CEE Legal Matters

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  • Schoenherr Advises ImWind and Bloch3 on Obtaining EIA permit

    Schoenherr has advised ImWind and Bloch3 on obtaining an environmental impact assessment permit in Austria for the Rustenfeld wind farm.

    ImWind is an Austrian renewable energy producer.

    Bloch3 is a family-run renewables project developer with over 25 years of experience operating wind farms and biogas plants.

    According to Schoenherr, this permit paves the way for the construction of four wind turbines with a total capacity of 26.6 megawatts in Zistersdorf, located in Lower Austria’s Weinviertel region.

    The Schoenherr team included Partner Christian Schmelz and Attorneys at Law Christoph Jirak and Sarah Wolf.

  • Sullivan & Worcester Advises EBRD on Participation in Akbank SCF Program

    Sullivan & Worcester has advised the European Bank for Reconstruction and Development on its unfunded risk participation in Turkiye’s Akbank SCF program. Allen & Overy Shearman Sterling’s Turkish affiliate law firm of Gedik & Eraksoy reportedly advised the EBRD as well.

    According to Sullivan & Worcester, the deal focuses on EBRD’s “unfunded risk participation in Turkiye’s Akbank SCF program in favor of Sok, a leading retailer in Turkiye. The program makes it possible for over 100 suppliers – primarily small and medium-sized businesses that are mostly based in cities struck by the 2023 earthquakes that claimed over 55 thousand lives – to benefit from the SCF program for the first time, providing them with access to affordable working capital solutions.” Furthermore, the firm reports that the deal is supported by the European Commission’s IPA II Fund. 

    The Sullivan & Worcester team included Partner Geoffrey Wynne and Counsel Daniela Barrdear.

  • The Evolving Regulatory Role of Competition Authorities: A CEE Legal Matters Round Table

    On January 16, 2025, competition experts from Moldova, North Macedonia, and Romania, sat down for a virtual round table moderated by CEE Legal Matters Managing Editor Radu Cotarcea to discuss the evolving role of the regulatory authorities in their countries.

    Round Table Participants: 

    • Anca Diaconu, Partner, Nestor Nestor Diculescu Kingston Petersen
    • Carolina Parcalab, Legal Manager, ACI Partners
    • Jasmina Ilieva Jovanovik, Partner, Debarliev Dameski & Kelesoska 

    CEELM: Let’s start with the basics – who is the competition regulatory body in your jurisdiction and how is its leadership appointed?

    Ilieva Jovanovik: In North Macedonia, the local authority responsible for competition regulation is the Commission for Protection of Competition. It is a state-independent authority comprised of a president and four members. These members are elected by the Assembly of North Macedonia following a proposal from the government. Additionally, the commission employs professional supporting staff. Members of the commission serve a five-year term and can be reappointed for a second term. The commission, although an independent organization, is still financially dependent on the state as it has no income on its own and is entirely financed by the state budget. Notably, a significant legislative change took place last year, redefining the role and qualifications of the commissioners. Previously, not all commissioners were fully involved in the daily operations of the commission, yet the recent amendment to the law now requires all commissioners to be professionally engaged and present in the daily operations of the commission. This change is expected to strengthen the role of the commission and improve its overall effectiveness. 

    Parcalab: In Moldova, the competition authority is the Competition Council. It is a public authority led by a plenum, which is a collegial decision-making body consisting of a president, two vice presidents, and two additional members. The president also has executive powers. Members of the plenum are appointed for a five-year mandate, which can be extended for an additional five-year term. The appointment process requires a simple majority vote in parliament.  Although the Competition Council is designed as an independent authority, its independence is questionable, as it remains heavily influenced by parliament, which also has the authority to dismiss members.

    Diaconu: In Romania, the competent authority is the Romanian Competition Council (RCC), a collegial body, whose plenum consists of a president, two vice presidents, and six other competition counselors. The RCC is a large institution, employing around 350 people, with numerous territorial directorates throughout the country.

