Category: Serbia

Comprehensive regulatory changes targeting tobacco products, specifically vapes and electronic cigarettes, as well as the upcoming general election taking place on December 17 hold the front page for lawyers in Serbia, according to Cvjeticanin & Partners Managing Partner Nenad Cvjeticanin.

“Previous provisions didn’t regulate the precise usage of vapes and electronic smoking devices not containing tobacco, but rather nicotine liquids,” Cvjeticanin begins, tackling the changes to the tobacco framework. These products are mainly imported from China and this, he points out, is not a tobacco-producing country. “Usage of these devices was noticed as an alarming trend among minors, even elementary school children, primarily influenced by social media – and this prompted the need for regulation.”

Cvjeticanin reports that “the regulator responded by forbidding the sale of these products to minors as well as their sale online. Now, only spare parts or batteries can be bought online, not vapes or their liquid charges.” Additionally, a maximum nicotine limit of 2 milligrams per charge, as well as 2 milliliters of liquid by charge has been set for electronic devices, he explains.

Moreover, Cvjeticanin says that the “government has introduced new registers for manufacturers and importers of tobacco-related products. These devices are mostly imported, so import and retail fees have been introduced, making them more expensive,” he explains. “Importers and retailers now need a special license, which is time-limited and involves extra costs for renewal; also, there are marketing restrictions to make these products less appealing to children.”

Putting things into a broader context, Cvjeticanin says that “Serbia still has the highest rates of smokers in the EU and the region. These regulatory steps are part of Serbia’s effort to harmonize with the EU’s acquis communautaire – many importers from the EU we work with have noticed similar changes in their regions,” he stresses.

Moving on to other matters, Cvjeticanin points out that Serbia is entering the final stages of a general election cycle. “The likelihood is that the same political option will remain in power,” he says, noting that “the government’s focus on digitalization and investments has led to a shift in the workforce, which is rather significant in the past years. Still, the current economic climate remains good, despite challenges brought about by the post-COVID times and the war in Ukraine.”

Speaking of workforce shifts, Cvjeticanin touches more on the challenges Serbia faces in industries like construction and transportation. “There’s a notable migration of Serbian workers from traditional industries to online and freelance jobs. Consequently, a lot of people from countries like Nepal, Cuba, and India are replacing them, especially in construction, agriculture, and transportation. To address the labor shortage, the government introduced the Carta Serbica, allowing emigrants to regain Serbian citizenship quickly,” he explains. “The shift in the workforce and the need for skilled labor in education, IT, and the public sector still present challenges,” he adds. “This restricts investments to smaller and medium-sized ventures, as significant new entries would require thousands of workers,” Cvjeticanin concludes.

The new Law on Electronic Media (“the Law“) has been published in the Official Gazette of the Republic of Serbia, no. 92/2023, and came into effect on November 4, 2023.

The primary objective of enacting the Law is to implement the European Union Audiovisual and Media Services Directive (“the Directive“) by introducing new obligations for providers of media services, especially on-demand media service providers. Additionally, the Law for the first time regulates video content exchange platforms, directly influenced by the Directive in domestic legislation.

The Law introduces several innovations concerning the selection of members of the Regulatory Body for Electronic Media (“Regulatory Body“) and obligations related to program placement by operators, among numerous other changes.

Below is a brief overview of the most significant innovations.

1. New Obligations for On-Demand Media Service Providers

Given that on-demand media service providers have increasingly taken precedence over traditional media in recent years, aiming to become the dominant model for consuming media content, and considering that, under previous legislation, they were subject to significantly more lenient rules regarding advertising, protection of minors, and promotion of European audiovisual works, the Law introduces new quotas for on-demand media service providers and other significant changes, such as those related to the protection of minors.

According to the Law, on-demand media service providers must ensure that at least 30% of the content in their catalogs during each calendar year consists of European audiovisual works. The quota is calculated based on the number of individual works in the catalog, considering one season of a TV series as one work. Furthermore, the Law explicitly stipulates that at least half of these works must be Serbian audiovisual works.

Additionally, on-demand media service providers are required to ensure the prominent visibility of European works in their catalogs by presenting them in an attractive and accessible manner, especially through a dedicated section for European works, search capabilities, promoting European audiovisual works, and content recommendations to users.

The stated obligations refer to media service providers under the jurisdiction of the RS, i.e., to a media service provider that is established in the RS or not established in the RS but uses a terrestrial satellite transmission station located in the RS or uses satellite capacities that belong to the RS.

Moreover, the Law introduces other significant changes, such as the elimination of distinct rules for linear and on-demand media concerning the protection of minors and the temporary restriction of the reception and retransmission of media services from foreign countries. The same conditions are now prescribed regardless of whether it is a linear or on-demand media service.

2. Regulation of Video Content Exchange Platforms

The Law marks the first time that media regulation covers providers of video content exchange platforms (YouTube, Instagram, TikTok, etc.), directly implementing the Directive.

