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Foreign investment

What is the prevailing attitude towards foreign investment?

After the fall of the communist regime in 1989, Romania developed its policies to encourage foreign direct investment (FDI), to create and strengthen a viable market-oriented economy, as well as to reduce the economic discrepancies between its regions. Romania worked towards creating an appropriate legal framework for the development of projects by foreign investors and adopting a national strategy in this field.

Its strategic position as a member of the European Union and its location close to the Commonwealth of Independent States, its rich natural resources (agricultural land, oil and gas) and its population (the seventh largest in the European Union) are some of the key elements that attract FDI. In 2017, Romania registered a gross domestic product growth of 7 per cent. By mid-2018, the growth was above 4 per cent.

Although sometimes confronted with red tape and difficulties in communicating with the authorities, foreign investors consider Romania a reliable partner because of its improving business climate. According to the World Bank, in 2018, Romania was ranked 45th out of 190 nations in the Doing Business rankings for ‘greenfield investments’, a little lower than its ranking of 37 in 2017.

Once documentation is completed by a newly created company (registration forms, by-laws, statements, etc), it takes an average of five to eight days to complete its registration. Foreign investors benefit from a cost-competitive business environment as follows:

  • a flat corporate tax rate of 16 per cent;
  • tax exemption in the case of reinvested profits;
  • a 19 per cent value-added tax (VAT) standard rate; and
  • a reduced 9 per cent VAT rate for some specific products and services (ie, foodstuffs, medicines, hotel accommodation, fertilisers, pesticides and other services in the agricultural sector).

While most EU countries apply a reduced VAT rate only for main foodstuffs (ie, milk and bread), in Romania, the 9 per cent VAT rate is applied overall (even including non-alcoholic beverages). A significant part of the Romanian labour force is located abroad, in particular in other EU countries. Romania is starting to import more EU labour in sectors such as construction and agriculture. In 2018, the minimum gross wage was approximately €400 per month.

What are the main sectors for foreign investment in the state?

According to the Romanian Central Bank, at the end of 2016, the main sectors for FDI in Romania were:

  • manufacturing industry (32 per cent);
  • construction and real estate (14 per cent);
  • trade (12.8 per cent);
  • financial services and insurance (12.6 per cent); and
  • professional, scientific, technical and administrative activities, and support services (5.6 per cent).

Is there a net inflow or outflow of foreign direct investment?

In Romania, there is a net inflow of foreign direct investment. Despite being affected by the 2008 global financial crisis, which lowered FDI in 2011 to €1,815 million, FDI rose to €4,517 million in 2016.

Investment agreement legislation

Describe domestic legislation governing investment agreements with the state or state-owned entities.

State legislation does not provide specific requirements - over the substance or the form - with respect to investment agreements concluded with the state or state-owned entities. Such agreements, whether concluded with national or foreign investors, must generally comply with domestic laws on the valid conclusion of contracts. The applicable provisions may vary, depending on, for example, whether the state institutions are engaged in agreements as private law partners or make use of their public authority; or, regarding the applicable procedures and formalities for the selection of the contracting parties, such as public procurement agreements and public-private partnerships.

International legal obligations

Investment treaties

Identify and give brief details of the bilateral or multilateral investment treaties to which the state is a party, also indicating whether they are in force.

Romania has entered into 92 bilateral investment treaties (BITs), and as of 2017, 75 were in force. The European Union has also entered into 75 investment treaties with investment provisions (that are not BITs) with other states, of which 55 are in force. In June 2015, the EU began infringement proceedings against five member-states, including Romania, requesting them to terminate intra-EU bilateral investment treaties between them (intra-EU BITs) owing to the existence of provisions that were considered incompatible with EU laws. As a consequence, Law No. 18/2017 entered into force on 24 March 2017, whereby the termination either by mutual agreement or by unilateral termination of 22 BITs with EU member states was approved. The Ministry of Foreign Affairs publishes the date when the BITs are to terminate in the Official Gazette.