    The current plenum was appointed last year. This came with some delay, after a period when the authority had difficulties in enforcing competition rules due to the lack of quorum since some of the members’ mandates were expired.

    Separately, there have been some issues with regard to some of the plenum members’ mandates, due to a legal provision that was later deemed unconstitutional. Companies have invoked these in the context of court challenges against sanctions imposed by the authority, questioning the legitimacy of the plenum issuing the sanctioning decisions. Due to the significant impact of accepting such a potential line of argumentation (that may result in the annulment of a significant number of sanctioning decisions), the Competition Council has even submitted requests for preliminary rulings before the European Court of Justice. While the final outcome of some of these cases is still pending, I expect that these issues will increase the level of diligence of the Competition Council in terms of procedural formalities.

    CEELM: How active would you say your competition authority is relative to others in the region?

    Ilieva Jovanovik: Compared to neighboring countries, the Competition Commission in North Macedonia, I assume that the Macedonian commission is less active, especially with respect to investigation and infringement proceedings. The level of regulatory activity largely depends on the level of economic development. A more dynamic market generally leads to a more active competition authority. North Macedonia is a relatively small country with a modest economy, and as a result, the regulator’s activity is modest.  On the other hand, the commission itself is quite a small organization, with only 25-30 employees, including commissioners, and it operates on a very limited budget and resources, which affects the level of activity of the commission. Therefore, it continues to strive for financial independence which shall increase its activity. Filing fees currently go to the state budget, and the government determines how much funding is allocated to the Competition Commission. Over the past few years, the commission has handled around 150-180 cases per year in total, including merger filings, antitrust investigations, and state aid approvals. Merger notifications represent the majority of its caseload which is the result of the fact that the filing thresholds for mergers are very low. These thresholds are mainly based on the parties’ turnovers and no matter the local nexus of the notifiable transaction, meaning that many foreign transactions are subject to merger filing requirements even without having any effect on the local markets in North Macedonia. This keeps the commission busy. Additionally, North Macedonia has the lowest filing fees in the region. For instance, the filing fee is EUR 100, while clearance costs EUR 500. This makes the process more accessible to businesses.

    Diaconu: The RCC is one of the most active competition authorities in the region, and its enforcement extends beyond Romania. The RCC has conducted dawn raids in multiple countries with the assistance of local competition authorities. For example, they recently conducted a dawn raid in the Netherlands on Nike and, in the past, have also carried out raids in Italy or Belgium.

    Additionally, the RCC usually follows trends from other EU jurisdictions. They have launched an investigation into Apple, following similar actions in France, Italy, Germany, and Poland. The investigation focuses on how Apple grants access to end-user data for advertising purposes within the iOS ecosystem.

    The RCC has also finalized investigations into a major pharmaceutical company for limiting the market access of generic drugs. This is not the first time the RCC has tackled such practices. This most recent case allegedly involved strategies aimed at influencing doctors’ decisions to the company’s more expensive innovative drugs over generics. 

    Additionally, the authority has conducted three dawn raids related to potential abuses of superior bargaining position. The investigations are targeting the dietary supplement distribution market, and supply of liquid medical oxygen in hospitals and car repair shops.   

    Parcalab: The activity of Moldova’s Competition Council is modest. However, we are fortunate to have Romania as a neighboring country, as the Romanian Competition Council provides significant support. Many Moldovan competition lawyers also receive support from Romania, which shares the same language. This makes it easier for us to understand complex legal frameworks without translation difficulties.

    The Moldovan Competition Council cannot be compared to those of EU countries. It was only established in 2012 and faces severe resource constraints, both in terms of funding and personnel. Currently, only half of its job positions are filled. At present, the council employs 57 people. The council has struggled to attract young professionals due to low salaries and a significant workload. 

    Recent years have seen the council’s activity influenced by Moldova’s EU candidate status. Efforts are being made to align national legislation with EU regulations and soft laws. However, institutional capacity remains a challenge. The council primarily focuses on merger clearances rather than investigations. In 2024, it closed only two investigations, but there are currently around 19-20 ongoing cases. The next 1-2 years will be dedicated to transposing EU directives into Moldovan regulations.