Services provided by video content exchange platforms are defined as information society services under the Electronic Commerce Act, whose main purpose is to make available to the public, for informational, entertainment, or educational purposes, program content, or user-generated video content, or both, through an electronic communication network, for which the platform provider is not editorially responsible but organizes such content, particularly through the presentation, labeling, and determining the order, using automated means or algorithms, among other methods.

Unlike linear and on-demand media services, which are responsible for producing, selecting, and controlling content and its organization, video content exchange platforms have organizational responsibility only for the content they distribute. They must take specific measures to protect users by organizing content, even though, in most cases, this is done automatically through algorithms.

Video content exchange platforms are also responsible for the advertising messages they offer and edit within their services, following the provisions of the advertising law.

Importantly, providers of video content exchange platforms are obliged to take appropriate measures to prevent harmful content that may harm minors, and encourage violence, hatred, or crimes of public incitement to commit terrorist acts, child pornography, or racial or other discrimination.

The Law does not prescribe specific appropriate measures that these platforms must take to be relieved of liability for unauthorized content. The Regulatory Body is authorized to determine them more precisely, taking into account the nature of the content, potential harm, the characteristics and categories of persons to be protected, including providers of video content exchange platform services, users who generated video content, and public interest.

It is noteworthy that the Law applies only to providers of video content exchange platform services with headquarters in Serbia (or when the parent company or subsidiary with headquarters in RS, i.e., when part of a group of companies, a company from that group has headquarters in RS). Given that none of the most popular platforms in Serbia is under our jurisdiction, the scope of these provisions is questionable.

3. Media Pluralism and Transparency of Media Ownership

The Law defines the concept of media pluralism, stipulating that it entails various forms of establishing media service providers, diversity of content in terms of equal and balanced expression of political opinions, and diversity of program content within the type and character of the media service provider’s programs.

Control and transparency regarding media ownership are also envisaged, with measures prescribed to achieve media pluralism.

Specifically, the Law introduces an obligation to report any changes in the ownership structure of the share capital of media service providers to obtain the consent of the Regulatory Body for such changes.

In the event of non-compliance with this obligation, or if a media service provider makes a change in the ownership structure without prior approval from the Regulatory Body, a fine for a misdemeanor will be imposed ranging from 500,000.00 dinars to 2,000,000.00 dinars.

4. Other Innovations

The Law introduces a new provision concerning the rights and duties of employees in the expert service of the Regulatory Body. It stipulates that general labor regulations apply to them instead of the previously valid provisions governing the rights and obligations of state officials.

Furthermore, the Law more comprehensively regulates the conditions that members of the Council of the Regulatory Body must meet. It is prescribed that members are selected from reputable experts in fields relevant to the tasks within the competence of the body, individuals with public standing who have advocated for freedom of expression, free flow of information, human rights, etc. Additionally, the Law explicitly defines who is considered an expert in fields relevant to the tasks of the Regulatory Body.

As before, members of the Council of the Regulatory Body are elected by the National Assembly, based on proposals from authorized nominators. A novelty is that, among others, the Ombudsman, the Commissioner for Equality, and the Commissioner for the Protection of Information of Public Importance and Personal Data, now have the authority and duty to propose members of the Council.

Moreover, the Law now directly, rather than through delegated authority to the Regulatory Body, specifies that the operator is obliged to position programs in its offer as follows: 1) the operator’s service channel with information about the operator’s content offer – position zero; 2) basic programs of public media services in their coverage area – positions immediately after zero; 3) all other TV media services in the operator’s offer – after positions from point 2, in the order determined by the operator.

An interesting point is that the Proposal of the Law included a provision stating that reality programming is considered inappropriate for all minors, i.e., individuals under 18 years of age, if it includes violence, indecent behavior, insult, or naked human bodies. It was also stipulated that reality programs are prohibited from showing severe violence, sexual relations, abuse of drugs, or hate speech, with the media service provider obligated to respect the dignity of the participants in reality programming and other rights, especially the prohibition of treating them in a discriminatory, inhuman, or demeaning manner. However, this provision is not included in the adopted text of the Law, and it is only stated that it will be the subject of a separate by-law.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Milan Petrovic, Managing Partner, and Danica Nikitovic, Junior Associate, PR Legal

In line with European efforts to create a competitive, innovative, and efficient business environment, electronic company registration has become a significant part of reforms in the field of company law. The branch of law related to business stands out as one of the most prominent examples of the impact of digitization on the law and its continuous evolution.

Electronic registration of the establishment of companies has numerous advantages, but it also brings certain challenges and dilemmas. However, due to the wide range of benefits it offers, the view that this institute represents an indispensable tool in a modern legal system stands out. It is considered a logical product of the development and digitization of company law, as well as the overall contemporary environment in which we live.

Legal framework in Serbia:

The Law on Companies, as the overarching law in the field of company law, provides legal support for the establishment of business companies, defining the basic institutes related to establishment. In addition to this, the Law on the Procedure of Registration with the Business Registers Agency is of exceptional importance for this topic, regulating the process of registration, recording, and publication of data and documents subject to the registration of the establishment of business companies.

