Guest Post: Hans Hysenaj on Enforcement in Albania
Posted on March 8, 2021
A warm welcome to new guest poster Hans Hysenaj, a student at Suffolk Law School here in Boston! I met Hans at an event sponsored by the International Law section of the Boston Bar Association—it’s great to meet law students eager to connect with colleagues through bar associations and the like. Hans is Albanian and brings us this note about the legal climate in his country.
I have been invited to write a post on Ted’s blog, and I am very excited to be given this opportunity to write a post. This is the first time my writing will be shared with an audience, and it is an audience of high intellectuals and decision makers no less. (Ed. note: laying it on a little thick, Hans!) I have read some of the posts Ted has written, as well as some of the posts of the other guests, and I am impressed with the knowledge and information packed into their posts. I thank Ted for this opportunity, and I hope this contribution brings the reader as much pleasure and insight as they are used to receiving while scrolling through the blog.
The issue I am writing about is the enforceability of contracts, and judicial assistance available for foreign companies investing in my country, Albania, and the underlying problems surrounding these issues.
Foreign Direct Investment (“FDI”) remains a big sector of employment for fellow Albanians. The domestic industry is not sufficiently advanced and industrialized to make Albania a dominant actor in regional trade, let alone world trade.1 The people of Albania rely on foreign companies coming in and revamping industry to conform to western standards. The strongest investments in Albania continue to be natural energy, telecommunication, and infrastructure; however, these sectors are also the ones the government keeps the strongest hold on.2 It is a problem that the government itself does not allow for the country to open up economically and intellectually to the world, and it is another problem that the courts do not predictably follow the law of the land. These issues, together with lack of judicial enforcement, dissuade foreign companies from competing in Albanian markets because: (1) the government already took ownership of the best industries, and (2) Albanian courts would not enforce their rights.
Albania is a party to many relevant treaties, including the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, 1971. Nevertheless, a sound legal framework does not equate with smooth international business. The main reasons why foreign businesses remain reluctant to stay in Albania is because courts are corrupt, they lack transparency, and they do not enforce contracts on legal grounds. Most cases are solved under the table between one of the parties to the dispute and the judge. Albania went through a huge legal reform in 2016 – I am talking “rewrite the Constitution” huge – to solve the issue of corrupt judges taking bribes to rule on cases, but now, 5 years later, that reform has gone nowhere. That is a topic for another time.
One major American business, Gulf Oil, entered Albania in 2013 and left in 2016, citing lack of judicial predictability and nonenforcement of contracts as its reasons for leaving. This is a story mentioned before.3 Three years is a typical timeline for an international business to stay in Albania before the environment becomes too unbearable for them and they move on. There is also a reason why I am writing this from the United States and not from my home county, Albania. Take note that Gulf Oil was subsequently encumbered by a fraud prosecution, brought by the District Attorney of Tirana, Albania’s capital city, on charges that Gulf sold unredeemable coupons to Albanian oil companies in order to purchase oil from Gulf.4 Gulf denies any involvement in this. However, it is a sign of Albanian culture to want to undercut the bigger dog, especially when the bigger dog does not speak the language or know the culture.5 I do not necessarily believe Gulf Oil itself was involved in this fraudulent scheme, maybe just caught in a bad place at a bad time.
The government’s actions and interference have not gone unnoticed from powerful European allies. Albania has been a candidate for the EU since 2014 and its actions are observed with scrutiny by the EU. For these reasons, the EU is aware of the ongoings in Albania. The Netherlands and France have withheld their vote to open negotiation talks for admission into the Union with Albania multiple times, due to Albania’s failure to create a proper political and judicial system.6 Albania’s MP and Prime Minister have always spun these reactions and claim that the EU expects unreasonably high standards for a small country like Albania. In addition, in 2016 I heard the Albanian Prime Minister Edi Rama refer to EU’s criticism as “Fake News” for the first time, so thank you Donald Trump for bringing that excuse into world politics once again.
Meanwhile, FDI has fallen steadily since 2018.7 It is not surprising to conclude that the difficult political situation and lack of a proper judicial system are causes of low FDI and international business in Albania. For U.S. businesses, Albania and the United States have a bilateral trade treaty in which Albania has given U.S. companies the best kind of treatment it can, but that treaty does not translate in action. The outlook for 2021 shows increases in most sectors and a raise in consumer spending, so there might still be hope in foreign businesses,8 but judicial reform does not seem to be getting anywhere. Arbitration was also removed from the Albanian Code of Civil Procedure. There still remain opportunities to grow in Albania. The country itself lacks proper infrastructure, technology, and a western culture, so if a company is able to withstand the great uphill climb of doing business in Albania they will find that–contrary to the politics and the mess going on in our institutions–Albania is a beautiful country with a loyal base of citizens who want the betterment of themselves and their children. More often than not, Albanians will tell you they do not agree the government is working for their interests, so a business can find a friend in Albanians even though not necessarily in the Albanian government.
- CIA, Albania: Economy, The World Fact Book, Mar. 3, 2021.
- Intellinews, Seldi Report Reveals Oligarchisaton of Economies and High Levels of State Capture in Western Balkans, Lexis Advance, Nov. 4, 2020.
- IntelliNews, US State Department Says Corruption Remains Main Problem for Investors in Albania, Lexis Advance, 07/31/2018 (showing biggest oil producers in Albania left Albania due to corruption and inefficient courts).
- Klaudjo Jonuzaj, Gulf Oil Terminates Contract with Licensee Sun Petroleum Albania, SeeNews, May 7, 2018.
- If you want to find out more about Albanian business culture check out the events of 1997. AP’s YouTube Channel does a good job of telling about it.
- IntelliNews, Outlook 2021 Albania, 2, Lexis Advance, January 5, 2021.
- IntelliNews, Albanian FDI down 10.6% y/y in 2Q20, Lexis Advance, September 13, 2020. See also Export Entreprises SA, Albania: Foreign Investment, Santander Trade Markets, March 2021.
- Supra, note 6, at 4.