All EU investors benefit from the same protection afforded by EU rules (eg, non-discrimination on the grounds of nationality).

Romania is a signatory to the Energy Charter Treaty (ECT), which aims to strengthen cooperation on energy issues by creating a unitary set of rules to be observed by the participating countries to enhance, among others, the management of the risks generated by the energy-related investments. The ECT was ratified by Law No. 14/1997 of the Romanian Parliament and has been in force in Romania since 16 April 1998.

Romania also became a member of the Multilateral Investment Guarantee Agency by signing the Convention Establishing the Multilateral Investment Guarantee Agency in Seoul on 11 October 1985, which is aimed at promoting and insuring FDI in developing countries to facilitate economic growth.

If applicable, indicate whether the bilateral or multilateral investment treaties to which the state is a party extend to overseas territories.

Romania has no overseas territories.

Has the state amended or entered into additional protocols affecting bilateral or multilateral investment treaties to which it is a party?

In the past three years, Romania has neither amended nor entered into additional protocols affecting bilateral or multilateral investment treaties to which it is a party.

Has the state unilaterally terminated any bilateral or multilateral investment treaties to which it is a party?

Romania enacted Law No. 18/2017, whereby the termination either by mutual agreement or by unilateral termination of 22 BITs with EU member states was approved. As to the unilateral termination by notification, BITs provide that for the investment made prior to the date when such notification becomes effective, the provisions of the BITs are to remain applicable for a certain period of time.

Has the state entered into multiple bilateral or multilateral investment treaties with overlapping membership?

Romania is party both to bilateral and multilateral investment treaties and, as such, overlapping membership may occur. For instance, Romania is party to the Energy Charter Treaty, to which member-state parties are also parties to BITs. Romania is also a member of comprehensive Economic and Trade Agreement entered into between the European Union and Canada. Where overlapping membership exists and the successive treaties do not relate to the same subject-matter, those treaties shall continue to operate in parallel. Otherwise, when two successive treaties between two parties cover the same subject-matter, this calls for an interpretation of the will of member states. Romania is not party to the Vienna Convention on the Law of Treaties 1969, which deals with such a situation under article 30.

ICSID Convention

Is the state party to the ICSID Convention?

Romania signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) 1965 on 6 September 1974 and deposited the instruments of ratification on 12 September 1975. On ratification, Romania made a declaration in relation to the provisions of article 70 of the ICSID Convention. The ICSID Convention entered into force with respect to Romania on 12 October 1975 and it has been invoked in several arbitral disputes.

Mauritius Convention

Is the state a party to the UN Convention on Transparency in Treaty-based Investor-State Arbitration (Mauritius Convention)?

Romania is not a party to the Mauritius Convention.

Investment treaty programme

Does the state have an investment treaty programme?

The first BIT signed by Romania was with the United Kingdom in 1976 (this treaty was replaced with a new BIT, signed by Romania and the United Kingdom in 1995). Before 1989, other BITs were signed by Romania, mostly with African or Asian countries, such as Sudan (1978), Cameroon (1980), Senegal (1980), Sri Lanka (1981) and Malaysia (1982). After the fall of the communist regime and the transition to the democratic system and market economy, the number of BITs signed by the Romanian government increased significantly. Among the first countries that signed BITs with Romania after 1989 were Italy (1990), Uruguay (1990) and Greece (1991).

Most BITs were signed in the 1990s, such as those signed with the United States (1992), China (1994) and India (1997), and illustrate the government’s objective to enhance its investment policies. Romania also signed BITs after 2000, with notable examples being new investment treaties with Turkey (2008) and Canada (2009). The main objectives pursued through Romania’s investment treaty programme refer to the promotion and protection of investments in view of stimulating the business initiative, by creating a core of rules applicable to the signatory parties of the BIT, such as:

  • fair, equitable and non-discriminatory treatment of the investors;
  • effective means of asserting claims and enforcing rights related to investments;
  • transparency of the laws and regulations applicable to investments; and
  • full repatriation of capital and profits.

