Category: North Macedonia

CMS has advised the Linamar Corporation on its acquisition of Dura-Shiloh’s battery enclosures factory in North Macedonia. The acquisition also included factories in the Czech Republic and the US, with a total transaction value of USD 325 million.

The Linamar Corporation is a Canada-based manufacturing company serving the mobility, access, agriculture, and medtech industries.

Dura-Shiloh is a mobility systems supplier specializing in the designing, engineering, and manufacturing of safety, range, and driving performance systems, including for the electric vehicle battery industry.

The CMS team in North Macedonia included Partner Marija Filipovska Jelcic and Attorneys at Law Aleksandar Josimovski, Aleksandar Kralevski, and Martin Ivanov.

CMS did not respond to our inquiry on the matter.

On February 19, 2024, Tosic & Jevtic and JPM Partners jointly announced their new strategic partnership, with the Serbia-headquartered firm expanding its presence to North Macedonia and Tosic & Jevtic becoming part of JPM Partners.

Established in 2012, Tosic & Jevtic primarily focuses on legal services regarding commercial law, corporate management, mining sector investments, real estate, energy, bankruptcy proceedings, IT, and labor law. The firm has so far been helmed by Managing Partners Ana Tosic and Ivica Jevtic. Before establishing their own law firm, both Jevtic and Tosic spent two years with the Polenak Law Firm, between 2009 and 2011.

According to their joint statement, “this strategic partnership, planned to be completed in the third quarter of 2024, will significantly enhance joint capabilities not only in the market of North Macedonia but also in the markets of Montenegro and Serbia.”

While the legal landscape in North Macedonia might be somewhat stagnant – due to 2024 being an election year – there are still challenging complexities to the judicial reforms on the table, as well as struggles with consistency and knowledge, according to Polenak Law Firm Partner Tanja Polenak.

“It’s an election year in North Macedonia and things are pretty static,” Polenak begins. “North Macedonia continues to face significant challenges in the rule of law. Despite numerous laws passed to align with European standards, there’s a gap in their proper enforcement and implementation,” she explains.

Polenak reports there have been certain developments in the judicial system that caused some ripples. “There are issues in the operation of the Judicial Council, and there is a need to oppose any external influence in the justice system, as assessed by the European Commission’s latest Report. We faced controversial amendments to the Criminal Code that affected the prosecution of high-profile cases, which is a concern.” In addition, there has been movement towards overall judicial transparency with court decisions now being published online. “Publishing court decisions online, though not a source of law per se, is a positive step towards transparency. However, our work remains complicated due to a lack of consistency and predictability in the rulings,” she posits.

Overall, the North Macedonian legal system still seems to be having some issues with the uncertainty it causes, both for the public and for the business sector. “The prevailing uncertainty undermines the credibility of the judicial system among the population,” Polenak stresses. “The Chambers of Commerce are vocal in their criticism of the status quo, and demand strengthening the rule of law to improve the business environment and willingness of potential clients to engage in due process.” The state of affairs is not made any easier with a noticeable decline in well-trained lawyers. “We’re facing a shortage of skilled lawyers, partly due to diminishing law school quality. Additionally, young people are less inclined to pursue legal careers,” she continues. “Many young lawyers are leaving the market for better opportunities elsewhere, some even taking a job in other professions.”

Taking stock of foreign investments in the country, however, Polenak sees an opportunity. “Foreign investors bring a more structured approach, positively impacting the legal processes within companies,” she says. “Their presence has been educational for in-house lawyers, improving legal services when compared to the past.” 

Finally, focusing on specific areas of the legislative landscape, Polenak reports that “employment law, particularly regarding foreigners, is quite challenging. While neighboring countries simplify procedures, North Macedonia lags behind.” According to her, “the new labor legislation draft aims to clarify existing ambiguities, but there are concerns about its effectiveness.” Ultimately, Polenak feels there is a “pressing need for judicial reform, better alignment between institutions, and enhanced training.” Still, she concludes on an optimistic note, saying that she feels that “North Macedonia’s potential EU accession will revitalize the legal profession and make it more appealing.”

