Category: Serbia

MMD Associates has advised Beam Global on its acquisition of Telcom.

Nasdaq-listed Beam Global is a clean tech company providing sustainable products and technologies for EV charging, energy storage, and energy security.

Telcom is a Belgrade-based power electronics company.

According to the firm, “the transaction represents the continuation of the expansion of Beam Global operations in Serbia, which represents a central hub for Beam’s European operations.”

The MMD Associates team included Partners Rastko Malisic and Miodrag Klancnik and Attorney At Law  Cedomir Jelesijevic.

When developing their models, AI providers use various data sets. Sometimes these are provided by their clients, as in the case of tailor-made chatbots, and sometimes the models are trained on licensed or even publicly available data.

In both situations, the data sets almost always include personal data. Thus, AI developers should carefully consider their obligations under the GDPR as well as local privacy law, depending on what applies to them.

The million-dollar question

Privacy compliance, amongst other things, should be considered as soon as training data is collected. Even if publicly available data is used for training purposes (e.g. data published on YouTube), it does not mean that such data can be freely used. This is a standard misconception amongst AI developers. Training on data sets that include personal data can take place only if the developers have a lawful legal basis for processing such data. Under the GDPR, this usually comes down to two things: consent or legitimate interest. While this may appear impossible or challenging, all AI providers training on personal data should consider privacy concerns very carefully.

The first EU guidance on the lawfulness of web scraping was encompassed under the EDPB’s Report of ChatGPT’s Taskforce issued in May 2024. This report indirectly supports innovation and stresses that legitimate interest might be considered as the only possible legal basis for data processing under web scraping techniques, provided that certain safeguards are applied. A couple of months prior to this, in March 2024, the UK Information Commissioner’s Office (the “ICO”) issued a consultation and explored the issues around the legality of web scraping. It also concluded that legitimate interest is the only remaining lawful basis for web scraping.

Pursuant to both the ICO and the EDBP’s report, legitimate interest might be considered as a lawful basis for web scraping if the following criteria are met: (i) a legitimate interest exists; (ii) the processing is necessary, with personal data being adequate, relevant and limited to what is required for the purposes for which they are processed; and (iii) the interests are balanced.

Legitimate interest can serve as a lawful basis for data processing only if the interest is clearly defined and justified. Thus, when training AI models on web scraped data, this interest should not be broadly defined or vague. According to the EDPB, it is necessary not only to recognise the interest, but also to concretely justify it in terms of the purpose for which the data is collected. If the intended use of the model cannot be clearly defined in advance, it becomes challenging to justify it.

Web scraping is often considered necessary due to the volume of data required to train these models. However, according to the EDPB, even when large data sets are used, it must be ensured that unnecessary data is not collected, especially data that is not relevant to the specific training purposes. Therefore, the EDPB emphasises the importance of applying measures during data collection and excluding certain types of data from the collection process, such as public social media profiles.

Balancing interests is perhaps the most complex criterion. It is necessary to assess whether the rights and freedoms of individuals outweigh the legitimate interests of the controller. Web scraping is an invisible processing activity, where people are often unaware that their data has been collected and processed in this way. This means that individuals may lose control over their data, which can compromise their privacy rights. This necessitates the mandatory application of technical and organisational measures, such as data filtering during collection and excluding certain sources from the process.

Special approach for special categories of personal data

A particular issue arises with the scraping of special categories of personal data, such as data related to health, political views and religious beliefs. Processing this data requires the explicit consent of the individual, which further complicates the legality of web scraping. Without clear and explicit consent, processing such data may directly violate the GDPR, which strictly demands respect for privacy and individual rights.

One example where this issue arises is search engine scraping. This is what Google engages in when it collects data for the sole purpose of indexing and enabling searches. Unique to search engines, this form of scraping may be considered justified in the context of the public’s right to information, as recognised by the Charter of Fundamental Rights of the European Union, but each case must still be carefully evaluated to ensure that the fundamental rights of individuals are not violated. This exception can only be justified with strict protective measures and a clear framework that limits processing to what is necessary to achieve legitimate objectives.

