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Significant Changes to the Serbian Law on Tax Procedure and Tax Administration Significant Changes to the Serbian Law on Tax Procedure and Tax Administration | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/06/changes-to-serbian-Law-on-tax-procedure-and-tax-administration.aspxSignificant Changes to the Serbian Law on Tax Procedure and Tax Administration Significant Changes to the Serbian Law on Tax Procedure and Tax Administration | Views | Karanović & Nikolić string;#26/06/2018<p style="text-align:justify;">​The amendments to the Law on Tax Procedure and Tax Administration ("<strong>LTPTA</strong>") mainly attempt to reduce and suppress tax evasion by broadening the responsibilities for tax payments, extending the competences of tax inspectors, restricting the rights of taxpayers, and securing more efficient tax collection. The rules governing tax audits have been changed in order to simplify and unify the process. Also, the amendments introduce tax services for taxpayers that will be provided by the <a href="http://www.poreskauprava.gov.rs/en.html">Tax Administration</a> (<strong>TA</strong>), as an activity that should help them settle their taxes in proper amounts and within the legal deadline.</p><p style="text-align:justify;">The amendments will generally start to apply as of 1 January 2019, although some changes have already started to apply as of 30 April 2018 (as specified below).</p><p style="text-align:justify;">Below is an overview of the most important changes. </p><h2 style="text-align:justify;">Limiting the VAT Refund</h2><p style="text-align:justify;">The amendments restrict the refund of VAT. If a taxpayer has unpaid dues, with respect to other tax, the amount of refundable VAT will be reduced by the amount of that unpaid tax evidenced by the TA.</p><p style="text-align:justify;">The amendments do not provide further explanation on what is regarded as unpaid tax dues, and whether these tax dues have to be evidenced under a binding resolution, or whether it is enough for it to be formally evidenced by the TA. As a general rule in tax proceedings, an appeal to a tax resolution does not postpone enforcement - therefore, unpaid tax may be evidenced under the tax resolution that is under dispute and not yet final and binding. With this in mind, it is not entirely clear what criteria the TA will apply in order to assess whether there is unpaid tax and whether refundable VAT should be reduced or not.</p><h2 style="text-align:justify;">Tax Audit</h2><p style="text-align:justify;">Instead of a field audit and office audit, the amendments encompass and regulate a unified tax audit, defined as the <em>TA's control of the legality and validity of the fulfilment of the taxpayer's tax obligations, as well as an audit of the accuracy, completeness and compliance of information disclosed in a tax return, tax balance sheet, financial statements and other records of the taxpayer</em>.</p><p style="text-align:justify;">The amendments introduce novelties in the procedure itself. It is now prescribed that when taxpayer files an objection to the minutes on a tax audit and the tax inspector accepts it, the tax inspector has 5 days to draft a supplement to the minutes. The amendments also introduce the right of a tax inspector to issue an appendix to the minutes. If the tax inspector has come to some new notions or facts (either through a taxpayer's complaints to the supplement to the minutes or on its own) after the delivery or supplement to the minutes, it may draft an appendix to the minutes and change its findings in favor of the TA. The taxpayer is allowed to file objections to such an appendix within 8 days as of its receipt. </p><p style="text-align:justify;">In case a major breach of tax laws is determined in the audit, the TA can now prohibit the taxpayer from conducting business activities for up to one year, which is significantly longer than the maximal 60-day period which was previously prescribed by the law.</p><h2 style="text-align:justify;">Restrictions on the Registration of Changes with the SBRA</h2><p style="text-align:justify;">An important change is that the Serbian Business Registers Agency ("<strong>SBRA"</strong>) is not allowed to register changes related to the status of a taxpayer once the Tax Police undertakes actions in order to determine the existence of criminal tax offences. Having in mind that the Tax Police is not obliged to inform the taxpayers on its investigation, it is unclear how this provision will be applied in practice. </p><p style="text-align:justify;">Before the amendments, registering changes with the SBRA was not allowed only during a tax audit. Contrary to the recommendations from the business sector – which called for the abolishment of even the existing limitations, the amendments broadened the application of this measure. Amendments in relation to SBRA registration have already started to apply – as of 30 April 2018.</p><h2 style="text-align:justify;">Inability to File Amended Tax Returns</h2><p style="text-align:justify;">Aside from their current inability to submit amended tax returns during a tax audit or after the TA renders a tax resolution, the taxpayers will now be unable to submit an amended tax return once the Tax Police starts an investigation on the existence of criminal tax offences. Again, it is unclear how this rule will be applied in practice, because the police was not obliged thus far to inform taxpayers on pending criminal investigations.</p><h2 style="text-align:justify;">Enforced Tax Collection</h2><p style="text-align:justify;">Under the amendments, the TA may order preliminary security measures in order to secure tax collection. Preliminary measures may be ordered in the following cases: </p><ul style="text-align:justify;"><li>In order to secure the collection of <span lang="EN-GB" style="text-decoration:underline;">tax that is not due</span> or that is not yet determined, but the TA finds that there is a risk that the taxpayer will obstruct the collection of potentially assessed taxes, the TA may in those cases restrict the taxpayer to dispose with movable and immovable property until the TA registers a pledge or mortgage over the assets of taxpayer, or until the collection of the tax; and,</li><li>In order to secure the collection of <span lang="EN-GB" style="text-decoration:underline;">tax that is due</span>, the TA may restrict the taxpayer to dispose with cash on their account, movable and immovable property, and restrict enforcement by third parties against the taxpayer, until the TA issues a resolution on enforced collection and blocks the taxpayer's bank account, or registers a pledge or mortgage over the assets, or until the collection of the tax.</li></ul><p style="text-align:justify;">The resolution on the setting of preliminary security measures is delivered to the taxpayer and to the SBRA for registration in the public registry.</p><p style="text-align:justify;">Concerning enforced collection from individual taxpayers, the TA is now permitted to collect unpaid tax from all of the taxpayer's earnings, even from savings accounts, and not only salaries and pensions – which was the case before the amendments. </p><p style="text-align:justify;">In addition, in the procedure of enforced tax collection, the banks will now be obligated to calculate the interest for the period from the issuance of the TA's resolution until the full payment of the debt, and transfer the funds from the taxpayer's account to the account of the TA. </p><h2 style="text-align:justify;">Tax Offences</h2><p style="text-align:justify;">Criminal offences provided in the LTPTA were amended in order to introduce harsher penalties. A person unlawfully requesting a tax refund or a tax credit higher than RSD 1 million (approx. EUR 8,500) may be penalised with a fine and with a six months to five years prison sentence. If the unlawfully requested amount exceeds RSD 3 million (approx. EUR 25,000), a fine and a prison sentence of up to eight years may be ordered. A maximal penalty of up to ten years of imprisonment is now prescribed in cases when the requested tax refund exceeds RSD 10 million (approx. EUR 85,000). </p><p style="text-align:justify;">Illegal production, refinement, holding or intermediating in the sale and purchase of goods subject to excise is introduced as a criminal offence, punishable with a sentence of up to five years in prison. </p><p style="text-align:justify;">Another major change is that the TA cannot submit a request for the initiation of misdemeanor proceedings in cases when it has already notified the Tax Police on its suspicions that the taxpayer has committed a criminal tax offence. This is a step forward in terms of legal certainty, as the simultaneous existence of criminal proceedings and misdemeanor proceedings is breach of the <em>non bis in idem</em> principle. </p><h2 style="text-align:justify;">Secondary Tax Liability</h2><p style="text-align:justify;">The amendments prescribe new rules on the liability of persons other than the taxpayer for tax payments (secondary tax liability). The person responsible for the calculation and payment of any tax on behalf of the taxpayer may be liable for the taxpayer's tax payment if they did not act with due diligence. Before the amendments, only persons in charge of the calculation and payment of withholding tax could be liable for the taxpayer's tax obligations. </p><p style="text-align:justify;">Furthermore, entities receiving assets from a taxpayer in a transaction without remuneration or with remuneration below the market price may be liable for secondary the tax liability of the taxpayer in the five years following the transaction, compared to previously provided three years' time limit.</p><h2 style="text-align:justify;">Tax Services</h2><p style="text-align:justify;">One of the novelties in favour of the taxpayers is the introduction of tax services provided by the TA. Tax services are defined as one of the TA's competences that involve the provision of legal support to the taxpayers, assistance with filling tax returns, drafting submissions and other assistance allowing taxpayers to comply with tax regulations.</p><h1 style="text-align:justify;">Foreign Company Benefits of the Amendments to VAT Law</h1><p style="text-align:justify;">The amendments to Law on Value Added Tax ("<strong>VAT Law</strong>") prescribe beneficial treatment for certain transactions involving foreign entities.</p><p style="text-align:justify;">Starting from 1 July 2018, supplies to foreign legal entities within the free economic zone ("<strong>FEZ</strong>"), whereby such foreign legal entities are not VAT payers in Serbia, will be exempted from VAT. The amendments provide VAT exemption for supplies to foreign legal entities conducting business in the FEZ, if such supplies are intended for the assembly of goods for export. Prior to the amendments, only supplies made within FEZ to registered VAT payers - users of FEZ, were exempted from VAT.</p><p style="text-align:justify;">Foreign VAT payers that are not registered for VAT in Serbia are now entitled to VAT refunds if they carry taxable supplies in Serbia when the recipient is obliged to account for VAT by applying the <em>reverse charge</em> mechanism. Before the amendments, foreign VAT payers performing supplies in Serbia were allowed VAT refund if they carry (i) the transport of goods exempted from VAT or (ii) the international transport of passengers when VAT was charged by customs authorities. These amendments will start to apply from 1 January 2019.</p><p> </p><p> </p><p><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p>
A Study in Red – The Importance of Louboutin Shoes for European Trademark Law A Study in Red – The Importance of Louboutin Shoes for European Trademark Law | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/06/red–louboutin-shoes-trademark-european-court-justice.aspxA Study in Red – The Importance of Louboutin Shoes for European Trademark Law A Study in Red – The Importance of Louboutin Shoes for European Trademark Law | Views | Karanović & Nikolić string;#14/06/2018<p style="text-align:justify;">On 12 June 2018, Christian Louboutin's won a key legal battle in the war over the trademark of his red soled shoes when the <a href="https://europa.eu/european-union/about-eu/institutions-bodies/court-justice_en">European Court of Justice</a> (ECJ) stated that their red colour was separate from the shape of the soles.</p><p style="text-align:justify;">For a bit of background, Paris-based Christian Louboutin has marketed the red-bottomed shoes for more than a quarter of a century, and they featured even on the television series "Sex and the City." Louboutin had registered trademarks in Belgium, the Netherlands and Luxembourg, covering footwear and high-heeled shoes, where the colour red is applied to the sole of a shoe. </p><h2>Louboutin vs. Copycats</h2><p style="text-align:justify;">Previously, in 2011 Louboutin sued Yves Saint Laurent for trademark infringement after YSL released a line of high heels that included a red shoe with a red sole. The case was ultimately dismissed.</p><p style="text-align:justify;">In 2012 he went to court in the Netherlands to prevent the Dutch high street chain, Van Haren, from selling its own versions of red-soled high-heeled shoes, a favourite on celebrity red carpets. The lengthy legal dispute centred on whether Louboutin's trademark involved a shape or a colour under European Union law.</p><p style="text-align:justify;">The Dutch company argued that European regulations say shapes by themselves cannot be registered as trademarks. However, Louboutin argued that the use of a colour, in this case a red pigment called Pantone 18 1663TP, can be trademarked. Also, Louboutin said that the shape of his shoes is a way of showing where the colour is located on the bottom of the shoe.</p><h2>The Curious Case of Red Soles</h2><p style="text-align:justify;">The District Court in The Hague granted a preliminary injunction against <a href="https://www.vanharen.nl/NL/nl/shop/welcome.html">Van Haren</a>, and in 2014, the case was referred to the European Court of Justice. However, Louboutin's case was dealt a blow in February. The advocate general ruled that a trademark combining colour and shape may be refused or declared invalid.</p><p style="text-align:justify;">Despite previous rulings, the CJEU decided not to follow the advice of the advocate general and has now ruled in favour of Louboutin, clarifying that shape trademarks do not apply to the red soles of Louboutin shoes.</p><p style="text-align:justify;">"The mark does not relate to a specific shape of sole for high-heeled shoes since the description of that mark explicitly states that the contour of the shoe does not form part of the mark and is intended purely to show the positioning of the red colour covered by the registration," the ECJ said in a statement.</p><p style="text-align:justify;">A trademark, such as Louboutin's, could not be regarded as consisting exclusively of a shape, since the main element is a specific colour – which is designated by an internationally recognized identification code.</p><h2>How This Will Affect the (Fashion) Industry or What Would Prada Do?</h2><p style="text-align:justify;">And while this event might mark only one victory in his years-long campaign against a Dutch fashion company, its implications in the field of <a href="/_layouts/15/FIXUPREDIRECT.ASPX?WebId=de941175-f8d4-4a41-8207-c9aec3e1e3b2&TermSetId=9c3dd502-4f62-4d66-9ef2-684258a8f9ed&TermId=93658f66-fd6d-4348-9961-bda527b121b1">Intellectual property law</a> are more interesting. In terms of sanctions, these might include both fines and maybe even jail time – and these might vary from jurisdiction to jurisdiction. </p><p style="text-align:justify;">However, perhaps more interesting are the possible implications for the fashion industry. Consider Prada and their recognisable red stripe across the sole. Are we to expect a lawsuit from Prada's lawyers? Will Converse trademark the white tops on their sneakers?</p><p>Stay tuned…</p><p>​</p>