At present, Romania’s efforts are directed towards the continuous developing of a business-friendly environment, reflected in the national legislation and by the continuous improvement of its judiciary or of other alternative disputes proceedings.

Regulation of inbound foreign investment

Government investment promotion programmes

Does the state have a foreign investment promotion programme?

In May 2016, the Ministry of Trade, Business Environment and Entrepreneurship launched website, a ‘one-stop shop’ for foreign investors, assisting and advising international companies for project implementation in the country and is divided into eight sections:

  • Country presentation;
  • Investor’s guide;
  • Why invest?
  • Business in Romania;
  • Government support;
  • About us;
  • Life in Romania; and
  • News and events.

Further, the Department for Foreign Investments of the Ministry of Trade, Business Environment and Entrepreneurship published a guide for foreign investors (see:

Applicable domestic laws

Identify the domestic laws that apply to foreign investors and foreign investment, including any requirements of admission or registration of investments.

Foreign investment in Romania is generally treated similarly to any type of national investment. Foreign investors can make investments in any domain and under any legal form provided by the law and they benefit from equal treatment like local investors, irrespective of whether they are resident or non-resident in Romania.

The state’s concern to protect and promote FDI is reflected in national laws that provide for a general framework regarding guarantees and facilities applicable to foreign investors. In this respect, Government Emergency Ordinance No. 92/1997 (which is still in force, except for the provisions relating to fiscal and customs facilities, which fall under EU competency) sets forth foreign investors’ main rights, which include:

  • the possibility to freely manage the company with full ownership rights;
  • full repatriation of capital and profits;
  • full protection against expropriation and nationalisation;
  • access to state aid and EU funds; and
  • the possibility of employing foreign citizens.

Government Emergency Ordinance No. 92/1997 provides that a company, a resident or non-resident legal entity, can acquire any rights regarding real estate, to the extent necessary for the development of its activity, with the observance of the laws in this field. Law No. 312/2005, which entered into force on 1 January 2007, partially put aside the previous interdictions related to the real-estate ownership by foreign nationals and set forth that EU citizens and legal entities can acquire ownership rights over real estate under the same conditions as for nationals.

Prior to 2007, before Romania’s accession to the European Union, foreign citizens and legal entities, either based in an EU member state or elsewhere, were not entitled to own any real estate in Romania. This restriction continues to apply to other countries that are not EU or European Economic Area (EEA) members. In such cases, owning real estate in Romania is difficult given that the law demands a specific international treaty and condition of reciprocity.

Further, as of 1 January 2012, citizens not residing in Romania and non-resident legal entities belonging to an EU or EEA member state, can acquire ownership rights over real estate serving as secondary residence and secondary company headquarters. In addition, as of 1 January 2014, citizens and legal entities belonging to an EU or EEA member state can acquire ownership rights over agricultural lands and forests.

There are no special restrictions for foreign investors when setting up a new business in Romania. The procedure of creating a new company requires the fulfilment of some legal formalities, such as (without limitation):

  • choosing the company’s object of activity and of its legal form (eg, SA (joint stock company), SRL (limited liability company) or SCA (company limited by shares));
  • submitting evidence regarding the verification of the company’s name availability and reservation of the selected name (online procedure);
  • establishing the headquarters (compulsory supporting legal documents);
  • preparing the company’s by-laws and statutes;
  • submitting evidence regarding the required bank deposit (social capital);
  • registration of the company with the Romanian Trade Registry;
  • registration for VAT purposes;
  • establishing the signature specimen;
  • registration of the employment contracts with the Territorial Labour Inspectorate; and
  • obtaining relevant authorisation for operational purposes, depending on the type of activity.

In addition, for most of the activities, additional authorisation is needed for any investor, including foreign ones (eg, for running registered and secondary businesses, for employment protection or for environmental legal obligations).

For some activities, which usually relate to highly regulated markets, specific authorisations, formalities and conditions are required (eg, banking, telecommunications, supply of water, energy or gas-related services, gambling, insurance or customs-related services).