But that’s not all

One of the key elements in ensuring GDPR compliance, especially in the context of web scraping, is the obligation to inform individuals whose data are being collected, even when consent is not the basis for processing. Article 13 of the GDPR clearly mandates that individuals must be informed prior to the processing of their data collected directly from them. However, when data is collected through web scraping, which often involves gathering data from publicly available sources, Article 14 of the GDPR (or Article 24 of the Serbian privacy law) applies. This article governs the obligation to inform individuals about the processing of their data, even when the processing is not immediately apparent or is indirect, as is the case with web scraping.

Depending on the AI product itself, the provider of AI systems might also have other obligations under the GDPR and/or local privacy laws. These obligations include legitimate interest assessment (LIA) and data protection impact assessment (DPIA), possibly with the obligation to acquire prior approval from the competent authority (depending on the AI system itself).

Final remarks

In an era of rapid AI development and widespread digitalisation, the legality of web scraping has become a critical question for AI developers. Despite the potential for innovation that web scraping offers, it is all too often forgotten that every step in this process is deeply rooted in a complex legal framework designed to protect individuals’ privacy. Given that the EU AI Act will become applicable for generative AI models within a year in the EU (or three years depending on whether the models were placed on the market before 2 August 2025), or outside of the EU in specific situations, developers collecting data through web scraping should carefully analyse whether their products will be affected by this law. If yes, their products and business operations must be promptly adjusted to reflect these developments.

By Marija Vlajkovic, Partner, and Marija Lukic, Senior Associate, Schoenherr

Harrisons has advised the French Development Agency (Agence Francaise de Developpement, AFD) on a credit facility to Serbian electric transmission system operator Elektromreza Srbije (EMS).

According to Harrisons, this agreement was one of the twelve important agreements signed during French President Emmanuel Macron’s recent visit to Belgrade.

EMS is a Serbian national transmission system operator company with its headquarters in Belgrade. It was founded in 2005 after being split from Elektroprivreda Srbije.

The Harrisons team included Head of Banking and Finance Ines Matijevic-Papulin and Associates Aleksandar Jovicevic and Mina Zeljkovic.

Harrisons could not provide additional information on the matter.

Vulic Law has advised Cofis on its sale of the Holiday Inn Express in downtown Belgrade to an undisclosed buyer.

In 2023, Vulic Law advised Cofis on establishing a new hotel operator in Belgrade (as reported by CEE Legal Matters on May 9, 2023).

The Vulic Law team included Managing Partner Milos Vulic and Associate Lawyer Bosko Dimitrijevic.

As we wrote in our earlier article, according to the decision made by the German data protection authority at the end of last year, the use of the “pay-or-okay” principle is generally allowed. This model involves a cookie notice (via a so-called cookie banner) on a website, giving the user the choice between:

• Consenting to the processing of personal data for personalized advertising purposes, and
• Paying a certain amount as a subscription fee, in which case the person can use the website without activating cookies that track and analyze their behavior on the website (for displaying ads from external partners).

The practice based on this stance has sparked controversy for several reasons, the most common being that this principle contradicts the rule of freely given consent for data processing, intensifies social inequalities, and suggests that the right to data protection is a commodity that can be traded.

In current practice, opinions on the application of this principle have varied depending on the regulatory bodies and data protection experts.

In this regard, on April 17 of this year, the European Data Protection Board (“EDPB“) issued Opinion No. 08/2024, in which it provided guidelines for further actions in implementing the “pay-or-okay” model.

Guidelines

The EDPB emphasizes that personal data cannot be considered a tradeable commodity but that the right to its protection is a fundamental right that cannot be subject to payment in order to be enjoyed.

Therefore, it is first necessary to consider providing holders of this right with an “equivalent alternative,” i.e., offering an additional, free alternative, such as advertising that involves processing a smaller volume of personal data or none at all. This would significantly impact the assessment of consent validity, particularly concerning the aspect of harm.

On the other hand, the EDPB believes that the application of this principle could be considered valid only to the extent that platforms or companies can demonstrate, in accordance with the principle of accountability, that the consent obtained for processing meets all the requirements of validity.

