Azerbaijan International

Winter 2000 (8.4)
Pages 30-32

Learning the Rules of the Game
Germany Assists Economic Legal Reform in Azerbaijan

Imagine that two teams are playing a game together, with high stakes involved. However, since each team is accustomed to playing by different rules, the game is in danger of falling apart. The players simply don't understand each other.

In this particular case, the game is business and the playing field is Azerbaijan itself. As the country transitions to a market economy, it has opted to play by the rules of international law as defined by the West, because it knows that this will help attract investors. In turn, the rights of those investors have to be safeguarded by laws that both sides understand.

To continue the sports metaphor, Germany has been coaching Azerbaijan to help it create its own set of rules and open its playing field to everyone. For the past three years, Professor Rolf Knieper of Bremen University has worked to help Azerbaijan reform its legal and legislative systems, from organizing civil courts to training Azerbaijani judges in the new property laws. In a recent interview, he told us that this work is far from over.

Rolf Knieper has worn many hats during his lifetime: business lawyer, law professor at Bremen University in Germany, distinguished author of several books about law. But the role that he keeps coming back to is much more hands-on. It's that of an advisor who helps forge the legal systems in newly independent countries.

Above: Azerbaijani stamps commemorate the famous German folktale, "Bremen Musicians" that was published by the Grimm Brothers, William and Jacob, in the mid-19th century. Stamp series 1997.

Knieper says that an eight-year assignment in Africa gave him his first taste of this excitement: "What I found intriguing was working in countries that hadn't yet developed into full-fledged civil societies. I was curious to see how law works in countries where you almost have no formal state. How do these states exist? Was it only because the colonial powers invented them, or did they have a reasonable sense of structure innate within themselves?" While in Africa, Knieper worked in the Central African Republic, Nigeria, Kenya and Niger.

Then he planned to return to Germany. "I wanted to go back to the university, be a professor and retire on my pension one day," he recalls. "But then unfortunately - or fortunately - the Soviet Union collapsed. Since so few people knew anything about the Caucasus, I was told: 'Mr. Knieper, you've found your way through the jungles of Africa. Why don't you go to the Caucasus and see what's happening there?'

"I looked at the map to see where Tbilisi [Georgia] was and found it so fascinating that I took a long-term sabbatical to throw myself into another experience of practical consulting, thinking that in two or three years I would return to the university and finish there."

Eight years later, he still hasn't gone back. "The longer I'm involved with this work, the more I realize that perhaps I've become 'too curious about the world' to go back and teach the basics of contract law and torts law to second-year law students in Bremen," he admits.

There has been a surge of interest in the the study of law at Baku State University (right) where law classes (below) have been filled, especially these past two-three years. The Germans have been very active in assisting the Azerbaijan government to reform laws especially those relating to the economy. The new laws should help attract and protect international investment.

Knieper became involved with Azerbaijan's legal reform when Michael Schmunk, Germany's Ambassador to Azerbaijan (1995-1996) at the time, asked him to come to Baku. The Azerbaijani government had asked the German government to look into the possibility of establishing a project and cooperating in the field of legal reform.

"Understand that the original idea did not really come from Germany," Knieper explains. "I think that in most countries, including Azerbaijan, people understand that in order to fundamentally change the basis of the economy and social structure, you need law. People believe that the law must be changed and reformed. And that's why Azerbaijan took the initiative and asked for help."

Azerbaijan specifically needed help with laws related to the economy, as it veered away from a "command economy" based on dictates from the Communist Party. "The more you depend on an open market," Knieper says, "the more you need contracts between equal partners. You need law to provide a fair framework for that. And Azerbaijan understood that."

Azerbaijan was not the only newly independent state to call on Germany's help. As early as 1992, Georgia asked Germany to help reform its legal system, Knieper says. "At the time, the World Bank and the U.S. didn't want to go into Georgia because there was a civil war going on. They thought it was too dangerous. We were the only ones working there for two or three years. So in the Caucasus, it's fair to say that the Germans were the forerunners and the most active legal consulting partners at the beginning. We also have a project in Armenia, which started at about the same time as the one in Azerbaijan, in 1996."

