. Looking at things from this angle, legal counselling to transformation states should emphasise the need to counteract legislative fragmentation and aim to bring about harmonisation which, however, must always be the result of both dialogue and the counselling process.
3. Even the best legislation is of no use if not implemented. Indeed, disappointment at failure to put a law into effect may even reinforce the negative aspects of a social problem which legislative reform is intended to eliminate. Awareness of this fact, established in the course of American and European implementation research, is now also starting to assert itself in the transformation states. As a means to precluding or at least minimising negative effects and generate positive impacts wherever possible, legislative cooperation projects will be required to focus more on realising positive implementation measures and on promoting the creation of a suitable legal infrastructure. This involves setting up, restructuring (where appropriate) and equipping professional institutions (courts, authorities, lawyers' and notaries' associations, training and upgrading facilities), publishing, disseminating and popularising laws, and informing citizens about their rights and how to enforce them. Importance must be attached from the outset to ensuring that counselling produces results which appear supported by a general consensus rather than imposed from outside.
One significant recommendation must be added in this context. Elaboration of laws and legal counselling are not investment-oriented state functions and should therefore under no circumstances be financed by means of loans. Such financing is at odds with fundamental budgetary principles.
4. To counteract the long-standing trend towards a form of legal nihilism, it is essential that co-operation in this field be a highly open process. First and foremost, this means that the relationship between foreign and local experts must be characterised by intercultural understanding in order to permit broad-based general discussion of draft legislation and other legal issues. Such debate should nevertheless involve more than just legal experts; the mass media in almost all transformation states are today willing to help extend it to the general public.
5. Foreign legal counsellors must be well prepared for their demanding work. While it is undoubtedly useful for them to have a command of the relevant national language, experience has shown that theoretical legal knowledge and practical experience are far more important. Such know-how must encompass the legislative traditions and situation in the country concerned as well as practices relating to application of the law. Only if they possess such knowledge can foreign experts help determine priorities or pinpoint and fill gaps. It is advisable for counsellors to be involved in elaboration of laws from as early a stage as possible, since they can then play a part in giving the legislative process a clear and systematic orientation.
6. The professional contribution of legal counsellors can take the form of written expertise on draft legislation, which should nevertheless be presented in oral form and subsequently discussed to permit both quality control and know-how transfer. Counsellors could also elaborate draft legislation themselves, provided that it be guaranteed they set out both the sources of their inspiration and the reasons for the content chosen.
7. Now that a certain transitional period has elapsed and there are unmistakable signs of disappointment at meagre results, consequences of nationalistic segregation and indeed counselling work itself, the time has come to take stock, analyse what has been accomplished so far and use the findings to determine the next steps. Members of legislative commissions of all countries in transition should have the opportunity to exchange information and experiences on a regular basis and should set out details of their work on priority aspects of substantive and procedural law in the civil and commercial fields with the aim of achieving harmonisation. The organisational prerequisites for implementation should also be discussed, including making the legal infrastructure as uniform as possible. All in all, it ought to be feasible to elaborate a specific, coordinated list of support measures on the part of co-operating institutions and to put forward reasons why what measures are necessary. It would therefore be important for the institutions concerned to participate in such exchanges of information
Working conferences of this nature should play a part in promoting integration of the legislative reform process. The flow of information and exchange of views could be placed on a systematic footing and channelled via national working parties. A possible way of achieving this would be to strengthen the Interparliamentary Assembly of the CIS States in St. Petersburg as well as various bodies such as the Scientific Consultative Centre for Private Law. Recognising these institutions as valuable partners does by no means imply the recognition of territorial boundaries let alone sympathy for dreams of re-instalment of the Soviet empire. It simply appreciates the fact of lasting professional and scientific relations and a rare concentration of experience and knowledge.