Spring Edition 2011 ALBANIA & KOSOVO LEGAL NEWSLETTER CHAMBERS GLOBAL – RANKS KALO FIRM ADVISES & ASSOCIATES TOP OF MARKET DELHAIZE Once again KALO & ASSOCIATES many of the country’s recent projects and GROUP IN $1.29 is ranked at the top of the competition by PPP deals, and has the ability to work on Chambers Global, a leading legal guide more niche issues’ relating to healthcare, BILLION DEAL and rating agency. All research con- pharmaceuticals, product liability and ducted by Chambers is done in a highly other areas. Chambers notes that clients confidential and ethical manner with a praise the firm’s “keen awareness of how cross-section of clients and members of Western companies operate”. the legal professions in the market being This is a firm that offers all interna- interviewed. tional and domestic companies excellent Chambers rates the firm as a leader legal services in Albanian, English, across the board in Albania. It is a mem- Italian and French. ber of the South East Europe Legal For more information visit Group (SEE Legal) and has an office in http://www.chambersandpartners. Kosovo. ‘It has been heavily involved in com/Global/Editorial/42170 FIRM ANNOUNCES PROMOTIONS AND REDEFINES DEPARTMENTS The firm is delighted to announce managing the intellectual property work “Limonat” promotions of two experienced lawyers for corporate clients By Kujtim Buza as Partners and two other lawyers as Jona BICA and Dorian KASHURI The KALO & ASSOCIATES team of Senior Associates. were promoted as Senior Associates. lawyers (covering a wide range of prac- Fatos LAZIMI and Anisa RRUMBU- Jona BICA will deal with banking, tice areas) provided legal advice to the LLAKU were promoted as partners. insurance, finance. Belgian company S.A. Fatos is a legal expert with 15 years of Dorian KASHURI shall deal with with respect to the purchase of the Ser- experience in public and private sectors. natural resources and energy. bian retailed Delta Maxi Group. Delhaize Group SA (DELB) agreed to buy Delta He has been heading the litigation By these promotions each partner Maxi Group, ’s largest food retailer, department within the firm and now will have supervisory role on various from Miroslav Miskovic’s Delta Holding covers also property matters departments: for 932.5 million Euros ($1.29 billion), Anisa has 6 years of experirnce as a • Corporate and Intellectual Property; including debt, to revive sales growth. lawyer and has been involved in mergers • Energy and Natural Resources; The transaction values the operator of and acquisitions as the head of corporate • Infrastructure, Concessions and PPPs; 450 stores in Serbia, , Bosnia, department. • Litigation and Property; Albania and Bulgaria at 10.4 times to 11 From now on she will be also • Tax, Employment and Banking. time’s estimated 2011 earnings before in- terest, tax, depreciation and amortization, Brussels-based Delhaize said today in a ROLE OF MEDIATION REINFORCED statement. It plans to complete the pur- chase in the third quarter and Delta will AS ADR METHOD add to earnings immediately after. The Law No. 10385, dated 24.02.2011 “On family issues; and civil claims related acquisition of Delta Maxi Group is sub- mediation in settling disputes” (replacing to criminal matters where mediation is ject to mutually agreed upon and custom- the old law of 2003 on mediation) was expressly required by law. ary conditions including the approval by enacted reinforcing the role of mediation A marked improvement in this the merger control authorities in Serbia, as an alternative dispute resolution new law is that courts are mandatorily Bulgaria, Montenegro and Albania. The transaction is expected to close in the method in the spirit of EC Directives. required to invite parties to settle third quarter of 2011. This method addresses out-of-court disputes through mediation (parties are, Delhaize was advised by CMS with settlements of a wide range of disputes of course, free to refuse), where for e.g.: KALO & ASSOCIATES as legal counsel pertaining to civil, commercial, labour, continue page 2 for Albania and Kosovo. Spring Edition 2011 from page 1 effective than going to court. Albania, the minimum age of mediator • In civil and family matters where the The new law also places more is increased from 22 to 25 years old, and legal rights and interests of minors are emphasis on the regulation of the holding a bachelor degree is a mandatory involved mediator, the licen-sing and potential educational requirement. Crucially the • Conciliation is required for divorce for the withdrawal of such licence. For law also regulates situations of conflict cases this purpose the Mediator Licensing of interests and addresses how such • To address pecuniary claims in an Committee was established and the should be dealt with. amount of up to 500,000 ALL. Mediator Registry which is held with- The provisions of this new law on Imposing this procedural obligation in the Ministry of Justice. This law media-tion for the settlement of disputes on the adjudicating authorities in Albania has both tightened up and diversified are in li-ne with recent amendments should in specific situations