Category: Serbia

Tanja Glisic has joined TSG as Partner in Serbia.

According to TSG, Glisic specializes in providing legal advice to German-speaking clients from the DACH region. Her core areas of expertise are corporate and commercial law, M&A, intellectual property, data protection, and compliance.

Before joining TSG, Glisic spent a year and a half with Doklestic, Repic & Gajin, almost two years with the Law office of Milosavljevic in cooperation with AGM Group, over two years at Hrle Attorneys, and almost three years with Karanovic & Partners.

Harrisons, working alongside CMS, has advised the EBRD on a EUR 27.6 million loan to District Center doo Beograd and PKS-LATEX-HLC doo Cacak. Karanovic and Partners advised District Center doo Beograd and PKS-LATEX-HLC doo Cacak.

The funds will be used to finance the development, construction, and operation of retail parks and shopping centers in Nova Pazova and Cacak, in Serbia.

According to Harrisons, “both companies are ultimately owned by CEE BIG BV from the Netherlands and these loans represent a part of the bigger project which will enable CEE BIG BV to expand its portfolio of modern retail parks and shopping centers in the Western Balkans.”

The Harrisons team included Principal Mark Harrison, Consultant Ines Matijevic-Papulin, and Associate Mina Zeljkovic.

The Karanovic & Partners team included Partner Katarina Guduric.

Editor’s Note: After this article was published, CMS informed CEE Legal Matters that its team included Partner Rafal Zakrzewski and Senior Associate Evgeniy Vazhynskiy.

Between upcoming elections and the situation in Kosovo, Serbia has plenty of reasons to expect a slowdown in the upcoming period, even if current activity levels remain, at times, surprisingly high according to JPM Partners Senior Partner Nenad Popovic.

“For the last two months, everybody was talking about the incoming elections – which are slotted to take place on December 17,” Popovic begins. “This, along with the events that recently took place in Kosovo, has shaped the discourse around the economic repercussions and potential pitfalls that we might collectively experience,” he says.

“As far as the elections are concerned, the legal market always experiences a slowdown – especially M&A or foreign investments,” Popovic continues. “This slowdown, if not a full stop, usually starts with the announcement of the elections and lasts all the way up to the formation of a new government, with investors being cautious about their positions,” he explains. “While there has not yet been any tangible slowdown, the legal market is bracing for a phase of reduced activity. Moreover, with the upcoming orthodox holidays, January has traditionally been a period of a slower pace, which we expect to decelerate matters.”

Additionally, Popovic reports that since the elections were announced, “legislative actions have halted, with the current government putting everything on hold. It’s challenging to predict the election results and the duration of potential negotiations for a new government, but until that occurs – we do not expect there to be much to report from the legislative front.”

Continuing, Popovic says that “the Kosovo situation is primarily an EU issue for us. As the EU is our largest foreign investor, any significant deterioration there could slow down our economy,” he says. Although there have been some red flags, Popovic reports that “no concrete investment slowdown from the EU has occurred yet. However, these political issues are beyond our control, so we must prepare for any eventuality.”

Moreover, commenting on the current status of the economy, Popovic says that, “despite a 15.5% inflation rate and an overall economic slowdown, there has been vibrancy.” Specifically, he mentions the booming real estate sector where “the prices are still very high for new projects, and are, indeed, disproportionate to the purchasing power in Serbia right now. Still, surprisingly, all projects that came to the fore were sold – which gave rise to questions of the origin of the funds for all of these acquisitions,” he explains.

Finally, Popovic mentions that the renewable energy sector hasn’t seen a slowdown either. “There’s significant investor interest here. However, with the lithium extraction issue with Rio Tinto — there have been constitutional and judicial review concerns at play that might affect the entire sector soon,” he reports. “Also, I must mention that the car part production sector has been increasingly active, with many investors entering the market,” he concludes.

The Serbian National Assembly has adopted amendments to the Law on Personal Income (PIT Law) and the Law on Mandatory Social Contributions (SSC Law) extending the deadlines for payroll incentives.

These amendments concern employers engaging newly employed individuals, allowing such employers to use these incentives until the end of 2024. The initial deadline was set for the end of 2023.

For reference, these incentives entitle the employers to refund salary tax and SSC, in the amount of:

• 65% if they engage at least 1, but no more than 9 newly employed individuals,
• 70% if they engage at least 10, but no more than 99 newly employed individuals,
• 75% if they engage at least 100 newly employed individuals.

In addition to these provisions, micro and small legal entities, as well as entrepreneurs who engage a minimum of two new individuals, are entitled to a 75% salary tax return and a 75% reimbursement of the paid SSC related to the newly employed individual, until the end of 2024, also extending the deadline from the previously foreseen 2023.

