Category: Serbia

Starting from 7th July 2018 amended Law on amicable resolution of labour disputes is in force. Main reason for amendments is to introduce possibility of concluding agreements in individual disputes, extending deadlines and supervising results of amicable resolution of disputes through statistics.

Namely, pursuant to the latest amendments definitions of collective and individual disputes have been expanded. Also, process of dispute resolution has been changed in a way that deadlines for taking certain actions have been changed, e.g. deadline for rendering recommendation is extended from three to five working days and in case that deadline is not respected, arbiter may propose recommendation upon request of the party. 

When it comes to individual disputes, the main novelty is that parties may execute an agreement, about which possibility arbiter informs parties. Earlier, such opportunity was reserved only for collective disputes.

Although in majority of the cases decision of the arbiter is enforceable without the need of initiating prior court procedure, when it comes to discrimination and abuse on work, arbiter has only conciliatory role. Therefore, in the said case arbiter cannot resolve such dispute unless the parties reach an agreement. Otherwise, arbiter stops procedure and court procedure may be initiated to resolve such dispute. 

By Jelena Aleksic, Partner, Nikola Dordevic, Partner, Marko Mrda, Senior Associate  JPM Jankovic Popovic Mitic

On 28th June 2018 National Assembly of Republic of Serbia rendered Law on amendments of Law on the conditions for assigning employees to temporary work abroad and their protection, which amendments came into force on 7th July 2018. Purpose of the amendments is to reduce bureaucratic procedure that employers must undergo during the process of assigning employees to work abroad. In that way, the whole process shall be easier and shorter, and performing business more effective, deprived of unnecessary and delaying steps.

Starting from 7th July 2018 employers can assign to work abroad only the employee who has been engaged at the employer for at least three months. Under prescribed conditions, assignment can also be done for the employee who has been engaged at the employer for a shorter period of time.

One of the additional novelties is that employer has to state the country in which employee is being assigned to work when changing the ground of insurance in the Central register of mandatory social insurance. 

Since all the relevant information regarding the process of assignment of employees to work abroad is available at the Central register of mandatory social insurance, employers no longer have the obligation of providing a separate notification to the competent ministry or informing the ministry in case of any relevant changes. Such information shall be obtained from the Central register of mandatory social insurance. 

In addition, provisions regarding certain misdemeanours have been changed in a way that the pecuniary fines have been increased from RSD 100.000 to RSD 150.000 for the company, i.e. from RSD 50.000 to RSD 70.000 for the entrepreneur. 

By Jelena Aleksic, Partner, Nikola Dordevic, Partner, Marko Mrda, Senior Associate  JPM Jankovic Popovic Mitic

The Serbian Government has adopted the Bill on Lobbying (the Bill) and submitted it to the Serbian Parliament. The Bill is expected to be in the parliamentary debate in the Parliament’s Fall Session.

The need to enact such legislation stems from Serbia’s EU accession process and the Chapter 23. It has also been recommended by the Council of Europe’s GRECO (Group of States against Corruption) organization.

High expectations…

It is expected that the Bill, once enacted, will make the legislative process more transparent, and that the provisions of the various laws will be more balanced, which will ensure more quality in the legislative texts.

The fact that the lobbying was not regulated, does not mean that there was no lobbying in Serbia, and the Government hopes that this legislation will make the process transparent. Generally speaking, the legislative processes on all levels of government in Serbia, suffered from the lack of transparency. It was a common practice that not all of the stakeholders had a saying when the legislation was drafted. It was the result of the lack of clear and transparent mechanisms to communicate with the officials preparing the legislative texts.

The Bill defines lobbying as influencing the central and local authorities in the process of enacting laws and other general regulations, for the interests of the user of lobbying, either individuals or companies.

The Bill stipulates that the lobbying may be conducted by a:

• registered or an unregistered lobbyist;
• a company registered for lobbying (provided it has employed at least one registered lobbyist).

Only Serbian nationals may be registered as lobbyists in Serbia. However, a foreign national who is registered in his or her native country as a lobbyist may be entered in the Serbian registry of lobbyists.

An unregistered lobbyist is a person representing or a company or an organization that is considered to be the user of lobbying.

The lobbyist has to send a request to an official he wants to lobby, and disclose who is he or she lobbying for and regarding which law or other general regulation he is lobbying.

