PROTECTION OF FOREIGN INVESTMENT
Efth. G. Navridis
Does the Albanian Law provide nationalization of a foreign investment?
According to the second article of Law no 7764/1993, foreign investments in the Republic of Albania are not conditioned upon prior authorization.
They are permitted and treated based on conditions not less favorable than those afforded to domestic investments in similar circumstances, except land ownership, which is regulated by special law. In all cases and at any time, investments have an equal and impartial treatment and enjoy complete protection and security. Also, they are treated not less favorable than the one provided by generally accepted norms of international law.
Does the Albanian Law provide expropriation of a foreign investment?
According to the fourth article of the above mentioned Law, foreign investments will not be expropriated directly or indirectly, they will not subject of any measure equal to these measures, except in special cases, in the interest of the public use, defined by law, without any discrimination, with immediate, appropriate and effective compensation, in accordance with legal procedures. However, as Law 8561/1999 “On Expropriations and Temporary Takings of Private Property for a Public Interest” provides, in the function of the public interest, expropriation may be done for the following reasons:
a) For the realization of obligations of the state that come from treaties and international multilateral conventions.
b) For the realization of programs, projects and investments contemplated in international agreements that extend into the territory of several states, to which our state is a party.
c) For the realization of projects and investments that present national or local territorial extent or interest in the field of transportation of every kind, energy, telecommunication, water and irrigation works of every kind, in the service and interest of the public.
d) For the realization of national or local projects and investments, in the function of protection of the environment, health, culture and public education, as well as infrastructure, in the service and interest of the public.
e) For the realization of programs and investments in the field of national defence.
f) For the protection of monuments and immovable objects of a nature that is archaeological, historical, cultural and scientific, when these purposes, by the very nature of the objects, cannot be realized by a private owner, because of his objective inability or subjective position, with the consequence of a real risk of failure of realization, damage or hindrance to their functioning.
g) For the protection of movable property with a historical, archaeological, cultural or scientific value, in cases when, even with the performance of the obligations of the organs that are competent according to law, these objects risk being damaged or disappearing. h) For cases when movable and immovable objects, for objective reasons or force majeure, create a permanent risk to public health and security, to the extent that, despite all the assistance of the state, these risks cannot be avoided by their owner.
What is the general legal frame about foreign investments in Albania? Are there any exceptions relating to some purchases of investments?
The ‘Law on Foreign Investment’ is designed to create a favorable investment climate for foreign investors in the country and stipulates the following:
No prior government authorization is needed for an initial investment and no sector is closed to foreign investment;
100 percent foreign ownership of companies is permissible;
Foreign investment may not be expropriated or nationalized directly or indirectly, except for in designated special cases, in the interest of public use and defined by law;
Foreign investors enjoy the right to expatriate all funds and contributions in kind of their investments; and
Foreign investors receive ‘most favorable treatment’ according to international agreements and Albanian law.
Additionally, in September 2010, the parliament approved several amendments to this law that provide special protection for foreign investment in the tourism, energy and agriculture sectors. This state special protection is not granted a priori but is granted only after occurrence of the dispute through a decision of the Council of Ministers following a request presented by the respective minister and the foreign investor. According to Law 10316 “On Some Amendments To The Law On Foreign Investments,” special state protection is granted to investments related to a concession agreement based on the Albanian Concession Law; or an immovable property, made available to the foreign investor by the Albanian state or an immovable property over which the foreign investor has rights based on a valid, legal, public document or act issued by a competent state-entity or public authority, where such investment exceeds or is foreseen to exceed the value of EUR 10 million. Under the special state protection, the foreign investor is substituted in the judiciary process by the Albanian state and any injunction order issued by the court shall be executed over state properties. The Law on Protection of Competition governs incoming foreign investment whether it is through acquisitions, mergers, takeovers, or green field investments. The competition law applies to all mergers irrespective of the industry or sector. In the case of particular share transfers in insurance and banking industries, additional regulatory approvals, are needed. Also, transactions between parties outside Albania, “foreign to foreign” transactions are covered by the competition law which explicitly states that it applies to all undertakings,
whether domestic or foreign, whose activities have a direct or indirect effect on the Albanian market.
There are limited exceptions to this liberal investment regime -most of which apply the purchase of real estate: agricultural land cannot be purchased by foreigners, but may be rented for up to 99 years; and commercial property may be purchased, but only if the proposed investment is worth three times the price of the land. There are no restrictions on the purchase of private residential property.