Reshaping the Financial Landscape Reshaping the Financial Landscape | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/06/reshaping-banking-financial-services-psd2-fintech-blockchain-serbia.aspxReshaping the Financial Landscape Reshaping the Financial Landscape | Views | Karanović & Nikolić string;#05/06/2018<p style="text-align:justify;">Recently, I attended the <a href="https://www.xceedconference.com/"><span lang="EN-GB" style="text-decoration:underline;">xCEEd conference</span></a> in Belgrade - the leading FinTech event in Central and Eastern Europe. The theme of this year's conference was "Road Mapping the Digital Future", focusing on the practical application of financial technologies in CEE.</p><p style="text-align:justify;">Supported by the <a href="https://www.gov.uk/government/organisations/department-for-international-trade"><span lang="EN-GB" style="text-decoration:underline;">UK Department for International Trade</span></a>, this is the second year that this event was held in Belgrade. Covering a wide range of topics concerning financial technologies, this year's conference also focused on the future of banks and their relations with FinTech, Blockchain and the role of millennials in this area, as well as the future of competition and relevant regulations.</p><p style="text-align:justify;">Along with the EU and the other countries in Central and Eastern Europe, Serbia is also making giant strides towards complete digitalization - creating the material conditions, man-power and regulations. It seems certain that the financial sector is undergoing huge changes.</p><h1 style="text-align:justify;">The PSD2 directive</h1><p style="text-align:justify;">In the beginning of 2018, the Revised Payments Service Directive (PSD2) came into force in the EU and it has the potential to change not only how we treat data, but also the way we see banking and financial services. For a bit of background: the Payments Services Directive (PSD) was adopted in 2007 to create the Single Euro Payments Area (SEPA). Its' aim was to simplify and modernise the rules and guidelines for money transfers within the European Union. </p><p style="text-align:justify;">PSD2, its' update, was passed by the European Parliament in 2015, with the goal of further promoting innovation while enhancing consumer protection. And the implementation of PSD2 will open the doors for the various startups in the FinTech niche to play a more important role. </p><h1 style="text-align:justify;">Banks and Banking</h1><p style="text-align:justify;">This directive enables bank customers, both consumers and businesses, to use third-party providers to manage their finances. This means that companies, like Amazon, could retrieve your account data from the bank – with your permission of course, so that when you buy something, the company can make a purchase for you, without having to redirect you to another service – like Mastercard of Paypal. </p><p style="text-align:justify;">And this will, in turn, break down the bank's monopoly on its users' data. By this I mean that banks will no longer be competing only against other banks, but everyone offering financial services – changing the payments value chain, what business models are profitable, and customer expectations. Retailers will be able to ask you for permission to access your bank account – no more intermediaries. </p><h1 style="text-align:justify;">The role of Blockchain</h1><p style="text-align:justify;">PSD2 will also affect, and possibly help, the successful development of Blockchain projects and create new opportunities. In essence, this regulation is about the sharing of personal data with a network. Currently, EU laws see the transfer of data being handled through Application Programming Interfaces (APIs). But, by using a private Blockchain, the transfer can be done in an open and secure manner. This way, FinTech services, retailers and banking institutions could all use the same system to share customer information.</p><p style="text-align:justify;">This system would be limited to network participants, and decentralised storage and transparency would enhance security and ensure good behaviour. To some, this seems a better option than a system in which banks control account data and cede information to a user-approved entity.</p><h1 style="text-align:justify;">Conclusion</h1><p style="text-align:justify;">Innovation is a rapidly moving force, pressing the financial sector to keep up with the technological and regulatory changes. Today's tech-savvy consumers are demanding faster, less formal, more personalized, easy accessible financial services. </p><p style="text-align:justify;">And, while we still cannot predict all of the changes in practice that the introduction of PSD2, various technological innovations and changing customer demands will bring, it seems certain that interactions between consumers, producers, creators and among citizens, businesses and administrations are being reshaped.</p><p>​</p>
Geographical Indications of Origin in Serbia: Where the Past Fuels the Future Geographical Indications of Origin in Serbia: Where the Past Fuels the Future | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/05/Geographical-Indications-of-Origin-Serbia-Intellecutal-Property-Law.aspxGeographical Indications of Origin in Serbia: Where the Past Fuels the Future Geographical Indications of Origin in Serbia: Where the Past Fuels the Future | Views | Karanović & Nikolić string;#21/05/2018<p style="text-align:justify;"><em class="ms-rteStyle-Quote">This article was written by </em><a href="/people/dragomir-kojic"><span class="ms-rteStyle-Quote"><span lang="FR" style="text-decoration:underline;"><em>Dragomir </em></span><span lang="FR" style="text-decoration:underline;"><em>Koj</em></span><span lang="FR" style="text-decoration:underline;"><em>ić</em></span></span></a><em class="ms-rteStyle-Quote">, Partner ⃰, and </em><a href="/people/tamara-bubalo"><span class="ms-rteStyle-Quote"><span lang="FR" style="text-decoration:underline;"><em>Tamara</em></span><span lang="FR" style="text-decoration:underline;"><em> Bubalo</em></span></span></a><em class="ms-rteStyle-Quote">, Associate ⃰, and was originally published in Issue 5.2 of the </em><a href="http://ceelegalmatters.com/"><span class="ms-rteStyle-Quote" lang="FR" style="text-decoration:underline;"><em>CEE Legal Matters Magazine</em></span></a><em class="ms-rteStyle-Quote">. To see the original article, please follow this </em><a href="http://ceelegalmatters.com/serbia/8439-geographical-indications-of-origin-in-serbia-where-the-past-fuels-the-future"><span class="ms-rteStyle-Quote" lang="FR" style="text-decoration:underline;"><em>link</em></span></a><em class="ms-rteStyle-Quote">.</em><span class="ms-rteStyle-Quote" id="ms-rterangepaste-end"></span><span class="ms-rteStyle-Quote">​</span></p><p style="text-align:justify;">Geographical indication of origin, this very peculiar form of industrial property protection, has undergone a revival phase over the past few years, thus becoming more omnipresent not only within the circles of interest, but also amongst the Serbian public at large. Although, up to this day, there are only a few dozen geographical indications of origin registered before the <a href="http://www.zis.gov.rs/home.59.html">Serbian Intellectual Property office</a>, for a country of little over 7 million spread over 80.000 square kilometers of land, these numbers are remarkable and represent something to be proud of. Through goods and services offered thereunder, they are painting a picture of a different Serbia.</p><p style="text-align:justify;">Generally used for the marking of natural, artisanal or industrially produced food, goods and produce, this legally coined term has come to reflect something much greater; the traditional and folkloric expressions of this country, its socio-cultural identity and its historical heritage. Through dozens of well curated picks of what each autochthone region has to offer as its best, once stemming from the ancient past only to be passed down to its modern day successors, these traditional expressions nowadays include, textiles, knits, cheeses, wines, and even health services.</p><p style="text-align:justify;">The surge in interest surrounding geographical indications of origin is nowadays largely due to the country's policy of promoting and subsidizing small and medium sized enterprises which focus on craftsmanship, artisanal work and localized types of services which, in a way, help revive and ultimately preserve some of the traditional craft. </p><p style="text-align:justify;">Geographical indications, similarly to  trademarks, transmit  certain messages, aiming at informing a potential consumer on the origins of a given product, and its specific properties only to be found in that unique place of origin. They are therefore very useful tools when it comes to highlighting those specific or unique properties of each and every product or service offered under its umbrella.  This can for instance be reflected through a particular climate, manufacturing or a traditional approach to creating a product, all depending on the given region.</p><p style="text-align:justify;">Thus impacting the perception of both domestic and international consumers and promoting the country at large has proven to be a large success. <em>Valjevski Duvan Čvarci</em>, <em>Pirot Kilims, Sirogojno Knits, and Bermet sweet desert Wine</em>, just to name a few, come to serve as excellent examples of products which, due to their (i) defined geographical area, (ii) specific, territorially defined manufacturing methods, and (iii) localized product quality, have become recognized tools of promotion not only in Serbia but also beyond its borders.</p><p style="text-align:justify;">By solidifying its bases through a plethora of now internationally recognized goods, Serbia has very recently even gone a step further by registering its very first geographical indication for services offered in Zlatibor, a mountainous region in western Serbia known for its „Golden Pines".</p><p style="text-align:justify;">Stepping out from theory into practice, Serbia has become the very first country to actually register a service under the category of geographical indication of origin, thus far only foreseen on paper by the local legislation. </p><p style="text-align:justify;">The geographical indication of origin in question refers to the provision of health-tourism services provided exclusively in the Zlatibor region, and more particularly on the territory of the municipality of Čajetina. Registered under the indication <em>Čigota, </em>a mountain pass in Zlatibor<em>, </em>this specific service epitomizes a well-balanced mixture of natural and human factors such as, on the one hand, clean air with low humidity, specific light ion concentrations, an absence of allergens, and high pH levels in water, and on the other, a highly skilled medical and diagnostics staff.</p><p><em>Čigota </em>is indeed that perfect example that allows us to shift our perception when it comes to geographical indications of origin, as it tears down the barriers of the traditional use of this legal tool and allows us to open up towards new possibilities stemming from more innovative concepts.</p><p style="margin:0px;padding:0px 0px 20px;border:0px currentcolor;text-align:justify;color:#444444;text-transform:none;line-height:24px;text-indent:0px;letter-spacing:normal;font-family:"times new roman", georgia, serif;font-size:16px;font-style:normal;font-weight:400;word-spacing:0px;vertical-align:baseline;white-space:normal;orphans:2;widows:2;font-stretch:inherit;background-color:#ffffff;text-decoration-style:initial;text-decoration-color:initial;"> </p><p style="margin:0px;padding:0px 0px 20px;border:0px currentcolor;text-align:justify;color:#444444;text-transform:none;line-height:24px;text-indent:0px;letter-spacing:normal;font-family:"times new roman", georgia, serif;font-size:16px;font-style:normal;font-weight:400;word-spacing:0px;vertical-align:baseline;white-space:normal;orphans:2;widows:2;font-stretch:inherit;background-color:#ffffff;text-decoration-style:initial;text-decoration-color:initial;"> </p><div class="WordSection1" style="margin:0px;padding:0px;border:0px currentcolor;color:#444444;text-transform:none;line-height:inherit;text-indent:0px;letter-spacing:normal;font-family:"times new roman";font-size:16px;font-style:normal;font-weight:400;word-spacing:0px;vertical-align:baseline;white-space:normal;orphans:2;widows:2;font-stretch:inherit;background-color:#ffffff;text-decoration-style:initial;text-decoration-color:initial;">⃰<span class="ms-rteStyle-Quote" style="margin:0px;padding:0px;border:0px currentcolor;color:#444444;line-height:inherit;font-family:inherit;font-size:inherit;font-style:italic;font-variant:inherit;font-weight:inherit;vertical-align:baseline;font-stretch:inherit;"><span> </span>Independent attorneys at law in cooperation with Karanović & Nikolić.</span></div>
Privatisation Disputes Privatisation Disputes | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/05/Privatisation-Disputes-Serbia.aspxPrivatisation Disputes Privatisation Disputes | Views | Karanović & Nikolić string;#10/05/2018<p style="text-align:justify;">​<em class="ms-rteStyle-Quote">This article was written by <a href="/people/milan-lazic">Milan Lazić</a>, Senior </em><em class="ms-rteStyle-Quote">Partner </em><em class="ms-rteStyle-Quote">⃰</em><em class="ms-rteStyle-Quote">,</em><span class="ms-rteStyle-Quote"> </span><em class="ms-rteStyle-Quote">and <a href="/people/milica-savic">Milica Savić</a>, Senior Associate </em><em class="ms-rteStyle-Quote">⃰</em><em class="ms-rteStyle-Quote">, and originally published in the </em><em class="ms-rteStyle-Quote">"Reshaping the boundaries of arbitrability: Are we heading forward?" publication by the <a href="http://www.stalnaarbitraza.rs/">Permanent Arbitration at the Chamber of Commerce and Industry of Serbia</a>.</em></p><p style="text-align:justify;"> </p><p style="text-align:justify;">This article will focus on the experience in practice and the evolution of privatizations of state and socially owned companies in Serbia in the period of transition and will assess the boundaries of arbitrability of disputes that arise out of the termination of privatization agreements. The term arbitrability will be analysed from a broader perspective, as opposed to the traditional and commonly used meaning of this term - whether a certain dispute is suitable for arbitration. There is no doubt that privatization disputes are arbitrable in terms of commercial arbitration – it is an asset related dispute, a dispute on rights parties can freely dispose with, for which there is no exclusive jurisdiction of Serbian court. In fact, many of these disputes have been brought before and resolved by commercial arbitral tribunals. The question is if these disputes are exclusively reserved for courts and commercial arbitration and is there an option for foreign investors to bring these disputes against states in investment treaty arbitration. </p><p style="text-align:justify;">Starting from the 2000s there was a major wave of privatizations in Serbia. Up until 2015, Serbia enacted several privatization laws and many amendments over the years. A special state authority – the Privatization Agency was established for this purpose with a wide range of authorities when it comes to privatizing companies, conducting and supervising the privatization process up to the termination of privatization agreements. As most of the privatizations were completed by 2014, the Privatization Agency ceased to exist. </p><p style="text-align:justify;">Turning back the clock and looking at what has been done in the past allows us to have a better perspective of the current situation and consequences that could be expected. This also allows us to distance ourselves from the local legal regime and to focus on international legal standards that protect foreign investors. The purpose of this paper is to assess how these standards apply to terminated privatization agreements. It could be that a time has come to seriously consider the fact that a flood of investment arbitrations may be well on its way.     </p><p style="text-align:justify;">Let us begin with some statistics.</p><p style="text-align:justify;">Up until 2011, a total of 2,385 socially owned companies were sold for a total of EUR 2.63 billion. The value of the investments that were agreed under the privatization agreements was EUR 1.13 billion and of the social program EUR 276.68 million. The number of employees was reduced for 410,000, i.e. over 60% in the period from 2002 to 2011, and in average 45,000 working positions disappeared a year. From the beginning of privatization process until 2011 around 630 privatization agreements were terminated. There has been a total of 6 arbitration cases before the Foreign Trade Court of Arbitration with the Serbian Chamber of Commerce, and a number of ICC arbitrations with the subject matter related to privatization.</p><p style="text-align:justify;">In order to assess the applicability of international standards for protecting foreign investors, we should start from the main obligations of investors according to privatization agreements and privatization laws, and consequently the main reasons that were used for the termination of privatization agreements. </p><p style="text-align:justify;">Traditionally, the main obligations of the investors were: to pay the purchase price, invest the agreed amount and honour the investment schedule, and comply with the measures for protecting employees contained in the social programme (that was an integral part of every privatization agreement). The investor was also supposed to provide bank guarantees securing the performance of the agreement and to refrain from the further sale of shares and the sale and encumbering assets of the privatized company above the threshold provided by the agreement (usually 10% of the total value of assets). </p><p style="text-align:justify;">One of the most controversial obligations from the social programme was to "maintain the continuity of production and operations", while the agreement itself usually contained a similar provision that "the buyer undertakes to make best effort to conduct business activities in accordance with the proposed business plan, to maintain current production volumes without reducing existing capacities".   </p><p style="text-align:justify;"> </p><p style="text-align:justify;">To read the complete article, please follow this <a href="https://drive.google.com/file/d/16gkerIV9B-a7jc0QTm_nctH586Fp6l6k/view?usp=sharing"><span lang="EN-GB" style="text-decoration:underline;">link</span></a>.</p><p style="text-align:justify;"> </p><p style="text-align:justify;"> </p><p style="text-align:justify;"><span class="ms-rteStyle-Quote"><em> </em><em>⃰</em><em> Independent attorneys at law in cooperation with Karanović & Nikolić.</em></span></p>
