Investments: Foreigners are mostly protected
In September the Parliament is expected to approve some amendments to the law on foreign investments. It is likely that nothing would be easy. According to the new draft, the foreign investors are qualitatively differentiated in terms of the legal protection compared to the Albanian investors. presents some opinions from different players, both pros and cons such amendments
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Strong debate are expected with regard to the amendments the Government proposed (which are expected to be discussed in the new parliamentary session) to the law “on foreign investments” of year 1993. Unofficially it is declared that the issue might be submitted for interpretation to the Constitutional Court, because of many problems it presents related to the treatment of the issues in the legal terms used and the fact that the draft-law privileges considerably the foreign investors compared to the Albanian ones in all bilateral agreements with the third parties, where one party is the Albanian government. Different business representatives stated that the law discriminates the foreign investments, and at the same time they call for the opinion of all stakeholders to be taken into consideration at the time when it will be discussed and approved.
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Lawyers go further on stating that the law goes above the Code of Penal Procedure, and it has anti-constitutional elements in the way how it is prepared.
Why was the law amended?
In the reasoning accompanying the amendments it is accepted openly the negative role that the Albanian courts have played in parting of the foreign investors, an official statement not very satisfactory for the image of Albania, the legal experts stated.
In the reasoning accompany the amendments proposed, repeatedly it is mentioned the fact that the judicial system in Albania has many problems in treating the ownership issues, making this law indispensable, the law compilers wrote in the said reasoning
Also, it is stated that the both political wings have been positive toward the foreign investments and that the courts remain the problem. “Recently for the foreign investors a specific, real and clear concern is the low security level of the investments of the foreign investors as a result of the intermediary decision of the Albanian courts”, it is written in the reasoning.
Ministry of Economy representatives explained that the new measures are necessary and they will serve as a guarantee for the foreign investments.
The Albanian government has considered the preparation of the law as an obligation of the Stabilization and Association Agreement.
Content that kindled debates
Prepared in 1993, the law on foreign investments (presently in force) was appraised as very advanced for the time. But, what has made the Albanian institution to call for its revision after 17 years are the problems that have arisen with the ownership and courts, but also the obligations arising from the Stabilization-Association Agreement.
For the first time in an Albanian law, the foreign investments will be under a “special protection”, a term completely new and known only in the Code of Penal Procedure. Such thing (according to the reasoning accompanying the draft-law) is undertaken because those investments are “threatened” by the intermediary decision of the Albanian courts. In the reasoning it is stated that:”due to the claims arising of the blocking activity of the Albanian courts, in some cases it is noticed a hesitation by the part of the foreign investors, up to their departure”. The draft-law compilers noticed that most of the actions contested in the court, where the foreign investors are a party, are all the claims of the third parties which challenge the official acts issued by the public administration servants with the claim that they are in violation of the Albanian legislation.
In the draft-law the term “special protection” and communitarian companies are reflected in the Article 1 (definitions) and in the Article 8, which foresees 6 additional provisions. Those provisions, it is stated in the reasoning, have an organic merge with the text of the law of year 1993. According to the draft-law “special state protection” consists in the civil judicial protection that the Republic of Albania may accord to the foreign investments in compliance with the provided conditions. Such protection mechanism would function in the cases where there is specific government interest. In particular, in the public or tourist, energy or agriculture infrastructure; it is done based on the concessionaire contract; on the real estate at the Albanian state availability; on a real estate where the foreign investors is entitled based on the duly documents or public acts; when the investments is done or foreseen to be undertaken for a value of less than 10 million euro.
Draft-law provides that the special state protection foresees the replacement of the full rights of the foreign investors by the Albanian state in legal-civil conflict with the third party. Albanian state is represented b the ministry of line through the General Advocate for the State.
In case the court decides in favor of the plaintiff, which might be the owner of the site or the object where the business will operate, the Albanian state undertakes to compensate it with public estate somewhere else, while the business will continue to operate normally. In addition to that, another bigger protection is related with the immunity of the foreign investments versus the Albanian judicial system. If an investment has the status of the special state protection, the Albanian courts cannot make any measure such as activity suspension or sequestration. After wining such status, the court measures can be made only on public properties.
In addition, the law recognizes the opportunity of expropriation of the owner in favor of the investor. In the cases when there is a final court decision objecting the foreign investors right on the real estate, the government may decide for the expropriation of this property for the public interest and to return it to the investor. Even in the cases when the court decision is made prior to the entry into force of this law, the Albanian state through the General Advocate for the State call the court for the replacement of such measure, already not longer on the business property, but also on the public property. All above, according to the compilers of the legal amendments, would serve to avoid the abusive phenomena, which in all cases is translated into a financial bill for the government in the international arbitration. On the other hand, it is deemed that this new procedure would serve for the unification of the judicial practices in disputes resolution. In all cases it would be the Council of Ministers that will define whether a foreign investor will be subject to the privilege of government special protection. It is defined that those measures are not applicable longer than seven years from the entry into force of this agreement. It is clarified that it would not lead to discrimination to the activities operating in Albania at the time when such measure is made compared to the Albanian companies or citizens.
In the reasoning it is stated that the Government taking into consideration the international commitments on completing the ownership registration within 4 years (of the second term) foresees that this instruments of special protection to be in force for a transitory period until 2014.