IVVK Lawyers has advised Star Finance on its acquisition of Tradewin.
Tradewin is a licensed broker house in Serbia.
The IVVK team included Senior Partners Aleksandar Ilic and Milos Vuckovic, Senior Associate Aleksandar Cermelj, and Associate Nada Bakrac.
The Serbian Competition Commission (“Commission“) has published a Report on the sector inquiry of competition conditions in the private healthcare services market in the Republic of Serbia for the period from 2019 up to 2023 (“Inquiry“).
Sector inquiries are conducted if certain circumstances indicate potential antitrust violations or the possibility of restricting, distorting, or preventing competition, in order for the Commission to further examine the state of competition in a particular industry.
Intro
According to the Inquiry and following the latest World Bank data for 2021, total healthcare spending in Serbia amounts to around 10% of GDP, out of which 35% is out-of-pocket payments. For comparison, at the European Union level, the share of out-of-pocket spending in total healthcare costs is significantly lower, averaging around 15%.
The subject of the Inquiry was an examination of the market power of the most significant participants in the market for the provision of private healthcare services in certain types of healthcare institutions through various business parameters. The aim of the Inquiry was to examine the state and dynamics of competition in the relevant market.
General hospitals and health centres in Serbia account for about 7% of the total number of all private health institutions, with the most significant number concentrated in Belgrade.
The analysis conducted by the Commission comprised two phases.
The first phase of the analysis included 18 participants that own general hospitals and health centres, including large health systems that own multiple general hospitals and/or health centres – including 16 general hospitals and 13 health centres on the territory of Serbia, together accounting for over 70% of all general hospitals and over 50% of health centres.
The total revenues of the included participants account for about 40-50% of the total revenues realized in all private health institutions in Serbia, which indicates that in the market for providing services only in general hospitals and health centers, their share would be significantly higher.
In the second phase of the analysis, the Commission requested data from all insurance companies that deal with non-life insurance.
Key Findings of the Commission
The Commission found that the revenues of the observed participants almost doubled between 2019 and 2023. The highest revenues were generated by the healthcare systems Medigroup, Belmedik, and Euromedik, accounting for around 80% of the total revenues of the observed participants, with the growth of their revenues individually ranging between 47% and 143% in the observed five-year period.
Based on price data, the Commission concluded that there was no parallelism in prices of the healthcare services provided by Medigroup, Belmedik, and Euromedik systems.
The conditions of competition in the private healthcare services market were positively assessed by the participants involved, who stated that apart from financial resources and technical and administrative requirements that need to be met when incorporating an institution, there are no other significant regulatory barriers that make it difficult to enter the market.
Furthermore, the Commission has concluded that the voluntary health insurance market is a highly concentrated market, with the four largest players accounting for an average of around 84% of the market share. However, with the entry of new players into the market since 2020, the degree of concentration of the voluntary health insurance market has decreased from 93%, which was achieved by the first four players together in 2019, to 79% in 2023.
Insurance companies that provide voluntary health insurance services positively assessed the conditions of competition in the market in which they operate. Most participants stated that the voluntary health insurance market is competitive, so service users can choose between several insurance companies that strive to justify users’ trust with both price and quality. However, when it comes to cooperation with private health institutions, almost all insurance companies pointed to certain negative aspects. For example, they stated that their negotiating power has been significantly weakened over the past few years, primarily due to frequent changes in price lists of health institutions that are implemented despite the contractual provisions on announcing changes in price lists.
Recommendations of the Commission
At the end of the Inquiry, the Commission presented its recommendations, as follows:
Conclusion
This Inquiry completed by the Commission, together with ongoing sector inquiry in the state and conditions of competition in the pharmaceutical industry reflects a broader effort to strengthen regulatory oversight, promote transparency, and encourage fair market conditions that benefit both consumers and businesses. We will continue to monitor Commissions activities.
By Nikola Poznanovic, Partner, and Katarina Rosic and Luka Hajdukovic, Senior Associates, JPM & Partners Serbia
NKO Partners has advised Pro Group on its acquisition of a 70% majority stake in Smart Tiger. MMD Advokati advised the seller, Slobodan Milivojevic.
Zagreb-based Pro Group is a licensed group in Croatia for consumer credit mediation, housing lending, and brokerage insurance services.