Striving Towards the Black Gold Striving Towards the Black Gold | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/05/Striving-Towards-Black-Gold-Montenegro-oil-gas-exploration.aspxStriving Towards the Black Gold Striving Towards the Black Gold | Views | Karanović & Nikolić string;#07/05/2018<p style="text-align:justify;">​<span class="ms-rteStyle-Quote">This article was written by <a href="/people/petar-mitrovic/">Petar Mitrović</a>, Partner ⃰, and <a href="/people/nikolina-kazic/">Nikolina Kažić</a>, Associate ⃰, and was originally published in Issue 5.2 of the </span><a href="http://ceelegalmatters.com/"><span class="ms-rteStyle-Quote" style="text-decoration:underline;">CEE Legal Matters Magazine</span></a><span class="ms-rteStyle-Quote">. To see the original article, please follow this </span><a href="http://ceelegalmatters.com/montenegro/8443-striving-towards-the-black-gold"><span class="ms-rteStyle-Quote" style="text-decoration:underline;">link</span></a><span class="ms-rteStyle-Quote">.</span></p><p style="text-align:justify;"> </p><p style="text-align:justify;">The first upscale exploration of oil and gas in Montenegro started in 1914, when King Nikola Petrović approved the National Assembly's decision for oil exploration around Lake Skadar. The first well in the area of Crmnica dates back to 1922 – although it produced nothing of significance.</p><p style="text-align:justify;">In later researches of the Montenegrin offshore, the existence of geological structures with the potential for hiding hydrocarbon deposits was confirmed. During the 70s and 80s, several American firms set up wells in the Montenegrin undersea area and confirmed oil and gas findings. However, no significant work was done pursuant to this confirmation, mainly due to the political and social instability of this Balkan country. </p><p style="text-align:justify;">In the years that followed, and especially following the dissolution of the state union of Serbia and Montenegro in 2006, oil and gas exploration and exploitation formed the center of the Government's energy policy, and Montenegro made a significant effort to develop the industry. The country has defined its energy policy until 2030, adopted the Energy Development Strategy until 2025, and signed the Declaration of Accession to the Energy Charter in late 2012. The main objective of the adopted energy policy is the creation of an adequate legislative, financial, and regulatory framework to encourage private sector involvement and investments. Research shows that the total oil core potential in two separate submarine zones in Montenegro amounts to 12.5 x 109 tons. According to existing data, potential oil reserves amount to approximately 7 billion barrels, while potential natural gas reserves amount to 425 billion square meters.</p><p style="text-align:justify;">Montenegro aims to follow the achievements of other countries in the Adriatic Sea that have valorized their potential in this field with around 1,500 exploration wells. Italy is the clear champion, with around 1,400 drilling sites. Neighboring Croatia drilled around 140 exploration wells and currently has 18 gas production platforms in the northern Adriatic.</p><p style="text-align:justify;">As a sign of progress and the decisiveness of Montenegro to use its existing potential, the first tender for oil and gas exploration and production was announced in late 2013. So far, the Montenegrin Government has signed concession agreements with two consortia: the Italian-Russian Eni/Novatek (which was granted concession rights over four offshore blocks, covering 1,228 square kilometers), and the Greek company <a href="https://www.energean.com/"><span style="text-decoration:underline;">Energean</span></a> oil & gas (which was granted two offshore blocks with a surface area of 338 square kilometers in shallow waters).</p><p style="text-align:justify;">In the light of normative regulation, Montenegro adopted the Law on Exploration and Production of Hydrocarbons, the Tax Law on Hydrocarbons, and regulations governing the method of calculating compensation payments for oil and gas production, construction of exploration and exploitation plants, development and production of hydrocarbons, drilling, and so on. Additionally, the Government has adopted the model of the Concession Contract for the Production of Hydrocarbons, which is divided into two phases: the Exploration phase and the Hydrocarbons production phase.</p><p style="text-align:justify;">The exploration phase may last for a maximum of six years for onshore or seven years for offshore blocks. Upon the concessionaire's request, and only in cases specified by law, the exploration phase may be extended for up to two years. However, the hydrocarbons production phase begins from the day of the commencement of the first extraction of hydrocarbons from the reservoir and lasts until the expiry of the deadline envisaged by the production concession contract, or a maximum of up to 20 years. The production phase may, at a request from the concessionaire, be extended at most for half of the duration of the production phase period specified by the production concession contract; i.e., for a maximum of 10 years.</p><p style="text-align:justify;">With the Tax Law on Hydrocarbons, Montenegro made a plan to acquire revenue from companies doing business in the industry involving taxes and reimbursements for produced oil and gas. The strategy for acquiring revenue is progressive – meaning that the companies that have the most profit will pay an increased (progressive) rate for the produced oil and gas. In the period during the production of oil and gas, oil companies are due to pay a tax of 54% on the profit acquired from the exploration and production of oil and related assets, as well as 9% on dividends (i.e., capital gains). </p><p style="text-align:justify;">The next tender for the exploration of oil and gas in the Montenegrin undersea area should open during this year or in 2019, since the Montenegrin Government is striving to introduce as many concessionaires as possible to the Montenegrin off-shore territory.</p><p style="text-align:justify;"> </p><p style="text-align:justify;"> </p> <style> div.WordSection1 { } </style> <div class="WordSection1">⃰<span class="ms-rteStyle-Quote"> Independent attorneys at law in cooperation with Karanović & Nikolić.</span></div>
The Serbian Law on Foreign Exchange Amended The Serbian Law on Foreign Exchange Amended | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/04/Serbian-Foreign-Exchange-Law-Amended.aspxThe Serbian Law on Foreign Exchange Amended The Serbian Law on Foreign Exchange Amended | Views | Karanović & Nikolić string;#27/04/2018<p><em class="ms-rteStyle-Quote">The article bellow was written by Maja Jovančević Šetka, Partner ⃰, and Kristina Pavlović, Associate ⃰. </em></p><p> </p><p style="text-align:justify;">On 20 April 2018, the amendments to the Law on Foreign Exchange (the "<strong>Law</strong>") were adopted and will enter into force on <span lang="EN-GB">28 April 2018</span>. Exceptionally, the application of certain provisions related to the assuming of competencies over foreign exchange control by the <a href="https://www.nbs.rs/internet/english/">National Bank of Serbia</a> is delayed until 1 January 2019.</p><p style="text-align:justify;">The main reasons behind the amendments to the Law are the harmonisation of the obligations that the Republic of Serbia undertook under the Stabilisation and Association Agreement and an alignment with international standards in the area of the prevention of money laundering and terrorism financing. These amendments contribute to the further evolution of the digital and IT sector in Serbia - in accordance with the activities that the <a href="http://www.srbija.gov.rs/?change_lang=en">Serbian Government </a>directed towards the development of this field.</p><p style="text-align:justify;">The main amendments to the Law are the following:</p><ul style="text-align:justify;"><li><strong>The list of issuers of long-term securities in which the residents may freely invest has been expanded </strong>– residents may now invest in long-term securities issued by the European Union and in legal entities registered within EU territory. Banks remain free to invest in long-term securities;</li><li><strong>The capital flow based on short-term portfolio investments is liberalised –</strong>residents and banks may perform the sale and purchase of short-term securities of certain issuers, while non-residents from the EU may sell and purchase short-term securities in the Republic of Serbia in accordance with the law regulating the capital market;</li><li><strong>It is clarified that the creditor's consent is required in cases of permitted debt assignment, which is a correction stipulated for the purposes of harmonisation with the general rules on obligations</strong>;</li><li><strong>Entering into certain cross-border credit transactions in electronic form has been enabled</strong>; </li><li><strong>Short-term borrowing by natural persons and branches is enabled – </strong>resident  natural persons may take loans/credits from  non-residents from the EU with a repayment term of up to one year, while branches may take a loan/credit from a non-resident  founder from the EU under the same conditions; </li><li><strong>The approval of financial loans by a resident legal entity to a non-resident is liberalised, as well as the granting of sureties and other security instruments under credit transactions between non-residents </strong>– the National Bank of Serbia is expected to adopt a bylaw which will prescribe the conditions and the manner under which these transactions will be carried out, whereby the restrictions prescribed by this bylaw will be exclusively for the purposes of preserving public interest and financial stability. The same bylaw should further regulate the conditions under which a resident legal entity will grant sureties and other security instruments under credit transactions between residents and non-residents;</li><li><strong>The scope of transactions based on which a resident legal entity may obtain a guarantee and surety from a non-resident has been extended – </strong>the<strong> </strong>resident<strong> </strong>legal entities now may obtain guarantees and sureties from non-residents also for transactions concerning the import of goods and services, as well as for investment works by non-residents in Serbia;</li><li><strong>All residents (as opposed to natural persons only) may execute cross-border payment transactions via payment institutions and public postal operators; </strong></li><li><strong>Charity organisations may receive charity donations from abroad through electronic money issuers as well</strong>;</li><li><strong>The sale and purchase of digital products in foreign currencies in Serbia is permitted under certain conditions - </strong>(i) that the payment is made using a payment card or electronic money through a local payment service provider, and (ii) that these products are delivered exclusively through telecommunications, digital or IT devices;</li><li><strong>The National Bank of Serbia assumes the competencies over foreign exchange control from the Tax Administration as of 1 January 2019 - </strong>The National Bank of Serbia will assume the competencies of the Ministry of Finance, Tax Administration over the issuance and revocation of authorisations and certificates for the conduction of currency exchange operations and the supervision over currency exchange operations and the foreign exchange operations of residents and non-residents.</li></ul><p> </p><p><span></span> </p><p><span class="ms-rteStyle-Quote"><em>The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></span></p><p> </p><p>⃰<em class="ms-rteStyle-Quote"> Independent attorneys at law in cooperation with Karanović & Nikolić.</em></p>
The use of AI in Law: How just is machine justice? The use of AI in Law: How just is machine justice? | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/04/AI-in-Law-How-just-is-machine-justice.aspxThe use of AI in Law: How just is machine justice? The use of AI in Law: How just is machine justice? | Views | Karanović & Nikolić string;#19/04/2018<p style="text-align:justify;">Artificial intelligence is a burning topic in many sectors today and the legal industry is no exception. Recently, at the <a href="https://www.worldservicesgroup.com/"><span lang="EN-GB" style="text-decoration:underline;">World Services Group</span></a>'s annual <a href="/_layouts/15/FIXUPREDIRECT.ASPX?WebId=de941175-f8d4-4a41-8207-c9aec3e1e3b2&TermSetId=9c3dd502-4f62-4d66-9ef2-684258a8f9ed&TermId=b564dd75-3e90-490a-bc95-08e217bb2ecc"><span lang="EN-GB" style="text-decoration:underline;">employment law</span></a> conference held in February, AI was heavily debated along with its' impact not only on the legal profession, lawyers, clients, the way business is done, but also our traditional understanding of concepts such as "law" or "justice". </p><p style="text-align:justify;">According to expert predictions, with current software developments and the rise of intelligent systems, in a few decades certain jobs will disappear – bank clerks, cash-register operators etc. It may be difficult to imagine, but it is actually not that far from reality.</p><h2 style="text-align:justify;">Artificial intelligence and employment </h2><p style="text-align:justify;">Software is even now used by HR professionals in the recruitment process and in later stages – certain interviews are conducted with no humans present apart from the interviewee, with intelligent software asking the questions. Whether by the various backdoors or through the main gates, technology is replacing the human workforce. So, what are the consequences?</p><p style="text-align:justify;">Certain jobs that seem necessary now will become obsolete – what will happen to the people doing those jobs? If they would become redundant, the system would need to find them new jobs or enable them to re-qualify in a timely manner. However, there are many positive aspects to this – such as the development of new professions and industries. In a sense, even though some jobs will disappear, new ones will pop into existence to replace them. Of course that there will always be jobs that machines are not sophisticated enough to perform, that will always need a "human touch". On the other hand, when working in dangerous environments, machines clearly have the advantage.</p><p style="text-align:justify;">Further, from an ethical viewpoint, the subject of discrimination in the relations between humans and their machine interviewers is quite interesting, especially in the recruitment process. Can we get accidentally discriminatory solutions based on the input "fed" to the programme on the acceptable candidate? Artificial intelligence still eventually requires humans to operate it and feed it information, so can a machine then really be more objective than a human?</p><p style="text-align:justify;">Other legal repercussions of the development of AI are quite substantial. If, for some reason or other, the machine fails to perform adequately, who is then to blame? Traditionally the one held responsible would be the user or the owner. Now, perhaps the one to blame is the developer that worked on that AI? </p><h2 style="text-align:justify;">Due diligence software</h2><p style="text-align:justify;">The legal profession is no exception to these developments. A growing number of international law firms use AI to conduct due diligences, partially or <em>in toto</em>. </p><p style="text-align:justify;">For example, in the most limited use of software for due diligence, the programme is given information from a virtual data room, and through a combination of key-words it eliminates unnecessary or irrelevant documentation. The next phase in more developed DD software includes the programme processing the relevant documentation through the recognition of certain word combinations or information, pairing it then with its' own legal terminology based on the laws and rulings that it was fed. The AI can also compare information, fill in parts of the report or assists in some other way. </p><p style="text-align:justify;">Since most clients these days request a fast reaction and a due diligence more and more often needs to be conducted within few days, in order to speed things up and reduce costs, international law firms decide to use this this kind of software as it makes things a lot easier, since long and arduous work can be sometimes resolved in hours.