increase the legal requirements that a mediator made to other rela-ted acts such as the the role of mediation as ADR methods, should meet to gain a licence, e.g. a amendments taking place in the Albania which are ultimately more cost and time foreign national may be a mediator in Code of Civil Procedures etc. LEGAL UPDATES PROJECT UPDATES The Taxpayers’ Advocate: additional payers who face problems and who are ALBPETROL SHA voice of taxpayers sometimes subject to unfavourable treat- The Taxpayers Advocate (‘TA’) is a ment by the Tax Administration. No news has yet been published on newly established body within the General From its first year in existence TA strategy or manner of privatisation Tax Directorate (‘GTD’). Although an is proving that its professional approach of this state owned company. internal body of GTD, TA is established towards the relevant tax administration Meanwhile in a 5-year deal with to be an independent actor (i.e. indepen- yields satisfactory results for the taxpayer. Albpetrol signed two years ago dent from the GTD and nominated by the By Aigest Milo - Associate bankers have taken over its low Minister of Finance). The mission of TA Tax, Employment and Banking Dept. production wells, redeveloping is to protect the rights and interests of the * * * and optimizing them, giving back taxpayers in their relationship with the Tax New Procedural Requirements for a percentage of old production as a Authorities. The key function of TA is to Capital Increase royalty. It seems there is no interest provide taxpayers with comprehensive Amendments have been recently in- at present in view of the depleting information and to present the problems troduced to Instruction no. 5, dated wells and assets of this company. and concerns of the taxpayers to the rel- 30.1.2006 “On income tax”, as amended, INSIG SHA evant administrative organs as well as to regarding taxation on capital increase of a After the first attempt in 2009, the ensure that taxpayers’ rights are respected company. This Instruction provides that Government of Albania intends to by the tax authorities. cash contributions made by individuals privatize all shares it holds in the According to the relevant legislation (either shareholders or third parties) not insurance sector, yet there have not this exercise is accomplished primarily originating from the company (i.e. not been any signs of interest expressed through ordering the relevant bodies of contributions from dividends distributed to initiate the privatisation process. the tax administration to carry out veri- by the company etc) that are used for the fications or investigations and through purpose of capital increase shall be sub- NATIONAL LOTTERY advising the tax authorities on solutions ject to income tax where tax has not al- This licence is still intended to be to problems faced by the taxpayers. TA ready been paid on this sum before. In offered and no changes have since is also entitled to make assessments, sug- this case the individual shall submit to occurred in terms of the initiation of gest ways to solve issues and to suggest the tax authorities a declaration certifying the tender procedures. possible changes of tax procedures. In the origin of personal income contribut- HPPs operated by Albanian addition, TA could recommend the ap- ed for capital increase (to identify that tax Power Corporation (KESH) plication of unified procedures in order has already been paid on that contribu- IFC has already initiated tender to prevent the implementation of dif- tion) and if not pay the personal income procedures to contract sub- ferent practices in cases with similar cir- tax at the rate of 10% on that sum con- consultant, and various companies cumstances. The TA is to be independent tributed. This declaration or evidence of have now been shortlisted. The final from the examination, collection and ap- the payment being made must also be offers are to be submitted in early peal operations of the Tax Administra- filed with the National Registration Cen- May. tion and, thus, such independence will tre no later than the date of the deposit of TIRANA-ELBASAN MOTOR serve to ensure that TA will not be influ- the cash contribution used for capital in- WAY enced by the structures of the Tax Ad- crease. Without either evidence the capi- A tender for this motor way (including ministration perceived as less friendly by tal increase shall not be registered. Ad- a 2-3 km tunnel) was opened with taxpayers. ditional documents certifying the value some 25 companies already having It is noteworthy to mention that ap- of the contribution and payment of per- expressed interest. The Greek proaching TA is not part of the tax ap- sonal income tax should also be attached company AKTOR succeeded in peal procedure and it does not replace it. to this declaration. winning the tender and are due to However, the powers vested in TA can By Loriana Robo, LLM - Associate start works very soon. be significant and meaningful for the tax- Corporate and Intellectual Property Dept. ALBANIA & KOSOVO LEGAL NEWSLETTER SECONDMENT OF EMPLOYEES Secondment of employees is widely only the liability of