What are the concessions?

What are the concessions?

The concept of concession 

The root of the word “concession” is found in Latin language. The word has multiple meanings and generally signifies permission, concession, authorization. The noun “concessio” in Latin signified permission, concession, privilege, permission of a state, city or municipal authority to perform a work which is not free from the control of that authority, and the forgiveness of a sentence, and the verb “concendo” is used in several meanings: to cede, to give over, to allow, to share, to confess, to give, to give up on something, to relinquish something, to leave it, to forgive.

The Latin word “concessio” served as the basis and root of this term in European languages. The term “concession” is used in English language, “Konzession” in German language, “concessione” in Italian language, “concessio” in French, as a rule in the sense of concession, approval, license, consent, acknowledgement, privilege, affability, permission, ceded things, special privileges, of a given right.

A concession is a special legal instrument by which a public authority permits a particular subject (individual or legal entity), domestic citizen or foreigner to exploit certain goods, perform certain tasks or perform some kind of activity.

Therefore, the concession is a legal work that is performed between the concession grantor – the Concendant and the concession recipient – the Concessionaire, with the aim of achieving a greater degree of efficiency in exploitation of the subject of the Concession Contract. The aforementioned legal work is twofold and refers to the exploitation of natural resources, i.e., goods in general use, or public service activities, and is realized by signing a Concession Contract which is a formal and bilaterally binding agreement.

Historical development

The historical development of the concession can be traced back to the times of Roman law when the concession, as a form of investment, was created. In Roman law, we find the roots, the beginnings of concessions, when the public authority (state) leases state revenues or the right to perform public works. The term concession was used in the sense of approval, permission, license or guarantee, and in legal terminology following terms can also be found: “concessio beneficii” – in the sense of giving, recognizing some kind of privilege, granting or giving over a privilege; “concessio gratuita” – in the sense of free – of – charge permission, granting of some kind of right or privilege without charge, voluntary permission and “concessio servitutis” – in the sense of giving an easement, allowing someone to establish an easement for their own benefit, as well as cede an easement.

In the Middle Ages, concessions, as a legal institute, did not disappear, but could, under another name, be traced through the system of regalia and regal rights of rulers. In the Middle Ages, the power-holders leased their rights, which they enjoyed according to their position, and the concessionaires paid them a certain sum of money. These concessions were of a feudal character, and the rights of the power-holders concerned, e.g. the right to collect various dues – tolls, the right to extract ores, etc. Concessions were also granted to foreigners, traders who were free to trade in the designated space, the territory of the concession grantor, without the obligation to pay any taxes or fees.

Concessions flourished in the 19th century when concessions were used most for economic purposes. Concessions to the Suez Canal from 1854 and the Panama Canal from 1878 are known from that time. It is interesting to mention the concession for the construction of the railway line Constantinople – Aleksinac – Banja Luka – Dobrljin from 1869, which was given by the Turkish government to the Hirsch bank. The concession was granted for the construction of the railway line and its exploitation within 50 years of its construction. In accordance with a special convention signed by the government with the companies that built the railway in 1872, these companies were also allowed to exploit state forests that were within 10 kilometres on each side of the railway line.

When the situation on the historical, political and economic plan changed, the content of the Concession Contract began to change during the 20th century into a Concession Institute, which found its place in the modern world economy again. At the beginning of the 20th century, concessions related to the exploitation of natural resources were more numerous, and changes made in the area of concessions led to the emergence of new concession relations and types of concession contracts which are regulating the concession relation. In the 20th century, the meaning of the word concession was limited to the classic concession of some kind of right by public authority, i.e. state, individual or legal entity.

In the 19th-century theories, concession was seen as an administrative act by which the state unilaterally and authoritatively acts toward the other side, while during the 20th century the role of the state was gradually replaced by the relation of “legal equality” between the state (Concendant) and the individual or legal entity (Concessionaire).

Historically, concessions were a form of licenses with which a ruler allowed certain persons to use his goods.

Positive law of Republic of Srpska

In the positive law of Republic of Srpska concession is defined as the right to perform economic activities by using public goods, natural resources and other goods of general interest, as well as the right to perform activities of general interest, in accordance with the Concession Law. The concession, as the right to perform economic activities, is ceded to the concessionaire for a certain time, under the conditions prescribed by the said law, with the obligatory payment of the concession fee.

The aim of the concession grant is to contribute to the economic development of the Republic of Srpska by creating a stimulating legal framework for attracting foreign and domestic investments, while enhancing the transparency of the concession grant process and increasing the efficiency and long-term sustainability of concession projects, and responsible management of natural resources and public goods.

In Republic of Srpska concessions are regulated by the Concession Law.

The Concession Law was adopted at the 28th session of the National Assembly of Republic of Srpska and published in the “Official Gazette of Republic of Srpska”, No. 59/13, on July 15th 2013 and became effective on July 23rd 2013.

The Law on Changes and Amendments to the Concession Law was adopted at the 23rd Session of the National Assembly of Republic of Srpska and published in the “Official Gazette of Republic of Srpska”, No. 16/18, on February 23rd 2018 and became effective on March 3rd 2018.

The Law on Changes and Amendments to the Law on Concessions was adopted at the 10th Session of the National Assembly of Republic of Srpska and published in the “Official Gazette of Republic of Srpska”, No. 70/20, on July 16th 2020. and became effective on July 24th 2020.

The Law on Changes and Amendments to the Law on Concessions was adopted at the 19th Session of the National Assembly of Republic of Srpska and published in the “Official Gazette of Republic of Srpska”, No. 111/21, on December 09th 2021. and became effective on December 17th 2021.

The Concession Law, as the basic law relating to the field of concession, regulates the subject, jurisdiction, procedure and conditions under which concessions may be granted in Republic of Srpska, the elements of the Concession Contract, as well as the termination of the Concession Contract, the rights and obligations of the Concessionaire and the Concendant, the jurisdiction of the Concession Commission and other matters of importance for the realization of concession projects.

The aim of the law is to create a public, non-discriminatory and clear legal framework for determining the conditions under which the concessions may be granted to domestic and foreign economic-legal subjects in order to attract domestic and foreign investors and create an environment for stronger economic development, and responsible management of natural resources and public goods in Republic of Srpska.

The Concession Law defines the meaning of the basic terms in the Glossary. Thus, the Concession Law regulates that the “Concendant” is the Government of Republic of Srpska on behalf of Republic of Srpska, or the assembly of a unit of local self-government on behalf of a unit of local self-government. “Concessionaire” is an economic society established in accordance with the regulations of Republic of Srpska, with which the Concendant has signed a Concession Contract. “Competent authority” is the ministry competent for a particular area to which the subject of concession falls, and the grant of that concession is the responsibility of the Government of Republic of Srpska, i.e., the mayor or mayor of the municipality, for the subject of concession within the jurisdiction of local self-government units. A “Bidder” is any, domestic or foreign, legal entity or individual, a consortium of two or more contractually connected legal entities, who submitted a bid in the concession grant procedure. “Concession Grant Justification Study” is a document on the technical, financial, economic, ecological and legal analysis of the concession grant justification. “Concession Fee” is the fee paid by the Concessionaire in accordance with the agreement that governs the Concession. A “Concession Contract” is a contract signed between the Concendant on one side and the Concessionaire as the selected most favorable bidder on the other, and it contains provisions on the mutual rights and obligations of the contracting parties.


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