When conducting their business, all investors, including foreign ones, must comply with national and EU norms that regulate competition issues, such as anticompetitive practices, economic concentrations and unfair competition.

The Romanian Competition Council monitors the observance of the competition rules and conducts numerous investigations to identify and sanction the breach of these rules.

Relevant regulatory agency

Identify the state agency that regulates and promotes inbound foreign investment.

Since January 2017, the Ministry on Trade, Business Environment and Entrepreneurship has been in charge of promoting foreign investment. One of its main missions is to increase inward FDI by promoting Romania’s business opportunities worldwide and assisting foreign investors to accomplish their projects in Romania.

Relevant dispute agency

Identify the state agency that must be served with process in a dispute with a foreign investor.

In the case of disputes before a regular jurisdiction (the state courts), the state is represented by the Ministry of Public Finance, which must be served with process, except for specific situations when the law grants to other authority the power of representation on behalf of the state.

However, regarding foreign investments, the law provides that the state or its public institutions are represented before ICSID tribunals by the institution or the public authority that managed the issues in the dispute regarding the mutual protection of the investments. Where those issues were managed by more institutions or public authorities, the competence of representation before an ICSID tribunal is established by the government.

To ensure the representation of Romania before an ICSID tribunal, the competent public institution or authority selects lawyers, either from Romania or abroad, specialised in international disputes, with the observance of the public procurement legislation.

In other arbitrations that are not based on BITs but on privatisation agreements of state-owned companies, the institution usually served with process is the Authority for the Administration of State Assets (AAAS). The AAAS exercises all rights and obligations deriving from the state’s capacity as shareholder in relation to the management, restructuring, privatisation or liquidation of the state-owned companies.

Investment treaty practice

Model BIT

Does the state have a model BIT?

Romania does not have a model BIT. Nonetheless, analysis of the BITs signed by Romania after 1990 illustrates that many of the clauses inserted therein are similar to most BITs, reflecting the country’s interest in ensuring a uniform protection of the foreign investors in Romania, as well as offering comparable business conditions for national investors in foreign countries.

Preparatory materials

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

Romania has a central repository of treaty preparatory materials, as well as treaties and agreements to which the country is a signatory party, at the Diplomatic Archives, in Bucharest. One of its sections - the Fund of the Historic Archives - also holds records of documents related to the state’s foreign policy, some of which date back to the beginning of the 19th century.

The documents, which consist of preparatory files, correspondence between governments and diplomatic reports, can be consulted on-site, upon request. Some of the documents are available in electronic form, although most can only be accessed in physical form.

However, some of the available data is classified and, pursuant to Law No. 16/1996 on the National Archives, can only be consulted by the public upon the expiry of a certain deadline (usually, a 50-year term).

Interested persons can obtain copies from non-classified documents, free of charge, after prior approval of the archives of the Ministry of Foreign Affairs. Personnel can help in searching and identifying relevant documents.

In addition, some materials concerning the state’s foreign relations with other countries - including documents dating back to the 17th century - are available for on-site consultation at the National Library of Romania (see:

The BITs applicable to Romania are available on the United Nations Conference on Trade and Development website (see: Moreover, the bilateral and multilateral treaties to which Romania is party, which apply to many domains, are available on the Ministry of Foreign Affairs’ site (see:

Scope and coverage

What is the typical scope of coverage of investment treaties?

Investments falling under the scope of the BITs concluded by Romania cover a wide range of assets, including movable and immovable property and other property rights such as mortgages, shares, bonds and other kinds of legal interests in companies, intellectual property rights, receivables, business concessions conferred by law or under contract, claims to any activity having an economic value. The protection is offered to any foreign investor, understood, as a general rule, as any citizen of a contracting party or as any legal entity incorporated under the laws of the state where its headquarters are located.

From a general perspective, the main scope of the BITs concluded by Romania with other states is to promote and to protect the investments and to offer sufficient guarantees to investors for a safe business climate on the contracting parties’ jurisdictions.