The European Bank for Reconstruction and Development (“EBRD”) and the World Bank are among the international financial institutions spearheading a 3-billion-euro plan to wean North Macedonia off its reliance on coal. The “Just Energy Transition Investment Program” (JET-P) plan follows the footsteps of several other countries in efforts to retire coal power plants, with the joint support of the government, as well as public lenders and private investors.

The plan, which is expected to be officially unveiled at the COP28 climate conference starting on 30 November in Dubai, outlines a roadmap to close North Macedonia’s two coal power plants, REK Bitola and REK Oslomej. The coal power plants will be replaced with 1.7 GW of renewable energy, a substantial step toward a greener and more sustainable energy landscape.

In 2021 North Macedonia joined the Powering Past Coal Alliance, pledging to become the first coal-free country in the Western Balkans. Initially set for completion by 2027, the deadline has been extended to 2030. The re-opening of the REK Oslomej power plant in 2021 slowed down the process, as a result of the country’s struggles to reduce electricity imports.

Additionally, a spokesperson for the Climate Investment Funds (“CIF”) confirmed that North Macedonia is being considered for concessional finance of up to 85 million dollars. The investment proposal should undergo approval by the CIF governing body at the beginning of next year.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Veton Qoku and Ljupka Noveska Andonova, Partners, Karanovic & Partners

Recent months in North Macedonia have brought notable proposals and draft laws for legislative changes and have seen thriving energy and financial sectors – but also a concerning lack of progress on the rule of law, impacting businesses and investment – according to Law Office Lazarov Managing Partner Dragan Lazarov.

“The significant developments in North Macedonia in the past three months revolve around two major legislative changes: the new proposal law on financial instruments, implementing the MiFID II Directive, and the proposal law on prospectuses,” Lazarov begins. “Consultations between the Financial Markets Association in North Macedonia and stakeholders have indicated a consensus that these changes represent a noteworthy step forward. The new law on financial instruments, set to take effect 18 months after the enactment, involves serious and structural shifts, including the formulation of bylaws and changes to existing rules.” Importantly, he notes, “these adjustments will facilitate engagement with European markets, and demand heightened attention from the legal, trading, and financial side.” Lazarov further says that the new proposal law on business secrecy, which regulates this matter for the first time, also requires significant attention: “lawyers are actively assessing its impact on companies to provide guidance for clients and those seeking to implement such measures.”

As for promising sectors, Lazarov highlights the energy sector, which continues to be significant and dynamic. Additionally, he says “even in this time of crisis, the construction sector is thriving, along with the robust performance of the financial sector, including banks, brokers, and investment funds. These entities appear to be the winners during this period of crisis and inflation.” Still, according to him, “the overarching concern for everyone is the issue of the rule of law, which significantly impacts the business and investment climate, forming the basis for various business connections.”

“International investment arbitration has become a significant focus in North Macedonia, with the government involved in new high-value investment arbitration cases,” Lazarov continues. “These cases, covering real estate, energy, mining, and construction, are typically rare but have increased substantially in a short period. There are claims amounting to EUR 1.5 billion against North Macedonia, a relatively small country. Through costly legal proceedings, efforts are being made to rectify issues that did not unfold as they should have in those projects.”

“This surge underscores a major concern – the lack of progress on the rule of law in the country,” Lazarov notes. “The latest Progress Report on North Macedonia’s EU accession revealed no improvement in judicial independence and judicial reforms, highlighting a persistent issue.” According to Lazarov, for lawyers this remains a fundamental topic, with “the stagnant situation in recent years actually translating into regression, considering our dynamic world. All stakeholders in the judicial system, including lawyers and judges, must actively contribute to addressing this concern and building a judicial system that befits the country’s aspirations,” he notes.

