Albania’s Hoxha, Memi & Hoxha law firm has joined the South East Legal Alliance.
The South East Legal Alliance (SELA) is a regional network of independent law firms operating across South East Europe. In addition to Hoxha, Memi & Hoxha, SELA’s members include Apostolska & Aleksandrovski of Macedonia, Bojovic & Partners of Serbia/Montenegro, Dimitrijevic & Partners of Bosnia and Herzegovina, Dimitrov, Petrov & Co. of Bulgaria, Kirm Perpar of Slovenia, and Zuric & Partners of Croatia.
The latest amendments to the Civil Procedure Code of Albania (CPC) which will enter into force in November 2017 are designed to increase the efficiency and performance of the country’s judicial system.
In this respect, one of the main amendments relates to the excessive length of judicial proceedings. Statistics show that until September 2014, 70% of the complaints filed with the High Council of Justice referred to delays in court proceedings, with approximately 50 claims filed with the European Court of Human Rights against Albania concerning the unjustified lengthy procedures of criminal and civil actions.
In light of this problem, the new CPC provisions provide a right of appeal against the unreasonable duration of a case as well as the right to seek compensation, including non-pecuniary damages. In other words, the provisions envisage the concept of a reasonable duration of judicial proceedings as well as the right to fair compensation for legal proceedings – consisting of investigations, trial, and enforcement – found to be unjustifiably long. Awards would take the form of an acknowledgment by the court of the breach of reasonable duration, as well as actions carried out in order to accelerate the judicial proceedings and/or the provision of damage relief.
According to the new amendments, the reasonable terms in civil and administrative cases are the following: (i) administrative cases – one year from filing in each instance (first instance and appeal); (ii) civil cases – two years from filing in each instance (first instance and appeal); (iii) civil cases before the Supreme Court – two years from filing; (iv) enforcement of both administrative and civil decisions – one year from filing of the execution request. However, as an exception to the rule, parties to a trial may claim that the proceedings are “unreasonably long” even before the code-specified time periods expire, in light of the relative simplicity of the case, the object of the claim, and the conduct of the relevant authority and/or any other party involved in the case.
The party claiming violation of their right to a reasonable judicial proceeding duration should file a claim before the competent court requesting that it acknowledge the breach of reasonable term and demanding acceleration of the proceedings. The competent court is the higher court of the same jurisdiction as the court against which the claim is filed; while claims against Supreme Court proceedings are considered by a separate panel of that court. The claims against enforcement proceedings are filed with the first instance court that is competent for the execution of the court decision. The court proceeding does not suspend the main action on the merits of the case nor its enforcement. The competent court vested with such claim has to rule within 45 days of its filing, and the claim will be dismissed if the authority against which it is filed carries out the required actions within 30 days of its filing.
Following the examination of the claim, the court may rule to either dismiss it or accept it by ordering the relevant authority (either court or bailiff) to carry out the necessary procedural actions within the requested deadlines. This court decision is deemed final. Compliance with court instructions and conclusions is mandatory for the court ruling on the merits of the case. The High Justice Inspectorate is informed of the court’s final decision in order to evaluate whether the delays caused by the judges constitute a disciplinary breach. The claim for compensation may be filed with the competent first instance court only where the procedure of acknowledging the breach of reasonable term and demanding the acceleration of the proceedings has been exhausted with no action being taken by the court or bailiff against which the decision was issued. The claim for compensation is prescribed within six months from the acknowledgment of the breach by the court. The court vested with authority over the claim for compensation has to rule within three months of its filing, and it may rule to grant damage compensation of ALL 50K (approx. EUR 380) up to ALL 100K (approx. EUR 750) for each year (or each month within a year) beyond the reasonable duration.
It is expected that the aforementioned changes will make the court system accountable for unjustified delays and length of trials; however, only time can tell whether the issue of excessively long judicial proceedings will be effectively addressed by the new provisions.
By Besnik Duraj, Partner, and Bojana Hajdini, Senior Associate, Drakopoulos Albania
This Article was originally published in Issue 4.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
The Buzz in Albania, according to Perparim Kalo, the Managing Partner at Kalo & Associates, is not as bleak as many who listen to the complaints of his countrymen might believe. “It is common to complain in the Balkans,” he says with a smile. “We usually consider positive trends or developments as less important than failures. It is a kind of a complaining culture.”