    CEELM: Has the role or scope of your competition authority grown or shifted recently? How?

    Ilieva Jovanovik: A significant legislative development in North Macedonia is the new law on unfair trade practices in the agricultural and food products supply chain, which falls under the supervision of the Competition Commission. Although the law came into force in 2024, the commission will begin enforcing it actively in 2025. Many EU countries have similar laws, but local lawmakers have added additional restrictions. The law limits all types of discounts between sellers and buyers to a maximum of 10%. This raises concerns about whether such a restriction is truly in line with competitive market principles. There are also questions about potential consequences for consumers, as reduced rebates could lead to higher product prices. It remains to be seen how the Competition Commission will enforce this law. Implementation is expected to be challenging.

    Additionally, North Macedonia does not have an FDI reporting obligation. The current FDI legislation differs from EU regulations and FDI filings in North Macedonia are more statistical in nature. However, as the country aligns its legislation with the EU, this may change in the near future.

    Parcalab: In Moldova, we face a similar situation regarding unfair commercial practices. Although amendments were made in 2023, there have been no investigations or actions in this field so far. Critics have raised concerns that such additional tasks might dilute the council’s primary role. They argue that these responsibilities should be delegated to specialized units, while the council focuses on preserving the economic spirit of competition law.

    Regarding FDIs, we have a mechanism called “notification of investment of state security importance.” This falls under the jurisdiction of a separate council, which includes representatives from various ministries. Any investment deemed significant to the state security must go through this process. However, it’s uncertain whether this power will be delegated to the competition council in the future. 

    Diaconu: The RCC has constantly taken up new roles/ increased its toolkit. Perhaps the most significant added role is that of the Secretariat of the Commission for the Examination of Foreign Direct Investments (FDI notifications are submitted and handled by the RCC, before being screened on merits by this Commission). The FDI regime proved particularly relevant to companies, considering that it also applies to EU investors (including Romanian citizens/companies), has an extremely broad scope (for example, security of the citizens and of collectivities among the areas falling under scrutiny) and the notification threshold is rather low with no guidelines as to its calculation. This broad scope means almost everything could qualify as an investment subject to screening, leading to a significant number of notifications. For instance, in 2023 alone, there were about 250 cases finalized, among which around 100 were through the issuance of decisions. One notable case saw a transaction cleared with commitments. 

    We have also witnessed more action based on the law transposing UTP Directive. Notably, the commitments imposed by the RCC in Profi/ Mega Image merger (between significant retailers) drew inspiration from the regime on Unfair Trading Practices (for example, protection of suppliers by implementing rules for listing and delisting of suppliers and imposing transparency obligations).

    CEELM: From your clients’ perspectives, what are their biggest challenges or complaints?

    Parcalab: One major issue in Moldova is the lack of clarity around how the competition council operates and evaluates practices. A recurring complaint is the absence of market studies since the council’s establishment in 2012. Although the council claims these studies exist, they haven’t been made publicly available. Without a strong competition culture, businesses need clearer guidelines on decision-making and market assessments. This uncertainty creates a risk-averse environment that stifles innovation and commercial practices, which are crucial for the market’s growth.

    Ilieva Jovanovik: In North Macedonia, a lower level of competition culture remains a significant challenge. Many businesses are unaware of competition laws and the benefits they offer. To address this, we actively invest in educating clients and business sectors about the main rules of competition law and how to incorporate them into daily practices. The competition authority is also making efforts to raise the awareness of the business sector about the competition legislation, by participating in forums, and seminars, and preparing educational materials despite their limited resources.

    Recently, the biggest challenges and concerns from food and agriculture companies spiked when the new law on unfair trade practices was introduced, and businesses in these industries are now adapting to these frameworks.

