Category: Moldova

  • The Buzz in Moldova: An Interview with Daniel Cobzac of Cobzac & Partners

    “The most important news right now in Moldova relates to the results of the recent presidential elections,” says Cobzac & Partners Managing Partner Daniel Cobzac, from Chisinau, referring to the November 15 victory of former World Bank economist Maia Sandu over incumbent Igor Dodon, the leader of the pro-Russian “Party of Socialists of the Republic of Moldova,” which holds a parliamentary majority.

    Cobzac believes that President-elect Sandu will try to strengthen cooperation with the United States and EU. He says that the relationship with Russia “will not be a priority as it was before, but I don’t believe it will be disrupted either.” Sandu is known for her desire for reform, he reports, describing that as “a good thing, given that, for the past 20 years or so, there have been no actual reforms.” According to him, “Moldova just didn’t have the luck of other ex-Soviet states that had leaders who had the well-being of their citizens as a priority.” Instead, he says, “almost every leader we had was either quite unpopular or ended up on trial for corruption.” 

    Although Sandu won almost 58% of the vote (which Cobzac describes as “remarkable,” as “the Socialist party controls the government and all administrative resources”), he believes she will need additional support to pursue the reforms she has promised. “The office of the President has no outright legislative power,” he points out, “so parliamentary support is crucial.” Accordingly, he says, “the President-elect is hoping for the opportunity to take control of parliament and has hinted at potentially calling for a general election soon, where this may be attempted.”

    Moving away from politics, Cobzac reports that the only recent major change to Moldova’s legislative landscape involves amendments to the country’s Insolvency Law. “The reforms to the Insolvency Law were brought on by the EU and were drafted by a group of experts from Moldova, US, the World Bank, and local qualified judges,” he says, adding that the changes “solved a lot of issues.”

    The most important amendment to the Insolvency Law, Cobzac reports, is the ability for companies to prolong the restructuring period. “The total period, now, is five years, as opposed to the previous three-year limit which was not enough to restructure a business.”

    Finally, assessing the pulse of Moldova’s economy, Cobzac says that “the situation is not good, for all sectors of business,” due to the Covid-19 pandemic. He reports that, because of the crisis, there have been no major deals for the past six months, and he reports that “the sectors that do work are large retail chains of stores and some local vendors here and there.” With Moldova not belonging to the European Union, there are no relief funds coming its way, which means that help must be sought elsewhere. “The government has applied for several relief programs with donors from the EU and the USA but that these are all contingent on detailed plans for the way the assistance will be utilized,” he says. “There are no indications that the government has completed any plans, so all of this is still on hold.”

    Nevertheless, Cobzac reports that on November 25 President-elect Sandu announced that Moldova will receive EUR 51.6 million in financial assistance from the EU. According to him, “although this money will come as a loan, it is still good news for the ailing Moldovan economy.”

  • Alexander Turcan Elected Vice President of the Chisinau Bar

    Turcan Cazac Managing Partner Alexander Turcan has been elected Vice President of the Chisinau Bar.

    The Chisinau Bar is the largest of four Moldovan regional bars, with 1,660 active members. The Vice President term is two years.

    According to Turcan Cazac, “after seven days of voting during the annual general meeting of the members of the Chisinau Bar, on 30 September 2020 …Turcan was elected vice president (prodecan) of the Chisinau Bar.” According to the firm, he was supported by 54% of participating voters.

  • Turcan Cazac Joins Andersen Global in Moldova

    Andersen Global has signed a Collaboration Agreement with Turcan Cazac to establish a presence in the Republic of Moldova.

    Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global is an international association of legally separate, independent member firms comprised of tax and legal professionals in 196 locations around the world. As reported by CEE Legal Matters previously, the association’s CEE footprint has been growing in recent years, including in Bosnia and Herzegovina (with the Sajic law firm), Slovenia (with Miro Senica and Attorneys), Croatia (with Kallay & Partners), Serbia (with JSP), Romania (Tuca Zbarcea & Asociatii and Tuca Zbarcea & Asociatii Tax), Turkey (the former Nazali Tax & Legal), Hungary (Szabo Kelemen & Partners), and most recently, in May of this year, Ukraine (with Sayenko Kharenko).