The official has to inform the Serbian Anticorruption Agency (the SAA) about the lobbying but also has the obligation to “timely” set up an appointment with the lobbyist and give the lobbyist all the information regarding the subject of lobbying. This will obviously give more access to the persons or groups with limited or no connections in the political circles, which will empower the stakeholders, and especially citizens groups.

The lobbyists have to deliver yearly reports on their activities to the Serbian Anticorruption Agency.

… and Possible Impediments

The reactions of the professionals have been a mixed one. There are concerns that too much reporting will clog the SAA and that the Bill will be stillborn. It is pointed out that the same thing happened in a few other countries in the region – Montenegro, Hungary, Macedonia.

The Bill stipulates that, in order, to be entered as a lobbyist, a person will have to undergo a mandatory training organized by the SAA. It is rather questionable why the state should organize training for the persons that will lobby on behalf of the private individuals or companies.

In accordance with the Bill, the new legislation will come into a force nine months after the enactment, and all the supporting regulations should be enacted within the period.

The Bill does not have within its scope lobbying for individual acts – i.e. permits, decisions in individual cases. This is not uncommon in comparative legislation, however, very large part of illegal influence remains in this area, and this will limit the effect of new legislation.

The Role of Legal Community in Lobbying

It is expected that the legal community will have a significant role in the lobbying process – both in exploring the limits and ethical obligations of lobbying laid down by the Bill, but also in helping the lobbyists prepare viable and practical amendments or whole legislative texts to the lobbied officials.

This will be important since the experiences in Serbian legislative practice show that, when the voice of the people practicing laws is not heard in drafting them, the laws tend to be impractical and sometimes difficult to apply to the different situations arising in the real world.

By Milos Velimirovic, Partner, Dusan Dincic, Senior Associate, Samardzic, Oreski & Grbovic (SOG) 

National Assembly of Republic of Serbia rendered amendments of several labour-related laws and adopted a new regulating seasonal work. We would hereby like to introduce you to the respective changes that have an impact on rights and obligations of both engaged personnel and employers.

As of 7th July 2018 latest amendments to the Law on employment of foreigners enter into force. These amendments are aimed at simplifying the procedure for issuing of work permit, with the purpose of developing more favourable business environment and attracting foreign investments.

First significant change is that labour market test now lasts 10 days instead of previous duration of one month. In addition, this period can be shortened by the competent ministry in case such reduction is in interest of the Republic of Serbia. 

Another important novelty is the possibility of obtaining “temporary permit” that allows the foreigner to work in Republic of Serbia for a maximum period of 45 days. In order to obtain temporary work permit foreign citizen has to fulfil work conditions and have necessary qualifications set out by the employer and submit the request for obtaining temporary residence permit. Minister competent for internal affairs then decides whether he will give his approval to grant the permit or not, depending on significance of engagement of foreigner for Republic of Serbia and undertaken international obligations. 

By Jelena Aleksic, Partner, Nikola Dordevic, Partner, Marko Mrda, Senior Associate JPM Jankovic Popovic Mitic

The Serbian Ministry of Construction, Transportation and Infrastructure has initiated the process of amending the country’s Planning and Construction Act, with the aim of boosting the construction industry and making the legal environment in the sector more predictable, reliable, and investor-friendly. The Serbian construction law has been revolutionized the last few years, with the introduction of e-permits and the unclogging of many sclerotic procedural labyrinths, so the readiness of the Serbian government to continue with the reforms and modernization is generating new excitement in the construction sector.

We have singled out a few of the amendments in the pipeline which show the direction in which Serbia’s construction policy is headed.

The validity of location conditions – one of the first and most important papers in the permitting process, which shows the investor what can be built on certain piece of land and under which conditions – is to be extended from one to two years. Similarly, the period for commencing work under a construction permit is to be extended from two to three years, and the conditions for extending this period have been relaxed. These amendments will allow investors more time to raise funds and make proper preparations for their investment cycles.

The procedure for amending planning documents is set to be simplified where the proposed amendment affects less than 50% of the area covered under the plan. This amendment will allow faster adaptation of the planning documents, thus shortening the path to changing the parameters of development where both investors and authorities agree on the need to modify the existing planning features of certain locations. Of course, diminishing public participation in changes which may dramatically affect almost half of the area covered by a planning document can be seen as excessive and ripe for misuse. Hopefully, the bylaws that will regulate this matter in more detail will properly set the procedural rules so as to eliminate these risks.