Electronic company registration was first introduced into Serbian law in 2017, initially limited to the establishment of entrepreneurs. Shortly thereafter, the option was extended to single-member limited liability companies. In May 2023, a provision came into effect requiring the registration application for the establishment of business companies to be submitted exclusively in electronic form, according to Article 9. paragraph 2. of the Law on the Procedure of Registration with the Business Registers Agency (more about this update can be found at the following link: https://vp.rs/en/2023/04/20/what-will-the-amendments-to-the-law-which/)

It is commendable to note that the Serbian legislator in the field of company law follows European trends. Serbian law in this regard is largely harmonized with the directives and regulations of the European Union. This undoubtedly has a significant impact on the development of business in Serbia and the attraction of foreign investments to our territory.

How electronic company registration works in Serbia:

The registration of the establishment of business companies in Serbia is done by submitting an electronic registration application on the website of the Serbian Business Registers Agency through a user application. Along with the completed registration application, certain documents in electronic form must be attached, signed with an electronic signature (depending on the form of the business company being established, the required documentation may vary). The registration application fee is paid electronically with a credit card, and the procedure is completed by submitting the registration application for establishment, signed with the electronic signature of the applicant. The Serbian Business Registers Agency, within the legally prescribed period of 5 business days, makes a decision to adopt or reject the registration application for establishment.

When submitting an electronic registration application, two situations should be distinguished. The first is when the applicant is the founder of the business company, and the second is when the applicant is the authorized representative of the founder (usually an attorney at law). The table below outlines the basic characteristics and differences depending on who is designated as the applicant:

Submitter of electronic company registration:
1. Founder of the business company	2. Authorized representive of the founder (attorney at law)
It is necessary to possess a valid electronic certificate issued in their name by a certification body in Serbia	If the client does not have an electronic certificate or if it is not issued in Serbia, the law grants special powers to attorneys at law
The founder(s) signs the Articles of Association of the business company with their electronic signature	1) The lawyer, as the authorized representative of the founder, signs the founding act with their electronic signature on behalf of the founder, based on a notarized power of attorney or 2) In the case of digitizing the founding act, where the act is composed on paper, manually signed by the founder of the business company, and notarized by a public notary, the lawyer scans and signs it with their electronic signature
The founder signs the registration application with their electronic signature	The registration application is signed by the attorney at law with their electronic signature based on the attached power of attorney in electronic form.

Advantages of electronic company registration:

Electronic registration of business establishments offers a wide range of advantages, among which the following stand out:

• Speed and Efficiency: Reducing the time required for registration accelerates the overall process of establishing a company. This primarily refers to the time needed for preparing paper documentation and its immediate submission after long waiting queues.
• Reduced Administrative Costs: Electronic registration eliminates the need for physical copies of documents, thereby reducing costs associated with printing, sending, or directly submitting documentation.
• Greater Transparency: The digitization of the process makes registration information easily accessible and transparent.
• Simplified Filling of Registration Applications: The electronic application system is designed to guide users through data entry, ensuring that the registration application is correctly filled out in accordance with relevant regulations. 

Efficiency as a new primary goal of Corporate and Commercial Law – Challenges it brings:

With the introduction of innovations influenced by modern technologies, legislative systems unmistakably prioritize efficiency as the main and fundamental goal for further development of commercial law. Electronic registration of business establishments serves par excellence example of favoring efficiency over protection as the guiding principle for the further development of commercial law.

Comparing the old method of registering business establishments (submitting paper documentation directly to the Serbian Business Registers Agency) and the current method (submitting documentation in electronic form), we can conclude that, from the perspective of legal security, the old method was far more secure. Although electronic registration brings numerous benefits, it also carries a certain risk of misuse, leading to various challenges. Therefore, addressing issues related to data security, identity verification during online registration, and user education on the proper use of electronic systems is crucial.

Balancing efficiency and user protection:

Despite the emphasis on efficiency, laws also incorporate strict legal mechanisms to protect user interests. Rules regarding transparency, clarity of information, and access to relevant documents set standards that shield users from unethical or unfair business practices. These rules are crucial to protect users and maintain trust in the business environment.

Future development of electronic company registration:

Globally, numerous proposals highlight the future development of electronic systems for registering business establishments. Integrating new technologies, such as blockchain or artificial intelligence, can further enhance the security and reliability of the system, anticipating future challenges.

The implementation of blockchain technology in electronic registration of business establishments has the potential to significantly improve transparency, reliability, and data integrity. As a decentralized distributed ledger, blockchain allows all participants in the process to track every change and transaction in real-time, ensuring data immutability and preventing information manipulation.

The application of artificial intelligence in electronic registration opens new horizons for process optimization. Machine learning algorithms can analyze large amounts of data to identify patterns and provide predictions regarding the registration process. Automating routine tasks, such as data validation or document verification, can significantly reduce the time required to complete registration.

