Law in Transition Journal 2021

How can the courts be transformed?

Court reform may take various forms. The EBRD’s countries of operations (CoOs) have long sought to reform their courts to minimise corruption, increase court efficiency (that is, make them faster), and improve the quality of decisions.8

Perhaps the current crisis offers a rare opportunity to approach court reform from a different perspective. For example, the United Kingdom and Canada9 took the view that courts should deliver better public service and be more user-friendly and accessible, in particular, to litigants in person (for some categories of cases). The EBRD’s Legal Transition Programme (LTP) organised a virtual discussion on 20 October 202010 where panellists offered ways to transform court proceedings.

Panellists suggested that throughout the transformation process, policymakers should also consider several reforms:

  • Simplifying the court proceedings is one of the first steps to consider, independent of the need for digitalisation. Lawmakers and the courts should consider court processes in detail and identify bottlenecks, redundant rituals and unnecessary parts of proceeding, such as mandatory court hearings for small claims disputes or loopholes allowing delays as a result of suspension of court proceedings. These could be excluded or reformulated for certain categories of cases, creating a separate more streamlined procedure (online court).
  • Unifying court practice through commentaries and guidance for judges and the legal profession will increase the predictability of outcomes. It will also help guide litigants when deciding to file a claim in court.
  • A preliminary mediation or negotiation step is obligatory in many jurisdictions before parties may file an action in court. This allows the resolution of many cases without court intervention. Technology also makes this easy to carry out.
  • Including templates, guidance and other tools to assist the litigants is essential in saving costs and time for the parties, as well as providing parties with the confidence to act on their own and navigate court proceedings.
  • User-friendly and intuitive technical solutions are another essential ingredient in the transformation of court processes aimed at improving access to justice. For example, in Canada, the reformers modelled the online court with a user-centric approach in mind (that is, the public comes first) to achieve simplicity and familiarity for the users.11 In Singapore, they offered pre-filling assessments to help litigants structure their disputes,12 while in China, service of documents was enabled via text messages, emails and WeChat messenger.13

During the aforementioned EBRD event in October 202014 there was consensus among the experts that to achieve better courts and public service the policymakers need to consult the public and understand their concerns. The best way to do this is to map out litigants’ experience by asking parties to provide feedback on each step of the process, including during piloting stages.

It is worth noting that improving access to justice through online, user-friendly processes may have a significant impact on access to justice for the more vulnerable categories of the population and the businesses they run (such as women, people with disabilities), although, so far not much data have been gathered to back this claim. In countries that set up online courts, there is a perception that women users outnumber men, and women access online courts at a proportionally higher rate than traditional courts. The EBRD study on access to justice of women entrepreneurs in Jordan15 and the discussions during the Regional Forum for Women Judges in SEMED16 revealed there are cultural barriers to women’s appearance in courts in some jurisdictions.

“The innovative idea behind online courts is the opportunity to revisit the way court services are delivered and consider new approaches that would ease access to justice.”

Focus on commercial disputes and small value claims

Taking on the reform of the entire court system would be a gargantuan task. It may also prove not very efficient, as various parts may need differently tailored approaches, depending on the type of case – criminal, family, commercial, labour, and so on. Most jurisdictions implementing online courts started with limited categories of cases. In Canada, the Civil Resolution Tribunal started with small claims of up to US$ 5,000, motor vehicle accident and injury claims of up to US$ 50,000, as well as societies and cooperative association disputes (Soc/Coop) and strata property (condominium) disputes of any amount.17 The Singaporean Community Justice and Tribunal System opted for small claims, community disputes and employment claims.18

Commercial disputes, and disputes based on small claims in particular (€5,000 to €10,000), seem
a good target for transformation and transitioning online. There are a number of reasons for this, including the need to ease access to justice for small and medium-sized enterprises. In small claims, the costs and time delays are often disproportionate compared with the value of the claim. According to World Bank data, the cost of resolving a commercial dispute through a local first-instance court in Serbia amounts to 39.6 per cent of the claim value, in Ukraine – 46.3 per cent, and in the Kyrgyz Republic – 47 per cent.19 In addition, many jurisdictions often already have a separate court procedure for small value claims.

This may mean that reform will require fewer changes to the law. Moreover, in many jurisdictions cases involving small value claims are generally examined without court hearings, based on documents submitted by the parties, making them particularly suitable for shifting online.

What are the challenges in establishing online courts in emerging markets?

As any reform in any jurisdiction, creating online courts will encounter resistance and a series of challenges. Many challenges, though, will be more prominent in the emerging markets.

Political instability and government turnover are a particular challenge in the EBRD’s CoOs. Reform of courts typically requires investments of financial resources and time. Hence political commitment, as well as leadership, is essential. In Ukraine, the new president came to power with the slogan: “A state in a smartphone”. But momentum must be maintained even as governments change: it is also important that the champions of reform have sufficient time to progress these reforms, or at least make them difficult to reverse through approved strategy commitments – or better still, by advancing them far enough for the people to realise and fight to keep the benefits of these reforms.

Insufficient information technology (IT) literacy of the judiciary and the public is another major concern in any jurisdiction. When polled during the LTP’s 20 October event, and a similar event during the World Bank Group’s Law, Justice and Development Week (LJDW) in November 2020 participants and experts in the field clearly indicated this as a major challenge to setting up online courts.20

CHART 3: Example of poll results on challenges to establishing online courts (LJDW)

Source: Online poll conducted during LJDW 2020: Urgency of Online Courts for Commercial Disputes.

Insufficient IT skills should not be regarded as a deterrent, but should nevertheless be considered when planning and designing such courts. In particular, a hybrid approach may be a solution, giving the public access to physical courts and/or guidance by court clerks as needed. Below is a snapshot of digital skills in the EU countries.

“As any reform in any jurisdiction, creating online courts will encounter resistance and a series of challenges.”

CHART 4: Internet User Skills Score (DESI, European Commission)

Note: The Internet User Skills Score indicates a combination of the number of individuals residing in EU member states with the skills they possess to use digital devices and/or the internet. The highest score indicates the higher number of individuals with basic internet and other digital user skills. The score is part of the European Commission’s Digital Economy and Society Index (DESI). To learn more about DESI, please visit

Source: European Commission, 2020.21

The significant financial resources necessary to put in place online courts pose another major challenge. While some jurisdictions that have developed online courts have deployed impressive resources to this end, the advice is to learn from their experience, as well as consider finding more affordable IT solutions. In particular, many EBRD jurisdictions have access to highly sophisticated IT resources, which may be used at a fraction of the cost of counterparts in developed markets. One of the most relatable experiences in digitising court systems for EBRD countries is the example of Estonia, which since early 2005, fully digitised its court system, offering online submission of claims. According to its experts in digital transformation, the investments in IT solutions may be recovered within two months of implementation.22

To put such savings into perspective and ascertain the potential investment required, one need only review the European Commission for the Efficiency of Justice (CEPEJ) reports on the Evaluation of the judicial systems. According to the latest report (2016-18 cycle), the annual public budgets implemented by some EBRD CoOs for court computerisation (equipment, investments, maintenance) are as follows: Armenia: €69,466; Bosnia and Herzegovina: €1,452,946; Bulgaria: €1,031,772; Croatia: €9,963,093; Estonia: €118,352; Georgia: €154,407; Moldova: €379,144; Montenegro: €382,646; Romania: €2,557,371; and Ukraine: €4,816,308.23 Note Estonia’s extremely reasonable court maintenance budget, which clearly indicates a reduced financial burden after the initial development investment.

Opposition from the judiciary and lawyers is another oft-cited challenge to online courts. The legal profession may perceive online courts as taking away their livelihoods by providing direct, easy access for litigants. In exploring this critique, Richard Susskind refers to “lawyerless courts”.24 However, depending on the type of cases deferred to online resolution, this concern may be overplayed. It is well recognised that small-value cases rarely reach the courts or, if they do, rarely require formal legal representation, due to their simplicity. Increasing access to courts may in fact raise the demand for legal services, for a smaller fee and simpler advice. As for the opposition from the judiciary, a constant dialogue and adequate training must be in place to help the transition.

CHART 5: Average participation of the implemented ICT budget in the budget of courts, annually, 2014-2018

Source: Source: European judicial systems CEPEJ Evaluation Report 2020 Evaluation cycle (2018 data), available at The three digit codes are ISO 3166 country codes.

“The Covid-19 crisis has only emphasised the structural and economic inefficiencies of the judiciary and will thus create a greater impetus for change.”


Technology will continue to disrupt and enhance the work of various sectors, including more conservative areas such as the justice sector and the judiciary. The Covid-19 crisis has only emphasised the structural and economic inefficiencies of the judiciary and will thus create a greater impetus for change.

Online courts are a viable solution for the highlighted issues. Advocates suggest that they increase access to justice for those who are otherwise deterred from resorting to court services because of the cost, duration and difficulty in navigating legal proceedings. This can be successfully addressed by adopting a user-centred approach.

With the onset of the Covid-19 pandemic, the time finally arrived to gradually reform our courts, but reform must be carried out while being mindful of the purpose of transformation and goals pursued– be it access to justice, efficiency of justice or simply modernising the justice system. We advocate for first embracing expanded and online access to justice as a goal, then designing the solutions appropriately.

Exploring blockchain in Georgia

The EBRD has always prided itself on promoting entrepreneurship and innovation, and helping advance the transition to market economies, while fostering sustainable and inclusive growth. Digitalisation fits this mandate perfectly and supports several of the transition qualities.

In late 2019 we responded to a specific request from the Ministry of Justice of Georgia to assist with identifying the possible uses of blockchain in government services delivered by the ministry. As explained below, at the time of the request, Georgia had already piloted the use of blockchain in its land registry, and the aim now was to expand its use.

In recent years, the Ministry of Justice’s efforts to innovate and improve efficiency have been lauded globally. In 2019 the Global Innovations Index ranked Georgia in its top 50 countries.30 In the same year, the World Bank’s economy rankings placed Georgia seventh for overall “ease of doing business”. Specific category rankings included: fifth place for ease of registering property, and second place for ease of starting a business. Georgia has retained its Doing Business rankings in 2020.31 These top accolades relate directly to the services offered by the Ministry of Justice.

To ensure that the public service offering remains highly efficient and accessible, the Ministry of Justice sought the EBRD’s help in exploring the use of blockchain to further improve the quality of the essential public services it provides, using the country’s well-established innovative approach.

The purpose of our assistance was to outline the specific opportunities for using blockchain in public service delivery by detailing a comprehensive and agency-specific set of use cases. The project has been led by the EBRD’s Legal Transition Programme and the Ministry of Justice of Georgia and supported by distinguished blockchain industry experts at Verum Capital AG.

Key use cases identified

The Ministry of Justice is the national government body in Georgia responsible for ensuring efficient and accessible public services to citizens through its 12 agencies. The services carried out by such agencies include: the notaries profession, registries (including land registry, real estate registry, movable property rights registry, entrepreneur and non-profit entities registry), enforcement of court decisions, national archives and legislative herald.

Through close cooperation with the Ministry of Justice and each of its agencies, in carrying out the assignment we studied the activities of, and services delivered by, each agency and devised potential use cases where blockchain can be deployed and add value to public services. For each use case, we tried to identify the specific technical requirements necessary to deploy it, as well as flag any potential legal and regulatory obstacles.

Lastly, each use case was evaluated against a measured scorecard, the metrics of which were defined in working with the Ministry of Justice. The criteria used to evaluate each use case stress the creation of value for all stakeholders, simplicity of solutions, increased impact and reach of services, valid use of the technology and potential for further innovation (see table below). These metrics have served as overall guiding principles to uphold the interests of the citizens that the Ministry of Justice serves every day.