Smart Tiger is a Serbian company that provides financial counseling and mediation services for cash and housing loans.
The NKO team included Partner Djordje Nikolic, Senior Associate Benjamin Graca, and Associate Tara Butulija.
The MMD team included Partners Rastko Malisic and Oliver Radosavljevic and Associate Andrea Arsic.
Serbia’s legal market is influenced by ongoing political instability stemming from months-long student protests and the recent resignation of the Prime Minister, according to NKO Partners Junior Partner Branko Jankovic. This situation is expected to slow M&A activity, particularly in real estate and mining, though everyday employment-related legal work is on the rise.
“The main topic right now is certainly the ongoing political situation, particularly the student protests that have persisted for about four months,” Jankovic begins. “The massive protest held in Belgrade on March 15 was peaceful and it definitely ended up pushing matters forward. A short while after it took place, the National Assembly acknowledged the resignation of the Prime Minister; currently, there’s uncertainty around the next steps, whether we’ll have a new government, new elections, or a transitional administration.” Naturally, this political instability is influencing the legal market significantly, Jankovic reports, particularly M&A transactions across different sectors. “Real estate development projects, especially the EXPO 2027 project, are likely to experience implementation delays, while the mining sector has already seen a slowdown due to permit issuance being effectively on hold.”
As for other significant events, Jankovic points to the “month-long strike by lawyers, which concluded on March 4. There’s an ongoing discussion about the possibility of another strike or work suspension, with an extraordinary session of the Bar Association convened for March 29, to discuss this option.” The upcoming vote will decide whether further action will occur. “This has understandably created additional uncertainty in the legal profession,” Jankovic adds.
Still, even with these circumstances, Jankovic shares that “despite everything, the business and investment climate remains relatively stable for now. However, we anticipate a noticeable slowdown in M&A activity, particularly in real estate and mining.” On the other hand, he reports an increase in everyday legal work, “especially in the area of employment law, such as managing redundancies triggered by the political and social climate.”
As for any notable legislative developments, Jankovic reports these matters are “mostly on hold at the moment due to the political situation. Until there’s a clear direction, whether we have a new government, elections, or some transitional solution, significant legislative developments are unlikely.” According to him, “the general approach currently is one of “wait and see” with most stakeholders awaiting political stabilization before proceeding.”
Finally, Jankovic indicates that Serbia’s immediate future is heavily dependent on political developments. “Naturally, this uncertainty is influencing both transactional work and day-to-day legal advisory. Once the political landscape clarifies, we’ll have a better sense of direction and stability, but for now, the situation remains fluid,” he concludes.
The distinction between a domestic and a foreign arbitral award is important because it affects the recognition, enforcement, and legal remedies available under Serbian law. The domicile of the award is determined by the seat of arbitration and the law applied to the arbitral proceedings.
However, in practice, there can arise confusion about what influences the domicile of an arbitral award. Hence, it is just as important to examine the factors that do not determine it, as overlooking them can lead to misunderstandings, unfounded arguments, and even legally incorrect court decisions. This article will assess the issue of what does and what does not influence the domicile of an arbitral award.
In a recently rendered decision, the Serbian Commercial Court of Appeals provided the rationale that the award made in arbitration proceedings conducted under the ICC Rules of Arbitration is a foreign arbitral award. The court determined that the application of the ICC Rules of Arbitration means that the award is foreign because foreign law was applied to the arbitral proceedings. Driven by concerns over the incorrect application of the law, this article examines the factors that determine the domicile of an arbitral award, as well as various factors that do not affect it but are sometimes wrongly believed to do so.
The Domicile of an arbitral award determines its legal nationality, which in turn affects key aspects of its enforcement, challenge, and recognition. In the Republic of Serbia, a domestic arbitral award has the same effect as a final judgment of the domestic court. It is enforceable in accordance with the law regulating enforcement procedure. Only domestic arbitral awards can be subjected to the procedure for setting aside before the Serbian courts. Unlike a domestic arbitral award, a foreign arbitral award gains the effect of a final judgment of the domestic court after being recognized by the competent court in the Republic of Serbia.
A domestic arbitral award is an award made in internal or international arbitration in the Republic of Serbia. A foreign arbitral award is an award made by an arbitral tribunal, the place of which is outside the Republic of Serbia, as well as an award made by an arbitral tribunal in the Republic of Serbia, if foreign law was applied to the arbitral proceedings.
