Albanian president Bujar Nishani said on January 23 he will send a draft law on the restitution of property seized during the communist era to the Constitutional Court, after the parliament refused to revise the bill.

More than 25 years after the fall of communism in Albania, the new law is intended to resolve the long outstanding issue of compensating Albanian citizens who lost their property as a result of nationalisation, expropriation or confiscation. However, it has become the subject of a political dispute between the parliament, which is dominated by the Socialist Party and its coalition partners, and Nishani, a former member of the opposition Democratic Party.

The law on the treatment of property and the completion of property compensation is aimed at completing the process of compensation within the next ten years, and was adopted by parliament on December 5. The government has pledged to allocate ALL50bn (€365mn) to finish the process.

However, on December 29 Nishani refused to ratify the law, as he claimed that victims would not get the compensation they deserved, and referred it back to the parliament.

"The law, in its entirety, violates the basic constitutional principles of legal certainty, equality before the law, it is against the concept of a market economy and contradicts the decisions of the Constitutional Court and the standards set by the European Court of Human Rights," the presidential office said in a statement on January 23.

The parliament refused to back down, rejecting a presidential decree instructing MPs to review the new law on January 21. The decree was overturned with 71 votes against, 28 in favour and one abstention, the parliament said in a statement.

The president’s decision not to ratify the law is not based on precise legal arguments, an MP from the governing coalition led by the Socialist Party, Ulsi Manja, was quoted as saying at the January 21 parliament session.

This move was expected, as two days earlier, the parliamentary commission on legal affairs had also refused to review the law.

Albania still has to compensate capital equivalent to around $4.5bn to former owners, according to a 2014 study by the Academic Journal of Interdisciplinary Studies.

Finding a solution to the problem of restitution is one of the main priorities for Albania on its European Union accession path. The denationalisation process (restitution of property sized during the communist era) is also seen as one of the main pillars of the new economic system in Albania.

Around 26,000 files have been submitted to Albania's Agency of the Property Restitution and Compensation for restitution of some 75,000 hectares of land.

The first law on property restitution entered into force in 1993, just three years after the fall of communism. However, it was abolished in 2004 due to serious problems with implementation, and was replaced with several other laws that failed to solve the problem, and only added to the confusion.

The proposed new compensation formula is composed of three components, taking into account the time of the expropriation, or what was expropriated, the added value of the property over the years and the need to estimate the value of the property when expropriated, justice minister Ylli Manjani was quoted as saying in a government statement on November 18 while addressing the parliament’s legal affairs commission.

However, the new law has been criticised by the Property with Justice association, which claims that the compensation formula proposed by the government is unacceptable as it refers to the value of land at the time of the illegal expropriation in 1944-1945 rather than the market value today, thus significantly reducing the value of compensation, according to a parliament statement from November 20.

Previous Albanian laws on property restitution did not provide any effective specific legal means for their application. The financial compensation, which was enacted in 2005, offered a partial solution and extremely limited compensation to individuals, a process which should have ended by 2015. A further problem that arose is the creation of overlap in property ownership.

The European Court of Human Rights has taken many court rulings against the decisions of Albanian courts concerning property restitution.

Other countries in the Western Balkans have also struggled to compensate victims of expropriation.

Slovenia was among the first to started the property restitution process, which was almost 95% completed in 2007. However, problems occurred with returning of some municipal properties.

Macedonia completed the process of denationalisation in 2012. Finance minister Zoran Stavreski said in a government statement at the time that a total of 30,744 requests for denationalisation of property had been settled which brought justice to about half a million citizens, who had been deprived of their property about 50 years ago. The 2000 denationalisation law allowed physical property restitution where possible or the issuance of bonds equal to the market value of the property. Restitution claims have been often complicated because property has changed hands many times.

Croatia started the process in 1990 but the implementation is going very slowly. Montenegro and Serbia have both adopted legislation on property restitution, but the processes still ongoing with many hurdles on the way. Bosnia still has no law on restitution of property.