The concept of a digital workplace, characterized as an employment environment allowing employees to complete tasks, collaborate, and function as part of a team, irrespective of location, has been around for some time but has gained significant traction in the aftermath of the COVID-19 pandemic. This surge in popularity can be substantially attributed to the measures enacted by the Macedonian Government to mitigate the impact of COVID-19.

While these measures have elicited mixed reactions, it is universally acknowledged that they have facilitated positive developments in several areas, notably in the digitalization of workplaces. Macedonian employers, in their bid to limit the spread of COVID-19, have embraced remote working arrangements, altering traditional business and operational practices, in particular in the IT sector.

Even after the relaxation of pandemic-related restrictions, many Macedonian employers have not reverted to pre-pandemic working arrangements. A significant number of them have opted for remote or hybrid working models (where employees work from the office only two or three days per week). The adoption of these models is influenced by the potential advantages offered by contemporary information technologies. Such technologies can either facilitate closer monitoring and control of employees, ensuring compliance and enhancing productivity through targeted software applications or grant employees greater flexibility and autonomy in their roles. This flexibility can result in improved productivity and employee contentment. The approach chosen by an employer largely depends on their philosophy and business nature, with each method having the potential to boost productivity.

However, it is crucial to acknowledge that remote work is not without its challenges. Macedonian laws do not explicitly regulate the various modalities of remote work but instead, allow the employer and the employee to agree on work from home or another location at the discretion of the employee. The requirements for implementing a remote work arrangement include the employer and the employee entering into an employment contract (or an addendum to an existing employment contract) specifying that the employee will work from home or another location. The employer is also required to provide the employment contract for remote work (or an addendum to an existing employment contract) to the Macedonian labor authorities within three days from the date of its conclusion.

Under Macedonian law, the employer continues to bear the responsibility for safeguarding the safety and health of employees, even when they transition to a remote working environment. This obligation is far from being a simple or straightforward task to accomplish in practice, primarily due to the nuanced and diverse conditions presented by the home-based or alternative workspaces that employees may utilize during remote work. Ensuring employee health and safety in remote work arrangements necessitates a comprehensive and meticulous assessment of the myriad risks potentially present in each unique working environment. Each employee’s home or chosen place of work may exhibit a distinct set of safety and health challenges, influenced by a range of factors such as space design, equipment setup, ambient environmental conditions, and the presence of other occupants or pets. The variability inherent in these individualized workspaces makes it exceedingly difficult for employers to implement a one-size-fits-all approach to managing and mitigating occupational health and safety risks. It is important to note that the Macedonian labor authorities have the power to prohibit remote work if it poses a risk to the safety and health of employees or the environment.

In addition to the need for customization in response to varied working conditions, the task of evaluating and addressing the safety and health risks associated with employees’ homes and alternative workspaces imposes a significant burden on employers. This endeavor not only demands a considerable investment of time and resources but also requires specialized knowledge and expertise to accurately identify and respond to the specific risks inherent in different environments. Furthermore, the practicality of employers conducting thorough assessments of, and interventions in, the remote workspaces of employees is questionable. In certain situations, it may even be an unfeasible expectation due to limitations such as privacy concerns, logistical challenges, and the absence of legal or contractual provisions empowering employers to effect changes in privately owned spaces. These constraints further complicate the employer’s role and responsibilities in ensuring the safety and health of remote workers, at times rendering the exercise practically impossible.

On the other hand, employees might find it difficult to maintain a healthy work-life balance while working remotely. In particular, working from home can blur the boundaries between professional and personal life, potentially negatively impacting the employee and, subsequently, the employer. This blurring can lead to decreased employee well-being and productivity. Employees who remain connected to their workplace while at home can struggle to recover from work-related stress, potentially leading to “technostress”—a negative psychological state associated with the use or anticipated use of digital technologies. In considering the adoption of remote work, it is vital to weigh its pros and cons. A hybrid approach is often seen as optimal, as it can foster a healthier work-life balance for employees, thereby enhancing productivity and cultivating a positive business atmosphere.

