The new Restitution Law (10/2001) was passed on February 14 2001. The scope of the law covers immovable assets, with the exception of agricultural and forestry land, that were abusively appropriated(1) by the Romanian state between March 6 1945 and December 22 1989. Previous restitution legislation exclusively regulated agricultural and forestry land (Law 18/1991), and residential buildings (Law 112/1995).

The new law entitles former owners or their successors to claim and obtain in-kind restitution of either land or buildings, irrespective of their destination at the time of their abusive appropriation by the state, as well as of any equipment and installations lost along with these immovable assets.

By derogation from the principle of restitution in kind, the law provides for specific cases in which restitution shall be made by equivalent means(2), some of which have or may have direct implications for the privatization process:

  • immovable assets appropriated by the state with valid title and registered in the name of a company which has undergone a lawful privatization process(3) as the property thereof. Former owners may apply for compensation to the Authority for Privatization and Administration of State Holdings (formerly the State Ownership Fund);

  • immovable assets that were abusively appropriated by the state and registered in the name of regies autonomes (a type of state owned company), or in that of national or commercial companies majority owned by the state or by a local administrative authority, where the managing bodies of such commercial entities do not approve the in-kind restitution or where performance of the restitution is impossible. The new law indicates no limitations or other constraints for approving or determining the impossibility of in-kind restitution. In addition, no judicial practice has been developed so far in this respect. In these cases the equivalent compensation must be borne by the respective commercial entities, by payment of the value of the claimed assets; and

  • immovable assets that were disposed of by way of sale, including assets sold during the privatization process, concluded with good-faith buyers.

The provisions of Law 10/2001 shall be applied in conjunction(4) with the provisions of Article 32(4) of Emergency Government Ordinance 88/1997 regarding the privatization of companies, as amended. Article 32(4) aims to confer a certain degree of protection to investors by expressly setting forth the right of privatized companies, and those undergoing privatization, to be compensated by the relevant public institution for damages incurred as a result of an order of restitution to former owners of immovable assets pursuant to final judgment.

In addition, Article 32(4) provides restitution by equivalent as the sole method of compensation of former owners in the case of real estate properties that have been turned into state properties based on laws, administrative acts or court seizure decisions, and that are now registered in the name of privatized companies or those undergoing privatization, if loss of these properties would materially hinder the companies' corporate activities to such an extent that they would no longer be able to perform these activities and would be subject to dissolution and liquidation.

For further information on this topic please contact Adriana Gaspar at Nestor Nestor Diculescu Kingston Petersen by telephone (+40 1 201 1200) or by fax (+40 1 201 1210) or by e-mail ([email protected]).


(1) In the sense of the new law, 'abusive appropriation' includes:

  • appropriation pursuant to the Law on Nationalization of Industrial, Banking, Insurance, Mining and Transportation Enterprises;

  • appropriation by way of seizure pursuant to conviction for political belief against the communist system;

  • appropriation by way of donation made based on normative acts that were annulled in court;

  • appropriation pursuant to administrative or judicial decisions relating to alleged abandonment or failure to pay taxes;

  • appropriation pursuant to regulations that were not published at the time of appropriation;

  • appropriation based on legislation on requisitions if not accompanied by fair compensation;

  • appropriation without valid title or without legal ground, effected through dispossession acts by the administrative authorities; and

  • appropriation based on a valid title as this term was defined by the Law on Public Property.

(2) The law indicates the following as nominally equivalent:

  • equity titles to be used exclusively in the privatization process;

  • shares of companies listed on the securities market; and

  • compensation in the form of other products made or services performed by the holder of the claimed asset.

(3) The scope of application of such provisions lacks clarity, considering that under the privatization legislation a company is considered to have undergone a privatization process irrespective of whether the state or the local administrative authority holdings have been sold in full or in part.

(4) The new law does not provide instruments for correlating its terms with the special provisions of the privatization legislation. In the specific case of the right of a privatized company (or of a company undergoing privatization) to be compensated, which becomes effective after a restitution judgment is passed, the fact that the restitution procedure was conducted out of court could be regarded as an obstacle to the exercise of this right. It can therefore be expected that companies may require that the former owner obtain a court order for restitution in order to meet the conditions for compensation.

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