Still, that doesn’t mean everything is sunny in the legal market, Kalo says. “We hear from all our peers in the Balkans,” he says, “that although there are new business cases, those cases do not bring considerable profit.” In particular, he says, this is due to pressure on fees; a service that generated 50 thousand euros a few years ago may only generate 15 now. “Of course it’s temporary,” he says, “and there is hope that it won’t last for long.”
Kalo says that the fee pressure didn’t happen overnight, but grew gradually, becoming much stronger over time. He doesn’t tie it to the global financial crisis, which he says “was not so evident here, because our economy has been rather closed.”
According to Kalo, although his firm, like other leading firms in Albania, benefits from strong relationships with international counterparts, the fees they receive from referrals are not high, “most probably due to fee arrangements with clients when they obtain global mandates.” Another factor affecting fees, he says, is the what he describes as “market fragmentation.” According to Kalo, “new firms are popping up and taking some cases and projects, so there seems to be a wider distribution of fees nowadays.”
Still, he says, he’s not unduly concerned, “as traditional firms know how to keep their positions, so they are not affected so much and therefore do not have to complain.”
Kalo believes important projects will arrive soon, “and those that have been in the pipeline will resume.” Business has been slower this year than last year, he says, “because it was an election year. When you have elections projects, including public works, slow down or even stop for a while. They usually accelerate on the brink of elections, and then stop while new institutions are formed or reconfirmed by the victorious political forces.” In any event, the slowdown over the past few years hardly means the economy has ground to a halt. “In terms of GDP growth the country still has some good indicators confirmed by the international agencies, so it may stay in the region of 3.5 percent, which is good compared to the rest of the region. But we were used to 6% for almost a decade, so it’s a slight drop.”
Despite the temporary slowdown, Kalo says that some areas like IP/IT are getting stronger. “We have seen an increase of activities that require protection, like copyright, trademark, and patent.” He says, “we are frequently hired by big proprietors to pursue infringements — there’s a lot of that going on here.”
In addition, he says, there are “more Chinese and Turkish investors are on the horizon,” who are interested in “hydro power generation and natural resources, mining and infrastructure, and also the oil sector.” He refers to the 2016 takeover of the country’s biggest offshore reserve by Geo-Jade Petroleum for EUR 440 million, which his firm assisted with. “And it appears that the Chinese want to invest more,” he says. “In port and airport infrastructure, for example. They have projects in Serbia, Croatia, and across the whole region.” The Turks are active as well, he says, in the banking, telecommunications, and power distribution sectors. “They have several big cases in hydro power concessions. They have construction, cement, steel, airport. They have many things.”
And the elections — which took place on June 25, with the victorious Socialist Party of Albania party forming its government in September — are over; Kalo says: “we’re hoping that things will move ahead soon.” Indeed, as the new government doesn’t need a coalition party for the first time in many years, “they are able to approve any projects, of any size, such as a new port worth billions by a large consortium, a new railway project worth EUR 90 million by the EBRD and EIB; a new highway worth EUR 250 million; a PPP for the motorway connecting Albania and Kosovo; a PPP for operating several laboratories of hospitals to a private company; as well as other projects involving mining, hydropower, and solar plants.”
Such projects would only be facilitated by the country’s candidacy for the EU, according to Kalo. “Let’s hope — it depends very much on the political will and behavior of the government — that we get the invitation to become a candidate country for EU membership, and of course if we’re accepted the EU would be more supportive in investments for the improvement of infrastructure so the country can be more comparable to other member countries”
Thus, despite the country’s cultural tendency towards complaining, Kalo says he is optimistic. “I think I can see the glass half full for 2018. Because we cannot go back anymore. We will go forward anyway. And the country has a lot of potential. We see more tourists coming, as the country becomes more attractive. Agriculture is another sector with great potential. The potential of the country is great also because of a fantastic geographical location and good assets, including human and natural resources. It would be a real pity if, 27 years after the opening in the 90s, we failed to take advantage of our values at this moment in time”
Very little has changed in the Albanian legal market, according to Besnik Duraj, Partner at Drakopoulos, apart from the judicial reform introduced last year to incentivize foreign investors who have been discouraged by the judicial corruption and political instability in Albania (as described by Besnik in The Buzz he provided CEE Legal Matters on July 20, 2016).
