Category: Estonia

Ellex has advised on the privatization of Operail’s business operations via a sale of its business operations along with its subsidiary Operail Repairs for EUR 19 million to Tiigi Keskus, an Estonian company that won the sale auction. Sirel & Partners advised Tiigi Keskus.

Operail is a state-owned company administered by the Estonian Ministry of Climate. According to Ellex, it specializes in freight transport on Estonian railways and in the maintenance and repair of rolling stock. Until early 2023, the company was also involved in wagon rental and freight transport in Finland, but its owner opted to divest these non-strategic business lines. In February 2024, the government decided to further privatize Operail’s remaining business lines, culminating in this transaction.

In 2019, Ellex advised Operail on entering the Finnish market (as reported by CEE Legal Matters on October 24, 2019).

The Ellex team included Partners Sven Papp and Martin Maesalu, Counsels Gerda Liik, Jaanus Ikla, and Mari Must, Senior Associates Hanna Pahk, Merlin Liis-Toomela, Kevin Gerretz, and Denis Tsasovskih, Associate Alan Paas, and Lawyers Miikael Tuus, Karl Rudolf Org, and Karoline Poska.

The Sirel & Partners team included Partners Juri Sirel and Sandra Toots and Associate Reelika Rohi.

Cobalt has advised the shareholders of Bauhub on its sale to Admicom’s subsidiary Tocoman.

Bauhub is an Estonian IT company specializing in SaaS workspace for construction project management. Founded in 2016 it develops cloud-based software tailored for the construction industry, offering solutions for project-level collaboration, task and workflow management, file and document storage, and information sharing. 

Admicom is a Finnish company specializing in software and services for the construction industry, building services engineering, and manufacturing sectors. Its shares are listed on the Nasdaq First North Growth Market Finland.

The Cobalt team included Partner Peeter Kutman, Specialist Counsels Madis Reppo and Tonu Kolts, and Junior Associate Ken Saksniit.

Cobalt did not respond to our inquiry on the matter.

Pohla & Hallmagi has advised Baltic Maritime Logistics Group on its acquisition of a 50% shareholding in Kaarlaid from Niverto. Your Office law firm advised the sellers.

Baltic Maritime Logistics Group is a logistics group active in Europe and Asia.

Kaarlaid is a transport company.

The Pohla & Hallmagi team included Partner Toivo Viilup.

The Your Office team included Managing Partner Mirjam-Mari Marastu.

Cobalt has advised PSA on its acquisition of 50% of Parnu Sadam shares from Transcom.

According to Cobalt, “Parnu Sadam is one of the most successful companies in Parnu [Estonia], which organizes ship traffic in the port, provides stevedoring services, and manages the warehouses and storage facilities on the territory of the port. The port’s services include loading and unloading of vessels, warehousing of goods, and towing of vessels. The port is visited by more than 500 merchant vessels a year and handles approximately 2 million tons of goods per year.”

The Cobalt team included Managing Associate Ott Aava, Senior Associate Kerli Salu, and Associate Elis Toim.

Cobalt did not respond to our inquiry on the matter.

TGS Baltic has successfully represented the Estonian Transport Administration in two court cases against cleaning and maintenance service provider Krausberg Eesti.

According to TGS Baltic, the disputes arose from a 2020 contract in which Krausberg Eesti agreed to provide general cleaning and maintenance services for the administration’s facilities. In March and April 2021, Krausberg Eesti claimed a fee of EUR 1.6 million for additional cleaning services, specifically charging EUR 100 per square meter for the removal of granite chippings – a rate more than 660 times the market price of approximately EUR 2,500 for such services. “The transport authority commissioned the service without knowing that the service provider intended to charge an abnormally high price. Nor did the service provider warn the administration of the anomalous price, which is to be expected of contractors acting in good faith. The administration tried to challenge the price and negotiate, but as no agreement could be reached, the cleaning company filed a lawsuit. However, the claim was rejected by the court.”

The TGS Baltic team included Partner Chirag Mody and Senior Associate Carel Kivimaa.

Triniti has advised Mainor Ulemiste on its acquisition of the Technopolis Ulemiste campus in Tallinn, Estonia.

According to Triniti, the acquisition enabled Mainor Ulemiste to take “full control of Ulemiste City, the largest business park in the Baltics. As part of the transaction, Mainor Ulemiste also attracted a new investor, Mulligan Capital, a joint investment company established by Anders Anderson and Ivar Vendelin, both with Estonian capital.”

Mainor Ulemiste is a subsidiary of Mainor, whose core business is the development of Ulemiste City. 

The Triniti team included Partners Siim Maripuu and Tanel Kalaus, Senior Associates Mikk Pold, Ain Kalme, and Sten Veidebaum, and Junior Associates Janel Jan-Marcus Lohvart and Peeter Paju

Triniti did not respond to our inquiry on the matter.

Editor’s Note: After this article was published, Triniti informed CEE Legal Matters that the sellers were Technopolis Baltic Holding, held by Finnish shareholder Technopolis Holding, itself held by Kildare Partners. Sorainen reportedly advised the sellers.

TGS Baltic has advised the metal band Horror Dance Squad on finalizing the recording and publishing contracts with the Swedish record label Icons Creating Evil Art.

According to TGS Baltic, “this collaboration is a significant milestone for the Estonian music scene, bringing local talent to an international audience. As a result, two remix tracks will be released, where Horror Dance Squad blends their experimental metalcore style with the dark drum & bass sound of producer Zardonic.”