Electronic registration of changes in registered data – Completing the E-Registry:

In addition to registering the establishment of business companies, the Serbian Business Registers Agency registers certain data and documents, as prescribed by law. For example, if a business decides to change its registered address, legal representative, business name, shareholder, increase in share capital, etc., it is necessary to submit a registration application for the change of that data along with the corresponding set of documentation to the Serbian Business Registers Agency.

In Serbia, for now, electronic submission of registration applications for changes in data is not yet possible. Instead, they are currently submitted exclusively by direct submission or by post. However, in the coming months, it is expected that this option will be introduced, allowing for the electronic submission of registration applications for changes in data. This would result in the completeness of the electronic registry of business companies, completing the story about electronic registration applications.

It is noteworthy that with the introduction of this option, the advantages of electronic registration applications will reach their full potential, considering their much greater frequency and quantity compared to registration applications for establishment.

Conclusion:

Electronic company registration in Serbia represents a significant step toward creating a modern, efficient, and transparent business environment. This innovation, in line with European trends, brings numerous advantages, with particular emphasis on speed, efficiency, reduced administrative costs, and greater transparency in the process of establishing business companies.

Despite the fact that it carries certain risks, primarily regarding data security and identity confirmation, electronic registration remains an indispensable tool in the modern legal order. The future development of the electronic registration system may include the implementation of technologies such as blockchain and artificial intelligence. These innovations promise to enhance security, transparency, and efficiency, anticipating challenges of the future. Electronic registration remains a key component of the contemporary legal and business environment, ready to adapt and support the accelerated pace of digital transformation.

By David Bojic, Trainee Lawyer, Vukovic & Partners 

Gecic Law has advised Telekom Srbija on its memorandum of understanding with the College of Europe to provide up to ten annual scholarships for Serbian students.

According to Gecic Law, “Telekom Srbija will provide up to ten annual scholarships for students in Serbia to attend this prestigious institution. Additionally, the students will have the opportunity to work at Telekom Srbija for at least one year following their studies. The scholarship program applies to the Master’s in European Studies at the College of Europe. The college has campuses in Bruges, Belgium, Warsaw, Poland, and soon in Albania’s capital, Tirana.”

The Gecic Law team included Partner Bogdan Gecic, Of Counsel Veljko Milutinovic, Counsel Ivana Stojanovic Raisic, and Senior Associate Vuk Lekovic.

In light of the latest amendments to the Law on Spatial Planning and Construction, which put the topic of energy efficiency and energy features of the building in the spotlight, it would be interesting to remind ourselves of the already existing legal in regard to energy efficiency improvement in Serbia, and above all, what laws and especially bylaws at the local level offer and provide to housing communities – buildings (in srb. – stambena zajednica) and individuals and in which manner they may obtain financial support in case that they intend to carry out certain measures/works that improve the energy efficiency of the building, i.e. apartment.

In addition to the Law on Spatial Planning and Construction, the topic of energy efficiency is the subject of other laws, especially the Law on Energy Efficiency and Rational Use of Energy and the Law on Housing and Building Maintenance. 

Among other goals, these laws tend to encourage owners of the buildings, facilities, and/or separate parts of the facilities to undertake measures that improve the energy efficiency of the building/facility/separate parts of the facility by providing them with incentives at the local level for such measures.

The Law on Housing and Building Maintenance and improvement of the features of the building through financial support for housing communities  

The Law on Housing and Building Maintenance delegates to the local self-government units the authority to determine under their acts the urban zones or blocks that fall under the obligation to carry out certain activities on maintenance of the building and/or mandatory improvement of the features of buildings, but this is limited to cases where these activities are needed to prevent damage. The law further leaves to the local self-government units the possibility to render decisions under which they shall provide non-refundable co-financing for such activities to improve the features of buildings, in which case the local self-government unit secures funding for co-financing of activities in its budget and renders the decision under which it prescribes the procedure of granting funds, the percentage of co-financing, that is, financial support, and conditions under which it shall participate in financing these activities.

When it comes to more detailed regulation of this provision of the law at the local level, we may look at the example of the City of Belgrade, that is, the Assembly of the City of Belgrade, which enacted in 2017 the Decision on non-refundable co-financing of the activities on improvement of the features of the buildings (followed by two sets of amendments and supplements) in 2019 and 2021.

The mentioned decision of the City of Belgrade prescribes that the City of Belgrade and its municipalities may co-finance the activities on the improvement of the features of the buildings with their own funds in a maximum amount of even 90% of the advance quotation of needed funds.

To apply for non-refundable funding, the following are necessary:

• The financed activities are the activities conducted within the project of improvement of the features of the building that are planned in order to prevent the occurrence of damages, that is, harmful consequences to life or health of people, environment, economy, or property of significant value.
• The activities are planned within the territory of the City of Belgrade.
• That the competent organizational unit of the City administration of the City of Belgrade in charge for communal and residential affairs, i.e. the administration of the competent city municipality, has published the public invitation for applying for granting of co-financing; and
• The authorized subject – the person authorized for management of the building (housing community, i.e., the manager of the housing community)–submitted the application for participation in public procedures for granting funds, that it meets the conditions set down in the decision of the City of Belgrade and in the appropriate public invitation.