</p><h2 style="text-align:justify;">Online dispute resolution and AI judges</h2><p style="text-align:justify;">A topic which excites considerable discussion is the development of online <a href="/_layouts/15/FIXUPREDIRECT.ASPX?WebId=de941175-f8d4-4a41-8207-c9aec3e1e3b2&TermSetId=9c3dd502-4f62-4d66-9ef2-684258a8f9ed&TermId=2feca75c-4d2e-42e5-8d02-6e0db3809927"><span lang="EN-GB" style="text-decoration:underline;">dispute resolution</span></a>. In cases when there is no need for hearings, and when disputes are handled through submissions, the current development of technology enables that submissions by the parties can be simply uploaded and read – after which a ruling can be reached, without the need for the physical presence of the parties before the authorities. Most courts are still not as advanced as to use this method, but there is a tendency to implement online submissions in some more flexible forms of arbitration or mediation. Technically it is a very small step to go from filing your submissions in hard copy to uploading them.</p><p style="text-align:justify;">This brings us to perhaps the most controversial application of AI in the legal industry – software passing judgements and rulings. The majority of lawyers would say that this is the last area that they would expect to be conducted via software. Most would say that this requires justice – a characteristically human concept. </p><p style="text-align:justify;">However, it may come as a surprise that a similar kind of software is being currently tested by some judges and professionals in EU as we speak. Most notably, this option is currently being considered for collective lawsuits, where numerous claims arise from the same factual background and the judges are actually copy-pasting their decisions in practice.AI can do this faster and more efficiently, saving the judges' time for more complex decision making. This appears to mark only the beginning of the silent AI revolution in the legal segment, since we may not be that far away from AI making decisions in other typical cases as well.</p><p style="text-align:justify;">An artificial intelligence judge has accurately predicted most verdicts of the <a href="https://www.echr.coe.int/Pages/home.aspx?p=home">European Court of Human Rights</a>. Scientists built AI that was able to look at legal evidence and asses its ethical questions to decide how a case should be decided. And it predicted those with 79 per cent accuracy, according to its creators. The algorithm looked at data sets made up 584 cases relating to torture and degrading treatment, fair trials and privacy. The computer was able to look through that information and make its own decision – which lined up with those made by Europe's most senior judges in almost every case.</p><h2 style="text-align:justify;">Paradigm shift</h2><p style="text-align:justify;">Would such a use of AI make law more neutral and unbiased? Is justice dealt out by a machine is more objective than human justice? Of course, this relates to the question of whether we want law to be objective in such a way or do we want to look at the specific circumstances of each unique case from a human perspective? Then again, some would argue against AI objectivity by pointing out that humans feed it information so that it can never reach the ultimately objective approach.</p><p style="text-align:justify;">The idea is that we still need to feed the software with court rulings, precedent law and information from which it would develop syllogisms, reach decisions and propose further actions. So, while inputting information, certain discriminatory ideas could be included accidentally, allowing for discriminatory rulings. According to some researchers, for example, republican judges are more inclined towards stricter punishments than their more liberal counterparts. Also, according to simple statistics, judges reach harsher verdicts before lunch than after. And, as much as judges try to be objective, there are indications that courts are generally more forgiving towards women or more inclined to provide them with certain rights – especially mothers. So, despite our attempts at neutrality, certain patterns emerge, given a large enough sample, that the AI can pick up and continue with in its decision making process.</p><p style="text-align:justify;">So, will machine justice be more just than human justice? And if so, would we want such a thing?</p><p style="text-align:justify;">The AI judge in our example was wrong in around 20 per cent of rulings – its logic and conclusions were mostly correct, similar to those of its human counterparts. Taking that into consideration and given the cost-effectiveness of the use of software as opposed to using human lawyers – the final word could be left to the clients. Whether to hire lawyers or to opt for the more affordable solution, even though not ideally just. </p><h2 style="text-align:justify;">Conclusion</h2><p style="text-align:justify;">Until recently, the legal profession was much the same as it was two thousand years ago. From the times of Ancient Rome, we have had the prosecution, the defence and arbiters that consider the arguments and then pass judgements. </p><p style="text-align:justify;">We are witnessing now a paradigm shift – the ideas of law and justice are being reconsidered. How we adapt to emerging technologies, new client expectations and industry trends will determine the place of lawyers in this brave, new world.</p><p>​</p>
Interview with Patricia Gannon: The Importance of Female Leadership in Law Today Interview with Patricia Gannon: The Importance of Female Leadership in Law Today | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/03/Interview-Patricia-Gannon-Female-Leadership-Law.aspxInterview with Patricia Gannon: The Importance of Female Leadership in Law Today Interview with Patricia Gannon: The Importance of Female Leadership in Law Today | Views | Karanović & Nikolić string;#28/03/2018<p style="text-align:justify;">​<a href="/_layouts/15/FIXUPREDIRECT.ASPX?WebId=de941175-f8d4-4a41-8207-c9aec3e1e3b2&TermSetId=9c3dd502-4f62-4d66-9ef2-684258a8f9ed&TermId=f616689d-b764-4295-8508-2e08c1cc7e9e"><span style="text-decoration:underline;">Patricia Gannon</span></a>, founding partner at Karanović & Nikolić, was recently appointed Chair of the European Forum at the <a href="https://www.ibanet.org/"><span style="text-decoration:underline;">International Bar Association</span></a>. In this interview, she discusses her role at the helm of the largest global gathering of legal professionals and tackles the important topic of diversity in law, as well as female leadership from her unique perspective as female co-founder of a leading law firm from Southeast Europe. </p><p style="text-align:justify;"> </p><p style="text-align:justify;"><span class="ms-rteStyle-Quote">You have recently been appointed to the role of Chair of the European Forum at the IBA. What does this important position entail? </span></p><p style="text-align:justify;"><strong class="ms-rteStyle-IntenseQuote">Patricia</strong><strong class="ms-rteStyle-IntenseQuote">:</strong> As a firm, Karanović & Nikolić has been heavily involved with the IBA since our foundation. In particular, I have personally been active in a number of committees over the years as they represent a great way to stay on top of professional change. Most recently, the European Regional Forum, which is the forum responsible for managing and organizing all of the IBA conferences and events throughout Europe. The Forum is made up of 9,000 individual lawyer members and is the largest Forum within the IBA.</p><p style="text-align:justify;">I have served as an officer for the last 5 years – culminating in a number of years of practical experience involving conference and event organizing. Today, there are 10 officers reporting in from different law firms all over Europe, we also have an advisory board of 25 senior lawyers, and approximately 50 council members representing every country in Europe. The council members are responsible for liaising between the European Forum and their own countries. </p><p style="text-align:justify;"> </p><p style="text-align:justify;"><strong class="ms-rteStyle-Quote">What do you feel that you bring to that role and what are your aims and hopes for the year?</strong></p><p style="text-align:justify;"><strong class="ms-rteStyle-IntenseQuote">Patricia:</strong><span class="ms-rteStyle-Normal"> </span>I bring a certain dynamic to the role which hasn't always been seen and I am keen to innovate a little more in order to move the IBA towards becoming a more modern organization, really reflecting the changes in the legal profession. This year, in addition to running the normal day-to-day conferences, we are looking for special funding from the IBA for a number of exiting projects. </p><p style="text-align:justify;">One of them includes a review of the UK Modern Slavery Act on production and supply chain in the fashion industry. We hope to come to an understanding on the impact of extraterritorial legislation on corporates operating in this field. This is an exciting project which is relevant to consumers everywhere, as they are increasingly concerned about the human and environmental impact of clothes production.</p><p style="text-align:justify;">I am working on a very exciting meeting in Rome – it is the Annual Meeting of the IBA scheduled for October, and it will include a number of very exciting sessions dealing with the hottest legal topics in the world. The ERF sessions include "Remaking Rome – the Treaty of Rome and what Europe Needs Now".</p><p style="text-align:justify;">We will be working with other committees in a session on European luxury brands titled "Do you know where your clothes come from?". There will also be a session organized by all fora titled "The Future of Food – a Global Issue for Humanity", where we look at legal and policy issues relating to food production, resources, packaging, regulation, genetically modified content etc. </p><p style="text-align:justify;"> </p><p style="text-align:justify;"><strong class="ms-rteStyle-Quote">You are interested in the IBA diversity group. Will this relate to your role as the Chair of the European Forum?</strong></p><p style="text-align:justify;"><strong class="ms-rteStyle-IntenseQuote">Patricia:</strong> Global membership in the IBA today is about 70 percent male and 30 percent female – which is not entirely in recognition of the make-up of the profession generally. In certain countries it is almost 50-50, and this is including the judiciary, prosecutors, house-counsel, solicitors and barristers. Different parts of the profession are more female than others. Overall, considering the 70-30 percent membership, I feel that the 30 percent has not historically been represented appropriately throughout the organization and, in fact, a special task force is being established within the IBA to deal with diversity in general, including gender. </p><p style="text-align:justify;">In my role as Chair of the European Forum, I made it my priority at one of my first meetings to ensure that 50 percent of all the representatives in my Council are female. I am very pleased to say that today 47 percent of the Council members are female. As a result of that, I expect to see a new dynamic with greater productivity and focus. Out of that pool of talented women, I hope to see more and more of them promoted across the ranks of the IBA. It's a process of change which the legal profession, as any other needs to address.</p><p style="text-align:justify;"> </p><p style="text-align:justify;"><strong class="ms-rteStyle-Quote">It must be interesting, not only being a woman, but also representing a law firm from this part of Europe?</strong></p><p style="text-align:justify;"><strong class="ms-rteStyle-IntenseQuote">Patricia:</strong> Yes, indeed! The IBA has relatively low membership numbers from Southeast Europe, and I hope that raising the organization's profile in SEE will raise membership and that we will get more active and learn from our colleagues both from Western Europe and across the globe. With that in mind, I will be opening the Balkan Legal Forum – our traditional bi-annual conference dealing with this region – which is to be held in Vienna on the 14th of June. I am very pleased to be involved in this highly relevant conference for all practitioners working in Southeast Europe. With approximately 150 attendees, it is the perfect opportunity to meet old friends who understand the complexity of doing business in the Balkans, making new connections and developing new ideas for investment opportunities. </p><p style="text-align:justify;">As for Karanović & Nikolić and its role, we have been a corporate member of the International Bar Association for many years – which means that all the lawyers working with us are individual members of the IBA and can participate in its activities and learn from their peers through committee work. As a firm, we are keen to support all the organizations where lawyers can learn, develop and be in touch with current best practices, albeit from other markets. I think that we in Southeast Europe have some catching up to do in terms of the levels of professionalism that we need to provide to our international clients. The IBA is a great instrument for our further professional evolution.</p>
New Amendments to Serbian Tax Laws New Amendments to Serbian Tax Laws | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/01/New-Amendments-to-Serbian-Tax-Laws.aspxNew Amendments to Serbian Tax Laws New Amendments to Serbian Tax Laws | Views | Karanović & Nikolić string;#01/02/2018<p style="text-align:justify;">At the end of 2017, the <a href="http://www.parlament.gov.rs/national-assembly.467.html"><span lang="EN-GB" style="text-decoration:underline;">Serbian Parliament</span></a> passed amendments to Serbian tax laws, including the Law on Personal Income Tax (PIT Law), the Law on Contributions on Mandatory Social Insurance (CMSI Law), the Law on Corporate Income Tax (CIT Law), and the Law on Value Added Tax (VAT Law). </p><p style="text-align:justify;">These amendments introduce tax relief for salaries paid to employees in newly incorporated legal entities. Also, starting from April 2018, only service fees for business advisory services paid to non-resident legal entities will be subject to withholding tax, as opposed to all service fees paid to non-resident legal entities, as prescribed in the current CIT Law. In addition, Serbia continues to reduce the tax burden related to NPL write-offs.</p><p style="text-align:justify;">The amendments are generally effective as of 1 January 2018, with some exceptions explained below.</p><h1 style="text-align:left;">Income tax and social security contributions </h1><p style="text-align:justify;">Under the amendments to the PIT Law and the CMSI Law, salaries paid to first nine employees as well as to the employed shareholders and entrepreneurs, will be fully exempted from salary tax and social security contributions. The exemptions will start to apply from 1 October 2018 and shall be applicable for salaries paid by entrepreneurs and legal entities that are established before 31 December 2020. Salaries will be exempted from tax for the first 12 months of employment.</p><p style="text-align:justify;">Although the introduced relief will be of significance for small start-up companies, it is unclear whether the employees will be mandatory insured during the period of exemption since contributions for pension and disability, as well as for health insurance, will not be paid. </p><p style="text-align:justify;">A collective life insurance premium – which is paid for all employees, as well as monetary support for the purpose of employee medical treatment is exempted from taxation and the payment of social contributions. </p><p style="text-align:justify;">Under the amendments, the write-off of the NPLs is not subject to personal income tax as long as such a write-off is deductible for corporate income tax purposes. Also, it is prescribed that the amount of the write-off that was not collected after the sale of mortgaged real property is not subject to tax. </p><p style="text-align:justify;">The position of non-resident individuals is also tackled in the recent changes in the Serbian legislation. Amendments to the PIT Law clarify that the taxable income of non-residents covers income from work done in Serbia, as well as income generated from (i) any right emerging on the territory of Serbia, or (ii) any property which is located in Serbia and which is at the disposal of a non-resident. In addition, it is now clearly prescribed that foreign employees seconded to Serbia (i.e. expatriates) are liable to pay salary tax for work done in Serbia.</p><p style="text-align:justify;">The PIT Law and the CMSI Law prescribe new thresholds for tax payments and contributions in 2018 as follows:</p><ul style="text-align:justify;"><li>the general monthly salary tax deduction is increased to app. EUR 130 (RSD 15.000), from existing app. EUR 100 (RSD 11.790);</li><li>the minimal monthly contributions base is set to a gross amount of app. EUR 200 (RSD 23,053); and,</li><li>the highest annual contributions base for 2018 is set to a gross amount of app. EUR 2.700 (RSD 329,330).