Attachment_5_IEE__DCN_2018_KOS_036_RCE_Commercial_Justice.pdf

DCN: 2018-KOS-036

USAID/Kosovo Commercial Justice

EE.BEU Standard Form: RCE.v3

SOP 1, Template 2: Request for Categorical Exclusion (RCE)

United States Agency for International Development (USAID)

USAID/KOSOVO

Request for Categorical Exclusion (RCE)

Program/Project/Activity Data:

Activity/Project Name: Commercial Justice

Assistance Objective: Governing Justly and Democratically

Program Area: Democracy and Governance

Country(ies) and/or Operating Unit: KOSOVO Originating Office: DGO Date: April 16, 2018

PAD Level RCE: Yes☐ No+ RCE/IEE Amendment: Yes☐ No+ Supplemental RCE: Yes☐ No+

DCN of Original RCE/IEE:

DCN of Amendment(s):

If Yes, Purpose of Amendment: N/A

DCN(s) of Related EA/IEE/RCE/ER(s): n/a

Implementation Start/End: LOP: FY 19-FY 24

Funding Amount: LOP Amount: $XXXXXX

Contract/Award Number (if known): TBD

Recommended Determination: Categorical Exclusion

Additional Elements:

Government to Government: ☐ Local Procurement: ☐ Donor Co-Funded: ☐

1. Project and Activity Description

1.1 Purpose and Scope of RCE - The purpose of this document, in accordance with Title 22, Code of Federal Regulations, Part 216 (22CFR216), is to provide a preliminary review of the reasonably foreseeable effects on the environment of the new Commercial Justice activity described herein and recommend determinations and, as appropriate, conditions, for these activities.

The Commercial Justice activity is a 5 year, $XXXXXX endeavor focused on improving commercial dispute resolution and enforcement to reduce opportunities for economic corruption, thereby encouraging investment in Kosovo

1.2 Project Overview - In the last 10 years, Kosovo has made significant progress in the areas of commercial law and justice sector institution building, including case backlog management. Kosovo now ranks 40th out of 190 economies on the World Bank Doing Business Report. However, these improvements have not resulted in the necessary economic growth, and investor trust needs to be further

USAID/Kosovo Commercial Justice 2 EE.BEU Standard Form: RCE.v3 increased. Ineffective dispute resolution, enforcement and insufficient implementation of laws remain the most significant challenges, which create an uncertain business environment and high perception of corruption.

Perception of grand corruption is widespread in Kosovo and at the same time, Kosovo’s judicial system lacks the competency and business orientation to enforce commercial contracts, which leads to an increased perception of and opportunities for corruption. In Kosovo, commercial judgements are not decided and enforced in a timely manner, which creates uncertainty in the business environment. Lengthy proceedings are a serious impediment that discourages potential investors to do business in Kosovo. The impact of not deciding commercial cases quickly or accurately has an outsized impact on investment. The World Bank Kosovo Systematic Country Diagnosis found that the poor performance of the justice sector creates obstacles for business growth. Further, because of the inefficient and unpredictable decision making, costs and risks associated with doing business rise, encouraging the offering, giving, receiving and solicitation of bribes.

Limited capacity at several institutions involved in commercial dispute resolution and enforcement significantly contributes to the inefficiency and untimely resolution of proceedings. The Kosovo Judicial Council (KJC) does not assign enough specialized judges to the Economic Departments. There is only one judge who serves in the Economic Department of the Appellate Court. The reputation of the Economic Department suffers from the general backlog in the Pristina Basic Court as the Economic Department is within the Basic Court. There is also interdependence and conflicting competencies between the Economic and Administrative Departments, where elements of a commercial case need to be resolved in the Administrative Department prior to being considered in the Economic Department. Both the KJC and the President of the Pristina Basic Court believe that increasing the number of judges will alleviate the workload in the Economic Departments. However, increasing the number of judges will not change the complexity of commercial law. The complexity of these cases requires specialized judges, professional legal assistants, and court support staff. The Kosovo Judicial Academy (KJA) only includes a five day commercial law training for all judge candidates, which is not enough time for any judge to gain expertise in commercial matters, especially not on international commercial law. More importantly, every judge interviewed questioned the quality of these trainings. There is currently no available training for support staff. Nevertheless, the Government of Kosovo (GoK) approved an increased budget for the KJC to include more positions for legal associates and clerks during 2018, which should also help the Economic Departments by increasing the number of staff, but not necessarily the expertise. The GoK has also begun a review of the justice sector, which includes a review of commercial law and justice within commercial law. The review aims to result in providing decision-making points to leaders about needs of the system and then a resulting Rule of Law (RoL) Strategy to serve as a guiding document for all RoL reforms in Kosovo.

USAID plans to build on its previous activities in rule of law but also go one step further in making sure that the mechanisms for resolving commercial disputes are effective and accountable.

2. Project Description and Climate Risk Screening - The purpose of this Activity is to reduce opportunities for corruption and improve business’ and public perception of corruption by improving commercial dispute resolution, enforcement and an understanding of the processes that promote investment and economic growth in Kosovo.

