TIRANA, May 22- Investments are equal whether they are foreign or domestic. Basically this seems to be the principle of the new “On Investments” bill, now sent to stakeholder discussion tables. Inside it are included additional elements that unify all current legislation into one, while there are other elements related to land use, strategic investments, and above all, the establishment of a mechanism of appeals and settlement of disputes outside the court, where the Prime Minister’s office is also included.
An attempt to unify the protection given to investors, which currently focuses on foreigners, and the need to summarize the issue of investment in a single law, has brought to the stakeholder tables the first draft that have these objectives. An “On Investments” bill has first corrected the point of ‘discrimination’ for domestic investors, offering them the same protection and guarantees as foreign ones, while simultaneously seeking faster resolution of disputes to avoid arbitration. The draft is expected to be subject to long discussions before the adoption of the government and it sanctions at its end that perhaps it will be in effect by January 2020. But what are the aspects that this “On Investment” bill brings?
Domestic and foreign investors are equal
“Foreign investors and their investment, subject to the provisions of this law or the legislation in force, shall be offered no less favorable treatment than that offered in the same circumstances to domestic investors in connection with the establishment, purchase, expansion, management, direction, operation, and sale, or other forms of disposition of their investment,” the law writes, underlining that there will be no differentiation between investments. The same document emphasizes in a separate article, the article on freedom to manage its enterprise. Thus, every investor enjoys the freedom to run his enterprise, according to the legislation in force.
According to the draft law this freedom includes the ability to hire and dismiss employees, as provided by the Labor Code, to determine production processes, raw materials, final product and prices, and freedom to close and sell the company within the law. Another article specifies the right to transfer funds abroad after tax payments have been paid internally.
According to the draft law the income generated by investment in Albania and that can be transferred include, but is not limited to, investment income received in the form of profit, dividends, interests, and other forms. Likewise it also includes funds received by investors after the full or partial liquidation of their investment in the Republic of Albania, or disposal of property, property rights, or compensation and expropriation.
The issue of land ownership and expropriation
The issue of ownership when it comes to investments is one of the hot topics that in many cases serves as a limitation for their development. This is mostly related to the inherited problem that has a long history of overlapping, expropriation, and the famous division according to law 7501. In the draft law “On investments” regarding the right to land the government has sanctioned in a separate paragraph that investors have the right to use, enjoy, or dispose the land for investment purposes in accordance with the law of land bargaining, or the law on the transfer of ownership of agricultural land, forests, meadows and pastures, or rent, or emphyteusis.
With regard to expropriation cases, the draft underlines that investors should not be subjected to any direct or indirect nationalization of expropriation, or measures having equivalent effect to them, with the exception of the public interest, in accordance with the due legal process without any type of discrimination and payment of appropriate compensation. Regarding the use of shores, the draft law only stops on special investments known as strategic.
“Allowing the use of the shores of the sea, lakes, rivers and their beds, as well as of the respective areas in function of the realization of a strategic investment project, it is approved by a decision of the Council of Ministers upon the proposal of the Minister responsible for Economy, after the discussion and approvement by the Strategic Investment Committee having priorly received an opinion from the institutions whose competencies extend to these areas,” the draft writes.
Strategic investments, sectors, and extra contracts in the Assembly
Strategic investments are currently dealt with by a separate law adopted in 2015. The new “On investments” draft law has included the strategic investment part, once again defining the sectors that will be seen with priority for the development of these investments. Being a relatively new law the sectors have remained the same in the draft. Strategic sectors include the energy and mining sector, the transport sector, infrastructure, electronic communications, urban waste, the tourism sector with its structures, the agriculture sector with its large farms, the fisheries, and the economic area sector that have developmental priority.
To the category of investors that are able to obtain the ‘strategic’ status, as in the current law, are offered a series of facilities related to the priority of document preparation, land consolidation and updating, support programs, state aid, support with ancillary infrastructure, as well as making available the state’s real estate for the development and realization of projects. What brings the draft as a novelty is to provide an additional guarantee for investors who want their contract with the state to pass another passage of approval, such as the Assembly.
“The entity receiving the status of strategic investment, a special procedure, other than the services and facilities listed above, has the right to request approval by the Assembly upon the proposal of the Council of Ministers, of the relevant strategic investment contracts, for increase security of the legal relationship born between it and the Albanian state,” the draft law notes.
Strategic Investment Committee and AIDA hold their positions
The Strategic Investment Committee, a body that currently functions under the law “On Strategic Investments,” continues to remain in the context that is under discussion. According to this draft this Committee has four main responsibilities. The first is the approval of projects to which the status of “Strategic Investment, Assistance/Special Procedure” is given. Secondly, adopting the action plan for the measures, procedures, and deadlines, in terms of services and facilitation of procedures for drafting and implementing the strategic investment project, in which the commitments, concrete tasks and deadlines for the central institutions and units local government are defined for all phases of project implementation and enforcement. The third responsibility of the Committee is monitoring the functioning of the “single counter” system for the services provided to the strategic investor. Lastly, monitoring the performance impact of strategic investments and the performance of the investment itself, as well as adopting concrete support programs and incentives for strategic investments.
The members of the Committee are nominally appointed by order of the Prime Minister. On the other hand, the Albanian Investment Development Agency (AIDA) is considered an important part of the entire architecture of the institutions involved with investments where besides the duties and obligations provided in its organic law, it is also charged to follow the procedure for granting the status of strategic investment. The draft law writes that it serves as the only window for strategic investments, provides the service of investor support in preparing and applying for the status as a strategic investment, serves as their subsidiary agent, and also provides later support in monitoring and data collection.
Prime Minister involved in the complaints mechanism
Cases of disagreements between the state and investors are not something without precedents. In order to avoid cost and arbitration the new draft law provides a new mechanism for investor complaints, and finding a solution outside the courts. According to the draft law, an investor may file a written complaint to the state institution for the complaint mechanism if it is damaged by a behavior, action, or decision of a public institution that is related to the investment. Thereafter, the responsible institution investigates the matter and takes any action necessary to find a solution acceptable to all parties within a reasonable time. The responsible institution requires the authorities involved to provide information on the complaint made and then draw up a written report on the findings of the investor, the institutions chiefs and ministers involved, within a deadline of seven days.
“With the decision of the state institution responsible for the complaints mechanism, the dispute can be sent at any time to the Prime Minister’s Office for further treatment and decision,” the draft law notes. Article 26 states that a dispute born between an investor, and one or more state entities in the Republic of Albania in relation to the invested capital, or the interpretation or application of the provisions of this law, should be resolved in a friendly manner.
New law offers guarantees to existing investors
Among other things the draft law also underlines how existing investments will be addressed at the time when the new legal framework becomes effective. Thus, an investment governed by this law which already existed at the moment when the new “On Investments” law was enforced, has the right to choose the protection under the previous law or by this one, whichever is considered more favorable to the investment. On the other hand, the rights that a business has acquired under this law are maintained in case the law gets abrogated.
The draft writes that in case the law is abolished, the investor has the right to choose between the rights and guarantees provided by this law and those to be foreseen by the new legislation. Entities that have applied for the status of “Strategic Investment/Investor, assisted/special procedure” with the previous law, have the right to choose the previous law or this one to regulate the legal relations between them and the State.
