KOSOVO

1. LEGAL SYSTEM

Kosovo’s legal order is based on the principle of separation of powers, whereby the judiciary is governed by the Kosovo Judicial Council, subject to the check-and-balance mechanisms provided for by the Constitution that came into effect on 15 June 2008. The Constitution is based on the Comprehensive Proposal for a Status Settlement for Kosovo, submitted by the United Nations Special Envoy for the resolution of Kosovo's status (the "Ahtisaari Plan"), which provides for supervised independence, overseen by two international mechanisms, namely the European Union Rule of Law Mission in Kosovo (EULEX), and the International Civilian Office (ICO). The Ahtisaari Plan authorizes EULEX to assist the Kosovo authorities in the rule of law area, with a particular focus on police, judiciary and customs. In this respect, EULEX retains limited executive powers, in particular to investigate, prosecute and adjudicate serious and sensitive criminal offences in cooperation with the Kosovo justice institutions. The ICO, on the other hand, is responsible for supervising the implementation of the Ahtisaari Plan.

Kosovo's legal system is based on the continental law tradition, whereby court decisions are generally not considered as precedents, although lower courts tend to follow the opinions and rulings of higher courts.

In light of Kosovo's declaration of independence on 17 February 2008, the applicable law in Kosovo stems from four different sources with the following order of precedence:

-laws passed by the Kosovo Assembly enacted on 15 June 2008 and thereafter;

-regulations enacted by the United Nations Interim Administration in Kosovo (UNMIK) between 10 June 1999 and 14 June 2008;

-laws dated prior to 22 March 1989, enacted before the abolishment of Kosovo's autonomy within the Socialist Federal Republic of Yugoslavia; and,

-laws dated between 22 March 1989 and 10 June 1999, enacted after the abolishment of Kosovo's autonomy, provided that they are not discriminatory and are required to fill a legal gap.

Kosovo's court system is comprised of seven Basic Courts with 20 branches, the Court of Appeals, and the Supreme Court. In addition to this, since June 2009 Kosovo has a Constitutional Court, which is responsible for ensuring the constitutionality of acts of public authorities and for hearing individual complaints regarding the violation of constitutionally guaranteed human rights.

The Basic Courts are comprised of five departments, each dealing with specific issues, namely: Department for Commercial Matters (operating in the Basic Court of Prishtina for the entire territory of Kosovo), Department for Administrative Issues (operating in the Basic Court of Prishtina for the entire territory of Kosovo), Department for Serious Crimes, General Department and Department for Minors.

The Commercial Department hears cases pertaining to commercial disputes between domestic and foreign businesses regarding their commercial affairs and reorganization. This includes but is not limited to: lawful commercial operations within business organizations, which refer to the partners’ rights in general partnerships, holders of proprietary interests in limited liability companies or joint stock companies, claims lodged by a limited liability partner who is prevented from transferring the proprietary interest to a third person, claims lodged by the holder of the proprietary interest who is prevented from access to information, claims submitted by the holder of the proprietary interest who is prevented from leaving the organization or who is dismissed from the organization, claims lodged by shareholders, whose rights have been violated by the merger of the limited liability company or joint stock company, etc.

Furthermore, the Commercial Department also deals with matters related to bankruptcy and liquidation of legal entities, unless otherwise provided by law, disputes regarding obstruction of possession, disputes regarding infringement of competition, intellectual property disputes, disputes involving aviation companies and other matters provided by law.

The Administrative Department adjudicates and decides on administrative conflicts. The Serious Crimes Department of the Basic Court hears cases related to various criminal offenses, which include but are not limited to: smuggling of immigrants, hostage taking, aggravated murder, kidnapping, torture, election fraud and destruction of voting documents, rape, counterfeiting money, organized crime, criminal offenses against official duty, including abuse of official position or authority, misappropriation in the office, fraud, accepting bribes and related conduct. Finally, as far as the Basic Court is concerned, the General Department mainly deals with minor offenses and various civil cases in the first instance, which have not been specifically assigned to other departments.

The Court of Appeals is a second instance court meaning that it only deals with complaints lodged against the decisions of the first instance courts. Furthermore, the Court of Appeals shall decide on conflicts of jurisdiction between the Basic Courts.

The Supreme Court consists of two departments, namely: a) the Appeals Panel of the Kosovo Property Agency, which deals with cases relating to property rights lost through discriminatory laws following the rescinding of Kosovo’s autonomous status on 22 March 1989, cases arising from informal property transactions during the aforementioned period, cases arising from interference with property rights through illegal occupancy; and b) the Special Chamber of the Supreme Court which has jurisdiction to adjudicate claims and counterclaims relating to the decisions or actions of the Kosovo Trust Agency, and its legal successor the Privatization Agency of Kosovo. In light of the above, the Supreme Court adjudicates on the following cases:

-requests for extraordinary legal remedies against final decisions of the courts of the Republic of Kosovo, as provided by law;

-revisions against second instance decisions of the courts on contested issues, as provided by law;

-Kosovo Property Agency cases as defined by law;

-(in its Special Chamber) Privatization Agency of Kosovo or Kosovo trust Agency cases as provided by law; and

-other matters as provided by law litigation.

