Category: Croatia

DTB has advised Interxion on its acquisition of Altus IT in Croatia. Mamic Peric Reberski Rimac advised Altus IT on the deal.

Financial details of the transaction were not disclosed.

Zagreb-based Altus IT is a carrier-independent data-center provider in Croatia. The company serves as a connectivity hub, connecting telecoms, customers, and partners.

Interxion is a provider of carrier and cloud-neutral data services, with more than 700 connectivity providers across eleven European countries.

DTB’s team included Senior Partner Damir Topic and Lawyer Dina Salapic.

Mamic Peric Reberski Rimac’s team consisted of Senior Partner Vladimir Mamic, Junior Partner Nikola Kokot, and Associates Valerija Cerovski and Marin Curic.

“This year was not chaotic just due to Covid-19 or the earthquake that struck Zagreb,“ says CMS Partner Marija Zrno Prosic, “but also because of the parliamentary elections that were held in July.“ 

Still, Zrno Prosic reports that, with the ruling HDZ party winning again, significant change is unlikely. What is to be expected, she says, is a further digitalization overhaul of the way businesses communicate with courts. “There have been efforts to overhaul the system in order to allow the courts to deliver documents to businesses electronically – to cut costs, save time, and not have to have mail delivered in person,“ she says. “The pandemic halted this process a bit, but it is back on track now. The legislative work has been done and the framework is in place – all companies had to register an email address with the court register maintained by the commercial courts.“

Zrno Prosic reports that there are also efforts to digitalize court communication in terms of litigation as well. “In addition to registering their email address in the court register, the companies were supposed to apply for e-communication with the courts by September,” she says, “but with all the mess and the fallout of the crisis, not all of them have done it. I hope that now, as things slowly return to speed, that we’ll be able to achieve further digitalization goals.” Indeed, she says, to some extent the coronavirus was useful in this particular regard. “If anything, the pandemic lockdown proved that this is a viable option and that full communication with the courts and administrative bodies can be achieved digitally as well.“  

The tourism sector – the cornerstone of Croatia’s economy – has fared better than expected, Zrno Prosic reports. “Back in March and April nobody knew how this would play out over the summer, and even in early June things seemed grim,“ she says. “There are not enough domestic tourists to fill out all of the tourist capacities so expectations were pretty low. But it turned out that both July and August were so good that they exceeded all expectations. That plus packages of state aid to this sector — as for all of the most heavily impacted sectors — allowed us to weather the storm, for the most part.“ The number of new Covid-19 cases spiked in late August, she concedes, which “led to an early end of the peak of the tourism season,” but she says “it was still not as abysmal as it was initially projected.“ 

“Of course, there are consequences of the crisis that continue to impact our economy – especially small businesses – but there are strong indications that large companies have managed to restructure their operations to successfully minimize losses,“ Zrno Prosic reports. She believes that “the word of the year will be ’restructuring’ as we continue to move forward,“ and she says she has faith that there will be “significant investor interest in Croatia across the board.“

Croatian law firm Marohnic, Tomek & Gjoic has joined CEE Attorneys.

Zagreb-based Marohnic, Tomek & Gjoic was founded in 2016 by Partners Josip Marohnic, Tena Tomek, and Tonka Gjoic Tomic, and the firm focuses on Corporate/M&A, Banking and Finance, Energy, and Infrastructure.

“We are very excited about our future cooperation,” said Tena Tomek.

“We are very pleased to have added another important member and strong partner to our international CEE Attorneys team, with whom we will cooperate on interesting projects,” noted CEE Attorneys Founder Zdenek Tomicek, who is a partner in the firm’s Czech office. “Croatia has a good location, excellent infrastructure and is an excellent place for investment opportunities. The Marohnic, Tomek & Gjoic law firm is an office with international experience and is one of the market leaders for private and public sector entities.“ 

Beiten Burkhardt has advised Dr. Zwiebelhofer GmbH on the acquisition of two Croatian companies, KM Kovnica and KM Alati, from an unidentified seller, and on the two companies’ reintegration into the Konig Metall Group, from which they had been sold in 2013.

Financial details were not disclosed.

Beiten Burkhardt’s Frankfurt-based team consisted of Partners Detlef Koch and Mario Riechmann and Lawyer Sherjeel Chaudhry.

