ALBANIA: 2009 EXPROPRIATION REPORT

UNCLAS TIRANA 000348

SIPDIS
SENSITIVE

DEPT FOR EUR/SCE J.ISMAIL, EB/IFD/POI FOR H.GOETHERT

E.O. 12958:N/A
TAGS: CASC EINV KIDE OPIC PGOV AL
SUBJECT: ALBANIA: 2009 EXPROPRIATION REPORT

REF: STATE 49477


1. (U) All four (4) previous claims of United States persons against
the Government of Albania (GOA) are considered extinguished.


2. (SBU)
a. Claimant A
b. 1939
c. Claimant and her family left Albania in 1939 when the Italian
occupying government allegedly expropriated their home and adjoining
land, which covers an area of approximately 2,700 square meters in
central Tirana and has a current estimated value of USD 1,000,000.
Claimant, now a U.S. citizen, initiated proceedings before a
privatization commission in 1995 to recover the property, occupied
then and at present by the Albanian Republican Guard. The
commission ruled that Claimant was entitled to the property,
provided that she pay approximately USD 8,000 to cover the cost of
improvements made by previous occupants. Claimant paid in full, but
continues to be denied possession of the property. Albanian law
clearly prescribes that, pursuant to privatization commission
rulings, occupants are allowed three years to vacate the premises,
provided that they pay rent and that the titular owner is in accord
with the arrangement. Claimant sserts that she never agreed to
such an arrangemet and that no attempt on the part of the currentoccupant
to pay rent has been made.

In February2000, after her attorney'ss attempt to negotiate th
current occupant's departure failed, Claimant fled suit a gainst the
Ministry of Public Order and the Albanian Republican Guard to obtain
payment f" back rent from 1995. In 2002, the court ruled i favor
of Claimant. The defendants appealed thed ecision, however, and the
court of appeals subsqquently ruled in their favor. The case is
currently pending in Albania's Supreme Court. Concerned about the
slow pace of the Supreme Court docket, Claimant initiated a second
lawsuit in mid-2003 to obtain actual ownership and possession (as
opposed to mere rent collection). Claimant has been unable to
occupy or alter the property, which she wishes to use for the
purpose of housing a charitable organization. Her attorney
indicated that Claimant is adamant about recovering the property in
question. Overdue rental payments are of secondary concern to
Claimant. Claimant entered into negotiations for settlement of all
claims with the Ministry of Public Order in January 2005. The
chage in government in September 2005, however,resulted in the
termination of settlement neotitons. In 2006, a District Court,
acting nClaman's econd lawsuit, ruled that Claimatdd ntownthe property, an
d in March 200 liatappaed o the Court of
Appeals. InMy20 h pel Cort proceeded with the hearn
n eie oanl the previous decision ofFbrur 06aantthe defendant and to retur
h caefrr-uget by another
panel of jugesa he ititLvl Court. The Plaintiff file anapea oteSpreme Cou
rt on June 7, 2007 In Febury,drn
meeting with the Ambassaor, Prime iistrBrisha committed
himself to esolve this sue quickly. As a follow-up, the
laimant, with Embassy support, met with two of the rime Minister's
advisors and both sides agreed o the steps required for the GOA to
vacate her prperty and restitute it back to the Claimant. The
Council of Ministers must still approve the decison to vacate the
facility as a final step before he government can return it to
Claimant. Althouh a final, positive resolution appears at hand,
the past 13 years of back-and-forth litigation without result leaves
us cautious in predicting a final resolution of this dispute.
Embassy continues to seek an outcome satisfactory to Claimant.

On June 6, 2009, Claimant was given keys to her property in the city
of Tirana and an agreement signed by the Ministry of Interior
acknowledges her right to the property. Although much still needs
to be done by the Claimant to resolve the financial claims and
counterclaims, Post considers this case extinguished.


3. (SBU)
a. Claimant B
b. 1993
c. Claimant entered into a joint venture with the Government of
Albania (GOA) in 1991 to establish a plastics manufacturing company.
Under the terms of the contract, the GOA was to provide the land,
building facilities, staffing and installation of equipment, while
Claimant provided capital and factory equipment. After a two-year
delay in building construction, Claimant initiated arbitration
proceedings, which determined that the GOA was liable for timely
completion of construction and restitution for lost profit and
interest from Claimant's capital investment. Execution of the
decision was unenforceable, since the state arbitration board would
not provide Claimant with a printed copy of the decision. In 1995
and 1997, the GOA unsuccessfully appealed the arbitration findings,
and in 1998, the GOA sold the unfinished factory building to a third
party. Various court decisions between 1998 and 2001 upheld
Claimant's rights. However, the order remained unenforced.

In August 2001 the GOA re-registered the buildings claiming sole
ownership and entered into a 20-year lease contract with a third
party, an Italian shoe manufacturer. In October 2001, Claimant
filed a complaint with the European Court for Human Rights, alleging
discrimination and violation of the right to private property. In
April 2002, the GOA People's Advocate (equivalent to a government
ombudsman) decided in favor of Claimant and recommended that the
1998 decision be executed. In June 2003, the Tirana Court of
Appeals issued another ruling in favor of Claimant. The Supreme
Court and its Joint College of Judges heard the case in March 2004
and ruled in favor of the GOA, and remanded the case back to the
District Court. The case was then appealed to the Constitutional
Court, which heard arguments in February 2005 and eventually came
out with a four to four tie decision (meaning the Supreme Court's
decision was not reversed). On December 18, 2007, the European
Human Rights Court (EHRC) in Strasbourg ruled against the GOA,
upholding in part Claimant's request. The EHRC awarded Claimant
330,000 euros for pecuniary and non-pecuniary damages and 5,700
euros for legal costs and expenses. The decision is not yet final
as the GOA has appealed the decision to the EHRC' Grand Chamber. The
Italian company continues to operate on the premises and has made
physical improvements, including the addition of two new buildings.
The Italian company currently employs over 1,200 workers and has
become a major exporter of shoes. The Embassy is striving to foster
an equitable solution for Claimant, who remains committed to opening
a plastics factory in Albania.

