Notification on decision in case KO248/23

The Constitutional Court of the Republic of Kosovo, has decided on the referral in case KO248/23, with applicants Ferat Shala and nine (9) other deputies of the Assembly of the Republic of Kosovo, submitted to the Court based on the authorizations established in paragraph 5 of article 113 [Jurisdiction and Authorized Parties] of the Constitution of the Republic of Kosovo, regarding the constitutional review of the Law no. 08/L-209 on Sustainable Investments.

The Court decided to (i) unanimously declare the referral admissible; and (ii) to hold, unanimously, that articles 21 (Council), 35 (Special selection of investor), 52 (Transitional provisions) and 53 (Abrogation) of the Law no. 08/L-209 on Sustainable Investments, are not incompatible with paragraph 1 of article 7 [Values], paragraphs 1 and 2 of article 119 [General Principles] and paragraph 2 of article 122 [Use of Property and Natural Resources] of the Constitution; and (iii) unanimously declare that based on article 43 (Deadline) of the Law no. 03/L-121 on the Constitutional Court of the Republic of Kosovo, the Law no. 08/L-209 on Sustainable Investments, shall be sent to the President of the Republic of Kosovo for promulgation.

The Judgment initially clarifies that the contested Law, among others, reflects the purpose of promoting, supporting, and protecting sustainable investments and exports in the Republic of Kosovo, including the determination of state objectives and priority sectors for development. According to the clarifications provided, the contested Law, among others, determines (i) the obligations of institutions, public authorities and investors regarding investments in the Republic of Kosovo, including the rights of investors, and including but not limited to the right to investment, equality before the law, respect for rights, protection from expropriation, and appropriate compensation and legal remedies; and (ii) the procedure of declaring the strategic investments, including the necessary criteria for this purpose. Furthermore, the contested Law establishes the Investment Council, which is responsible for evaluating, selecting, implementing, supervising and deciding on the strategic investment projects according to the criteria set out in the contested Law. The Judgment also clarifies that upon the entry into force of the contested Law (i) two other laws shall be repealed, namely Law no. 04/L-220 on Foreign Investments and Law no. 05/L-079 on Strategic Investments in the Republic of Kosovo; while (ii) Agency for the Investment and Enterprise Support in the Republic of Kosovo shall be abolished and two new executive agencies shall be established, namely the Agency for Investment and Export under the Office of the Prime Minister and the Agency for Innovation and Support to Enterprises in the Republic of Kosovo under the Ministry of Industry, Entrepreneurship and Trade.

The applicant deputies of the Assembly, challenge the aforementioned law in its entirety, claiming its incompatibility with the Constitution, but specifically contesting three categories of articles of the contested Law, namely (i) article 21 (Council), alleging that it violates the principles of the organization of economic relations in the Republic of Kosovo, including as a result of the failure to determine by law, reasonable conditions for the utilization of natural resources of Kosovo based on the obligations deriving from paragraph 2 of article 122 [Use of Property and Natural Resources] of the Constitution; (ii) article 35 (Special selection of investor), alleging that it violates the right to equal treatment of all investors as it creates opportunities for arbitrariness in the selection of the strategic investors through a direct negotiation procedure by the Investment Council, contrary to article 119 [General Principles] of the Constitution; (iii) articles 52 (Transitional provisions) and 53 (Abrogation), emphasizing that they abrogate two applicable laws, namely Law no. 04/L-220 on Foreign Investments and Law no. 05/L-079 on Strategic Investments in the Republic of Kosovo, thereby infringing the rights of foreign investors acquired based on these laws, and moreover that upon the establishment of the Agency for Investment and Export and the Agency for Innovation and Support to Enterprises in the Republic of Kosovo, the Agency for Investment and Enterprise Support in the Republic of Kosovo shall be abolished, violating the rights of its public officials in the context of their employment relation status. The allegations of the applicants are counter-argued by the Office of the Prime Minister of the Republic of Kosovo and the Parliamentary Group of the VETEVENDOJSE! Movement, emphasizing that the contested Law is in compliance with the Constitution, among others, because it (i) ensures equal legal rights for all investors and all domestic and foreign enterprises; (ii) sets clear rules governing the Investment Council and determining the strategic investment; (iii) clarifies that all acquired rights of foreign investors based on the laws abrogated through the contested Law, are guaranteed according to the laws under which they were acquired; furthermore, and it (iv) specifies that all rights of officials of the Agency for Investment and Enterprise Support in the Republic of Kosovo, shall be respected based on the provisions of the Law on Public Officials.