The digitalisation of the Croatian court system is proceeding and e-communication is expanding. Snail mail and “paper” communication are on the verge of extinction. As of 1 September 2020, all legal entities will have to use e-communication with the court.

All legal entities registered in the Croatian Commercial Register must submit information on their e-mail address for e-communication no later than three months from the registration of the establishment.

The new era is beginning and no one can afford to ignore these changes or think that notifying their e-mail address to the court registry is all that e-communication will entail. Even worse, failing to notify the e-mail address and not using e-communication may have harsh consequences. This article serves as a roadmap for companies seated in Croatia to keep up with all the forthcoming obligations.

It is also a wake-up call before you discover that money was collected from your account based on a default judgment rendered by the due delivery of a lawsuit to your company through the e-communication system – or rather the attempted delivery if your company has not previously notified its e-mail address to the court.

Mandatory e-communication with courts for legal entities

With the latest amendment of the Civil Procedure Act (OG 70/2019) and the associated Rulebook on Electronical Communication that came into force in late January 2020, e-communication is made operational in all commercial, municipal and county courts as well as in the High Commercial Court of the Republic of Croatia.

Unlike for natural persons, which can still opt for the preferred mode of communication with the courts, e-communication is made mandatory for all legal entities in Croatia. Up until September 2020, this was the obligation for attorneys, public notaries, public bodies and the like.

Therefore, as of 1 September 2020,legal entities are required to communicate only electronically with courts in civil and commercial proceedings.

E-communication is not yet possible for Land Register and Commercial Register cases as they run on a separate system.

What is meant by e-communication?

E-communication essentially means submitting and receiving documents in a court proceeding, but it also enables a party in a dispute to have remote access to all the case files.

For example, e-communication includes:

• receiving court documents;

• sending submissions and attachments to the court;

• remote access to court documents;

• receiving a warning that bankruptcy proceedings have been initiated against one of the parties in cases in which they are proxies.

How does the e-communication system work?

E-communication is facilitated through the special system “eKomunikacija” as part of the “eSpis” system used by the Croatian judicial system.

To fully use the e-communication system as an external user, i.e. as a legal entity, it is necessary to submit the following data to the Ministry of Justice at helpdesk@pravosudje.hr:

• personal identification number (OIB) of the legal entity;

• name of the legal entity;

• e-mail address of the legal entity (at this address you will receive notifications about court documents received by e-communication);

• first name and surname, personal identification number (OIB) of the proxy authorised on behalf of the legal entity to take actions in e-communication (the Ministry will include only persons registered in the Commercial Register as authorised representatives, while these persons may later authorise new proxies through the e-communication system).

After registration in the system, there are still some technical preconditions that a legal entity must obtain in order to safely use e-communication:

• electronic credentials level 3 or higher;

• signature certificate used to sign documents with a qualified electronic signature.

In practice, bank tokens of all major banks may be used to access the e-communication system, but signing documents requires the use of a qualified electronic signature which may be obtained from several providers.

What are the format requirements of the submissions filed through the system?

Submissions must be submitted in electronic form (pdf format) and signed with the qualified electronic signature of the legal entity. In practice, all attorneys in Croatia have made this transition in a short period with the assistance of the Croatian Bar Association.

If the submission or attachment consists of several sheets, all sheets should be contained in one file, without blank sheets. Each submission and attachment should be formed as one file or (due to the size of the file) in several files indicating in the file names that they together form one file as a whole.

How does the filing and delivery work?  

After a successful submission, the court will send a notification of receipt certified with a qualified time stamp. The moment of receipt is therefore considered to be the day, hour and minute stated on the time stamp and the notification acts as confirmation of receipt.

However, if the submission is not suitable to be processed by the court, the court will notify the applicant electronically and order them to correct the submission in accordance with the instructions.

Upon delivery of new court decisions or documents through the e-communication system, the user will receive an e-mail notification informing them about new items in their secure electronic mailbox. Electronic documents sent by the court must be retrieved through the secure mailbox of the legal entity by:

1. proving its identity using the credentials;

2. inspecting the secure electronic mailbox; and

3. confirming the receipt electronically.

By doing so, the legal entity will receive a certificate of delivery for the electronic court document, also signed with a qualified time stamp.