Due to its innate features, blockchain technology lends itself particularly well to ledger-like solutions such as databases and registries by ensuring the integrity and authenticity of data stored therein.

Example: Blockchain land registry, Sweden

Piloted in 2016, the blockchain land registry ensures that land titles are stored securely in a trusted environment. It ensures, among other things: complete trust in government data; prevention of internal parties from manipulating data; verification of the integrity of government data independent of its central database and in real time to enable data interoperability between systems and across borders.

Source: Kairos Future (2017), ‘The Land Registry in the blockchain – testbed’.

TABLE 1: Use case evaluation scorecard
1. Value
Prioritises low initial investments and high operational outcome
  • ongoing improvements
  • immediate benefits to staff
2. Simplicity
Prioritises ease of integration
and low ongoing operational requirements
  • ongoing requirements
  • ease of integration
3. Impact
% of population that will benefit and the level of service improvement experienced
  • service improvement
  • reach
4. Validity
Prioritises the blockchain as a critical feature and its ongoing value
  • blockchain’s ongoing value
  • blockchain’s necessity
5. Potential
Prioritises a stepwise implementation and foundational benefits for further blockchain projects
  • foundational capacity
  • stepwise implementation

Land registries and real estate ownership records were identified early on as one of the main public services that could benefit from using blockchain. In countries with unreliable registries, implementing blockchain solutions could form the foundation for more investment in land and development of the mortgage and credit markets.

In Georgia, the National Agency for Public Registry (NAPR) currently offers sporadic and systematic forms of land registry to citizens. The NAPR currently stores the data centrally and has written hashed32 datasets written to the blockchain, ensuring that centrally stored data cannot be manipulated. With early experiments in using a public blockchain well under way, the NAPR is well poised to create an enduring solution for the Land Registry, one that leverages blockchain as an enduring solution for data integrity and creates new opportunities to automate transactions and enables new possibilities for ownership transfer.

Migrating the land registry to blockchain could attract many benefits, including:

  1. Enhanced reliability and trust. A stand-alone blockchain can improve the security of the existing registry system ensuring that records have not been manipulated by any party who might have access.
  2. Automation and cost savings. The use of smart contracts can reduce errors related to manual processing, costs-related menial work done by officials, and lower the risk of threats, phishing and otherwise, at the point of data entry, in this case the citizens’ portal. For more advanced use cases, a blockchain-based digital identity could reduce recurring procedural costs by approving citizens for registry interaction and allowing them to enter data into the smart contract directly.

Below, in no particular order, we provide a summary of some of the key use cases identified in our report.

CHART 2: Blockchain-based systematic land registry*

Source: EBRD-Verum (2020), “Distributed Ledger Technology Opportunities for the Ministry of Justice of Georgia : An Innovative Approach to Public and Governmental Service Delivery”.
*As the EBRD-Verum AG Report envisages it to be implemented in Georgia.

Debtor registry

The National Bureau of Enforcement (NBE) manages Georgia’s Debtor’s Registry, ensuring that it is up to date and publicly accessible. It is a systematised electronic database that lists individuals, legal entities and organisations against which enforcement administration has been exercised. The database is accessible on the NBE website; citizens can submit a request, at a negligible cost, to instantly retrieve relevant records. Individuals and entities are added to the registry at the moment that they become the target of an enforcement proceeding.

Migrating such a registry to blockchain could attract many benefits, including:

  1. Reduced risk for fraud and corruption. A blockchain-based debtor’s registry, similar
    to other registries, can reduce the risk of manipulation of records from parties that might have access to a centralised database.
  2. Cost reduction for involved parties. Through the eventual automation of access, the administrative costs associated with managing requests could be eliminated.
  3. Social support. Opportunities to consolidate records and outstanding debts from multiple parties could allow agency officials to support citizens with debt relief counselling based on complete information.
Example: Ukrainian Ministry of Justice Auction Portal

Piloted in 2017, this blockchain-based auction portal helps fight corruption by providing a transparent and decentralised system for the sale and lease of state properties and other rights and ensuring legitimate ownership and transfer of ownership.

Source: Reuters (2017), ‘Ukrainian ministry carries out first blockchain transactions’.

Example: Groningen Debt Assistance, The Netherlands

Piloted in 2018, blockchain supports debtors to coordinate their credit information from external parties so that government agents can easily provide debt-relief assistance and help them to be stricken from the debtor’s registry. Key benefits include secure consolidation of financial obligations for debtors and reduced administrative and legal costs.

Source: CGI (2018), ‘Using blockchain to help Groningen residents control their debts’.

CHART 3: Blockchain-based auction portal*

Source: EBRD-Verum (2020), “Distributed Ledger Technology Opportunities for the Ministry of Justice of Georgia : An Innovative Approach to Public and Governmental Service Delivery”.
*As the EBRD-Verum AG Report envisages it to be implemented in Georgia.

Auctioning of property

The NBE enables all citizens to trade online and purchase property that is being auctioned. The auction process starts by NBE publishing a statement online, announcing an auction that will last from seven to 10 days. Participants in the auction proceed to agree to terms, pay a guarantee, register via the relevant website and ultimately submit their bid online. The winning bidders are required to pay in full for purchases within 10 days or they lose their guarantee. Certified ownership documents are then issued and the buyer must collect their property within 15 days.

Migrating such registry to blockchain could come with many benefits, including:

  1. Secure payments. Guarantees can be submitted and returned instantly. This allows people to make more bids and feel more secure with how their funds are being handled.
  2. Secure transfer of ownership. Transfer of ownership can be completed instantly on auction close or after payment in full has been received with minimal administrative efforts. Citizens can prove ownership rights to avoid collection issues.
  3. Automated and secure processes. A smart contract programmed to uphold the terms of
    the auction can reduce opportunities for error by agency officials and prevent any internal manipulation of bids or pricing.

“The National Bureau of Enforcement (NBE) enables all citizens to trade online and purchase property that is being auctioned.”

General legal requirements to ensure enforceability of blockchain transactions and compliance with local laws and regulations

Lastly, when considering the adoption of blockchain in the delivery of a public service, a key consideration should be the extent to which the platform and the services delivered through it are compliant and enforceable under the local law. In a sense, there needs to be a recognition of specific actions/events as having the force of law. Such actions can be summarised as recognition of: (i) digital signatures and stamps attributed to an individual (that are able to indicate intention in a binding and timely manner); (ii) timestamps (that indicate when and by whom the action has been conducted placing it in time); and (iii) other sorts of validation relevant to a specific use case (for example, uploading of documents and agreements; approval of actions by third parties).

Enforceability of blockchain-based smart contracts is predicated on being able to ascertain parties’ identities (which may also be helpful if a dispute is presented before a court of law) and intention. Mechanisms introduced on the basis of recognised international standards and regulations (that is, European Union eIDAS regulation) such as electronic signatures and time stamps would need to be recognised and given equivalence to their written/analogue counterparts.

In addition, whether smart contracts (the computer code utilised to automatically execute certain functions on blockchain) are legally enforceable contracts themselves or form part of legally enforceable contracts, remains a fundamental question for blockchain adoption. In general, analysis of this question relies on the application of basic contract law principles with modern-day facts and circumstances.

Importantly, the inherent features of blockchain technologies (especially immutability and security) may place it at odds with data privacy laws and regulations which call for the possibility to amend, correct and delete personal data. As a result, careful analysis of local laws and regulations is required in order to ensure conformity of blockchain solutions with the local regulation in this respect.

The EBRD’s Legal Transition Programme’s Report “Smart contracts: Legal Framework and Proposed Guidelines for Lawmakers”,33 published in 2018, provides further detailed and useful guidance for state authorities considering all these issues.

“Digitalisation has found a new spotlight, so this is the perfect time to focus on digital transformation.”

“Careful analysis of local laws and regulations is required in order to ensure conformity of blockchain solutions with the local regulation in this respect.”


The cryptography that underlies blockchain technology helps increase the security of the transaction in any sort of application. Blockchain offers government bodies the ability to provide a secure, trustworthy and transparent service while improving communication with its citizens. Furthermore, blockchain is able to provide secure access to public sector data, which in the long term will help ensure all information is kept safe.

The saying “necessity is the mother of invention” rings especially true now. Digitalisation has found a new spotlight, so this is the perfect time to focus on digital transformation. Industries across the board are evolving at lightning speed and keeping up with the change is challenging. It is no surprise that blockchain has caught the eye of the government, notwithstanding that widespread implementation of it may be some time ahead.

Shepherding the government through such a digital journey needs to be a steady process. With technology changing at breakneck speed, infrastructures must be put in place to help navigate the platforms of the future. Governments must focus on the value of technology and acquiring the necessary skills.

Our work, as evidenced by our activity in Georgia, is significant progress, where it can be seen that a priority for the government is to recruit more digital and technology specialists in order to improve the government’s technical capability. We look forward to seeing this evolve and adapt through the years.

Online mediation as a response to Covid-19

Online mediation is a dispute resolution process that uses online video conferencing platforms to allow parties and a neutral mediator to “meet” remotely for sessions. In online mediation, the entire process is conducted remotely using a digital platform (a video conferencing service provider such as Zoom, Skype, Teams, and so on). Unlike a traditional mediation, the parties and the mediator will not meet face-to-face and all interactions are digital.

Advantages of online mediation

  • It makes traditional mediation services more accessible.
  • Parties can mediate from anywhere, so long  as the parties have access to a computer and
    a secure and reliable internet connection.
  • Scheduling can be more convenient, saving time and cost: parties need only consider the scheduled mediation time (no travel/logistics issues).
  • The physical distance can be an advantage for the parties in cases of high level of contentiousness: when parties are physically in the same room, their old patterns and dynamics may emerge more readily, which can negatively affect communication and negotiation.
  • Similar to traditional mediation, online mediation allows for caucusing by utilising virtual meeting or breakout rooms so parties are able to meet separately with the mediator if needed.
  • Parties, legal counsel and experts can participate easily: when the parties are legal entities (companies and so on), online mediation facilitates the participation of legal representatives, managers directly involved in the dispute and their legal counsel because they can remain in their respective offices and devote limited time to the mediation session.
  • Documents can be shared and edited instantaneously.
  • Respect of social distancing rules owing to Covid-19.
  • Mediation fills the gap for solving disputes when access to courts is limited.

Disadvantages of online mediation

  • Risks to confidentiality when using third-party applications and the possibility of third-party presence near the parties’ devices.
  • Difficulty for the mediator in building rapport with parties: absence of human insight and empathy.
  • The ability to read body language, hand gestures, eye contact and so on are all likely
    to be reduced over video conferencing.
  • Difficulties for those who are not used to technology.

Online mediation pre-Covid-19

Online mediation existed before the Covid-19 pandemic but it was not used intensively as
a traditional in-person method. For example, in Italy, the Italian General Law on Mediation (legislative decree n. 28/2010) provides that mediation can also be conducted online. Based on the law, Italian mediation centres adopted the rules on online mediation. The Mediation Rules adopted by the Special Agency of the Chamber of Commerce of Rome for Arbitration and Conciliation, include an appendix on rules for online mediation. Its official website says that: “This system (online mediation) is very quick and easy to use but it is advisable to use it when it is not possible to meet personally because mediation, to work at its best, requires the physical meeting of the parties…”36 Due to the Covid-19 pandemic, however, the use of online mediation has gained in popularity.

Online mediation during Covid-19

Since the onset of the pandemic, a number of mediation centres, where mediation has been successfully used for a long time, have promptly introduced online mediation and trained their mediators in new skills.