By Gjorgji Georgievski, Partner, and Dimitar Trombevski, Junior Associate, ODI Law

Tender Opportunities in North Macedonia

1. Rail Corridor VIII – Phase II Project, Lender’s Monitoring Advisor

The European Bank for Reconstruction and Development (“EBRD”) seeks a Lender’s Monitoring Advisor (“LMA”) who will monitor the implementation of rail infrastructure projects in North Macedonia. The intention is to ensure timely and within-the-budget implementation of the investments. The estimated EUR 500,000 contract will be awarded to the highest–ranking bidder based on technical evaluation and financial scores. The selected bidder and EBRD will enter into negotiations for the single–use contract/statement of work.

Some of the selection criteria include a requirement for a well-equipped team of experienced experts/engineers in various relevant fields, such as project manager/railway expert, tunnel expert, bridges, or structure engineer, signalling and telecommunication engineer, etc. The successful bidder will have to visit the project sites when required, but at least quarterly throughout the project implementation, in order to conduct on–site inspections and converse with project partners.

The duration of the contract is 48 months. Interested candidates can submit their bid to EBRD by 19 October 2023.

2. Supervision of Works Contracts for the Establishment of Integrated and Self Sustainable Waste Management System in East and North-East Regions in North Macedonia

The Central Financing and Contracting Department (“CFCD”) in the scope of the Ministry of Finance of North Macedonia has published a contract notice for the supervision of works contracts (“Works Contracts”) for the establishment of an integrated and self–sustainable waste management system in the east and north-east regions in North Macedonia (“Project”). The Works Contracts will be implemented in accordance with the PRAG FIDIC 1999 Yellow Book and it is divided into the following two lots:

construction of the central waste management facility for the east and north-east regions in the municipality of Sveti Nikole; and
construction of six local waste management facilities for the east and north-east regions in the municipalities of Berovo, Makedonska Kamenica, Vinica, Shtip, Rankovce and Kumanovo.
The winning bidder should ensure that the services are in accordance with all requirements for quality control, control of design, control of quantities, supervision of the work progress, analyses of expenses, as well as working on administrative questions during the construction and the defect liability period.

The contract worth EUR 1,020,000 will be awarded based on several selection criteria, including at least EUR 700,000 annual turnover for the last three financial years, at least two permanent employees currently working in fields related to the contract, a professional license/certificate/right for the execution of the supervision of construction works in their country, etc. The total duration of the contract will be 33 months, out of which 18 months correspond to construction works supervision, three months for administrative issues and completion of documents and 12 months correspond to the defects liability period.

Interested candidates can submit their bids by 20 October 2023. 

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Veton Qoku and Ljupka Noveska Andonova, Partners, Karanovic & Partners

North Macedonia continues to align its laws with EU directives while introducing a solidarity tax and a food price freeze – both of which raise concerns, according to Debarliev, Dameski & Kelesoska Partner Jasmina Ilieva Jovanovik.

“One of the most frequent questions and concerns in North Macedonia pertains to the Law on the Solidarity Tax, which was enacted on September 25,” Ilieva Jovanovik begins. This law, while resembling EU Regulation (EU) 2022/1854, on an emergency intervention to address high energy prices, differs in a significant way, she says. “In the EU version, the extra profit tax applies exclusively to the energy sector. However, in North Macedonia, it encompasses all companies, regardless of their industry, as long as they had over EUR 10 million in income in 2022. The abrupt implementation of this law, retroactively, on the same day it was announced, has raised constitutional and practical challenges for companies.”

Separately, Ilieva Jovanovik reports that “the government’s decision in September to freeze prices for a list of essential food products – as they were in the retail sector on August 1, minus 10% – coupled with restrictions on trading margins between retailers and wholesalers, aims to curb rising food prices.” While this is a public interest measure, she says that it has “generated concerns and uncertainties, especially among clients in the food retail sector. Moreover, a recent change in VAT and customs taxes adds complexity to the situation. The government is reassessing its approach, but clients in this sector are eagerly awaiting clarification,” she adds.

