Greece’s judicial system efficiency is among the lowest in the EU, negatively impacting its economic performance. The massive increase in demand for judiciary services during the crisis period, driven by significant business and personal insolvencies, limited alternative dispute resolutions, and relatively low court fees, was not matched by an adequate supply of services. This was due to inadequate deployment of human and financial resources, a low level of digitalization, and a lack of specialization among judges.
The ongoing judicial system reform, leveraging EU funding, aims to address these inefficiencies through court reorganization, digitalization, training, and shifting non-contentious cases from judges to lawyers. The reform targets bringing the length of court proceedings to the average EU level by 2027.
Key drivers of judicial efficiency include:
- Demand-side factors: The crisis period led to a surge in insolvencies and litigation. Low court fees and legal aid, which is at courts' discretion, contributed to higher litigation rates. Alternative dispute resolutions only recently became an important factor.
- Supply-side factors: The supply of judiciary services has declined since the crisis due to inadequate deployment of human and financial resources, a low level of digitalization, and a lack of specialization among judges.
The inefficiencies in the judicial system have adverse effects on debt enforcement and insolvency proceedings, leading to delays and hindering economic performance. Delays in obtaining court orders and the rigidities in the Code of Civil Procedure significantly impact debt enforcement. Similarly, progress in implementing the new insolvency framework has been insufficient due to court inefficiencies.
Judicial system efficiency affects economic performance through various channels, including investment, productivity, and credit markets. Empirical evidence from other countries, such as Portugal and Slovakia, suggests that judicial reforms can positively impact investment and productivity.
Policy simulations for Greece indicate potential gains from judicial reforms in terms of investment and productivity. To enhance judicial efficiency, the following policy options are proposed:
- Establish commercial courts to enable judges to specialize in commercial matters on a permanent basis.
- Improve judicial statistics and data systems to support effective management of the court system.
- Simplify and revise the Code of Civil Procedure to improve procedural efficiency.
- Further develop, regulate, and supervise insolvency professionals to strengthen institutional capacity.
Swift and bold policy actions are needed to address the legacy issues and create conditions for higher growth and greater economic resilience in Greece.