For example, the Singapore International Mediation Centre (SIMS) Mediation Rules provides an online mediation service. The parties requesting mediation should indicate the mode of mediation: in-person or online mediation (full or hybrid).37 SIMS has also designed a Covid-19 Protocol which provides a swift and inexpensive route to resolve commercial disputes online during the Covid-19 period. This protocol applies whether a dispute was to a material extent caused by the pandemic or legislation relating to the pandemic.38

In the United Kingdom, in response to Covid-19, while the normal procedure is disrupted, the Centre for Effective Dispute Resolution (CEDR) offers online and telephone mediations to resolve disputes and help businesses find a sustainable way forward. CEDR has designed the Mediator’s Guide to Online Mediation and the Model Mediation Agreement for Online and Telephone Mediation.39 The mediators and businesses can find the CEDR’s guidance to conducting online mediations and can book online mediation on its mediation webpage.40

“Since the onset of the pandemic, a number of mediation centres have promptly introduced online mediation and trained their mediators in new skills.”

Technical requirements for online mediation

Online mediations can provide a more cost-effective and environmentally friendly mechanism for dispute resolution. In order to create an environment which is conducive to settlement it is important that the mediator thinks carefully about the process from the outset and that he or she is familiar with all the relevant equipment and functions.41

There are certain requirements that are essential to any online mediation:

  • strong, reliable internet connection with up-to-date security software
  • computer/laptop with a microphone and high-quality camera
  • secure video conference service provider, such as Zoom, Webex, GoToMeeting, Teams, Skype or others, which has the following functions:
    • waiting room which allows the holding of all participants on their own separate lines until the mediator opens the call
    • multiple room (a “conference room” for all parties)
    • breakout rooms for the individual parties which allow each party to have their own separate virtual room where they may discuss matters with the mediator or among themselves confidentially.
  • sharing documents online
  • utilisation, if possible, of electronic signing services.

In addition to the normal rules of mediation, there are online-specific issues which need to be considered, as the mediator will not have full visibility and control of the environment where
the mediation is taking place. This includes:

  • confidentiality
  • privacy (ensuring that the parties agree that only individuals listed on the participant form may attend or be present in the rooms where each party member is joining)
  • recording (agreeing in writing that recording is not permitted)
  • planned or possible interruptions
  • active management of communication
  • explanation of how the mediation will run
  • use of phones/checking emails (agree ahead of time if participants should have email and messenger functions closed and off during the mediation)
  • having a Plan B, if there is a technical issue that arises.42

EBRD support of online mediation

The EBRD has been continuously supporting the promotion of commercial mediation in a number of economies where the EBRD invests, including the Kyrgyz Republic, Moldova, Serbia and Tajikistan, and as a means of improving the investment climate.

As a response to the Covid-19 crisis, in order to support SMEs to resolve their disputes more efficiently through mediation during and post the Covid-19 pandemic period, the EBRD launched
a technical cooperation project in Montenegro in September 2020. In the Kyrgyz Republic and the Republic of Tajikistan similar projects have been approved in October/November 2020 and will be launched at the beginning of 2021.

The situation in these countries varies in terms of the level of development of commercial mediation, but none of these countries currently has online mediation.

For instance, in the Kyrgyz Republic, the Law on Mediation was adopted in 2017, and with the support of the EBRD a self-regulated organisation for mediators entitled Republican Community of Mediators of the Kyrgyz Republic was established. There are currently two mediation centres in the country with a pool of mediators trained with EBRD support. Although Kyrgyz legislation has introduced the right of judges to refer disputing parties to the first informative mediation session and judges have received training on mediation, the number of cases of mediation is still small.

In Tajikistan, the Law on Mediation has not yet been adopted. The EBRD, through its project on commercial mediation launched in 2017, contributed to the promotion of commercial mediation and drafting the law on mediation. To promote mediation in the country, the Chamber of Commerce and Industry in the Republic of Tajikistan (CCI) established the Commercial Mediation Centre (CMC) as its structural subdivision which became operational in 2020. The EBRD project helped to develop the package of statutory documents for the CMC and organised the training of mediators. All certified mediators have been registered in the CCI mediators’ registry and are ready to start practising mediation. The EBRD, during the next phase of the project, will provide support with adoption of the law on mediation in the country and, on its adoption, will assist with promoting and facilitating the use of commercial mediation, including online mediation to SMEs.

In Montenegro, the new Law on Alternative Dispute Resolution was adopted by the parliament on 16 July 2020 and came into effect on 6 August 2020.43 The law simplifies the procedure for enforceability of mediation settlements and provides for an obligatory referral of parties to a first meeting with a mediator in some types of disputes, including commercial ones. While the recent improvements of the legal and institutional framework establish an important milestone towards increasing the use of commercial mediation, the overall use of mediation in the country remains low. There is still a high number of commercial cases causing an overload in the courts, especially because of Covid-19, which remains of concern. In 2020 the Mediation Centre, recently renamed as the Centre of Alternative Dispute Resolution of Montenegro, received 3,535 cases (2,885 cases were referred by the courts) of which 2,085 cases were settled (other cases are still pending). Of these 46 were commercial disputes from which 27 were settled and 19 are in progress.44

To achieve the aforementioned objectives, these Covid-19 response projects will assist in providing guidance on how to conduct mediations online and organising capacity-building training for online mediators. In cooperation with EBRD Advice for Small Businesses, it is planned to promote the use of commercial mediation, including online mediation, among SMEs.


Online mediation is predicted to become the “new normal”. Its simplicity ensures it is an attractive option for anyone involved in commercial disputes. The Legal Transition Programme at the EBRD will continue to support the promotion of online commercial mediation in our regions to help SMEs resolve their disputes more effectively during and post Covid-19. In addition, the EBRD aims to enhance the necessary skills of the mediators and ensure the use of mediation, including online mediation, becomes normal business practice.

Major reforms to Armenia’s insolvency system

In 2018, after extensive consultations with public and private stakeholders and the World Bank Group, we delivered a report to the MOJ containing recommendations on how to reform the insolvency framework. The report focused on two areas where reforms were most pressing: insolvency practitioners and court practice.

First, the report advised creating a more robust regulatory and supervisory regime for insolvency practitioners to address issues of malpractice. Often referred to as “trustees”, “administrators” or “liquidators”, insolvency practitioners play a critical role in insolvency systems around the world and help to administer the debtor’s estate for the benefit of creditors.

Second, the report made recommendations on how to improve court rules and practice to tackle court overload and the widespread practice of open-ended appeals and challenges to court decisions. One such recommendation was to create a specialist court to manage insolvency cases and deliver a consistent approach to the interpretation of insolvency laws and rules.

The MOJ accepted many of our recommendations, and the Centre for Legislative Development,
a body affiliated with the MOJ, drafted a series of widespread amendments to the country’s Law on Bankruptcy.47

The government moved quickly on judicial reform. On 6 August 2018 the Supreme Judicial Council, an independent constitutional state body established in April 2018 and responsible for guaranteeing the independence of courts and judges, approved the composition of a new Insolvency Court and selected 12 acting judges. This was given effect on 10 August 2018 by a decree from the president of Armenia, which provided that the Insolvency Court would start operating from 1 January 2019 in accordance with the Judicial Code of Armenia. The authorities had a number of practical tasks to administer, including locating a building for the court, furnishing it and engaging administrative staff.

Reform to insolvency legislation moved at a slower pace but on 26 December 2019 the Law on Bankruptcy was amended.

The amendments introduced major changes and improvements to the regulatory system for insolvency practitioners. For example, there are 97 active insolvency practitioners in Armenia,
12 of whom have passed retirement age and are only allowed to continue working on ongoing cases. The amendments liberalised the regulatory structure for these practitioners by allowing more self-regulatory associations of 20 or more insolvency practitioners to be created, beyond the existing self-regulatory organisation (SRO), which effectively has a monopoly on the profession. The changes also prevented the SRO from raising membership fees above a certain threshold, calculated on the country’s minimum salary, without the MOJ’s consent, to reduce the risk of the SRO fixing a high entry fee that would keep out new professionals.

Significantly, the amendments gave the MOJ a central role in regulating the profession and provided that the MOJ would have the authority to supervise insolvency practitioners’ observance of legal requirements, backed up with relevant disciplinary powers.48 At the same time, the amendments clarified and limited the SRO’s responsibility regarding supervision of professional conduct.

Another important shift in the balance of powers between the MOJ and the SRO relates to the automatic appointment system for insolvency practitioners. This system, which applies to cases where the parties fail to reach agreement on the individual to be appointed, had been run by the SRO but had lacked transparency. Following the amendments, the automatic appointment system is now under the control of the MOJ, a more neutral body.49

The legislation also addressed insolvency practitioner training. Armenia now requires insolvency practitioners to cover a minimum of 24 academic units or 18 hours of training per year and makes the SRO responsible for providing training to its members and recording their participation in such training.50

On the procedural side, the reforms helped to make insolvency proceedings more efficient. Apart from confirming the role of the Insolvency Court, they provided for an electronic exchange of documents between the court, state and local authorities and the insolvency practitioners.51

Furthermore, they introduced the rule that all civil cases connected with the debtor in insolvency proceedings are heard by the Insolvency Court, reducing the previous lack of coordination within the judicial system. Other improvements relate to the appeals process.

The amendments also clarified the process for appeal of decisions made by the court during examination of the insolvency case before the Court of Appeal and stipulated that appeals do not suspend the performance of any actions arising from such decision, unless the Court of Appeal determines that this would “inevitably give rise to grave consequences for the debtor or creditor”.

Since the main legislative amendments came into effect, the Centre for Legislative Development and the MOJ have been busy developing secondary legislation and templates to standardise certain aspects of the insolvency process. There are now five pieces of secondary legislation covering mandatory training of insolvency practitioners, annual reporting on activities by the SRO and practitioners, the register of insolvency claims, financial analysis of the debtor and guidance on lists of property owned and co-owned by the debtor.52 The Insolvency Act allows for further secondary legislation in a number of key areas, including applications for a qualifying test and enrolment by insolvency practitioners before the MOJ.

“With a new online training platform for insolvency judges, Armenia has become a benchmark for future projects of this kind.”

Perceptions of Armenia’s insolvency system

While the range of insolvency amendments is significant, the timing of the reform means that organisations such as the OECD and the World Bank have not yet interpreted them in their reports on Armenia’s insolvency framework.

A recent comparison of Eastern Partnership countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) in March 2020 by the OECD found that insolvency frameworks remain one of the weakest areas for Eastern Partnership countries, and for Armenia in particular.53 Moreover, the World Bank’s Doing Business 2020 report ranks Armenia 95th out of 190 economies for resolving insolvency, including indicators such as the time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework.54

These results do not reflect the efforts that the Armenian authorities have made in recent years to reform and improve the Armenian insolvency framework. Nevertheless, one major area where insolvency reform is still needed relates to the reorganisation and continuation of struggling businesses, as well as the liquidation of failed businesses.

This is deeply engrained in the OECD SME Policy Index, which is based on the principles of the European Union’s Small Business Act for Europe.55 It is also a principle upheld by the EBRD’s Core Principles of an Effective Insolvency System, which advocate for the importance of insolvency procedures that support the reorganisation of debtor businesses.56

Indeed, there is a major trend within European Union national insolvency systems to support early attempts by the debtor at “preventive restructuring” following the publication in 2019
of the EU directive 2019/1023 on preventive restructuring frameworks. This trend conflicts with the existing ability of creditors in Armenia to enforce their security in insolvency proceedings aimed at financial rehabilitation of the debtor.

The EBRD’s new assessment on business reorganisation, launched in September 2019, aims to present specific recommendations to the economies where the EBRD operates, including Armenia, on how to improve their legislation to use insolvency as a positive force for business rescue.57 This is vital for many businesses whose operations have been disrupted and whose profitability has been eroded because of the coronavirus pandemic.