Food and agriculture products – and the related trading practices – are also in the focus these days with a new Law on unfair trading practices in the supply chain of agricultural and food products about to be adopted. Ilieva Jovanovik stresses that this draft law is designed to align with EU Directive 2019/633 on unfair trading practices in the agricultural and food supply chain. It targets both retailers and suppliers and seeks to limit certain contract clauses while granting more authority to the Commission for the Protection of Competition,” she explains.

Furthermore, Ilieva Jovanovik says that on the road to alignment with EU regulations, the new Law on the settlement of banks was adopted recently. “This law aligns with Directive 2014/59/EU and introduces mechanisms for state intervention in troubled banks to enable continuity of their critical financial and economic functions and prevent negative consequences to the financial system. It’s a significant development aimed at protecting consumers, the market, and the overall banking framework,” she says. “While our country’s banks are currently stable, the new law will help mitigate the consequences should any future banking crises arise, ensuring a more robust financial system.”

Finally, Ilieva Jovanovik reports that the “Fitch agency recently rated North Macedonia at BB+, indicating a certain level of creditworthiness. However, what has piqued interest is the inflation report, which has returned to single digits, at 8.3% in August. This is a noteworthy development after a long period of two-digit inflation,” she explains. “The real estate market, on the other hand, has experienced a slowdown due to the national bank’s decision to increase interest rates, making mortgages less affordable. Prices have stabilized but the market is eagerly awaiting new trends,” Ilieva Jovanovik concludes.

The end of September 2023 not only marked the close of the month but also heralded the replacement of Macedonia’s previous Law on Advocacy with a new substantially amended law. The new law, which entered into force on 3 October 2023, introduced significant amendments designed to elevate the level of practice of law in Macedonia.

One of the significant amendments that have been incorporated into the new law pertains to the establishment of an Education Centre for Attorneys by the Macedonian Bar Association. This Centre will serve as the primary provider of mandatory continuing legal education for all attorneys in Macedonia. This move is aimed at enhancing the knowledge and skills of legal practitioners to enable them to provide better legal services to their clients while adhering to the legal and ethical standards set by the Macedonian Bar Association. The Education Centre for Attorneys will play a crucial role in ensuring the continued professional development of legal practitioners in Macedonia by offering a range of courses, workshops, and seminars that are designed to provide the latest updates on legal practices and procedures, as well as to enhance the overall competence and proficiency of the attorneys. Apart from this significant amendment, the introduction of new eligibility requirements for aspiring attorneys, an enhanced right of attorneys to obtain information and documents from state authorities for the purposes of providing legal advice and opportunities for legal professionals to serve as state officials, collectively constitutes a leap forward in the legal landscape of North Macedonia.

The new law mandates that state authorities, local self-government units, entities endowed with public powers, and individuals must, within eight days of receiving a request from an attorney, provide the necessary data and documents to facilitate the provision of legal advice pertinent to a case. This marks a departure from the previous law, under which these entities could lawfully withhold information deemed confidential. Furthermore, attorneys are now empowered to initiate misdemeanor proceedings against state authorities, state-affiliated entities, officials, or any other legal or natural persons, which have not complied with the request to provide data or documents. For non-compliance with these provisions, state authorities, state-affiliated entities, or any other legal entities may face fines ranging from €2,500 to €5,000, responsible individuals at the state authorities, state-affiliated entities, or any other legal entities may incur fines of €250 to €500, and natural persons might be penalized with fines between €150 and €350.

In terms of eligibility for candidate attorneys, the law introduces two novel requirements. Firstly, individuals who have previously held positions as judges, public prosecutors, state attorneys or deputies, ombudsmen or deputies, elected or appointed officials, notaries, or enforcement agents are barred from becoming attorneys if they have been found responsible for misconduct in service through a final decision in any judicial, disciplinary, or other proceedings. This prohibition lasts for five years following the final decision. Secondly, candidate attorneys are now obliged to complete initial training at the newly inaugurated Education Centre for Attorneys of the Macedonian Bar Association, which will serve as the sole venue for mandatory and continuous education, training, seminars, and workshops for all attorneys.