If a legal entity does not retrieve the document sent by the court within 15 days of receiving the notification, the e-communication system will send a confirmation of non-retrieval for the relevant document to eSpis. At that point, the document is deemed to be validly delivered and the disputed party properly notified.

What to do if there is a system crash?

If the system is not working properly and the user is unable to send their submission with less than two hours left until the deadline, the user must report the problem to the system administrator. In such cases, the submission deadline will be extended by one day from the moment the system becomes available for use again.

The previous exemption does not apply if it is determined that the user is responsible for the malfunction of the e-communication system.

Notifications about the system’s unavailability due to technical difficulties and information on the continuation of the deadlines for submissions will be published on the system website.

Also, if the court is made aware of the fact that a user is unable to access the system for some objectively justified reason, the documents may be delivered in another appropriate manner.

Consequences of non-compliance

If a legal entity does not comply with the previously mentioned obligation, they will not be able to file submissions to the court. If a submission is filed in any other form, the court will have to order the applicant to file the submission in electronic form within eight days. If the applicant does not file the submission in electronic form within the specified time limit, the submission will be considered withdrawn. Moreover, as of 1 September 2020, Croatian courts will not have an obligation to provide additional time to file submissions in electronic form. The courts could automatically consider a submission that is not filed through e-communication as not filed at all.

The most severe consequence is that a default judgment could be rendered against a legal entity that does not have access to the e-communication system. Namely, if a respondent is a legal entity and does not file a response to the lawsuit via e-communication within the specified time limit, a judgment could be issued accepting the claim (a default judgment). However, this can happen only if among other conditions that should be met the court properly delivers the lawsuit. It is questionable how the Croatian courts will deliver lawsuits and other submissions to legal entities that are not using e-communication.

Pursuant to the practice of the European Court of Human Rights, courts and public authorities must do all that can be reasonably expected of them in the circumstances of the case to inform the party of the proceedings. In so doing, the national court must be able to prove what concrete steps it has taken to find the party’s address. It is therefore uncertain exactly what measures (if any) a Croatian court should and will take when a legal entity does not have e-communication despite being obliged to use it.

This uncertainty could gravely impact companies seated in Croatia, so it is highly advisable to notify the e-mail address to the competent court and to set up the e-communication system. If a lawsuit is filed, the company will be notified by e-mail from the system and may take appropriate actions. As the law prescribes a 15-day period in which a submission may be collected from the system, it would be advisable to log into the system every two weeks.

E-communication is no different from the company’s mailbox and ignoring it could have negative consequences. Notifying the e-mail address to the court and monitoring e-communication is therefore of the utmost importance.

By Gina Grancaric, Associate, Vlahov Buhin i Sourek d.o.o., and Vice Mandaric, Attorney at Law, Mandaric & Einwalter, in cooperation with Schoenherr

Looking back on the first five months of 2020, three data processing topics in Croatia deserve attention, if for nothing else than their historical value. Data Protection – particularly finalizing the EU’s e-Privacy Regulation – has been identified as among the priorities of the Croatian Presidency of the Council of the European Union. The Croatian Personal Data Protection Agency (AZOP) publicized its first administrative fine against a bank for denying its clients the right of access to their personal data. And, if you were hoping this article would skip the ubiquitous COVID-19, no such luck: data processing issues and guidance amid the pandemic is the winner of our mini chart.

1. Croatian Presidency of the Council of the European Union

This is Croatia’s first time presiding over the Council of the European Union since the country’s accession in July 2013. The motto of the Presidency is “A Strong Europe in a World of Challenges.” No one can deny the abundance of challenges the world has faced so far in 2020. One of the priorities identified by the Croatian Presidency also proved to be a challenge, as its e-Privacy Regulation proposal of February 21, 2020 that the processing of metadata and collection of information from terminal equipment be allowed based on legitimate interests rather than consent raised many eyebrows. The proposal is clearly contrary to the position of the European Data Protection Board (EDPB), as expressed in its May 25, 2018 Statement on the Revision of the ePrivacy Regulation and its Impact on the Protection of Individuals with regard to the Privacy and Confidentiality of their Communications.  The EDPB supported an approach based on “broad prohibitions” and “narrow exceptions” and ruled out the option of processing “…electronic communications content and metadata based on open-ended grounds, such as ‘legitimate interests’, that go beyond what is necessary for the provision of an electronic communications service.”