What substantive protections are typically available?

BITs concluded by Romania offer a bundle of protections to foreign investors, such as:

  • protection against expropriation or equivalent measures;
  • the right to a fair and equitable treatment;
  • the right to repatriate incomes and other funds;
  • a full protection clause; and
  • a guaranteed treatment, in line with that granted by the host state to its most-favoured nation or to its own nationals.

Dispute resolution

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

In addition to submitting a dispute to ICSID, a number of BITs concluded by Romania provide for other options, such as referring the dispute to the domestic courts of the contracting party’s state on whose territory the investment was made or to an ad hoc arbitral tribunal established under United Nations Commission on International Trade Law rules of arbitration, as in the case of:

  • the Treaty between the Government of Romania and the Government of the United States of America on Mutual Encouragement and the Safeguarding of Investments, of 28 May 1992;
  • the Agreement between the Government of Romania and the Government of the Republic of Peru for the Promotion and Safeguarding of Investments, signed in Lima on 16 May 1994; or
  • the Agreement between the Government of Romania and the Government of the Republic of Kazakhstan on the Promotion and the Safeguarding of Investments, of 2 March 2010.

However, no information is available regarding the use of these dispute resolution options in the case of litigation arisen from BITs signed by Romania.

As far as the settlement of disputes by ICSID is concerned, Romania has been involved in several disputes settled under the ICSID Convention. ICSID is, therefore, the most commonly used dispute resolution option for investment disputes.


Does the state have an established practice of requiring confidentiality in investment arbitration?

No information is available regarding confidentiality in investment arbitration. In spite of this, the awards concerning Romania are generally publicly available, whereas other documents, such as expert opinions, memorials and hearings transcripts, are not subject to disclosure.


Does the state have an investment insurance agency or programme?

At present, there is no specific investment insurance programme for foreign investments, therefore, there is no special insurance for investors. Nevertheless, the investor may conclude private insurances in connection with their investments.

For deploying certain activities, Romanian law may impose mandatory insurance coverage. For example, the providers of healthcare services, medicine or medical devices, when concluding contracts with the public health authority, are obliged to hold insurance policies against malpractice.

Investment arbitration history

Number of arbitrations

How many known investment treaty arbitrations has the state been involved in?

To date, Romania has been involved in 14 investment treaty arbitrations, of which nine were concluded and five are still pending (see:

Notable cases involving Romania were disputes initiated by a major private oil company, a company operating commercial venues in airports and individual investors owning a group of companies in a disfavoured region. The most recent arbitration action was initiated in June 2018 by an international electrical, automation and mechanical installations company regarding a renewable energy generation enterprise. No information is publicly available regarding investment treaty arbitrations organised outside the ICSID Convention.

Industries and sectors

Do the investment arbitrations involving the state usually concern specific industries or investment sectors?

Investment arbitration involving Romania has concerned various specific industries, such as duty-free shops, newspaper distribution, the investment sector or the oil sector. Numerous disputes were initiated following investments made during the privatisation period after 1990.

Selecting arbitrator

Does the state have a history of using default mechanisms for appointment of arbitral tribunals or does the state have a history of appointing specific arbitrators?

In cases involving Romania, the arbitral tribunal is composed of three arbitrators, one appointed by each party and the chairman appointed by both parties and, failing that, using the default mechanism under the ICSID Convention. As a rule, the selection of arbitrators is based on the general principles of selection, which primarily concern independence and impartiality, good knowledge of mechanisms and legislative provisions, as well as experience gained in similar international disputes. Both Romanian and foreign professionals have been selected.


Does the state typically defend itself against investment claims? Give details of the state’s internal counsel for investment disputes.

Broadly speaking, the defence against investment claims is administered by means of cooperation between the in-house lawyers of the Romanian government or government department, as the case may be, and the specialised law firms, either domestic or foreign, whose services are contracted to serve this purpose.

