Law firm business is decent in Kosovo, according to Visar Ramaj, the Managing Partner of Ramaj & Palushi, but it’s currently mainly simple transactional/commercial work with local companies making business connections primarily in trade (distributorship agreements, etc.). There are also a growing number of disputes — the result of an increasingly active tax administration and regulatory agencies.
But Ramaj believes business should pick up substantially in the next few years, resulting from an ever-improving legal framework, projected economic growth, and a series of major development projects expected to effect the country’s major industry and infrastructure.
Improving Legal Framework
Kosovo is known for being a “dynamic legal market”, Ramaj reported, explaining that the country’s legal framework changed frequently in the 17 years since the Kosovo War concluded. This resulted in an improved legal environment for business and a resulting increase in the need for legal services. As evidence, he pointed to three major legislative changes in recent years. The first, he said, was the Law on Obligations enacted in 2012/2013 which made Kosovo a stronger and more appealing business environment, especially in the area of Contract law. The second development of significance was the “complete change in the tax regime” that took place in the second half of 2015, including a new Law on Value Added Tax, Corporate Income Tax, Personal Income Tax. Finally, Ramaj said, the country’s Law on Public Procurement came into force earlier this year, which digitalized and simplified the relevant procurement procedures, while also guaranteeing that foreign and local investors would be treated the same in tenders. Ramaj described the three changes as “positive … with impact on the legal industry,” though he conceded that the country was still in a “period of uncertainty,” waiting for a formal practice to be established under the new laws.
Ramaj also drew attention to the new EU-funded Code of Civil Law which has been in the drafting process for almost two years, and which is expected to unify the current patchwork system, with various laws drafted by Americans and EU experts under different grant programs. No public draft has been released yet, so it’s difficult to predict the eventual success of the project, but he’s hopeful.
Ramaj then turned the conversation to the major projects happening which bring with them the potential for significant work for lawyers in the country, but he started with a disappointment: the recent failure of the Brezovica privatization — one of the very first PPP projects contemplated in the country — for a ski resort widely regarded as the best in the Balkans. The tendering process lasted some two years, but it failed because the French investors failed to provide guarantees for the first stage of the investment (approximately EUR 164 million), sending the entire project back to square one. Ramaj noted that another major project, the apparently-successful privatization of the Kosovo Post & Telecommunications services, had also failed for several reasons, including a breakdown of the political process in Parliament, turning it into what Ramaj described as “a major failure to the country.” The resulting dispute is now before ICSID arbitration panel.
Still, Ramaj emphasized, there were a number of encouraging projects in process. First he referred to the creation of a new coal-based power plant (sponsored by the World Bank, the Kosovo Government, and Contour Global). An MOU was signed and the contract should be signed soon, Ramaj said, noting that the project will inevitably create a need for legal expertise.
Ramaj also referred to the disposal of the Trepca mining complex. Kosovo is widely considered one of the richest countries in terms of mineable resources, Ramaj reported, including coal, lead, etc. The Government has initiated a feasibility study to see whether Trepca requires reorganization or liquidation, and review possibilities for infusions of private capital to revitalize the mining industry. The results of the study, Ramaj claimed, will be important for the development of the country and will provide a lot of work for lawyers.
Finally, Ramaj said, the country was exploring the development of its railway system, following a EUR 50 million grant from the EU and a EUR 50 million loan from the EBRD. The law was passed accepting the loan in February. This project as well will involve many local companies and various transactions with local enterprises, requiring more local legal expertise.
In light of these major projects planned for Kosovo, the Government has drafted a Law on Strategic Development which would allow it to negotiate directly with investors rather than following the strictures of the Public Procurement Law. This has raised many concerns and caused some controversy, Ramaj reports, but he notes that the “Government is pushing hard,” for the Law, which would also provide for tax breaks and subsidies for major investors.
“The current level of development in Kosovo is very low,” Ramaj concedes. But with more investment expected soon and projected economic growth leading to increased activity in local business, he’s expecting “an increased need for legal services.” As a result, he says, “the legal industry is optimistic about the future."
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.