CEE Legal Matters

Category: Estonia

  • Government of Estonia Appoints Four Estonian Dispute Experts to Permanent Court of Arbitration

    Government of Estonia Appoints Four Estonian Dispute Experts to Permanent Court of Arbitration

    The Njord law firm is reporting that the Government of Estonia has appointed Njord Tallinn Associate Partner Triinu Hiob and three other Estonian legal experts as members to the Permanent Court of Arbitration in the Hague, the oldest intergovernmental institution resolving international disputes between states, international organizations, and private parties.

    In addition to Hiob, the Government of Estonia also appointed Toomas Vaher (Partner at Raidla Ellex), Lauri Malksoo (Director of the Institute of Constitutional and European Law at the University of Tartu), and Rene Vark (Associate Professor of Constitutional and International Law at the Estonian National Defence College and Assistant Professor of International Law at the University of Tartu).

    According to Njord, “the Permanent Court of Arbitration (PCA) is based on two conventions which unite a total of 121 member states. Additionally to the interstate disputes, PCA also resolves investor-state disputes arising out of the bilateral or multilateral investment treaties, or the Energy Charter Treaty. Currently PCA acts as registry in eight interstate disputes and in 75 investor-state disputes. Members of the PCA are appointed for six years. Each member state may appoint up to four members to be included in the list of the PCA members as potential arbitrators.”

  • Hedman Partners Helps Estonian Fintech Startup Enter YCombinator Accelerator

    Hedman Partners Helps Estonian Fintech Startup Enter YCombinator Accelerator

    Hedman Partners law firm has helped fintech startup Upgraded Technologies be accepted into Silicon Valley’s YCombinator, which Hedman Partners describes as “one of the most prestigious business accelerators in the world.”

    Hedman Partners advised Upgraded Technologies on how to enter the accelerator and assisted with a share swap, whereby the Estonian company became the subsidiary of a US-based enterprise. Upgraded Technologies, helmed by Hendrik Roosna, has created a platform for bringing more efficiency to the leasing market through binding finance and insurance. Upgraded is the first Estonian fintech startup to enter YCombinator, and only the second Estonian company overall, following Click&Grow’s successful tour of the accelerator in 2005.

  • Aivar Pilv Appointed Member of Legal Commission of Estonian Olympic Committee

    Aivar Pilv Appointed Member of Legal Commission of Estonian Olympic Committee

    The Estonian Olympic Committee has appointed attorney-at-law Aivar Pilv a member of the legal commission, along with Hanno Pevkur (Chairman), Ants Veetousme, and Monika Sehver.

    According to the Leadell Pilv website, “the main task of the commission it to elaborate the standpoints of the EOC to amend Estonian legislation in various issues related to sports and the legal analysis of draft laws. The Statutes of the EOC also includes the assessment and preparation of necessary amendments to laws as well as the establishment of an Arbitration for Sport. At the 28 November 2016 meeting of the legal commission, various issues regarding the necessary amendments to the Sport Act and the Non-Profit Associations Act were covered as well as the necessity to establish the Arbitration for Sport, specification and amendment of the regulation of athletes’ employment contracts were discussed.”

  • Tark Grunte Sutkiene and Raidla Ellex Advise on Cybernetica Sale of Navigation Systems Business Unit to Carmanah Technologies Corporation

    Tark Grunte Sutkiene and Raidla Ellex Advise on Cybernetica Sale of Navigation Systems Business Unit to Carmanah Technologies Corporation

    Varul — the Estonian branch of Tark Grunte Sutkiene — has advised Cybernetica on the sale of its navigation systems business unit, including EKTA branded products and contracts, to Carmanah Technologies Corporation. Raidla Ellex advised the buyers on the transaction, which is expected to close in December 2016 and remains subject to the satisfaction of certain closing conditions, including the approval of the Toronto Stock Exchange. 

    Cybernetica is an ICT company, established in 1960, that researches, develops and manufactures mission-critical systems, light signaling and telematics products, maritime surveillance and radio communications systems. Cybernetica has been an active counterpart in developing critical e-Government systems. Oliver Vaartnou, Chairman of the Board of Cybernetica, said the acquisition is an homage to the competence of the Estonian electronics sector, because Carmanah is a world-renowned company. According to Ulo Jaaksoo, Chairman of the Supervisory Board of Cybernetica, the acquisition enables creating synergies to strengthen the growth strategies of both companies.

    Carmanah is a Canadian corporation, established in 1996, that has earned a global reputation for delivering durable, dependable, efficient, and cost-effective solutions. John Simmons, Carmanah CEO, said the acquisition will strengthen the worldwide product portfolio and allows to provide more comprehensive single-source solutions for marine customers. At the same time, he said, the assignment of Cybernetica’s sales contracts adds to overall market share and position as the dominant provider in Europe.

