12 January 2001



The Special Representative of the Secretary-General,

Pursuant to the authority given to him under United Nations Security Council resolution 1244 (1999) of 10 June 1999,

Taking into account United Nations Interim Administration Mission in Kosovo (UNMIK) Regulation No. 1999/1 of 25 July 1999, as amended, on the Authority of the Interim Administration in Kosovo,

For the purpose of reconstructing and enhancing the economy of Kosovo and creating a viable market-based economy by attracting foreign investment,

Hereby promulgates the following:

Section 1

The purpose of the present regulation is to create certain legal guarantees necessary to make Kosovo more attractive to foreign investment.

Section 2

2.1 For the purposes of the present regulation:

"Authorities" means the Interim Administration of Kosovo and its successors.

"Business organization" means any organization established under the law applicable in Kosovo for the purpose of carrying on a lawful business.

"Domestic business organization" means a business organization that is not a foreign investment.

"National treatment" means that with respect to all laws, regulations, instructions and other acts having the force of law in Kosovo, foreign investments in Kosovo shall be treated not less favorably than similar domestic business organizations.

"Equity" means the ownership interest in a business organization.

"Foreign control" means the exercise by a foreign investor of over fifty per cent (50%) of the management rights of a foreign investment.

"Foreign investment" means a business organization that is at least twenty-five per cent (25%) owned by a foreign investor.

"Foreign investor" includes:

(a) any natural person who is a resident or citizen of a foreign State;

(b) any legal entity that:

(i) was founded and registered under the law of a foreign State;

(ii) was founded under the law applicable in Kosovo with a legal address or principal place of business in a foreign State; or

(iii) is a foreign investment;

(c) a foreign State or administrative unit thereof; and

(d) a legal entity created by inter-governmental treaty or agreement.

"Freely usable currency" means any currency designated as such by the International Monetary Fund.

"LIBOR" means the London Interbank Offered Rate.

"Person" means a natural person or a juridical person.

"Taking" means the expropriation, nationalization, condemnation, requisition, excessive or repetitive tax, or regulatory measures which have a confiscatory effect, either alone or in the aggregate, of a foreign investment by the authorities, but does not include UNMIK's administration of property pursuant to UNMIK Regulation No. 1999/1, as amended.

2.2 As used herein, the singular includes the plural and the plural includes the singular, unless the context otherwise requires.  The personal pronoun "he" similarly includes "she" and "it"; and "him" includes "her" and "it" unless the context otherwise requires.

Section 3
National Treatment

The principle by which foreign investments shall be regulated is that of national treatment.  In particular, but without limitation:

(a) Business organizations defined as foreign investments under the present regulation shall be organized in the same manner as similar domestic business organizations;

(b) Foreign investments are subject to approval by the authorities only to the extent that such approval would be required for similar domestic business organizations;

(c) A foreign investor may transfer his property rights, including permits, to other legally qualified persons in the same manner and to the same extent as domestic persons;

(d) Foreign investments shall have the same rights to purchase non-agricultural residential and non-residential immovable property as domestic business organizations;

(e) Foreign investors with less than a majority stake in a foreign investment shall be protected as domestic minority shareholders in accordance with the applicable law;

(f) In no event shall a foreign investment be taxed less favorably than a similar domestic business organization;

(g) The rights of foreign investors shall not be affected by the fact that the authorities may be a party to an investment contract; and

(h) Foreign investors may establish subsidiary enterprises, branches and representative offices in the same manner and to the same extent as similar domestic business organizations.

Section 4
Filing Requirements

Foreign investments may be required to file a statement with the authorities identifying the principal parties and the nature of the investment solely for the purposes of statistics gathering and for identifying and conferring the benefits of foreign investment status.  No other filing requirements in excess of those required of similar domestic business organizations shall be required of foreign investments.

Section 5
Sectoral Scope of Foreign Investments

With the exception of the specific industries listed in section 6, foreign investors may wholly-own and wholly-control business organizations in all sectors of the economy of Kosovo.  Foreign investments in strategic or other specific sectors shall be subject to the same licensing requirements by the authorities as domestic business organizations.

Section 6
Restrictions on Foreign Investment

Foreign investors may have not more than a forty-nine per cent (49%) ownership or control interest in business organizations that are manufacturers or distributors of military products.

Section 7
Protection regarding Takings

7.1 Foreign investments shall not be subject to a taking by the authorities except as provided in the subsections below.  The authorities may effect a taking of a foreign investment only if such a taking:

(a) is for an overriding public purpose;

(b) is the least burdensome available means to satisfy that overriding public purpose;

(c) is made on a non-discriminatory basis, in accordance with due process of law; and

(d) is accompanied by prompt, adequate and effective compensation to the foreign investor.