The existing law allows the development of certain types of facilities (such as infrastructure, energy facilities, etc.) on agricultural land, subject to approval of the ministry competent for agriculture. The draft law will also allow such facilities to be built on forestry land as well, and abolishes the requirement for ministerial approval. While the concept of approval under the existing law was under-regulated, thus giving too much discretion to the ministry, the new solution seems to go to the opposite extreme, neglecting the importance of preserving agricultural and forestry land.

Instead of listing all the facilities for which no permit is required, or which require a simplified construction permit, the amendments envisage that the ministry will specify such facilities in its bylaws. Such approach promises more flexibility, because a bylaw list can be more easily adapted to the requirements of the market than a list set out in the law.

These are just some of the innovations that the amendments will introduce. In addition, the amendments should clarify some of existing provisions and regulate certain matters in more detail, thus responding to the inconsistencies and ambiguities that appeared in the implementation of the law so far.

Nevertheless, some points requiring action by the legislator still remained unaddressed. This is the case with licenses for contractors and designers, for example, as, even though the market is deficient in licensed contractors and designers for complex projects such as large infrastructure facilities and renewable energy projects, the ministry is still not willing to relax the requirements for obtaining licenses or at least to allow engagement of licensed subcontractors to be sufficient to fulfill the licensing requirements. Hopefully, by the time the draft amendments are ready for parliamentary procedure, the ministry will recognize and address this issue.

To conclude, the upcoming amendments are more than welcome – and they will be even better if they pick up the outstanding licensing issues. Readiness for prompt implementation of the amendments, which also includes a swift adoption of all necessary bylaws, remains a challenge – one which all the investors expect to be successfully addressed. 

By Milan Dakic, Partner, BDK Advokati

This Article was originally published in Issue 5.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Commercial Court of Appeals has finally aligned its court practice related to change of the litigant in the procedure in case of assignment of the claim, with the regional court practice, thus making the NPL market in Serbia more attractive.

According to Article 204 of the Litigation Act, assignment of a claim during litigation does not affect the course of litigation. So far, the change of the litigant was possible only in case all parties consented thereto. However, in case either party opposed the change of litigant, the litigation continued regardless of the assignment of the claim and the resulting judgment had an effect towards the acquirer of the claim.

The prevalent interpretation of Article 204 of the Code of Civil Procedure law was that in case one of the parties in litigation proceedings restrained from approving the change of litigant, due to claim assignment, the original parties would both retain their status of a party to the proceedings, but would lose its standing to sue, or to be sued (due to lack of material, i.e. active or passive standing). Ultimately, this led to denial of the claims, to the detriment of both transferors and acquirers of such claims. This stance was based on the understanding that the Litigation Act cannot address material issues, but rather procedural ones. However, such practice was entirely opposite to the one established in the countries in the region, such as in Croatia or Montenegro, the laws of which contain almost identical provision to the Article 204 of the Serbian Litigation Act. In addition to this, there was also fragmentary practice of certain Serbian courts of general practice, which was completely opposite to prevailing one.

The change in trajectory came with the judgment of Commercial Court of Appeals Pž 829/2017 dated 15 March 2018 which was recently published in Commercial Courts’ Bulletin no. 1/18. This judgment asserted that despite the fact that, during the course of litigation, the original claimant assigned the claim to a third party that was not allowed to replace the original claimant due to defendant’s opposition on the basis of Article 204 of the Litigation Act, the original claimant did not lose its active standing in the litigation proceedings. According to the court’s opinion, Article 204 of the Code of Civil Procedure should be, and in this case is, interpreted in such a manner that it serves to protect the litigants when they, after the start of litigation proceedings, assign the claim or subject of dispute. It follows from the content of the aforementioned legal provision that in such case the claimant will not lose the active standing, nor will the defendant lose its passive standing in the initiated dispute, which ends between the same parties, regardless of the transfer of the claim or subject of dispute.

Beside the fact that assignment of the claim leads to relatively easy replacement of the creditor in enforcement and insolvency proceedings, now, it also does not affect outcome of litigation in case change of a party is blocked by other party to the proceedings.

This novel court practice, in case it is widely accepted by other Serbian courts of general practice, could be regarded as a turning stone for the Serbian NPL market, which will definitely contribute to making this business more attractive and developed.

By Milan Samardzic, Partner, Ivan Nikolic, Senior Associate Samardzic, Oreski & Grbovic