    Management control of the new Estonian subsidiary will be effected by the management of Carmanah’s other marine business, Sabik Marine OY, located in Porvoo, Finland.

    Varul’s M&A team was led by Associate Partner Sander Karson.

    The Raidla Ellex team was led by Partner Risto Vahimets and Lawyer Anna Trine Raudsepp.

  • Sorainen Advises Lords LB Baltic Fund IV on Acquisition of EU House in Tallinn

    Sorainen Advises Lords LB Baltic Fund IV on Acquisition of EU House in Tallinn

    Sorainen has advised Lords LB Baltic Fund IV in the acquisition of an office building in central Tallinn known as EU House.

    According to Sorainen, “the transaction posed some unique challenges due to the fact that the property is structured as a building title and parts of the building remained under reconstruction during the transaction. Additionally, the transaction involved use of some instruments not previously used in similar transactions in Estonia.”

    The closed-end real estate fund Lords LB Baltic Fund IV, controlled by investment management company Lords LB Asset Management, invests in cash flow generating commercial real estate projects in the Baltic States. With an area of 9,670 square meters, the EU House office building in Tallinn is the third purchase by the fund since its foundation in 2015. The first object of the fund – the k29 office complex on Konstitucijos avenue, in Vilnius, opened its doors in 2015, and the fund increased its assets in March 2016 with the 200 room Comfort Hotel LT situated on Kaunas Street, Vilnius.

    Sorainen’s advice included performing legal due diligence, conducting negotiations, and carrying out closing. The firm’s team was led by Co-Managing Partner Toomas Prangli and included Specialist Counsel Paul Kunnap, Assistant Britta Park, and Legal Assistant Kelli Eilart.

    Sorainen did not reply to our inquiry about the identify of the sellers and their counsel.

  • Sorainen Advises The Climate Corporation on Acquisition of VitalFields

    Sorainen Advises The Climate Corporation on Acquisition of VitalFields

    Sorainen Estonia has advised The Climate Corporation, a subsidiary of Monsanto, in its acquisition of VitalFields, a European farm management software company based in Estonia. The VitalFields team will join The Climate Corporation, strengthening the company’s efforts to deliver digital technologies to farmers around the world.

    Says Mike Stern, chief executive officer of The Climate Corporation, “VitalFields has built a successful business spanning multiple European countries, and we see how their digital tools will complement our Climate FieldView platform offerings in the future. This acquisition marks Climate’s first step into the European market, and we’re looking forward to working with VitalFields to grow and enhance their current tools to help farmers maximize their return on every hectare.”

    The Sorainen transaction team was led by Co-Managing Partner Toomas Prangli and included Senior Associate Piret Lappert and Associates Kai Vainola and Hali Sokk.

    Sorainen did not reply to our inquiry about the identity of the sellers or their counsel.

  • Tark Grunte Sutkiene and Raidla Ellex Advise on Sale of IT Services Business to Telia Estonia

    Tark Grunte Sutkiene and Raidla Ellex Advise on Sale of IT Services Business to Telia Estonia

    Varul — the Estonian office of Tark Grunte Sutkiene — has advised IT company AK Systems on the sale of its IT services business to the largest IT and telecom company in Estonia, Telia Estonia. Raidla Ellex advised the buyers on the deal, which will enter into force after the Competition Authority has approved it.

    AK Systems was founded in 1997. The company provides IT services for more than 100 companies and organizations in Estonia and eight foreign countries in cooperation with local partners. Telia Estonia’s IT services are used by more than 600 companies and government organizations in Estonia, including large banks, several government ministries, and many small-sized companies.

    According to Varul, Lauri Mihkelson, a member of the board at AK Systems, “noted that consolidation on the market is a natural process because the IT infrastructure market is becoming more service oriented and it is important to invest in the development of services and increase business revenue.”

    The Varul team was led by Associate Partner Sander Karson.

    The Raidla Ellex team was led by Partner Sven Papp and Senior Associate Gerda Liik.

  • Leadell Pilv Persuades Estonian State Prosecutor’s Office to Dismiss Criminal Charges Against Tallinn City Officials

    Leadell Pilv Persuades Estonian State Prosecutor’s Office to Dismiss Criminal Charges Against Tallinn City Officials

    Attorneys from the Leadell Pilv law firm have successfully defended four former and current Tallinn city officials in a criminal case involving “so-called hidden election advertisements,” in which the defendants were accused of having facilitated the acquisition of city budget funds.

    According to the firm, the accused city officials were accused of having improperly used funds from the Tallinn city budget to order advertisements for placement in various city districts immediately before 2013 local government elections that were ostensibly related to the provision of physical and mental assistance which – according to the firm – “turned out to be political advertising … advertis[ing] the politicians of the Estonian Central Party before the elections in order to increase their popularity and the number of votes in the elections.”