TABLE 1: Progress in the bankruptcy and second chance dimension
and second chance
ArmeniaAzerbaijanBelarusGeorgiaMoldovaUkraineEaP average
2020 scores2.402.973.343.032.792.562.85
2016 scores3.762.872.572.942.682.052.71
2020 scores*2.733.

*2016 methodology

Scores are initially derived as percentages (0-100) and then converted into a 1-5 scale with 5 being the highest-performing score. The methodology changed in 2020 hence the chart also reports 2020 scores based on the old 2016 methodology, as well as the new methodology, which includes an assessment of bankruptcy prevention measures. Source: OECD SME Policy Index: Eastern Partner Countries 2020: Assessing the Implementation of the Small Business Act for Europe.

Operation of the new Insolvency Court

Apart from legislative changes, our work with the Armenian authorities has encompassed a number of capacity-building initiatives and outreach.

Soon after the Insolvency Court was established, we launched a project in partnership with the International Law Development Organization (IDLO) to help the court analyse and improve its operations and to deliver training to the court’s insolvency judges, as well as judges in the higher instance courts.

Working closely with the Supreme Judicial Council and the Insolvency Court, we conducted a full operational analysis of the court and proposed an action plan to improve court processes. This was officially presented to interested parties and stakeholders in a webinar in June 2020.

Specifically, the team analysed the court’s organisational structure, the institutional structure of the insolvency judicial system and reviewed the main operational processes. Benchmarking was conducted against court systems in Estonia, Germany, Russia, Slovenia, the United Kingdom and the United States of America to understand potential solutions and improvements.

The key areas identified for improvement included:

  • standardising insolvency documents, including a recommendation for the creation of an insolvency application template
  • establishing an internal database for sharing decisions and information, together with tools for monitoring and managing any old or long-running cases
  • upgrading court software to extract statistical information for reporting, coupled with other
    IT tools to improve IT security management.

An insolvency court, similar to an insolvency law, should strive to achieve certain key objectives.
On the policy side, the EBRD’s Legal Transition Programme therefore worked closely with the authorities and national experts to create a vision for the Insolvency Court.

The vision statement, illustrated above, was “To ensure Transparent and Unbiased judgments by providing Prompt, Efficient, Professional, and Trusted resolutions to insolvency cases”.

In summary, these qualities reflect the following:

  1. Transparent and unbiased: all processes and decision-making in insolvency proceedings should be transparent and understood by all stakeholders in order to promote stability in commercial relations, enable creditors to assess risks and prevent disputes between parties.
  2. Prompt: timely management of the insolvency process is essential to avoid undue disruption to a debtor business or distress in the case of a consumer and generally to preserve and maximise value for all stakeholders concerned.
  3. Efficient: imposition of extensive costs on the insolvency estate should be minimised and procedures should be performed with minimal cost and maximum result.
  4. Professional and trusted: all judicial proceedings should be conducted with high professional standards that are trusted by the community. The Insolvency Court should be perceived as an institution that ensures that the interests of all stakeholders are considered in accordance with the law.

While there is clearly significant work to be done by the Insolvency Court to improve its operations, there is also a sense of opportunity. If managed effectively, the court should help to reduce general instance court overload and the timeframe for insolvency case hearings. Having insolvency cases heard by a small group of specialist judges who are dedicated to overseeing insolvency proceedings can also have great benefits. Apart from ensuring more consistent court judgments, expertise and knowledge can deliver greater efficiency and timely conduct of insolvency proceedings.


Source: Armenian Insolvency Court Action Plan, 2020.

Source: Armenian Insolvency Court Action Plan, 2020.

Capacity building for judges and insolvency practitioners

Our ongoing work with the Armenian authorities is now primarily in the area of capacity building and training. As a result of the coronavirus pandemic, we have had to be agile and adapt our plans from in-person training to an e-learning format. We have been fortunate that Armenia is quite a highly digitalised society, with 64.7 individuals out of 100 recorded as using the internet according to UN data for 2020.58

Moving the training online has led to some delays but – in cooperation with IDLO – we have now finalised the judicial training modules, which will enable insolvency court judges and higher instances judges to hone their knowledge and skills. The modules will be launched in the coming months.

This project is the first comprehensive training programme by the EBRD for insolvency judges and the programme is highly innovative in both the content and breadth of training, covering not only legal aspects but also financial skills and knowledge, which are critical for assessing the financial standing of the debtor business and the feasibility of any restructuring plan. It focuses on international best practices as well as on domestic legislation and practice. We have built a strong team of leading national and international experts and trainers.

We are developing a similar programme now for insolvency practitioners, which will contain additional elements specific to the profession, including professional status, supervision and discipline, case management and reporting obligations.

All of these initiatives support ongoing investments in Armenia. With a new online training platform for insolvency judges that systematically incorporates national and international trainers and expertise, Armenia has become a benchmark for future projects of this kind. We hope to have the opportunity to continue our work with the Armenian authorities in the area of insolvency and address new, innovative approaches, including in the field of restructuring and reorganisation.

“On the policy side, the EBRD’s Legal Transition Programme worked closely with the authorities and national experts to create a vision for the Insolvency Court.”

Country outcomes

Applying the above approach and methodology to individual countries and regional groupings, detailed conclusions were drawn and recommendations offered to overcome any identified impediments. These conclusions and recommendations are reported in detail in the full survey reports, 12 of which have been published on an individual country basis and as two regional groupings.61

Herewith a summary of the conclusions and recommendations for the two regional groupings. Table 1 shows that Egypt is the largest market by population and is also forecast to be the fastest-growing market for broadband services, from the lowest current base. Morocco is the second-largest market by population, with the second-best forecast broadband growth rate, also from a low base. All five countries have relatively low positions in the overall world rankings for ICT development, although Jordan and Lebanon appear to have made some progress in improving their position.

Serbia (see Table 4) is the largest market in population terms but is also forecast to be the slowest-growing market for broadband services. Croatia is the second-largest market by population and also has a low forecast broadband growth rate. The highest forecast growth rates are in Albania and Kosovo. Croatia has the highest global ranking for ICT development, benefiting from its EU membership.

Survey analysis and conclusions – the southern and eastern Mediterranean region

TABLE 1: Main market benchmark indicators in the SEMED countries
Market indicatorEgyptJordanLebanonMoroccoTunisia
Population (million)10010.16.936.511.7
Penetration of fixed broadband per 100 population5.44.7213.98.8
Penetration of mobile broadband per 100 population50104575881
% of population using the internet4567786564
ICT Development Index (world ranking)103rd70th64th100th99th
Average download speed per fixed broadband user (Mbps)26.5250.538.1018.529.12
Average download speed per mobile broadband user (Mbps)16.8917.7446.6933.5725.32
Forecast overall broadband market growth up to 2023
(% compound growth per annum)

Source: United Nations, ITU, Speedtest Global Index, Fitch Solutions.

TABLE 2: Market attractiveness - the SEMED countries
Market attractiveness factorsEgyptJordanLebanonMoroccoTunisia
Overall size of the market, in population terms and relative spending power
Growth potential of the market, in terms of demand for broadband services
Efficiency of the markets in terms of fair competitive conditions
A clear national ICT market strategy for the country with stated ambitions and goals, for example targets for broadband coverage and take-up

Good Medium Poor
Source: United Nations, ITU, Speedtest Global Index, Fitch Solutions.

Jordan and Lebanon are relatively small markets, but with relatively high standing in internet usage. Jordan already has high mobile broadband penetration, while its relatively expensive fixed broadband prices contribute to relatively low fixed broadband penetration. Jordan’s forecast for broadband growth remains the lowest of the five countries. The average broadband speed test results show that the highest users are Jordanian fixed broadband subscribers, followed by Lebanese mobile broadband users. Relatively low speed usage is recorded by fixed broadband subscribers in Tunisia and Lebanon. The countries with the highest average download speeds also have the lowest fixed broadband penetration, showing that in these markets, the big users are purchasing fixed broadband.

Based on the respondents’ views (see Chart 1), Egypt is the most attractive of the SEMED broadband markets and Lebanon the least attractive. For this component, the survey participants were asked to rate only the pure market potential, disregarding any investment risk factors, which are only taken into account in the next component. Both the market attractiveness and the risk factors are combined to calculate the Overall Broadband Investment Index.

Jordan appears to be the fastest at adopting best practices for lowering investment barriers (Chart 2). Its legal and regulatory framework has followed the main liberalising steps already adopted by the European Union (EU). Jordan’s current policy is to continue to harmonise with the EU’s more investor-friendly laws and regulations.

Morocco and Tunisia have the same overall harmonisation aims but are slower to implement the required steps.

CHART 1: SEMED Broadband Market Attractiveness Index

On the comparative scale, zero would indicate a perception that the broadband market had no attraction. A score of 100 would indicate a perception that the market potential was perfect. Source: EBRD

CHART 2: Best Practice Index - SEMED countries

A value of zero would indicate that the country had no best practices relating to broadband investment conditions. A score of 100 would indicate that the country had already adopted all relevant best practices. Source: EBRD

Lebanon is currently deadlocked by policy and regulatory inaction.

Respondents have the lowest confidence in Egypt’s adoption of best practice adoption by the sector.

The Overall Broadband Investment Index is a composite index and has been compiled from the scoring in the components set out in the preceding sections, namely:

  • market attractiveness
  • investment risk
  • confidence towards adopting best practices.

Chart 3 shows that in all SEMED countries, conditions are a long way short of what respondents would ideally wish for.

CHART 3: Overall Broadband Investment Index – SEMED countries

On the comparative scale, zero would indicate a perception that the investment climate was very poor. A score of 100 would indicate a perception that the overall conditions were perfect for investment. Source: EBRD

TABLE 3: SEMED countries - recommended priorities for action
Investment risk factorsEgyptJordanLebanonMoroccoTunisia
Taxation generally or targeted at the sector
Access to spectrum resources
The legal and regulatory framework specific to electronic communications and broadband investments
The country's overall legal system, predictability and process
State participation in the sector
State assistance and funding schemes
Certainty in construction permits or wayleaves
Trade barriers

Source: United Nations, ITU, Speedtest Global Index, Fitch Solutions.
Low priority Medium priority High priority

TABLE 4: Main market benchmark indicators in the SEE countries
AlbaniaBosnia and HerzegovinaCroatiaKosovoMontenegroNorth MacedoniaSerbia
Population (million)
Penetration of fixed broadband
per 100 population
Penetration of mobile broadband
per 100 population
% of population using the internet72707377727973
ICT Development Index (world ranking)89th83rd38thNot available61st69th55th
Average download speed per fixed broadband user (Mbps)
Average download speed per mobile broadband user (Mbps)49.633.661.528.849.341.343.4
Forecast overall broadband market growth up to 2023
(% annual compound growth )

TABLE 5: Market attractiveness factors
Market attractiveness factorsAlbaniaBosnia and HerzegovinaCroatiaKosovoMontenegroNorth MacedoniaSerbia
Overall size of the market, in population terms and relative spending power
Growth potential of the market, in terms of demand for broadband services
Efficiency of the markets in terms of fair competitive conditions
A clear national ICT market strategy for the country with stated ambitions and goals, for example targets for broadband coverage and take-up

Good Medium Poor

Kosovo, Montenegro and North Macedonia are relatively small markets, but with relatively high standing in internet usage together with some potential to grow their broadband markets.

Based on the respondents’ views, Montenegro is the most attractive of the SEE broadband markets and Kosovo is the least attractive (Chart 4). For this component, the survey participants were asked to rate only the pure market potential, disregarding any investment risk factors (which are only taken into account in the next component). Both the market attractiveness and the risk factors are combined to calculate the Overall Broadband Investment Index.