securing the health, used, and Albania is no exception to this safety and hygiene in the work place of occurrence with the increasing number the seconded employee, in the same of global companies having a presence manner as for its own other employees. here and also for specialised short term The Labour Code provides that the labour projects. Although not much utilised contract between the original employer until recently this practice of seconding (i.e. the one seconding the employee) staff has been supported by legislation, and the seconded employee remains in specifically in the Labour Code (Law no. force. However, regardless of this, there “Peshku” 7961, dated 12.7.1995) is room for an interpretation that the By Lumturi Blloshmi Why “Secondment”? seconded employee may be considered Secondment is an arrangement where to be an employee of the Host, thus the the original employer “lends” their latter taking on the various ‘employer’ IFC – TRANSACTION employee to another employer (the host). obligations towards that employee. The host will typically pay the original How to regulate this three-party ADVISOR FOR PPP employer for the salary and other costs/ arrangement? expenses arising from the employment of Secondment is a three-party relation- OPERATION AND the seconded employee. The idea behind ship and, therefore, it requires a written this arrangement is that the seconded agreement to appropriately allocate MAINTENANCE employee will remain employed by the obligations and liabilities for the original employer for the duration of the secondment period. The issues to be OF ROAD secondment and thereafter return to work covered include protection of personal to the original employer. data, who is responsible for the salary KALO & ASSOCIATES has, together Companies, especially those set up (including payment of the respective with CMS Cameron McKenna, been se- here as branches or affiliates of foreign income taxes and social and health lected by the IFC to serve as legal con- companies find the secondment of staff insurance), protection of intellectual sultants in the project for the introduc- to be a very attractive option. It enables property, who is supervising the tion of Public-Private-Partnership for the movement of employees from one seconded employee, etc. In addition, the the operation and maintenance of the company branch to another or even from three-party agreement should also clarify Milot-Morine highway. The firm’s selec- one company to another, within or from to what extent the ‘new employer’ shall tion reflects the continued recognition of outside the country, in a much more time take on obligations towards the seconded its expertise in the fields of infrastructure, and cost effective manner particularly employee, and should also take into project finance and in particular transa- where specialised experience is required. consideration effects of vicarious liability. ction advisory services. This project if Who is the Employer during the It is advisable that such agreements be implemented successfully shall be the secondment period? prepared with professional legal advice, first PPP structure in road maintenance This is a particular key issue to preferably that with a specialist in and will serve as a good example and a determine who bears the obligations and employment and secondments matters. basis for similar projects in other areas of liabilities set under the Labour Code for By Emel Haxhillari, LLM - Associate Albanian infrastructure. the seconded employee. The Host bears Tax, Employment and Banking Dept.

FINAL PACKAGE FOR RENEWABLE ENERGY LAW On April 2010, the International of the Renewable Energy Regulatory incentive of a ‘Feed-in Tariff’ which shall Finance Corporation (“IFC”) officially Improvements in Albania. This followed be benefited by producers of categories launched the Renewable Energy Albania several rounds of discussions with the to be determined; (v) standard power Project (RE Albania) as part of the wider relevant stakeholders. purchase agreement; and (vi) standard Western Balkan Renewable Energy The outputs included (i) step-in right grid connection agreement. Whilst each Program – BREP. In addition to the for the concession law – providing individual output is much developed regulatory improvements, RE Albania something much more detailed in the and enhanced and do alleviate many aims to provide support to SHPP law than presently exists; (ii) improved oversights currently in the framework, sponsors to improve their designs and standard concession contract (for it is the whole package that reflect a business plans and create a framework SHPP) – developing on the existing responsive outlook of the needs of the to enhance the bankability of energy contract taking into account the energy market as a whole and take into projects (in particular for SHPPs). market requirements, and comments account the EU legislative requirements On 21 March 2011, KALO & of stakeholders and legal advice; (iii) but at the same addressing the actual ASSOCIATES together with Gide improved selection criteria for SHPP realities of the Albanian market model Loyrette Nouel serving