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publication December 11, 2019

Commercial Justice in Bosnia and Herzegovina – Time for Reforms!

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Highlights

  • A weak judicial system is perceived as a severe obstacle to doing business in Bosnia and Herzegovina.
  • The analysis of available data shows that large case backlogs, long processing times, low clearance rates, and overly complex procedures are typical traits of the country's court system.
  • The collaboration between government and judicial institutions in the country is vital to moving forward and getting the most out of the reforms.

The latest national statistics in Bosnia and Herzegovina (BiH) confirm the weakness of the judicial system there, with the average duration for commercial cases in key courts exceeding 500 days for first-instance proceedings (700 days in small-claim cases), and 900 days for appellate proceedings. 

Efficient commercial justice is essential for attracting investments and securing a healthy and prosperous business climate in the country. The inability of businesses to uphold their rights in court creates legal uncertainty and leads to a stagnation of private investment - hampering economic growth.

In some instances, poor court performance incentivizes businesses to solve their disputes informally, outside of the realms of the legal system, while in others it leads to vexatious litigation and abusive practices. Micro, small, and medium sized enterprises (MSMEs) suffer most from these dynamics, due to their relative power imbalance.

In recognition of these challenges, the authorities in BiH have committed to deepening judicial reforms at all levels to foster the business environment, competitiveness, attract private investment, and create jobs. The World Bank welcomes this initiative - as it aligns closely with the strategic pillars for World Bank engagement in BiH, notably accelerated private sector growth, improved public service delivery, and enhanced entrepreneurship. This initiative is in perfect synergy with the country's drive towards EU integration and builds upon the rule of law reform taking place there.

With financial support from the United Kingdom, and in close cooperation with the High Judicial and Prosecutorial Council in Bosnia and Herzegovina, other judicial institutions, businesses, and the professional community, the World Bank has produced a set of three analytical studies assessing key issues in commercial case processing and offering recommendations on how to strengthen commercial departments and reduce case backlogs, fast-track small-claim cases, improve procedural efficiency, and build the capacities of commercial judges. We have also produced guidelines for MSMEs to improve their access to justice.

Now that this analytical work has been completed, collaboration between the government and judicial institutions in BiH has become even more vital in order to move implementation forward and get the most out of the reform process.

This will not be an easy task, given the country’s complex governance system.

The World Bank and the government of the UK will therefore continue to provide support to key stakeholders in this process, in order to sustain momentum and ensure ownership of the reforms. With such commitment by all stakeholders, Bosnia and Herzegovina can get closer to accomplishing one of its key strategic goals: increasing competitiveness and a creating a favorable business environment for sustainable and accelerated growth.