    “Over the years, our firm has built a reputable position in providing the leading law practice for the country,” said Turcan Cazac Managing Partner Alexander Turcan. “Our tax practice has also been growing and has become an important area of the firm. The collaboration with Andersen Global will further our firm’s growth and capability in delivering the highest level of client services internationally, and we look forward to working together.”

    “Turcan Cazac is a leader in the Moldovan market, and this collaboration reflects our desire to align ourselves with firms that share our vision and underscores our commitment to provide best-in-class service seamlessly to our clients,” Andersen Global Chairman and Andersen CEO Mark Vorsatz said. “Additionally, Alexander and his team have working relationships with several of our collaborating firms in the region. This creates significant connectivity and establishes a strong foundation as we continue to expand our global platform in the region.”

  • Gladei & Partners Advises EBRD on Acquisition of Stake in Vestmoldtransgaz

    Gladei & Partners and K&L Gates have advised the EBRD on the acquisition of a 25% stake in Vestmoldtransgaz, a gas transmission company operating the newly built Ungheni-Chisinau gas pipeline. Turcan Cazac reportedly advised Vestmoldtransgaz on the deal.

    According to the EBRD, “the capital increase of Vestmoldtransgaz is EUR 20 million,” and “the 120 km Ungheni-Chisinau gas pipeline will soon become operational and complete the connection of the gas transmission systems of Romania and Moldova by linking the capital Chisinau to the Iasi-Ungheni interconnector between the eastern Romanian city of Iasi and Ungheni, a Moldovan town on the Romanian border.”

    “This connection will enhance Moldova’s energy security by diversifying its gas supply sources, a prerequisite for the country’s successful development,” commented EBRD Vice President Alain Pilloux. “The project also helps integrate Moldova into future major gas infrastructure projects such as the Trans Adriatic Pipeline and gas sources from central European hubs and links it with Black Sea gas deposits. Greater integration will deliver economic benefits for consumers.”

    Founded in 2014, Vestmoldtransgaz owns and manages a gas pipeline network in western Moldova and provides natural gas transportation services. In 2018 it was taken over by Eurotransgaz, a subsidiary of SNTGN Transgaz, the company operating the Romanian natural gas transmission system.

    Gladei & Partners’ team included Managing Partner Roger Gladei, Senior Associate Dan Nicoara, and Associate Vlad Roibu.

    Editor’s Note: After this article was published, Turcan Cazac informed CEE Legal Matters that its team included Partners Vadim Taigorba and Ana Galus and Senior Associate Olga Saveliev.

    In addition, Tuca Zbarcea & Asociatii announced that it had advised sellers TransGaz and its Moldovan subsidiary Eurotransgaz. The firm’s team included Partner Sorin Vladescu and Managing Associate Nisa Jecu.

  • Real Estate: New Standards of Superficies Right

    The new version of the Moldovan Civil Code, which came into force pursuant to the Law to Modernize the Civil Code and to Amend Certain Legislative Acts 133/2018 (the “Law”), reformed several features of the private law and turned out to be a real challenge for all kind of individuals and organizations, from natural persons and entrepreneurs to public authorities.

    The modernized Civil Code includes a significant innovation in the field of Real Rights. The starting point of the civil real estate relationship reform has been the return to the principle superficies solo cedit, meaning the immovable is deemed the plot registered in the Real Estate Register under a distinct cadastral number, upon which the things and any other objects firmly attached (the “Objects”) are a component part. Since March 1st 2019 the Law gives the Objects’ owners a superficies’ right over the plot, regardless whether they have a legal or contractual right of possession or use over the plot or not. Unless otherwise provided by law or contract, the owner’s right in rem covers only the use plot’s part necessary for exploiting the object registered separately in the Real Estate Register. The adjusted Law on the Implementation of the Civil Code compels the parties to negotiate and set the term of the superficies right, or have it be fixed by the court.

    Inevitably, the new regulations are likely to increase the number of real rights lawsuits and overburden the Real Estate Register keeper.