Furthermore the Supreme Court is also responsible for defining principle attitudes and legal remedies for issues that are important for the unique application of laws by the courts in the territory of Kosovo.

The Law on Contested Procedure provides that first instance cases as well as extraordinary appeals for the repetition of proceedings are adjudicated by a single judge, while second instance cases and extraordinary appeals for revision are handled by a panel of three judges. Cases involving the determination of the territorial jurisdiction of the court as well as the resolution of jurisdictional disputes between lower courts are also heard by a panel of three judges.

Minor offenses such as violations of sanitary standards, as well as violation of traffic safety laws and public order rules fall under the competence of Basic Courts' General Departments.

Civil proceedings in Kosovo are governed by the Law on Contested Procedure, which was enacted on 30 June 2008. According to this law, civil litigation is based on the adversarial model, whereby the process is driven by the actions of the parties. Namely, representatives of the parties are responsible for presenting their claims and counter claims as well as the examination of witnesses and experts. In this respect, while the court is allowed to examine the witnesses and experts at all times, judges' questions are usually supplementary and they intervene only to ensure the observance of mandatory provisions of law.

The litigation process begins with the filing of the statement of claim by the claimant. However, the claim becomes legally effective only upon its service to the respondent. Prior to the commencement of the main hearing, the court is required to hold a preparatory hearing, which shall be scheduled latest 30 (thirty) days after the receipt of the statement of defence by the respondent. During the preparatory hearing the court determines the object of the dispute and the evidence that will be admitted in support of the parties' claims and counterclaims. The claimant is entitled to seek an injunction order to secure its claim in cases where: the existence of the claim is made believable by the claimant, and there is a risk that if the injunction is not ordered the opposing party will hinder or will make it considerably difficult for the claimant to realize its claim, particularly by disposing of or concealing its assets.

The imposition of an injunction order may be conditional upon the claimant providing a guarantee (the amount and the form of which is determined by the court) to secure the potential damages caused to the opposing party by the unwarranted imposition of the order. The injunction order can be sought prior to the filing of the claim as well as during the time period after the conclusion of the proceedings and until the entry into effect of the judgment. In cases when the injunction is sought prior to the filing of the claim, the claimant is required to file the lawsuit during a time period of not less than 30 (thirty) days.

The appellate procedure includes regular remedies and extraordinary legal remedies. A regular appeal can be filed for the following reasons: Violation of the provisions of the Law on Contested Procedure; inaccurate or incomplete determination of the factual situation; and, wrongful application of the substantive law. Extraordinary legal remedies, which include Revision, Repetition of the Proceedings, and Request for the Protection of Legality, can be exercised only in cases that meet a set of stringent requirements. It should be noted that the Law on Contested Procedure provides for special provisions regarding cases dealing with labour disputes, obstruction of possession, commercial disputes, and payment order procedures as well as for disputes of minor value.

Court expenses in Kosovo are rather low, which results in a very high number of litigation cases. By way of example, for cases in which the amount in dispute is more than EUR 10,000 the court fees for the initiation of proceedings are EUR 100 plus 0.5% of the amount in dispute, whereby the total fee may not exceed EUR 1,000. According to the Law on Contested Procedure the losing party is required to reimburse the opposing party for all of its court expenses.

Kosovo courts suffer from a high degree of inefficiency due to the low number of judges and a considerable backlog of cases. Consequently, while court proceedings are relatively swift once they commence, it usually takes a considerable amount of time before cases are heard (unless urgent preliminary measures are sought). By way of example, at the beginning of 2013 the Basic Courts in Kosovo had 342,323 unresolved cases inherited from the past years, while for the first three months of 2013 the Basic Courts accepted 109,231 new cases. During this time period, the Basic Courts in Kosovo were able to resolve 86,433 cases, leaving 365,121 unresolved cases at the end of the first trimester of 2013.

According to the 2016 enforcement of contract survey conducted by the World Bank "Doing Business" project, the enforcement of a contract in Kosovo, without the appellate procedure, takes 330 days. The survey notes that the costs of enforcing a contract in Kosovo amounts to 34.4% of the claim, of which 25.2% are attorney costs, 7.8% are court costs and 1.4% are enforcement costs.

Corruption remains a serious challenge for Kosovo. A survey by the Kosovo Democratic Institute indicates that 73% of the respondents in Kosovo believe that since 2007, the level of corruption has increased, while only 8% think that corruption has decreased. According to the World Bank’s Worldwide Governance Indicators, Kosovo’s control of corruption has shown little improvement since 2003, and remains low at more or less 30% (100% representing full control of corruption), with no clear tendency since 2005.

A more recent study, the 2015 Corruption Perceptions Index by Transparency International indicates similar results. Since 2010, Kosovo's total rank and score (shown in brackets, whereas 0 indicates corruption to be perceived as very high and 100 indicates an environment very clean of corruption) has somewhat improved from 110th (28) to 95th (36) of 176 participating countries in 2016.

