Category: Kosovo

Despite high political aims and a comfortable single-party majority in Parliament, the current Government of the Republic of Kosovo has been surprisingly slow on legislative activity, according to Kerveshi & Partners Partner Kujtim Kerveshi. “They could do what they want but are not doing much.”

Following the February 2021 election, the new Government has been in power for seven months. “They have a major backing in Parliament, they are just one political party, and they had big plans and lofty promises, so it’s very surprising that they’ve not been more productive in reaching those goals,” Kerveshi begins. He says this has been “one of the slowest periods in Kosovo’s history, in terms of legislative activity.” 

He goes further, saying that even the older, advanced-stage proposed legislative changes – planned by the former government – were frozen: “one major thing that was planned to be changed was the process for vetting judges and prosecutors. We’ve had no updates on that and no concrete steps were taken.” He says he was one of the independent experts on the working group discussing the vetting process: “Since February 2020, we worked a number of months into the pandemic. Then the Government changed and we disagreed on some counts with the new one, so the group was reorganized. But seven months on, there is no work being done on that project, and no strategy has been announced.” He says these legal uncertainties undermine Kosovo’s judiciary: “This brings some uncertainties – with the process not legally tangible – so the process itself becomes untrusted. As judges and prosecutors feel uncertain in their careers, there is a slowing down of the judicial process that could lead to a deadlock situation. And that uncertainty would then be extended to every professional field connected with the justice sector.” 

He mentions a couple of things the Government could do to restore legislative faith: “the first is obviously making visible progress on the vetting process. The second would be the new Commercial Court Law – where the plan is to build up the Commercial Court as an entity separate from the main court in Pristina, thus enabling cases to be tried faster than before. This would definitely increase trust between business and judiciary.” 

Kerveshi says the economy is making a recovery. He mentions some COVID-19 prevention measures are coming back, many of them affecting both families and business, with kindergartens shutting down, restaurants only serving outside, and a 10 p.m. curfew. Yet the economy “is bouncing back, partly due to the increased prices of everything, but mostly because people are working hard and there is hope for things improving.” He’s not optimistic about the strategy for state support of the most affected economic sectors: “there are COVID-19-related measures affecting businesses negatively, but we see no certain plan to offer government support.” 

He does mention two unsurprising winners. The first is the construction sector. “It is in overdrive, even though everyone is complaining about prices – you see new buildings popping up every week. And this level of activity is bleeding into other sectors as well. Real estate overall is registering solid growth. It is the biggest factor in the economy today,” and while he mentions there is some activity on energy, mines, and minerals, he says the second winner is retail. “Shopping has never slowed down, even during the lockdown. And it’s happening both online and in person. Many of our clients worked on new online applications and platforms, and they need help on compliance, quality assurance, intellectual property, data protection – as a result, our technology business has been growing steadily.” 

Kerveshi says innovative law firms offering services through in-house platforms (rather than face-to-face meetings) are around the corner. “Let’s face it, the pandemic has changed the world. People will keep finding faster and more innovative ways to do business. Online has changed our work, our lives, and I don’t think it’s over,” he concludes.

Hodaj & Partners has joined the Rivet:Net law firm alliance in the Western Balkans.

“In line with technological developments and aiming to facilitate services for businesses and other clients in the region, Hodaj & Partners based in Pristina, has become part of the Rivet:Net alliance, the largest network of law firms in the Western Balkans,” comments Managing Partner Taulant Hodaj. “This alliance will enable us to offer faster legal services to our clients in every country in the region, as well as to be closer to our customers throughout the Balkans.”

Rivet:Net is a “closely integrated alliance of leading independent law firms in Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, North Macedonia, and Kosovo, bringing together requisite industry knowledge and legal and regulatory expertise,” according to the alliance website.

Rivet:Net itself was formed earlier this year (as reported by CEE Legal Matters on April 27, 2021).

Holman Fenwick Willan, working with RZZ Law, has successfully represented the Privatisation Agency of Kosovo in UNCITRAL arbitration proceedings relating to one of the country’s largest mines.

According to HFW, “the Tribunal dismissed all of the claims made against PAK – for expropriation, unjust enrichment and compensation – and also awarded the agency a proportion of its costs of defending the arbitration.”

HFW’s team was led by Partner Michael Buisset and included Lawyers Patrick Myers and Emma Bud.

The right to privacy that is guaranteed by the Constitution of the Republic of Kosovo is embodied in the new Law on Protection of Personal Data, which was approved in January 2019 as an amendment and supplement to the old law, which had been in force since 2010. With the introduction of the new LPPD, Kosovo has implemented an advanced and comprehensive regulatory and institutional framework for data protection, incorporating the main principles and provisions of the EU General Data Protection Regulation.