Considering the cited provisions, there are two criteria that affect the domicile of an arbitral award:
In most cases, the place of arbitration is defined in the arbitral agreement. If this is not the case, it will be determined by the arbitral tribunal or in accordance with the rules of the chosen institutional arbitration. If it is not determined in either of the described manners, it shall be considered that the place of arbitration is the place that is indicated in the award as the place of its rendering.
In respect to the law applied to the arbitral proceedings, in the majority of the cases, this is the law of the place of arbitration. Nevertheless, the parties have an option to envisage that the law applied to the arbitral proceedings will not be the law of the place of arbitration.
The easiest way to illustrate how the arbitral award’s domicile is determined in accordance with the above-described criteria is through an example. If the arbitration agreement envisages that the place of arbitration will be in Belgrade and that the law applied to the arbitral proceedings will be Serbian law, the arbitral award will be considered domestic. If the arbitration agreement defines that the place of arbitration shall be in Belgrade and is silent about the law applicable to the arbitral proceedings, the law applied to the proceedings will be Serbian law. Hence, in this case the award will also be domestic. If the seat of arbitration is in Belgrade but the parties opted that the law applicable to the arbitral proceedings will be the law of another country, the arbitral award will be considered foreign.
To conclude, the place of arbitration and the law applied to the arbitral proceedings are the factors that influence whether an arbitral award will be considered domestic or foreign. However, it is equally important to discuss which factors do not influence the domicile of the award, as they can result in misunderstandings, unsubstantiated arguments, and even court decisions that are contrary to the law.
One of the factors that may mislead that the arbitration is foreign, and not domestic, is the language of arbitration. Choosing a language other than Serbian—such as English or another widely spoken language—can often be more convenient, particularly in international commercial arbitration involving parties from different countries. When businesses from different countries engage in arbitration, they frequently select a language common to both parties to ensure efficient communication, avoid unnecessary translation costs, and accommodate participants who may not speak the local language. Despite the practical advantages of conducting arbitration in a language that is common to both parties, it has no bearing on whether the arbitral award is considered domestic or foreign.
Another factor that does not influence the domicile of an arbitral award is the institutional rules. One can wrongly conclude that opting to conduct arbitration before a foreign institution will result in a foreign arbitral award. Yet another erroneous assumption is that the rules of a foreign institution located outside of the Republic of Serbia are in fact a foreign law applied to the arbitral proceedings. Both assumptions are incorrect. Institutional arbitration rules play a crucial role in ensuring that arbitration proceedings are conducted efficiently, fairly, and in accordance with best practices. They provide a structured framework for resolving disputes, offering procedural clarity and administrative support. Parties in a dispute often choose to conduct arbitration under the rules of a well-known institution, such as the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), Swiss Arbitration Centre (SCAI), German Arbitration Institute (DIS) or the Vienna International Arbitral Centre (VIAC). However, the institutional rules are regulations of private organizations, and not the state law applicable to the procedure. If the agreed seat of arbitration is in Serbia and the Serbian Arbitration Act is applied to the proceedings, the resulting award is domestic, even if the rules of a foreign arbitral institution govern the proceedings.
Another issue that does not affect the domicile of the arbitral award is whether the arbitration is internal or international. Internal arbitration is an arbitration without an international element and awards rendered in such disputes are always domestic awards. International arbitration is an arbitration having as its subject matter disputes arising out of international business relations. The arbitral award is international if the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different states. Award is also international if one of the following places is situated outside the Republic of Serbia in which the parties have their places of business (i) the place of arbitration, if determined in, or pursuant to, the arbitration agreement, or (ii) the place where a substantial part of the obligations of the business relationship is to be performed or the place with which the subject matter of the dispute is most closely connected. In this respect, there is one issue that can affect the domicile of an international arbitral award, and that is the place of arbitration. If the place of arbitration in international arbitration is outside of the Republic of Serbia, the award rendered in such dispute will be a foreign arbitral award. Finally, an award is international if the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.
The material law applicable in a dispute also does not influence the domicile of the arbitral award. Same as the state courts, the arbitral tribunals will apply foreign law in disputes when such law is designated in the contract as applicable or determined pursuant to the Law on Resolving the Conflict of Laws with Regulations of Other Countries. However, the application of foreign substantive law does not affect the legal seat or domicile of the award.