Our own perception of this issue seems to confirm the above studies.

The main regulations concerning combating business crime are recorded in Articles 284 – 318 of the Kosovo Criminal Code. These articles regulate a variety of crimes, such as the violation of patent rights, unauthorized communication of trade secrets, damaging creditors, causing of bankruptcy, use or production of counterfeit money, tax evasion, unjustified gift giving and acceptance and many more. The extent of the catalogue is comparable with catalogues from other countries in Europe.

Besides the Criminal Code, there are several other laws which regulate offenses connected with business crime. The most important examples are the Law on Internal Trade, which contains the basic principles of trading and the Law on Liability of Legal Persons for Criminal Offenses.

On 1 February 2012 the Project against Economic Crime in Kosovo (PECK) was initiated by the European Union and the Council of Europe. PECK’s overall objective is to contribute to democracy and the rule of law through the prevention of corruption, money laundering and financing of terrorism in Kosovo. A large number of agencies and authorities are taking part in this project. The key players are the Kosovo Anti-Corruption Agency (KAA), the Financial Intelligence Unit (FIU), the Office for Good Governance Human Rights and the Equal Opportunities and Gender Issues (OGG) at the office of the Prime Minister. During the project, numerous laws have been revised (e.g., the Criminal Code) and new laws have been adopted.

A criminal trial in Kosovo is divided into several stages. It starts with a pre-trial, conducted by the competent state prosecutor and the judicial police, in which investigations are carried out and evidence is recorded. The aim of the pre-trail is to decide whether to file an indictment or to discontinue proceedings. In case there is sufficient proof the state prosecutor will bring in an action and the main trial will commence.

The main trial is terminated by a judgment by the competent court. The judgment is rendered and announced in the name of the people and either rejects the charge or acquits the accused of the charge or pronounces the accused guilty. If the accused is guilty, there are three principal punishments: long-term imprisonment, imprisonment and fines. Within 15 (fifteen) days of the day the copy of the judgment has been served authorized persons are able to file an appeal. "Authorized persons" in accordance with the Criminal Procedure Code are: the parties, the defence counsel, the legal representative of the accused and the injured party. Also the public prosecutor may file an appeal either to the detriment or to the benefit of the accused. An appeal has to be filed with the court which rendered the judgment in first instance.

The court of first instance will serve the opposing side with a copy of the appeal with the opportunity to reply to the appeal within 8 (eight) days of the service of the copy. The court of first instance then sends the appeal, the reply and all related files to the court of second instance. The court of second instance takes its decision in a session of the panel or in a hearing. The court of second instance is able to dismiss an appeal as belated or inadmissible; reject an appeal as unfounded and affirm the judgment of the court of first instance; annul the judgment and return the case to the court of first instance for retrial and decision; or modify the judgment of the court of first instance. An appeal against a judgment of a court of second instance can be filed with the Supreme Court of Kosovo but only in the following instances:

-if a court of second instance has imposed a punishment of long-term imprisonment or has affirmed the judgment of a court of first instance by which such punishment was imposed;

-if a court of second instance after conducting a hearing has made a different determination of the factual situation from the court of first instance and based its judgment on such factual determination; or

-if a court of second instance has modified a judgment of acquittal by the court of first instance and rendered instead a judgment of conviction.

The Supreme Court considers the appeal in a session of the panel; a hearing does not take place.

The basic power and the main function of the state prosecutor are the investigation of criminal offences and the prosecution of their perpetrators. The state prosecutor is an impartial institution and acts in accordance with the Constitution and the law. The organization, competencies and duties of the state prosecutor are defined by law. Concerning criminal crimes, the state prosecutor has the power to:

-undertake the necessary measures connected with the detection of criminal offences and the discovery of perpetrators and to undertake investigative actions while directing or supervising the investigation in preliminary criminal proceedings;

-file and present the indictment or summary indictment before the competent court; and to

-file appeals against decisions of the court that have not become final and to file extraordinary legal remedies against final decisions of a court.

The Kosovo Prosecutorial Council is a fully independent institution, which ensures equal access to justice for all persons in Kosovo. The Kosovo Prosecutorial Council recruits, proposes, promotes, advances, transfers, and disciplines prosecutors in a manner provided by law.

Mandatory representation is provided according to the Criminal Procedure Code:

-if the defendant is mute, deaf, or displays signs of mental disorder or disability and is therefore incapable of effectively defending him or herself;

-at hearings regarding detention on remand and throughout the time when the defendant is in detention on remand;

-if indictment has been brought against a defendant for a criminal offence punishable by imprisonment of at least 8 (eight) years; and

-for proceedings under extraordinary legal remedies when the defendant is mute, deaf, or displays signs of mental disorder or disability or a punishment of long-term imprisonment has been imposed.