</li></ul><h1 style="text-align:justify;">Law on corporate income tax </h1><p style="text-align:justify;">The amendments to the CIT Law narrowed the list of service fees that are subject to the withholding tax. Serbian resident legal entities will have to pay withholding tax only for service fees paid to non-residents providing market research, accounting, auditing and other legal and business consulting services, irrespectively to the place of the provision or usage of those services. Also, the deadline for the payment of withholding tax is extended, so that one has to pay the tax within 3 days after paying the non-resident's fee. The amendments related to withholding tax are effective from 1 April 2018. </p><p style="text-align:justify;">Amendments concerning depreciation specify that fixed assets which are comprised out of immovable and movable parts should be classified in tax depreciation groups – which corresponds to the classification made for accounting purposes. Intangible assets (concessions, patents, licences...) will be depreciated using the proportional, instead of the declining method.</p><p style="text-align:justify;">Further to the decision of the <a href="https://www.nbs.rs/internet/cirilica/index.html"><span lang="EN-GB" style="text-decoration:underline;">National Bank of Serbia</span></a> (NBS) issued earlier in 2017 and which prescribes that NPLs should be written-off by the banks and evidenced off-balance, the amendments to the CIT Law prescribe that the expenses recorded by the bank, as a consequence of the write-off, are deductible for CIT purposes. These amendments are already applicable to the assessment of CIT for 2017.</p><h1 style="text-align:justify;">Law on value added tax</h1><p style="text-align:justify;">The main change introduced by the amendments to the VAT Law is related to concession agreements and public-private partnership agreements. Based on the amendments, any supply made between a concessionaire and the provider of the concession are not regarded as supply for VAT purposes, and therefore are not subject to VAT under certain conditions. This exception applies if both parties are registered VAT payers and if they would be entitled to a deduction of input VAT in case that the regular supply is carried. </p><p style="text-align:justify;">An important amendment introduces the possibility for VAT payers to reduce their output VAT if the tax authority determines that there was a misapplication of the "reverse charge" calculation. If the tax authority denies the deduction of input VAT to the taxpayer that applied the "reverse charge", the taxpayer may also reduce its output VAT on the basis of such the tax resolution. </p><p style="text-align:justify;">In order to align Serbian VAT rules with the VAT rules in the EU, amendments to the VAT Law introduce rules on the VAT treatment for the supply of "investment gold". Generally, the supply of investment gold and intermediation in the supply of investment gold are exempted from VAT.</p><p style="text-align:justify;">Amendments also relate to the VAT position of individuals. It is prescribed that individuals are entitled to a VAT refund paid when purchasing one's first apartment, in cases when the purchase price was paid to a bank account other than the bank account of the seller, as well as when the apartment is under mortgage or when the apartment is purchased in enforcement proceedings. Also, the supply of goods to travellers that do not have a permanent or temporary address in Serbia (not only supplies to foreign citizens) is exempted from VAT, if the value of the goods exceeds EUR 100.   </p><p> </p><p> </p><p><span class="ms-rteStyle-Quote"><em>The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></span></p><p>​</p>
Amendments to the Slovenian Construction Law Amendments to the Slovenian Construction Law | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2018/01/Amendments-to-the-Slovenian-Construction-Law.aspxAmendments to the Slovenian Construction Law Amendments to the Slovenian Construction Law | Views | Karanović & Nikolić string;#24/01/2018<p style="text-align:justify;">With the aim of breathing a bit of fresh air into the Slovenian construction legislation, three new laws have been adopted recently and will be applied with effect from 1 July 2018. The current Construction Act will be replaced with both the new Building Act and the Architectural and Civil Engineering Activities Act, while the current Spatial Management Act will also be subject to certain amendments. </p><p style="text-align:justify;">The Slovenian construction legislation went through several major changes due to its complicated and unclear nature. The previous law required broad project documentation, meaning very high expenses and long procedures for obtaining building permits. The new Building Act thus simplifies the procedure and brings many novelties, especially for investors to the procedure itself, with pre-decision being one of the most important ones. Apart from that, the Building Act does not require building permits for simple and temporary buildings. They also become unnecessary for building maintenance and demolition purposes, in which case only the demolition of the building should be registered with the administrative unit 8 days before the demolition starts. The Building Act further broadens the definition of "building" to the physical, construction and similar structural changes. </p><p style="text-align:justify;">Apart from the above, the Building Act brings the procedure of obtaining building permits and the procedure of obtaining environmental approval – where the latter is a requirement for the building permit, into the so called "integral procedure". According to the Building Act, only one body based on one document shall decide on both the building permit and environmental approval, while a special role is assigned to the general public, which will have an opportunity to review the documentation and submit comments and suggestions. </p><p style="text-align:justify;">One of the main novelties that the Building Act brings, in relation to the renewed procedure on obtaining the building permit, is the reduction of documentation that has to be submitted in order to obtain the building permit. The requested documentation is still to be defined in further regulations that will be adopted after the Building Act is applied. In order to simplify the procedure further, administrative units will have a more important role - being obliged to provide investors with non-binding information and advice. </p><p style="text-align:justify;">Investors will now have the possibility of requesting the administrative unit to issue a pre-decision in relation to the compliance of the project with the spatial planning documents and other construction law provisions. Investors will still be obliged to submit detailed project documentation alongside with the request for a pre-decision. However, investors will not be obliged to prove the ownership right or the right to build on land for the issuance of the pre-decision. The pre-decision will provide legal security and investment predictability for the investor, as the administrative unit will issue the opinion on the admissibility of construction even before the administrative unit issues the building permit and the investor obtains ownership over the land. The pre-decision will also be binding for the administrative unit when issuing the building permit itself, and will thus prevent spatial planning documents to be subsequently amended. </p><p style="text-align:justify;">The Building Act will also simplify the procedure of obtaining the building permit by amending the procedures on obtaining consent from the competent authorities. The Building Act thus abolishes consent (<em><strong>Slovene soglasja</strong></em>) and instead implements opinions<strong> </strong>(<em><strong>Slovene mnenje</strong></em>)<strong> </strong>by the authorities competent for granting the opinions (<em><strong>Slovene mnenjedajalec</strong></em>). In cases when the opinion authority will not issue the opinion, or the opinions are inconsistent or exceed the legal grounds, the administrative unit will be entitled to organise an oral hearing in order to harmonise opinions, and even decide on the opinion itself. If the opinion authorities will not issue an opinion during the given deadline, its' opinion may be substituted with the opinion of the authority supervising the opinion authority, or by the opinion of an expert.  </p><p style="text-align:justify;">The Building Act further implements broader conditions for the use of the short fact-finding procedure, which will be carried out for all buildings, if the project documentation is submitted together with the building designer's or project manager's confirmation on the fulfilment of the essential conditions, positive opinions of the opinion authorities, notices by third-party participants, and the confirmation on the payment of the communal fee or the compensation for degradation and usurpation. </p><p style="text-align:justify;">Also, certain changes will be implemented concerning the registration for the commencement of the construction. Instead of registration with the Labour inspectorate 15 days in advance, the investor will be obliged to register the commencement of construction with the administrative unit 8 days before the construction begins. The registration shall be submitted electronically or by form – which is still to be prescribed by the <a href="http://www.vlada.si/en/about_the_government/ministries/ministry_of_the_environment_and_spatial_planning/"><span lang="EN-GB" style="text-decoration:underline;">Ministry of the environment and spatial planning</span></a>. </p><p style="text-align:justify;">The Building Act also amends the legalisation procedures for existing buildings, aiming to solve past problems. It will be thus possible to legalise all buildings with deviations, which will be acceptable under the Building Act, as well as those buildings, which comply either with the Building Act or with the act which was in use during the construction time. The latter can be carried out 5 years after the Building Act enters into force. Further, all buildings, built prior to 1 January 1998, whose purpose and scale remained the same, can become legal. In those cases, permissions for long-existing buildings will be issued. </p><p style="text-align:justify;">Apart from the above, all procedures will be simplified by submitting the requests and documents via the electronic spatial information system, providing for the simple obtaining of permissions and faster communication between the authorities and parties in the procedures. The electronic system is planned to be implemented by 2021.</p><p style="text-align:left;"> </p><p style="text-align:left;"> </p><p style="text-align:left;"><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p>
New Rules on the Private Enforcement of Competition Laws in Slovenia New Rules on the Private Enforcement of Competition Laws in Slovenia | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/12/New-Rules-on-the-Private-Enforcement-of-Competition-Laws-in-Slovenia.aspxNew Rules on the Private Enforcement of Competition Laws in Slovenia New Rules on the Private Enforcement of Competition Laws in Slovenia | Views | Karanović & Nikolić string;#08/12/2017<p>After some delay, Slovenia finally adopted the new amendment to the Prevention of Restriction of Competition Act ("Competition Act"), which implements the Directive 2014/104/EU ("Directive") on actions for damages for infringements of the competition law. </p><p>While the Directive stated that member states should bring into force national regulations to implement it by December 2016, the amendment was adopted by the <a href="https://www.dz-rs.si/wps/portal/en/Home">National Assembly</a> on the 25th of April, 2017, and it came into effect on the 20th of May, 2017.</p><div style="text-align:justify;"> </div><p style="text-align:justify;">Up until now, compensation claims were scarcely regulated by the Competition Act. General rules of the law of obligations and civil procedure applied - apart from specific regulation of the statute of limitations, and some provisions regarding the interaction between the courts and the national competition authorities and the <a href="https://ec.europa.eu/commission/index_en">European Commission</a>.</p><p style="text-align:justify;">In order for the Directive to be implemented, 16 new articles were added to the Competition Act, and a couple more were amended. Still, the use of general rules of the law of obligations and civil procedure apply, however, there are a lot of new, specific rules which govern both procedural and substantive aspects of compensation claims. The outline of such novelties is presented below.</p><h3 style="text-align:justify;">The disclosure of evidence and handling of confidential information</h3><p style="text-align:justify;">The new provisions regulate in detail the rights and obligations of the parties, as well as third persons with regard to the disclosure of evidence. With the exception of leniency statements and settlement submissions – the disclosure of which is not permitted, parties may request access to the relevant evidence. A special concern is given to the protection of business secrets and other confidential information, where certain measures may be undertaken in order to ensure protection of such information.</p><p style="text-align:justify;">Taking into account the principles of necessity and proportionality, both the injured party and the infringer may request that the evidence is disclosed by the opposing party or third parties, including public authorities (such as the national competition authorities). If the party does not comply with its obligation to disclose the evidence, the court will decide on the legal costs at its discretion. Whereas, if the third party refuses to do so, the court's decision on the disclosure of evidence may be enforced in accordance with the rules governing the execution proceedings.</p><h3 style="text-align:justify;">The effect of the national competition authorities' final decisions </h3><p style="text-align:justify;">In addition to the court being bound by a final decision of the <a href="http://www.varstvo-konkurence.si/en/">Slovenian Competition Protection Agency</a> ("Agency"), the Competition Act now also stipulates that in case that the final infringement decision was adopted by a national competition authority of another EU member state, such a final decision generates an assumption that an infringement of competition law has indeed occurred, whereas counter-evidence is admissible.</p><h3 style="text-align:justify;">Joint and several liability of the infringers</h3><p style="text-align:justify;">Joint and several liability of the infringers, which is provided for by the Directive, is a general rule under the Slovenian law of obligations. The new amendment therefore brings into force only specific provisions regarding (i) infringers who are small or medium-sized companies, and (ii) infringers that received immunity from a payment of a fine.</p><p style="text-align:justify;">An infringer, with less than 250 employees and an annual turnover less than 50 million euros or 43 million euros of total assets, is liable only to its own direct and indirect purchasers, if its market share is below 5% and joint and several liability would inflict economic damage on it and cause its assets to lose all their value. Notwithstanding, such an infringer remains jointly and severally liable to other injured parties if they cannot obtain full compensation from the other infringers. Infringers, who compelled other companies to take part in the breach of competition laws or against whom a final court or administrative decision on the breach of competition laws was already issued, also remain jointly and severally liable to all injured parties.</p><p style="text-align:justify;">Joint and several liability of the infringer that received an immunity from fines, is limited to the amount of damages caused by this infringer to its own direct and indirect purchasers or suppliers.</p><p style="text-align:justify;">Another novelty is that the injured party who concluded the settlement with one of the infringers may claim damages from the rest of the infringers, but only up to the amount reduced for the co-infringer's share of the harm. Notwithstanding, the injured party may claim the reduced amount also from the infringer, with whom it concluded the settlement, if the other infringers are not able to reimburse the injured party and unless it was agreed in the settlement that such claim is not admissible.</p><h3 style="text-align:justify;">The Statute of Limitations</h3><p style="text-align:justify;">The period of limitation of actions for damages is five years (it was previously three years) from the moment the injured party becomes aware, or could be reasonably expected to become aware, of (i) breach of competition laws, (ii) damages incurred due to breach, and (iii) the infringer, whereas the action cannot be brought before the court after ten years (previously five years) from the moment damages had incurred. Notwithstanding the foregoing, the limitation period does not start to run before the breach of competition laws has ceased.