Based on the conducted public procedure, the commission formed in accordance with the provisions of the decision of the City of Belgrade ranks, selects projects, and determines the final ranking list of projects.

This model of co-financing activities is especially popular for arranging and restoring the facades of buildings in Belgrade. These activities are especially interesting for the housing communities of buildings that were built before the Second World War, and such housing communities may keep track of publishing public invitations and apply for this type of support. For example, the city municipality Savski Venac published a public invitation for the co-financing of activities on arranging facades in March of this year, and rendered the decision on the co-financing of particular projects in June.

The Law on Energy Efficiency and Rational Use of Energy and financial support for households and housing communities for energy improvement/rehabilitation  

The Law on Energy Efficiency and Rational Use of Energy promotes financing for the efficient use of energy, envisaging the budget of the Republic of Serbia, the budget of the Autonomous Province and of local self-government units, EU funds and other international funds, loans of international financial institutions, and others as potential sources of funding for the same. The law authorizes autonomous provinces and local self-government units to determine under their acts specific financial and other incentives, and to determine budgets, that is, funds for the implementation of such projects and other activities for the efficient use of energy within its territory.

We may take the City of Belgrade again as an example – based on this authority provided under the law, and already mentioned Decision on non-refundable co-financing of the activities on improvement of the features of the buildings, the City council of the City of Belgrade rendered in the year 2021 the Rulebook on co-financing of measures of energy improvement/rehabilitation of residential buildings, houses, and apartments on the territory of the City of Belgrade.

The Rulebook prescribes non-refundable co-financing of the measures of energy improvement/rehabilitation of residential buildings, houses, and apartments, more specifically for replacement (procurement and installation) of windows and front doors and of other transparent elements of thermal “envelope,” for the purposes of improvement of energy efficiency in residential sector.

The funds for financing these measures are secured in appropriate percentages and maximum amounts prescribed in the rulebook, partially secured by the City of Belgrade and partially by the Ministry of Mining and Energy. 

The ultimate beneficiaries of these incentives are housing communities and citizens – natural persons (i.e., households)–with regard to real estate (residential buildings, houses, and apartments) that are used for residential purposes and in which the ultimate beneficiaries live.

Thus, to acquire this incentive, it is first necessary to select direct users – commercial subjects that may be engaged by the ultimate beneficiaries for the provision of services – conducting measures of energy improvement/rehabilitation, on the basis of the public invitation/tender, and afterward the public invitation for ultimate beneficiaries is published. The ultimate beneficiaries may apply, and if they meet the criteria and are selected in accordance with the rules set down in the rulebook, they may be granted the right to non – non-refundable co-financing. In this case, non-refundable co-financing does not assume direct payment to the ultimate beneficiaries, but the funds are paid to the direct user – commercial subject after the service is rendered and after the ultimate beneficiary has paid the entire amount of its portion of the price to the direct user. 

The Project of Clean Energy and Energy Efficiency for Citizens

In addition to the mentioned regulations, the Project of Clean Energy and Energy Efficiency for Citizens, that is, the Loan Agreement executed between the Republic of Serbia and the International Bank for Reconstruction and Development, which was verified by the National Assembly in December 2022, is also worth mentioning. On the basis of this agreement, the International Bank for Reconstruction and Development ensures through loan financial means for financial support of the projects that aim to increase the uptake of energy efficiency, sustainable heating, and rooftop solar photovoltaics by households located in the local self-government units in the Republic of Serbia, and that participate in the project. This project is expected to last until November 30, 2027.

The ultimate beneficiaries of this financial support provided by the local self-government units on the basis of this project are the owners of single-family houses (e.g., family houses) and individual apartments, who plan to conduct clean and efficient energy measures, which, among others, are: ((i) replacement of windows and/or doors, (ii) roof and ceiling insulation, (iii) wall insulation, (iv) boiler replacement, (v) heat network renewal, and (vi) purchase of heat pumps, solar photovoltaic systems, and solar collectors.

In this case, same as in the previous, the ultimate beneficiaries may be granted this support if they have applied for co-financing of measures of energy improvement/rehabilitation on the basis of the public invitation of the local self-government unit, if they meet the published conditions and are elected in the public procedure, accordingly. 

For example, this year in Belgrade, the city municipality Palilula published the public invitation/tender for direct users, and then also for the ultimate beneficiaries, for co-financing of measures of energy improvement/rehabilitation of family houses and apartments for different types of measures of energy efficiency that include: (i) replacement of windows and front doors and other transparent elements of thermal “envelope”; (ii) lining of thermal insulation of outer walls, floors connected to the ground and other parts of thermal “envelope” toward non-heated areas; (iii) lining of thermal insulation under the roof or ceiling; (iv) replacement of existing heating that uses solid fuels, liquid fuels or electric energy (boiler or furnace) with more efficient gas boiler; (v) replacement of existing heating that uses solid fuels, liquid fuels or electric energy (boiler or furnace) with more efficient biomass boiler; (vi) installation of heating pumps; (vii) the replacement of existing or installation of new plumbing, heating elements and accompanying utensils; (viii) installation of solar collectors in the installation for central system for preparation of hot water; (ix) installation of solar panels and accompanying installations for production of electric energy for individual use; and (x) for preparation of designing documents.

