Albania in Arbitration, PPPs 'steal' 173.1 million euros from the state budget

Until September 2023, the cost of international arbitrations has reached 173.1 million euros in the Albanian state budget.

The data obtained from the relation of the 2024 Budget Project, processed by Open Data Albania , show that this value includes the legal costs of representation, defense, court costs or other costs related to international arbitration decisions and still unpaid.

Cases referred to arbitration relate to disputes between private investors and the state party. Albania has faced and is still following the Arbitration process with 4 Private Investors implementing PPP concession contracts. 

An open case in International Arbitration that could potentially bring additional costs to the state budget if the Decision of the International Court of Arbitration is made in favor of the private party, is the case between EMS Shipping & Trading GmbH vs the Republic of Albania, a case registered in ISCID on April 7, 2023.

EMS has established EMS ALBANIAN PORT OPERATOR (EMS APO) 2013 for the implementation of the Concessionary contract "Management, operation, construction, maintenance and technical improvement and adaptation of the East Terminal in the Port of Durrës", which allows the company to load and unload ships. EMS has opposed the Albanian state's decision-making on the new port transformation project (Durrës Yachts & Marina project) which would require them to move their operations to Porto-Romano.

The first session was held on September 18, 2023 through a video conference. On January 19, 2024, the respondent (in this case the Albanian state) filed a request to address objections to jurisdiction as a preliminary question in accordance with Article 41(2) of the ICSID Convention and ICSID Arbitration Rule 44. On February 24, 2024, the tribunal issued Procedural Order No. 3 regarding the respondent's request to address objections to jurisdiction as a preliminary question; as a result, objections to jurisdiction merge with the merits of the dispute.

Another PPP concession contract that is in the process of arbitration is related to the disputes between Durrës KURUM Shipping sh.pk and others vs the Republic of Albania, which started on September 23, 2020 by the company Durrës Kurum Shipping and others, towards the Albanian state, for due to the unilateral termination of the concession contract "For the Management, operation, maintenance and technical improvement of the container terminal in the Port of Durres", as well as due to the acquisition of the terminal's assets by the Port Authority of Durres.

On 12.02.2019, the Administrative Court of Appeal upheld the decision to terminate the concession contract due to the non-fulfillment by the gold concessionaire of the obligations arising from this Concessionary contract as well as the determination of the amount of the corresponding compensation. According to the data published by ICSID, the amount of compensation claimed by this company is in the amount of 100 million Euros, which constitutes a contingent liability for the Albanian state, even though the final decision has not yet been taken by the Court. For this case until September 2023, the value recognized by the Albanian state is 1.18 million Euros, which are administrative and legal costs for pursuing the case.

Another arbitration issue is that between the Albanian state and the Tirana International Airport concession company sh.pk. On April 19, 2019, the State Bar announced a call for the provision of foreign consultancy in order to protect the interests of the Albanian state, in the conditions of negotiation or the possible revision of the Concession Agreement related to Tirana Internacional Partners SH.PK, for "Mother Teresa" Rinas International Airport, Tirana. The liability is recognized by the State Accounts and currently 150,000 Euros have been liquidated from the total liability (the initial declared value of the liability is 250,000 Euros). 

Another arbitration case related to PPP concession contracts, concluded in favor of the Albanian side is that of Hydro srl I vs Republic of Albania, which is related to the Beçhetti family (the Beçheti family has more than one Arbitration case with the Albanian State). The case was registered in the International Chamber of Commerce IÇ in 2014 with plaintiff Hydro Srl and defendant Republic of Albania. The dispute between the parties arose in relation to the Concession Agreement for the construction of the Kalivaç hydropower plant and due to the non-realization of the concession contract and the abuse of taxes.

The final decision was announced in September 2018, according to which the claimant must pay the defendant:

Late fines in the amount of 1 693 157 euros with interest thereon on a compound basis using 12-month Euro LIBOR plus 2% from 16 July 2011 until full payment.

Damages in the amount of €5,182,535 with interest thereon compounded using 12-month Euro LIBOR plus 2% from January 9, 2018, the day after the Partial Award was signed, until termination.

Decides that the responsible party compensates the legal expenses of the claimant for the second stage of the procedure in the amount of 142,975.78 euros;

It orders that in respect of the arbitrators' fees and costs and the CI's administrative costs, the Claimant shall reimburse the Respondent the sum of USD 325,000. 

According to the 2024 Budget Report, Albania's contingent liability resulting from this process is 142,976 Euros.