    A different approach exists for plots owned by the state or administrative-territorial units. Apart from private-to-private relationships, the owner’s legal superficies right over a plot owned by the state is deemed established for a period of 99 years. Except as provided by law, regardless whether the owner has concluded a tenancy agreement with the local public authorities or not, he becomes de iure a superficiary and is bound to pay state-regulated rent till the expiry of his ownership, unless its amount has not been set by contract.

    By enhancing fluency in the relationship between Real Estate investors and public authorities, the reformed Civil Code facilitates the development of the Real Estate sector. Thus, investors have been exempted from the bureaucratically burdensome procedure of arranging legal relationships with the authority-landowners.

    According to a Regulation-Project of the Chisinau Municipal Council that is about to be approved, local public authorities (LPAs) cannot urge owners to sign contracts granting a superficies right. For new contracts, LPAs have already conceived the main mandatory contract clauses in the new Regulation, such as: LPAs do not guarantee against eviction nor guarantee any characteristics of the plot; LPAs may require the demolition of any buildings or improvements made on the municipality plot at the termination of the contract, without paying any damages; the LPAs have the right to terminate the contract with three months’ notice; the LPAs have the right to unilaterally increase the amount of rent if it is required by the law. In the absence of a contract, the amount of the superficies rent shall be set by the LPAs’ decisions and charged to both the present owners and subsequent acquirers, unless the subsequent acquirers challenge the LPAs’ decisions in court. Also, a specialized municipal subdivision is assigned to develop and approve geometric plans for the plot’s parts encumbered with the superficies right. Nevertheless, the LPAs have not even nearly exhausted the solutions for real-life cases.

    However, a problem occurs when an enterprise intends to change the legal relationship arising from a pre-existing tenancy contract into a grant of superficies right. Though the enterprise has a legally arisen superficies right, the LPAs will continue to keep the tenancy agreement in force until its expiration. Obviously, the enterprise should not be deprived of the superficiary’s legal privileges as long as the tenancy agreement remains effective. Amendments to the LPAs’ Regulation are thus required, and we have submitted an argumentative brief in this regard.

    Summing up, assuming the parties concerned will comply with the legislative framework, the new regulations aimed at streamlining the real rights relationships will achieve their goal.

    By Daniel Cobzac, Managing Partner, and Elena Vintea, Lawyer, Cobzac & Partners

    This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Moldovan Employment Law in the Age of the Pandemic

    The COVID-19 pandemic has revealed a certain degree of inflexibility and lack of vision with regard to employment regulations and rules, especially in Eastern Europe, where countries which were slower to adjust than their Western European counterparts. Unfortunately, Moldova was no exception, and Moldovan businesses have frequently found themselves in positions where there were no obvious legal and commercial options available to their specific situation during this pandemic. 

    For example, Moldovan legislation provided no real and effective means of allowing employers to change an employee’s work-place or to establish a remote working relationship with an employee without that employee’s written consent. This forced employers to choose between pushing the boundaries of the law and send employees to work from home, even though no legal guidelines existed, or terminating/suspending their employment agreements and, consequently, in many cases, effectively suspending their businesses. 

    In May, we and other leading businesses participated in a series of discussions with the government to modify and adjust the Moldovan Labor Code to address these problems and to help businesses during this time of need. While not all of our recommendations were accepted by the government, we believe that the amendments that were accepted and implemented have been helpful to those businesses that were able to effectively “work from home” – an arrangement which could not be implemented before the necessary legal framework was added.

    For example, a new type of individual labor agreement was introduced: telecommuting. This effectively allowed a working relationship between the employee and the employer in which the employee can perform his/her tasks from home or any other location he or she chooses. In addition, the government created a framework allowing employers, during states of emergency, to temporarily change employees’ work places without amending the employment agreements (which would require the approval of the employee). 

    During our work advising the World Bank and the Moldovan State on updating the Labor Code, we gained valuable insight into the issues and problems with the current employment rules. With that in mind, we believe that several other amendments should be made to the Labor Code to help employment relationships during pandemics or economic crises. For instance:

    Implementing the German “kurzarbeit” (adjusted to Moldovan realities). This would allow an employer to establish a reduced and flexible work schedule for all or some of its employees (without the specific consent of each employee) when the employer’s activity does not have regularity or consistency. Obviously, the eligibility criteria and the effects for the employer would have to be adjusted to the financial abilities of the Moldovan government (for example, a reduction of the percentage of the salary subsidized by the government), while still providing effective help to local businesses and protection to their employees.