CHART 4: SEE - Broadband Market Attractiveness Index

On the comparative scale, zero would indicate a perception that the broadband market had no attraction. A score of 100 would indicate a perception that the market potential was perfect. Source: EBRD

All the SEE markets surveyed have problems in the adoption of best practices, creating significant barriers to investments including time delays and inconsistently applied procedures. The most common example across the region is the problem experienced by investors in obtaining permissions for constructing civil infrastructures. This includes building mobile transmission towers, laying cables and ducts, getting access to public and private properties and for installing specialist equipment. In many of the markets there are bureaucratic delays, multiple levels of decision-making and inconsistently applied rules.

Best practice would be in place if the necessary applications could be made online via a one-stop-shop procedure, with all the layers of permission granting following the same effective procedures and timescales. Even in Albania, Croatia, North Macedonia and Serbia, where the introduction
of new procedures for permission-granting has begun, there are still significant problems experienced by network operators.

Croatia is the market where there is most confidence that best practice policies, legislation and regulatory practices will be applied to the sector (Chart 5). This arises from its membership of the EU. In the other markets, confidence varies, especially in the way that geographical municipalities apply the various legally defined procedures. The lowest confidence is in Serbia, where private investors feel particularly disadvantaged in competing against the state-owned incumbent operator.

CHART 5: Best Practice Index - the SEE countries

A value of zero would indicate that the country had no best practices relating to broadband investment conditions. A score of 100 would indicate that the country had already adopted all relevant best practices. Source: EBRD

CHART 6: Overall Broadband Investment Index – SEE countries

On the comparative scale, zero would indicate a perception that the investment climate was very poor. A score of 100 would indicate a perception that the overall conditions were perfect for investment. Source: EBRD

The Overall Broadband Investment Index is a composite index and has been drawn from the scoring in the components set out in the preceding sections, namely:

  • market attractiveness
  • investment risk
  • confidence towards adopting best practices.

The chart shows that in all the markets, the investment conditions are less than what respondents would ideally wish for.

TABLE 6: SEE markets - Recommended priorities for action
Investment risk factorsAlbaniaBosnia and HerzegovinaCroatiaKosovoMontenegroNorth MacedoniaSerbia
Certainty in construction
permits or wayleaves
Availability of labour
especially with digital skills
State participation
in the sector
Taxation generally or targeted at the sector
Political stability, security, criminality, terrorism
Corruption generally or applied to the sector
State assistance and
funding schemes
The country's overall legal system, predictability and process
Access to spectrum resources
Legal and regulatory
framework for broadband
Quality of databases
and access to information
Labour regulations,
militancy, disruptions

Low priority Medium priority High priority
Source: United Nations, ITU, Speedtest Global Index, Fitch Solutions.

Recommendations for each country are given in more detail in the full survey reports which can be found here.

Covid-19 considerations

Some of the analysis for the survey took place before the advent of the Covid-19 virus, so no account has been taken of the subsequent impact of the pandemic. The forecasts of fixed and mobile broadband growth are based on 2019 data and cover the period up to 2023. These forecasts are likely to be affected by the pandemic, typically arising from a greater demand from personal and business users for social and work-related networking.

Although the impact of Covid-19 is likely to vary from market to market, the overall relative growth rates should remain consistent. For example, the relatively high growth rates for broadband services in Egypt and Morocco (17 per cent and 12 per cent per year, respectively) are likely to be maintained as broadband coverage improves. The relatively lower growth rates in Lebanon, Jordan and Tunisia (from 3 per cent to 6 per cent per year, respectively) will continue to reflect the greater relative level of saturation already achieved in those markets. Similarly, the relatively high growth rates for broadband services in Albania, Kosovo and Montenegro (around 3 per cent to 7 per cent per year) are likely to be maintained because the fundamentals of their competitive market growth remain unchanged. The relatively low growth rates in Croatia and Serbia (around 1 per cent per year) will continue to reflect the greater level of saturation already achieved in those markets.

Broadband speeds appear to be affected62 for example in Albania, where average mobile broadband download speeds have decreased by 9 per cent while fixed broadband speeds have increased by 1 per cent. In Montenegro, fixed and mobile broadband speeds have increased by 3 per cent and 13 per cent, respectively while in North Macedonia these have both decreased slightly. Similarly, fixed broadband speeds in Jordan have increased by 44 per cent and Tunisia by 30 per cent. Mobile broadband speeds have reduced in Morocco and Tunisia while in Jordan mobile broadband speeds have risen by 7 per cent and in Lebanon by over 100 per cent. The inconsistency of these changes will add further uncertainty to investment conditions.

Several SEMED countries adopted measures to cope with the increasing demand for communications services during the Covid-19 outbreak. For example, governments in Egypt and Tunisia requested operators to provide free internet packages and to offer free access to e-learning and healthcare platforms. In Egypt, the cost of the additional data packages and free browsing was financed by the state. The regulator in Jordan temporarily granted telecommunications operators additional spectrum to increase network capacity.

This report makes both general and detailed recommendations based on the analysis of respondent views given before the coronavirus outbreak. These recommendations will still apply and in many instances their relevance will be brought more into focus by the new situation. The case for further investment in broadband infrastructure has increased, now with even more attention on more reliable and universal broadband services.

At a policy and regulatory level there will also be greater focus on the collaboration between government investments and private sector investments. This is particularly relevant in areas such as policy consultation, the use of public funds, achieving universal broadband coverage and the need for greater investment efficiencies to achieve cost reductions and greater network resilience.

SOE boards: need for legal improvements and professionalisation

Most corporate governance standards devote much of their attention to the board65 as a company’s governing body in charge of driving its key decisions. OECD Guidelines are no exception in this respect as a whole chapter deals with the boards’ responsibilities and functioning. In order to be effective in this crucial role, it is traditionally understood that boards need to be entrusted at least with the responsibilities for setting strategy and budget and monitoring their implementation, overseeing the system of internal controls, supervising management, appointing and removing the CEO and setting executive remuneration.

Unfortunately, our analysis has shown only a limited share of SOEs (mostly those organised as companies) across EBRD economies have a governance structure which envisages a body tasked with strategic oversight over the company. Moreover, in most of the jurisdictions analysed, boards lack comprehensive strategic authority and have limited autonomy to make decisions. Our analysis did not reveal a single jurisdiction where SOE corporate legislation would equip the boards with all the responsibilities necessary to duly exercise their roles (for example, approval of strategy, budget and risk appetite, appointment and removal of executives, approval of capital expenditures and oversight of management performance). Fewer than 20 per cent of economies seemed to empower all their SOE boards with a range of essential duties, still subject to various limitations, such as for example – managerial appointments, approval of capital expenditures (and risk management) which are missing in several jurisdictions.

CHART 2: Which of the following are defined in the law, regulations and code as the explicit responsibilities of SOE Boards?

Source: EBRD, corporate governance legislation and practices of state-owned enterprises, 2020.
Note: Although the number of reviewed jurisdictions was 37 for all topics covered in the chart, in some bars a higher number was exhibited because of the complexity of the framework applicable to different categories of SOEs. For example, the same responsibility could be assigned as a default under the corporate legislation, whereas for non-corporatised SOEs it would have to be explicitly envisaged in the SOE’s charter.

Strikingly, in almost half of jurisdictions SOE boards do not approve strategies or budgets and the two often seem to be developed separately and without connection to each other. In addition to lack of clarity on the strategy, authorities for approving the business plan and/or budget and for overseeing the risk management and internal control framework are the ones most frequently missing. It seems that in most jurisdictions risk is not seen as integral to the strategic planning and implementation monitoring processes, as overseeing risk management is an explicit responsibility of the boards for all SOEs in only 45 per cent of them (18 countries). In only six countries does the framework have a reference to board responsibilities related to managing the environmental and social risks and factors in the company’s operations. This suggests that the environmental, social and governance and climate change-related risks do not play a major part in the decision-making on strategy and its monitoring activities.

In addition, it seems little attention is paid to how boards are composed and how they function. The board nomination process is frequently inconsistent and lacks transparency: only 16 per cent of countries in the EBRD region have a requirement for a nomination policy that would set out the desired profile of an SOE’s board. In 81 per cent of countries there are no existing pools of potential directors in place to be drawn on for future appointments. SOE boards often lack independence and the board composition is often not appropriate to ensure effective and independent supervision over SOEs. A requirement for independent directors on SOE boards is in place for all SOEs only in 40 per cent of EBRD economies (15), and for some or selected SOEs (mostly for SOEs operating in the form of companies or listed SOEs) in nine other countries. However, over one-third of jurisdictions (13 of them) still do not reflect such a requirement in their legal frameworks. In any event the definition of independence and the test over the “independence of mind” has room for improvement in the vast majority of jurisdictions.

When discussing committees, it seems some (mostly audit committees) are required in at least some categories of SOEs in almost 60 per cent of EBRD jurisdictions. However, composition of SOE board committees is not strictly limited to board members in over 60 per cent of jurisdictions, which makes us wonder if these committees can be considered board committees and whether they contribute to the work of the board in any way.

CHART 3: Is there a requirement for independent directors on SOE Boards?

Source: EBRD, corporate governance legislation and practices of state-owned enterprises, 2020.

“Unfortunately, our analysis has shown only a limited share of SOEs across EBRD economies have a governance structure which envisages a body tasked with strategic oversight over the company.”

Do SOEs have appropriate internal controls?

Proper internal controls are essential in SOEs, not least because of their susceptibility to corruption66 and the potential fiscal risks which seem to be exacerbated in cases of SOEs that are used to provide subsidies to the wider population and are therefore more dependent on further state support.67

While internal controls in private sector companies tend to be organised according to the so-called “three lines of defence” model, it seems that in SOEs these controls are much more scattered and do not allow the identification of SOEs’ risks from a holistic perspective.

The most frequently seen internal control function is the internal audit as in 17 (46 per cent) countries all SOEs are required to have such a function. In 27 per cent of countries this requirement only applies to some SOEs.

In the majority of jurisdictions (54 per cent, 20 countries), SOEs are not required to have codes of ethics or compliance programmes. Compliance with codes of ethics is monitored and enforced in all SOEs only in 12 countries (32 per cent) while in three countries (8 per cent) it applies only to selected SOEs. However, this is not specified in over half of the jurisdictions (51 per cent). In 80 per cent of EBRD economies, SOEs are not required to have a unit dealing with compliance issues.

SOEs also seem to conduct very little risk analysis. SOE strategies are rarely assessed from the risk perspective, while specific risks are unlikely to be addressed in strategies and mitigating measures in budgets. Most have no risk department, thus no organisational framework to act on (external) risk analysis.


There is little doubt that the economic needs on the one hand and the decreasing room for state spending on the other will require SOEs to run successfully without relying (as) much on the state budget for years to come. This will require adjustments from both the state and the SOEs themselves. Starting with the state, this current situation will provide an excellent opportunity for many governments to re-assess their ownership rationales and define more clearly (preferably within the framework of state ownership policies) in which cases state ownership is necessary. Hopefully this will mean that they will also be more incentivised to set clearer expectations, not just in terms of public service obligations and financial performance, but also with respect to environmental, social and governance issues that are relevant for particular SOEs. This will mean that many jurisdictions will need to strengthen their own capacity in order to follow up as to how objectives that have been set for SOEs are being implemented and hold boards and management to account in cases of poor performance.

On the SOEs level, the greater clarity to be provided by the state should be reciprocated with an improved intelligibility on what an SOE can realistically achieve and the risks (and opportunities) it may face on this journey. This requires improved strategic planning, risk analysis and budgeting processes as well as diligent oversight and controls in implementation, which – as is usually the case in corporate governance – can be built with the help of a professional and empowered board and a management team that is capable, motivated and accountable.

“In 80 per cent of EBRD economies, SOEs are not required to have a unit dealing with compliance issues.”