The Information and Privacy Agency in Kosovo is the main authority responsible for policymaking and regulating personal data protection in Kosovo. The AIP is an independent institution from the public administration, with a Commissioner elected by Kosovo’s Assembly, and its mandate includes supervising the implementation of the LPPD, receiving individual complaints regarding suspected violations of personal data protection rights, and imposing fines for non-compliance with LPPD provisions.

As the pandemic has forced companies to conduct their operations online and provide their services remotely, data privacy requirements have taken on critical importance all over the world. This situation has prompted stakeholders to embed data protection features in each service and product. In Kosovo, one of the main controversies related to this issue is companies seated outside Kosovo using the data of the country’s citizens.

The issue is, unsurprisingly, covered by Kosovar law. With a few exceptions, where the processing of data is ordered by data controllers seated outside of Kosovo, the controller or processor is required to designate a representative in Kosovo to carry out activities in cooperation with the AIP and relevant data subjects on all issues pertaining to the processing of personal data.

The provisions of the LPPD also apply to controllers or processors that are not established in Kosovo but make use of automatic tools or other equipment to process data in Kosovo. In cases like these, the controllers or processors shall designate a representative in accordance with Article 26 of the LLPD, which is almost identical to Article 27 of the GDPR. Article 26 of the LPPD provides that the representative shall be the contact point for the Information and Privacy Agency which acts as a data protection authority, and for data subjects, on all issues related to the processing of personal data. Controllers or processors shall inform the data subjects about the identity of that representative whenever they are required to notify data subjects about the processing of personal data. Controllers or processors employing more than 250 people, or their representatives, are required to retain records of all data processing activities, and, when requested, must submit them to the IPA for review of compliance with the LPPD.

Based on the LPPD, controllers or processors must also designate a data protection officer, who can be either an employee or service provider and who should be responsible for informing and advising the controller or processor of all obligations arising out of the LPPD concerning the processing of personal data. The data protection officer serves as a contact point with the IPA and may consult with the IPA on any matter.

Additionally, two by-laws concerning data security are expected to be voted on by the Kosovo Assembly during the ongoing legislative session. These laws will help ensure that personal data is protected to the highest standard.

In light of the current trends, the regulatory authorities in Kosovo are embracing an expanded notion of data privacy and data protection, including imposing increased obligations on data controllers and processors not seated in Kosovo. Therefore, companies that process personal data, especially those seated outside of Kosovo, are encouraged to strictly follow the guidelines imposed by the law, and make sure they designate a representative and appoint a data protection officer in Kosovo.

By Kushtrim Palushi, Partner, and Festa Stavileci, Associate, RPHS Law

This Article was originally published in Issue 8.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The pharmaceutical sector in Kosovo is undergoing three major policy and legal reforms to increase its competitiveness and transparency. These reforms are part of a national project to improve the underdeveloped and under-regulated pharmaceutical market which would, in turn, encourage increased spending in the healthcare and pharmaceutical sector.

These reforms include regulating the pricing of pharmaceutical products, mandating health insurance and functionalizing the health insurance fund, and completing and functionalizing a comprehensive health information system.

The first reform relates to regulating the price of pharmaceutical products, as a precondition of implementing the health insurance fund, and as a control mechanism for the tendering procedures for the purchase of pharmaceutical products in light of increased public funding.

The proposed legal framework calls for minimal intervention and mandates a comparison between the price proposals of the holders of marketing authorizations, and a comparison of those price proposals with the average prices in Montenegro, Albania, North Macedonia, and Croatia (known collectively as the “Basket of Reference Countries”).

The final price would be determined on the basis of the lowest internal proposal or that offered in the Basket of Reference Countries. It is hoped that this reform will bring transparency and increase competitiveness, based on an expected increase in demand and a fairly under-regulated market.

The second reform relates to the functionalization and implementation of the health insurance fund to establish universal access by citizens and residents to quality basic healthcare services. Kosovo is one of the few countries without a mandatory health insurance scheme, with marginal enrollment in private health insurance, and with the public healthcare sector and purchase of medicinal products directly supported by the state budget.

The creation of a health insurance fund which will collect premiums based on level of income (reaching up to 7% of gross salary (paid jointly by an individual and his/her employer, at 3.5% each)). Once the health insurance fund is made functional, it is expected that spending on healthcare services and medicinal and medical products will increase. This will open the road to new companies investing in Kosovo.

The third reform will consist of implementing health information systems, to facilitate a shift to data-based decision-making in the healthcare and pharmaceutical sectors.