One may ask, why hasn't the U.S. taken an active role in Azerbaijan in the legal reform field? Section 907 of the Freedom Support Act, passed by the U.S. Congress under the influence of Armenians, prevents U.S. aid from going directly to the Azerbaijani government. Until this past year, this law blocked the American Bar Association (ABA) from helping Azerbaijan.

Common Values
Why exactly did Germany get involved in Azerbaijan's legal reform? Wolfram von Heynitz, Economic Officer at Baku's German Embassy, sees the project as an investment in foreign relations: "In today's international relations, many people talk only about the great game of power and influence, who gets the oil and gas in Azerbaijan. But we're not just dealing with power politics here. I think one of the concepts our government and most other European governments follows is that international relations are also based on respect for values."

"'Geopolitics' is a word that has been dead for some time now," explains Knieper. "It's an extremely old-fashioned word that doesn't belong to a modern society anymore. These days, it's important to open the field and let all the players play according to identical rules and shared values, no matter who they are." International relations are no longer dominated by wielding power over physical territory or land, but rather by gaining access to markets and economic exchanges.

In order to create a win-win situation for all sides, von Heynitz says it is necessary to create common, shared values. "Once there is the rule of law and the belief that certain principles in our systems should be consistent, then you have a common base between the two different countries. This is one of the key principles in our understanding of foreign policy.

"There's a lot of talk about Azerbaijan becoming more and more oriented towards Europe, but what is Europe?" Heynitz asks. "It's not only a geographical designation; it's basically a union of countries sharing the same basic values. If Azerbaijan wants to get closer to Europe and Western countries, we need to help it implement those same standards. These are the same values that we want to develop and strengthen through-out the Caucasus, in Central Asia and the Russian Federation."

Legislation 101
One of Germany's first projects in Azerbaijan was a seminar given by Knieper in 1997, which helped the members of Parliament learn the techniques of drafting legislation. Prior to that, laws had been framed in Moscow, not Baku, so this process was unfamiliar. Knieper recalls: "I did a long paper, which was also translated into Azeri and Russian and given to members of Parliament, the Cabinet of Ministers and the President's Office. We started to build up mutual trust." Soon afterward, Azerbaijan asked the German government to help its legislators establish key laws, acts and courts for developing the economy.

"We didn't want to concentrate on big oil or international investment," he says. "We wanted to focus on legislation that was important in the everyday lives of citizens, including contracts for rent, property and land. All of these things are embedded in one single code - the civil code. Big oil has its own international contracts, international arbitration and it has its own ways of protecting itself without relying very much on national law. That's the way it is for them more or less all over the world.
"Neither have we touched on inheritance law or family law," he continues. "We don't want to interfere in cultural spheres. It would be strange for a foreigner to delve into those areas. Instead we've concentrated on laws that are basic for the development of the economy."

With help from German consultants, Azerbaijan's civil code with its more than 1,500 articles has passed through Parliament and is now in force. Also put into place was a new civil procedure code, which details the procedures that the various courts follow in Azerbaijan.

According to Knieper, Germany also assisted in drafting national law on arbitration: "This is, perhaps, the only example that really leans heavily towards international investment. We established it on the basis of a model law that was established in 1985 by the United Nations Institute for Trade Law. It's a very successful model, and we convinced Azerbaijan to follow this model law almost to 90 percent-from legal basis to international arbitration."

In May of 2000, Azerbaijan's Parliament ratified a key international convention, called the New York Convention, which obliges each country that ratifies it to execute international arbitration awards as rendered by international courts. "There was a certain mistrust among the decision-makers toward all these international conventions and international treaties," Knieper says. "Keep in mind that Azerbaijan had just gained its independence, and they felt they were having to give it up just to ratify all these conventions so that they could become integrated into the world of international business legislative conventions. But it's very important for international investors and exporters who do business within Azerbaijan to have this convention ratified," he says.

