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Foreign Investment Regime

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Foreign Investment Regime

        1. The foreign investment regime is very open. Law No. 7,764 of 2 November 1993, On Foreign Investments, state that investment is permitted on the same terms to both foreign and domestic investors, the only exception being with respect to land ownership.38 Prior authorization for investments is not required. Foreign investments are not subject to conditions: the Law guarantees equal and impartial treatment, and protection and security. Companies investing in Albania have the right to employ foreign citizens, and funds related to investments may be transferred outside the country, with limitations in certain circumstances.39 Under the law, funds related to a foreign investment include: (a) revenues; (b) compensation; (c) payments deriving from an investment dispute; (d) payments made pursuant to a contract, including loan and interest payments made according to a loan agreement; (e) revenues deriving from the sale or the partial or complete liquidation of an investment; and (f) revenues deriving from reduction of the company's capital.

        2. The Constitution guarantees the right to private property. Articles 4 and 5 of the Law on Foreign Investments states that foreign investments may not be nationalized or expropriated, except in special cases defined by law and when in the public interest. In these cases, procedures must take place without any discrimination, with compensation, and in accordance with the law. Legal provisions on expropriation and nationalization of private property are also set out in the Constitution (Article 41). These Constitutional provisions are developed in more detail in Law No. 8,561 of 22 December 1999, On Expropriations and Temporary Takings of Private Property for a Public Interest. It, inter alia, specifies the procedures and conditions that must be followed in order for expropriations to take place, the reasons for which expropriations may be made, whom they may be in favour of, valuation of and compensation for expropriated objects, and, appeal procedures.40 Compensation must be equal to the real market value of the investment and paid without delay. As set out in Article 8 of the Law on Foreign Investments, foreign investors may submit disputes to the appropriate national court. The authorities indicated that, since 2000, there has been one case of expropriation in the public interest: this involved the expropriation of land from the Kamza Development Company (foreign owned) in order to develop a road interchange. They noted that the company was duly compensated.

        3. Albania has recently ratified both the New York Convention of 1958 and the Geneva Convention of 1961. Law No. 7,764 of 2 November 1993 stipulates that Albania is committed to recognize and enforce any international arbitration award concerning a dispute relating to foreign investment. Albanian legislation provides for the possibility of entering a clause into a contract indicating the steps to be taken to resolve disputes. If this clause has been inserted, the foreign entrepreneur may turn to a court or arbitrator, as required by Albanian law. Disputes concerning unequal treatment or expropriation of foreign investment by the Government of Albania, may be submitted to the International Center for Settlement of Investment Disputes (ICSID), as determined by the Convention on the Settlement of Investment Disputes, adopted in Washington in 1965. In accordance with Albanian law, every international arbitration decision is final and irrevocable for the parties in dispute. In case any provision of Law No. 7,764 is not in conformity with international agreements ratified by Albania, the latter will prevail to the extent that they provide greater rights or protection for foreign investors.

        4. Albania has 37 bilateral agreements in force on reciprocal protection and promotion of investments. These are with: Austria; Belgium and Luxembourg; Bosnia and Herzegovina; Bulgaria; China; Croatia; Czech Republic; Denmark; Egypt; Finland; France; Germany; Greece; Hungary; Israel; Italy; UNMIK; Kuwait; Republic of Korea; Lithuania; Former Yugoslav Republic of Macedonia; Malaysia; Moldova; Netherlands; Poland; Portugal; Romania; Russian Federation; Serbia; Slovenia; Spain; Sweden; Switzerland; Tunisia; Turkey; Ukraine; United Kingdom; and United States.41 A further eight agreements have been approved in principle but not yet signed, with Malta; Cyprus; Iran; Lebanon; Libya; Norway; Syria; and Qatar.

1 The Constitution was adopted on 21 October 1998, and entered into effect on 28 November 1998. Viewed at:

2 Presidential candidates must be put forward by at least 20 Members of the Assembly.

3 The powers of the President are mainly set out in Part Four, Article 92 of the Constitution. The President exercises his or her power by issuing decrees.

4 Full proportional representation was introduced by constitutional amendment in 2008, prior to that 100 members were elected directly, and 40 by proportional representation.

5 SIGMA (2008).

6 Law No. 8,652 of 31 July 2000, sets out the functions and competences of communes and municipalities. These include functions of local interest such as: infrastructure and public services; urban planning, land management and housing; local economic development; and order and civil protection. Certain competences are also shared with the Central Government, such as the provision of health care and education.

7  People’s Advocate (2008).

8 For example, codes, and laws for the state of emergency, on citizenship, on general and local elections, on the status of civil servants, on referenda, on amnesty, on administrative divisions of the Republic.

9 The ratification of international agreements in Albania is done by law if they relate to: (a) territory, peace, alliances, political, and military issues; (b) freedoms, human rights, and obligations of citizens as provided in the Constitution; (c) its membership in international organizations; (d) the undertaking of financial obligations; and (e) the approval, amendment, supplementing or repeal of laws.

