by Gian Piero Cigna - Studio Legale Tonucci, Tirana
A new positive atmosphere is leading Albania out of its troubled past. In 1993, the Albanian Parliament enacted a foreign investment law that greatly liberalized foreign investment and provided a number of basic guarantees and protections for foreign investors. Law 7764 dated November 2, 1993 on "Foreign Investment" parallels World Bank guidelines and addresses the admission, treatment, expropriation and settlement of disputes concerning foreign direct investment in Albania.
Now, those guarantees have been reaffirmed by the new Constitution approved by the people in a referendum on November 22, 1998. The 1998 Constitution is a clear signal of the political willingness to proceed towards the European Integration.
Albania is defined by the Constitution as a parliamentary republic, basing its economic system on private and public property, on market economy and freedom of economic activity. Private property is protected by law and limitations on the freedom of economic activity may be established only by law and for important public reasons. All fundamental rights and freedom contemplated in the Constitution for Albanian citizens are valid also for foreigners and no one may be unjustly discriminated for reasons of race, ethnicity, language and economic condition.
In compliance with those constitutional provisions, Art. 2 of Law 7764 states that foreign investments in the Republic of Albania have not to be subject to prior authorizations and are permitted and treated on conditions no less favorable than those that apply to domestic investments in similar circumstances. The right of private property is guaranteed: expropriation may be decided only for public interests, by law and upon fair compensation. Law 7764 defines compensation as the equivalent to the fair market value of the expropriated investment, calculated immediately prior to the expropriation.
Compensation has to be paid without delay and will include interest at the commercial market rate from the date of expropriation. The right to file a complaint before a Court on the amount of the compensation is guaranteed by Art. 42 of the Constitution.
Law 7764 further permits foreign investors to freely transfer abroad all assets and revenues related to the investment in Albania, subject to nondiscriminatory laws of general application, including laws on taxation, foreign exchange and the satisfaction of claims and court decisions.
Any disagreement pertaining to a foreign investment in Albania may be submitted to a dispute resolution procedure of choice. In the event of a dispute arising between the foreign investor and either a private Albanian party or any body of the Albanian government, the dispute may be submitted to arbitration. Albanian Constitution recognizes the validity of international agreement and laws. In this respect, under the foreign investment law, Albania agrees to recognize and enforce any international arbitration award based on a foreign investment dispute.
It is therefore recommended that in planning an investment in Albania, investors determine beforehand the preferred dispute resolution procedure to ensure that any contract entered into with either a private Albanian party or body of the state government clearly sets forth the chosen procedure.
Finally, in the event of a dispute involving discrimination, transfers of assets, or direct or indirect expropriation of a foreign investment by the Albanian government, investors may submit the dispute to the International Center for the Settlement of Investment Disputes ("ICSID"), according to the Convention on Settlement of Investment Disputes between States and Citizens of Other States, approved in Washington, D.C. in 1965.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.