2. What is your institution doing specifically to help the international effort of managing the ongoing Covid-19 crisis?

Cynthia (IFAD): The Covid-19 crisis is having a severe negative impact on the progress achieved in the Sustainable Development Goal (SDG) 1, no poverty, while threatening to aggravate the already deteriorating SDG 2, zero hunger. IFAD’s response strategy includes:

  • repurposing ongoing investments
  • establishing a Rural Poor Stimulus Facility (RPSF). IFAD launched a rapid-response intervention to mitigate the effects of Covid-19 on vulnerable communities. The RPSF aims to improve the resilience of rural poor communities by ensuring timely access to inputs, information, markets and liquidity. We launched the facility by providing an initial US$ 40 million seed donation envisioned to be scaled up to at least US$ 200 million through contributions by countries and partners. To accelerate the recovery of poor and vulnerable people from Covid-19, the RPSF will focus on four main areas: (i) inputs and basic assets, (ii) access to markets, (iii) targeted funding to small-scale producers and agricultural enterprises, and (iv) digital services
  • supporting policy responses through advice and analysis
  • working with financial institutions to improve financial flexibility in affected countries.

Douglas (ADB): In mid-April this year, ADB announced that it would be providing an overall Covid-19 response package of US$ 20 billion, which included approval of several special policy variations and other measures that allow ADB to respond more rapidly and flexibly to the crisis. In terms of financing support, the most significant step ADB has taken is the establishment of a COVID-19 Pandemic Response Option (CPRO) under its existing Countercyclical Support Facility. Up to US$ 13 billion of the ADB response package has been allocated for CPRO operations to help the governments of ADB’s developing member countries implement effective countercyclical expenditure programmes to mitigate the impacts of the pandemic, with a particular focus on the poor and vulnerable. In addition, approximately US$ 2 billion of the response package is being made available for the private sector, and a number of policy variations were approved to facilitate such support. ADB has also quickly deployed grant resources for providing expert technical support and medical and personal protective equipment and supplies from expanded procurement sources.

Remy (EBRD): In March 2020 the EBRD’s shareholders approved the Covid-19 Solidarity Package (further expanded in April 2020), which consists of a series of response and recovery measures with a view to helping the 38 economies where the EBRD invests to combat the economic impact of the coronavirus pandemic. A central pillar of the Solidarity Package is the Resilience Framework, a €4 billion envelope focused on providing finance to the EBRD’s existing clients to meet their short-term liquidity and working capital needs. Other elements of the Solidarity Package include an expansion of the EBRD’s Trade Facilitation Programme, the use of existing finance frameworks to expeditiously channel financing in particular to small and medium-sized enterprises (SMEs) and corporates and a new Vital Infrastructure Support Programme to provide financing for the continuity of essential infrastructure services or infrastructure investment programmes. Moreover, the EBRD can help the economies where it invests survive the pandemic not only with investments but also by providing governments and other state institutions with high-quality, straightforward and usable policy advice. Covid-19-related areas of policy dialogue where the Bank is active include:

  • supporting digitalisation efforts in various government sectors
  • facilitating SME access to finance
  • promoting financial restructurings and insolvency policy initiatives.

Turgut (IFC): IFC is providing US$ 8 billion in fast-track financial support to existing clients to help sustain economies and preserve jobs during this global crisis, which will likely hit the poorest and most vulnerable countries the hardest. IFC’s response consists of four financing facilities.

  • Supporting critical industries – the Real Sector Crisis Response Facility will provide US$ 2 billion to support existing clients in the infrastructure, manufacturing, agriculture and services industries vulnerable to the pandemic.
  • Keeping trade flowing – the Global Trade Finance Program will provide US$ 2 billion to cover the payment risks of financial institutions so they can provide trade financing to companies that import and export goods.
  • Helping clients pay their bills – the Working Capital Solutions Program will provide US$ 2 billion funding to emerging-market banks to extend credit to help businesses shore up their working capital, the pool of funds that firms use to pay their bills and employees’ salaries.
  • Shoring up local banks – the Global Trade Liquidity Program, and the Critical Commodities Finance Program, will together provide US$ 2 billion in funding and risk-sharing support to local banks so they can continue to finance companies in emerging markets.

“From what I have seen, the legal profession’s characteristic ability to manage uncertainty and time pressure is helping lawyers shine through in this environment.”

3. In such Covid-19 crisis projects, what are the new challenges or opportunities that lawyers of your institution are facing? How are the lawyers contributing to the objectives of your institution?

Cynthia (IFAD): Before the onset of the Covid-19 crisis, IFAD had already been working on a timely paradigm shift to expand its development toolkit to include financing the private sector as well as sponsoring (and now itself investing in) an agri-impact investment fund. Throughout this shift and expansion, the legal team has been adapting in an agile, creative way to help IFAD solve the complex 21st century problems facing the rural poor. Our lawyers’ assistance in developing the RPSF is no exception. The legal team was able to ensure that the RPSF was established quickly and with integrity—minimising risk while enabling innovation in a time of global crisis. More specifically, the legal team has been instrumental in expediting approvals of new projects under the RPSF. The legal team has also helped redesign ongoing projects and amended the respective loan and grant agreements to incorporate such changes. Furthermore, we have supported project teams with internal approvals and changes to internal policies and procedures.

Douglas (ADB): The attorneys and other legal staff of ADB’s OGC have been right in the middle of virtually all aspects of ADB’s pandemic response efforts. Numerous OGC attorneys took a front-line role in the working group that identified and crafted the special policy variations needed to facilitate ADB’s Covid-19 response efforts. Similarly, ADB attorneys have been key members of the teams put together to prepare individual financing operations both for governments and the private sector, helping ensure that the compliance and quality of ADB’s operations remain high, notwithstanding the speed at which new Covid-19-related operations are being processed and approved.

Remy (EBRD): The EBRD’s staff have been working remotely since mid-March. Remote working combined with the increase in EBRD’s workload has been challenging: (i) working remotely on a full-time basis is to a certain extent more difficult and less efficient than working in an office environment with easy access to printing facilities and secretarial support; and (ii) there were initially IT issues. We also had to adapt, anticipate and address issues linked to a world where remote working was the new way forward, such as ensuring that enough bank executives across the Bank’s regions had the required authorities to execute agreements, that originals of the signed documentation were being kept track of, and so on. Of course, the current conditions are not only challenging on the transactional side, but across all groups in OGC. I think generally lawyers at the EBRD are very involved and our contribution has been critical to the adaptation of EBRD’s processes and modus operandi to the new Covid-19 situation and the EBRD’s operations.

Turgut (IFC): I think the obvious new challenge for lawyers is the increased demand for our services. Clients look to us to fulfil these functions, which we do on top of our pre-existing day jobs, and often under great time pressures and unknown variables given the uncertainty around how the Covid-19 crisis will unfold. But from what I have seen, the legal profession’s characteristic ability to manage uncertainty and time pressure is helping lawyers shine through in this environment. In my mind, the main opportunity is to use our experience to facilitate these fast-track Covid-19 financings and help our clients. They also raise a number of novel legal issues and thus provide a new platform for creating and sharing new knowledge across our institutions. For example, within weeks of the announcement of the pandemic, IFC’s legal department had launched an internal website dedicated to Covid-19 related legal issues, raising awareness among our clients of how the main legal issues (force majeure, and so on) are addressed at our institution and in the market, as well as how to think about practical challenges (how to deal with remote signings, and so on). Another opportunity is to re-think how technology can help us do our jobs, and to seize the moment to create positive momentum in our institutional culture in that direction (for example, facilitating remote work and signings).

“Above and beyond the institution’s support toward its staff, for me the most motivational factor has been to see the institution’s quick and extensive response to the Covid-19 crisis.”

4. With the increasing amount of new challenges coming with these projects as well as the inconvenience necessitated by working from home, how are you and your colleagues coping with this new norm? How is your institution helping its employees during this adjustment?

Cynthia (IFAD): As the situation changed rapidly, our team handled uncertainty and changes with optimism. Our headquartered location in Rome, Italy, placed us at the epicentre of the outbreak at the beginning of the pandemic. Without having many others to consult with, we were among the first IFIs to develop and implement a work continuity plan and Covid-19-related policies. As part of these efforts, we have successfully handled the virtual onboarding of various new staff members based all over the world. Later, IFAD became an adviser to other IFIs regarding Covid-19 adjustments. More specifically, a key coping strategy from the onset has been frequent and honest communication. This has resulted in tailored solutions to specific challenges – from providing the appropriate equipment in order to work from home, supporting authorisations to telework from a different country, adjusting portfolio priorities, among others. We have continued with this strategy as we recently started a gradual return to the office. Our flexibility and optimism has paid off.

Douglas (ADB): ADB’s headquarters are located in Manila, the Philippines, which has been subject to government-mandated quarantine starting from mid-March of this year. Since that time, virtually all of ADB’s headquarters staff has been on work-from-home arrangements, with many international staff returning to their home countries. The technology solutions and resources made available to ADB staff even before the pandemic started have enabled us to largely perform our jobs without significant disruption. What’s more, not having to commute to the office each day (Manila traffic is notoriously bad!) means more productive use of the available time. Of course, one of the huge perks of working at a multilateral development bank is the chance to meet and work with colleagues and clients from around the world, which has been unfortunately lost under the current circumstances. While I imagine that the old way of working will not be entirely restored once the crisis is over (some degree of working from home will likely continue), I do look forward to the day that I get to catch up with my colleagues in the hallways and over lunch again!

Remy (EBRD): I think some of those who were sceptical about working from home have learned to adapt, organise their workstation to be efficient and are now seeing the positive aspects of it; when this is for a couple of days per week and not full time. I think most of us are struggling with an increased workload while being overall less productive because of the working conditions, leading to longer days. Also, whilst you can (most of the time) leave work behind when leaving the office, there are no boundaries when working from home and work seems to invade your private life without a set timeframe. Lastly, after a few months of remote working and with the absence of face-to-face contact, staff are missing the human interaction with colleagues and this has become difficult for morale. The EBRD has been supportive of its staff, by giving allowances to buy equipment and facilitate the set-up of functional and comfortable workstations, doing surveys and giving regular advice on how to improve our work conditions or mental health as well as giving regular updates on the Covid-19 situation and on the EBRD’s plans.

Turgut (IFC): From my perspective, it took around a month to adjust but overall it seems to me that colleagues are coping rather well with the new norm (though many of us admit that some days are better than others). In my mind, this is largely because our baseline is an institutional culture of mobility, personal accountability, and genuine dedication to the development mission. The institution is very good about keeping us informed on a real-time basis, creating a lot of personal touch-points that could have otherwise disappeared in remote work settings, providing excellent technology platforms and support, and providing administrative flexibilities where needed. But above and beyond the institution’s support toward its staff, for me the most motivational factor has been to see the institution’s quick and extensive response to the Covid-19 crisis – which further reinforces my personal sense of belonging to the development mandate and justifies all the extra work that we are doing during this period.

“I think some of those who were sceptical about working from home have learned to adapt, organise their workstation to be efficient and are now seeing the positive aspects of it.”


In 2015 the government of Georgia requested the EBRD’s assistance with the development of legal instruments to attract private sector participation and investment in public infrastructure. Although the laws of Georgia allowed PPP structuring without a specific PPP law, the government of Georgia, similar to many other countries, decided it would be beneficial to promote PPP. The EBRD’s Legal Transition Programme, together with international and local consultants have helped draft a PPP policy in accordance with internationally recognised standards and best practices that the government approved in June 2016. In addition the EBRD assisted the government in developing a modern, investor-friendly and transparent PPP law. On 4 May 2018 the Parliament of Georgia approved the Law “On Public-Private Partnerships” and the relevant amendments to primary legislation. In August 2018 Georgia adopted secondary legislation developed by the Asian Development Bank (ADB) with extensive comments from the EBRD team.