    The Leadell Pilv team argued to the State Prosecutor’s Office that the criminal proceedings should be terminated.  According to the firm, “the prosecutor agreed … that the activities of the defendants cannot be handled as the facilitation of acquisition, [and] therefore the criminal proceeding initiated against these city officials was terminated.”

    The firm’s team consisted of Managing Partner Aivar Pilv, Partner Jaak Siim, and Senior Associate Marko Pilv.

  • New Case Law on Remedies for Unlawful Dismissal in Estonia

    The Supreme Court of Estonia has recently ruled that the Employment Contracts Act (the “Act”), which does not provide for reinstatement as a remedy to employees that have been unlawfully dismissed, is constitutional, and that the Act entitles such employees to seek compensation much higher than the customary amount of three months’ average wages.

    The Act states that the termination of an employment contract is void when the employee is dismissed without a valid reason. However, in most cases no reinstatement will follow once the court or the labor dispute committee (collectively, the “Court”) has established the absence of a valid reason. The Court shall, upon the request of the employer (or the employee), itself terminate the employment contract as of the time when it would have expired in the case of valid dismissal. The Act provides only one exception to the rule, protecting employees who were pregnant or had the right to pregnancy or maternity leave or had been elected as the employees’ representative at the time of dismissal. In these cases the Court shall not satisfy the employer’s request for termination and the employment relationship shall continue, unless it is not reasonably possible considering mutual interests. 

    The Act provides that the employee is entitled to three months’ average wages as compensation for unlawful dismissal, but at the same time grants the Court the right to change the amount of the compensation, depending on the circumstances of the case and the interests of both parties. In practice, the customary position of the courts has been to award the employee three months’ wages without any analysis of the actual damage suffered by the employee due to the unlawful dismissal. 

    In the last two years several cases have reached the Supreme Court which have a significant effect on the resolution of unlawful dismissal cases. 

    In 2014, the Supreme Court was asked to determine whether the Act, which does not provide for reinstatement as a remedy to employees that have been unlawfully dismissed, is compliant with the constitution of the Republic of Estonia. The Supreme Court found that the Act was compliant with the constitution as well as with the specific requirements of the European Social Charter that employees be provided with adequate compensation if they are dismissed without a valid reason. In 2015, the Supreme Court also confirmed that termination of a fixed-term contract by the Court, upon the request of the employer, is constitutional. 

    The Supreme Court also, however, explained that the compensation amount of three months’ wages stipulated in the Act is not an adequate compensation in most cases, but merely a minimum one which shall be awarded at the initiative of the Court, without any employee’s request even needed. 

    The Supreme Court has ruled that employees are entitled to seek full compensation for lost income from the date that the unlawful dismissal took place and the date of the termination judgment, less any wages received in new employment while the litigation was ongoing. In addition, compensation may even be awarded for unpaid wages after the lawful expiry of the employment contract and for non-financial loss (i.e., anxiety and/or stress). 

    Furthermore, the Supreme Court has said that the Courts are obliged to explain to the employees their right to seek full compensation of loss. The Supreme Court has also found that upon the request of the employee the Court may terminate the employment contract with the condition that it ends only upon payment of the compensation awarded to the employee. 

    These recent decisions of the Supreme Court have clarified that the previous customary compensation amount of three months’ wages awarded by the courts is not in most cases the adequate level of compensation for the unlawful dismissal. Consequently, employers should be aware that unlawful dismissal entitles the employees to seek full compensation of loss, including the wages not received during the litigation. The litigation may, however, last for a year or more. Therefore, it is wise to consult a lawyer and measure twice, cut once, before dismissing any employee.

    By Anu Sander, Head of Employment, Varul

    This Article was originally published in Issue 3.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Rask Represents Allfilm EV 100 in Film Competition Dispute

    Rask Represents Allfilm EV 100 in Film Competition Dispute

    Rask is representing Estonian film producer Allfilm in a dispute over funding it received over the Estonian Film Institute’s “EV100” film competition.

    Accordingt to Rask, in December 2012, the Estonian Film Institute announced a competition to produce films for the Republic of Estonia’s 100th anniversary. Allfilm, which has produced such well-known films in Estonia as Tangerines and The Fencer, submitted several proposals. The film contest’s results were declared in March 2016, and two of the company’s films — Truth and Justice and Deal or no Deal — received funding.

    Factory OU, which did not receive any financing for its submissions, challenged the results in Administrative Court. At the beginning of October, 2016, the Court dismissed Factory OU’s claims, agreeing with Allfilm and the Estonian Film Institute that no violation existed in the judging and that there was no reason to withdraw Allfilm’s funding.

    Partner Ramon Rask led the team representing Allfilm in the matter.