Spring Edition 2012

ALBANIA & KOSOVO LEGAL NEWSLETTERFIRM RATED TOP BY CHAMBERS GLOBAL – 2012 EDITION

FIAA HOLDS ANNUAL CONFERENCE AND EXHIBITION FOR NATURAL RESOURCES SECTOR

DIGITAL PROPERTY REGISTER AND NEW PROCEDURES FOR PROPERTY TRANSFER

Our firm, KALO & ASSOCIATES, has yet again been highly commended and rated in the legal market in Albania. Chambers Global (part of Chambers & Partners) is one of the top legal rating agencies/directories used by many multinational corporations and international law firms. Clients have been quoted as saying that they “...feel comfortable and secure dealing with Kalo & Associates.” “ The firm offers high standards and fair billing,” comments one client

The firm prides itself on maintaining the highest of standards in the legal services it offers, ensuring a full range of legal services are offered with in-depth local legal knowledge and advice delivered at international standards.

The Albanian Minister of Justice announced that the main objective for this year is the digitalization of the Immovable Property Register and the granting of online access to the Immovable Property Register to Notary Offices. It was announced that the Property Strategy which was compiled with the assistance of the World Bank and EU will be concluded this April. New amendments to the law no. 7829, dated 1.6.1994, “On notary”, as amended, (Notary law) and law no. 7843, date 13.7.1994, “On registration of immovable property”, as amended, will be introduced in order to reduce the time and procedures for transactions for immovable property.

The new law on Registration of Immovable Property entered into force on the 28 of April 2012. This law seeks to regulate the activities of the public registry of immovable property

As part of the common trend in the whole of the SEE region, energy & natural resources, continues to be an area of interest for foreign investors and one that continues to thrive in the current economic climate. The Government of Albania is very keen to promote this sector, including the country’s hydro capacity, oil, gas and mineral reserves. Managing Partner, Perparim Kalo, also a board member of FIAA, was keen to support this event and has, at first hand, experienced the increase

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interest of investors in this sector. The firm has developed a particular expertise in hydro power investment transactions (advising financiers, sponsors and investors), in oil, gas and mining.

and, inter alia, the method of recording and organizing the activities of the Immovable Property Registration Office (IPRO).

The most important change is that the Immovable Property Register will now also be kept in an electronic form which will be form the central state database and be administered by the IPRO. The Register will record the registration of property titles and other real rights on immovable property on the basis of legal documents proving ownership of immovable property. It will serve as a basis for the preparation, maintenance and management of immovable pro-perty records, maps and registration documentation confirming the right of ownership and other real rights over immovable property.

Currently all contracts and agree-ments for the disposal of property rights or other real rights over immovable

property must be presented for registra-tion no later than 30 days from the time of its conclusion. The new law extends the obligation to include that courts, notaries, bailiffs and other state bodies are also obliged to send to the respec-tive IPRO copies of court judgments (final and binding) or acts that include the acquisition, recognition, modifica-tion, termination of a property right to estate, or a real right over it, or declare invalid legal action over property previ-ously registered, within 30 days of issue.

The owner or person, who proves a legitimate interest in accordance with the provisions of the law, is entitled to obtain information and copies of documents that are in the registers of immovable properties, files, cadastral maps, documentation filed with application for registration and documentation held and

Spring Edition 2012

Under the new law no. 10489, dated 15.12.2011 “On trade and supervision of the market of non-consumable goods” (the “Act”) a much stronger emphasis on the obliga-tion of product recall by manufacturers, importers and distributors of non-food products was imposed. Although this obligation had been covered to a certain degree in the previous law (i.e. Law no. 9779, dated 16.7.2007 “For general security, essential requirements and evaluation of confor-mity of non-consumable goods”) there lacked specified procedures and importantly timing obligations for the recall.

This new Act expressly imposes on the economic operators (i.e. manufacturer/producer, its authorized representative, importer or distributor) “...the obligation to recall, or when it is the case, to ban or take corrective actions when they believe or have reasons to believe that the products made available on the market are not in conformity with the applicable legislation”.

The Act reinforces the obligation also of the market surveillance authority (i.e. competent organ under METE), to order to recall a certain product if after control tests it is proven that the product is dan-gerous and/or it is not in conformity with the security requirements or irrespective of the compliance, it might jeopardize life, safety, health, environment and/or other matters of public interest. It is in any case the duty of the economic op-erators to duly notify consumers or end users and to organise the actual physical removal of the products from the market. It is now expressed more clearly that to conclude a recall the economic operator should also reimburse or exchange the product for another subject to the agree-ment of the consumer.