USAID/Kosovo Commercial Justice 3 EE.BEU Standard Form: RCE.v3

The Contractor will employ a flexible, demand-driven approach that builds on consultations with all stakeholders, other donors, and USAID. The operating environment can be unpredictable and the Contractor will need to adapt quickly per the needs of the environment in achievement of the stated objectives. Thus, it is essential that the Contractor practice adaptive management of the Activity in order to seize new opportunities and adjust to challenges as they develop. For additional details, see Section C.6 “Guiding Principles”.

OBJECTIVE 1: Strengthen Kosovo’s Capacity to Resolve Commercial Disputes and Enforce Judgments

This objective will expand the advances Kosovo has made to improve the resolution and enforcement of commercial disputes and judgments, such as improved legislation, technical assistance to the Economic Departments in courts, Private Enforcement System, etc. The Contractor must provide technical assistance to the institutions dealing with and regulating commercial dispute resolution and enforcement to improve efficiency of commercial dispute resolution and enforcement.

The Contractor must also assist the Ministry of Justice (MOJ) to implement amendments to the Law on Enforcement Procedure regarding strong oversight of PEAs and work with the CPEA to improve efficiency and cooperation with Ministries.

OBJECTIVE 2: Enhance Commercial Law, Use of Alternative Dispute Mechanisms, and Improve Public’s Awareness and Legal Literacy

Given that the number of commercial laws is increasing and many have new amendments that are not harmonized, the Contractor must undertake activities to improve the quality, standardization, and harmonization of commercial law in Kosovo. In addition, the Contractor must work with the Kosovo business community, through the relevant active chambers of commerce and business associations to increase legal literacy among businesses and investors. The Contractor must also conduct interventions for judges, support staff, businesses, and other relevant actors to increase their knowledge and proper application of commercial law.

The Contractor must also undertake activities to increase the usage of other existing Alternative Dispute Resolution (ADR) mechanisms that will contribute to more efficient and effective dispute resolution for public and private parties.

The Contractor must seek to strengthen the systems for commercial dispute resolution and enforcement by facilitating the growth of relationships between private sector, government, civil society, and academic stakeholders, as well as other interested actors. The quality of these relationships is key to upgrading and improving the overall business climate in Kosovo. By facilitating through local actors and by instituting strategic communication within Kosovo’s local institutions, the relationships formed and capacities developed will inherently rest within the local system and will be more likely to be sustained over time.

Strategic communication also entails a planned, analytical approach for determining whom the Activity must involve in achieving reform objectives, and for what purpose, when, and how they must be engaged.

The Activity includes strategic communications in order to overcome misconceptions among the public and provide useful information for stakeholders. As part of this objective, the Activity will improve both

USAID/Kosovo Commercial Justice 4 EE.BEU Standard Form: RCE.v3 the quality of information and its availability to stakeholders and will do so jointly with stakeholders of this Activity.

Strategic communications is a cross-cutting theme closely related to both of the Activity’s objectives, and which requires particularly close coordination with any future USAID activities which may also address economic corruption. In addition, interventions under strategic communication may require significant coordination with USAID programming supporting civil society and media.

Defined or illustrative activities under Component One — Strengthen Kosovo’s Capacity to Resolve Commercial Disputes and Enforce Judgments

Potential Climate Risk

Climate Risk Rating*

1.1 Increase capacities of Economic Departments of Pristina Basic Court and Court of Appeals to resolve cases and enforce decisions efficiently and professionally;

N/A Low

1.2 Improve Ministry of Justice capacities for oversight of the Private Enforcement System;

N/A Low

1.3Improve organizational capacity of the Chamber of Private Enforcement Agents to more effectively manage its resources, improve enforcement, strengthen professional standards, and retain and recruit staff;

N/A Low

1.4 Increase knowledge and effective application of commercial law by judges, court staff, and other stakeholders.

N/A Low

Defined or illustrative activities under Component Two — Enhance Commercial Law, Use of Alternative Dispute Mechanisms, and Improve Public’s Awareness and Legal Literacy

Potential Climate Risk

Climate Risk Rating*

2.1 Increase use of Alternative Dispute Resolution mechanisms; N/A Low

2.2 Harmonize commercial legislation with European Union (EU) and international best practices;

N/A Low

2.3 Improved strategic communication between commercial justice institutions and the general public;

N/A Low

2.4 Increase public awareness of commercial law dispute resolution and enforcement mechanisms, including existence and nature of reforms.