The main objective here is to develop a health information software platform, which, as a nation-wide platform, can be used for such things as clinical registries, medical decision support, public health statistics, and so on. However, this reform is facing delays due to its complexity.

To conclude, these three reforms will have a great impact on the pharmaceutical and healthcare sector in Kosovo. First, the regulation of pricing of pharmaceutical products in Kosovo will increase transparency and competition and open the market to new foreign companies. Second, the implementation of the health insurance law will significantly increase investment in the healthcare and pharmaceutical industry. Third, the implementation of the health information system will transform the industry by providing real-time insights and data-based decision making.

By Visar Ramaj, Partner, and Metin Qestaj, Associate, RPHS Law

This Article was originally published in Issue 8.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

RPHS has helped the Moxico Luma Kosova Mining consortium from the UK and Poland obtain strategic investor status in Kosovo.

According to RPHS, “the consortium will develop the investment project Vicianum Mining Project in the region of Mitrovica and Vushtrri in Kosovo. The total investment capital is expected to be around 45 million euros for the upcoming period of five years.”

Acquisition of property ownership in Kosovo is regulated by the Law on Property and Other Real Rights. The Law on Property, along with the Law on Cadaster, sets out the process of acquisition and registration of property in Kosovo. The Law on Property regulates the creation, content, transfer, protection, and termination of real rights, while the Law on Cadaster regulates the basis for the registration and recognition of the real rights by creating cadastral units for parcels, buildings, part of buildings, and utilities.

Based on the Law on Property and Other Real Rights, there are two conditions that must be met to acquire ownership of immovable property in Kosovo: a) a legal basis (a sale-purchase contract, donation, etc.) and b) registration of the change of ownership in the immovable property rights register. Natural and legal persons who wish to buy property need to ensure first that the property is registered in the cadastral office with the details described in the property certificate in order to enable the transaction between the buyer and seller. If the property is not registered in the cadastral office, the buyer cannot transfer ownership via a contract signed in front of a Notary Public. The sale is not final and the transfer of the property rights from the seller to the buyer has not been completed until the property is registered by the buyer in the cadastral units.

In the last decade, the construction of buildings and housing in Kosovo has grown exponentially, contributing directly to the increase of economic activity in this sector. As the sector has become more competitive, many investors failed to register their constructed buildings and housing with public authorities and register their ownership in the cadaster offices. This failure was caused by two primary factors: the first and most common is the bureaucratic and time-consuming process required to have public authorities technically accept the structures and register them in the cadastral office, and the second is the failure of investors to comply with the terms of the  construction plans permitted by the public authorities. These properties are treated by public authorities and applicable law as unauthorized until they receive technical acceptance and are registered in the cadastral office.

Given that, currently, investors cannot transfer ownership of the structures to the buyers, a mechanism for buyers to have the right to use and exploit the unauthorized structures has been adopted. This mechanism is implemented in two ways: a) by entering into legal obligations through internal contracts (i.e., one not involving the presence of a notary public) between an investor and a buyer; and b) preliminary contracts between an investor and a buyer signed in front of a notary public. However, neither of them fulfills the condition of registering the property in cadaster register. These two forms both aim to regulate or enforce a future binding contract between a buyer and an investor. In addition, this mechanism seeks to assure the buyer that the investor will not enter into other contractual obligations with third parties. Lastly, it ensures that the transfer will take place at the moment when the investor receives the property certificate from the cadastral office.

Both of these mechanisms have, to some extent, regulated the transfer of ownership and the de facto recognition of the buyer’s rights to the property. Courts and public authorities still do not always rely on the same doctrines in upholding these contracts, however, with some relying on the legal doctrine of substantial fulfillment and winning prescription to prove that the contract has been fulfilled.

In light of these crucial problems, Kosovo must undertake act quickly in order to regulate, ease, and quicken the process of registering these immovable properties in cadaster registers, since as the real estate sector is continuously growing, the number of unregistered buildings is growing as well.

All the above obstacles in transferring ownership for newly constructed buildings have a direct impact on access to financing, especially for buildings used for residential purposes, since buyers do not have legal title in their hands and are thus unable to use it as collateral for securing loans.

By Mentor Hajdaraj, Partner, and Blerina Ramaj, Senior Legal Associate, Ramaj, Palushi, Hajdaraj, Salihu Attorneys at Law

This Article was originally published in Issue 8.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Draft legislation, including a draft law to create a Commercial Court and a draft Civil Code, is at the top of the agenda for lawyers in Kosovo, according to Ramaj, Palushi, Hajdari & Salihu Partner Mentor Hajdaraj, who also points to several ongoing foreign investment disputes of significance to the country’s overall FDI strategy.