Some of these measures are only applicable to houses (e.g., installation of solar collectors and solar panels), while others apply to apartments.

Accordingly, the citizens of the municipality of Palilula who planned some of the above-mentioned works this year were provided with the possibility of obtaining financial support in maximum percentages (50%, 55%, 60%, or 65%) and in maximum individual amounts determined in the public invitation. For example, the maximum individual amounts for non-refundable funding for the replacement of windows and front doors in apartments amounted to RSD 120,000, while in the case of houses, in the case of individual measures, it amounted to RSD 160,000. 

All citizens who plan to upgrade their homes – apartments or houses in terms of conducting works that improve the energy efficiency of the facility–may look out for public invitations published on web pages of their municipalities and cities, that is, the City of Belgrade, or get informed in the premises of their municipalities on the possibility of obtaining certain types of financial support for planned works. The same applies to housing communities as well.

By Marija Vukcevic, Senior Associate, JPM Partners

A historic labor strike unfolded in 2023’s ever-evolving Hollywood scene, resembling a gripping drama.  On May 2, the Writers Guild of America (WGA) took center stage, unanimously endorsing a strike.  This was reminiscent of the industry-shifting 2007–2008 Hollywood strike, marking fifteen years since writers last voiced dissent.

This unfolding saga seized the entertainment industry’s attention.  The second act began on July 14, 2023, when the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) initiated a historic labor strike against the Alliance of Motion Picture and Television Producers (AMPTP).  This marked the first time since the iconic 1980 strike when actors took a leading role in a high-stakes labor dispute.

The 2023 strikes weren’t mere cameos; they were headline acts.  The WGA strike, spanning 148 days from May 2 to September 27, involved 11,500 screenwriters clashing with the AMPTP.  Simultaneously, SAG-AFTRA’s record-breaking strike from July 14 to November 9 impacted 45,000 jobs.  This dealt a staggering USD 6.5 billion economic blow to Southern California.

The Demands

Initially, the strikers’ demands were straightforward.  SAG-AFTRA sought minimum increases to counter inflation, revenue sharing, per diem increments, upfront payment, better singer and dancer payment conditions, wage increases, and improved working conditions for background actors, pensions, health, and retirement.  WGA demanded increased minimums, better working conditions (more employees and guaranteed minimum employees) in episodic television, minimum employment duration, and pension and health contributions.

These demands mirrored standard labor strike requirements.  However, both SAG-AFTRA and WGA presented requests related to AI.  SAG-AFTRA called for comprehensive provisions protecting human-created work, ensuring informed consent and fair compensation when AI significantly alters a performer’s voice, likeness, or performance.  On the other hand, WGA aimed to regulate AI use on MBA-covered projects, prohibiting AI from writing or rewriting literary material or being used as source material and restricting the use of MBA-covered material to train AI.

The primary concern among writers was the potential use of AI by producers to create or complete scripts, potentially diminishing writers’ compensation.  The WGA proposed that adaptations from language models be considered original screenplays, preventing AI material from being labeled as literary or source material.  Studios would also be mandated to disclose when providing AI-generated content to writers.

The Outcome

It appears they’ve succeeded.  As per Adam Conover, the updated terms prohibit studios from using AI to create or edit scripts by human writers.  The contract explicitly bars categorizing AI-generated content as “source material,” which could reduce compensation and credit for screenwriters adapting it.

The new terms don’t explicitly forbid using AI tools for writing but set guidelines ensuring writers retain control over the technology, empowering them rather than subjecting them to AI control.

SAG-AFTRA also achieved its goals.  Studios must secure an actor’s consent before creating a digital replica using their image.  They also require compensation based on the digital model’s on-screen work.  Consent from performers whose facial features contribute to a synthetic performer is also mandatory.

Beyond the AI-related demands, the strikers secured higher minimum salaries and revenue sharing from streaming services.  The specifics of the terms remain undisclosed.  However, it will be intriguing to observe the impact of these strikes on AI’s utilization across various industries.

By Milica Novakovic and Bojan Tutic, Associates, Gecic Law

Kinstellar has advised Chinese investors CMC Capital and Shanghai Electric Power & Energy Development Limited on the acquisition of Crni Vrh Power, a project company developing a 150-megawatt onshore wind farm in the eastern Serbian municipalities of Bor, Zagubica, and Majdanpek.

CMC Capital is a member of the China National Technical Import and Export Corporation group.