N/A Low

2. Justification for Categorical Exclusion Determination The activities under the Commercial Justice will not have an effect on the natural or physical environment and are among the classes of activities listed in 22 CFR 216.2(c)(2). Therefore, under §216.2(c)(1), neither an IEE nor an EA will be required for these activities. Instead, a categorical exclusion threshold determination is recommended for the following identified activities under 22 CFR 216.2(c)(2):

● Activities 1.1, 1.2, 1.3, 1.4, 2.1 and 2.3 under §216.2(c)(2)(i) Education, technical assistance, or training programs except to the extent such programs include activities directly affecting the environment (such as construction of facilities, etc.);

USAID/Kosovo Commercial Justice 5 EE.BEU Standard Form: RCE.v3

● Activities 2.2 and 2.4 under §216.2(c)(2) (iii)Analyses, studies, academic or research workshops and meetings;

3. Limitations of the Categorical Exclusion Determination:

This categorical exclusion does not cover classes of actions normally having a significant effect on the environment under §216.2(d):

i. Programs of river basin development;

ii. Irrigation and water management;

iii. Agricultural land leveling;

iv. Drainage projects;

v. Large scale agricultural mechanization;

vi. Resettlement projects;

vii. New land development;

viii. Penetration road building and road improvement;

ix. Powerplants;

x. Industrial plants; and

xi. Potable water and sewerage projects

In addition, this categorical exclusion does not cover activities that:

● Support project preparation, project feasibility studies, engineering design for activities listed in §216.2(d)(1);

● Affect endangered species ;

● Provide support to extractive industries (e.g. mining and quarrying);

● Promote timber harvesting;

● Lead to construction, reconstruction, rehabilitation, or renovation work;

● Support agro-processing or industrial enterprises;

● Provide support for regulatory permitting;

● Lead to privatization of industrial facilities or infrastructure with heavily polluted property;

● Assist the procurement (including payment in kind, donations, guarantees of credit) or use

(including handling, transport, fuel for transport, storage, mixing, loading, application, clean-up of spray equipment, and disposal) of pesticides or activities involving procurement, transport, use, storage, or disposal of toxic materials--pesticides cover all insecticides, fungicides, rodenticides, etc. covered under the Federal Insecticide, Fungicide, and Rodenticide Act; and/or

● Procure or use genetically modified organisms.

Any of these actions would require a Europe and Eurasia Bureau Environmental Officer (BEO) approved amendment to the categorical exclusion.

4. Mandatory Inclusion of Environmental Compliance Requirements in Solicitations, Awards, Budgets, and Work Plans

● Appropriate environmental compliance language, including limitations defined in Section 4, shall be incorporated into solicitations and awards for categorical exclusions.

● The implementing partner shall ensure annual work plans do not prescribe activities that are defined as limitations in Section 4.

5. Revisions Under §216.3(a)(9), if new information becomes available that indicates that activities covered by the

USAID/Kosovo Commercial Justice 6 EE.BEU Standard Form: RCE.v3 categorical exclusion might be considered major and their effect significant, or if additional activities are proposed that might be considered major and their effect significant, this categorical exclusion determination will be reviewed and, if necessary, revised by the Mission Environmental Officer (MEO) with concurrence by the BEO. It is the responsibility of the USAID Contract Officer’s Representative (COR)/Agreement Officer’s Representative (AOR) to keep the MEO and BEO informed of any new information or changes in the activity that might require revision of this determination.

1 Climate Risk Screening and Management Tool for Project Design

Climate Risk Screening and Management Tool for Project Design

OUTPUT MATRIX: CLIMATE RISKS, OPPORTUNITIES, AND ACTIONS

* = A required element, according to the Mandatory Reference # Project elements may include Purpose / Sub‐purpose, Areas of Focus, or Activities / Mechanisms, etc.

1.1: Defined or Anticipated Project

Elements*

1.2:

Time‐ frame

1.3:

Geo‐ graphy

2: Climate Risks* 3: Adaptive Capacity

4:

Climate Risk

Rating*

5:

Opportunities

6.1: Climate Risk

Management Options

6.2: How Climate Risks Are Addressed in the

Project*

7: Next Steps for Activity Design*

8:

Accepted Climate Risks*

1. Strengthen Kosovo’s Capacity to Resolve Commercia l Disputes and Enforce Judgments

2. Enhance

Commercia l Law, Use of Alternative Dispute Mechanism s, and Improve Public’s Awareness and Legal Literacy years

Pristina and Kosovo wide

● Public Service Disruption due to flooding – water distribution system breakage or contamination, transportation (roads washed out, bridge collapse) negatively affected

● Public Service Disruption due to drought – lower availability of water

● Water contamination due to flooding – higher chance of waste/contaminates washed into waterways after flooding events, i.e. petrol, fertilizers, pesticides, debris

● Water contamination due to drought – less dilution of municipal/industrial effluents due to lower water flow in rivers

● Public Service Disruption due to temp. extremes (prolonged cold/heat snaps) resulting in high energy demands that cannot be met

● Increased likelihood of food and water-borne diseases after floods

● Increased likelihood of vector-borne diseases

● Agency for Emergency Management and municipal emergency departments

● Funding from the central budget and some funding from the municipalities

● Municipal/ civil servants, development

● 2-3 functioning meteorological stations in Kosovo

LOW Increase awareness for climate risks in the meetings and/or on civil society activities.

Inform the public about possible delays due to climate risks.

While the services are provided the IP should be mindful to gather any information related to climate risk, if applicable.

While the services are provided the IP should be mindful to consider any information related to climate risk, if applicable such as property ownership in flood zones.

While the services are provided the IP should be mindful to include climate information that could affect technical assistance.

None