    Diaconu: In Romania, the main challenges revolve around the FDI regime. It’s a relatively recent regulation, and everyone is still trying to navigate this landscape. The law is broadly drafted aiming to leave significant leeway to authorities in an uncertain and continuously evolving global context. While the margin left to the authority aims to protect national interests, compliance requires significant effort, time, and money from businesses. Change is inevitable, but with it comes the challenge of staying compliant while adapting to these new requirements.

    CEELM: What are your predictions for your competition authorities in the next five years?

    Diaconu: I expect enforcement to either remain robust or become even stricter. Competition authorities enjoy the spotlight, and they’re unlikely to relinquish it. I also anticipate more clarity on new regulations since there are some uncertainties and additional guidance is essential. The Competition Council is generally receptive to feedback. For instance, business associations and practitioners have been involved in the drafting of FDI guidelines and we expect our proposals will be considered by the authority. These developments would benefit all stakeholders. 

    Parcalab: Considering Moldova’s efforts to align with EU standards, I expect all relevant soft laws to be incorporated into Moldovan legislation within the next five years. The number of investigations will likely rise as the council strengthens its institutional capacity. Ideally, the focus will shift from punishment to helping markets develop. This would encourage businesses to prioritize compliance and prevent anti-competitive behavior proactively. I also foresee increased interest from lawyers and economists, which would foster a stronger competition culture in Moldova. Ultimately, effective competition law benefits everyone, not just the state. 

    Ilieva Jovanovik: In North Macedonia, we anticipate more progress in implementing EU competition legislation and regulatory updates. For example, the EU vertical block exemption regulations introduced in 2022 are still not implemented as well as the latest EU updates in the horizontal agreements’ regulation and guidelines which we expect to finally be adopted in the near future. We also hope the state will recognize the importance of the Commission and invest in resources to build its capacity, which would elevate the competition culture. Additionally, new government initiatives, including the strategic investors’ law, could bring a significant increase in state aid cases to be handled by the Commission, especially as they require approval under state aid rules. Looking ahead, we expect and hope for successful outcomes and brighter days for competition law and culture in North Macedonia.

  • Good News for Startups and Investors: The IP Contribution is Tax-Free

    On 1 January 2025, inter alia, an amendment to the Personal Income Tax Act relating to intellectual property (IP) contribution entered into force.

    According to the amendment, if an individual who creates an intellectual property (the original IP right-holder) transfers its IP to a business company as an in-kind contribution, he/she will not have to pay income tax on the share he/she acquires in the company up to the contribution’s value indicated in the company’s articles of association (practically the market value).

    Under the previous legislation, income tax had to be paid in such a case, the tax base of which equalled the value of the transferred IP. This was an obstacle for inventors who wanted to raise venture capital for the development of the product they wanted to create from their IP.

    The tax was an obstacle, since IP right-holders most common way to raise venture capital is that they establish a startup, transfer their IP to it and afterward the venture capital investors provide cash contribution to that same startup. Since it was the inventor (i.e. the provider of IP contribution) who had to pay the tax on the IP transfer, many inventors could not afford to raise venture capital in this way. This was compounded by the fact that an inventor does not receive any cash income after the IP transfer, therefore, the tax payment had to be covered by the inventor’s other resources. This change now will predictably foster venture capital investments and innovation.

    By Gabriella Galik, Founding Partner, KCG Partners Law Firm

  • Wolf Theiss Advises McWin on Partnership with ElephantSkin

    Wolf Theiss, working alongside Goodwin Procter, has advised McWin Capital Partners on its partnership with Austrian scale-up ElephantSkin.

    According to Wolf Theiss, ElephantSkin produces the world’s first patented antimicrobial, washable, and reusable gloves, aiming to reduce the use of single-use plastic gloves and thereby minimize environmental waste and costs. Under a marketing-for-equity agreement, McWin will introduce ElephantSkin’s products to restaurant operators within its affiliated network in exchange for an option by the McWin Food Tech Fund to acquire an equity stake in ElephantSkin.

    The Wolf Theiss team included Partner Christian Mikosch, Counsel Doris Buxbaum, and Associate Paul Samonig.

