Category: Estonia

Former Managing Associates Jesse Kivisaari and Lembit Tedder have been promoted to Partner at Cobalt Estonia.

According to the firm, Kivisaari will continue to work in the M&A team as the Head of the Finnish Desk, while Tedder will continue to work in the dispute resolution team as the Co-Head of the White-Collar practice group.

Kivisaari has been with the firm for 13 years, joining as a Trainee in 2011. He was promoted to Junior Associate that same year, Associate in 2013, and Specialist Counsel in 2016. He became a Managing Associate in 2022.

Tedder has been with Cobalt for nine years, joining in 2015 as an Associate. Earlier, he spent almost four years with Lawin, between 2011 and 2014.

TGS Baltic has advised Nordic Investment Bank on an investment loan of EUR 16.1 million to TKM Kinnisvara to finance the construction of a logistics center.

TKM Kinnisvara is a member of the TKM Group.

According to NIB, “the logistics center will be built to serve the volumes of goods of the TKM Group companies, serving mainly the volumes of goods of Selver, one of the largest retail store chains in Estonia, in the initial phase. The new center, with a total area of 17,200 square meters, is planned to be completed in the fall of 2024.”

The TGS Baltic team included Partners Kirsti Pent and Karin Marosov, Counsel Silvia Urgas, and Senior Associate Olger Kaelep.

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

After prolonged delays, the Estonian Parliament finally incorporated the EU Whistleblowing Directive into national law on 15 May 2024 by passing the Act on the Protection of Whistleblowers of Work-Related Violations of European Union Law (referred to as the Whistleblower Protection Act).

• The Act on the Protection of Whistleblowers of Work-Related Violations of European Union Law will come into effect on 1 September 2024.
• Whistleblowers will be protected when reporting specific violations of EU law.
• As of 1 September 2024, companies with at least 250 employees must introduce internal reporting channels.
• As of 1 January 2025, the requirement will extend to companies with 50 to 249 employees.

The new law establishes a minimum framework for receiving reports from employees about violations of EU law that they become aware of in the course of their work. It also sets requirements for providing feedback to whistleblowers and protecting them from retaliation.

The Whistleblower Protection Act does not regulate reporting of all types of violations as initially conceived. Thus, employees will only receive protection when reporting specific EU law violations, not other types of employment-related violations, through the whistleblowing channel. The law ensures only the minimum protection required by the EU Directive. According to the new law, whistleblowers are protected when reporting to their employer any violation of EU law in the following areas:

• public procurement
• financial services, products and markets, and the prevention of money laundering and terrorist financing
• product safety and compliance
• transport safety
• environmental protection
• radiation protection and nuclear safety
• food and feed safety
• animal health and welfare
• public health
• consumer protection
• privacy and personal data protection, and the security of network and information systems
• violations affecting certain financial interests of the EU
• income tax-related violations concerning the internal market

Employees who are not experts in EU law may find it challenging to distinguish between violations of EU law and national law. Despite the limited scope of the Whistleblower Protection Act, workplace discrimination against individuals reporting other breaches is still prohibited under the European Convention for the Protection of Human Rights and Fundamental Freedoms and other applicable laws. However, employers are not required to investigate reports of other violations in the same manner or provide feedback on them.

By 1 September 2024, the following entities must establish internal reporting channels for receiving reports of violations:

• companies with 250 or more employees
• entities under national financial supervision
• certain state and municipal authorities and their subordinate institutions

Starting 1 January 2025, the requirement to establish internal reporting channels will extend to employers with 50 to 249 employees. Employers with fewer than 50 employees will not be required to create separate reporting channels.

The established channels must enable the confidential receipt of violation reports, either in writing, orally or both. The confidentiality requirement does not imply that anonymous reporting must be ensured – the Act does not regulate anonymous reporting.

When receiving a violation report (within the scope of the Act) through the reporting channel, the employer must acknowledge receipt within seven days. The employer must take appropriate follow-up actions to identify, eliminate and prevent the violation, or forward the report for processing by a competent authority, such as the national supervisory authority or the police).  Feedback on the follow-up measures must be provided to the whistleblower at the earliest opportunity and no later than three months after receipt of the report. The whistleblower must also be informed of the outcome of the proceedings.

Whistleblowers have the right to confidentiality, and any direct or indirect workplace retaliation or threat thereof is prohibited. Although current law already prohibits this, the new law explicitly reiterates this protection.

Hindering reporting, breaching whistleblower confidentiality and retaliatory measures are punishable by fines of up to 100,000 euros under the new law. Therefore, to avoid risks, companies are advised to establish appropriate channels for receiving reports – such as setting up an email address where employees can report violations, making the emails accessible only by designated competent personnel.

To comply with the new requirements, companies should prepare separate guidelines on how to evaluate received reports (including whether an investigation is necessary), who to involve in the investigation (depending on whether the required expertise is available within the company or if external service providers are needed), when to notify national supervisory authorities, and so on. Companies should also consider how to maintain confidentiality and provide feedback to whistleblowers.