Valid consent is one that has the following characteristics:

1. Freely given, meaning that:

• The individual does not suffer harm as a consequence of not giving consent or withdrawing consent, which implies that the fee is not such that it effectively prevents individuals from making a free choice, or that individuals do not face exclusion from the service if they do not agree to pay, especially in cases where the service plays an important role or is crucial for participation in social life or access to professional networks;
• There is a balance of power between the individual and the company, where the assessment of balance considers the company’s position in the market, the extent to which individuals rely on the service, and the target audience of the service. Where there is a clear imbalance, consent can only be used in “exceptional circumstances,” and where the platform or company, in accordance with the principle of accountability, can demonstrate that there are “no harmful consequences” for the individual if they do not give consent, especially if the individual is offered an alternative that has no negative impact;
• It meets the conditions concerning whether consent is necessary for access to goods or services if processing based on consent is not essential for the execution of the contract related to the offer of such goods or services. In this regard, individuals who refuse to give consent for certain data processing should be offered, “if necessary, for an appropriate fee, an equivalent alternative that does not involve such data processing.” This avoids conditionality. In the “equivalent alternative,” data processing that is not necessary for providing the service and relies on consent should be excluded, except when such processing also serves another legitimate purpose;
• The fee imposed is not such that it prevents individuals from making a real choice or leads them to give consent, i.e., it should be appropriate in the given circumstances;
• Individuals are free to choose which purpose of processing they accept, instead of facing a single consent request that combines several purposes (granularity);

2. Informed, meaning that there is complete and clear understanding of the value, scope, and consequences of possible choices for the individual before any choice is made;
3. An unambiguous indication of will, meaning that individuals are not exposed to deceptive design patterns. For consent to be considered clearly given for other purposes, those purposes must be actively chosen by the individual;
4. Specific, meaning that platforms or companies must precisely define and limit the purpose of processing.

The EDPB reminds that obtaining consent does not exempt platforms or companies from the obligation to comply with other rules and principles provided by the General Data Protection Regulation 2016/679 of the European Parliament and Council (“GDPR“), including the principles from Article 5 of the GDPR.

For the application of the mentioned model, the following principles are of particular importance:

1. Purpose limitation and data minimization necessary to achieve that purpose.
2. Fairness, which implies assessing the impact of processing activities on individuals’ rights and dignity and providing the highest possible level of autonomy to individuals’ data.
3. Data protection by design, which implies providing processing safeguards to meet GDPR requirements.
4. Data protection by default, meaning that “default settings” only allow processing that is strictly necessary to achieve the set, legitimate goal.
5. Accountability, meaning that platforms or companies must be able to demonstrate compliance with the GDPR and the aforementioned principles.

It can be expected that the EDPB guidelines will contribute to the unification of practice across Europe regarding the application of the “pay-or-okay” model. Whether this will be the case remains to be seen.

This article is for informational purposes only and does not constitute legal advice. If you require further information, feel free to contact us.

By Borinka Dobrnjac, Senior Associate, PR Legal 

Recently, the Court of Appeal in Belgrade, in its ruling No. Gž4 168/22 dated May 30, 2024, addressed the issue of determining copyright infringement in a case where, at the time of publication of the work, a different author was credited as the author.

Background

• The Plaintiff personally credited another party as the author of the photograph at the time of its publication on an internet portal.
• The Defendant (media) obtained the published photograph from that internet portal and, when publishing the acquired photograph, credited the individual listed as the author of the photograph.
• The Defendant acted in good faith, respecting the right to attribution of the author by acknowledging the individual indicated as the author of the photograph, reasonably believing that this individual was indeed the author.

After the photograph was published by the media, the person claiming to be the author of the photograph filed a lawsuit alleging copyright infringement, specifically the failure to attribute the photograph to its true author.

Position of the court

The first instance court determined that there was a copyright infringement without addressing the aforementioned circumstance. Conversely, when deciding on the appeal of the Defendant media publisher, the second instance court found it essential to examine in the retrial whether the Plaintiff was identified as the author at the time of the initial publication of the photograph before it was obtained by the media.