    Wolf Theiss was unable to provide additional information on the matter.

  • Montenegro: New Legal Framework in the Field of Construction and Spacial Planning

    At the session held on December 19, 2024, the Government of Montenegro adopted the Bill of Law on Construction of Buildings and the Bill of Law on Spatial Planning. It was proposed that these laws should be adopted through an expedited procedure.

    So far, these areas have been comprehensively regulated through the Law on Spatial Planning and Construction of Buildings. In the event of the adoption of the proposed changes, instead of the current single law, these areas will be separated into two new laws, while the issue of legalization is planned to be addressed through a separate third law.

    The Bill of Law on Construction of Buildings is aligned with Directive 2006/123/EC on services in the internal market, Directive 2005/36/EC on the recognition of professional qualifications, Directive 2013/55/EU amending Directive 2005/36/EC on the recognition of professional qualifications, and Annex I of Regulation No. 305/2011 of the European Parliament and the Council on laying down harmonized conditions for the marketing of construction products and repealing Directive 89/106/EEC.

    One of the significant changes introduced by the Bill of Law on Construction of Buildings is the requirement to obtain a construction permit and the decentralization of responsibilities regarding the issuance of construction permits between the Ministry and local self-government units.

    In the regular procedure, a construction permit will be issued to the investor within 30 days from the date of submitting the application, which must include: the main project; a report on the positive review of the main project; approval from the chief country or city architect; proof of liability insurance for the designer and reviewer of the main project. All other required documentation will be obtained ex officio by the competent authority.

    The obligations of the investor before the commencement of construction, the deadline for completing the construction of the building, and the responsibilities in case of a change of investor are also stipulated. The investor is required to complete the construction of the building within five years from the date the construction permit is issued. If construction is not completed within the specified timeframe, the investor must pay an annual fee and continuously maintain the construction site until an occupancy permit is obtained.

    According to the Bill of Law on Construction of Buildings, the local self-government authority will issue construction permits for buildings, except in cases involving country buildings of general interest; buildings with a gross construction area of 3,000 m² or more; and hotels or tourist settlements with four or five stars, as well as tourist resorts.

    Exemption from the obligation to obtain a construction permit will apply to temporary and auxiliary structures.

    A new provision introduces the requirement for a technical inspection to issue an occupancy permit for all buildings, except for the category of single-family residential houses.

    The Bill of Law anticipates that the construction permit system will achieve a higher level of safety and security for buildings, as well as increase legal certainty for investors. The Bill of Law also includes new activities in the construction process, prescribes greater responsibility for individuals engaged in construction activities, and introduces enhanced inspection oversight through construction inspectors.

    The Bill of Law provides revised conditions for licensing companies engaged in the preparation of technical documentation, including design, review of technical documentation, professional supervision, technical inspections, and designer supervision, as well as other licenses related to activities prescribed by the Bill of Law.

    The Bill of Law on Construction of Buildings envisions the establishment of a separate Chamber of Architects, as well as the formation of two chambers: the Engineering Chamber of Montenegro and the Chamber of Architects and Planners of Montenegro, comprising architects, urban planners (from both engineering and non-engineering disciplines), and spatial planners.

    The Bill of Law on Spatial Planning defines a new policy in this area, with a primary focus on the decentralization of planning tasks and the allocation of responsibilities between the country and local self-governments for adopting planning documents, in accordance with European regulations and practices. This approach partially restores the authority of local self-governments in the field of spatial planning and development.

    The Bill of Law designates and separates planning documents into country-level planning documents and local-level planning documents. These documents are defined in a manner that allows for comprehensive planning assessment and definition of various spaces at both local and country levels, considering their environmental characteristics, significance, and coverage area. Additionally, the Bill of Law redefines instruments for implementing planning documents and addresses construction land. It introduces and defines the concept of urban land consolidation, a process that merges existing cadastral parcels within the consolidation area into a single unit and reorganizes them into urban plots in accordance with the planning document. This process will be conducted by the Urban Land Consolidation Commission.