The proposed creation of a Commercial Court has been the hottest topic of conversation among lawyers dealing with commercial issues, Hajdaraj says. This special court would handle commercial disputes that are currently heard by the Department for Commercial Matters. “These have captured everyone’s attention in part because of the constant delays in courts,” he explains. “If you initiate a lawsuit in the Basic Court of the Department for Commercial Matters you can expect to wait at least three years for a decision, so it’s normal to want to expedite the process.”

Supporters of the Commercial Court argue that it will help the economy by solving disputes in a faster matter, which is crucial for businesses. “However,” Hajdaraj says, “the draft law on Commercial Court seems to have a lot of critics, including some who think that this law is unconstitutional, which means we can even see the draft ending up in the Constitutional court.”

The other proposed law of significance is a draft Civil Code. “There are, naturally, several laws regulating various procedures in place,” Hajdaraj explains, “but there is no such thing as a Civil Code, per se, that would integrate all the issues and not have overlaps.” 

The draft law creating the Commercial Court and the draft Civil Code were presented as part of the legislative program of the previous government, Hajdaraj reports, and he notes that, at the moment, it is still unclear if the new government will support them. In fact, he says, “the new government, which has been in place since the end of March, so far seems to have other priorities when it comes to the legislative program.” According to him, “the first legislative initiative of new Government is the Draft Law on the Confiscation of Unjustifiable Property – an initiative that is making all the headlines for the time being.”

Turning to another issue of significance, Hajdaraj reports that the Central Bank of Kosovo has recently amended and/or adopted various regulations, including, most importantly, the Regulation on Issuance of Electronic Money, which regulates the Central Bank’s authorization of non-banking financial institutions to issue electronic money. “It is still a very new sector that many people are not very familiar with,” he says. “While traditional banks have not welcomed the update, the CBK seems set to support it and the evolution of the sector will definitely be worth keeping an eye on, with several non-banking financial institutions currently applying for such a license.” 

“In terms of new deals, when it comes to foreign investments, there is not much going on,” says Hajdaraj, adding that many players “are on hold because we are waiting for the new government to present a new plan and to see how it will choose to deal with ongoing issues.”

In the meantime, he says, a particularly interesting focus of attention are the three open foreign investment disputes currently in international arbitration. “The state is currently in the process of appointing an international law firm to represent Kosovo in these procedures, and these cases have given rise to two main debates: First, to what extent were the past governments right in terminating the relevant agreements – or whatever legal instruments were used; Second, whether the current law designed to attract FDI into Kosovo is too generous.” According to him, “the fallout from these cases is definitely something to follow.” 

The energy infrastructure in Kosovo has not undergone major change over the past few decades. Due to high reserves of lignite, 97% of Kosovo’s electricity generation comes from two aging coal power plants. Unfortunately, lignite-coal of the kind found in Kosovo is among the most polluting and least efficient sources of energy. Consequently, Kosovo’s infrastructure is outdated and a major source of air pollution.

Emitting for more than 50 years, Kosovo’s two coal plants – Kosovo A and Kosovo B – do not possess the capacity to adapt to, support, or handle current demand in the country. In order to meet this demand, the Government of Kosovo is rehabilitating the Kosovo B power plant, which is more than 30 years old, to bring it in compliance with the European Union Directives, and is building a new, more efficient, lignite-fired power plant to replace the 45-year-old and highly polluting Kosovo A power plant.

Kosovo’s large lignite resources – a total of 12.5 billion tonnes – are reported to be the second largest in Europe and fifth largest in the world. Kosovo A and Kosovo B are supplied with lignite from the nearby Sibovc Southwest and Sitnica mines. Kosovo has no oil or gas extraction and no gas import infrastructure, although it is interested in building a pipeline to connect to the Trans-Adriatic Pipeline. 

Until recently, a project that would include the building of a power plant with a capacity around 450 MW net – Kosova e Re – was under development. Unfortunately, the project was interrupted when both the World Bank and the EBRD announced that they would not provide necessary financing, leaving only the U.S. International Development Finance Corporation and various credit agencies as potential financiers.

Kosovo does not have plentiful water resources like other Balkan countries, but construction of small hydropower plants has still sped up in recent years – and begun generating controversy, as several of them are situated in protected areas.   

The Long-Term Strategy on Energy

In the long run, Kosovo has several targets in the energy sector, including a renewable energy target of a 25 percent share in the final gross consumption of energy by 2020, according to the Energy Community Treaty. In 2017, it achieved a renewable energy share of 22.9 percent, putting it on track to meet this target.

