DP12731 The Greek Justice System: Collapse and Reform

Author(s): Stavroula Karatza, Elias Papaioannou
Publication Date: February 2018
Keyword(s): bankruptcy, contractual institutions, investor protection, law and economics
JEL(s): K00, K40, O1, O43, O52, O57, P16
Programme Areas: Public Economics, International Macroeconomics and Finance, Macroeconomics and Growth
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12731

This paper discusses the key structural deficiencies of the Greek justice system and proposes some concrete policy reforms. In the first part, we provide an anatomy of the Greek legal system using cross-country indicators reflecting the formalism, quality, and speed of the resolution mechanisms. The analysis shows that the Greek justice system is failing to protect citizens, as delays in all types of courts exceed five years and in some instances reach a decade. At the same the quality of laws protecting investors, even property, is low. Using comparative data from other EU jurisdictions, we show that the key reasons behind these failures are the absence of information technology, the lack of supporting to judges staff, the absence of specialized courts and tribunals, and a hugely dysfunctional administration. At the same time, there are minimal checks and balances. In the second part, we detail a set of policy proposals. Our proposals consist of immediate measures for clearing the large backlog and a set of more ambitious medium-term reforms (many of which require a constitutional amendment). Our proposals aim to make the Greek justice system professionally administered, less formalistic, suitably flexible, more responsive and more accountable to society at large. Given the strong link between legal institutions and development, justice reform is an absolute priority of the reform agenda and a sine qua non-condition for the much-needed sustainable recovery of the Greek economy.