Albania's New Step In Support Of Foreign Direct Investments: Special Protection Of Foreign Investors Involved In Dispute Resolutions

Albania's attraction of foreign direct investment (FDI) has been, and remains, a major factor in its recent strong economic growth. In September 2010 the Albanian Parliament approved amendments1 to law no. 7764 dated 2 November 1993 "On Foreign Investments" (Foreign Investments Law). The amendments caused a heated public and political debate, not only because they were the first in 17 years but because they introduced a significant change to the foreign investment framework in Albania.

Unfortunately, one of the main obstacles to FDI in Albania remains disputes on real property ownership related to the restitution and compensation process of the ex-nationalized lands. The new amendments to the law aim to provide the foreign investors with a special protection to prevail such difficulties in case of disputes resolution with private parties.

Legal status of foreign investors

According to Albanian law, "foreign investor" means a (i) citizen of a foreign country, (ii) Albanian citizen who resides outside the country, (iii) legal person established under the laws of a foreign country or (iv) a "community company" or "establishment"2 that directly or indirectly seeks to or carries out an investment in Albania.

Foreign investments in Albania are granted treatment not less favourable than domestic investments and generally accepted norms of international law. Additionally, the law forbid expropriation, nationalisation or any similar measure towards foreign investments, except in special cases. Moreover, foreign investors have the right to repatriate all funds and contributions in kind related to the investment, including revenues.

Special protection to overcome difficulties

Pursuant to the Foreign Investment Law, disputes between a foreign investor and a private party can be settled either according to previously agreed modalities or through the competent court or arbitrator in Albania. The same principle is applicable in relation to disputes between a foreign investor and the Albanian state.

According to the new amendments, the Council of Ministers may grant through an ex-post decision "special state protection" to foreign investments, when a judiciary dispute raised with third private parties impedes the execution or exercise of the economic activity deriving from or otherwise related to the foreign investment. This special state protection contains the following provisions:

Replacement in full rights of the foreign investor by the Albanian state...

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