However, this was mostly achieved by household use of woods biomass, not by investing in renewable energy. Kosovo’s first major wind farm is the 32 MW Kitka plant, which started operating in late 2018. In December 2019, the ERBD approved a loan for the 105 MW Bajgora plant. 

The energy sector also occupies an important place in the Stabilization and Association Agreement, which entered into force on April 1, 2016. Under Article 114 of this Agreement, Kosovo must satisfy the obligations related to integration into the common regional market involving the Parties Energy Community Contractor. In order to meet these targets, the Government of Kosovo has drafted the National Energy Strategy for the period of 2017-2026.   

The Strategy is based on five main objectives: (i) Ensuring a stable and quality supply of electricity and capacity required for a stable electricity system; (ii) Integrating into the Regional Energy Market; (iii) Increasing the existing capacity of thermal systems and building new capacity; (iv) Developing natural gas infrastructure; and (v) Fulfilling goals and obligations vis-a-vis energy efficiency, renewable sources of energy, and environmental protection. 

In addition, Kosovo largely relies on the support and cooperation of its regional and international partners in pursuing its various goals. This cooperation takes the form of improving and diversifying supply and improving access to the energy market, in accordance with the EU acquis on the security of supply and the regional energy strategy of the Energy Community, and implementing the EU acquis on energy and efficiency resources, renewable energy, and overall environmental impact. 

On a positive note, different sources such as solar and wind in Kosovo represent potential investment opportunities in the energy sector, and the common electricity market with Albania, in conjunction with that country’s existing hydropower may open the way for a more flexible electricity and energy system. Accordingly, such cooperation would lead to new and larger investments, which would significantly impact the economy.

By Ahmet Hasolli, Managing Partner, and Vjollca Hiseni, Associate, Kalo & Associates Kosovo Office

This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

“The current political situation in Kosovo is fragile, since the assembly, in the middle of the COVID-19 crisis, dismissed the government of Prime Minister Albin Kurti in a no-confidence vote on March 25, 2020, triggering a huge political crisis in the country,” says Fisnik Salihu, Partner at the RPHS Law Firm in Pristina. The government was dismissed, he says, “mainly after a dispute between coalition partners over whether to declare a state of emergency and the way the dialogue with Serbia should be handled in the future.”

Nonetheless, Salihu says, the government has been handling the COVID-19 crisis well. “Only two days after the first confirmed case, on March 15, the government put measures in place, such as quarantine arrangements and border control, and closed schools and businesses, except for essential ones.” However, some of these decisions did not fare as well as others, and on March 23 the country’s Constitutional Court found that the anti-movement measure was not constitutional, as the “piece of legislation the government cited as the source of this restriction was not powerful enough.”

“The former coalition political party, LDK, has initiated negotiations with other opposition political parties to form a government within the existing composition of Kosovo’s Parliament,” Salihu explains. However, that process isn’t going smoothly. “There is a political debate as to whether the parties can form a new government without elections after a no-confidence vote was successful,“ he says. “As a result, the attempt to form a new government has transformed into a constitutional debate, and ultimately has become subject to constitutional review from the Constitutional Court.” Indeed, the Court issued an interim measure, which expires on May 28, suspending the vote in Kosovo’s Parliament for a new government until it rules on the merits.

The COVID-19 crisis itself is bound to leave a mark on Kosovo’s economy, Salihu says, noting that “according to the World Bank’s projections, the country’s GDP will contract by 4.5% but rebound in 2021.” The direct effect will be felt in investments, exports, and remittances. “The Government has approved an initial fiscal stimulus package of EUR 170 million,“ Salihu reports. “This package includes covering monthly salaries up to EUR 170 for April and May for those who were affected by the crisis, as well as backing SME lending activities by guaranteeing 80% of unpaid loans and subsidizing 50% of interest payments.” Nonetheless, he isn’t convinced that even that stimulus will be sufficient, considering the full impact on the economy, and even with tax payment deadlines being extended and a three-month loan repayment moratorium placed by the Central Bank.

“The business community was quite proactive during this period, proposing measures to the government and developing innovative plans and strategies to handle the crisis,” Salihu says. “The crisis has led to the rapid development of online retail and e-commerce in Kosovo, and even restaurants, stores, and other non-essential businesses have started to rethink online sales and e-commerce.” He says that the legal market had to adapt as well, adding that “law firms have also started to rethink their business models and enquire about ways to accommodate some of the services remotely.” He says that thanks to IT solutions and resources, the market was able to adapt to the “new way of doing business” during this time.