    The Bill of Law also envisions the development of a spatial management program, which will outline the preparation of new planning documents, amendments and additions to existing ones, as well as measures significant for the creation of these documents.

    The Bill of Law stipulates that the revision of a country-level planning document will be carried out by the Revision Commission, while the revision of a local-level planning document will be conducted by the business entity responsible for drafting the country and local planning documents.

    Of particular importance is the Spatial Plan of Montenegro, as proposed in the Bill of Law. This plan serves as a strategic document and the general basis for the organization and development of Montenegro’s territory. It is adopted for a 20-year period and defines national goals and measures for spatial development in line with Montenegro’s economic, social, environmental, and cultural-historical development.

    Also of significance is the development of a national architectural development strategy, adopted by the Government of Montenegro. This strategy aims to promote architecture as part of the national culture and identity. Additionally, it establishes conditions for improving the quality of the built environment.

    Additionally, the Bill of Law proposes the establishment of the Chamber of Architects and Planners of Montenegro, as well as inspection oversight in this field through an urban planning inspector.

    The Bill of Law on Spatial Planning is aligned with Directive 2014/89/EU which is establishing a framework for maritime spatial planning, Directive 2005/36/EC on the recognition of professional qualifications, Directive 2013/55/EU amending Directive 2005/36/EC on the recognition of professional qualifications, and the Protocol on Integrated Coastal Zone Management in the Mediterranean (Madrid, 2008), which was ratified through the adoption of the Law on Ratification of the Protocol on Integrated Coastal Zone Management in the Mediterranean in 2011.

    Finally, it is important to highlight the instability of Montenegrin legislation in this area, given the fact that numerous changes have been introduced over the past decade, with several laws being enacted during this period, often with significant differences. Before 2008, Montenegro had a model where this area was regulated by multiple laws, such as the Law on Spatial Planning and Land Development, the Law on Construction of Buildings, and the Law on Construction Land. For the first time in 2008, a unified law was introduced to comprehensively regulate this field – the Law on Spatial Planning and Construction of Buildings – which remained in force until 2017. During its applicability, this law underwent as many as eight amendments.

    A similar fate befell the Law on Spatial Planning and Construction of Buildings, adopted in 2017, which has been amended six times to date. Now, without valid justification, there is a return to the pre-2008 model, involving multiple laws regulating this area. This approach reflects a lack of continuity in the legislative framework and creates additional legal uncertainty. Unfortunately, the General Regulation Plan of Montenegro, which was supposed to be adopted more than four years ago, has still not been implemented, further worsening the situation in this field.

    Instead of constant changes to the legal framework, it is crucial to focus on the effective implementation of existing regulations. The issue often lies not with the laws themselves but with their enforcement and oversight. Even less-than-perfect legal solutions can yield results if consistently applied. Conversely, frequent legal amendments destabilize the system, discourage investors, and hinder long-term planning, which is not in the interest of a country striving to attract foreign investments and achieve sustainable development.

    By Lana Vukmirovic Misic, Senior Partner and Dajana Drljevic and Bojan Rolovic, Associates, JPM & Partners

  • Kondracki Celej Advises bValue Fund on USD 10 Million Investment in Fudo Security

    Kondracki Celej, working with Sparring, has advised bValue Fund on a USD 10 million investment in Fudo Security. Pillsbury Winthrop Shaw Pittman reportedly advised Fudo Security.

    Fudo Security is a privileged access management solutions company that specializes in helping organizations protect sensitive IT systems.

    The Kondracki Celej team included Partner Rafal Celej, Senior Associate Karolina Piotrowska-Andryszczyk, Associate Monika Twerdochlib, and Paralegal Gabriela Lewicka.

  • Hungary: AI Act Provisions Applicable from February 2025

    The AI Act introduces a comprehensive legal framework for companies dealing with AI systems in the EU. From 2 February 2025, companies subject to the regulation must take steps to ensure AI literacy and ensure that no prohibited AI practices are used. Non-compliance could lead to substantial fines.

