In early April, Prime Minister Edi Rama made an announcement that Albania is contemplating withdrawing from the jurisdiction of the International Centre for Settlement of Investment Disputes (ICSID). This statement followed a ruling by the International Centre in favour of the Italian entrepreneur Francesco Bechetti, which obligated the Albanian state to pay compensation exceeding 120 million euros. However, fact-checking investigations reveal that the withdrawal from arbitration remains merely a declaration. In response to Fact-checking, ICSID refutes Rama’s statement and confirms that Albania has not sought to withdraw from the convention.
By the end of March, Albania e had definitively lost the arbitration against Italian entrepreneur Francesco Bechetti at the ICSID, leading to a compensation bill surpassing 120 million euros. When questioned by journalists about this matter, Prime Minister Edi Rama hinted at the possibility of withdrawing from the jurisdiction of the International Centre for Settlement of Investment Disputes.
“… with a court with which we will face significant problems starting from next week. And from which, we are even considering the possibility of complete withdrawal, as what happened is scandalous”, said Rama on April 7, under pressure after a ruling that forces Albania to pay a significant amount from the state budget.
In light of this statement, Faktoje addressed a request for information to the Prime Minister’s Office and the Agency for Media and Information to ascertain the ‘significant problems’ that Albania had encountered with ICSID, a court considered as the gold standard for resolving investment-related disputes.
The Agency for Media and Information responded in mid-April, stating that the Albanian government is exploring all possibilities to better defend the state’s positions in international organizations. However, there seems to be no concrete action regarding the ‘risky adventure’ the Prime Minister had mentioned concerning Albania’s withdrawal from the ICSID convention.
“In response to your request, based on Article 1 of Law No. 119/2014 ‘On the Right to Information,’ this law regulates the right to access information produced or held by public authorities, and therefore does not impose any obligation on public authorities to prepare analyses, comments, etc.,” explained Merita Bundo, coordinator for the right to information at the Prime Minister’s Office, thus avoiding providing the requested information based on the law on the right to information.
Meanwhile, the State Advocate’s Office also responded with a ‘no-reply’ approach. To the question of how this institution assesses the possibility of withdrawing from the ICSID jurisdiction, the State Advocate’s Office responded:
‘As provided for in Law No. 10 018, dated November 13, 2008, ‘On the State Advocate,’ as amended, the role of the State Advocate is to represent and protect the interests of the Albanian state before foreign courts and international bodies, with judicial or supervisory character, where the Albanian state is a party.’
ICSID refutes Rama
ICSID was established in October 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the World Bank to promote international investment.
Albania has been a member of the ICSID convention for 32 years. The agreement was signed on October 15, 1991, and entered into force a month later.
Currently, 165 countries are part of the international treaty for the settlement of investment disputes, while 7 of them have not yet ratified the agreement.
Countries that decide to withdraw from the convention must send a written notice to ICSID, and the process lasts only 6 months. Faktoje approached ICSID with a request for information if such notice has been received from Albania.
“ICSID has not received a written notice from the Government of Albania regarding its withdrawal from the ICSID Convention. “, the ICSID Secretariat’s response reads.
Withdrawal from ICSID ‘frightens’ investors
Enio Jaço, President of the American Chamber of Commerce, points out that the International Centre for Settlement of Investment Disputes is considered the gold standard for resolving disputes related to foreign investments. He emphasized to Faktoje that the withdrawal from ICSID has serious consequences for Albania.
Enio Jaço, President of the American Chamber
‘Countries that decide to do this must be prepared for some consequences: a) the most apparent one is the loss of the best source of arbitration resolution and a potential decrease in foreign investments, as the departure from ICSID would be perceived as a ‘high-risk’ move; b) the country must rely on other alternative arbitration institutions that may not be as reliable or effective as ICSID.’, says Jaço for Faktoje.
What do experts say?
According to former State Attorney Ledina Mandija, withdrawing from ICSID membership puts Albania on the list of unsafe countries for investors.
“The Albanian state has been a member since the establishment of democracy, which means that when you become a member of the ICSID convention, you do it to protect investors and foreign investments. This implies that an investor who comes and invests in Albania, being a party to the convention, is guaranteed to be protected to address a specific issue. And in these conditions, it is more guaranteed to come and invest. When they do not have this guarantee, then there is doubt.” argues Mandija, adding that the consequences would extend even further.
Ledina Mandija, former State Advocate
“I think the European Union would see it as a worsening situation if there were steps by Albania to withdraw from the ICSID convention. Only totally underdeveloped countries have attempted such things in the world. Albania cannot align itself with those countries. Even the World Bank would take measures regarding such a state, which is on the path to joining the EU and is withdrawing from such a convention. So, all EU member states are parties to the convention. All developed countries in the world are parties to it.”, emphasizes former State Attorney Ledina Mandija.
Based on Faktoje investigations, it turns out that Albania has not taken any concrete steps to withdraw from the jurisdiction of ICSID. Therefore, we categorize Prime Minister Edi Rama’s statement as False.