In April 2015, Law No. 34/2015 establishing special rules for expropriation, building permits, taxation and land lease for the realisation of the Belgrade Waterfront project was adopted as lex specialis by urgent procedure. Belgrade Waterfront is a construction project headed by the Government of Serbia to develop approximately 170 hectares of the right bank of the Sava river in Belgrade.
- Construction and urbanism
- Type of Law
- Capturing a market, an industry or public resources
Description of the law
In April 2015, Law No. 34/2015 establishing special rules for expropriation, building permits, taxation and land lease for the realisation of the Belgrade Waterfront project was adopted as lex specialis by urgent procedure. Belgrade Waterfront is a construction project headed by the Government of Serbia to develop approximately 170 hectares of the right bank of the Sava river in Belgrade. The law provides the right to expropriate private land and objects to build residential apartments and offices for commercial purpose (Articles 2 to 14). This would not be allowed under the Law on Expropriation (Official Gazette of the Republic of Serbia numbers 53/1995, 23/2001–SUS, 20/2009 and 55/2013).
The new law has rules for procurement procedures and taxation (Article 16 on the possibility of waiving taxation for building in the area), and special rules for construction permits (Article 15) and land lease (Article 17). The Law on Expropriation does not allow expropriation of private property to construct commercial or residential buildings, or buildings for tourism and catering. Law No. 34/2015 grants this right. To overcome the limitations of the Law on Expropriation, the Serbian government presented Law No. 34/2015 as lex specialis. The accuracy of this legal denomination has been contested. The government defined Belgrade Waterfront as a project of “national interest” to justify the need for the law.
Law No. 34/2015 makes it possible to avoid public procurement procedures in this area. The investor is Eagle Hills. This company is based in the United Arab Emirates (UAE) and is behind Waterfront Capital Investment LLC, created for the development of the project. The competition for the project design took place in Abu Dhabi. Apparently, no Serbian architects were invited. The design was made without public participation. The Waterfront project contract between the Serbian government and the UAE illustrates the increasing closeness between the two countries: the UAE brings money to the country and Serbia provides expansion opportunities for the UAE (see here and here).
Full Law Name
Law establishing the public interest and special procedures of expropriation and issuance of the construction permit for realisation of the project Belgrade Waterfront (Official Gazette of the Republic of Serbia 34/2015)
Type of law
Act of Parliament
Scope of application
- Substantive: the establishment of special rules for expropriation, construction permits, procurement, taxation and land lease to implement the Belgrade Waterfront construction project
- Personal: authorities of the Republic of Serbia, authorities of Belgrade and the investor in the project
- Territorial: City of Belgrade
- Temporal: while the law is not temporal, it is related to the implementation of the Belgrade Waterfront project, which is envisaged to be completed in 30 years.
Time of adoption and entering to force
Adopted on 10 April 2015
Entered into force on 15 April 2015
Who drafted it
Government of Serbia
Who submitted it to parliament or other collective body, such local council
Government of Serbia
Relevant developments in the process of adoption that show signs it is tailor-made
The Law was defined as lex specialis by its proponents. In legal theory, this means a law that provides specific rules for issues regulated in the general law. In this case, Law 34/2015 contains special rules for one project (Belgrade Waterfront) on expropriation and public procurement, but it was drafted independently of the general Law on Expropriation. Defining the law as lex specialis allowed the expropriation of private property to construct commercial or residential buildings, or buildings for tourism and catering, which would not have been possible under the Law on Expropriation. The new law was approved by urgent procedure and entered into force in five days. The justification for the urgency was the need to keep within the project deadline, even though the deadline is not stated in the text (see here).
Two days after its approval, Law 34/2015 was amended to issue a special construction permit that allowed the investor to use the latest techniques. The amendments suggest dividing the work into phases and refer to a preparatory phase involving the demolition of existing facilities, relocation of infrastructure and preparation of the terrain. The amendments responded to challenges encountered by the investor and the belief that if the law did not change, they could not construct the most complex facilities (see here).
The government prioritised this law and portrayed it as an issue of “national significance”. This importance is reflected in the fact that the prime minister at the time, Aleksandar Vucic, “defended” the law in Parliament, when this is usually the task of ministers or state secretaries. In his presentation, the prime minister, with the help of several ministers, emphasised the potential economic benefits of the Belgrade Waterfront project. He justified it as lex specialis and stated that it was not the first time a special law had been created for a project.
The opposition submitted over 70 amendments, but none were adopted. Some members of parliament opposed the project on the grounds that it was not in the public interest nor in compliance with the Constitution. The government’s response was that these were critical opinions that went against the modernisation of Serbia. The discussion in Parliament lasted 15 hours. Finally, 176 members of parliament from the ruling coalition voted to adopt the law. Although it was presented as lex specialis, the adoption procedure was not considered urgent and was the same as for any other law adopted by Parliament (see here, here, here, here and here).
Who adopted it
The Parliament of Serbia, by a majority of 176 members of parliament (out of 250)
It was enforced
Initiatives to challenge it and their outcomes
The Anti-Corruption Agency did a corruption risk assessment on the lex specialis provisions on the Belgrade Waterfront project. It concluded that the law contains certain risks of corruption due to insufficiently precise wording and because it grants broad discretionary powers to public authorities. It recommended considering the disputed provisions of the law further (see here and here).