10 Article 122 of the Constitution.

11 Council of Ministers Decree No. 52 of 14 January 2009 prohibited imports of a certain type of diesel (D2), but granted a local company the sole right to produce and sell this diesel in the domestic market. The Constitutional Court, through its Decision No. 24 of 24 July 2009, repealed this decree as it found that it violated Albania's commitments under the WTO and other international agreements.

12 The provisions relating to the Constitutional Court are set out in Part 8 of the Constitution.

13 As indicated by the authorities, these decrees related, among other things, to the establishment of the territorial competences of first instance and appeal courts, and to determination of the number of judges for each court of appeal and first instance.

14 The draft laws being debated in the Assembly relate to administrative disputes and the organization of administrative justice on one hand, and to judicial administration on the other.

15 European Commission (2008).

16 The Judicial Reform Index (JRI) is an assessment tool implemented by the American Bar Association’s Rule of Law Initiative (ABA ROLI) to assess a cross-section of factors important to judicial reform in emerging democracies. See American Bar Association’s Rule of Law Initiative (2008).

17 European Commission online information. Viewed at:

18 SAA Article 70.

19 WTO online information. Viewed at:, and

20 WTO documents TN/MA/W/99, 2 January 2008 and TN/AG/GEN/28, 20 December 2007.

21 WTO documents TN/TF/107/Add.1, 18 March 2009; TN/TF/W/108, 18 March 2009; TN/TF/W/109/Rev.1/Add.1, 18 March 2009; TN/TF/W/110/Rev.1/Add.1, 18 March 2009; TN/C/W/52, 19 July 2008; WT/GC/W/587/Add.1, 11 April 2008; TN/C/W/48/Add.1, 11 April 2008; TN/S/W/60/Add.4, 27 September 2007; S/CSC/W/51/Add.4, 27 September 2007; TN/TF/W/137/Add.4, 24 July 2007; TN/AG/GEN/24, 13 March 2007; TN/MA/W/83, 26 February 2007; TN/S/W/60, 26 January 2007; S/CSC/W/51, 26 January 2007; TN/MA/W/29, 19 March 2003.

22 WTO document WT/MIN(05)/ST/94, 16 December 2005.

23 WTO online information. Viewed at:


24 There was an earlier CEFTA Agreement (1991), signed by Poland, Hungary, and the former Czechoslovakia. Slovenia, Romania, Bulgaria, and Croatia joined subsequently. However, the membership of CEFTA diminished as these countries acceded to the EU.

25 The services aspect of the EU-Albania FTA was notified to the WTO under GATS Article V:7(a) (WTO document S/C/N/515, 12 October 2009) and is scheduled to be considered by the Committee on Regional Trade Agreements in 2010.

26 EU-Albania (goods): WTO document WT/REG226/1/Rev.1, 29 April 2008; Turkey-Albania (goods): WTO document WT/REG240/1, 31 March 2009.

27 Under the EU-Albania Agreement, 69.2% of tariff lines on agricultural products will be duty-free by the end of the implementation period in 2011; under the Turkey-Albania Agreement, the equivalent share is 14.7%.

28 The member states of EFTA are: Iceland, Liechtenstein, Norway, and Switzerland.

29 The Stabilisation and Association Process is the framework for EU negotiations on accession with the Western Balkan countries. Its aims include encouraging their swift transition to a market economy and promoting regional cooperation. EU online information. Viewed at:


30 Council Decision 2008/210/EC of 18 February 2008 on the principles, priorities and conditions contained in the European Partnership with Albania and repealing Decision 2006/54/EC. Viewed at:

31 EU online information. Viewed at:


32  European Commission (2009b); and European Commission (2009a).

33 WTO document WT/REG/GEN/N/5, 7 August 2007.

34 Signatories to the 2001 Memorandum of Understanding on Trade Facilitation and Liberalization are: Bosnia and Herzegovina, Bulgaria, Croatia, the Federal Republic of Yugoslavia, the Former Yugoslav Republic of Macedonia, and Romania. Viewed at:


35 Albinvest online information. Viewed at:


36 WTO documents WT/L/380, 13 December 2000; WT/L/380/Corr.1, 8 January 2001; and WT/L/654, 2 August 2006. Under the terms of this waiver, the EU is required to submit an annual report to the WTO General Council. For the most recent report, see WT/L/763, 21 July 2009.

37 Joint WTO/OECD Trade Capacity Building Database. Viewed at:

38 Law No. 7,764 of 2 November 1993, On Foreign Investments. Viewed at:

39 As set out in Article 7(3) of Law No. 7,764 of 2 November 1993, Albania may limit transfers through a non-discriminatory application of laws of a general character, including those regarding the payment of taxes and fulfilment of duties and court decisions.

40 The reasons for expropriation are set out in Article 8 of the law. They include: realizing treaty obligations and projects contemplated in international agreements; investments for the public interest in the areas of: transportation, telecommunications, water and irrigation works, environmental protection, heath, culture, public education, and infrastructure; reasons of national defence, public health, and national security; and to protect property of a historical, archaeological, cultural or scientific value. As set out in Article 9 of the law, expropriation may be done in favour of the State, public or private, local or foreign juridical persons for the reason of a project, investment or object that presents a public interest.

41 Albinvest online information. Viewed at:


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