In this case, if it is proven in the retrial that the Plaintiff’s name was not attributed at the time of the initial publication, the Plaintiff would not be considered the author of the photograph.

In this regard, the question arises whether Article 13 of the Copyright and Related Rights Law, which addresses situations involving unknown authors, applies. 

In such cases, the presumption of authorship falls upon the person who published the work, meaning that the publisher is deemed the author. Consequently, there would be no grounds to discuss the alleged copyright infringement.

Additionally, the question arises as to whether, if it is subsequently established that the Plaintiff holds copyright over the published photograph, such a finding would be sufficient to award non-material damages, regardless of the fact that the Plaintiff was not attributed as the author at the time of the initial publication.

Conclusion

The potential award of non-material damages in this scenario clearly raises concerns about misuse, as an author might improperly attribute the work to another party at the time of the initial publication and later seek damages by claiming that they are the actual author, rather than the person initially credited.

For this reason, among others, courts must consider the fact that the photograph was obtained and subsequently published in the same manner and with the same attribution as it was initially published, meaning that it was done in good faith and with respect for all authorial rights.

This article is for informational purposes only and does not constitute legal advice. If you need further information, please feel free to contact us.

By Minja Mucic, Junior Associate, PR Legal

Moravcevic, Vojnovic and Partners in cooperation with Schoenherr has advised Integral Venture Partners on its acquisition of a 50% stake in EsoTron. Karanovic & Partners advised the founders of EsoTron on the sale.

Integral Venture Partners, founded in 2013, manages institutional private equity and growth capital and is focused on investments in Central and Southeastern Europe.

EsoTron is a circular economy company in the Adriatic region. It specializes in the collection and recycling of organic waste and used cooking oil from various industries, retail networks, and restaurant chains.

According to Karanovic & Partners, “Integral’s investment marks a strategic step forward, with plans to utilize EsoTron to expand bio-waste management operations across the Adriatic region, particularly in Slovenia, Serbia, Croatia, and Bosnia & Herzegovina. The partnership aims to enhance EsoTron’s operations, processes, and corporate infrastructure and promote general ESG standards and values across the wider region where the EsoTron Group operates.”

The Schoenherr team included Partners Luka Lopicic, Vojimir Kurtic, Igor Zivkovski, and Zoran Soljaga and Associates Luka Milosevic, Zeljko Loci, and Stefan Dobras.

The Karanovic & Partners team included Senior Partner Milos Jakovljevic, Partner Bojan Vuckovic, Senior Associates Jelena Zelenbaba and Milorad Gajic, and Junior Associates Teodora Vasin and Kristijan Nikolic.

Radovanovic Stojanovic & Partners has advised British American Tobacco on the sidestream merger of its Serbian subsidiaries: British American Tobacco South-East Europe DOO Beograd, as the transferring entity, and British American Tobacco Vranje AD, as the surviving entity.

The RSP team included Partners Nikola Cincovic and Sasa Stojanovic, Attorneys at Law Djordje Vicic, Luka Radojevic, and Zivko Kovacevic, and Associates Irina Petrovic and Nikola Micic.

In Judgment No. Rev₂ 1986/22 dated November 24, 2023, the Supreme Court took the position that the days during which the employee was on sick leave cannot be counted in the eight-day period within which the employee is obligated to respond to the offer of an annex to the employment contract, starting from the date of receipt of the offer.

Below, we analyze the reasons for the judgment.

Background 

The defendant employer presented the employee with an offer to conclude an annex to the employment contract to change the elements for determining salary. The employee received the offer but refused to confirm receipt by signing it.

The employer prepared an official note stating that the employee received the offer, refused to sign it, and that the offer was posted on the employer’s bulletin board.

After the expiration of the eight-day period from the posting on the employer’s bulletin board, the employer considered the offer as delivered to the employee, deemed that the employee had not accepted it, and issued a decision to terminate the employment contract on the grounds that the employee refused to conclude the annex to the employment contract, in accordance with the Labor Law. The termination decision was delivered to the employee by mail.