Enforcement of awards against the state

Enforcement agreements

Is the state party to any international agreements regarding enforcement, such as the 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

Romania adheres to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) by Decree No. 181/1961 of the State Council published in the Official Gazette No. 19 of 1961. Romania has made declarations and reserves under article I (3) of the Convention.

Award compliance

Does the state usually comply voluntarily with investment treaty awards rendered against it?

There has only been one unfavourable award rendered against Romania, the effects of which, pursuant to the provisions of the ICSID Convention, have been stayed by a judgment of the Bucharest Court of Appeal until the ICSID annulment procedure is over. If there are other cases where unfavourable awards were rendered against Romania, they were most likely voluntarily implemented.

Unfavourable awards

If not, does the state appeal to its domestic courts or the courts where the arbitration was seated against unfavourable awards?

The first unfavourable award rendered against Romania was delivered in an ICSID case (see question 29). Romania, at the time of writing, has filed an application for annulment pursuant to the ICISID Convention.

Provisions hindering enforcement

Give details of any domestic legal provisions that may hinder the enforcement of awards against the state within its territory.

First, foreign awards should be divided between awards rendered and those not rendered under the ICSID Convention. For the first category, the provisions of the ICSID Convention dealing with the enforcement of awards are incidental, while for the latter their enforcement is governed by the New York Convention or the Romanian Civil Procedure Code.

Second, to have the awards enforced, leave by the court has to be granted based on an application by the concerned party, pursuant to article 1126 of the Romanian Civil Procedure Code.

Third, the principle enshrined in article 1125 of the Civil Procedure Code is that any foreign arbitral award may be recognised and enforced in Romania insofar as the dispute may be subject to arbitration in Romania and as long as the award has no provision inconsistent with Romanian public policy. Failure to comply with the two requirements implies a refusal to enforce the award.

Last, as far as other impediments to enforcement are concerned, the Civil Procedure Code of Romania provides under article 1129 the following cases when an enforcement of a foreign arbitral award may be hindered:

  • the parties were under an incapacity to conclude the arbitration agreement, according to their own law, established pursuant to the law of the state where the award was rendered;
  • the arbitration agreement was void pursuant to the law elected by the parties or, failing such election, pursuant to the law of the state where the award was rendered;
  • the party against which the award is enforced was not duly informed on the appointment of the arbitrators or on the arbitration proceedings or it was unable to defend in arbitral dispute;
  • the appointment of the arbitral tribunal or the arbitration proceedings violated the convention of the parties or, failing such convention, the law of the place of arbitration;
  • the award deals with a dispute not provided by the arbitration convention or outside the limit set out by such convention or comprises provisions exceeding the terms of the arbitral convention. However, as long as the provisions from the award dealing with the aspects subject to arbitration may be separated from those regarding aspects not subject to arbitration, the former are to be recognised and enforced; and
  • the award is not yet binding on the parties or it was set aside or stayed by a competent authority from the state where or pursuant to which it was rendered.

Update and trends

Current developments

Are there any emerging trends or hot topics in your jurisdiction?

Law No. 98/2016 on public procurements authorised the Romanian Executive to adopt models of general and special terms and conditions to be used for the works (and design) contracts on investments financed from public resources. At the beginning of 2018, according to Government Resolution No. 1/2018, such models were enacted by the Romanian Executive. As far as the settlement of disputes deriving from, or in connection with a contract is concerned, the models propose a multi-tier arbitration clause. In case of claims made by a contractor seeking additional time for work or additional costs, the first tier consists of a mandatory pre-arbitral procedure before a person acting as a supervisor who will render the decision on the claims submitted by the contractor. Against such a decision of the supervisor, any party may present its written dissatisfaction and may commence the arbitration. The institution selected for arbitration by the Romanian Executive is the International Court of Arbitration, attached to the Romanian branch of the International Chamber of Commerce (ICC). The procedural arbitration rules proposed by the Romanian Executive are those of the Romanian ICC’s branch of the International Court of Arbitration.