    The applicability of Chapter I and Chapter II of the AI Act

    EU Regulation 2024/1689 (“AI Act”) establishes a uniform legal framework for the development, the placing on the market, the putting into service, and the use of artificial intelligence systems (“AI systems”) within the Union. The AI Act entered into force on 1 August, 2024, with its rules becoming applicable at a later date. In particular, the first two chapters of the AI Act will come become applicable on 2 February 2025, for which companies must make the necessary preparations. Below is a brief summary of the provisions contained within these chapters:

    I. Chapter I – AI Literacy

    Chapter I includes general provisions, outlining the scope of the AI Act and providing definitions. Article 4 of the AI Act imposes a practical obligation on companies that provide or deploy AI systems, to ensure mandatory AI literacy within the companies.

    AI literacy means skills, knowledge and understanding that allow providers, deployers and affected persons to make an informed deployment of AI systems, as well as to gain awareness about the opportunities and risks of AI and possible harm it can cause.

    To meet the AI literacy requirements, companies that provide and deploy AI systems must take measures to ensure a sufficient level of AI literacy of their staff and also other persons dealing with the operation and use of AI systems on their behalf. This in practice, means promptly organizing training and education for everyone involved in the AI provision, use and deployment chain within the company.

    II. Chapter II – Prohibited AI practices

    The chapter on prohibited AI practices also becomes applicable on 2 February. Practices listed in this chapter are prohibited from 2 February 2025. Examples of such practices include:

    • AI systems that deploy subliminal techniques beyond a person’s consciousness or purposefully manipulative or deceptive techniques, with the objective, or the effect of materially distorting behavior.
    • AI system that exploits any of the vulnerabilities of a natural person or a specific group of persons with the objective, or the effect, of materially distorting the behaviour of that person(s);
    • AI systems that infer emotions in workplaces or educational settings; and
    • AI systems that create or expand facial recognition databases from internet images or CCTV footage.

    Non-compliance with rules on prohibited AI practices could lead to administrative fines up to EUR 35,000,000 or 7% of the company’s global annual turnover. Other sanctions, including sanctions for noncompliance with AI literacy can be established by the member states.

    By Csaba Vari, Counsel, and Anna Howe, Junior Associate, Baker McKenzie

  • SSK&W Advises Xplorer Fund on Exit from Photon Entertainment

    SSK&W has advised Xplorer Fund on its exit from Photon Entertainment to Fidiasz ASI.

    Xplorer Fund is a BRIdge Alfa fund.

    Photon Entertainment operates in the edtech industry. According to SSK&W, the company is the creator and manufacturer of the globally innovative Photon educational robot and an entire ecosystem of educational products, including educational kits, a portal for the teacher community, and an academy with courses.

    The SSK&W team included Partner Szymon Syp.

  • Trade Debt Recovery in North Macedonia

    Recovering trade debts in North Macedonia can be challenging, especially when maintaining ongoing commercial relationships with local debtors. The recovery process entails a business creditor attempting to collect payment for an unpaid invoice for goods or services provided to a local customer who is legally obligated to pay what they owe.

    Debtors may fail to honor their debts according to the agreed payment schedule, may not respond to reminder calls, emails, or letters, or may be difficult to reach. In some cases, debtors might evade payment by making excuses, such as raising complaints about the quality of the goods or services delivered by the creditor under the contract. Additionally, Macedonian customers may be hesitant to engage with creditors known for an aggressive approach to debt recovery, which can cause the creditor to lose goodwill in the market. However, creditors cannot allow their long-overdue debts to accumulate and potentially turn into bad debts, so decisive action is often necessary.

    In North Macedonia, the only option for recovering uncontested trade debt from local debtors is summary debt collection proceedings. These proceedings are overseen by public notaries, who, as trustees of the courts, are authorized to receive proposals for summary debt collection from creditors and issue payment orders to local debtors. The payment orders issued by public notaries are equivalent to court payment orders.