Constitutional Protection
Another project Germany has been involved in concerns Azerbaijan's new Constitutional Court. This court has the power to double-check all of the laws that are passed by either the Parliament or the President. If a certain law contradicts the Constitution, the Constitutional Court has the power to say it is invalid.

For example, if a law were to be passed that enabled companies to not offer the same pay to both men and women, the Constitutional Court would declare it unconstitutional, since Azerbaijan's Constitution says that men and women are equal. It would be unconstitutional for an employer to pay different wages for the same work. Nor can authorities open someone's personal mail, since the confidentiality of mail is guaranteed by the Constitution.

Likewise, if a law is passed against ethnic minorities, it would be declared unconstitutional, since discrimination against ethnic minorities is prohibited by the Constitution.

During Soviet times, Azerbaijan did not have a constitutional court. Its new court has been modeled to a certain extent on the German Constitutional Court, which has developed into a powerful institution, Knieper says. This type of court is slightly different from the U.S. Supreme Court, which doesn't distinguish between constitutional questions and other legal questions.

Different Mindsets
Now that these new laws and courts are in place, the second major step of the project is to train judges and lawyers to understand them. This is far from easy, Knieper says: "These concepts - which to us seem so normal - are complicated for post-Soviet lawyers to understand. Once they manage to understand them, they're still likely to have doubts about whether they can work or not.

"It's incredible, just imagine what we are asking lawyers in these former Soviet countries to do - not just in Azerbaijan. When the new civil code in Germany was introduced 100 years ago, making minor changes to the old system, 20 percent of the judges quit their jobs, saying: 'No, I don't want to get into these new things.' But the new civil code in Germany at that time was much less different from the previous system than the new civil code of Azerbaijan is from Soviet times.

"Just imagine - decisions on economic questions are left to private parties to negotiate between themselves. If I want to sell someone a house or some land or a car, it's a matter between the two of us. If we go to court, it's not up to the judge to make an official inquiry into the case. The parties decide what evidence to present to the court.

"Another difficult concept for them to understand is the limited liability of a shareholder of a joint stock company. In the end, he or she is not responsible for the debt of the company. That's a concept that developed in Europe in the 17th and 18th centuries, and then in the U.S. over the past 100 years. It's a very complicated, abstract concept, especially if you've been brought up under a different system."

More to Come
For further education on legal reforms, Azerbaijani working groups will write commentaries on the new laws so that lawyers, notaries and judges will understand them.

"We hope to have the commentaries out by the summer of 2001," Knieper estimates. "Germany is ready to subsidize the costs of the first editions so that they will be available. Then the second, third and fourth editions will be paid for by the income from the first edition. This self-sustaining process has worked well in Georgia, so we believe it will work well here also.

"I hope that this entire project will be completed in three years' time. By then the laws will be written, the commentaries will have been written and distributed and we will have trained at least one entire group of judges. Hopefully by then they will be equipped to train a new generation of judges. These laws are very complicated and the wording is very abstract.

"A team has been organized under Safar Mirzayev, the head of the staff of Parliament, who is recognized as the leading specialist on civil law in the country. The working group for civil procedure code and chief editor of the commentaries is another brilliant lawyer - Fuad Alasgarov of the President's office."

Right now, Azerbaijan is deciding in which language to publish these commentaries. There is no precedent to publish legal commentaries in Azeri, so it might be easier to publish them in Russian. But on the other hand, that might create difficulties in accessing the law. "It's not for us to decide. It's a political decision - the Azerbaijanis will make the choice themselves," Knieper explains.

But educating the judges and lawyers is not enough either, he says. "We also need to educate the public about these legal reforms. We've had meetings with the newspapers, and we're working with radio and TV to develop programs that will explain the new laws and courts. We want to communicate to the Azerbaijani people that it is in their best interests to go to the court to protect their rights. For example, if someone wants to sue because he's been sold a lousy car, that's his right. In this way, we want to build up the public's trust in the courts.