According to Kinstellar, “the Crni Vrh wind farm was purchased ‘ready-to-build’ – which means that all essential permits and land rights were secured prior to the start of the construction phase, which includes 28 wind turbines. With this acquisition, CNTIC and SEP have entered Serbia’s renewable energy sources market for the first time. The companies formed a joint venture for the deal, with SEP holding 51% and CNTIC holding 49% of the shares.”

The Crni Vrh wind farm is scheduled to begin commercial operations in 2025, with an expected annual electricity generation of 480 million kilowatt-hours.

The Kinstellar team included Managing Partner Milos Velimirovic, Special Counsel Olga Sipka, Senior Associates Aleksa Bosnjovic and Mario Kijanovic, and Associate Miroslav Ravic.

Editor’s Note: After this article was published, Isailovic & Partners confirmed its involvement on behalf of the sellers of Crni Vrh Power. The firm’s team included Senior Partners Nikola Rodic and Igor Isailovic and Partner Mirjana Radovic.

Legislation proposes to roll back rules to prevent employees misusing leave entitlement.

Serbian employers have faced major issues with staff absenteeism due to sick leave abuses, and the 2019 Health Insurance Law has done little to address the situation.

Under the law, employers are required to disburse statutory sick pay for the first 30 days of an employee’s sick leave, whereupon, on day 31, the National Health Insurance Fund (RFZO) assumes this responsibility. This has meant that sick leave abuses have had a significant impact on companies’ profits, as well as on their ability to effectively manage their business.

The current rules allow general practitioners (GPs) to order to 60 days of sick leave, and any longer periods have to be cleared by a first-instance medical board. The regulation has not only failed to prevent sick leave abuses but has actually promoted employee absenteeism.

The ability of GPs to approve sick leave of as much as 58 continuous days, with medical boards not able to review the decisions, has proven a major drain on the resources of both companies and the RFZO, which seems to have been the primary reason behind the initiative to amend the law.

The Serbian Government’s statement of reasons accompanying the amendments notes the practice of GPs ordering sick leave in contravention of official guidelines linking leave periods to diagnosis, as well as in the absence of appropriate substantiating documents and without the patients undergoing additional diagnostic procedures and specialist examinations. This, the Government suggests, has meant some company employees have wrongfully benefited from sick pay for longer than the statutory 60 days, resulting in financial damage for both employers and the RFZO. The health insurance budget earmarked for this purpose has been steadily increasing to stand at as much as 29.5 billion dinars (slightly more than 250 million euros) in 2023.

The proposed amendments to the Health Insurance Law in effect roll back the rules to what they had been before 2019, when GPs could order a maximum of 30 days of sick leave, with employers being responsible for sick pay for this period. The changes seem designed to reduce costs to the RFZO, but the long-standing sick leave abuse problem may persist, and companies may continue to shoulder the financial burden associated with it.

*Published in the first edition of the Vukovic & Partners Law Firm Western Balkan Newsletter

By Sabina Dautovic, Attorney at Law, Vukovic & Partners

Karanovic & Partners has advised BIG CEE on its acquisition of two retail parks in Serbia – NEST Obrenovac and NEST Kraljevo – from RC Europe. Djokic+Partners advised RC Europe.

According to Karanovic & Partners, NEST Obrenovac, with a gross leasable area of 11,000 square meters, and NEST Kraljevo, with 9,500 square meters, “both boast a full occupancy rate of 100%. Over the next few months, BIG will focus on optimizing and adapting the shopping centers, rebranding them as BIG in the upcoming Spring-Summer season.”

The Karanovic & Partners team included Senior Partner Milos Vuckovic, Senior Associate Marko Culafic, and Associate Marina Zivanovic.

The Djokic+Partners team included Senior Partner Djordje Djokic, Partner Marina Martinovic, and Associate Pavle Peno.

Both consumers and companies that are using the software in everyday activities, either for business or pleasure, usually do not own the software, but only have limited rights granted by a license agreement with specifically defined scope and terms of use. Why the misunderstanding? In general, software is a set of instructions or programs used to operate computers and execute specific tasks. It is an intangible object, opposite to hardware compartments. With the latter, the ownership perception is clear when you are buying it. On the other hand, software brings confusion to end-users – is it purchased or licensed? Because the difference is essential.

Often, tech companies are not selling their valuable software but only grant a non-exclusive license with defined terms of use, scope, allowed territories, and payments (royalties). This is relevant for both b2b and b2c relationships due to the advantages of licensing compared to the sale of the software. Advantages are numerous – it is simple and cost-efficient, the licensor remains the owner and in control over software and code, it can license software to numerous entities or individuals (non-exclusive license) and they can sub-license that software to others on the market (if it’s allowed under the main license agreement), etc.

Software is a copyrighted work of authorship

In Serbia, software is regulated by the Law on Copyright and Related Rights (‘’IP Law’’) as a work of authorship that is copyrighted, if it represents the original spiritual creation of the natural person (AI-generated creations excluded), expressed in a certain form, regardless of its artistic, scientific, or other value, regardless of its purpose, size, content, manner of expression, as well as the permissibility of public announcement of its content. IP Law prescribes that works of authorship are written works (e.g., books, brochures, articles, translations, computer programs in any form of their expression, including their preparatory design material and others).