According to the Criminal Procedure Code a person who has been arrested by the police authorities has the right to legal representation. The competent court decides on the granting of a public defender. A public defender can be granted for defendants who are accused of a crime which can be punished with a prison sentence of at least 8 (eight) years. Moreover, granting a public defender is possible due to special requirements of the case. The costs for the support of a public defender are carried by the public budget. All police stations, courts and detention centres are legally required to enable an arrested person contact to a lawyer.

The Criminal Procedure Code guarantees an accused person several rights which are necessary for his/her defence. The defendant has the right to make statements on all the facts and evidence, which incriminate him/her, and to state all facts and evidence favourable to him/her. Further the defendant has the right to examine or to have examined witnesses against him/her and to obtain the attendance and examination of witnesses on his/her behalf under the same conditions as witnesses against him/her. The defendant or his/her representative has the right to request the recording of evidence. It is the duty of the state prosecutor to present the facts on which he/she bases the indictment and all necessary evidence for these facts. The defendant and the state prosecutor have the status of equal parties. The suspect and the defendant have the right to be assisted by a defence counsel during all stages of the criminal proceedings.

The injured party has the right to file a property/civil/damages claim in criminal proceedings. During all stages of the criminal proceedings, the injured party has the right to draw attention to all facts and to propose evidence which has a bearing on establishing the criminal offence, on finding the perpetrator of the offence or on establishing his/her property claims. Further the injured party has the right to inspect the record and documents and objects that serve as evidence. In the main trial, the injured party has the right to propose evidence, to put questions to the defendant, witnesses and expert witnesses, to make remarks or give other statements, present clarifications concerning their testimony and to file motions. In case the state prosecutor withdraws the indictment, the criminal procedure will be concluded. In a judgment pronouncing the accused guilty the court may award the injured party the entire civil/property/damages claim or may award him/her only part of it and refer the injured party to civil litigation for the remainder. If the data collected in the criminal proceedings do not provide a reliable basis for either a complete or a partial award, the court will instruct the injured party that he/she may pursue the entire property claim in civil litigation.

It is hardly possible to determine the exact duration of a criminal trial - it differs from case to case. The Criminal Procedure Code merely states that fair criminal proceedings have to be conducted within a reasonable time. However a more precise definition or time limitation is missing.

In legal disputes the unsuccessful party generally bears all the costs. According to the Criminal Procedure Code such costs for example are: the costs of witnesses, expert witnesses, interpreters, specialists, technical recordings, transportation costs or the costs of a site inspection. Every judgment and ruling which discontinues criminal proceedings contains a decision on who will cover the costs of the proceedings and the amount of the costs. If the court finds the defendant guilty, he/she must reimburse the costs of the proceedings; when criminal proceedings are terminated or when a judgment is rendered, which acquits the defendant or rejects the charge the costs are paid from budgetary resources.

According to Law No. 04/L-017 on Free Legal Aid, under certain circumstances Kosovo citizens are able to claim legal aid for civil, criminal, labour and administrative matters before courts and authorities.

The attorney fees are basically determined by the Kosovar Bar Association.

An English-language version can be found on its website:

http://www.oak-ks.org/repository/docs/1.EXSTRAT_from_Tarifs_895441_715118.pdf.

However, experience has shown that many lawyers charge higher fees. In principle all fees are based on the possible jail sentence, divided into four stages: (a) up to 3 (three) years; (b) up to 5 (five) years; (c) up to 10 (ten) years; and (d) more than 10 (ten) years. Basic charges for a defence range from EUR 100 up to EUR 200. For every extra hour the attorney is entitled to charge an additional 30% of the basic charge. The costs for actions, such as a criminal private prosecution or an examination application, start at EUR 130 and go up to EUR 360. For appeals and all other extraordinary remedies, attorneys are entitled to charge EUR 200 up to EUR 530 depending on the possible jail sentence.

Insolvency proceedings for business organizations, such as general partnerships, limited partnerships, limited liability companies and joint stock companies, are governed by the law on bankruptcy, which was enacted on 7 July 2017.  The law on bankruptcy is partially in accordance with EU Regulation 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings. It is applicable to all forms of business organizations; however it is not applicable to institutions, banks, insurance companies, pension funds and socially owned enterprises under the administration of the Privatization Agency of Kosovo or to publicly owned enterprises.

According to the law on bankruptcy, for the voluntary initiation of a case, a debtor files either a petition in reorganization or a petition in liquidation. A debtor does not need to be insolvent to be eligible as a debtor under this law. In case a debtor files a petition for an improper purpose or in a manner intended to deceive, defraud or subvert creditors, the court may fine the debtor or individual members of the debtor’s management or governing body. It is considered that a debtor has filed its petition for an improper purpose or with the intent to deceive or cause damage to creditors, if a debtor (i) files a case without listing its name properly; (ii) does not list all prior material names under which it has conducted business; (iii) does not list a material creditor and that creditor therefore is not informed of the proceeding; or (iv) provides fraudulent information in any phase of the procedure or tries to manipulate the procedure in any way.

