“As part of Albania’s new judicial reform, in the beginning of 2018 a vetting law entered into force, which stipulates that about 800 judges and prosecutors will undergo a professional and ethical re-evaluation,” reports Alban Caushi, Managing Partner at CR Partners. “As a result, there is an impasse in the judiciary system: The Constitutional Court does not have a quorum to take over cases and the Supreme Court is paralyzed.”
To give context, Caushi explains that, due to pressure from the European community emanating from the common perception that Albania has a high level of corruption in both judges and prosecutors, in 2016 the Albanian parliament enacted a set of laws aiming to reform the justice system and established a special commission to vet judges and prosecutors.
“The Independent Qualification Commission is looking at three main aspects: professional integrity, moral integrity, and their personal assets,” Caushi says. “They started with the Constitutional Court, then the Supreme Court, then other judges and prosecutors. When the procedures started, there were nine constitutional judges, and now we have only two.” In addition, he notes that the vetting procedure is going much slower than had been expected, with less than 10% of the country's judges and prosecutors having been vetted since the beginning of 2018.
“I think it’s slow because of the high amount of work,” Caushi says, “and there are only a few people serving in the commission. There was an effort from the majority party which runs the government to speed things up, but they don’t have the numbers to pass legislation, thus filling the vacancies within the justice system will take some time." He describes the selection process for the commission as a difficult one. “There was no political involvement in the selection, and the law is being implemented under the scrutiny of international observers,” he reports. “There are two levels of administrative process review: the first degree is for the assessment itself, while the second one is for appealing the first-level decisions.”
Finally, Caushi notes that even though the reform is an important step forward, it is negatively impacting the day-to-day work of lawyers, for cases are stuck at the Supreme Court, and cases which require urgent adjudication are being delayed, and can last for years. “The situation is quite critical,” he says, “for soon we may end up even without a court of appeals.”
Turning to the Albanian business market, Caushi mentions that recently a number of foreign banks – mainly Greek and French – are withdrawing from the country. “Recently we saw Piraeus Bank selling its subsidiary, Tirana Bank, and three months ago the National Bank of Greece did the same. Societe General was another bank which left this year." He believes the trend is not tied directly to the Albanian economy. “In my opinion, at least for the Greek banks, the reason the Greek banks are leaving the country is the regulatory measures imposed by the Central Bank of Greece forcing them to reduce their recapitalization costs. It’s not only happening in Albania, but in the entire region. According to my information, Piraeus and NBG also cut operations in Serbia, Romania and Bulgaria, so it has nothing to do with the economy itself.”
Indeed, Caushi insists, things seem good at the moment. “Compared to previous years I see improvement when it comes to foreign investments,” he says. “There is an increasing demand from domestic and foreign investors to enter into the tourism and infrastructure sectors.” In addition, the Albanian government seems to be making appropriate moves to generate more FDI. “The government is also enacting an incentivizing legislative package to further motivate foreign investors. For example, those who are willing to invest in four and five star-branded hotels will be awarded certain benefits, like a VAT reduction to 6%, which is quite low compared to the general 20% rate in Albania. In addition, a ten year profit tax break will be applied, no infrastructure impact tax will be applied, and so on.
Finally, Caushi mentions that lately the Albanian government has started to assume an active role in the construction of photovoltaic plant, aiming to reduce carbon emissions. “They have just opened a tender for the construction of a big photovoltaic plant, with an investment value roughly up to EUR 70 million and with an installing capacity of 50 MW,” he says. “Its deadline ends in the mid of September.”