2. First Fine for Data Processing Violations

In March, the AZOP announced on its website that it had imposed the first administrative fine for a GDPR violation in Croatia, against a Zagreb-based bank that had denied its clients access to their personal data in violation of Article 15(3) of the GDPR.

Since October 2018, the AZOP had received frequent complaints from the bank’s clients that they had repeatedly been denied access to requested documentation. The AZOP rendered 34 orders instructing the bank to provide its clients access to their personal data. Apparently, the violation affected more than 2,500 of the bank’s clients.

Under the national GDPR Implementation Act, the AZOP must publish on its website a final and binding decision without anonymizing the perpetrator data if the imposed fine amounts to at least HRK 100,000 (approximately EUR 13,195). Since the identity of the bank and the amount of the fine remain undisclosed, we assume the AZOP’s decision has not become final and binding yet. Presumably, the bank has contested it before the competent administrative court.

3. Data Protection amid Covid-19

In view of the anti-pandemic measures imposed by the Civil Protection Headquarters of the Republic of Croatia, the AZOP provided guidance on the GDPR-compliant processing of health-related personal data in the context of the state of emergency caused by the novel coronavirus.

In March, advice on the processing of employee health data by employers was published. In the beginning of May, as the preventive measures were relaxed, the AZOP reflected on the processing of client personal data by service providers where services require physical contact (such as beauticians, hairdressers, and barbers). The AZOP’s recommendations boil down to the importance of (a) abiding by the GDPR’s data processing principles; and (b) determining the proper legal basis for the processing of health-related data under Articles 6 and 9 of the GDPR. Specifically, the AZOP emphasized that often consent will not be a valid legal basis for data processing in the subject-matter context.

In April, with the support of local businesses, the Croatian Government launched a digital assistant based on the WhatsApp Business API, to help educate people about the symptoms of coronavirus infection through assisted self-assessment, direct them to the competent institutions, and report relevant information about their household to facilitate real-time data sourcing for epidemiologists. It was named Andrija, after Professor Andrija Stampar, a distinguished Croatian scholar in the field of epidemiology and preventive medicine, who was one of the founders of the World Health Organization. In May, the Government revived the idea of developing a contact tracing app on iOS and Android platforms. According to recent media publications, the app is intended to be GDPR-compliant and follow EDPB guidelines.

By Olena Manuilenko, Head of IP & TMT, Divjak, Topic Bahtijarevic & Krka

This Article was originally published in Issue 7.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Divjak, Topic, Bahtijarevic & Krka and Baker McKenzie have advised mobile game developer Playrix on the acquisition of Croatian gaming studio Cateia Games.

According to DTB, “Playrix’s acquisition of Cateia is the first large acquisition in the gaming industry in Croatia.”

The Divjak, Topic, Bahtijarevic & Krka team included Senior Partner Damir Topic and Partner Marina Kovac Krka.

Schoenherr Partner Alexander Popp in Austria and Attorney at Law Ivan Einwalter in Croatia talk about the CEE 2019 Deal of the Year in Croatia

CEELM: First, congratulations on winning the Deal of the Year Award in Croatia!!

Ivan: Thank you, we are happy and proud to have received the award. We see the award as recognition of a strong business year in 2019, with the Tele2/United Group as one of the headline M&A transactions we worked on. For our Croatian office it is our first CEELM Deal of the Year Award, so we are especially pleased for this recognition!

CEELM: Can you describe the deal for us, and Schoenherr’s role in making it happen?

Ivan: We assisted Swedish telecommunications group Tele2 – a major telephone operator in the Nordic and Baltic countries and an alternative provider in many others, with about 17 million customers in eight countries and revenues of EUR 2.5 billion in 2019, on the sale of its Croatian business to the United Group, a leading telecoms and media provider in South East Europe, for an enterprise value of EUR 220 million. The United Group has the broadest network coverage in the region with 3.82 million subscribers and offers both local and international content. The United Group has operations in six countries and employs around 4,400 employees. The acquisition of Tele2 Croatia is, for the United Group, an important step in further strengthening its market position in South East Europe.  We assisted Tele2 on all aspects of this auction sale transaction, including the setting up of the data room, the structuring, preparation, and negotiation of the transaction agreements, and providing assistance in relation to the regulatory proceedings.