Within the framework of these laws, a newly employed individual is an individual: (i) with whom the employer concluded an employment agreement, (ii) registered with the Central Registry of Mandatory Social Insurance, and (iii) who was, before being employed, registered as unemployed with the National Employment Agency continuously for a duration of at least 6 months, or 3 months in the case of an intern.

The amendments are set to take effect from 1 January 2024.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Branimir Rajsic, Senior Consultant, Katarina Tomic Senior Associate, Milica Mijatovic Associate, Karanovic & Partners

Polo shirts are probably more broadly recognized than the sport itself. Unlike t-shirts, polo shirts feature a collar, a sleek design, and a knitted polo player logo on the chest. However, if you’re not fashion-savvy and examine it closely, you’ll notice that this polo player logo varies.

The U.S. Polo Association (USPA) logo depicts two polo players, one with a mallet raised upwards and the other downwards. In contrast, the Polo Ralph Lauren (PRL) logo features a single polo player with a mallet raised upwards. The primary difference lies in the presence or absence of the words “USPA” or “Polo Ralph Lauren” beneath the polo player. You might wonder how such similarity is permitted in trademarks and why these companies haven’t sued each other. They have led to a rich history of legal disputes between them.

Polo 1984

Ralph Lauren, established in 1967, has used the polo player mark since 1972, whereas the U.S. Polo brand launched in 1981. In 1984, the USPA initiated legal action against PRL, seeking a declaration that merchandise with a mounted polo player symbol did not infringe on PRL’s logo. PRL countersued for trademark infringement, claiming the double horse riders’ marks violated their logo. USPA argued that the mark was a generic depiction of a polo player without a specific product association. The court disagreed, finding USPA’s use of the polo player mark and the word “POLO” infringing on PRL’s trademarks. Nonetheless, USPA was permitted to continue using its name and mounted polo player logo, provided it was distinct from PRL’s in content and perspective.

Polo player(s)

PRL retaliated with a lawsuit against USPA and its licensee, Jordache, Ltd., alleging that four logos with double horse riders on clothing infringed on the Ralph Lauren polo player mark. A pivotal element was the prior business negotiation, where PRL had consented to USPA’s use of the double horse rider mark. Despite PRL’s objection, the court admitted evidence of this consent. The jury found the first logo, a solid double horse rider silhouette without lettering, infringed PRL’s trademarks. However, the other three logos (with added lettering or outlined horse riders) were deemed non-infringing.

Fragrances and Eyewear

Unsurprisingly, disputes extended to other products. USPA’s fragrance, in a dark blue package similar to PRL’s earlier Polo Blue fragrance, was found to infringe on PRL’s trademarks. The court determined that USPA’s “confusingly similar” logo with two mounted polo players and their use of “POLO” infringed on PRL’s marks concerning fragrance products. The court noted that, unlike apparel, PRL’s Player logo and POLO trademarks for fragrance products were valid and “extremely strong” and thus were entitled to substantial protection from infringement. The court took this further and claimed that USPA had acted in bad faith by producing a fragrance with the double horsemen logo and the word “POLO,” knowing the product had a high likelihood of confusion. The court issued a permanent injunction against the USPA and dismissed its request for a declaratory judgment disenabling the USPA from using the mark for fragrances. The Second Circuit confirmed that the USPA may use and license its Double Horsemen logo in one industry (apparel). However, it did not necessarily mean it was allowed to use the same marks in a different sector (fragrances), in which RPL was well established.

Similarly, in another case, the court found that USPA’s sale of sunglasses bearing its Double Horsemen logo violated the injunction regarding fragrances and other products. The court granted PRL’s motion to hold USPA in contempt, finding that the plain language of the earlier injunction applied to eyewear. However, the higher-instance court vacated the contempt order and returned the case to the lower courts. This litigation continues to this day.

The court noted the strength of PRL’s fragrance marks and issued a permanent injunction against USPA in this category. The Second Circuit ruled that authorization to use the logo in apparel did not extend to different industries like fragrances, where PRL was established. Similarly, USPA’s sale of sunglasses with the Double Horsemen logo was initially found to be in violation of the injunction but was later remanded for further review.

Western Balkans

In Serbia, both RLP and USPA polo player trademarks are registered. Interestingly, the RPL polo player trademark is registered for class 3, which covers perfumery (makes sense considering the U.S. court decision above). At the same time, the USPA has the double horse riders trademarks registered for clothing, footwear, headwear, retail sales, and online retail store services.

The same goes for Montenegro, although USPA’s double horse riders mark isn’t registered for clothing, footwear, and headwear.

In Bosnia and Herzegovina, the only polo player protected by a trademark is Ralph Lauren’s, and it’s registered for retail sales and online retail store services.