In assessing the constitutionality of the contested Law, the Court initially elaborated (i) the fundamental principles of market economy according to the Constitution and the applicable legislation of the Republic of Kosovo; and (ii) to the extent it is relevant in the circumstances of the present case, the relevant principles stemming from international instruments related to the market economy based on free competition, as defined through the applicable regulations of the European Union, as well as the principles stemming from the case-law of the European Court of Human Rights and the relevant Opinions of the Venice Commission.

In applying the aforementioned principles in the constitutional review of the contested Law, the Judgment initially emphasizes that, based on article 7 [Values] of the Constitution, the market economy is a value of the Republic of Kosovo, while based on article 10 [Economy] of the Constitution, the market economy with free competition is the basis of the economic order of the Republic of Kosovo. Furthermore, and to the extent it is relevant in the context of the constitutional review of the contested Law, the Judgment also highlights article 119 [General Principles] of the Constitution, according to which, among others, the Republic of Kosovo shall (i) ensure a favorable legal environment for a market economy, freedom of economic activity and safeguards for private and public property; (ii) ensure equal legal rights for all domestic and foreign investors and enterprises; (iii) establish independent market regulators where the market alone cannot sufficiently protect the public interest; and (iv) ensure that a foreign investor is guaranteed the right to freely transfer profit and invested capital outside the country in accordance with the law. The Judgment also elaborates on article 122 [Use of Property and Natural Resources] of the Constitution, emphasizing, among others, that (i) the people of the Republic of Kosovo may, in accordance with such reasonable conditions as may be established by law, enjoy the natural resources of the Republic of Kosovo, but they may not infringe on the obligations stemming from international agreements on economic cooperation; and that (ii) limitations on owners’ rights and other exploitation rights on goods of special interest to the Republic of Kosovo and the compensation for such limitations shall be provided by law.
In the Court’s Judgment, the principles clarified above have been applied in the examination of each assessed article. Having said this, and for the purposes of this summary, the Court will clarify the main findings and conclusions regarding the most contentious issues of the contested Law based on the arguments and counter-arguments of the parties before the Court, specifically (i) the establishment of the Investment Council; (ii) the possibility of special selection of investor; and (iii) the principle of legal certainty related to the abrogation of the Law no.04/L-220 on Foreign Investments and the Law no.05/L-079 on Strategic Investments in the Republic of Kosovo and the abolishment of the Agency for Investment and Enterprise Support in the Republic of Kosovo and the rights of the officials of this Agency.

(i) Establishment of the Investment Council of the Republic of Kosovo

The Judgment initially clarifies that article 21 (Council) of the contested Law determines the role and responsibilities of the Council in the field of investments and exports in the Republic of Kosovo, including in relation to the evaluation, selection, implementation, supervision, and decision-making regarding strategic investment projects, as well as the approval of action plans and reports on the promotion and protection of investments and exports, also paying attention, according to the provisions of the contested Law, to the removal of barriers to investments and the improvement of the economic activity environment. The Judgment also clarifies that the Law no. 05/L-079 on Strategic Investments in the Republic of Kosovo, which is abrogated by the contested Law, had established an Inter-Ministerial Committee on Strategic Investments with similar competencies and responsibilities as those of the Investment Council.