as legal advisor for concessions; (iv) Renewable Energy as it is today. The package is expected IFC on the regulatory part of this project Law – drafting basic framework for to get the seal of approval by Parliament and successfully concluded the final phase renewable energy sources and the where necessary in the next few months. Spring Edition 2011 KOSOVO NEWS MFI TRANSFORMATION Most Micro-financing Institutes in Kosovo have been established as NGOs LIQUIDATION PROCEDURES STAGNATE pursuant to the NGO Law and subse- The reform for the creation of a legal quently acquiring a MFI ‘registered infrastructure for judicial reorganization status’ licence from the central Bank and liquidation in Kosovo has been of Kosovo. This has enabled them to stalled for unknown reasons. collect deposits of up to 125,000 EUR. Currently the one law that is However, these institutes now face a enforceable in Kosovo is Law 2003/4 problem if they wish to expand this ser- On Liquidation and Reorganization vice, specifically if they wish to collect of the Legal Persons in Liquidation deposits of over 125,000 EURO. In or- applicable as of 14 April 2003 though “Peizazh” der to expand their loan portfolio they in essence it is not functional as there is By Rafael Dembo must acquire a MFI Licence from the no secondary legislation in the form of the practical implementation will be Central Bank of Kosovo. Among other administrative instructions or directives taking place for cases of involuntary requirements they must be a registered enacted to facilitate or enable its liquidation of companies. entity with the Ministry of Trade and efficient implementation thus making In practice the Commercial Court in Industry, which essentially means that if the law, in effect, inapplicable. Prishtina is the only judicial institution they are already established as an NGO Moreover, to date there are no responsible for implementing the they must somehow convert their legal licensed liquidators to conduct the procedures of liquidation and existence into a private commercial en- liquidation procedures as required by the reorganization of businesses in Kosovo. tity. This one obligation creates a host liquidation law. The original intention We understand that in the archive of legal complications deriving from was for the project for licensing to of this Court are “several” proposals the fact that there is no framework be completed by 2010. However the for initiation of judicial liquidation of ‘transformation’ so to speak of an liquidators had been terminated for procedures filed earlier and all these NGO into a commercial entity. Thus unknown but it is said that the project initiatives have stagnated due to the the only option is to set up an entirely as such is still very much active. reasons mentioned above. new company and potentially lose the We are not aware of when these By Gazmend Nushi history as an already existing NGO liquidators will be licensed and when Partner when applying for the MFI Licence.

PTK PRIVATIZATION PROJECT UPDATES financial advisor of the Privatization PROCESS: Committee of KEK, said that is in the PRIVATIZATION OF KEK: The governing coalition of Kosovo best interest of Kosovo to privatize The prequalification of interested put together in March 2011 managed KEK as soon as possible and in companies for privatization of compliance with the best international to secure the majority of votes to Distribution Network and Supply of standards for more transparency. The adopt the Law on Budget which KEK has been concluded with the allows the establishment of Post deadline for pre-qualification having following 6 companies submitted and Telecommunication of Kosovo closed on 18th march 2011. The process qualification: Calik Holing (Turkey), despite objection of opposition of distribution privatization of KEK Limak Holding (Turkey), Park Holding parties and the trade unions of PTK has begun and is expected to conclude (Turkey), G.C.T.s.r.i.l. (Italy), Elsewedy employees. According to local media in 2011 and the representatives of Power (Egypt), Union D. Energy Systems the government plans to transfer the appropriate institutions that are Development Corporation (Great Britain); the ownership of PTK to private responsible for this exercise have those that pre-qualifiedare “Limak”, investor(s) by September of this year. been announced. Emsale Limani, “Çalik”, “TAIB” and “Elsewedy”.

Disclaimer: The contents of this newsletter is for information-purposes only and are not intended in any way as legal or other professional advice. It is advised that professional advice should be CONTACT sought prior to any action being undertaken based on any of the contents of this newsletter. [email protected]

TIRANA - Kavaja Avenue, G-KAM Business Centre, 4th Floor, P.O. Box 235, Tirana-Albania, Tel.: +355 4 2233532, Fax.: +355 4 2224727, [email protected] PRISTINA - Pejton, Str. Mujo Ulqinaku 5/1, 10.000 Pristina-Kosovo, Tel.: +381 38225674, Fax: +381 38225798, [email protected] www.kalo-attorneys.com SEE Legal • Tirana • Pristina • Athens • • Bucharest • Istanbul • Ljubljana • • Sarajevo • Skopje • Sofia • Zagreb www .seelegal.org