If economic operators fail to comply with the product recall obligations under this Act, fines varying from 100,000 Lek for distributors to 200,000 Lek for manufacturers or importers shall be imposed. These fines are less than they were under the old law.

The market surveillance authority is responsible for ensuring that all measures applicable to products, including product recall, are observed under the principle of proportionality (balancing the interests of the economic

PRODUCT RECALL OBLIGATION REINFORCED

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freedom and that of public interests/and protection of consumers) and in accordance with the Act.

If measures are to be imposed the economic operator shall be notified within 5 days from the last day of inspec-tion by the market surveillance authority. The economic operators have the right to reply to the imposition of such mea-sure within ten days. However, the mar-ket surveillance authority does not have to comply if the case requires a rapid in-tervention to protect the public interest.

The protection of consumers’ rights in the Albanian market, as a potential integral part of the internal European market, demanded more specific legal regulation on product recall. The new Non-consumable goods Law now fully implements Decision No. 768/2008/EC of the European Parliament and of the Council of 9 July 2008 “On a common framework for the marketing of products and repealing Council Decision 93/465/EEC”, but it is not entirely approximated with Regulation (EC) No. 765/2008 of the European Parliament and of the Council of 9 July 2008 “Setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing regulation (EEC) No. 339/93”.

The implementation of this Act is likely to result in increased enforcement of the consumer product safety requirements, including the ability to demand that companies take corrective action and/or recall products on an expedited schedule. This may in due time also contribute to more effective claims under the tort of product liability.

By Loriana Robo, AssociateCorporate/Commercial Contracts

administered by local IPROs. Parties, who can be legal or physical, domestic or foreign persons, will be given access and shall have the right to take data directly only through the electronic registry. The online register will be designed to ensure that data registered therein is safeguarded. Parties entitled to have access to the electronic system may take extracts or proprietary electronic documents directly after receiving the consent of entities registered as owners of immovable property. Other subjects, who have no right of access to the online register, will have the right to ask the IPRO for relevant information by electronic or ordinary mail, upon the satisfaction of the requirements of the law.

Changes to the Law on Notary: The effect of the new changes to the Law on Notaries is expected to reduce the time of transactions for immovable property from 23 working days to 10 days. Currently, before a notary public can certify a property transfer agreement it must see evidence of the ownership of the property by the Seller and to check if there are any registered interests obstructing the possibility of transfer, i.e. the updated Cartela or certificate of title issued by the respective immovable property registry no earlier than 3 days prior to the intended transfer. These certificates or Cartela can only currently be physically issued by the local IPRO, which could for e.g. be in Vlore, or Gjirokastra. Generally the time to acquire the certificate of title by the Seller can take up to 10 days. Following the execution of the transfer before the notary public the Buyer shall then have to register the registration at the respective local IPRO.

Pursuant to these amendments the notary public shall now be responsible for obtaining the verification of the Seller’s ownership rights over the property to be transferred. The Seller shall provide the notary with the ownership documents and the notary (equipped with the necessary access code for the electronic registry) shall verify the Seller’s true legal ownership and clearance of any registered interests obstructing transfer from the electronic online IPRO register.

By Xhet HushiAssociate, Infrastructure/Property

Landscape, Oil on canvas, 2011 Artist: Aleksander Filipi

ALBANIA & KOSOVO LEGAL NEWSLETTER

Solid Waste Management continues to be a big issue in Albania, and as with many areas of the public sector services can benefit hugely from private sector participation.

The Managing Partner of KALO & ASSOCIATES was invited to speak in one of the panels on the Albanian legal framework of PPP solutions. Some of the key legal issues raised and discussed were (i) Concession Law serves as adequate ba-sis; (ii) possibility of inter-unit cooperation agreements and establishment of a unique vehicle to represent all the governmental units with competence over the service/matter for execution of contract with the private party; (iii) existence of a new Plan for the National Strategy on Waste Man-agement (January 2011); New Law on Inte-grated Waste Management fully transposing Waste Directive 2008/98/EC – (Novem-ber 2011); need for the harmonisation be-tween new Environmental Protection law and that of the Law on Integrated Waste Management (no environmental standards as of yet for landfills).

