The legal system of Kosovo

1
The legal system of Kosovo

• a short guide for prospective Investors
• Christian Mikosch
• Wolf Theiss

2
INTRO

• Under the 1974 constitution of the SFRY, Kosovo
  was an autonomous province with its own court
  system.
• In March 1989, restriction of Kosovos autonomy
  through Markovic Decrees.
• After the 1999 war the court system was
  dilapidated and most legal practitioners left
  Kosovo
• Parallels to FBiH and RS
• UNMIK wanted to create standards before status
• Independence will shift competencies to the
  Kosovo parliament and government

3
THE APPLICABLE LAW OF KOSOVO

• UNMIK Regulations Pre March 1989 laws Pre
  1999 (if they are not discriminatory)
  Applicable Law
• UNMIK Regulations (see www.unmikonline.org)
  follow EU Standards
• Pre 1989 laws are based on the old Yugoslav
  system but are not entirely communist
• Pre 1999 laws are represent laws adopted in the
  transformation period of other CEE countries.
• Independence will create new laws adopted by the
  Kosovo parliament. It is expected that these will
  be based on UNMIK Regulations.
• Companies under international ownership can
  always choose arbitration (UNCITRAL and ICC).

4
THE COURT SYSTEM

• 23 municipal courts, five district courts, one
  commercial court and the Supreme Court
• Special Chamber of the Supreme Court of Kosovo
  hears property cases relating to public and
  social enterprises and cases relating to
  privatization and liquidation of SOEs and POEs by
  KTA
• Additional court in Leposavic/Leposaviq in
  northern Kosovo (not approved by UNMIK) and
  courts in Serbia
• Administrative appeals, e.g. tax or municipality
  decisions go straight to the Supreme Court
  (blacklog problem)
• International judges are predominantly active in
  relation to criminal and ethnic matters (as
  described in the movie Rule of Law)

5
SOEs and POEs

• Before 1989 almost economic activities were
  operated through socially owned enterprises (SOE)
• Publicly owned enterprises (POE) can be
  understood as large sate owned SOEs (e.g. KEK,
  PTK, Prishtina Airport)
• UN Council Resolution 1244 was interpreted to
  allow the Kosovo Trust Agency (KTA) to privatise
  SOEs (but not POEs)
• KTA has developed a special regime for SOE
  privatizations (spin off privatizations) and has
  thus already privatized several SOEs (e.g.
  Ferronikelei, Grand Hotel)
• Spin-off Privatizations as well as the
  transformations of POEs in modern companies are
  aimed at preserving the integrity of the
  companies and their new owners while keeping
  proceeds from the privatizations in trust to
  satisfy claims of previous owners and creditors.

6
COMPANY LAWs

• UNMIK Regulation 2001/6 creates a modern and
  simple company law environment.
• The provisional commercial register serves now as
  an ordinary business register (see
  http//www.arbk.org/en_default.asp).
• Most common forms of companies are the limited
  liability company (minimum capital EUR 2,500) and
  the joint stock company (minimum capital EUR
  25,000) structured in similar terms as in Austria
  and other Western European countries.
• The management of corporations is regulated along
  the lines of the Anglo-American tradition (e.g.
  Board of Directors, business judgement rule).
• No share certificates are necessary.

7
LAWs on FOREIGN INVESTMENTS

• UNMIK Regulations no. 2001/3 grants foreign
  investors equal treatment
• Foreign investors may
• open bank accounts in currencies legally
  permitted
• transfer into and out of Kosovo profits after the
  payment of taxes (subject to dividend withholding
  taxes)
• use their investments and any income lawfully
  received for any lawful purpose and
• retain the profits of their investment, and
  convert such into another currency in any
  domestic of foreign market.

8
PUBLIC PROCUREMENT LAWs

• Kosovo has a modern public procurement and
  concession law.
• I practice, as no detailed concessions rules have
  been drafted, the public procurement tender
  templates and rules are followed for concessions.
• The PISG, KTA and POEs who need to apply public
  procurement laws will use EU legal precedents for
  the interpretation of certain legal questions.

9
LABOUR LAWs

• Kosovo has fairly modern labor laws comparable to
  other legal regimes in former Yugoslavia.
• Until 1989, labor unions had great influence on
  corporate management since the war this influence
  has decreased.
• The actual influence of labor unions differ in
  each company.
• Kosovo generally has a 40 hour week.
• Foreign investors are entitled to employ staff of
  any nationality.
• Economic, technological, or structural changes to
  the enterprise are reasons that justify a
  termination by an employer.
• Large scale lay-offs are subject to restrictions.

10
REAL ESTATE

• Kosovo s real estate laws are largely governed
  by pre-1989 and 1999 laws.
• The Kosovo land register is based on the previous
  Cadaster system.
• Mortgages, encumbrances and other rights and
  obligations can be registered.
• Generally, the land register is reliable and
  would indicate potential restitution issues.
• As in Serbia, not all real estate parcels are
  actually registered.
• SOE real estate is under a special regime which
  provides for a 99 year lease of SOE real estate.