</p><h3 style="text-align:justify;">Quantification of harm</h3><p style="text-align:justify;">The quantification of damages, often a tough nut to crack due to complex issues which have to be taken into consideration, is now expected to be facilitated by rules brought into force by the amendment. When the court is determining the amount of damages at its discretion in accordance with the general rules of civil procedure, it is now authorised to take into account the profit the infringer gained by the breach of competition laws. Moreover, a legal presumption that cartels cause harm is now in force, shifting the burden to prove otherwise to the infringer. The court can also ask the Agency or the national competition authority of another EU member state to give their opinion on the quantification of damages.</p><h3 style="text-align:justify;">The passing-on of overcharges and indirect purchasers</h3><p style="text-align:justify;">According to the amendment, the amount of the overcharge presents actual loss and while full compensation should be reached, it should not exceed the said amount. The infringer may invoke a passing-on defence, proving the overcharge was – in whole or in part – transferred to the next level of the supply chain. It has to be noted though, that in case the injured party passed-on the overcharge and it resulted in a decline of sales or purchases, it should be entitled to damages for loss of profit.</p><p style="text-align:justify;">If the indirect purchaser brings an action for damages, the claimant bears the burden of proving that an overcharge was passed-on to him. The amendment alleviates the claimant's onerous duty by introducing a legal presumption that the overcharges have indeed been passed-on to the claimant, if the claimant succeeds in proving that (i) the defendant breached competition laws, (ii) passing-on of overcharges to the claimant was a result of that breach, and (iii) the claimant purchased goods or services, that were the object of the breach. This legal presumption is rebuttable if the defendant can prove that the overcharge was not, or at least not in its entirety, passed on to the indirect purchaser.</p><h3 style="text-align:justify;">Consensual dispute resolution</h3><p style="text-align:justify;">If the parties consent to an alternative dispute resolution procedure, the court proceedings may be suspended for up to two years. Such a provision encourages the parties to reach an out-of-court agreement even though the court proceedings have already started.</p><h3 style="text-align:justify;">What all of this really means?</h3><p style="text-align:justify;">More claimant-friendly regulation, as well as adjustments of the compensation claims to specifics of competition law, are hoped to increase the number of private antitrust litigation cases throughout the EU member states. The idea of the Directive and the new amendment to the Competition Act is to raise the incentives for private damage claims and thus bring together, and ensure an effective combination of both public and private enforcement - since only the combination of both will ensure the full effectiveness of competition law.</p><p style="text-align:justify;"> </p><p style="text-align:justify;"><em class="ms-rteStyle-Quote"></em> </p><p style="text-align:justify;"><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p><p style="text-align:justify;">​</p>
The New Serbian Competition Law – Emerging Europe Interview with Rastko Petaković The New Serbian Competition Law – Emerging Europe Interview with Rastko Petaković | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/11/New-Serbian-Competition-Law–Emerging-Europe-Interview-with-Rastko-Petaković.aspxThe New Serbian Competition Law – Emerging Europe Interview with Rastko Petaković The New Serbian Competition Law – Emerging Europe Interview with Rastko Petaković | Views | Karanović & Nikolić string;#07/11/2017<p style="text-align:justify;">The interview with Rastko Petaković was published in November 2017, by Emerging Europe. To see the original article, please follow this <a href="http://emerging-europe.com/regions/serbia-drafts-new-competition-law/"><span lang="EN-GB" style="text-decoration:underline;">link</span></a>.</p><p style="text-align:justify;">The Serbian <a href="http://mtt.gov.rs/en/"><span style="text-decoration:underline;">Ministry of Trade, Tourism and Telecommunications</span></a>, together with the country's Competition Commission, has begun to draft new competition legislation, in order to improve the business environment.</p><p style="text-align:justify;">"The idea came from the competition authority, as it felt some changes might improve enforcement of the law and clarify some of the legal ambiguities to ensure the Serbian antitrust regime is further harmonised with that of the EU," explains Rastko Petaković, managing partner at Karanović and Nikolić, which will contribute to the new law.</p><p style="text-align:justify;">"A more immediate trigger however came from the changes to the law governing administrative procedure; in June this year, changes to the general rules on administrative procedure came into effect, some of which could also affect antitrust related procedures. To avoid ambiguities as to the application of general rules (governing general administrative procedures) vs. specific rules (governing special administrative procedure in antitrust cases), the authority wanted to speed up the process," he tells <em>Emerging Europe</em>.</p><p style="text-align:justify;">According to the President of the <a href="http://www.kzk.org.rs/en"><span style="text-decoration:underline;">Competition Commission</span></a>, Miloje Obradović, the new law will help better protect market competition, facilitating a more effective use of existing resources and offer better and higher quality products to consumers.</p><p style="text-align:justify;">"As long as the business community knows what to expect in interpretation, application and enforcement of the law, it will see the local legal framework as predictable and easier for doing business. As long as the antitrust law is EU based and predictable enough, it should reduce the risk of doing business in Serbia," Mr Petaković adds.</p><p style="text-align:justify;">"As to more specific changes, the new law is expected to increase merger filing thresholds which may reduce the number of filings being made in Serbia each year. It is also expected to bring more clarity and better align the regime with EU secondary regulation relating to restrictive agreements. Consequently, it should allow for more flexibility in setting up more flexible distribution structures," he says.</p><p style="text-align:left;"> </p><p style="text-align:left;"> </p><p style="text-align:left;"><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p><p>​</p>
Favouring Slovenian Origin is Contrary to EU Law Favouring Slovenian Origin is Contrary to EU Law | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/11/Favouring-Slovenian-Origin-is-Contrary-to-EU-Law.aspxFavouring Slovenian Origin is Contrary to EU Law Favouring Slovenian Origin is Contrary to EU Law | Views | Karanović & Nikolić string;#03/11/2017<p style="text-align:justify;">On the 8th of June, 2017, the <a href="https://europa.eu/european-union/about-eu/institutions-bodies/court-justice_en"><span lang="EN-GB" style="text-decoration:underline;">Court of Justice of the European Union</span></a> (CJEU) reached an important decision in the case Medisanus d.o.o. v General Hospital Murska Sobota (C-296/15) concerning public procurement procedures. The judgement is relevant from both the procedural aspect - since the National Review Commission (DKOM) was acknowledged for the first time as a "national court" for the purposes of Article 267 of the Treaty on the Functioning of the European Union (TFEU), as well as from the substantive point of view – due to the emphasis on the principle of equal treatment and the prohibition of discrimination within public procurement procedures. </p><h2>Disputed Public Procurement </h2><p style="text-align:justify;">General Hospital Murska Sobota reached a decision, on public procurement in 2015, concerning the purchase of two types of drugs derived from plasma. The tender documentation specified as a technical prerequisite that these drugs have to be obtained from Slovenian plasma. This prerequisite was included in the tender documentation based on the provision of the Law on Medicinal Products, which stipulates that supplies must come as a matter of priority from medicinal products manufactured from plasma collected in Slovenia. </p><p style="text-align:justify;">According to the opinion of the contracting authority, this should not be contravening EU primary law, since deviation from Article 34 of TFEU may be justified on the grounds of public health protection. Consequently, such a provision of the Law on Medicinal Products contributes to the national self-sufficiency by encouraging Slovenian citizens to make voluntary blood donations. The only contractor that could fulfil such a prerequisite was the <a href="http://www.ztm.si/en/"><span lang="EN-GB" style="text-decoration:underline;">Institute for Transfusion Medicine of the Republic of Slovenia</span></a>. </p><p style="text-align:justify;">The company <a href="http://www.medisanus.com/"><span lang="EN-GB" style="text-decoration:underline;">Medisanus d.o.o.</span></a>, which was offering drugs of the same type but from foreign plasma, after the rejection of its tender application, challenged the decision before DKOM. The procedure was subsequently stalled by the DKOM, since it made a request for a preliminary ruling before the CJEU. Namely, whether the request for a plasma of Slovenian origin is in accordance with the Public Procurement Directive.</p><h2>DKOM is Entitled to Request a Preliminary Ruling before the CJEU </h2><p style="text-align:justify;">For the first time in DKOM's existence, the CJEU had the opportunity to assess whether the DKOM could be considered as the "national court" for the purposes of Article 267 TFEU. Considering the established case law on similar national revision bodies in member states, the CJEU ruled that the DKOM fulfils all relevant criteria for the obtainment of such status which entitles the DKOM to request preliminary rulings. </p><p style="text-align:justify;">The DKOM has, namely, no connection with contracting authorities whose decisions it reviews, its members enjoy the same safeguards as judges in relation to their appointment, term of office and the grounds for removal. Its members are, furthermore, independent and the jurisdiction of the DKOM is mandatory and permanent. Also, the DKOM is established pursuant to a special law and the procedure is <em>inter partes</em>. </p><h2>Prerequisite on the National Origin of Plasma is Contrary to EU Law </h2><p style="text-align:justify;">The CJEU established that the drugs derived from human blood or plasma are "goods" in terms of Article 34 TFEU, and are as well "products" under the Public Procurement Directive. CJEU furthermore states that the prerequisite for a national origin falls under the scope of Article 34 TFEU, which prohibits obstacles to the free movement of goods. </p><p style="text-align:justify;">This prohibition covers both the quantitative restrictions, as well as measures that are capable of hindering, directly or indirectly and actually or potentially, imports between member states. This prohibits all discriminatory practices that limit the free movement of goods within the EU. The paramount conclusion of the CJEU is that the prerequisite on national origin of plasma is discriminatory per se, since it does not allow companies that collect plasma from other countries to successfully participate in the tender procedures. </p><p style="text-align:justify;">It is true that the Public Procurement Directive itself enabled references to certain origin, however only if this is justified by the subject matter of the procurement and such reference is only exceptional. It also derives from the CJEU case law that in such cases a specific source stated in the tender documentation has to be accompanied by the words "or equivalent" in order for the tender to be in compliance with EU law. There was no such wording in the case at hand. </p><p style="text-align:justify;">Pursuant to the fact that it is possible to deviate from the principle of the free movement of goods in certain exceptional cases, the CJEU deliberated whether such deviation is justified. The sole reason for justification could only be based on the grounds of public health protection. The CJEU did note that the prerequisite for a national origin of plasma pursues a legitimate objective. </p><p style="text-align:justify;">However, the priority principle for medicinal products manufactured industrially from Slovenian plasma does not contribute decisively to encouraging the Slovenian population to make voluntary blood donations. Thus, the CJEU held that the priority principle is disproportionate. </p><h2>Conclusion </h2><p style="text-align:justify;">The most important conclusion for the practice on public procurements will be the fact that neither the Public Procurement Directive nor the primary EU law forbid tender documentation provisions which would require that drugs are derived from Slovenian plasma, even if national legislation requires such a provision. </p><p style="text-align:justify;">A decision like that, which further limits the scope of potential deviations from the free movement of goods, will be beneficial for public procurement procedures, since such practices are not uncommon. In light of enhancing the professionalism of the DKOM, the decision on admissibility of its request should be welcomed. Thus, we can anticipate further activity from parties which will surely more often propose to DKOM to request preliminary ruling in cases where ambiguous legal provisions are at play.</p><p> </p><p> </p><p><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p><p>​</p>
Slovenia Adopts Class Action Law Slovenia Adopts Class Action Law | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/10/Slovenia-Adopts-Class-Action-Law.aspxSlovenia Adopts Class Action Law Slovenia Adopts Class Action Law | Views | Karanović & Nikolić string;#13/10/2017<p style="text-align:justify;">The <a href="http://www.dz-rs.si/wps/portal/Home/"><span lang="EN-GB" style="text-decoration:underline;">Slovenian National Assembly</span></a> adopted the Class Action Law, which will implement an important institute to the Slovenian legal system, i.e. mechanism of class action. This mechanism is already applied in the UK, Belgium, Netherlands and Sweden, but is yet to be implemented in numerous EU member states. The new mechanism of class action will provide for the injured parties, both natural and legal persons, to file a compensation claim in case of mass harm situations. Besides a collective action for compensation, the law also provides for the possibility to file a collective action for the cessation of illegal behaviour against the infringers, as well as the procedure of collective settlement in case of mass harm events. The law will come into force on the 21<sup>st</sup> of October, 2017, while it will apply with effect from the 21<sup>st</sup> of April, 2018.</p><p style="text-align:justify;">The law regulates procedures for collective redress in cases when the infringer breached consumers' or workers' rights, as well as rights arising from the prohibition on the restriction of competition, or rights from the financial instruments market, and in cases of damage caused by environmental accidents. The law aims to offer solutions for numerous cases of harm mass situations, in which individuals, injured by the same infringer's act, did not seek judicial protection mainly due to the high cost and low amount of individual claims for compensation. Apart from providing for easier access to the court protection, the law also aims to stop and prohibit infringers from carrying out illegal behaviour by providing the possibility to file a collective action for the cessation of illegal behaviour against the infringers.</p><p style="text-align:justify;">Court procedure under the new law can be commenced by the senior state attorney or by the private-law legal person, the activity of which is non-profit and is related to the breached right, wherein the court will assess in each case individually whether the above mentioned person is representative to start the procedure or not. An exception regarding the commencement of the court procedure applies to the consumer disputes, in which an the action for cessation of illegal behaviour of the breaching companies can be submitted only by the <a href="http://www.beuc.eu/beuc-network/members/zveza-potrosnikov-slovenije-zps"><span lang="EN-GB" style="text-decoration:underline;">Slovenian Consumers' Association</span></a>, chamber, or association of companies of which the breaching company is a member. In case the company with its seat located in Slovenia breaches the rights of consumers, coming from any other European Union member state, an action against the Slovenian company can be also submitted by the organisation, established for the protection of consumers' rights under that EU member state.</p><p style="text-align:justify;">Even though the injured party will not be party to the court procedures, governed by the new law, the injured party will nevertheless have the possibility to submit comments during the procedure. After the court procedure is finished, the infringer will pay the notional amount, whether directly to the injured parties, or to the notary public, who will act as a fiduciary of the compensation in certain cases. The law also introduces a public registry of class actions, where everyone will be able to access certain documents within the individual procedures free of charge.</p><p style="text-align:justify;">The aim of the new law is therefore to provide for the easier enforcement of the right to compensation to injured individuals and legal persons, while the breaching companies can also be prohibited from carrying out illegal behaviour in the future. On the other hand, the law also provides for the safeguards against abusing such court procedures by regulating the procedure, based on which the court will first - after preliminary assessing the admissibility and completeness of the action - assess whether the requirements for approval of the action exist, while only after that it will proceed with deciding on the claim. It is also important to note that it will be possible to commence a procedure under the new law in relation to the mass harm situations which occur before the new law comes into force, if the claim for compensation is not statute-barred.</p><p> </p><p> </p><p><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p><p>​</p>