The roundtable provided an effective setting for representatives of the local and central government, parliamentarians, pri-vate sector, NGOs, IFC and Swiss experts in relevant areas, international financ-ing institutions and donor organizations to discuss issues regarding private sector participation in sustainable and integrated solid waste management projects in Alba-nia’s municipalities, as well as internation-al best practice in this field.

LEGAL TAX UPDATES Extension of deadline for the submission of 2011 personal income tax declaration

The recent amendment of the Income Tax Law, among other changes, provides for the extension of the deadline for the submission of the 2011 personal income tax declaration, such deadline now being 30 September 2012. Foreign citizens who are tax residents in Albania are also subject to personal income declaration.

Amendment of the VAT deferral scheme

The Council of Ministers has amended its Decision “On VAT deferral for imported machineries and equipment” by changing the procedures required to be followed for the application for the deferral of VAT for a period of more than 12 months.

Recent amendments on royalty payment procedures

The Council of Ministers has amended its Decision on royalty payment procedures, such amendment having better clarified the procedures, the taxable base and the required documents that shall be used for the calculation of royalties.

Changes to Social and Health Insurance Contributions

Some changes and additions were brought into effect as of 15.03.2012 to this system, aiming to regulate and coordinate the e-declaration of the payrolls and other data of the employees by the taxpayer. Under these new changes, the taxpayer is obliged

IFC & SWISS COOPERATION OFFICE ROUNDTABLE ON SOLID WASTE MANAGEMENT

PROJECT UPDATESALBPETROL SHA The special privatisation law (setting out the form of the sale) that 100% shares shall be put up for offer has now been approved by Parliament. There have been indications that after the sale Albpetrol’s licence to exploit and produce shall be limited to 25years. There is no indication yet of when the invitation to bid shall be published.NATIONAL LOTTERYThe Government has approved a Council of Ministers Decision which approves the tender assessment criteria, standard documents and structure of the bid evaluation commission for the

issue of the national lottery licence. It is expected that the Ministry of Finance will initiate the tender procedures soon.OSUMI River, VJOSA and Shkopeti 2+3 HPPsA tender procedure for the Osumi River HPP concession offer has opened and bid submission was to be on the 4th May. Tender procedures for Vjosa River HPP not yet opened. A Council of Ministers Decision confirmed the opening of concession tender procedures for the grant of a BOT concession for Shkopeti 2 and 3 HPPs (capacity around 24MW),

also confirming the award of 2% bonus points for the company that initiated the process with an unsolicited proposal. HPPs PRIVATISATION METE, with the help of IFC has launched the tender procedures, publishing the expected timeline for the two-phase tender procedure, with the signing for both the tenders for the privatisation of both companies (i.e. for HEC ULËZ SHKOPET and for HEC BISTRICA 1 AND BISTRICA 2) expected to occur in late August 2012.For more information on the project updates please contact: info@kalo-attorneys.com.

to take and register notes as required under the Labour Code during the employment period and to disclose this information to the authorized persons of the tax authorities as and when required. Also now within one calendar year the taxpayer should provide each employee with a form including all the data specified for each month with regard to the salary, contributions and tax paid for the said employee during the employment period.

Furthermore, to reinforce the Law on Tax Procedures the new changes emphasize the obligation of each person performing a commercial activity to be registered with the National Registration Centre and obliges them to declare to the tax authorities the list of employees hired and their relevant salary, after 2 working days from the registration with the NCR. Also within the 2 working days, an entrepreneur (registered with the NRC) must also declare the list of his/her unpaid members (over the age of 16) of his/her family whom he/she lives with and that carries out work for the business. Each taxpayer must now declare each new employee 1 day before commencement of work and declare any terminated employee within 10 days from the last day of work.

The law also provides for the registration with the tax authorities of the persons who are not obliged to be registered with the National Registration Center (“NCR”) including for e.g. NGOs.

For all queries on Tax issues please contact tax@kalo-attorneys.com.

Spring Edition 2012

CONTACTinfo@kalo-attorneys.com

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 sought prior to any action being undertaken based on any of the contents of this newsletter.