    Increasing the duration of “technical” unemployment (i.e., the temporary suspension of the employee by the employer, due to economic reasons, where the employee is still paid a percentage of his/her salary, but may be recalled at short notice). Currently, the maximum duration for technical unemployment is four months in a year. However, since we are now beginning our fourth month of the pandemic, this period is clearly too short.  Given economics forecast with respect to the prolonged effects of Covid-19 on the global economy, four months would appear to not even cover the actual pandemic period, let alone to allow any time to “recover” from the economic effects.

    Transfer. Allowing employers to transfer employees to other divisions within the same town and in the same position, without requiring the employees’ written consent.

    Allow work at “0”.  Offering employers the ability to pay only for the work actually performed for a maximum period of one month (but not less than the national minimum wage).

    We are confident that, in the aftermath of the pandemic, the Moldovan government will be willing to take a more modern approach towards labor regulations as the challenges faced by employers proved detrimental not only to the business community, but to employees and governmental revenues as well. Allowing more flexibility for employers during times like these will help the business community to rebound quicker and, with a little luck, get us all back to normal.

    By Diana Neagu, Partner, and Eduard Gurin, Associate, Vernon | David

    This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • M&A Deals: Trends and Developments

    The time is gone forever when our lawyers would sit down in a physical data room to dig through tons of documents provided by the target’s head of legal or corporate secretary. We will miss the personal contact, but it’s fair to say that the due diligence process has become more streamlined and efficient in Moldova, making it possible to shrink the timing of M&As and close deals in weeks rather than months.

    Having learned from the painful experience of legal negligence in the early days of Moldovan acquisitions (particularly at the privatization stage), which resulted in disputes and even property vindication, foreign investors have become more diligent and prudent, preferring to go for professional advice from day one (or even before) of an investment project in Moldova. In addition, a purely Moldovan element, the “billion theft” from the banking system, has caused investors to take pains to do their homework properly, instructing Moldovan counsel to look into all dark corners of potential target companies.

    The large-scale acquisitions landscape has been dominated in recent years by banking deals. The state needed to clean the banking system from the non-compliant shareholders who had managed to populate the largest banks in early 2010s, posing systemic risks. So the remedy chosen was revolutionary: a special law passed in December 2017 that shielded the acquirers of systemic banks from legal attacks from former shareholders. In such 1-2-3 legal dribbling, shares of non-compliant shareholders were to be annulled, new shares issued, and the state was to purchase the new shares and sell them on to ultimate investors.

    Reputable investors fell in love with the scheme and the two largest banks found new owners shortly thereafter: first in 2018, with the acquisition of a controlling stake in Moldova-Agroindbank (Moldova’s largest bank) by an EBRD-led consortium (a transaction selected as the Deal of the Year for Moldova by CEE Legal Matters), then in 2019, with the acquisition of a majority stake in the second largest bank, Moldindconbank, by Bulgaria’s Doverie Obedinen Holding. 

    Although dealmakers predicted that in 2020, as the COVID-19 cloud loomed, Moldovan M&A would stall, in fact April 2020 saw the acquisition of the country’s second largest ICT operator – Moldcell – by CG Cell (a member of CG Global), in a combination of equity and shareholder loan purchase deal.

    As local law allows parties to shop both jurisdiction and forum, the overwhelming majority of Moldovan cross-border M&A transactions are English-law governed, with LCIA or other reliable arbitral tribunals set as dispute resolution fora. 

    Sale-purchase framework agreements (backed by local law transfer instruments) are quite often followed by shareholders, and less often, by share put and call agreements. Drag-along, tag-along, or first refusal right provisions are widespread but untested in Moldovan courts, which are left aside.

    With 50 double taxation treaties in place, the Republic of Moldova has actually invited investors to shop the tax jurisdiction as well. No wonder investors, including reputable ones, have preferred structuring investments via tax-friendly jurisdictions like the Netherlands or Cyprus, and that banking regulations have been shaped to accept SPVs from transparent jurisdictions. 