“Still at a theoretical stage, the reform is not going forward as expected” says Duraj, who believes that the impending elections slated for mid-June 2017 will likely slow things further. In Duraj’s opinion there is little reason to believe the election results will change things for the better, but he suggested that the incumbent government’s re-election would at least mean building on what’s already in place rather than starting all over.
Although the legal market has been a bit slow, “the law firm has had a lot of quality work this past month” says Duraj, mostly in the form of foreign clients needing assistance in niche legal matters, such as data protection, regulatory, TMT, IP, and so on. Duraj suggested that foreign companies are more likely to recognize the need for formal law firm assistance than many of their domestic counterparts in Albania.
When asked about the controversial restrictions on law firms imposed by Bar association in some neighboring countries, Duraj laughed, reporting that, “we don’t have such issues in Albania,” and explained that the Albanian Bar is quite liberal about law firm advertising and related issues. “At least Albania can boast of that much,” he said.
In general, the legal market is relatively stable in Albania, Duraj reported, with little movement or change of significance.
As for his own firm, Duraj said that Drakopoulos had hired no lawyers recently, but had expanded its tax and accounting practice.
“The big news in Albania,” says Besnik Duraj, Partner at Drakopoulos, “not just in the legal market, but in the social and economic areas as well, is the ongoing struggle with judicial reform.”
“The country”, Duraj reports, “has been dealing with these problems almost since the beginning of Democracy.” Even this current push towards reform is sliding towards failure, and Duraj’s frustration with the inevitable delays, finger-pointing, and politicizing of the process is palpable. “This is not a really a new thing,” he says with a sigh. “We’ve been struggling with this current process for at least two years now.” According to Duraj, the country’s reputation for judicial corruption, lack of transparency, and lack of predictability is the biggest obstacle to moving talks about potential EU membership forward, and the market risks and inconsistent (and unreliable) law enforcement is the reason foreign investment in the country continues to lag. “So this is our country’s number one priority,” he says.
Still, and despite its importance, the actual process of addressing the necessary reform remains, unfortunately, highly politicized, which Duraj describes as “the no. 1 problem.” Indeed, he notes that the Constitutional amendments alone took 18 months to pass — and even that only came after substantial international pressure. In addition, he reports, “what started as a technical matter, day by day turned into a political matter.” The result, he said, is unsurprisingly muddy. “We know it’s not very clear when lawyers draft — you can imagine how bad it gets when politicians do it!”
Staying on the topic, Duraj also pointed to a shocking lack of transparency in the process, with the actual draft laws being debated very difficult to find. “Lawyers should be part of the solution,” he says, unhappily, “but we are often seen by society as part of the problem. We have a passive role in the process, and it’s a pity.”
“If even the constitutional process took 18 months …” he says, trailing off, before picking up with a combination of black humor and frustration: “And we still have 40 laws to debate! And we’re still discussing only the first seven!”
All of this, he says, delays the foreign investments the country so desperately needs. “And this is what bothers me,” he says, “because this country has a lot to offer, and we are waiting for serious Western investors. And they are waiting for the country to be able to provide a secure market, financially and legally.”
Otherwise, he says, there’s nothing really new to report. He’s not seeing so much M&A in the country, but he describes the energy sector as extremely busy, as the country’s Central Bank has reported that about 60% of all foreign investments in Q2 2016 were concentrated in major energy projects — 24% more than the same period a year ago. Mainly concession projects, Duraj reports, but also some privatizations and capital injection in building up hydro-power plants and putting the necessary infrastructure into place, as “the country is not yet at the stage where it’s all built up and energy can be sold.”
There are some other industries going well too, he says, pointing towards exports in the garment and footwear industry, compared to the extracting industry, which has had a drastic decrease in investment recently. Client service, call centers, joint centers for data processing, technology information services are all strong as well, he reports, and “all seem not to be too affected by the crisis or the other political issues we’re facing.”
“But also litigation,” he says with a laugh. “I don’t think there’s ever a period where litigators aren’t busy.”
In “The Buzz” we interview experts on the legal industry living and working in Central and Eastern Europe to find out what’s happening in the region and what legislative/professional/cultural trends and developments they’re following closely.