In the context of the competencies and responsibilities of the Council, the Judgment emphasizes article 93 [Competencies of the Government] of the Constitution, according to which, among others, the Government promotes the economic development of the country. According to the clarifications provided in the Judgment, in exercising this competence, the Government is conditioned by the principles related to the market economy stemming from the Constitution, namely (i) respecting the values of the Republic of Kosovo, including the market economy with free competition and respecting the fundamental rights and freedoms, including of economic operators, as defined in articles 7 [Values] and 10 [Economy] of the Constitution respectively; (ii) respecting the provisions of article 119 [General Principles] of the Constitution, according to which, among others, the Republic of Kosovo has the obligation (a) to establish mechanisms whereby it shall ensure a favorable legal environment for a market economy, freedom of economic activity, and safeguards for private and public property; (b) to ensure equal legal rights for all investors and all domestic and foreign enterprises; and (c) to ensure that a foreign investor is guaranteed the right to freely transfer profit and invested capital outside the country in accordance with the law; and (iii) ensuring that the natural resources of the Republic of Kosovo shall enjoy their special protection in accordance with the law as defined in article 122 [Use of Property and Natural Resources] of the Constitution.

Applying the constitutional principles as above, the Judgment clarifies that the establishment of an Investment Council does not result in violation of the market economy based on free competition, moreover, its decision-making is subject to constitutional guarantees, including in the context of fundamental rights and freedoms, ratified international agreements, and other applicable laws of the Republic of Kosovo. Furthermore, based on the competencies and functions of the Investment Council, the establishment of the latter, does not result in violation of the constitutional guarantees related to the use of property and natural resources according to the provisions of article 122 [Use of Property and Natural Resources] of the Constitution, including the applicable laws in the context of the use of property and natural resources of the Republic of Kosovo.

As a consequence, and according to the clarifications provided in the Judgment, the Court held that article 21 (Council) of the contested Law, is not incompatible with paragraph 1 of article 7 [Values], paragraphs 1 and 2 of article 119 [General Principles] and paragraph 2 of article 122 [Use of Property and Natural Resources] of the Constitution.

(ii) Special Selection of the Investor

The Judgment clarifies that based on article 35 (Special selection of investor) of the contested Law, the Council may publish an invitation to select the partner for the implementation of the strategic investment according to the evaluation criteria in accordance with the applicable legislation, while as an exception from this rule, the Council may select by direct negotiation a trusted company as the proposer, implementer, or partner for the implementation of a strategic investment according to the evaluation criteria established by the applicable law. According to the clarifications provided in the Judgment, the contested Law defines the general conditions for declaring a strategic investment, including in relation to employment, growth of production and export, regional development, and environmental sustainability, which are also related to the state objectives aimed to be fulfilled through the promotion and protection of investments and priority sectors for investments in the Republic of Kosovo in accordance with the provisions of the contested Law. Moreover, the Judgment underlines the fact that the contested Law provides the possibility of additional and/or supplementary verifications of a potential investment, especially if the intended or completed investment by a foreign investor may result in violation of public order or national security.

According to the clarifications provided in the Judgment, considering that the partners for the implementation of strategic investments shall be selected through a public process, and that only exceptionally, the selection of a partner for strategic investments is possible through a direct negotiation procedure (i) provided that the criteria specified in the contested Law are fulfilled, including those provided for in the applicable Law on Public Procurement; and (ii) subject to the right to legal remedies in accordance with the provisions of articles 32 [Right to Legal Remedies] and 54 [Judicial Protection of Rights] of the Constitution, it results that in the context of article 35 (Special selection of investor) of the contested Law, as per the clarifications given, the guarantees of paragraphs 1 and 2 of article 119 [General Principles] of the Constitution have not been violated. Having said this, the Judgment also clarifies that this assessment does not imply the legality and/or constitutionality of the Council’s decision-making in the context of special selection of an investor, which may be subject to the assessment of legality by the regular courts and constitutional review by the Constitutional Court according to the provisions of paragraph 7 of article 113 [Jurisdiction and Authorized Parties] of the Constitution.

As a result, and according to the clarifications provided in the Judgment, the Court held that article 35 (Special selection of investor) of the contested Law, is not incompatible with paragraphs 1 and 2 of article 119 [General Principles] of the Constitution.

