Chapter 1

Predictability of decisions

A measure of risk and uncertainty is in the nature of litigation. However, it should be possible for investors to obtain meaningful advice about the likely outcome of commercial disputes. Decisions should show consistency in the courts' treatment of disputes of a similar kind. The assessment concluded that decisions in the region indicated variable levels of predictability (see Chart A.1.2.2). For most countries local experts were able to discern patterns in the case law in each sector assessed, but with frequent divergences. Decisions were considered strongly predictable in Russia and Ukraine and least predictable in Mongolia and Tajikistan. In Turkmenistan, where case law is not available and the outcome of past decisions is not known, judicial proceedings are necessarily highly unpredictable.

Various factors affected the scores for predictability. Lack of predictability in a particular legal sector was often linked to uncertainties in the relevant legislation, reflecting the frequency of changes in the law and lack of consistency between primary legislation (statutes made by legislatures) and secondary legislation (rules and regulations made by executive authorities). However, the assessment found that the quality of legislation, although significant, was not an overwhelming factor driving predictability. Decisions in some sectors scored strongly for predictability despite more moderate scores for the adequacy of the legislative framework (see results for Russia and Ukraine in Charts A.1.2.2 and A.1.2.4); others were unpredictable within an adequate legislative environment. This suggests that lack of predictability often arises from underlying problems in judicial decision-making unrelated to legislative influences, a hypothesis supported by the correlation between the scores for the predictability and quality dimensions (compare Charts A.1.2.2 and A.1.2.3).

Another factor contributing to greater predictability was the presence of superior court mechanisms promoting the uniform application of commercial law, such as decrees, information letters and summaries on judicial practice and interpretative issues. Such instruments are present in all of the countries reviewed: in some they are binding on lower courts (Azerbaijan, Belarus, Russia and Turkmenistan), while in others only recommendatory (Moldova and Ukraine). In those sectors of law where such superior court guidance exists, predictable decisions were more prevalent. In Russia, which had the best scores for predictability, the instruments are well-developed; the Presidium of the Supreme Arbitrazh Court (the court of final instance in commercial disputes in Russia) has been very active issuing explanatory resolutions in many legal sectors, providing interpretative and procedural guidance for lower courts. In Tajikistan such mechanisms are also in place, although much less developed. The quality, frequency and comprehensiveness of superior court guidance, particularly dealing with topical and difficult areas where the possibility for confusion and divergent approaches is greatest, have a significant effect.

The accessibility of judicial decisions also had a strong correlation with predictability. By definition, predictability of decisions must be assessed within the known context of the broader case law. In countries where availability of decisions is limited, such as Tajikistan, predictability will be inherently lower, and trends in the case law, if they exist, will be less apparent. In contrast, commercial law decisions in Russia are widely available and searchable by subject matter on the web sites of the Arbitrazh Courts.

In addition, there was a moderate correlation between predictability and impartiality. Greater predictability in judicial decision-making can reduce the risk of improper influences on the court. The more coherent the case law, the more divergent approaches (including those resulting from corruption) tend to stand out, inviting scrutiny. However, predictability can have a negative manifestation where, on particular issues, court bias might be anticipated.

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