7.2  A foreign investor who claims that his foreign investment has been subject to a taking shall be entitled to a prompt judicial or administrative hearing or a hearing before some other competent authority in accordance with due process of the law.  If it is determined at the hearing that the claim is valid, the authority hearing the case shall assess the value of the claim and order the timely payment of compensation.  Said compensation shall be equivalent to the fair market value of the foreign investment which is the subject of the taking immediately prior to the taking, but if information concerning the taking had become publicly known prior to the taking, then the value of the investment taken shall be calculated, if the foreign investor so elects, as its fair market value immediately before the event that made the taking publicly known.

7.3 The compensation shall be in the form of a freely useable currency, and shall include interest at the one-year LIBOR rate for the period between the date of the taking and the date of complete payment of the compensation.

7.4 As an alternative to the hearing provided above, the fair market value of the subject of the taking may be determined by other agreed means.

Section 8
Redress for Extraordinary Losses

Foreign investments that incur losses as a result of a war or other military conflict, revolution, emergency situation, civil conflicts, civil unrest or other similar circumstances shall have legal rights and protections not less favorable than those available to similar domestic business organizations.

Section 9
Guarantees for Unrestricted Use of Income

9.1  Foreign investors shall have the unrestricted right to use their investments and any incomes lawfully received therefrom for any lawful purposes.  All lawful proceeds of the operations of a foreign investment may be retained by the foreign investment, apart from tax and any other liabilities, or disposed of in any matter, including repatriation or conversion to another currency in any domestic or foreign market.

9.2 Foreign investments shall have the same rights as similar domestic business organizations to open bank accounts.  There shall be no legal restrictions on the currencies in which such accounts may be opened and operated.  Subject to tax and other liabilities, foreign investments may freely transfer lawfully-acquired funds, regardless of their source and without delay, into and out of Kosovo.

Section 10
Protection from Intellectual Property Abuses

The authorities shall enforce trademark, copyright and patent laws, and any applicable related international conventions.

Section 11
Access to Public Information

Foreign investors shall have direct and open access to all laws and decisions of courts or other adjudicative bodies and to any other public information which bears a rational nexus to their investment interests.

Section 12
Protection against the Retroactive Application of Adverse Laws

No law, regulation, instruction or other act having the force of law that imposes less favorable conditions on any foreign investment than those existing when the foreign investment was made may be applied retroactively.

Section 13
Prohibition against Favoritism and Discrimination

No official, agency, law or other legal authority shall discriminate against investors from a particular country or give special treatment to prospective foreign investors based upon their country of origin or nationality.

Section 14
Application of the Laws of Kosovo

Unless otherwise provided by the present regulation, foreign investments must abide by the same laws that apply to domestic business organizations.  In particular, and without limitation:

(a) Any licenses or other permits for conducting specific business activities that are required of domestic business organizations shall be similarly required of foreign investments;

(b) Foreign investments must maintain business books and records in accordance with the same accounting standards that apply to similar domestic business organizations;

(c) Foreign investments are subject to the same insurance requirements that apply to similar domestic business organizations; and

(d) Foreign investments shall be taxed in the same manner as similar domestic business organizations.

Section 15
Adherence to Ethical Business Principles

Foreign investors shall observe business practices consistent with the principles of the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Council of Europe, Strasbourg, 8 July 1990), the Convention on Combating Bribery of Foreign Government Officials in International Business Transactions (Organisation for Economic Cooperation and Development, Paris, 21 November 1997), the Criminal Law Convention on Corruption (Council of Europe, Strasbourg, 27 January 1999), and the Civil Law Convention on Corruption (Council of Europe, Strasbourg, 4 November 1999); and the violation thereof may be cause for disqualification from business operations in Kosovo.

Section 16
Labour and Employment

16.1 Employees of foreign investments in Kosovo, regardless of nationality, shall be subject to the laws applicable in Kosovo.

16.2 Labour relations between foreign investments and their employees shall be regulated by their labour agreements.  These labour agreements may not establish standards lower than the mandatory requirements of Kosovo.  The concept of worker self-management shall not apply to foreign investments.

16.3  Foreign investments shall have the right to employ legal entities and natural persons, including foreign nationals, in order to conduct their investment and business activities.

16.4  Foreign investments shall have the right to employ managers and staff of any nationality.

Section 17
Resolution of Investment Disputes

The courts of Kosovo shall have jurisdiction over the resolution of business disputes.  Notwithstanding the above, the parties to a foreign investment may specify any arbitration or other dispute resolution procedure upon which they may agree, and if such an agreement between the parties so provides, any judgment resulting from such an agreed procedure shall be final and shall be enforceable, without review or appeal in any manner, in any court of competent jurisdiction in Kosovo.

Section 18
Entry Into Force

The present regulation shall enter into force on 12 January 2001.

Bernard Kouchner
Special Representative of the Secretary-General