"You have to create a public awareness and obedience toward the law. One fundamental question is how to introduce law that is fair enough, and legislation that is fair enough so that all people will realize that they should obey the law - that it's also in their long-term interests to do so.

"That's one of the challenges in all new countries, not just Azerbaijan," says Knieper. "There's a certain amount of skepticism among the population that the laws are repressive against the poor."

One of the outgrowths of Knieper's and his German colleagues' involvement in legal reform in the Caucasus has been to cultivate the concept of regional law in these three countries - Georgia, Azerbaijan and Armenia. It's only natural that it would begin to emerge, as the modern legal history of all three countries is very similar. When it comes to economic law, there really is very little room for ethnic specialties, Knieper says. "If someone sells a car and creates an act of sale, there is nothing Armenian or Azerbaijani about such a sale. An act of sale is an act of sale, and a car is a car. Lawyers understand that."

In 1997, a conference was held in Bremen, and legal representatives from all of the CIS countries were invited. In addition, major funding organizations such as USAID, World Bank, European Bank, Asian Development Bank, the European Commission, and the Dutch Embassy sent representatives as well.
In 1998, another conference on Civil Code was organized just for the Caucasian countries. The Ministers of Justice from Azerbaijan, Armenia and Georgia all came with their delegations to discuss various issues and identify areas where the law could be the same.

At the closing press conference, one of the Armenians remarked: "Bremen has become something like the secret capital of the Caucasus, because although we cannot visit each other in our countries these days, we can talk freely when we come to Bremen."

"That was a wonderfully touching moment," says Knieper, "because he was sitting beside an Azerbaijani partner who agreed with him. Since that time we have convened lawyers from Armenia, Azerbaijan and Georgia on five different occasions.

"We held a conference in Tbilisi and everything went fine. We've thought about organizing a conference in Yerevan or Baku, but it seems a bit too early for that. We don't want these conferences to be usurped for political purposes. We're dealing with each other as professional lawyers, not politicians."

There's still a lot of work to do, and the Germans are hoping to find other countries that can join them in bundling funds and cooperating closely. Knieper explains that now that the American Bar Association has a "carve-out" - an exemption from the U.S. aid restrictions of 907 - they're hoping to involve the Americans in helping educate the Azerbaijanis about these new laws. "Americans are very smart in working with TV, so we hope we can work together to accomplish these long-term goals here in Azerbaijan," he observes.

The mayor of Bremen visited Baku this past September. Knieper explains: "He was here to meet with officials and try to drive home some important points in a diplomatic way, such as: 'You've organized a court system, you have an Appellate Court, and you have newly appointed judges who've been examined before they were appointed. So now, don't forget to pay the judges adequately. Otherwise, you'll continue to have corruption. If you have a judiciary that is not corrupt, then this will be a major step in countering corruption and reinforcing a non-corrupt society."'

One of the discernible trends that Knieper has observed since working in Azerbaijan is the way young people are viewing the legal profession. "Under the Soviet system, lawyers weren't highly respected because the job was viewed as highly ideological. No decent person wanted to become a lawyer. Instead, they preferred to enter fields such as engineering, physics, music and medicine.

"But nowadays, with the market economy emerging, there's an enormous interest in law, and the number of students enrolled in law at Baku State University has increased dramatically. Many young people are trying to find ways that they can study law abroad and then return home. I don't want to be unfair to their professors, but the truth is, it's probably easier for young people to grasp these new concepts than their elders, who have been trained in a completely different context."

As far as his own role in all of this, Knieper admits, "It's fascinating to be involved with helping to create a new legal system in a new country." Who knows if he'll ever retire - in the traditional sense of the word - and go back to Germany or not.

Professor Rolf Knieper and Wolfram von Heynitz (Economic Officer at the German Embassy in Baku) were interviewed in Baku by Azerbaijan International's Editor Betty Blair on September 17, 2000.

Azerbaijan International (8.4) Winter 2000.
© Azerbaijan International 2000. All rights reserved.

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