Post has not heard from the Claimant in over one year. Since the
claim was filed before 1995, and since the case has been heard
before the EHRC, pursuant to reftel special instructions in
paragraph 19, Post considers this case extinguished.


4. (SBU)
a. Claimant C
b. 2005
c. Claimant is a builder/developer who had three projects/properties
destroyed by Albania's Construction Police in the fall of 2005. For
the last ten years, Albanian law has prohibited the construction of
private businesses on the grounds of public education facilities.
During the Socialist Party-led rule from 1997 to 2005, however, a
number of businessmen contracted directly with the GOA to build on
such properties, in exchange for rehabilitating the educational
facility or for providing rental income to the facility. The
government issued construction permits, and bars, hotels, gas
stations, offices, etc. were built by private companies.

In October 2005, the new Democratic Party-led government declared
that such buildings were in contravention of the law and would be
destroyed immediately, with no compensation to the owners. One of
the first properties destroyed was a popular bar owned by Claimant.
Despite only a few hours of legal notice, Claimant obtained a court
order enjoining the destruction of the bar until his rights could be
determined in court.

Claimant showed the certified Order to the Chief of Construction
Police at the premises of the bar minutes before the destruction was
to begin. The Chief said he had to carry out his orders to destroy
the building. Within 20 minutes, the building was destroyed.
Claimant filed a suit in Tirana District Court seeking roughly USD
1,000,000. In 2006, the court ruled in his favor and fined the
Construction Police USD 400,000. Claimant, not fully satisfied with
the verdict, has appealed to the Court of Appeals to achieve the
financial compensation he originally sought. The Court of Appeals
ruled in Claimant's favor and gave him an additional $140,000.
Claimant, still not fully satisfied with verdict, has appealed to
the Supreme Court. The Supreme Court's verdict is still pending.

Although the Minister of Transportation, Telecommunications and
Public Works assured Embassy representatives that: 1) the
Construction Police had to respect court orders and the legal
process had to be played out; and 2) the Construction Police should
give adequate formal notice of its plans, the police issued notice
on a Friday evening and destruction occurred the following Monday
morning before a court order could be obtained. Compounding this
situation, one of the buildings, an eight-story, 2,000,000 euro
investment, was not even located on public property, but was
attached to a two-story annex located on public property, a fact
Embassy had brought to the GOA's attention earlier. In the case of
the eight-story building, the Claimant has brought two different
charges, one against the Construction Police in order to block
further demolition of the building, and the second against the
National Council for the Regulation of the Territory (NCRT) to
confirm the construction permit which was previously revoked by the
NCRT after the demolition of the annex. Claimant has won both cases
in Tirana District Court. On October 18, 2007, the Court of Appeals
ruled in favor of Claimant on the case against the Construction
Police. The hearing process is on-going at the Court of Appeals on
the case against the NCRT. Claimant has not made any attempt to ask
for compensation because he hopes to be able to complete the
project.

Post has not heard from the Claimant for over one year. The
Claimant, a member of the opposition Socialist Party, will likely be
elected to Parliament in June. Since the case is still in the court
system, Post considers this case extinguished until additional
factors surface.


5. (SBU)
a. Claimant D
b. 2005
c. Claimant is a large, internationally-known engineering company.
Claimant entered into a contract with the GOA to build a rail line
connecting the port of Durres to Tirana and Tirana''s international
airport. The 28-mile rail link project was valued at USD
90,000,000. In September 2005 a new government came to power and,
after having criticized the project during the preceding electoral
campaign, subsequently terminated the project.

Claimant is pursuing an arbitration claim against the GOA under the
terms of the project agreement, which follows the New York
Convention on Arbitral Awards. The first arbitration hearing held
in June 2007 in Rome established that the GOA is liable to the
claimant for damages. Since then, different hearings were held to
determine the amount of damages owed to the Claimant and its Greek
partner. In April 2008, both sides presented their final arguments
on the case and the GOA's legal representatives asked for an
independent expert to evaluate the claimed lost profits of the
Claimant. The GOA's representatives have submitted a settlement
proposal to the Claimant and are waiting for a response. Claimant
and its partner are suing for a total of USD 20,000,000 in lost
profits, of which Claimant's share is approximately USD 13,000,000.


In summer 2008, Claimant was awarded a 14 million euro judgment by
the International Chamber of Commerce in Paris. Despite numerous
attempts to negotiate a settlement with the GOA, the GOA refused to
pay. In early 2009, Claimant filed suits in the U.S. and Europe to
claim Albanian assets to satisfy the judgment. In June 2009, a
Belgian court awarded Claimant fees due Albania for providing air
traffic control to aircraft transiting Albanian airspace. The exact
amount or terms of the award are not known at this time. Post
considers this claim extinguished.


6. (SBU) List of Claimants

Claimant A: Drita Ivanaj, U.S. Citizen. Claimant has not signed a
Privacy Act Waiver.
Claimant B: Vlash Marini, U.S. Citizen. Claimant has not signed a
Privacy Act Waiver.
Claimant C: Fidel Ylli, U.S. Citizen. Claimant has not signed a
Privacy Act Waiver.
Claimant D: General Electric Transportation Systems, U.S.
corporation. Claimant has not signed a Privacy Act Waiver.

WITHERS