    Looking ahead, 2020 foreshadows more challenging times for dealmakers. The year got off to a strong start, but many coped with increased volatility in equity markets, decreasing valuations, and local economic and political uncertainty.

    We believe Moldovan authorities will be seeking strictly to enforce merger control regulations, given the record levels of fines of up to EUR 1 million imposed in the past. The competition council and other branch regulators will also seek to bolster their foreign investment regulations. Also, considering the political discussions currently held on merger control for sectors deemed to be of national interest (such as airports and energy companies), future transactions may well be subjected to increased government scrutiny.

    Businesses planning to expand or restructure through M&A in 2020 or beyond will do so against a background of changing political, trading, and social conditions. Despite the challenges, however, since Moldova is also rich with companies in the SME sector, where there is rarely a natural succession plan, these companies will need either a trade exit or a management buy-out. The outlook for M&A in Moldova therefore remains promising.

    By Roger Gladei, Managing Partner, and Dan Nicoara, Senior Associate, Gladei & Partners

    This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • The Funambulists – Moldova Walks a Tightrope Between the EU and Russia

    A Fortunate or Unfortunate Positioning

    Central and Eastern Europe lies at the crossroads between East and West, with countries struggling to free themselves from the lingering shadow of their five-decade-long association with the Soviet Union while still, where possible, benefiting from their relative proximity to Russia’s riches. This is true perhaps nowhere else as much as Moldova, a small, land-locked country trapped between Romania and Ukraine.

    Indeed, Moldova – Europe’s poorest country, with a nominal GDP per capita for 2019 of only 3,300 international dollars – often finds itself struggling to define its role independent of the economic, geo-political, and cultural pressures put on it by the Russia/CIS countries on one side and the European Union on the other. Its positioning is as much a strategic asset as a problem, though, and the country has free-trade agreements with the EU and the Commonwealth of Independent States, as well as with Turkey and the Balkan states.

    In fact, Moldova has, in recovering from a 2014 banking crisis and the effects on its economy of Russia’s financial downturn and the conflict in Ukraine that led to a recession in 2015, begun to stabilize, and the ties to the West that started to form in the years before that crisis hit have begun to grow stronger. Indeed, a majority of the country’s population now identifies as pro-EU – especially in the country’s cities – and the great majority of foreign direct investment into the country comes from EU member states.

    The most significant factor in this turn to the West in recent years, according to most, was the 2014 Association Agreement entered into by Moldova and the European Union, which came into effect in 2016, in the process establishing a “Deep and Comprehensive Free Trade Area” between the EU and Moldova, removing import duties for most goods traded between the two, and asserting a commitment to “broad mutual access to trade in services for both partners.” In large part as a result of this agreement, FDI, which had dropped from USD 338 million in 2014 to only USD 91 million in 2016, began to recover, amounting a total of USD 228 million in 2018, and then a historic high of USD 593 million in 2019.

    Still, and although Moldova’s membership in the Soviet Union ended 29 years ago, the country’s ties to Moscow remain strong as well. The country is currently governed by a Russian-friendly coalition, and Moldovan President Igor Dodon – the former chief of Moldova’s Socialist party – has been identified as “pro-Russian.” In fact, in an attempt to support President Dodon, on April 17 of this year, Russia granted Moldova a loan of EUR 200 million (which the Moldovan parliament then ratified on April 23). Moldova also has observer status with the Russia-dominated Eurasian Economic Union.

    Of course, nothing is black or white. Attracting FDI – from whatever source – is a common goal of all parties, and President Dodon has stated that, despite his personal friendship with Putin, “in Moldova it is almost impossible to be only pro-Russian or only pro-European.” According to Dodon, “the overwhelming majority of our citizens want to be friends both with the Russian Federation and the European Union.” Thus, he has insisted, “the foreign policy I have been promoting for the last years is a balanced one, meaning, on one hand, implementing the association agreement with the EU, and re-establishing the strategic relations with the Russian Federation on the other.”

    Given the importance of FDI coming from both the EU and Russia to Moldova’s fragile economy, and the historic ties (and investors coming from both), we asked leading commercial lawyers in Moldova to share their thoughts on the twin sources of investment, and how the legal industry in Moldova has adapted to its unique circumstances.