The PPP Agency has been established following the PPP law enactment. It is looking at international experience and is active in discussing possibilities for future projects with private investors and IFIs. The EBRD plans to provide assistance to the PPP Agency with capacity enhancement and drafting practical documentation to facilitate project preparation and implementation.

The prospects of implementing PPP projects in quite a number of sectors could be considered.

Georgia’s PPP market has good experience in the energy sector (whether one refers to PPP or quasi-PPP when talking about the energy sector this is a matter of definition and project particulars), with further projects under discussion.

There is a fair potential for the development of the country’s infrastructure both in the merchant and social sectors and PPP mechanisms would surely be useful. A few healthcare projects are being discussed. Road rolling may be a potential and the EBRD and the ADB have each examined it in their respective studies. Municipal transport may also become attractive.


All three countries are making efforts in the development of their public infrastructure by way of attracting private investors’ finance, efficiency, management skills and know how. Authorities are generally open to international cooperation with investors and financial institutions and welcome advice as well as technical and financial assistance. It is particularly important for any initial pilot PPP project to be a success in order to ensure a broader take-up of the whole PPP programme in a respective country, thus paving the way for further PPP projects.

“All three countries are making efforts in the development of their public infrastructure by way of attracting private investors’ finance, efficiency, management skills and know how. ”

Overview of Tunisia’s energy sector and key challenges

For more than two decades, Tunisia has focused on the rational use of energy and a gradual development of renewable energies. Due to its ambitious energy demand management programmes, the country has reduced the growth rate of energy consumption and substantially improved energy intensity.73

Despite these efforts, the Tunisian energy mix remains heavily dependent on fossil fuels with demand for electricity still growing. The international context, characterised by a sustainable rise in energy prices, clean energy policies and investors’ expectations for energy decarbonisations will significantly influence the energy situation in Tunisia.

The Tunisian government has targeted two priority actions for its energy strategy for 2030, namely strengthening energy efficiency (through, among other things, improving energy independence by reducing consumption of fossil fuels and reducing greenhouse gas [GHG] emissions) and the use of renewable energies. Tunisia’s mitigation efforts under the country’s Nationally Determined Contributions (NDCs) are mainly focused on the energy sector, as it is the biggest contributor to direct gross GHG emissions (it accounts for 75 per cent of the proposed emission reductions).74

STEG is the central and critical player in the Tunisian electricity and gas sector. Given its responsibilities as transmission system operator, single buyer of electricity, and electricity distributor and producer, its long-term sustainability is critical for Tunisian social and economic stability and green energy transition. STEG is heavily dependent on gas imports. The absence of substantial tariff reform and, more recently, the Covid-19 crisis have exacerbated liquidity issues.

STEG’s stability and efficiency is essential both for the success of Tunisia’s renewable programme (since STEG is the long-term purchaser of all renewable power) and for the stability of energy supply in Tunisia. In this context, the EBRD has been approached to support STEG’s ambitious long-term reform objectives in the electricity sector while providing STEG with an immediate response to the Covid-19 crisis.

“In today’s environment, organisations can no longer ignore the impact that climate change has on their assets, portfolio and supply chains.”

STEG investment and policy roadmap integrating corporate climate governance and disclosure measures

On 30 December 2020 the EBRD signed a loan agreement with STEG, which combines long-term reform objectives with an immediate response to the Covid-19 crisis. The proceeds of the EBRD’s loan will be used to: (i) stabilise STEG in light of the Covid-19 crisis; and (ii) refinance its short- and medium-term debt to provide terms more consistent with STEG’s operations, with the purpose of contributing to the financial stability of STEG.

To respond to the country’s energy priorities and in accordance with its transition mandate, the EBRD, in cooperation with the Ministry and STEG, has put together a comprehensive roadmap to reform and restructure STEG, which is integrated into the investment project. Most of the envisaged ambitious measures will be developed with the EBRD’s technical assistance, which would aim to achieve the long-term sustainability of STEG and the Tunisian energy sector.

Disbursements of the EBRD’s loan are linked to STEG’s implementation of the reform and energy sustainability roadmap. The roadmap aims to: (i) improve the company’s corporate and climate governance and disclosures; (ii) enhance financial management of the company; and (iii) promote a series of inclusive initiatives both at the company and industry levels to support equal opportunities and career development for women and young professionals in the energy sector.

As part of this roadmap, the EBRD developed a Corporate Climate Governance Action Plan (CCGAP), aimed at enhancing the company’s governance and management of climate-related risks and opportunities and drawn on TCFD recommendations.75

The main objectives of the CCGAP are to ensure that:

  • the company’s board is tasked with environmental and climate matters, including the approval of the corporate strategy (which features climate-related key performance indicators [KPIs])
  • the management has the adequate tools to assess climate risks and prevent them from materialising as well as to identify and assess climate-related opportunities
  • the policies adopted by the company, in particular those related to climate matters, are complied with by the operational divisions and the management
  • STEG makes adequate disclosures to the public, in particular on matters related to identification and management of climate-related risks and opportunities in line with international voluntary climate-related disclosure standards (for example, TCFD, CDP, or others).

Taking into account the four pillars of the TCFD, some critical actions under the CCGAP can be identified as follows.

1. Governance. Under the CCGAP, STEG is required to ensure clear reporting and accountability lines in the company and to map all key functions, including environmental and climate-related matters. Another action refers to strengthening the responsibilities of STEG’s board so that it is clearly tasked with approving the company’s strategy and budget and determining its risk appetite, including in relation to climate-related risks and opportunities. Considering the challenges that state-owned enterprises (SOEs) face in making any governance changes, STEG committed, on a best efforts basis, to adopt a new charter and, once enabled by the relevant new legislation, to approve the new board’s bylaws. The EBRD is working closely with the relevant policymakers to ensure timely adoption of this legislation.

2. Strategy. Once the board is equipped with the responsibilities regarding strategy approval, STEG will adopt a corporate strategy aligned to a defined budget and risk appetite with clear and defined KPIs that shall include climate-related issues.

3. Risk management. The company’s due diligence showed that it needed to strengthen its risk management function by adopting a risk register, developing an internal risk management framework with a methodology and tools to establish climate-related risks and opportunities. A stronger risk function is required for better identification, assessment and management of climate-related risks and opportunities.

4. Metrics and targets. The company will have to develop specific metrics and targets for mitigating its impact on climate change (for example, developing renewable energy sources and adopting energy efficiency measures) and preventing physical climate risks from negatively affecting the company’s assets and investments. In order for STEG to be able to disclose the metrics and targets used to assess and manage relevant climate-related risks, it is essential that the company improve its corporate governance disclosure in its annual report and website, including introducing climate-related reporting in line with international frameworks and standards.

While it contains improvements to “traditional” corporate governance elements (that is, the role and composition of the board and audit committee, a stronger internal control function and so on), the CCGAP focuses on specific climate actions that reflect international standards and that are innovative for the Tunisian market.

When implemented, the climate actions will lead to strategic and organisational changes in the company. Such changes will ensure that climate-related risks and opportunities are effectively identified, assessed and managed so as to inform STEG’s decision-making process. Further, it will lead to the development of a corporate strategy with a progressive and clear climate-related strategic direction with multiple time horizons, which will have an impact on future investment plans and a natural shift towards renewables.

STEG has also committed to publishing climate-related data, including the company’s enhanced climate governance, climate metrics and targets, which, once publicly available, are expected to have a positive impact on the country’s energy sector.

STEG’s implementation of these ambitious climate actions is expected to act as a model for other SOEs and the energy market in Tunisia, given that STEG is one of the most important SOEs in Tunisia (in terms of the number of employees). As noted above, climate-related governance and disclosure are still uncommon for energy companies in emerging markets; in fact, there is not yet a Tunisian company listed as a TCFD supporter (as of January 2021). In addition, this is one of the first CCGAPs developed by the EBRD with a public utility company and it is expected that it will have a wide impact on the Tunisian and regional energy markets.

Due to their market position, electric utilities in particular have a central role to play in leading a transition to the low-carbon economy, driven by electrification and decarbonisation. The transition and development of generation and non-generation fossil-free activities while ensuring security of supply present great challenges.76 At the same time, the companies that assess and manage their climate risks will be among the first to identify and implement opportunities revealed by the new technology, green finance and consumer preference.

“The EBRD and other multilateral development banks have a vital role to play in helping their clients address climate-related risks and identify business opportunities.”


There are significant gaps between climate disclosure standards and evolving regulation in Europe and other leading jurisdictions on the one hand, and the levels of disclosure in emerging markets on the other. Given these challenges, and in line with their climate commitments, the EBRD and other multilateral development banks have a vital role to play in helping their clients address climate-related risks and identify business opportunities.

Energy utilities are key players in advancing the green energy transition and building climate resilience. The ones that are able to realise and implement climate-related opportunities offered by new technologies, infrastructure and customer solutions would create a substantial value for their businesses and for the wider society. Through the investment in STEG and its technical assistance programme, the EBRD will help ensure financial stability in times of crisis and contribute to the long-term sustainability of the company. As the company develops its corporate climate governance and climate strategy, it will identify the most effective pathways for reducing emissions and introducing energy efficiency measures.

As it implements the reform roadmap, STEG will transition towards a profitable, more efficiently run and modern SOE, and be in a better position to mitigate risks and promote the development of green energy in the country over the medium and long term.

Bondholders’ representative


Article 31A of the Capital Markets Law provides that a bondholders’ representative may be appointed to represent the bondholders. While the designation of a bondholders’ representative is optional, it can be expected that bondholders will make it a requirement for their investment.

The bondholders’ representative can be appointed by the issuer in the offering document or in the issuance certificate, or by a vote of bondholders representing a simple majority of the bonds’ nominal value. The same majority of bondholders can dismiss a bondholders’ representative.

a. Eligibility criteria

The new provisions include certain eligibility criteria for the role of bondholders’ representative: (i) absence of any sentence for any of the crimes listed in the communiqué; (ii) the professional education, knowledge and experience, honesty and prestige necessary to protect the rights of bondholders.

It will be up to the bondholders to set further eligibility criteria (in the offering document or in the issuance certificate) to ensure that a bondholders’ representative has no links to the issuer or bondholders, which could raise a conflict of interest. For instance it would not be appropriate for any representative or employee of the issuer or of any majority bondholder to act as bondholders’ representative.

b. Bondholders’ representative’s rights and obligations

The new regime is quite succinct regarding the bondholders’ representative’s rights and obligations. Under section 5 of the communiqué, the representative will protect the rights of bondholders in accordance with the equal treatment principle if there is a conflict of interest between the issuer and the bondholders. In order to protect the bondholders’ rights efficiently, the bondholders’ representative will need to have certain information rights against the issuer. It would also be advisable that the bondholders’ representative is entitled to take action against the issuer, any guarantor or security provider, under the guidance of the bondholders’ meeting. The bondholders’ representative will also have a fundamental role in the proper conduct of the bondholders’ meetings.

One can expect that bondholders’ representatives will seek to include liability limitations, which will need to be carefully reviewed by investors.

Issuers, bondholders, the regulator and other market participants will have to translate the general principles into more detailed provisions in the issuance documentation. They will need to provide the bondholders’ representative with such rights as are necessary to make the individual an efficient agent of the bondholders.

c. Remuneration

The new provisions indicate that the bondholders’ representative’s remuneration will be determined in the offering document or in the issuance certificate. Usually the issuer would fix the level of the remuneration and bear the costs.

