The judiciary carries a high corruption risk for businesses in BiH. Irregular payments are bribes are often exchanged in return for favorable judicial decisions (GCR 2015-2016). Public trust of the judiciary is low (NiT 2015). More than two-thirds of households consider the judiciary to be corrupt (GCB 2013). Furthermore, the independence of the judiciary is limited by pressure exercised by the executive and political parties, and court verdicts are perceived to be politically influenced (NiT 2015). One example is the corruption case of Živko Budimir, the President of the Federation of Bosnia & Herzegovina, who was arrested in 2013 for allegedly taking bribes from convicted criminals seeking early release and for abuse of office (NiT 2015). Živko Budimir was released after one month in custody (Denevi Avaz, Feb. 2016). Despite that the Prosecutor’s Office had filed an indictment against Budimir, the Court of BiH declared incompetency in the case, which is now handled by a Municipal Court in Sarajevo (Denevi Avaz, Feb. 2016).
The law enforcement’s capacity to prosecute corruption is weak; this is mainly attributed to poor cooperation between the police and prosecution services and lack of specialization in corruption crimes. The government has established specialized departments within the Federation’s Prosecutor’s Office and Supreme Court, however, these entities are not operative creating a legal vacuum for the prosecution of corruption cases above a certain threshold (EUB&H 2015).
Businesses perceive the judiciary to be inefficient in settling disputes and challenging government regulations (GCR 2015-2016). The courts suffer a huge backlog (NiT 2015). The inefficiency of the judiciary is attributed to the absence of a single state supreme judicial body in BiT instead of the current four separate court systems, with each one having their own judicial systems with constitutional and supreme courts (NiT 2015). The separation of the courts has also often led to conflicts over jurisdictions (NiT 2015). Enforcing contracts in BiH is more time-consuming and more costly than the regional average, taking 595 days (DB 2016). Bosnia & Herzegovina is a member of the International Centre for Settlement of Investment Disputes (ICSID) and is a signatory to the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.