    Russia’s Waning Influence

    Although Russian commercial influence on the Moldovan economy remained strong in the first years after the 1989 fall of the Berlin Wall and the country’s 1991 declaration of independence from the Soviet Union, that influence is now much weaker. “The situation was different in the early 90’s, when a lot of the investment came from the East,” says Roger Gladei, Managing Partner at Gladei & Partners. “However, the situation took a massive shift afterwards, and now most of it comes from the EU and the US.”

    In fact, as late as 2015 Russia remained the largest source of FDI in Moldova, with 28% (although even then European countries contributed 61% of all FDI). Still, by 2019 Russia was only the seventh largest source of FDI (following Romania, the UK, the Netherlands, France, Estonia, and Italy, in that order).

    As the moment, according to Igor Odobescu, Founding Partner of ACI Partners, “although Russian firms are generally present on the market, there isn’t a single sector in which they are more popular than the EU.”

    Ultimately, Moldova may simply be too small a market for Russian investors to bother with, suggests Alexandar Turcan, Managing Partner at Turcan Cazac. “If we look at the list of top 100 Russian companies,” he says, “then we can recognize only a few names that have actually invested in Moldova (like Gazprom, Lukoil, and Yandex). Large Russian companies traditionally have showed little interest towards the Moldovan market due to its small size and lack of mineral resources.”

    Oleg Efrim, Managing Partner at Efrim, Roca & Asociatii, says that “it’s interesting to note that Russian companies showed more presence last year than in the previous few years. Still, in sectors such as Banking or Energy, EU investments were decisive.”

    Gladei confirms that there are almost no Russian banks in Moldova, and indeed, that “the Banking sector is where most of the strategic investment from the EU comes from.” Other strong sectors for the EU, he reports, “are ICT, Telecom, Manufacturing – particularly in the export-oriented free economic zones and industrial parks – and Energy, where also only a few minor Russian players are present.”

    And it appears that even the few high-profile investments that are made by Russians are controversial. The 50-year concession to run Moldova’s only international airport – the Chisinau International Airport – is a particular source of scrutiny. Many Moldovan authorities and media watchdogs have challenged both the legality of the concession and the ultimate ownership of the company holding it, Avia Invest. Indeed, in February of this year, under pressure from Moldovan authorities, Russian billionaire Andrey Goncharenko said he had given up his shares in the company owning 95% of Avia Invest. Nonetheless, both President Dodon and Prime Minister Ion Chicu have cited the need to terminate the concession contract, and have accused Goncharenko of being a front for local business tycoon Ilan Shor, who is now a fugitive in Israel. “There are no investors from Russia [in the airport] and never have been,” Dodon said in an interview on Radio Free Europe last December.

    With Russia’s decline, the European Union has stepped up its investment in Moldova, and the 2014 Association Agreement is a frequently-cited factor in the country’s recent growth. “The deal signed with the EU in 2014 makes for a cooperation that has contributed to changing the Moldovan export and FDI landscape, and has the potential to continue to do so,” says Ludmila Ciubaciuc, Senior Legal Associate at PWC Legal in Chisinau. “The future of FDI coming into Moldova depends on the government’s commitment to the continued implementation of the Association Agreement, the country’s political climate, and the economic dynamic both in western and eastern neighbors.”

    But not everyone is so enthusiastic about the Association Agreement. Daniel Cobzac, Managing Partner at Cobzac & Partners, describes it as “limiting our country’s Government when it comes to choosing partners,” and he reports that “the Agreement is not very welcomed by the ruling Socialist Party, since it’s viewed as a matter of political influence.” Ultimately, though, even he suggests Moldova’s future lies with the West. “Even though the pro-Russian Government is trying to prepare the grounds for more Russian investment, I see no way of this succeeding.”

    Either way, according to Efrim, “even more investment is likely going to come from the EU than it has up to this point.”

    The Legal Industry Does Not Discriminate

    The political and cultural ties between Moldova and the Soviet Union that dominated the middle part of the 20th century meant that for many years Russian was a second language in Moldova (after Romanian), and laws were historically published in both languages. As a result, Efrim says, “the older generation of lawyers have no problems speaking Russian – that might only be an issue, sometimes, to the younger generations.”