Has a foreign investor the right to address to Albanian courts and invoke the Albanian law or ask for arbitration regarding to his investment in Albania?
Albanian Law provides equal treatment of foreign and domestic investors. Investors in Albania are entitled to judicial protection of legal rights related to their investments. Foreign investors have the right to submit disputes to an Albanian court. In addition, parties to a dispute may agree to arbitration. Provisions regarding domestic and international commercial arbitration are incorporated into the Albanian Code of Civil Procedure.
Is remittance permitted by the Albanian Law?
According to the seventh article of the Law no 7764/ 1993, foreign investors have the right to transfer outside the territory of the Republic of Albania all funds and contributions in kind related to a foreign investment, including:
a) revenues
b) compensation in accordance with article 5 of this law
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
f) revenues deriving from reduction of the capital of the company in accordance with Albanian legislation.
Foreign investors have the right to perform these transfers outside the territory of the Republic of Albania in an easy convertible currency, calculated according to the spot exchange rate of transactions on the day of transfer in the currency in which their investments will be transferred. The Republic of Albania may limit the transfer right through impartial and nondiscriminatory application of laws of a general character, including those regarding the payment of taxes and fulfillment of duties and court decisions.
What is the tax policy for a foreign investment in Albania? Is there equal taxing and legal treatment between Albanian and foreign investors?
For tax purposes, in general, the foreign investments are treated similarly to an Albanian. The tax system includes basically personal income tax, profit tax, tax on real estate, value added tax (VAT) and excise tax. The tax year is the calendar year. Corporations conducting business in Albania are subject to a corporate income tax (profit tax) at a rate of 10%. The rate of VAT is 20%. No VAT is paid for activities referring to exports of goods and international transport and telecommunications. Exceptionally, there is a cut-rated VAT of 10% for medicaments and medical services.
For real estate property owned by individuals and legal entities, the Albanian law make allowances for taxation consisted of the tax on building and the tax on agricultural land.
Are there bilateral treaties for promotion and protection of foreign investments?
Albania has signed bilateral treaties for promotion and protection of foreign investments with Austria, Belgium, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, FYROM, Germany, Greece, Hungary, Israel, Italy, Luxembourg, Malaysia, the Netherlands, Poland, Portugal, Romania, Singapore, Slovenia, Sweden, Switzerland, Tunisia, Turkey, Ukraine, United Kingdom and United States.
How are trademarks protected in Albania?
According to articles 140 -175 of law 9977/1998, a mark is every sign or combination of signs presented graphically that serve to distinguish the goods or services of a natural or juridical person from those of another natural or juridical person. Marks are registered only if they can be presented graphically. This regards in particular, but not only, special types of marks such as voice and light signals. The request to obtain the right to a commercial mark may be made by a natural or juridical person. The request to register a mark contains one or more goods and/or services. The request for the registration of a commercial mark contains the following elements:
a) the name and address of the submitter of the application;
b) the representation of the mark as to which registration is sought;
c) a list of the goods and/or services as to which registration is sought, grouped on the basis of the international classification for goods and services;
c) a declaration claiming priority, if there is such a claim;
d) a document showing payment of the tariff of filing.
After the approval of the filing date, the GDPT examines an application within a three-month period as to whether it is in conformity with all the legal requirements. During the examination, the GDPT has the right to ask the submitter of the application for additional materials and documents. The period within which the applicant should submit them to the GDPT is defined in the implementing regulation. The GDPT makes publication of a registered mark in its gazette. The owner of a registered mark has the right to impede third parties from using, in the course of trade, without his authorization:
a) a sign that is the same for goods or services that are the same as those for which the mark is registered;
b) a sign that is the same as or similar to a mark, but which, because of the identity or similarity of the goods and services for which the sign is used the sign with those designated by the registered mark may cause a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark;
c) the same or similar sign for goods or services even when they are neither the same as nor similar to those as to which the mark has been registered, when the mark has a reputation in the Republic of Albania and from the use of the sign, without due cause, an unfair benefit is created or the distinguishing nature and good name of the mark are damaged.
The registration of a mark lasts for 10 years, starting from the filing date. A mark may be renewed endlessly for ten-year periods, after the owner of the mark files a request in the GDPT and pays the respective tariff, in a period no later than six months from the end date of the time period of registration. If the owner of a mark does not file a request for its renewal or does not pay the respective tariff according to the requirements of point 2 of this article, the mark in question becomes invalid.
*This text was originally published in the volume “Albania Law Digest” (edition of Nomiki Bibliothiki)