The TGS Baltic team included Partner Priit Latt.

TGS Baltic did not respond to our inquiry on the matter.

TGS Baltic has advised the Estonian Actors Union on drafting and negotiating a good practice agreement.

The Estonian Actors Union is a collective representation organization that unites professional actors in Estonia.

According to TGS Baltic, “the agreement is mainly driven by the changed legislation regarding the rights of the performer, in particular the performer’s right to know how his/her performance was used and the possibility to receive compensation for the use of the performance also afterward. The good practice agreement, which will be valid for five years, sets out minimum requirements for the working relationship between the film producer and the actor, from casting to occupational health and safety, as well as the exercise of the actor’s personal and proprietary rights as a performer.”

“As this is the first time such an agreement has been signed, we will take the first year as a test period,” commented Estonian Actors Union CEO Kaia Kadai. “The deeper meaning of the agreement is to ensure that the actor can receive fair compensation for the use of the audiovisual work.”

The TGS Baltic team included Senior Associates Priit Latt, Indrek Ergma, and Silvia Urgas

Ellex has advised Infortar on its acquisition of Tallinn Book Printers.

Infortar is an Estonian investment company.

Tallinn Book Printers is an Estonian printing company, specializing in the printing of books. The company produces approximately 5 million printed materials annually, employs 104 people, and operates production and warehouse space totaling about 8,000 square meters.

According to Infortar Deputy Managing Director Priit Tamme, Tallinn Book Printers is “one of the most recognized players in its field. In many manufacturing and export industries, consolidation is a common trend and key to unlocking additional efficiencies. This helps secure positions in both domestic and international markets.”

The Ellex team included Partners Martin Kaerdi and Martin Maesalu and Senior Associates Karin Tartu and Liisbeth Eero.

Ellex did not respond to our inquiry on the matter.

Presumably many of us have watched Bonanza when they were younger. Bonanza is an American Western TV series about the Wild West of the 1860s. It wasn’t an easy life – lawlessness reigned, and justice was only for the strong.However, in 2024, it’s a different story – the laws are in place and being effectively enforced. The development and use of artificial intelligence is no longer a lawless environment. Existing regulations remain in place, and now a new Artificial Intelligence Regulation has entered into force, carrying hefty fines of up to €35 million or up to 7% of a company’s global turnover. So, the answer to the question in the headline is already a pre-emptive ‘no’.

How will the new AI regulation affect everyone?

Roughly speaking, artificial intelligence regulation does two things: it divides different artificial intelligence systems into four classes and then specifies what obligations must be met for each class. These obligations are primarily important for the developers of artificial intelligence, but to some extent also for the users.

Examples of systems that pose an unacceptable risk include assigning a social score to citizens (as is done in China, for example) and real-time remote biometric identification of people by law enforcement (for instance, with cameras). Such activities will be banned as they unduly infringe on people’s privacy. In the case of remote identification, however, there was a long debate about whether it was more important to facilitate the fight against terrorism or to protect people’s privacy. The latter won.

High-risk systems are physical products in which artificial intelligence is a security component of the product, such as self-driving cars. Also, artificial intelligence programs which are designed for use in a specific field, such as education and healthcare. For example, this includes a system that uses AI to grade students or diagnose patients. The Regulation imposes many obligations on such artificial intelligence programs, both for developers and implementers. For example, it obliges the system to register, implement a risk and quality management system, ensure the quality of training data, log the system’s activities, and so on.

General-purpose systems include programs that are less risky and not designed for a specific use. An example is ChatGPT, which is a general-purpose tool. There are significantly fewer obligations, but the developer needs to share technical information about the use of the system.

Finally, there are systems with transparency obligations. These are, for example, chatbots or deep link generators. The primary obligation is the information obligation. For example, if a bank uses chatbots to communicate with its customers, they must be informed about it at the beginning of the conversation. There is no particular risk associated with this practice.

There are, in fact, more obligations and areas, but in the interests of brevity, I will not list them all here.

What else should you bear in mind?

It’s important to remember that the new Regulation will, in practice, impose obligations on the development and use of AI under existing legislation, even if they are not specific to artificial intelligence.

In Estonia, as elsewhere in the world, copyright applies when a person creates an original work that is protected by their rights. Articles, programs, visuals, books, images, videos, and even this newsletter, for example, are protected. You must have the author’s permission to incorporate someone’s work into an artificial intelligence program. It is also essential for developers to maximise the input of material into the artificial intelligence program and to allow it to evolve. However, in doing so, it must not be forgotten that the author’s permission must be obtained. Developers often forget to do this, which is why there are several lawsuits in America. The New York Times is also in dispute with artificial intelligence developers over the unauthorised use of newspaper articles.

Another critical issue is the protection of personal data. Processing personal data, such as a person’s name and picture, requires a specific legal basis, such as consent or legitimate interest. Thus, an artificial intelligence developer cannot indiscriminately and thoughtlessly take people’s personal data and process it in the name of developing a program. The legal basis for doing so needs to be thought through and put on paper.

In conclusion

Artificial intelligence is not the Wild West as seen in the old American TV series. Its developers and users should know what their rights and obligations are. The fines in the new Regulation are hefty, and it’s cheaper to comply with the law than to break it.

By Henri Ratnik, Co-Head of IT, IP, and Data Protection, Senior Associate, WIDEN