Under the new law, attorneys are now permitted to hold public offices or serve as elected or appointed officials, which is a significant departure from the previous law that limited attorneys to their professional practice. This change in legislation opens up new opportunities for attorneys to use their legal expertise and skills in public service and governance, thereby contributing to the betterment of society. With this development, attorneys can now aspire to take on leadership roles and responsibilities outside of the traditional legal domain and make a meaningful impact on the community they serve.

The new law imposes stricter penalties on attorneys found guilty of immoral or irresponsible behavior. The previous law mandated a temporary cessation of legal activities for a period of one year, however, the new law now extends this penalty to up to three years. This means that any legal practitioner who is found guilty of such behavior will have to bear the consequences of their actions for a longer period of time, highlighting the importance of upholding ethical standards and responsible conduct in the legal profession.

In light of the above amendments, the new Law on Advocacy has substantially redefined the role and responsibilities of attorneys in Macedonia, providing a robust written framework. With over four thousand members comprising attorneys, associates, and trainees, the Macedonian Bar Association has successfully navigated through negotiations with political stakeholders to arrive at this enhanced legal instrument. The practical efficacy of these changes remains to be seen over time, but as it stands, the legislation promises a stronger, more accountable practice of advocacy in the nation.

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

The summer slowdown in North Macedonia has not dented interest in the energy sector, with several renewable energy initiatives on the docket, while a new law on expert findings and data protection fines are making a splash, according to Apostolska Aleksandrovski & Partners Partner Svetlana Trendova.

“Due to the holiday season, there has been a bit of a slowdown in North Macedonia,” Trendova begins. “Still, current trends in the overall legal market are focused on the energy sector. Renewable energy continues to be a major focus for the Macedonian government. Recent regulatory actions have been taken in this field, particularly due to the growing popularity of photovoltaic systems.” She says that conversations about making further regulatory changes have been ongoing, but these are still in the preliminary stages. “The intention behind these discussions is to transpose the EU Regulations and Directives from the Clean Energy Package and to simplify the process of utilizing energy resources, which is currently quite complex.”

According to Trendova, there has been significant activity on the legislative front. “A new by-law for energy supervision has been adopted by the Energy and Water Services Regulatory Commission,” she notes. “This regulation defines their role in overseeing activities within energy-related organizations. The regulation came into effect recently and is scheduled to be implemented starting January 2024. It aims to cover various supervision aspects such as operation, ownership separation, licensing obligations, and more.”

“The month of July marked a significant step as a new law on expert findings was introduced, a product of the Ministry of Justice.” Trendova continues. “This forward-looking initiative not only offers clarity to the previously ambiguous judicial expert examination system but also lays out the prerequisites, conditions, and procedures pertaining to the revocation of expert licenses.” She explains that the law serves to enhance the authority of the Chamber of Experts, “which had existed before but is now revitalized. Furthermore, the legislation delves into the realms of expert licenses, their issuance, maintenance, and the potential for termination or revocation.” According to her, beyond its direct legal implications, this progressive step has the added benefit of streamlining the work of attorneys, providing them with an authentic point of reference.

“Also in July, there was a noteworthy announcement regarding the safeguarding of personal data,” Trendova points out. “This marked the first instance of a public disclosure concerning data protection fines, with a cumulative monetary penalty amounting to MKD 1.32 million. This action was prompted by violations related to data subjects, leading to the imposition of fines on the legal entities and their responsible persons.” One such case, she explains, “involved a financial firm that offered online loans to individuals who were exploiting others’ personal details. Similarly, a hospitality company faced penalties for not adhering to the law after collecting guest information.” According to Trendova, it is important to note that this legal framework was established in 2020 and came into effect in 2021. “Subsequently, since 2021, the Personal Data Protection Agency has demonstrated strong support for effective law implementation, culminating in this significant public fine announcement – a first of its kind.”