1. The promise of mediation practice in corporate governance Presented by: Lada Busevac, Operations Officer, IFC Sarajevo Paris, February 13, 2007

2. 2 Commercial mediation project in Southeast Europe - highlights Law on Mediation enacted in all SEE countries 8 Court-referred mediation pilot projects currently running – Belgrade (3), Subotica, Sarajevo and Banja Luka Close to 2000 mediations completed successfully (of which 45% commercial) 42 million EUR released Over 90% of participants in mediation procedure stated willingness to use mediation again* *Comprehensive evaluation report on PEP SE ADR program to be completed and published soon August 2006 – opening of the Belgrade National Mediation Center Banja Luka Mediation Center – mediator in session with parties

3. 3 50 trainings events, 700 people trained in basic and/or advanced mediation techniques 34 active mediators in pilot projects (Serbia and Bosnia) 60 people obtained Mediator’s certificate from MoJ in Macedonia in July 2006 In Bosnia as of February 2007 a first generation of formally licensed mediators (expected up to 50 candidates to apply) Commercial mediation project in Southeast Europe - highlights October 2006 – Sarajevo, Advanced Commercial Mediation Training with CEDR UK December 2006 – Tirana, Round Table on Mediation Prospects November 2006 – 20 judges/stakeholders from Serbia visiting the Netherlands

4. 4 Commercial mediation project in Southeast Europe - highlights 100 presentation/seminar/events, 4000 participants 38 PR materials developed 3 books and 2 manuals published 17 issues of newsletters, 500 press mentions 1 web site 3 study trips organized Macedonian PR material DISPUTE.MEDIATOR.AGREEMENT

5. 5 Commercial mediation project in Southeast Europe - highlights Program Indicators TargetBiHMacedoniaSerbiaTotal 2005-2008(start-up) No. active mediation centers 102147 No. courts referring 162136 No. cases referred 6,3003,86101,7425,953 No. referrals accepted 2,45053601,7422,585 No. successfully mediated disputes 1,49030001,5511,985 Funds released (mn. Euros) 19.09.30.033.142.4 ---------Results 2005-2006 (Sept.)------------- Key Targets and Results: 2005-2008 IFC Alternative Dispute Resolution Program

6. 6 Better business performance - data on Bosnia - Of all cases referred 75% commercial Approximately three years in court In 87% of cases financial transaction completed within two weeks after signing a mediation agreement Total funds released EUR 9,5 million Funds released earmarked for the following purposes: –72% to cover current overhead and liabilities –8% reinvested –20% other

7. 7 Fostering CG mediation practice in Bosnia - WB’s CG Country Assessment data - App. 1 million shareholders, 1500 investment funds Poorly developed CG practice overall Ownership structure (above 50%):  23% state  18% FDI’s  9% individuals High potential for conflict (already 6% in litigation) Inadequate protection of shareholders’ rights detected as one of the main weaknesses

8. 8 Fostering CG mediation practice in Bosnia - pilot project results - - pilot project results - 220 mediation agreements signed where a shareholder company and/or individual shareholder were involved Total funds released EUR 4.2 million Good example of enunciating pro ADR practices  Central shareholders register

9. 9 Fostering CG mediation practice in Bosnia Preconditions for success Legal framework necessary  Example - over 50% of surveyed parties in the pilot projects state a problem of non-enforceability of mediation agreement Judges as catalysts of change  Example – anecdotal use of mediation before the court; Pro-ADR corporate policies  Until now ad hoc decisions to engage in mediation  Targeted and continuous public awareness campaign a MUST

10. 10 Thank you. Lada Busevac lbusevac@ifc.org