Bondholders’ meetings

The holders of bonds of a certain tranche can regroup in a bondholders’ meeting and take collective decisions. Decisions taken by the relevant majority are binding for all bondholders.

a. Types of decisions and majority requirements

Changes to the interest, maturity, principal and other main terms and conditions of the bonds require a vote of the majority of bondholders holding two-thirds of the nominal value of the bonds. But the communiqué also allows the issuer to provide for a different voting majority for changes to the financial or operational commitments made by the issuer in the offering document or the issuance certificate. The qualification of a matter within one of the two categories of decisions with their potentially different majority requirements will be important. The issuance can provide for higher majority requirements. Bonds held by the issuer or related parties do not give a right to vote.

No distinction between attendance quorum and voting quorum is made. There are no provisions about second meetings with reduced attendance quorum or voting majority requirements. This means that for issuances with a large number of bondholders, an issuer wanting to modify the terms and conditions of the bonds will need to make significant efforts to mobilise and engage the bondholders to reach the required majority.

b. Tranche bondholders’ meeting and general bondholders’ meeting

Alongside the bondholders’ meeting regrouping the bondholders of a particular tranche, Turkish law has introduced the concept of a general bondholders’ meeting. Such general bondholders’ meeting regroups the bondholders of all other tranches of a particular issuance. The role of this general bondholders’ meeting is to entitle such bondholders to block the decision of a particular tranche bondholders’ meeting, if such a decision adversely affects the rights of the holders of other tranches.

Bondholders holding at least 20 per cent of the nominal value of such other tranches can convene a general bondholders’ meetings within five days after the tranche bondholders’ meetings and the issuer have made a change to the terms and conditions of the bonds of the relevant tranche. If bondholders of the other tranches holding two-thirds of the nominal value of the other tranches reject the decision of the tranche bondholders’ meeting, then such latter decision becomes invalid. Such general bondholders’ meeting must be held within 15 days of it being convened.

This rule creates an intercreditor relationship among different tranches of a bond issuance and cuts across the principle that tranches are independent. It is likely that the notion of a decision adversely affecting the rights of the general bondholders will be subject to much debate. The requirements to convene a potentially large group of bondholders within a short timeline and to obtain the necessary majority will probably limit the practical impact of this provision.

Secured bondholders cannot take part in the general bondholders’ meeting, unless the decision at stake relates to security interests.

c. Convening bondholders’ meetings

Bondholders’ meetings are convened by the issuer, through its board of directors, or by the bondholders. Whether each individual bondholder has the right to convene the bondholders’ meeting or whether this right can only be exercised by more than one bondholder is not clear. Until this point is clarified by law, one can expect various approaches in the issuance documentations. In most cases it will be the issuer who will take the initiative to convene the bondholders’ meeting to request an amendment, consent or waiver with respect to certain terms and conditions of the bonds. However, in a restructuring scenario, the initiative will most likely come from the bondholders, and the bondholders’ representative will play a crucial coordination role. For this reason, it may be appropriate to also entitle the bondholders’ representative to convene a bondholders’ meeting.

d. Meeting format

Meetings can be held physically or electronically in line with the relevant regulations (for example, registration to the e-meeting system of the Central Registry Agency). But resolutions can also be adopted without physical or electronic meeting, by circulating the resolutions among the bondholders for signatures. This flexibility is important. Indeed, during the Covid-19 pandemic the holding of shareholders’ meetings has proven quite difficult. Flexible solutions in this area are now a necessity.

The important rules about notice periods, invitation methods, announcement of the meeting, determination of the agenda, payment of meeting costs, appointment of proxies, management of the meeting, evidence of bond ownership are left for the issuer to determine in the issuance documentation. Equally, rules about furnishing of information to bondholders in advance of the meeting (for example, proposed resolution, any report submitted by the issuer in the meeting) or after the meeting (minutes) are not expressly regulated. This approach will require market participants to design their own rules. Potential investors will be well advised to carefully review the proposals made by the issuer in the draft offering document. With time, it is likely that some standard market practice will emerge.

Individual bondholder’s rights in case of default

The communiqué provides that if the terms and conditions of the bonds are restructured due to the issuers’ default, all enforcement proceedings initiated for payment of the bonds and all interim injunctions must be automatically suspended as of the date the bonds’ terms have been changed. This seems to indicate that a bondholder retains its right to start enforcement proceedings for its own bonds until a collective decision has been taken. This approach may trigger a race of individual bondholders to obtain enforcement and seize issuer’s assets before a collective decision is made. An alternative would be to prohibit individual actions entirely and let the bondholders’ representative take action on the basis of the collective decision of bondholders.

The communiqué remains silent on the role of the bondholders’ representative in an insolvency scenario. It may be of benefit if the individual would be entitled to represent the bondholders in the proceedings and register their claims.


The Turkish lira volatility and the Covid-19 crisis have adversely affected activity on the Turkish lira corporate bond market. However, once the Covid-19 impact will be mitigated, this market will revive. The new legal regime on bondholders’ meetings and bondholders’ representatives will then come to the forefront of market participants’ attention. The legislator has taken an important positive step in providing the framework. Issuers have been given a broad margin to design the rules in detail. The next bond issuances will certainly be followed with much attention and one can expect an interesting period of experimentation before a settled standard emerges.

“The legislator has taken an important positive step in providing the framework. The next bond issuances will certainly be followed with much attention and one can expect an interesting period of experimentation before a settled standard emerges.”

Challenges to SME growth

There is no doubt that policies are essential to support SMEs as they are constrained by their size.
Literature indicate that in spite of their influence, SMEs continue to face many challenges. The World Bank has identified the following key challenges:

  • regulatory and legal frameworks – which includes licensing and registration requirements, and the application of commercial legal frameworks
  • access to finance – SMEs also face high costs of credit, which includes land ownership rights and the ability to use collateral as security, information asymmetry and alignment with international accounting standards
  • SME support activities – they struggle to define their key competitive edge that allows them to continue to grow and deliver, for example, business development service and access to markets.85

In the Uzbek context, the BEEPS VI provides important insights into the challenges SMEs face when it comes to their business operations. Asked what their most pressing issue is, SMEs indicate that they struggle with tax rates, access to electricity and access to finance most. Competition from informal firms and an inadequately educated workforce are also important concerns (see Chart 1).

In regards to the issue of access to electricity, there is a clear difference between getting an initial grid connection and having a reliable power supply. Initial access is relatively good compared with other Central Asian countries: with SMEs waiting less than 10 days to get connected, compared with nearly 17 days on average in the Central Asia region. However, power supply is an issue with the incidence of electricity outages far higher than the average in the region (see Charts 2.1 and 2.2). This also leads to higher economic damage in terms of losses in sales.

CHART 1: Most pressing challenge SMEs face in Uzbekistan (share of respondents)

Source: BEEPS VI.

CHART 2.1: Days to connect to grid

Source: BEEPS VI.

CHART 2.2: Number of outages per month

Source: BEEPS VI.

SMEs in Uzbekistan also indicate that access to finance is an important issue. Generally, SMEs tend to struggle more with accessing external finance than larger firms because of higher perceived risk, a lack of collateral, but also an inability to present a bankable project due to shortcomings in terms of financial management and business planning. Not all firms want or need a loan. However, access to finance can allow a firm to invest into new assets for an expansion of production, or facilitate working capital management, in particular in environments where reliance on a supplier or buyer credit is low, such as Uzbekistan. It is therefore important that those firms that identify a need for credit can have a reasonable chance of getting a loan. In Uzbekistan, of those firms that said they needed a loan, a significant share were credit constrained, meaning they were either rejected when applying, or were discouraged from applying in the first place, due to high interest rates, excessive collateral requirements or complex loan application procedures. Chart 3 shows that SMEs tend to be significantly more credit constrained than larger firms. In Uzbekistan, nearly half of SMEs that say they need a loan feel that they cannot access one, an experience comparable with that of other countries in the region.

CHART 3: Share of credit-constrained firms

Source: BEEPS VI.

At the same time, SMEs in Uzbekistan who are able to access external financing seem to rely more on bank financing than other types of sources, compared with their peers in Kazakhstan (see Charts 4.1 to 4.4). This suggests that the banking system is a major source of financing for those
that are able to tap into it, whereas the reliance on supplier or buyer credit or government grants appears to be comparatively low. Nevertheless, it is worth noting that nearly half of the SMEs
are financed through state-owned banks. Their presence is significantly stronger in the country compared with, for example, Kazakhstan or the EBRD region at large, where only around 13 per cent of SME lending is channelled through state-owned banks. Interestingly, non-bank financial institutions such as microfinance organisations, leasing or factoring companies play a negligible role in facilitating access to finance although they can be important alternatives to banks, especially for SMEs. This suggests ample room for development. In many cases, an insufficient legal or regulatory framework inhibits the emergence and growth of such alternative finance providers. In certain economies, introducing a regulatory framework can lead to fair competition as there are clear rules for all participants. Authorities are able to ensure business standards and provide the often-needed assurance for investors and clients.

CHART 4.1 to 4.4: Source of financing for SMEs in Uzbekistan and Kazakhstan

Source: BEEPS VI.

One area that is important for SMEs in particular is their limited capacity to deal with legal and regulatory requirements. As many small businesses are managed by their owner, or have very limited managerial staff, it is particularly crucial for SMEs to have an efficient public service when it comes to permits, licensing, tax administration and similar issues. Ease of use, reduction in administrative steps, and different access points for businesses are important aspects in this context. For example, the provision of e-government services, or one-stop shops where several government services can be accessed in one go, are ways to ease the burden on businesses. In this regard, the Uzbek government has made important progress by putting in place one-stop shops and cutting the number of required licences and permits required to run a business. Indeed, managers of Uzbek SMEs spend less time dealing with government regulation than their counterparts in larger firms, or in Central Asia and the EBRD regions more widely (see Chart 5).

CHART 5: Percentage of time spent by senior management to deal with government regulation

Source: BEEPS VI.

Uzbekistan has made major reform efforts in recent years in this regard and climbed a number of ranks in the annual Doing Business reports.86 It currently ranks 69th out of 190 economies. However, there is further room for improvement. When looking at the Doing Business results, an area that stands out is the ease of trading across borders. Uzbekistan has huge potential for producing and exporting goods. But the time and cost of filling in documentation and getting physical goods across the border is a multiple of that in other Central Asian countries. Again, SMEs would be disproportionately affected as they tend to have fewer resources to deal with such obstacles. However, for SMEs in particular, issues associated with the attempt to reach foreign markets tend to go much deeper. They span from complying with quality requirements and obtaining internationally recognised certification, to identifying clients or suppliers abroad. In all of these areas, government services can play an important role to facilitate access to international markets.


SMEs make a substantial contribution to the growth and development of economies globally. They can lead to job creation, generate productivity, and in some instances export trade and act as a key link in value chains. While their contributions in these areas may differ by country, size or statistical definition, there is little doubt as to their importance regarding economic activity. Recognition of their contribution has generated interest from policymakers at both the political and bureaucratic levels. That interest has grown over time in Uzbekistan as it has in other regions.

The main reason for policy intervention is that SMEs face market failures that inhibit their survival and growth. These failures should be the focus of government policy. Regulations remain an obstacle for SMEs as these firms tend to be poorly equipped to deal with problems arising from regulations. Access to information about regulations should also be made readily available to SMEs by policymakers.

As revered as SMEs are, the fact is that many SMEs in Uzbekistan remain fragile, immature and undeveloped. There is a need for them to reach their full potential and enhance competitiveness. Based on the above, this can be achieved through the provision of sustainable and pertinent support mechanisms, including access to credit, through the assistance of the government, but also the private sector can play a key role in providing the right environment to thrive.

“Ideally, the SME definition should reflect the overall size of the economy and be based on structural business statistics that help identify those companies most in need of support.”