Therefore, software is a work of authorship protected by copyright and can be subject to licensing.

(Non) Exclusive license 

In Serbia, the Law on Contracts and Torts (‘’Contract Law’’) prescribes that the license agreement is a written-form agreement that mandates the licensor[1] to assign to the licensee, in whole or partially, the right to use the invention, technical knowledge, and experience (‘’know-how’’), trademark, sample or model, and the licensee[2] is mandated to pay the licensor a consideration (fee) in return. According to Contract Law, the licensee acquires the exclusive right to use the subject of the license only if this is explicitly agreed (so-called ‘exclusive license’).

Oftentimes, an exclusive license creates confusion between the parties whether the rights are exclusively assigned to the licensee or whether the licensor is left with some prerogatives. Contract Law does not leave a place for any misunderstanding, so it explicitly prescribes that a licensor is prohibited from using the licensed object itself when the exclusive license is granted. Although the law is clear in this sense, it is better to articulate prohibition explicitly under the license agreement to enable transparent and stable cooperation between parties. On the other hand, if the license agreement does not indicate the type of license, it is considered that a non-exclusive license is granted (this means that the licensor can grant to other parties simultaneously or can use the licensed object itself).

License does not transfer ownership

License agreements are not the same as the ownership transfer agreement. This makes all the difference keeping in mind the scope of licensees’ rights in comparison with a software owner, for example. There is a common misconception because licensees are using the licensed software as if they were the owner (especially with an exclusive license). This results in serious contract breaches, damages, and a time-consuming procedure for a licensor to pursue and prove such misconduct. License agreements are executed in written form, but in a practical sense, when used by a group of end-users (like end-user licensing agreement – ‘EULA’) they are provided as a precondition for installing the licensed software on one’s computer (when end-users are required to select ‘Agree’ a couple of times before installation). 

This brings yet another confusion because end-users are sometimes not aware that this type of adhesion and acceptance of terms represent a license agreement.

The Serbian courts on software licensing 

In one of the recent cases (Belgrade Court of Appeal confirmed the Belgrade Higher Court decision) related to the software licensing, the court has found that the defendant (licensee) was obliged to pay the damages to the claimant (licensor) due to the use of the software contrary to the license agreement. Therein, the license agreement was an integral part of the software, so the installation of the software was possible only with the consent to the conditions of the said agreement. 

Each copy of this software that was distributed to the defendant under the license agreement, was protected by a single-user hardware key. However, the defendant began to use the software in a server way by creating one computer acting as a server on which it installed licensors’ software with a single-user hardware key, to which it connected numerous other computers that used the installed software without requiring a key, bypassing the hardware protection. In this way, the defendant overcame the hardware protection on the licensor’s software and used its software on multiple computers with a single license and a single hardware key. In simple terms, the defendant has made ‘virtual duplicates’ of the licensed software (by remote access to the software from other computers).

The defendant did not make copies of the software by placing the program in the computer’s memory. Regardless, the defendant has violated the copyright (Article 20 paragraph 5 of the then-valid IP Law). The court has found that this ‘virtual duplication’ is equal to unauthorized use by ‘physical duplication’ as explicitly regulated under IP Law. The ratio behind the court’s conclusion was that the IP Law guarantees the author an exclusive right to reproduce copies of work and it was established to protect authors. So, authors are protected from unauthorized reproduction of the work done in almost any manner (not just the ways explicitly defined under the IP Law). 

The court took the stance that the defendant had violated the copyrighted work and infringed the economic rights of the software owner (licensor) guaranteed under the IP Law. For any (economic) exploitation of the author’s work by another entity/person, the author is entitled to compensation. Having in mind that the defendant, contrary to the accepted terms of use of the software, made economic use of the software by unauthorized virtual duplication, the licensor was entitled to payable damages for the harm caused by copyright infringement and to the extent of the achieved benefits by such economic exploitation. Damages were calculated by court experts using the software’s average unit rate use in EUR multiplied by a number of virtual duplications made by the defendant.

Conclusion

The software is an intangible asset and users sometimes cannot comprehend the legal restraints to its use as well as the legal repercussions in case of breach. The other issue is the misconception about software licensing. End-users usually forget or omit that the license agreements do not transfer any ownership over software but only grant limited rights. However, being ignorant of the law does not release from liability, given that any use contrary to the license is deemed a breach of the license agreement enabling the breached party to seek damages and stopping such illegal actions.

The growing market of ICT and the technology sector in general (especially with the development of AI) enables numerous applications to appear almost daily. To avoid possible license breaches, liability for damages, and other legal repercussions, end-users and companies must become aware of the IP rights mandatory laws, and the boundaries of the license agreements, and get acquainted with the thorough license terms even though it’s sometimes the toughest part.

 

By Aleksandar Popovic, Partner, and Milos Maksimovic, Senior Associate, JPM Partners