(iii) Abrogation of Law no. 04/L-220 on Foreign Investments and Law no. 05/L-079 on Strategic Investments in the Republic of Kosovo

The Judgment clarifies that (i) through article 53 (Abrogation) of the contested Law, two previous laws are abrogated, namely the Law no. 04/L-220 on Foreign Investments and the Law no. 05/L-079 on Strategic Investments in the Republic of Kosovo; while (ii) through article 52 (Transitional provisions) of the contested Law, the Agency for Investment and Enterprise Support in the Republic of Kosovo, is abolished. The latter is replaced by two other Agencies, established based on article 18 (Establishment of agencies) of the contested Law, namely the Agency for Investment and Export and the Agency for Innovation and Support to Enterprises in the Republic of Kosovo, the functions, competencies, and organization of which, are also defined by the contested Law.

According to the clarifications provided in the Judgment, including the elaboration of the principles related to the principle of legal certainty in the context of the allegations of the applicants that the abrogation of the previous laws violates the rights of foreign investors acquired based on them and that the abolishment of the Agency for Investment and Enterprise Support in the Republic of Kosovo, results in violation of the rights of its public officials, the Judgment, among others, clarifies that the adoption, amendment and/or abrogation of laws is within the competence of the Assembly of the Republic of Kosovo according to the provisions of articles 65 [Competencies of the Assembly], 80 [Adoption of Laws], and 81 [Legislation of Vital Interest] of the Constitution, always provided that the values of the Republic of Kosovo as defined in article 7 [Values] of the Constitution are respected, which also include the principle of legal certainty and the criteria of “clarity” and “predictability” of laws, are respected. According to the clarifications provided, the contested Law was issued based on the aforementioned constitutional authorizations of the Assembly, and taking into account the content of the final provisions of the contested Law, in the Court’s assessment, the principle of legal certainty has not been violated. Furthermore, according to the clarifications provided, the contested Law specifies that the Agencies established by it, each assume the responsibilities, properties under administration, contracts, obligations towards third parties, and ongoing administrative procedures, and consequently, any rights acquired based on the previous laws is subject to the guarantees of the Constitution and the contested Law and furthermore, any legal dispute that may arise related to the acquired rights of legal persons, namely economic operators based on the abrogated laws as mentioned above, is subject to the right to legal remedy and judicial protection of rights according to the applicable laws and the provisions of articles 32 [Right to Legal Remedies] and 54 [Judicial Protection of Rights] of the Constitution.

On the other hand, and in relation to the abolishment of the Agency for Investment and Enterprise Support in the Republic of Kosovo, including the status of its public officials, the Judgment clarifies, among others, that the establishment of Independent Agencies is within the competence of the Assembly in accordance with article 142 [Independent Agencies] of the Constitution. Beyond the constitutional guarantees, according to the clarifications provided, issues related to the establishment but also the merger and abolishment of Agencies, including executive ones, as is the case in the circumstances of the contested Law, are also regulated by the Law no. 06/L-113 on the Organization and Functioning of State Administration and Independent Agencies. The latter, in the context of the abolishment of an Agency, regulates the legal consequences related to the respective public officials, as also defined by the contested Law itself that the Ministry of Industry, Entrepreneurship and Trade shall assume the respective systematization of civil servants. According to the clarifications provided, this systematization is subject to the guarantees of Law no. 08/L-197 on Public Officials, including the right to legal remedies and judicial protection of rights according to the provisions of the Law on Public Officials itself, and also articles 32 [Right to Legal Remedies] and 54 [Judicial Protection of Rights] of the Constitution.

As a result, and according to the clarifications provided in the Judgment, articles 52 (Transitional provisions) and 53 (Abrogation) of the contested Law, are not incompatible with paragraphs 1 and 2 of article 119 [General Principles] of the Constitution.

This translation is unofficial and serves for informational purposes only.

Note:

This press release was prepared by the Secretariat of the Court for informational purposes only. The full text of the decision will be submitted to the parties involved in the case, will be published on the Court’s website and in the Official Gazette, once the relevant procedures established in the Law on the Constitutional Court and the Rules of Procedure of the Court have been completed. The summary published through this notice may be subject to language and technical corrections in the final draft of the decision. To receive notifications on the decisions from the Constitutional Court please register at the Court’s website: https://gjk-ks.org/en/