Two or more creditors can file a petition for the initiation of insolvency proceedings in cases when:

-the debtor has failed to pay a debt due to each of the petitioning creditors;

-the debtor has failed to pay its debt that is at least 90 (ninety) days overdue;

-the total amount of the debt overdue exceeds EUR 3,000;

-each debt is not conditional or subject to pending court proceeding or an ongoing arbitration; and

-the debtor does not usually pay its debts in a timely manner, and the total of unpaid debts exceeds

EUR 5,000.

According to this law, the Basic Court, Commercial Department is the competent court for bankruptcy cases and the use of extraordinary legal remedies is not allowed. Within 3 (three) days following the receipt of a petition for the initiation of insolvency proceedings, the court appoints an administrator. The court should promptly notify the debtor within three (3) days of the filing of the petition for initiation of the bankruptcy proceeding. The court should also set the term by which the debtor may respond to the petition as well as a hearing session on the acceptability of the petition. All this information should be contained in the notice delivered to the parties. In the interim, the court shall issue an order to the parties with the purpose of protecting the petitions of debtor and creditors. Such order should be required and proved as necessary by the parties.

Each creditor must file a proof of claim to the court to establish the validity and amount of its claim. The court provides the parties with a specific form for the registration of the claim and proof of the existence of the claim. In absence of a specific form, the creditors shall file at the court a written statement, which is considered a statement under oath if it includes the following information: (i) description of the claim, including whether the claim is deemed to be unsecured, priority, or secured; (ii) the amount of the claim as of the date of the opening of the case; and (iii) appending, if available, accurate and complete copies of the documents related to the claim or to any security related to such claim. Unless the creditor files a proof of claim, it will not be able to participate in any distribution of property of the bankruptcy estate to creditors, serve on any creditors’ committee or vote on any plan of reorganization.

In a liquidation case, a creditor must file a proof of claim within sixty (60) days of the date of the notice of the opening of the bankruptcy proceeding. In a reorganization case, unless the court orders otherwise according to the needs of the reorganization, a creditor must file a proof of claim within thirty (30) days of the date of the notice of the opening of the bankruptcy proceeding. Until thirty (30) days after the deadline for filing proofs of claims has passed, the bankruptcy estate representative may file a proof of claim on behalf of any creditor. Such filing must be made in good faith. The claims register shall be open to the public when the court is open, and the court shall allow for reasonable procedures for the inspection and copying of all documents contained in the register.

Debtors, bankruptcy administrators, creditors, equity holders, creditor committees, and government units may object to the claims. If any of the above objects to a claim, the court shall determine the validity and amount of the claim in EUR according to applicable laws, as of the date of the opening of the bankruptcy case. The objecting party shall prove its objection. Unless otherwise requested by the party objecting to a claim or as ordered by the court, the presumption of validity of a proof of claim persists until a court rules to the contrary. After the resolution of all challenges, the administrator will, no later than ten (10) days after resolution of all claim objections, provide the court with the entire list of claims in the priority order set forth by law. If no objection to the list is filed within thirty (30) days of submission to the court, then the list shall be deemed to be final for all purposes.

The payments of creditors' claims in cases of liquidation are made in the following order or priority:

-Secured claims: secured by duly perfected/registered collateral, i.e. mortgages, pledges or other liens. Secured claims are limited by the value of the collateral securing its repayment. The amount of the secured claim that exceeds the collateral is considered an unsecured claim.

-Unsecured claims: administrative costs (including but not limited to unpaid salaries and unpaid tax obligations since the initiation of bankruptcy, loans taken by the bankruptcy administrator with the approval of the court, fees of professionals engaged by the bankruptcy administrator with the approval of the court; and the bankruptcy administrator’s fees); claims deriving from family obligations and requests for compensation of victims; claims deriving from employment relations; claims deriving from tax obligations; and any other unsecured claim.

-Equity interest: is defined as the property on the capital or other property rights to shares or parts of a legal person or other business organization, the holder of which may be a shareholder, owner, partner or similar.

In cases where the debtor seeks the reorganization of its enterprise, the debtor in possession has the exclusive right to file a plan of reorganization within 120 (one hundred and twenty) days after the opening of the case. This time limit is interrupted if the debtor in possession files a plan before the expiration of the deadline. The court may shorten or extend the above-mentioned debtor’s exclusive period on request of a party in interest, if such party in interest proves that such shortening or extension will likely enhance the debtor’s prospects for reorganization. After the expiration of the above-mentioned term or extension or shortening of such term, each party in interest shall file a plan of reorganization of the debtor.

A plan proponent must file a disclosure statement with the plan of reorganization. The disclosure statement must contain sufficient information to allow creditors and holders of equity interest to make an informed vote on the plan. Such information shall include, but not be limited to, (i) short descriptions or summaries of why the debtor or the bankruptcy estate representative requested reorganization; (ii) how the changes to be made by the plan of reorganization will benefit the reorganized debtor; (iii) why distributions to creditors under the plan will exceed the distributions such creditors could reasonably expect in a liquidation; and (iv) the reorganized debtor’s prospective cash flow for the five (5) year period following the anticipated confirmation, or if creditors will receive all distributions under the plan before the passing of the five (5) year period, a summary of the prospective cash flow until the last proposed distribution under the plan.