    The proceedings are set in motion by a proposal from a creditor for the issuance of a payment order against a particular debtor. The proposal must be submitted to the public notary who is competent to act as a trustee of the court, which has territorial jurisdiction where the debtor has its registered office. The proposal must be detailed and include the relevant corporate details of the creditor and the debtor, i.e. their company names, identification numbers, registered seats, authorized representatives and official e-mail addresses for court correspondence, accompanied with their recent trade excerpts from the Central Company register of North Macedonia. Furthermore, the creditor must enclose along with the proposal a document substantiating its claim. These documents include invoices, bills of exchange, accounts receivable ledger, interest calculation and others. The creditor must include expert witness reports, if applicable, or a letter from an expert witness stating that they have been engaged by the creditor to prepare an expert witness report. Otherwise, the creditor will not be permitted to present expert witness reports in court proceedings if the debtor objects to the payment order.

    The creditor also must substantiate any claims for interest. Commercial parties usually make express contractual provisions for the payment of interest on overdue invoices. If parties have agreed on an interest rate for late payments in their contract, the creditor should include a claim for interest in the proposal. However, such a contractual interest rate agreed between the parties cannot be higher than the established statutory penalty interest, increased by a maximum of 50%. Upon receipt of the proposal from the creditor, the notary public will review it to ensure it is complete. If all formal requirements are met, the notary public will issue a payment order, ordering the debtor to settle the outstanding debt within three days of receipt of the proposal. The notary public will serve the payment order to the debtor, who has 8 days to either settle the outstanding debt in full or contest the payment order.

    If the debtor fails to contest the payment order by the legal deadline, it becomes enforceable, the same as a court judgment. This allows the creditor to enforce it directly against the debtor’s assets. Enforcement proceedings commence with filing an enforcement request by the creditor to the competent enforcement agent, accompanied by the enforceable court judgment, which will issue an enforcement order to block the debtor’s bank accounts. If any funds are transferred to the debtor’s accounts, they will be confiscated and transferred to the creditor via the Enforcement agent’s bank account. If no funds are available in the debtor’s bank accounts, the creditor may request that enforcement be carried out by other enforcement methods, such as seizure and sale of the debtor’s movable and immovable property.

    If the debtor files a complaint against the payment order, the notary public must refer the case to the court which has territorial jurisdiction based on the debtor’s registered office. Particular attention should be given when the creditor and the debtor have agreed to arbitration in their contract. The consensus of the Macedonian courts is that when a creditor launches summary debt proceedings, it has repudiated the arbitration clause in the contract. The Macedonian courts tend to view the commencement of summary debt proceedings as a rejection of the contractual obligation to resolve disputes through arbitration. Hence, unless the debtor raises a jurisdictional objection based on the arbitration clause in the contract, the Macedonian courts will generally uphold their jurisdiction over the dispute.

    The court’s review of a complaint against a payment order is confined to examining the facts concerning the disputed part of the claim. If the debtor files a counterclaim alongside their complaint, the court is not allowed to consider it within the proceedings related to the payment order. A final decision on the creditors’ claim results in a court judgment that completely supersedes the notarial payment order. The statutory time limits for completion of the proceedings before the court are relatively short. The first instance court must issue a judgment within six months upon the receipt of the case from the public notary. In case of an appeal by either party, the appeals court must issue a decision within thirty days following the receipt of the appeal. In practice, however, the courts often exceed the statutory deadlines, and the proceedings might take several years to be completed.

    During the court proceedings, the creditor may propose interim remedies, including prohibiting the debtor from the alienation of his movable property; the alienation or encumbering of his immovable property, selling securities and shares; receiving a claim from the debtor’s debtor or ordering the debtor’s payment service provider not to allow any payments from his bank accounts. Interim remedies may be allowed if the creditor makes it probable that the claim exists and that there is a danger that, without such a measure, the debtor will significantly impede the collection of the claim by alienating, concealing or otherwise disposing of his property.

    By Gjorgji Georgievski, Partner, and Boban Velickovic, Associate, ODI Law