CEELM: The team working on the Tele2/United Group consisted of attorneys and partners from both the firm’s Austrian and Croatian offices. How did that affect your work on the deal?

Alexander: Being a regional law firm, Schoenherr possesses extensive local market knowledge with an operation model based on the principles of an international law firm. Advising on multi-jurisdictional mandates is therefore part of our daily business. Our strong CEE footprint allows us to combine knowledge about the local culture and habits with the high level legal expertise of an international law firm. The great results we achieve year after year show that this model is working! As for the Tele2/United Group deal, I truly believe that, with our mixed Croatian/Austrian team, we pulled all our strengths together, resulting in this success.

CEELM: Who were on those teams, exactly?

Alexander: The core Schoenherr team on this transaction consisted of me, Ivan, and Austrian attorneys Manuel Ritt-Huemer and Michael Marschall. I headed the team, and Michael and Manuel assisted in the first row on transaction structuring, drafting, and negotiating the contracts. Ivan handled all Croatian-law-related aspects (in particular corporate, regulatory, and commercial), in particular in the negotiations of the contracts, and organized the closing process. Vienna-based Partner Christoph Haid led the merger control working stream, and Vienna-based Partner Robert Bachner led the working stream for the transitional agreements.

CEELM: Schoenherr won four deals at this year’s CEELM DOTY Awards, following similar success last year. Where do you think this success comes from?

Alexander: To win an award obviously feels great – but the award always comes at the end of a process that involves many great minds and a lot of effort from everybody involved. Winning a total number of four awards in four different jurisdictions shows that our expertise across all offices is exceptional. Due to our ability to advise on transnational deals by working with Schoenherr teams from all over the region, we have traditionally been involved in a lot of international transactions. Over the past years, we were able to further strengthen this position, and I am positive that we will continue to do so in the future.

This Article was originally published in Issue 7.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Franka Baica has been promoted to Partner at Croatia’s Ilej & Partners in cooperation with Karanovic & Partners.

Baica specializes in domestic and cross-border M&A and real estate. According to Karanovic & Partners, “she also regularly advises clients on all matters related to corporate law with a particular focus on company law and corporate governance issues and has an extensive background in various banking and finance matters.”

Among the deals she has worked on is Hungary’s Optima Befektesi Alapkezelo 2020 acquisition of a 61.49% share in Globe Trade Centre S.A. from Lone Star Funds (as reported by CEE Legal Matters on April 17, 2020) and Italy’s UniCredit S.p.A. 2016 takeover of the CEE business of its subsidiary UniCredit Bank Austria AG (as reported by CEE Legal Matters on October 13, 2016).

Mario Krka has been made Senior Partner at the former Divjak Topic & Bahtijarevic law firm in Croatia, which is now operating as Divjak Topic Bahtijarevic & Krka.

According to DTB (the firm will keep its traditional acronym, despite the formal name change), “the new name and new senior partner mark a new era for the firm and reveal our desire to continue growing. From the very beginning we have strived to be a top law firm, at the forefront in both quality and excellence. It makes us proud and happy that over the past 25 years we have been recognized as such by both our clients and peers. We are honored to continue attracting talented, smart and passionate lawyers and grateful to serve loyal clients. Inspired by the trust placed in us, we are committed to remaining in the top league and dedicated to keeping our clients a priority.”

Krka is the firm’s Head of Competition and Antitrust and, according to the DTB website, he is the “firm’s expert for all sophisticated transactions and competition matters.” He joined the then-Divjak Topic Bahtijarevic in 2008, and was made Partner in 2013. He obtained his law degree from the University of Zagreb in 2004 and followed it up with 2011 MLBs from WHU – Otto Beisheim School of Management in Vallendar, Germany and the Bucerius Law School in Hamburg, Germany.

Divjak Topic Bahtijarevic & Krka was established in Zagreb in 1994. Krka becomes the third Senior Partner at the firm, joining Damir Topic and Emir Bahtijarevic. Founding Partner Sasa Divjak died unexpectedly last summer (as reported by CEE Legal Matters on August 26, 2020).