Before the plan proponent may distribute the plan of reorganization to creditors for a vote, or solicit any votes on the plan of reorganization, the court must approve the disclosure statement. The court shall approve a disclosure statement if the plan proponent proves that it contains all material information necessary for a reasonable creditor to make an informed decision on whether to accept or reject the plan. If the court approves the disclosure statement, it will then order the plan proponent to distribute the plan of reorganization, the disclosure statement, and the ballot sheet to all creditors or equity holders who are entitled to vote on the plan. The decision regarding distribution shall set the date for the return of ballot sheets, the date for any objections to be filed, and the hearing on plan confirmation. The plan proponent does not need to submit the ballot sheets or to provide a disclosure statement and the plan of reorganization to any class that is deemed to accept or to reject such a plan.

The plan of reorganization is deemed to be accepted, if creditors holding at least 50% (fifty percent) of all claims voting in that class accept the plan of reorganization. Moreover, the plan of reorganization is deemed to be accepted without the need of solicitation, if it leaves the claims or equity interests unimpaired. The plan of reorganization is deemed to be rejected without the need for solicitation, if it eliminates the claims or equity interests.

The provisions of a confirmed plan of reorganization bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor or equity holder, whether or not the claim or interest of such creditor or equity holder is impaired under the plan of reorganization and whether or not such creditor or equity holder has accepted the plan. Except otherwise provided in the plan of reorganization or the decision confirming the plan, the confirmation of a plan of reorganization vests all of the property of the bankruptcy estate to the debtor. The court shall decide by ruling to close a reorganization case when all obligations under a plan of reorganization have been fulfilled.

It should be noted that the voluntary dissolution of business organizations is governed by the Law on Business Organizations. At the same time, the procedures for the reorganization or liquidation of enterprises and their assets are currently under the administrative authority and management of the Privatization Agency of Kosovo and are governed by UNMIK Regulation 2005/48.

According to the Law on Arbitration, enacted on 10 September 2008, arbitration is a recognized instrument for the resolution of both domestic and international disputes between physical persons and legal entities.

In Kosovo, all disputes related to civil and economic matters may be arbitrated, but only if there is an arbitration agreement between the parties indicating consent to arbitration. The arbitration agreement must be in writing; however, this requirement is deemed to have been satisfied if the arbitration agreement is recorded by means of letters, telefaxes, telegrams or other means of telecommunication or electronic communication etc.

In the event a matter is pending before a court which is the subject of arbitration, the court shall reject the matter if a party invokes the arbitration agreement in its defence. The parties may agree on a sole arbitrator or on a panel of arbitrators, provided that the panel is composed of an odd number of arbitrators. However, in the event the parties fail to specify the number of arbitrators, the number shall be three, with each party appointing one and the two party-appointed arbitrators selecting the third arbitrator.

The arbitral tribunal may issue preliminary orders that are enforceable by the court upon request of a party, if that party gives credible evidence that an immediate or irreparable injury, loss or damage will result to the party if no preliminary order is granted. However, the arbitral tribunal may require any party to provide appropriate security in connection with such preliminary orders.

In arbitrations involving international issues, the arbitral tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law determined by the rules of private international law. In all other cases, the arbitral tribunal shall apply Kosovo law.

According to Article 36 of the law on Arbitration, a party may challenge an arbitral award before the court; however, the award will only be set aside if the applicant proves that:

-a party to the arbitration agreement did not have the capacity to act;

-the arbitration agreement is not valid under the law determined as applicable by the parties or the arbitral tribunal or, in the absence of such determination, under the law applicable in Kosovo;

-the applicant was not given proper notice of the appointment of the arbitrator(s) or of the arbitral proceedings or was otherwise unable to present his/her case;

-the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or,

-the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the provisions of the law or a valid arbitration agreement, under the condition that such defect had an impact on the arbitral award.

The award can also be set aside if the court finds that

-the subject matter of the arbitration is prohibited by law; or

-the enforcement of the award conflicts Kosovo public policy (ordre public).

Unless the parties have agreed otherwise, a request for setting aside an arbitral award shall be submitted to the court not later than 90 (ninety) days after the award was received by the respective party. Otherwise, an arbitral decision is binding on the parties involved in the arbitration, and the arbitral decision shall have the same effect between the parties as a final and binding court decision.

Foreign awards, rendered outside of Kosovo, can be recognized and become enforceable in Kosovo by making a request for recognition and enforcement to the Basic Court in Prishtina. The request for the recognition and enforcement of a foreign award must be accompanied by:

-the authenticated original award or a certified copy thereof;

-the original arbitration agreement or a certified copy thereof; and,

-a certified translation of the arbitration agreement and the arbitral award into an official language of Kosovo if the award or agreement is not made in an official language of Kosovo.

Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, if that party proves that:

-a party to the arbitration agreement, under the law applicable to the agreement, did not have the capacity to act; or the arbitration agreement was not valid under the law determined as applicable by the parties or, in the absence of such determination, under the applicable law in the territory where the award was made;

-the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator(s) or of the arbitral proceedings or was otherwise unable to present its case;

-the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that if the decisions on matters submitted to arbitration can be separated from those not submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced;

-the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the law applicable to it; or,

-the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the territory in which, or under the law of which, the award was made.

Recognition and enforcement of an arbitral award shall also be refused if the Court finds that:

-the subject matter is not capable of settlement by arbitration under the applicable law in Kosovo; or,

-the recognition or enforcement of the award would be contrary to the public policy (ordre public) of Kosovo.

While foreign criminal sanctions are regulated by the Law on Execution of Penal Sanctions (Law no. 04/L-149) adopted in July 2013, civil execution procedures are regulated by the Law on Executive Procedure (Law no 03/L-008) which was adopted in June 2008. Article 17 of the Law on Executive Procedure allows an execution of a foreign decision by a Kosovo court only if it fulfils the conditions for recognition and execution of Kosovo law or of international treaties.

2. LITIGATION

3. BUSINESS CRIME

4. INSOLVENCY

5. ARBITRATION

6. ENFORCEMENT OF FOREIGN JUDGMENTS AND ARBITRAL AWARDS

7. PRACTICE TIPS

TYPE OF PROCEEDINGS

PRACTICE TIPS

PROCEDURE AND ASSUMPTIONS

jury trials

Parties have the right to access and inspect the case files. The law is silent on whether the parties have the right to compel the production of a document from another party. Notwithstanding the above, the court is authorized to verify facts that the parties have not presented, subject to certain legal requirements.

Approximate Duration

Approximate Costs

Yes. Collective redress is foreseen by law in cases when the object of the claims derives from the same or similar factual or legal basis.

Document Production

-The first instance procedure consists of two parts: the preparatory proceedings and the main trial.

-According to the Kosovo Judicial Council (KJC) Statistical Report 2014, Kosovo Courts have a backlog of 455,699 of total unresolved cases inherited from the past years, while for the first three months of 2014, the Basic Courts accepted 225,236 new cases. During this time period, the Basic Courts in Kosovo were able to resolve 222,551 cases, leaving 438,383 unresolved cases in front of Basic Courts and 463,301 unresolved cases in total at the end of the first trimester of 2014.

No. Parties can represent themselves in civil proceedings and/or they can authorize any other person, fit to stand before the court, to represent them even if the latter is not an Attorney-at-Law.

Pro Bono System

STANDARD CIVIL PROCEEDINGS

class actions

Mandatory Representation

by Counsel

Yes. There is legal aid system for people who cannot afford the cost of legal proceedings which is provided by Kosovo Legal Aid Commission.

The approximate duration for the enforcement of a contract at the Basic Court, Commercial Department, in Prishtina is 420 days, which includes:

-60 days for filing and service of claim;

-180 days for trial and judgment; and

-180 days for enforcement of judgment.

The aforementioned estimates are based on a case that includes a claim assumed to be equivalent to 200% of the income per capita.

There are no jury trials in Kosovo. The first instance trial is chaired by an individual judge, while the second instance proceedings are chaired by a three-member panel of judges.

Official fees in Kosovo Courts range from EUR 20 for a claim up to EUR 1,000 to EUR 1,000 for a claim of over EUR 100,000.

According to the World Bank’s Doing Business in Kosovo Report 2016, approximate costs for a case, including a claim assumed to be equivalent to 200% of the income per capita, are as follows:

-attorney Costs: 25.2% of the claim;

-court Costs: 18% of the claim;

-enforcement costs: 18% of the claim.

In the World Bank's Doing Business in Kosovo Report of 2016, no significant improvements can be detected. The recovery rate remains at 38.8% with costs of an average of 15% of the estate.

class actions

Business Crime

According to Law No. 04/L-017 on Free Legal Aid, under certain circumstances Kosovo citizens are able to claim legal aid for civil, criminal, labour and administrative matters before courts and authorities.

The unsuccessful party generally bears all the costs.

The fees are determined by the Kosovar Bar Association.

Approximate Duration

Approximate Costs

COURT FEES

ATTORNEY'S

FEES (NET)

The parties to a dispute have the right to access and inspect the case files.

In the main trial, the injured party has the right to propose evidence, to put questions to the defendant, witnesses and expert witnesses, to make remarks, give other statements and present clarifications concerning their testimony and to file motions.

The private prosecutor and the subsidiary prosecutor have the same rights as the public prosecutor, excluding those rights belonging to the public prosecutor as a public official.

According to the Criminal Procedure Code, costs may include, for example, the costs of witnesses, expert witnesses, interpreters, specialists, technical recordings, transportation costs and the costs of a site inspection.

