Recent months in North Macedonia have brought notable proposals and draft laws for legislative changes and have seen thriving energy and financial sectors – but also a concerning lack of progress on the rule of law, impacting businesses and investment – according to Law Office Lazarov Managing Partner Dragan Lazarov.
“The significant developments in North Macedonia in the past three months revolve around two major legislative changes: the new proposal law on financial instruments, implementing the MiFID II Directive, and the proposal law on prospectuses,” Lazarov begins. “Consultations between the Financial Markets Association in North Macedonia and stakeholders have indicated a consensus that these changes represent a noteworthy step forward. The new law on financial instruments, set to take effect 18 months after the enactment, involves serious and structural shifts, including the formulation of bylaws and changes to existing rules.” Importantly, he notes, “these adjustments will facilitate engagement with European markets, and demand heightened attention from the legal, trading, and financial side.” Lazarov further says that the new proposal law on business secrecy, which regulates this matter for the first time, also requires significant attention: “lawyers are actively assessing its impact on companies to provide guidance for clients and those seeking to implement such measures.”
As for promising sectors, Lazarov highlights the energy sector, which continues to be significant and dynamic. Additionally, he says “even in this time of crisis, the construction sector is thriving, along with the robust performance of the financial sector, including banks, brokers, and investment funds. These entities appear to be the winners during this period of crisis and inflation.” Still, according to him, “the overarching concern for everyone is the issue of the rule of law, which significantly impacts the business and investment climate, forming the basis for various business connections.”
“International investment arbitration has become a significant focus in North Macedonia, with the government involved in new high-value investment arbitration cases,” Lazarov continues. “These cases, covering real estate, energy, mining, and construction, are typically rare but have increased substantially in a short period. There are claims amounting to EUR 1.5 billion against North Macedonia, a relatively small country. Through costly legal proceedings, efforts are being made to rectify issues that did not unfold as they should have in those projects.”
“This surge underscores a major concern – the lack of progress on the rule of law in the country,” Lazarov notes. “The latest Progress Report on North Macedonia’s EU accession revealed no improvement in judicial independence and judicial reforms, highlighting a persistent issue.” According to Lazarov, for lawyers this remains a fundamental topic, with “the stagnant situation in recent years actually translating into regression, considering our dynamic world. All stakeholders in the judicial system, including lawyers and judges, must actively contribute to addressing this concern and building a judicial system that befits the country’s aspirations,” he notes.