A New Concessions Act Passed in Croatia A New Concessions Act Passed in Croatia | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/10/A-New-Concessions-Act-Passed-in-Croatia.aspxA New Concessions Act Passed in Croatia A New Concessions Act Passed in Croatia | Views | Karanović & Nikolić string;#06/10/2017<p style="text-align:justify;">The New Croatian Concessions Act entered into force on the 14<sup>th</sup> of July, 2017. Those already involved in the pending concession granting procedures do not have to worry about legal instability because the application of the Old Concessions Act will continue for procedures that were initiated earlier. </p><h2 style="text-align:justify;">Much Ado about Nothing </h2><p style="text-align:justify;">The entire Croatian public rose to their feet when the motion of the New Concessions Act was published, motivated primarily by the <a href="https://www.total-croatia-news.com/business/18346-prime-minister-orders-review-of-zlatni-rat-concession-decision"><span lang="EN-GB" style="text-decoration:underline;">"Zlatni Rat" affair</span></a>, which took place in April, 2017. The Split-Dalmatia County granted a concession for one of the most attractive beaches on the Adriatic to a dubious company, in the procedure which was later annulled by the Ministry of Administration. This event drew the public's attention to the passing of the New Concessions Act, causing protestations from several NGOs. </p><p style="text-align:justify;">In fact, the novelties are mostly oriented on improving the technical aspects of the procedure, improving efficiency and accelerating the procedure, while several material aspects remain unchanged, especially those related to the maritime domain.</p><h2 style="text-align:justify;">Reasons for Exclusion </h2><p style="text-align:justify;">The New Concessions Act provides a number of facts, as reasons for the exclusion of a potential concessionaire, i.e.: </p><ol style="text-align:justify;"><li>breaches of labour, environmental and social regulations; </li><li>an on-going bankruptcy procedure; </li><li>the potential concessionaire committed a severe professional breach, bringing into question his integrity;</li><li>conviction for a criminal deed, which was committed conducting business activities; </li><li>cartel-like behaviour; and,</li><li>a previous concession agreement concluded with the respective entity terminated, or the potential concessionaire had to pay damages due to its defaults. </li></ol><p style="text-align:justify;">It is important to note that these reasons must be published in the tender documents, if the concession provider wishes to apply them in the respective procedure. However, the reasons under a) and c) seem very broad and quite vague. In fact, it is left for the concession provider to adjudicate which professional omissions or environmental breaches are severe enough to qualify for exclusion. It remains to be seen if the respective provision will result in any abuses, as such ambiguities usually do. </p><h2 style="text-align:justify;">Pledge over Concessions</h2><p style="text-align:justify;">A lot of noise was raised in the general public concerning the possibility of the concessionaire to pledge its concession right in favour of the financial institution. However, the solution to this issue remained unchanged in comparison with the Old Concessions Act. So, the concession right may be subject to a pledge in favour of the financial institution (exclusively), if the consent of the concession provider is obtained. </p><p style="text-align:justify;">Further, the financial institution may exercise its right as pledgee, by transferring the concession right to another entity. In such case, consent by the concession provider should be obtained, and the new entity entering the legal relation is to fulfil all the legal prerequisites for being a concessionaire. </p><p style="text-align:justify;">Despite not being a novelty, we expect this mechanism will be used more often in the upcoming period by the banks in the maritime domains, beaches and marines. The concessions have proven to be low-risk investments thus far, so the expected increase of investments in the Adriatic will most certainly be followed by an increase of the banking sector. </p><p style="text-align:justify;">The New Concessions Law does not provide major novelties with respect to the transfer of the concession itself, which still remains subject to concession provider`s consent. The only addendum to the content is reflected in the legal possibility to transfer the concession through the restructuring procedure. </p><h2 style="text-align:justify;">Sub-concessions </h2><p style="text-align:justify;">The obligation to obtain the concession provider`s consent to a sub-concession agreement also remains. Further, in order to amend the existing sub-concession agreement or change the sub-concessionaire, it is also necessary to obtain the concession provider`s consent. The reasons for the exclusion of a potential sub-concessionaire would still apply. </p><h2 style="text-align:justify;">Misdemeanours</h2><p style="text-align:justify;">As expected, the New Concessions Act provides more severe fines for misdemeanours committed with respect to the concessions. It especially focuses on exploitation without the adequate permit or concession agreement. In that respect, the upper limit amounts to HRK 1,000,000 (approximately EUR 133,000), while the director may be fined by up to HRK 20,000 (approximately EUR 6,600). There is also a number of other determined misdemeanours, with the highest prescribed monetary fine of HRK 500,000 (approximately EUR 66,000).</p><h3 style="text-align:justify;">Expectations </h3><p style="text-align:justify;">It is safe to say that the New Concessions Act did not bring any vital changes to the procedure, but only administrative relief - which always represents good news. However, when we talk about concessions related to beaches and marinas, we face another problem – the maritime domain. It is important to note that all maritime domains which could potentially be subject to concessions are not registered with the competent land registries, and their limits are not yet determined in all of the Croatian counties. Without a step forward in the right direction on that front, Croatia will not see as much development as may be expected. However, as investments increase, we expect that the local municipalities and counties will take the lead in this process. </p><p style="text-align:justify;">For further information on this subject, please write to <a href="mailto:info@karanovic-nikolic.com">info@karanovic-nikolic.com</a>.</p><p style="text-align:justify;"> </p><p style="text-align:justify;"> </p><p style="text-align:justify;"><span class="ms-rteStyle-Quote"><em>The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em> </span></p>
The Untapped Potential of South Eastern Europe The Untapped Potential of South Eastern Europe | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/09/The-Untapped-Potential-of-South-Eastern-Europe.aspxThe Untapped Potential of South Eastern Europe The Untapped Potential of South Eastern Europe | Views | Karanović & Nikolić string;#14/09/2017<p style="text-align:justify;">We have seen emerging markets in Central and Eastern Europe opening up and developing quite quickly. Some of them have done so through their ascension to the European Union, and others by organising their legislation in accordance with European standards, opening up borders, having foreign investors come in, as well as putting in place free trade agreements and investment incentives.</p><p style="text-align:justify;">Of course, transitional economies traditionally have a lot to offer to foreign investors. Some of the benefits include less competition and less mature and saturated markets. Usually, these are consumer markets in need of products and services that are not there yet. Or that are just too sparsely available and at unsuitable levels of sophistication. </p><p style="text-align:justify;">The countries of South Eastern Europe, with their singular economic infrastructure, and with a number of state-owned companies ready to be privatised, remain highly attractive for foreign investments tired of more mature European markets. </p><p style="text-align:justify;">Foreign investors in the countries of this region have the possibility of owning a 100% interest in a company, options of employing foreign citizens and open bank accounts in domestic and foreign currencies. This, along with and estimated regional GDP growth of 3% per annum until 2020, and positive forecasts and rankings in the <a href="http://www.doingbusiness.org/rankings">Doing Business reports</a>, encourage further investments in Western Balkan countries.</p><p style="text-align:justify;">For local companies, this means turning towards new markets that are outside of their countries. It is an incentive for local manufacturers, service providers or financial institutions to go beyond their home markets. On the other hand, foreign investors and investments create new jobs, raise the standard of living and the purchasing power of the population, as well as increase the competitiveness of local players. </p><p style="text-align:justify;">However, there is a certain transitional period, during which the rules are not yet firmly established. For example, when the local legislation is not harmonised with EU laws. There is also a vacuum in terms of institutions – especially courts – that are not able to apply the same standards or the same expertise or professionalism than in other countries such as for instance those in the EU are in a position to offer.</p><h2 style="text-align:justify;">A Learning Curve in doing Business</h2><p style="text-align:justify;">When it comes to transitional economies, the local way of doing business is usually different to the established way in more mature markets. However, it is a learning process on both ends. Locally, you have to get used to different standards and methods, as well as different compliance rules. This was a problem in Ukraine, for instance: how to deal with the Western, standardised compliance rules that were previously unknown off in that country. </p><p style="text-align:justify;">There is also a learning curve for investors. Obviously, they have to do a lot of research about a country before investing or entering a new market. Getting accepted by local communities is something for which one cannot prepare easily – surprises might happen. But, in the end, it is beneficial for both ends.</p><p style="text-align:justify;">The Southeast European markets hold a lot of appeal, from a global perspective. They are quite diverse, but all are opportune. The Slovenian market is more adapted to Western standards, since Slovenia has been a member of the European Union for a number of years now. The country has very close ties to other Western economies. Traditionally, there is a lot of interaction with a number of its surrounding countries – Austria, Italy and Hungary to a certain extent. </p><p style="text-align:justify;">On the other hand, Serbia is still seen as standing aside in relation to the European market. Smaller markets such as Bosnia Herzegovina, Macedonia or Montenegro are very much untapped markets with fast development potential. </p><p style="text-align:justify;">The Balkans draw investors from around the world, especially from the EU, Turkey, Russia and China. On their part, the countries of that region further foster a friendly environment for foreign investors through tax reforms and various incentives.</p><h2 style="text-align:justify;">A Foothold into Europe</h2><p style="text-align:justify;">One of the more appealing characteristics of South Eastern Europe, especially when compared to Central and Eastern Europe, is that it is still very much untapped. Looking at the events in the past 20 years, we can definitely see the same pattern being duplicated in South Eastern Europe. Particularly in markets such as Serbia, Macedonia, Montenegro and Bosnia and Herzegovina. These are markets that offer huge opportunities and that still have a number of regulations a bit weaker, or more flexible than in the EU. </p><p style="text-align:justify;">For instance, Macedonia is 10<sup>th</sup> on the World Bank's Doing Business List. The GDP is expected to exceed 3.3% in 2018, due to higher domestic demand, and public and foreign investments. And, Macedonia's "One-Stop-Shop" system enables investors to register their businesses four hours after the application submission – ranking it number four globally in the Starting Business category.</p><p style="text-align:justify;">With a 15% income tax, <a href="http://ras.gov.rs/invest-in-serbia/why-serbia">Serbia</a> has one of the most favourable corporate income taxes in the wider region. The country signed free trade agreements to markets counting 1.1 billion people – the EU, Customs Union (Russia, Kazakhstan, and Belorussia), Turkey, CEFTA, and others. I see Serbia as a good gateway for Chinese and other overseas investments into the rest of Europe. For example, the 10 billion euro-worth "Belt and Road" infrastructure project in one of such initiatives that will greatly improve communications and increase Chinese presence in Europe and Asia.</p><p style="text-align:justify;">Clearly, the existing historic relations and numerous trade agreements set the stage for positive opportunities. In a certain sense, through these markets, despite some of them not being a part of the EU yet, one can definitely get a firm foothold into the rest of Europe.</p><p style="text-align:justify;"> </p><p style="text-align:justify;"> </p><p style="text-align:justify;"><em class="ms-rteStyle-Quote">The opinions expressed in this article are the author's own and do not reflect the view of any other partner of or any other person associated with Karanović & Nikolić. This document is not, and should not be regarded as investment or legal advice or as a recommendation regarding any particular course of action.</em></p>
