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Eliminating Administrative Barriers to Investment: The Kosovo Story

How can you invest in an economy if you aren’t sure whether your rights will be enforced?

The U.S. supports Kosovo’s goal for Euro-Atlantic integration by helping improve stability in the country and the broader Balkan region “as part of a Europe that is whole, free, and at peace.” More specifically, the U.S. and Kosovo are committed to building an enabling environment for investment. Leaders from the investment sector – including business owners, commercial lawyers, and even some multinational corporations – have urged the need to reform how Kosovo’s judiciary handles commercial cases. As a result of that advocacy, USAID engaged with the Kosovan government to reform these processes, selecting Dexis to implement its Commercial Justice Activity.

At the time, all commercial legal cases in Kosovo were handled by a single department within the larger Pristina court; meaning, those cases were heard by only four or five judges at any given moment, with even fewer judges available to handle appeals. Because not enough resources were dedicated to resolving a growing number of commercial cases, the department was rendered practically ineffective, and cases routinely took five to eight years to resolve. The inefficiency of the department was increasingly becoming a disincentive to investment in Kosovo.

There were two possible paths the judicial reform project could take. The first was to focus on investment in the commercial department that already existed within the larger Pristina court and attempt to solve the inefficiencies from within. The second was to create a separate standalone court to handle commercial cases that would operate independently from the Pristina court.

Dexis’ Chief of Party Chris Thompson and Deputy Chief of Party Vjosa Shkodra understood the potential challenges and outcomes of the project. They knew from their considerable experience in traditionally unstable governments – including past work in Kosovo – that the first option of investing in the current court structure would be a simpler effort, but likely only bring marginal improvements, if any. The second option of creating a separate commercial court would bring significant improvement, but it would also require passage of special legislation to create the court – a big risk in a country with a recent history of governmental instability.

If the program did not succeed in getting legislation passed, there would be little or no improvement in how commercial cases were handled, and the program would not be a success. Despite that risk, Chris and Vjosa recommended pursuing the second option – the creation of a separate, specialized court – as a successful implementation would provide the best possible solution for both the country’s judiciary and its investment environment.

To accomplish this, Chris and Vjosa fielded a team of lawyers and policy reform experts with similarly extensive experience working in Kosovo, particularly around institutional and legislative reforms in commercial law. That experience helped quickly establish the team’s credibility with their counterparts in the Kosovo government and in Kosovo’s private sector and civil society community.

To avoid the law drafting effort from resetting to zero with each new government, the team needed to approach the development process as a series of milestones and sub-milestones. There were two major milestones: 1) development of a Concept Note defining the reform; and 2) development of draft legislation to implement the reform. Each of these had several sub-milestones such as the drafting, stakeholder consultation, and adoption or passage stages. To make the approach work, the team committed to working with unstable governments to achieve each milestone and its respective sub-milestones, taking up the next steps with successive governments.

At the time they began the reform, the chance of governmental change in the country was high. The government was expected to fall “any day now.” The team therefore moved quickly to advocate to the Kosovo legal community, lawyers, judges, and government officials to take up and champion the reform. The program’s first milestone – the drafting of a governmental Concept Note that defined the scope of the commercial court reform – was completed, but it was not adopted before the government fell.

That was when the team faced its first test. There was no guarantee the work would continue. The new government could reject or deprioritize the reform, or even start over with an entirely new concept note.

However, the intense advocacy of the team in the initial phase had created critical momentum that carried the reform forward. The resulting caretaker government chose to conduct stakeholder consultations rather than to redraft the Concept Note from scratch.

The next successive government later took up formal adoption of the Concept Note.

The next one began drafting the legislation, and the one after that submitted it to the National Assembly.

This was the process as each successive government fell and new ones formed. As each new government took office, the program advocated taking up the initiative, then continued stoking stakeholder and political support so that the next government would see an attractive possibility for a quick, popular win. The team would strive to achieve milestones or sub-milestones before that government would fall.

As Chris explains, “It’s like a small plane crossing an ocean. We island hop to do it. Milestones and sub-milestones are the islands. We dealt with governmental instability by identifying those process milestones and working hard with each new government to achieve each milestone to lock things in before that government fell. Then, we worked on convincing the next government to buy into the reform – that gave us more gas for the next stage.”

Eventually, over four governments and two caretaker governments, they achieved success. On January 21, 2022, the Kosovo Assembly unanimously voted to adopt the Law on the Commercial Court. The court is now in the process of formation, through hiring of judges and staff and setting up premises.

Chris credits the team’s past work in Kosovo for the project’s success, saying, “We relied on long-standing relationships of trust and confidence our team members enjoyed with non-political governmental officials — civil servants who remain in office across multiple governments to help bridge the gap between governments. We also worked with private sector organizations and civil society to stoke support for the reform high between governments. These activities and relationships helped us keep momentum going forward when a new government assumed office.”

Taking the risk of creating a new court paid off. But, as Vjosa says, “It was a very informed and experienced risk. We have done a lot of work in Kosovo and handled unstable governments, and we have built trusting relationships with government officials, who have confidence in the quality and reliability of our team.”

The success of the project resulted in a secondary benefit, as well. The implementation is being leveraged to address another challenge: the insufficient number of young professionals in commercial justice. The program is working to provide internship opportunities for students and recent law graduates to support the new court and to learn about commercial justice as a career opportunity. Working with Kosovo’s next generation of leaders, the program team expects to dramatically increase the number of professionals entering into and serving Kosovo’s commercial justice system.

Chris Thompson is the Chief of Party for the USAID-funded Commercial Justice Activity in Kosovo, which supports reforms in commercial dispute resolution, judgment enforcement, and commercial legislation in order to enhance Kosovo’s investment environment. An attorney admitted to practice in Virginia and Washington DC, for over 20 years he has advised governments and local counterparts on commercial law, access to justice, and private sector development.

Vjosa Shkodra is the Deputy Chief of Party for the USAID-funded Commercial Justice Activity in Kosovo. Vjosa is an attorney at law from Pristina, member of Kosovo Bar Association and member of Kosovo Chamber of Commerce as an arbitrator.