    In fact, Efrim reports that, even today, “we require new hires to know either of the two languages [English and Russian], given the fact that our clients will need assistance and answers in one of the two. Knowing both would be perfect. We tend to make BD trips to both markets, and our promotional products in Russian at this moment include offers for legal services if they are required by a specific client.”

    “Our lawyers speak Romanian, English, and Russian languages, so lawyers on our team are assigned to work on projects from both [the EU and Russia],” reports Ludmila Ciubaciuc. “When looking for new hires, knowledge of both Russian and English is important to us,” she says.

    Still, there’s little doubt which language is most important to the modern practice. “Each candidate has to take an English test,” Ciubaciuc says, “and only individuals who score high enough are then selected for additional interviews, [but] we don’t give tests on candidates’ Russian knowledge level.” In addition, she says, “most of our promotional material is made in English and Romanian,” though she emphasizes that “we sometimes contribute articles in the local newspaper or magazines dedicated to the business community in Russia as well.”

    Beyond language, most believe the idea of significant cultural differences between East and West are overblown. “No particular differences stand out,” insists Alexander Turcan. “Good Eastern companies have adopted the Western corporate culture, so that language is often the main difference. The legal needs are generally the same, too.”

    Roger Gladei agrees, noting that “legal-wise, both markets speak the same language, and the same approach to business and culture makes almost all differences disappear.”

    Igor Odobescu stakes out a middle ground. “While maybe some cultural differences exist, at the end of the day big investors are quite professional and used to the current standards in the industry,” he says. “This might not be true for smaller ones, though.”

    But not everybody is so sure. Oleg Efrim, for one, insists that “the culture of doing business is different – the classic Russian way of working is distinct from the European one in due diligence, approach, mindset, and perspective.” Still, he is quick to note, “strategically, these differences are getting smaller.”

    Daniel Cobzac believes some differences exist as well. “With Russian companies, things happen faster,” he says. “There is no central body that makes decisions, nor many people to consult with.” By contrast, he says, “with EU companies every decision requires that they obtain the approval of a supervisory body, hence things happen slower.” He reflects. “We recently advised a client who exported goods to the Netherlands. Because he was a bit late, the purchaser didn’t want to wait half an hour, which cost our client. This could never have possibly happened in Russia – they just don’t like to waste their money like that.”

    In addition, Cobzac reports, the kind of legal services clients from Russia require is different than those from the West. “It’s common for Russian businesses to usually ask for legal services in connection with large-scale transactions (i.e., business acquisitions), while European companies require a more diversified portfolio of legal services, like setting up a business, regulatory compliance, employment law matters, and real estate transactions.”

    Looking Forward

    “In the next 10 to 15 years we will not become members of the EU,” President Dodon has said. “Even if part of our population – meaning young people – want immediately to become members of the EU this will not happen. So we need to be pragmatic.”

    Pragmatism. Balance. Focus. For leading Moldovan law firms, keeping their options open and making sure they are ready and able to serve clients from both the West and the East is a critical element of their success.

    This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Guest Editorial: A Nostalgic Outline from a Moldovan Lawyer in Moldova

    I was born in Moldova and obtained my first degree in law from a Moldovan university 20 years ago. Since its independence in 1991, Moldova – a small landlocked country located between Ukraine in the East and Romania in the West – has struggled to survive, being torn apart by various geopolitical interests, political havoc, corruption, and economic fluidity. The legal industry has struggled as well. Although a lot has changed in my time as a lawyer, I cannot confidently say that the legal industry in Moldova has witnessed tremendous growth.

    These days, the Moldovan legal market is still dominated by local law firms and individual practitioners. There is an exiguous number of lawyers with sufficient experience and knowledge to professionally address complex projects in line with the best industry standards.

    Back when I began my career 20 years ago, lawyers were mainly associated with court representations. There was little-to-no demand for lawyers experienced in contract law (one-page contracts were the rule at the time), let alone other areas of expertise.

    In time, however, and with the first wave of foreign investments, and even though the legal framework was not ready to accommodate the investment structures investors were accustomed to from more advanced settings, lawyers were required to display a different set of competences and skills. Investors needed lawyers fluent in English, experienced in due diligence, deal structuring, contracts, mergers and acquisitions, who could also address client goals and concerns.