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TIRANA - Kavaja Avenue, G-KAM Business Centre, 4th Floor, P.O. Box 235, Tirana-Albania, Tel.: +355 4 2233532, Fax.: +355 4 2224727, info@kalo-attorneys.comPRISTINA - Pejton, Str. Mujo Ulqinaku 5/1, 10.000 Pristina-Kosovo, Tel.: +381 38225674, Fax: +381 38225798, pristina@kalo-attorneys.com

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KOSOVO OfficeKOSOVO PERMANENT TRIBUNAL OF ARBITRATION

USE OF NOTARIES

INVESTING IN KOSOVO - ECIKS

The Kosovo Economic Chamber of Commerce with support of USAID has established the Kosovo Permanent Tribunal of Arbitration mandated to govern domestic and international com-mercial disputes. The Kosovo Economic Chamber of Commerce has adopted its Arbitration Rules and Decision on Cost of Proceedings in line with Kosovo Leg-islation and well-recognized international principles that will enable parties to solve their disputes rapidly and cost effectively.

The Permanent Tribunal of Arbitration offers list of reputable international and national arbitrators mainly from legal, academic and commercial community.

Also, recently, the Permanent Tribunal of Chamber of Commerce has concluded a cooperation agreement with the Ger-man Institute of Arbitration and all re-gional arbitration and mediation centres. This agreement creates a legal basis for the promotion of arbitration as a means of commercial dispute resolution and to share knowledge and experiences between contracting parties (i.e. all ADR centres in SEE and German Institute of Arbitration).

The law on notary in Kosovo was ap-proved on 17th of October 2008. The goal was to relieve the courts which are over-burdened with non-contentious matters that could be dealt with by notaries. With the introduction of the notary service, it is hoped that the notaries will be able to ef-ficiently certify and authenticate and swiftly legalise and secure transactions. A more effective and efficient legal system will en-hance guarantees for private property. Fol-lowing the enactment of the law and during the transition period there has been much progress with now over 45 certificate nota-

The high-level conference organized by the Economic Initiative for Kosovo (ECIKS) and partner institutions in Ber-lin on 7th March 2012 has contributed towards changing the German percep-tions about doing business and investing in Kosovo. Over 100 potential investors, representatives of German economic institutions, members of Bundestag, representatives of the German Foreign Ministry, German diplomats and decision-makers have listened to facts and evidence about political and economic realities in Kosovo, provided by Kosovo represen-tatives, public Austrian and German per-sonalities as well as foreign investors who have already invested in Kosovo.

Kosovo e Re Power Plant Project The Government of Kosovo

is planning to open tender on 30th of September for construction of Thermal Power Plant “New Kosova” with capacity of 300MW + 300 MW. Based on prediction of Government “New Kosovo” Power Plant will be constructed in 2013. As part of tender package of “New Kosova” will be the existing Power Plant “Kosova B” and decommission of “Kosova A” in 2017. Moreover Government is planning to participate as shareholder in mining with 49% and 31% in generation. Privatization of PTK

Kosovo has resumed the privatization of its biggest publicly-owned company, Kosovo Post and Telecom (PTK) by selecting European consultants to help it organize a tender. French bank Lazard Freres and Raiffeisen Investment of Austria were chosen as transaction consultants “for the process of selling 75% of PTK holdings,” the economic development ministry said in a press release.KEDS PROJECT

Privatization of KEK’s Electricity Distribution and Supply Functions, for which four companies are shortlisted (Limak, Calik, Elsewedy and TAIB), has been extended with the bid submission expected to have occurred on the 21st May 2012. Compliance of technical requirements shall be evaluated first and then the financial offer reviewed. BREZOVICA Ski Resort

Brezovica is said to the potential largest ski resort in the Balkans and is currently state owned. One of the big four auditing companies ‘Deloitte’ has already been selected as the strategic advisor to the government of Kosovo. The Ministry of Trade and Industry is currently looking to evaluate the tenders for the selection of the legal transaction advisors for development of the “Project Brezovica”.

PROJECT UPDATES

Horses, Oil on canvas, 2012 Artist: Dashamir Turku

ries having been certified and are expected to start their activity very soon.

There are certain transactions under the Law on Notary that must be concluded as a notarial deed (i.e. certified by a notary pub-lic) failing which it risks being null and void. Such include (i) transfer/acquisition of own-ership or other real rights over real estate; (ii) mortgages on immoveable property; (iii) marriage contracts and settlements on prop-erty between spouses or those living togeth-er but not married; (iv) founding of corpo-rate bodies and businesses and amendments to statues of such corporate bodies.