Mandatory Representation

by Counsel

jury trials

Mandatory representation is provided for a defendant according to the Criminal Procedure Code:

-if the defendant is mute, deaf, or displays signs of mental disorder or disability and is therefore incapable of effectively defending him/herself;

-at hearings on detention on remand and throughout the time when he or she is in detention on remand;

-If indictment has been brought against him or her for a criminal offence punishable by imprisonment of at least eight years; and

-in proceedings under extraordinary legal remedies when the defendant is mute, deaf, or displays signs of mental disorder or disability, or a punishment of long-term imprisonment has been imposed.

Document Production

No.

The Criminal Procedure Code merely states that fair criminal proceedings have to be conducted within a reasonable time. There is no precise definition or time limitation.

There are no jury trials in Kosovo. The first instance trial is chaired by an individual judge, while the second instance proceedings are chaired by a three-member panel of judges. The Supreme Court considers an appeal in a panel session.

It is hardly possible to determine the exact duration of a criminal trial. It differs from case to case.

Pro Bono System

Preliminary Injunction Proceedings

-In cases when the Court determines that the party that is subject to the injunction order may suffer damages, the Court will request the claimant to provide a security for the Order to Secure the Claim.

-According to the law, injunctions can be ordered for securing a monetary claim, securing a claim involving an object or preservation of existing circumstances.

-Due to the Kosovo courts being overloaded with pending cases and the different approaches of individual judges, certain judges tend to reject any Order to Secure the Claim for formal reasons.

-In the event an Order to Secure the Claim is considered, it is advisable to talk to judges to whom the case may be assigned before filing the Order to Secure the Claim.

With respect to time limits for seeking injunctive relief, the following deadlines should be considered:

An Order to Secure the Claim, as it is referred to by the Law on Contested Procedure, can be sought even before a claim is filed with the Court. However, in these cases the claim must be submitted no later than 30 days after the request for an Order to Secure the Claim.

The Court may decide on the request without notifying the party but in that case the Court must inform the opposing party after the decision is taken. In these cases, the opposing party has 3 days to file an objection, which triggers a hearing.

Otherwise, in regular cases, the Court sends the request to the opposing party prior to making a decision and the opposing party has 7 days to respond. The Order to Secure the Claim can remain in effect until 30 days after the award becomes enforceable.

Due to limited experience there is insufficient information available to determine the costs and duration for these proceedings, except for what is stated above on the wide range of court fees.

Approximate Duration

and costs

Further details and documents can be downloaded under www.kosovo-arbitration.com

Document Production

Arbitration Proceedings

Article 21 of the Law on Arbitration states that all statements, documents or other information supplied to the arbitral tribunal by one party shall be communicated to all other parties. Also, any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to all parties.

The Law on Arbitration, Law No. 02/L-75 specifies no overall time frame. Due to the different periods specified by law (i.e., for the appointment and challenge of arbitrators or the notification of witnesses), several months can be expected.

The costs are transparent and predictable, and the parties make the payment for arbitrators through the PTA (Kosovo Permanent Tribunal of Arbitration). In principle, the costs of arbitration are borne by the unsuccessful party. The costs are apportioned if the parties solve the dispute by settlement.

Approximate Duration

APPROXIMATE COSTS

Enforcement of Foreign Judgments and Arbitral Awards

There is no sufficient information available to determine the costs for these proceedings, except for what is stated above on the wide range of court fees.

-Kosovo is not part of the Brussels Regime, which consists of the Brussels Convention, the Lugano Convention, and the Brussels I Regulation. Enforcement of judgments is conducted based on the principle of reciprocity.

-Attaching a certified translation of the judgment in the Albanian language is highly recommended in order to avoid delays.

-Enforcement of awards under the New York Convention is possible. In such a case, the creditor must provide the court with the authenticated original award or a duly certified copy thereof and the original of the arbitration agreement or a duly certified copy thereof.

According to anecdotal evidence, the approximate duration of proceedings for the recognition of foreign judgments is 3 to 4 months.

In cases when such a decision is appealed, the proceedings may take between 6 and 9 months.

Enforcement of foreign judgments is facilitated by the Ministry of Justice of the Republic of Kosovo, Section on International Legal Cooperation.

APPROXIMATE COSTS

Approximate Duration

Creditors can file a claim for insolvency proceedings in cases when

-the Debtor has not paid the debt for 90 days after the debt was due for payment;

-the amount of the debt exceeds EUR 3,000;

-the debt is not conditioned; and

-the Debtor is generally not able to settle its debts.

To date, the Basic Court (Commercial Department) in Pristina has not had any liquidation cases which have been completed.

Insolvency Proceedings

APPROXIMATE COSTS

Filing of Insolvency Claims by Creditors

According to the law, direct liquidation processes must be completed within 90 days (for unsecured debts) and within 60 days (for secured claims) after the case was assigned to an Administrator.

Approximate Duration

CONTACT

In cooperation with

Pallaska & Associates L.L.C.,

Pristina, Kosovo

www.pallaska-associates.org