Kosovo
Commercial Legal Framework (CLIR)
This information comes from the assessment conducted in country for the Kosovo report, which was published in September 2004.
Although the existing company law in Kosovo is sound for the time being, an updated version that reflects modern, market-oriented principles – including an improved foundation for corporate governance – should be given urgent priority. The draft law that was rejected by the Assembly in 2004 was backward looking. In addition, significant work needs to be done with respect to advising growing businesses about the advantages of limited liability – most companies in Kosovo, even large ones, are registered as personal business enterprises and are therefore missing out on certain advantages of incorporation. Also, there is a strong need in Kosovo to help incorporated enterprises implement the principles of sound corporate governance.
Contract law in Kosovo, in many respects, it is reasonably up-to-date. Most important, a new Law on Obligations recently passed the Kosovo Assembly and, while not without its deficiencies, is comprehensive, suitable for a modern commercial environment, and compatible with European Union directives. Despite this, discussions with several leading commercial lawyers indicated that, in practice, contracts are not widely used by the business community in Kosovo. Most transactions and commercial arrangements, typically involving other family members, are based on oral agreements, and there is very little appreciation for written contracts. Furthermore, most local lawyers have limited experience with regard to drafting and negotiating commercial contracts.
The current structure of the Kosovo court system is largely unchanged from former Yugoslav times. The legal framework under which it functions, of course, is different – the framework now consists of a complex combination of UNMIK regulations and former Yugoslav laws that have been preserved under the UNMIK administration. There is wide consensus that the court system badly needs reorganization.
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