The Buzz in Serbia: CEE Legal Matters Interview with Darko Jovanović The Buzz in Serbia: CEE Legal Matters Interview with Darko Jovanović | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/08/The-Buzz-in-Serbia-CEE-Legal-Matters-Interview-with-Darko-Jovanović.aspxThe Buzz in Serbia: CEE Legal Matters Interview with Darko Jovanović The Buzz in Serbia: CEE Legal Matters Interview with Darko Jovanović | Views | Karanović & Nikolić string;#24/08/2017<p style="text-align:justify;">The interview with Darko Jovanović was published in August 2017, by CEE Legal Matters. To see the original article, please follow this <a href="http://ceelegalmatters.com/index.php/serbia/6948-the-buzz-in-serbia-interview-with-darko-jovanovic-of-karanovic-nikolic">link</a>.</p><p style="text-align:justify;">Karanović & Nikolić Partner Darko Jovanović is upbeat. "Serbia is once again a hotspot in the region," he says, "this time not for unpleasant reasons, but for its economic recovery."</p><p style="text-align:justify;">According to Jovanović, "the previous and current government made significant moves forward in terms of financial consolidation — tightening and cuts to loose ends of the public deficit — to increase the attractiveness of the country to FDI." Jovanović refers, among other things, to an investment incentives scheme adopted by the Republic of Serbia, and says that, "as a result of the concerted efforts of the government, the IMF is projecting that the country's deficit will shrink to 1.1 % of GDP." </p><p style="text-align:justify;">Jovanović also refers positively to a recent Western Balkan Summit in Trieste, where "it was decided to create a Regional Economic Area, consolidating markets of some 20 million people — Serbia, Macedonia, Montenegro, Albania, Bosnia, and Kosovo. A transport community treaty was also signed, which should make transport more efficient and facilitate the transfer of goods. Also good is that there is a higher commitment by European banks that attended the meeting, and they committed to investing 3.5 billion euros in that Regional Economic Area, out of which 50% will be committed to Serbia exclusively."</p><p style="text-align:justify;">Jovanović reports "high activity on the infrastructure side, predominantly on the basis of highway construction projects with Chinese construction firms." He says, "there will be a new railway built between Belgrade and Budapest, in large as the result of the good cooperation between two countries, plus Hungary's overall commitment to Serbian investments, which also includes the recent acquisition by Hungary's OTP bank of the Serbian NGB subsidiary." According to Jovanović, "this railway will fit within that context."</p><p style="text-align:justify;">Similarly, he says, "we were delighted to come to the end of the first/epic PPP project in Serbia — a waste treatment project in Vinča, Belgrade — which is now in the final phase of awarding the project on the basis of Serbia's PPP/Procurement legislation." In addition, he reports, "a new and even bigger concession has been announced for the Belgrade airport expansion." The project has created "huge interest" in foreign investors, Jovanović says, including Vinci, from France, Inchon Airport from Seoul, GMR (which operates New Delhi airport), and HNA, from China, which Karanović & Nikolić is advising on the process. "The decision should be made in the next two months, he says, and the process is expected to result not only in a good concession fee to the government but also in improvements and expansions to the current airport.</p><p style="text-align:justify;">"And we're expecting to see several large privatisations as well," he says, "including several agriculture companies and the Bor mining and smelting complex." According to Jovanović, "if the government manages to sell it — probably to either Chinese or Russian investors — we would see further financial consolidation, as currently it's losing money, so it would need to be improved first before it becomes profitable."</p><p style="text-align:justify;"> "Real Estate is booming," Jovanović says, "primarily because of Israeli investments, but also because of South African REITs that have come and bought two largest shopping malls in Belgrade." He says new residential complexes and new office parks are popping up regularly, and he describes a notable development on the Belgrade waterfront. "At the end of the day," he says, "there are a number of very good things happening in Serbian real estate, influenced to some extent by the relaxation of certain procedures for issuing construction permits."</p><p style="text-align:justify;">The banking sector in Serbia is consolidating, Jovanović reports, with several banks exiting the market and others expected to follow in the next few months. "But the sector is not shrinking," he says, "because their assets are being taken over by existing banks (such as OTP and Societe Generale) or by new banking players (such as Direktna Bank and RiverStyxxInvestments). He says the first wave of NPL transactions is more or less over in Serbia, "but we're now starting to see more secondary sales of those portfolios."</p><p style="text-align:justify;">Finally, Jovanović reports that there are ongoing discussions about amending the Serbian Constitution, "If these amendments happen, other legislative shaping may be expected as well." </p><p style="text-align:justify;">Notwithstanding possible amendments to the Constitution, Jovanović says changes to the country's Company Law are being considered, as are changes to the PPP/Concession Law, which will l be changed to fix some of the practical problems that arose in recent projects. "We also expect to see changes in the Law on Capital Markets, which are still relatively weak in Serbia," he says, as well as "changes to the foreign exchange regulations, as well as to the Public Procurement law, which also needs to be reshaped." According to Jovanović, "at the end of the day all these changes should have the same goal: To improve the market to attract domestic and foreign investors."</p><p style="text-align:justify;">Ultimately, Jovanović says that he's optimistic about the state of things in Serbia, though he cautions that political and other developments across CEE may affect the country's progress. "As always, lots of things in the region are moving into right direction," he says, "and currently forecasts look very good."​</p><p style="text-align:justify;"> </p><p style="text-align:justify;"><br></p><p style="text-align:justify;"><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p><p style="text-align:justify;">​</p>
The Third Energy Package – What the Macedonian Electricity Market Needs? The Third Energy Package – What the Macedonian Electricity Market Needs? | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/07/The-Third-Energy-Package–What-the-Macedonian-Electricity-Market-Needs.aspxThe Third Energy Package – What the Macedonian Electricity Market Needs? The Third Energy Package – What the Macedonian Electricity Market Needs? | Views | Karanović & Nikolić string;#18/07/2017<p><span style="font-family:"times new roman", georgia, serif;font-size:1rem;">Two and a half years after the expiry of the deadline for the implementation of the Third Energy Package, the Macedonian authorities seem eager to finalise this process in the near future. The new draft legislation has been i</span><span style="font-family:"times new roman", georgia, serif;font-size:1rem;">n the pipeline for quite some time, but until now its adoption was postponed due to different reasons. From recent meetings between the delegation of the Energy Community and the representatives of the new <a href="http://www.vlada.mk/?language=en-gb">Government of the Republic of Macedonia</a>, it appears that the officials set up an agenda for overcoming the</span><em style="font-family:"times new roman", georgia, serif;font-size:1rem;"> status quo</em><span style="font-family:"times new roman", georgia, serif;font-size:1rem;">.</span><br></p><p>During the process for transposing the Third Energy Package into national legislation, the main focus will have to be put on the requirements for unbundling, market opening, regional market integration and strengthening the position of the Energy Regulatory Commission ("<strong>ERC</strong>"). The most challenging issue which needs to be tackled is certainly the postponement of the electricity market liberalisation.</p><h2>Unbundling </h2><p>The Macedonian electricity market consists of the following three key players:</p><ul><li>the state-owned <strong><em></em></strong><a href="http://www.mepso.com.mk/en-us/">Electricity Transmission System Operator of Macedonia (MEPSO)</a> (<em>Macedonian</em>: <em>Македонски електропреносен систем оператор)</em>, acting as a transmission system operator and as a market operator;</li><li>the<em> </em>state-owned <strong><em></em></strong><a href="http://www.elem.com.mk/?lang=en">Macedonian Power Plants (ELEM)</a><em> </em>(<em>Macedonian</em>: <em>Електрани на Македонија</em><em>)</em>, the biggest domestic electricity producer and an operator with a limited distribution network; and, </li><li><strong><a href="https://evn.mk/">EVN Makedonija​​​​​​</a></strong>, a private company which owns and operates most of the distribution network (i.e. 99.38%).</li></ul><p>In line with the provisions from the Second Energy Package, MEPSO has been legally unbundled for quite some time, whereas ELEM and EVN Makedonija are not compliant with the applicable unbundling requirements. In particular, both companies hold supply licences and do not keep separate financial accounts for each of their regulated activities. According to the latest Annual Implementation Report prepared by the Energy Community Secretariat, EVN Makedonija undertook several steps to rectify this situation, however a functional unbundling was not reached. </p><p>The revised electricity legislation intended to transpose the Third Energy Package will have to introduce rules for ownership unbundling and the certification of the transmission system operator. According to recent news, the draft certification rules have been finalised, but their adoption will come after the amendments to the primary energy legislation. The authorities will also need to ensure the implementation of the legal and functional unbundling of the distribution system operators, EVN and ELEM.</p><h2>Market opening and Eligibility </h2><p>In 2014, a few months before the scheduled full liberalisation of the electricity market, the Government decided to postpone it until the 1<sup>st</sup> of July, 2020. The liberalisation process should now happen in several stages i.e. each year a certain group of consumers will become eligible to choose its electricity supplier. For instance, non-households (having less than 50 employees and annual turnover below EUR 10 million) with electricity consumption over 100 MWh will enter the open market on the 1<sup>st</sup> of July, 2018, while those with electricity consumption over 25 MWh on the 1<sup>st</sup> of July, 2019. The households and the rest of the non-households will be eligible from the 1<sup>st</sup> of July, 2020.</p><p>The liberalisation was postponed in order to prevent shock prices, especially in the case of households. Now, on the one hand, according to an announcement, this breach of the Treaty establishing the Energy Community will be rectified. But on the other hand, the Government plans to introduce a daily tariff for cheap electricity, which needs to be carefully structured in order to avoid any further non-compliance with the Energy Community acquis. The Third Energy Package allows for such temporary measures, but they must focus on the socially vulnerable population and not be burdensome for the other electricity consumers. </p><p>Another obstacle to the establishment of a well-functioning electricity market are the public service obligations imposed on EVN and ELEM. On one side, EVN carries out a supply of last resort, while ELEM generates electricity to meet the demands of the suppliers of last resort, and sells the electricity at regulated prices. As noted by the Energy Community, these public service obligations represent a breach of the Third Energy Package - since they are excessive and without time limitation.</p><h2>Regulatory Independence and Powers</h2><p>All requirements from the Third Energy Package, with respect to the national regulatory authorities, aim to ensure an independent and autonomous decision-making process. To reach this goal, the regulatory authority should be independent from any public or private party, it should have a separate annual budget and sufficient human and financial resources for exercising its powers. </p><p>The national legislation satisfies the Third Energy Package independence requirements, with respect to the ERC, except for the lack of a rotation scheme for ERC board members. Hence, the announced amendments need to focus on this issue and on transposing all of the regulatory powers from the Third Energy Package.</p><p><br></p><p>​ </p><p><em class="ms-rteStyle-Quote">The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em></p><p> </p><p>​</p>
The New Montenegrin Law on Prohibited Advertising The New Montenegrin Law on Prohibited Advertising | Views | Karanović & Nikolić https://www.karanovic-nikolic.com/knviews/Pages/2017/06/14/The-New-Montenegrin-Law-on-Prohibited-Advertising.aspxThe New Montenegrin Law on Prohibited Advertising The New Montenegrin Law on Prohibited Advertising | Views | Karanović & Nikolić string;#14/06/2017<p>On the 27<sup class="ms-rteFontSize-1">th</sup> of April, 2017, Montenegro introduced the new Law on Prohibited Advertising ("<strong>Law</strong>"), <span class="ms-rteFontSize-2">which </span>came into force on the 17<sup class="ms-rteFontSize-1">th</sup> of May, 2017. This Law represents a new piece of Montenegrin legislation deriving from the process of harmonising the local law with the EU Directive 2006/114/EZ about misleading and comparative advertising. </p><p>Its aim is to protect traders and consumers from prohibited advertising. Since the consumers have already been protected from prohibited advertising through the Law on Consumer Protection, the primary focus of the new Law is to provide traders with adequate protection in relation to their competitors (<em>business to business</em>).</p><h3>What is Prohibited Advertising?</h3><p>Advertising is defined as the production of a representation which recommends the advertiser, its professional or business activity, in order to promote the supply of goods, services and immovable property. The Law explicitly prohibits:</p><ol><li><strong>Misleading advertising</strong> - any advertising, including the manner of presentation of the advertiser, which deceives, or is likely to deceive, the persons to whom it is addressed and might affect their inadequate economic behaviour or injures or is likely to injure the interests of competitors; and,</li><li><strong>Comparative advertising</strong> - any advertising which directly or indirectly refers to a competitor or goods and services offered by a competitor. </li></ol><p>However, comparative advertising shall be permitted when the following conditions are met:</p><ul><li>it is not misleading within the meaning of the Law and the Law on Consumer Protection;</li><li>it compares goods or services meeting the same needs, or intended for the same purpose;</li><li>it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, including the price;</li><li>it does not discredit or denigrate the trademarks, trade names, other distinguishing marks, goods, services, activities or relations between competitors;</li><li>in the case of products with a designation of origin, it relates in each case to products with the same designation;</li><li>it does not take an unfair advantage of the reputation of a trademark, trade name or other distinguishing marks of a competitor, or of the designation of origin of competing products;</li><li>it does not present goods or services as imitations of goods or services bearing a protected trademark or trade name; and,</li><li>it does not create confusion among traders, between the advertiser and a competitor, or between the advertiser's trademarks, trade names, other distinguishing marks, goods or services and those of a competitor.</li></ul><p>The trader who performs advertising shall be responsible for misleading and comparative advertising ("<em>prohibited advertising</em>").</p><h3> Protection from Prohibited Advertising</h3><p>The lawsuit for the cessation of prohibited advertising can be filed by: </p><ol><li>chambers and interest trade associations; and, </li><li>an organisation for consumer protection (authorised to file a lawsuit for the protection of collective consumer interests). </li></ol><p>When Montenegro enters the European Union, authorised persons from the EU will be able to initiate the procedure for the protection from prohibited advertising which affects or is likely to affect the traders from EU member states. In order to do this they need to: </p><ul><li>be authorised to initiate the procedure for the collective protection of traders from prohibited advertising in their EU member state; and, </li><li>they have to submit relevant evidence accordingly. </li></ul><p>The lawsuit is filed against a particular trader, or a group of traders from the same economic sector, that uses or encourages the same or similar prohibited advertising, or a holder of the codex stipulating rules that encourage such advertising.</p><p>If the lawsuit is well-grounded, the court will order the cessation of prohibited advertising and the prohibition against its repetition in the future. The court will also potentially order the defendant to publish the entirety or a part of the decision at its own expense and correct such advertising.</p><p>The court decision upholding the lawsuit creates an obligation for the defendant to refrain from the same or similar prohibited advertising even towards other traders who did not participate in the court procedure.</p><p>However, since this Law is the result of obligations that Montenegro has in the course of its negotiations for entering the EU, and because it is a new and specific regulation directed exclusively towards prohibited advertising, it remains to be seen what effect it will produce in practice.</p><p>Should you have any questions or concerns, do not hesitate to contact us:</p><p><a href="mailto:Marjan.Poljak@karanovic-nikolic.com">Marjan.Poljak@karanovic-nikolic.com</a></p><p><a href="mailto:Milena.Roncevic@karanovic-nikolic.com">Milena.Roncevic@karanovic-nikolic.com</a></p><p><a href="mailto:Milica.Filipovic@karanovic-nikolic.com">Milica.Filipovic@karanovic-nikolic.com</a></p><p><a href="mailto:Sonja.Guzina@karanovic-nikolic.com">Sonja.Guzina@karanovic-nikolic.com</a></p><p> </p><p><span class="ms-rteStyle-Quote"><em>The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.</em> </span></p>