By Karina Paatsi, Partner, and Heili Haabu, Senior Associate, Cobalt

Former Rask Partner Mart Rask has decided to end his career as an Attorney at Law and step down from the Estonian Bar Association. He will continue his work with his eponymous firm as an Advisor.

According to the firm, “Mart has made significant contributions to the establishment and development of Rask Attorneys-at-Law for over 10 years.”

“The time is right for this step,” Rask said. “I have reached an age where I prefer to talk about the work of an attorney-at-law and the role of a Partner rather than doing it firsthand.”

“We have been fortunate to benefit from Mart’s extensive experience in building the firm,” said Rask Partner Tarmo Peterson. “Although he has decided to step down from practicing as an attorney, Mart has been our ‘advisor’ in terms of being an attorney and running the firm since the first day he joined us, and I believe this will continue.”

Magnusson has successfully represented Albrecht & Dill Trading in having its claim accepted as part of the bankruptcy proceedings against Erst Finance, Albergrupp Teenused, and Omul-Fot, in bankruptcy.

Albrecht & Dill Trading is a company registered in Hamburg, Germany. The company buys, sells, imports, and exports cocoa products, including beans, liquor, butter, cake, and powder.

According to Magnusson, per the decision of the Court of Appeal of Circuit of Tallinn, the request of Albrecht & Dill Trading for its claim to be accepted in the bankruptcy procedure of Omul-Fot was satisfied.

In terms of background, “Albrecht & Dill Trading traded approximately  268 tons of cocoa beans to Omul-Fot. The sale was according to two different sales confirmations. The seller issued 3 invoices to the purchaser, who received the beans but did not pay them according to the invoice. The worth of the trades combined is approximately EUR 625,000,” the firm reported.

Moreover, according to Magnusson, “Albrecht & Dill Trading claimed that the defendants accept the demand in the bankruptcy procedure. The arbitral tribunal of the Federation of Cocoa Commerce in the United Kingdom granted the claim with two judgments, both awarding the claimant with the principal claim and interest.”

The claimant then filed an application for the recognition of the arbitral tribunal’s judgment in Estonia, but the defendant became insolvent during that procedure. According to the firm, “the claimant added the judgments of the FCC to the claim but did not rely on them during the procedure. According to the claim, the claimant provided services to the debtor. One confirmation of sale was annexed, whereas the second one was not. The trustee in bankruptcy should have requested the claimant to complement the application and set a time limit for curing the defects.”

The Magnusson team included Senior Associate Stig Hendrikson.

Former Alterna Partner Annika Vait has joined Rask as a Partner and Co-Head of the firm’s Business Consulting and Transactions department.

According to Rask, Vait has over two decades of association consulting experience. Before joining the firm, she spent almost 12 years with Alterna. Earlier, she spent over five years with Glikman, Alvin & Partners, and, earlier still, three years with Bigbank.

“It is known that Annika, as an Attorney at Law, is one of the most knowledgeable business advisors in Estonia,” Rask Partner Ramon Rask commented. “At the same time, her social footprint and social nerve are significantly larger and sharper. In addition to her knowledge and broad horizons, we also highly value Annika’s previous experience in running her own business. A dozen years of experience as a Partner, founder, and manager of the law firm Alterna amplifies her expertise and provides the necessary additional depth in advising clients.”

TGS Baltic has advised Estonian energy company Soldera on launching the first renewable energy certificate of origin management platform in Estonia.

Soldera describes itself as enabling “renewable energy producers to earn additional income through an automatic guarantee of the origin trading system. Soldera brings together its renewable energy-producing members to combine their position on the market, ensuring the most favorable conditions on the market.”

According to TGS Baltic, the certificates of origin have been “created in the European Union in order to promote the production and use of renewable energy. They ensure transparency and reliability of the origin of energy.”

The TGS Baltic team was led by Partner Priit Latt.

Former Senior Associate Liis Konn has been promoted to a Partner position with Ellex in Estonia. In her new role, she will co-lead the Dispute Resolution practice at the firm.

With more than 10 years of experience, Konn specializes in dispute resolution in both court and extra-judicial proceedings. Before joining Ellex, she worked for SEB Bank, where she was responsible for dispute resolution and represented the bank and SEB Leasing in insolvency cases.

“Liis Konn has a wealth of expertise, particularly in representing clients in complex cases and pre-trial negotiations. Her extensive background in the banking sector has equipped her with a deep understanding of financial disputes, making her a formidable advocate for clients seeking resolution in this area,” the firm announced. “As an attorney-at-law, Liis’ primary focus lies within civil court proceedings. However, her proficiency extends to representing clients in bankruptcy and restructuring proceedings, showcasing her versatility in resolving corporate law disputes.”

Tallinn’s Rask law firm has announced it signed a strategic cooperation agreement with environmental consulting firm Hendrikson DGE to offer the best possible service to clients based on a “unique combination of information and experience [resulting from] the daily interaction of our specialists.”