Fifteen lawyers from Belgrade urged the main state institutions to withdraw the draft law. The initiative was handed over to the Parliament of Serbia, parliamentary clubs, the Government of Serbia and the president of Serbia. According to the lawyers, the law is “harmful, unconstitutional and contrary to the basic postulates of international law”.
Transparency International Serbia submitted an initiative to Parliament arguing that it would be more appropriate to amend the Law on Expropriation with provisions that would serve in future similar situations, rather than creating new laws on a case-by-case basis. TI Serbia pointed out to members of parliament several controversial points in the law, such as choosing a partner in a joint investment without public competition, irrespective of the law’s constitutionality (see here and here).
Opposition member of parliament Balša Božović submitted a criminal charge against construction minister Zorana Mihajlović, and other unidentified persons, regarding the joint venture contract with the private investor, Eagle Hills, in charge of the Waterfront project. He argued that the contract was damaging to the interests of the Republic of Serbia (see here). The public prosecutor’s office rejected the criminal charge and stated that a public official, in this case the minister, cannot be liable for the implementation of government decisions. Furthermore, the charge was premature and it would take 30 years to properly assess whether the contract was damaging (see here).
Construction and urbanism; Public finance; Public contracting
Direct beneficiaries and related networks
A direct beneficiary is the UAB company Eagle Hills, established in May 2014 by Muhamed Alabbar for the Belgrade Waterfront project. Eagle Hills is the Serbian government’s contracting partner for this project. The company Almaabar, represented by Muhamed Alabbar, is the guarantor of the project. Almaabar is a subsidiary of Eagle Hills and was founded as a joint venture under the UAE government. The contract between the Serbian government and Eagle Hills is an example of the increasingly close commercial relationship between the UAE and Serbia, resulting in millions of dollars of investment in Serbia and expansion opportunities for the UAE in the Balkan country. In 2014, the UAE government lent Serbia US$1 billion (€732.5 million) and in 2013 Etihad Airways acquired 49 per cent of Air Serbia.
Eagle Hills owns 68 per cent of the multibillion-euro project and the government of Serbia owns 32 per cent. Under the contract between the Serbian government and Eagle Hills, the government grants the Abu Dhabi-based company a 99-year lease on the land under the condition that 50 per cent of the project must be completed in 20 years. In return, Eagle Hills provides €150 million of cash investment for the project and €150 million as a shareholder loan. The company also lends the Serbian government €130 million to buy land in the area (see here, here, here and here).
According to NIN, a political weekly, Serbia had not benefitted from the Waterfront project by April 2019. NIN stated that the project partner is Belgrade Waterfront Capital Investment LLC from Abu Dhabi, not Eagle Hills as presented to the public, which showed a net loss by the end of 2017. “The total deficit by the beginning of last year climbed to more than 20 million euros,” said NIN (see here and here).
Direct victims are private owners of the land, the budget of Serbia and the city of Belgrade. Private owners’ property was expropriated under the provisions of the law. They received compensation for less than the fair market price (see here).
The budget of Serbia and the city of Belgrade were victims as the public budget could have been higher if a competitive process had been held for the project instead of direct negotiations with one investor. The law enabled a contract to be signed with an investor without a public procurement procedure and facilities to be built for public use to “settle up” the costs for clearing the land for construction (see here). The estimated value of the works is 33 billion dinars (€283 million, around 10 per cent of the value of all public procurements in Serbia in 2014), and the estimated value of the regulation of construction land is 33.7 billion dinars (around €300 million).
The construction sector was affected by the lack of open competition at national level. This meant that local architecture studios and investment companies did not have the opportunity to grow and develop. However, the improvement of the area and concentration of apartments and offices in one place (approximately 2 million square metres) affect the real estate market in Belgrade by increasing the value of property in the area around Belgrade Waterfront and decreasing demand on other locations.
Impact on rule of law
One main impact of the lex specialis on the rule of law is that general legislation non longer applied to one specific project. The exception made in this case sets a precedent for subsequent exceptions, which undermines the value of the general legislation. For example, in 2019, a special law was adopted to regulate expropriation and procurements for another infrastructure project, Morava Koridor. Serbian authorities undervalue the law by putting it on the same level as large investments. This sets an example that diminishes respect for the law above money in Serbia.
The interest of the Belgrade Waterfront investor brought about a change in Belgrade’s general plan. In June 2014, Belgrade announced the beginning of a “public inspection” into general plan amendments, which was planned to last until 9 July. The amendments state that “if the Government of the Republic of Serbia identifies any of the aforementioned locations as a location of importance for the Republic of Serbia, such a location does not require a tender competition” (see here). On 1 May 2014, the government determined that the Belgrade Waterfront project is of importance for the Republic of Serbia. This conclusion was included in an annex to the general plan amendments (see here, here and here). Belgrade changed its general plan to enable the project even before adoption of the lex specialis. These changes were necessary to allow skyscrapers to be built on the land and to avoid previously envisaged international public competition for an urban planning project for that part of the city. The general plan amendments did not cause changes in other legal regulations.
Initiatives to challenge it and outcomes
According to available information, there was a constitutional court initiative to oppose the framework agreement between the Republic of Serbia and the UAE. The interstate agreement was the basis for contracting the waterfront project with the partner from the UAE, without competition (see here). However, the outcome of this initiative is not known. It is not known whether there was an initiative to oppose the lex specialis itself and what its outcome was.
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