The location of the hearings can also give rise to confusion regarding the nationality of an arbitral award. Hearings usually take place in the seat of arbitration. However, there is no obstacle to organizing the hearing in a different place it would be more convenient for the participants. Also, in recent years, there has been a rise in the use of online hearings. If the hearings take place in a foreign country, one might assume that the award itself will be considered foreign. Despite the hearings being held in a foreign location, the domicile of the award will still be tied to the seat of arbitration, not where the hearings took place.
Finally, the nationality of the arbitrators can sometimes lead to confusion about the domicile of an arbitral award. If a tribunal is composed entirely or primarily of arbitrators from foreign countries, one might incorrectly assume that the award is foreign as well. This impression stems from the idea that the nationality of the decision-makers influences the character of the award, leading to a misconception that the award is bound to follow the legal norms and procedures of the arbitrators’ home jurisdictions.
In conclusion, the domicile of an arbitral award is determined only by the place of arbitration and the law applied to the arbitral proceedings. Other factors, such as the language of the arbitral proceedings, institutional rules, nationality of the arbitrators or the participants in the proceedings, or the substantial law applied in the proceedings do not influence the domicile of the award.
By Djordje Novcic, Partner, and Ivana Petkovic, Senior Associate, JPM & Partners Serbia
NKO Partners has advised Mark Medical on the acquisition of Hermes-Pharma. Joksovic, Stojanovic & Partners advised the sellers.
Mark Medical is an Italian MedTech company and a member of SVAS Biosana Group.
Hermes-Pharma is a MedTech company based in Belgrade, Serbia. According to NKO Partners, Hermes-Pharma is renowned for its expertise in the wholesale distribution of medical devices and holds marketing authorizations for products from companies such as Abbott Vascular, Johnson & Johnson, and Aidian.
The NKO Partners team included Partners Djordje Nikolic and Branko Jankovic and Associate Valerija Mandic.
The Joksovic, Stojanovic & Partners team included Senior Partners Petar Stojanovic and Dragan Psodorov, Partner Goran Vucic, and Associate Danilo Vukcevic.
Vulic Law has advised Mediolanum Invest JSC on the acquisition of Koncern Farmakom–Lece Mine in Serbia for approximately EUR 35 million.
According to Vulic Law, the acquisition resulted from a bankruptcy with the seller being the bankruptcy administrator who, on behalf of the state, organized the sale through a public bidding process.
According to the firm, the mine is one of the largest ones in Southeast Europe.
The Vulic Law team included Partner Milos Vulic and Associate Bosko Dimitrijevic.
Harrisons has advised the EBRD on an RSD 1.17 billion (approximately EUR 10 million equivalent) loan under the GEFF Regional framework program to Erste Bank.
According to Harrisons, the loan is designed to support green investment on-lending, providing access to finance in a gender-responsive manner for both the residential sector and the public sector.
The Harrisons team included Principal Mark Harrison, Consultant Ines Matijevic-Papulin, and Senior Associate Mina Zeljkovic.
ZSP Advokati, working with Dentons and Harneys, has advised NLB Komercijalna Banka Beograd and Banca Intesa Beograd on the financing of the Airport City East Gate Business Tower 1 project, developed by AFI Europe.
According to ZSP Advokati, this state-of-the-art business tower, with a total investment of approximately EUR 60 million, will introduce 27,000 square meters of premium office space to Belgrade’s commercial landscape.
The ZSP Advokati team included Partner Jelisaveta Stanisic and Senior Associate Tijana Trivunovic.
The Dentons team included Bucharest-based Partner Simona Marin and Senior Associate Catalina Raca as well as further lawyers in Amsterdam.
Karanovic & Partners has advised the European Fund for Southeast Europe’s Regional Sub-Fund and the Green for Growth Fund on providing two MREL-compliant loans to Serbian AIK Banka.
According to Karanovic & Partners, the EUR 30 million loan from EFSE is aimed at supporting MSMEs, especially in rural areas, while the EUR 10 million loan from GGF is intended to boost green lending.
The Karanovic & Partners team included Partner Maja Jovancevic Setka and Associate Dimitrije Ilic.