A key circumstance in this case was that the employee, starting the day after receiving the offer, and throughout the response period, was temporarily incapacitated (i.e., on sick leave). According to the reasoning of the contested termination decision, the employer included the days of sick leave in the eight-working-day period given to the employee to respond to the offer.

Relevant Provisions

The Labor Law stipulates that the employer may offer the employee a change to the agreed working conditions (annex), including changes to salary elements, performance, salary compensation, increased salary, and other employee benefits, as was the case here.

A written offer or notice of the reasons for the offer of an annex to the employment contract delivered to the employee along with the annex, must include: the reasons for the proposed annex, the period within which the employee must respond, which cannot be less than eight working days, and the legal consequences of not signing the annex. Additionally, the law provides that the employee is deemed to have rejected the offer if they do not sign the annex within the given period.

Further, the Labor Law stipulates that an employee’s employment can be terminated if there is a justified reason related to the employer’s needs, including refusal to conclude the annex to the employment contract for changes to salary elements.

Court Decisions

The lower instance courts found that the contested termination decision was lawful because the employer had followed the procedure prescribed by the Labor Law.

However, the Supreme Court found that the appellant’s revision rightly pointed out the incorrect application of substantive law.

Specifically, the Supreme Court took the view that the days when the employee was on sick leave could not be counted in the aforementioned period, so it could not be considered that the employee had rejected the conclusion of the new employment contract and that the conditions for terminating the employee’s employment had been met. Therefore, the Supreme Court considers the contested termination of the employer to be unlawful.

Conclusion

The Supreme Court’s judgment deviates from previous caselaw.

This is supported by the following position of the Constitutional Court taken in Decision No. Už 637/11 dated October 31, 2013:

“The Constitutional Court notes that the contested judgments of the second-instance and revision courts are based on a unified stance that the defendant employer carried out the delivery of the offer an annex to the agreed working conditions in accordance with the law, and that after the expiration of the deadline for response, which was counted after the eighth day from the posting of the offer on the employer’s bulletin board, the conditions for terminating the employment contract were met, in accordance with Article 179, Item 7 of the Labor Law. The Constitutional Court assessed that the reasoning of the contested judgments is based on constitutionally acceptable application of substantive law.

According to the Constitutional Court’s understanding, by analogy, it can be concluded that the delivery of an offer an annex to the agreed working conditions is carried out in the same way as a decision concerning the realization of rights, obligations, and responsibilities of the employee, especially as the norms regulating the procedure for concluding the so-called annex to the employment contract do not contain a detailed provision on how to deliver this act. (…) The Constitutional Court finds that regarding the delivery of the offer to conclude an annex to the employment contract, in all other respects, the provisions of Article 185, paragraphs 2 – 4 of the Labor Law apply.“

In this case, the offer of an annex was delivered to an employee during their annual leave, and the response period also expired during the annual leave.

Given the above legal provisions and the Constitutional Court’s conclusions, the reasoning of the Supreme Court’s judgment is unclear.

This position could be problematic for future employer practices in cases of organizational changes and work process needs, especially considering that the duration of an employee’s temporary work incapacity is an uncertain factor, potentially lasting for an extended period (months, a year, or longer).

Finally, the question arises whether this position will lead to similar conclusions regarding other labor law institutes, such as the delivery and response to a warning about reasons for terminating the employment contract, where the employee also has a deadline to respond, and there is a mandatory legal deadline for sanctioning in disciplinary procedures.

We will have to wait and see.

This article is for informational purposes only and does not constitute legal advice. If you need additional information, feel free to contact us.

By Borinka Dobrnjac, Senior Associate, PR Legal 

JPM & Partners has advised the founders of the Sidro philanthropic foundation on its launch in Serbia.

According to JPM & Partners, the founders include a “US-based, global agricultural conglomerate, listed on the NYSE, which is present in Serbia through its shareholding in the largest Serbian soybean processor, as well as three entrepreneurs. The mission of the Sidro Foundation is to promote the development of sustainable and healthy food systems in Serbia and to support smallholder farmers and their communities, along with local infrastructure.”

The JPM & Partners team included Partners Nikola Djordjevic and Bojana Javoric Micovic and Senior Associate Luka Hajdukovic.