    And this kind of knowledge and competences could not be acquired from local universities or from other local practitioners. Under such circumstances, when the Internet was just debuting, getting access to information was a challenge. A good speciality book was worth a few months’ salary. I remember grasping the information and knowledge that I needed, piecemeal, to educate myself, to avoid becoming just another lawyer in Moldova.

    A few years after my graduation I was very lucky to be admitted to a Master’s degree program at one of the finest law universities in the Netherlands. That was a different world – students with access to good learning opportunities simply cannot imagine how lucky they are! I could only dream of that kind of opportunity when I started working in the legal profession.

    Now, access and availability have become less of an issue. Although still limited in number, some good legal practices have been established, meeting the demands of the most exquisite clients. Our legal learning opportunities may have not improved much over the last 20 years, but foreign universities are closer and more accessible to my co-nationals than they were before. Also, with the advanced use of the Internet and other new technologies, self-education and distance learning have become very popular and efficient, especially when combined with existing jobs.

    Some say that lawyers will soon be replaced by Artificial Intelligence, which may be true in a progressive world, where the legal system is perfected and adapted to the needs of people and businesses. But I would argue that a good lawyer is not one who knows and professionally operates with the law, but one who discerns creative and professional solutions to meet the demands and expectations of clients, considering the imperfections and peculiarities of the existing legal framework – which can prove to be a hard nut to crack in Moldova.

    By Igor Odobescu, Partner, ACI Partners

    This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Guest Editorial: Massive Open Pro Bono

    The Spring of 2020 brought the pandemic to CEE, with its “perfect storm” of ingredients – including significant legal ramifications. Whether you are an individual, a business, or a governmental official, the storm made you ask at least one of these questions: “What are my rights in pre-existing contract?”, “Am I still bound to pay?”, “Can I get my money back?”, “Will I be liable for this?”, and “What legislation is needed to help ease the impact on the public?” 

    Disruption of business as usual inevitably means disruption of the legal business as well.  There is no longer a beaten path. We have to learn to walk anew. 

    As a business lawyer I am happy that business law firms in Moldova and elsewhere in CEE (I pay particular attention to firms in neighboring Romania, Ukraine, and Russia) have each made significant contributions to helping the public navigate the legal aspects of this storm. 

    We have taken full advantage of the digital tools that enable an instant, easy, and free-of-charge flow of ideas. The public – including both the business community and public administration – has flagged issues and raised questions, and the legal community was able to respond quickly with valuable legal assessments. 

    This is a new sort of pro bono work. We could call it “massive open pro bono” work (similar to already-popular “massive online open courses”), consisting of short-notice Zoom webinars and podcasts, publications, and infographics. This has especially helped SMEs assess their specific situations and decide early on whether to suspend business or adapt and continue – and, regardless, how to handle their workforce and customers. 

    This new type of work is not only helpful for business communities, but for legal communities as well. Before this crisis, a lawyer would confront a new matter, make his or her own legal assessment, and recommend a strategy to the client. The accuracy and value of that assessment would usually be established over time, and would depend June 2020– in advisory work June 2020– on whether a risk eventually materialized and all went smoothly, or June 2020– in dispute resolution work June 2020– on whether the client prevailed in the litigation or arbitration proceedings. After a few years the lawyer might find out that he or she understood the law incorrectly and cost the client money and stress, or a lawyer might conclude that justice was not served and that the judge or arbitrator wrongfully applied the law to the client’s case. 

    During the stay-at-home period enacted by authorities across CEE and elsewhere, however, the legal community was actually given time to process many legal questions, discuss them extensively, confront divergent ideas, and find common ground. Similarly, judges and arbitrators got heads-ups on the legal issues to come and were able to observe the discussion within the legal community and even provide early guidance. 

    I very much welcome this novel phenomenon within the legal community. Because if lawyers fight less among themselves and if clients hear less of “it is uncertain” or “it can go either way,” then we could start defeating Professor Frank Emmert’s observation that “instead of being the cure, laws and lawyers have become part of the disease.”

    By Octavian Cazac, Partner, Turcan Cazac

    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.