With offices in Tartu and Tallinn, Hendrikson DGE was founded in 1997 as a planning and environmental management consultation company. It operates at various organizational levels, ranging from spatial planning to projections and supervision. Its clients primarily include businesses, local governments, and state institutions. It is a part of the DGE Group, which operates in the Nordic and Baltic regions, uniting various environmental consulting firms.

The “prevention and resolution of spatial conflicts, as well as increasingly complex knots in environmental issues, require more extensive knowledge and experience than before,” Rask and Hendrikson DGE announced in their joint statement. “Our cooperation is based on common values: room quality, environmental friendliness, sustainability, and legal certainty. We share specific know-how and the diverse experiences of [our] experts. We [aim to] undertake joint projects and trainings.”

Finnish Hameenlinna Administrative Court made a historic resolution on 22.02.2024, in which it found that Wolt couriers are entrepreneurs, not employees. The question of whether platform employees are independent entrepreneurs or salaried employees is also relevant in Estonia. If and how can the resolution of the Finnish court affect how the activities of couriers would be qualified according to Estonian law?

In the resolution, Hameenlinna Administrative Court evaluated the contracts between Wolt and the couriers through four characteristics related to the employment relationship valid in Finnish law. These characteristics were:

• agreement on the performance of work;
• compensation paid for work;
• doing work for the employer personally;
• supervision of work.

The Finnish court found that the first two characteristics were fulfilled, but the last two were not. For example, in the case of Finland, the recipient of the work did not have to do the work personally as specified in the third point, but they could delegate the work to their substitute or subcontractor. Regarding the fourth point, according to the court, the work was not performed under such conditions that the courier’s work should be considered as working under the management and supervision of the company. For example, the working hours are not defined and the courier is not obliged to accept the work. From this, the Finnish court concluded that Wolt’s couriers in Finland are entrepreneurs, not employees.

The situation is different in Estonia

Therefore, when asking whether the Finnish judgment could influence Estonian legal approaches, Finnish and Estonian law must be compared. Since a person working on the basis of an employment contract is guaranteed greater rights and better protection by law than people working on the basis of other contracts, similar disputes may also arise in Estonia. According to Estonian law, the characteristic features of employment relations are:

• doing work as a continuous process (employee and employer bind themselves to an employment contract and there is an expectation that the employee/job will exist for a longer period of time);
• the employee’s submission to the management and control of the employer;
• the person obliged to perform work is not largely independent in choosing the way, time and place of performing the work;
• payment of periodic remuneration for work (obligation arising from the law to pay wages at least once a month).

By checking these characteristics, it is possible to distinguish an employment contract from other contracts.

For example, it can very formally be concluded that couriers are obliged to follow the company’s rules when providing services (use a thermal bag with specific markings, check the person’s age when delivering age-restricted products, etc.), therefore, in the event of a dispute, it could be said that during the provision of courier services, the courier is subordinate to the company.

It can also be related to the way the work is done, i.e., following the procedural rules of the platform, the way the courier works is inevitably to a certain extent prescribed. At the same time, each situation and the exact content of the relationship must always be looked at separately and at the same time the overall picture must also be taken into account.

Unlike the Finnish resolution, delegation of work is apparently not allowed on Estonian platforms. In such case, problems could arise, for example, regarding the existence of a legal basis for employment. For platforms, it is allowed to delegate work in case of a business account, but not in case of a personal account.

It is known that couriers have the freedom to decide when and how much work to do. In case within a certain period norms are established (number of orders, certain rating, etc.), the fulfilment of which is mandatory for the continuation of the delivery of the courier’s service, it could be said that the time-independence of the courier is not fully guaranteed, and the management-control of the employer is also guaranteed here in volume norms or standards.

Couriers have less protection when working as an entrepreneur

The employment contract is characterized by a strong dependency relationship. If the employer can influence the employee very strongly, then the law must also protect the employee more. Thus, from the perspective of law, it is necessary to distinguish an employment contract from other contracts for the provision of services, because the parties, especially the employee, need special protection and specific regulation of the legal relationship. In the event of a dispute, the nature of the contractual relationship is evaluated by the labour dispute committee or the court. As of today, there is no labour dispute committee or court practice in Estonia that could give an exhaustive answer on this issue.

It is worth considering that based on the practice of the Supreme Court, the aim of the legislator has been to place a greater burden of proof on the alleged employer. Since distinguishing an employment contract from other contracts for the provision of services can be difficult, the law establishes a presumption for the protection of the employee, based on which a contract in which one person performs work for another is considered an employment contract until the contrary is proven.

This means that in case of a dispute, the alleged employer must in particular prove in the labour dispute committee or court that it is not an employment contract, that the employee was not subject to his management and control, and that he was largely independent in choosing the way, time, and place of work.

In conclusion, Finnish and Estonian labour law have different rules for assessing whether a contract is an employment contract or not, so the Finnish resolution will presumably not have an effect on the qualification of the relationship in Estonia. Until the long-discussed European Union directive regulating platform work has been adopted, the qualification of courier services will have to be set in the future by Estonian court practice.

By Kaisa-Maria Kubpart, Attorney, Lextal