Outro

This rivalry highlights the importance of trademarks in fashion (and commerce in general). Trademarks play a significant role in safeguarding a company’s brand identity, reputation, and market position.

This battle also serves as an important reminder that trademark infringement analysis is market-specific, and the main concern is whether using a mark will likely confuse. Furthermore, one spot may create confusion in one geographical market but not in another. For example, the USPA double horse riders mark can be registered in the USA and Serbia. For instance, in Japan, the Japan Patent Office found that just the word “POLO” may confuse the market and declined USPA’s trademark application for the mark “U.S. Polo Assn.”

In the end, remember that if there is one polo player, it’s Ralph Lauren. If there are two, that’s the U.S. Polo Association, three or more players, and maybe it’s a counterfeit polo shirt.

By Milos Petakovic, Senior Associate, and Bojan Tutic, Associate, Gecic Law

Karanovic & Partners has advised Rudis on the construction of the Alibunar I wind farm development. Karanovic & Partners also advised PLC Internergo, which will purchase energy produced in the wind farm on the basis of a long-term PPA.

The Alibunar I wind farm consists of three 3-megawatt wind turbine generators located near Vrsac, Serbia.

Rudis is a Slovenian engineering company.

PLC Interenergo is an electricity management services company.

In 2021, Karanovic & Partners advised Elicio Ali on the refinancing of the Alibunar wind farm (reported by CEE Legal Matters on November 22, 2021).

The Karanovic & Partners team included Partner Petar Mitrovic and Senior Associate Katarina Tomic.

The government of the Republic of Serbia in its session held on 03 November 2023 adopted Regulation on amendments to the Regulation on conditions of delivery and supply of natural gas, published in the Official Gazette of the RS no. 97/2023.

Amendments to the regulation allow, as an exception, that natural gas transmission/distribution system operator may take over in system or deliver from system gas that deviates from the prescribed quality and chemical composition.

In order for this deviation to be allowed, it is necessary that the system operator submits a reasoned request to the Ministry of Energy specifying the isolated parts of the system, i.e., the entry and/or exit points on the system where the quality deviation will be applied, as well as the parameters of the quality and chemical composition of the natural gas.

If the Ministry of Energy accepts the system operator’s request, it will issue an act determining the quality and chemical composition of natural gas that deviates from the prescribed quality, the places in the system where such gas can be taken over in or delivered from the system, and that act will be published in the Official Gazette of the RS.

The reason for adopting this amendment to the regulation lies in preparations for greater diversification of natural gas supply sources, which will be achieved with the imminent opening of the new Serbia-Bulgaria gas interconnector. According to the statements of the Ministry of Energy, it is expected that through this interconnector, the Republic of Serbia will be supplied with natural gas from Azerbaijan, which increases the security of supply to the Republic of Serbia, and which is one of the proclaimed goals of the Energy Development Strategy of the Republic of Serbia.

This amendment to the regulation will enter into force on 11 November 2023.

By Jelena Gazivoda, Senior Partner, Nikola Djordjevic, Partner, and Marko Mrdja, Senior Associate, JPM & Partners

As we have written about in one of our previous texts, the Labour Law (“the Law“) stipulates, among other, that an employee’s employment may be terminated if there is a justified reason pertaining to employer’s needs, i.e., if due to technological, economic or organisational changes the need for certain job ceases or if the workload is reduced.

Depending on the circumstances of specific case, notably the number of persons engaged by an employer on full-time basis and the number of redundant employees, an employer may be obliged to enact a program for redundancy resolution. In any case, a redundant employee’s agreement shall be terminated by decision, which shall be passed in writing and include a rationale and legal redress.

The Law nevertheless does not stipulate a deadline in which an employer is obliged to enact a decision on termination of employee’s agreement upon the establishment of cessation of the need for employee’s work.

Court practice

In relation thereto and according to a Judgment of the Supreme Court of Cassation Rev2 2118/2021 of December 6, 2022 (“the Judgment“), the fact that the decision (terminating employment agreement of a redundant employee) has been passed some time after the establishment of cessation of need for employee’s work does not render such decision unlawful.

Namely, acting in the particular case the court found that “no provision of the Labour Law stipulates the deadline by which an employer, after the establishment of cessation of need for an employee’s work, should enact a decision on termination of employee’s agreement, and the fact that the employer enacted the disputed decision on termination one and a half month after the establishment of cessation of need for the employee’s work, does not render the disputed decision unlawful“.

Statute of limitations

However, the Law prescribes that termination of employment agreement under Article 179, para. 1, item 1) and para. 2 and 3 of the Law, namely if employee does not achieve work results or does not have necessary knowledge and skills to perform the duties within the job, if he/she violates working duty or fails to respect working discipline, the employer may dismiss the employee within six months after finding out about the facts on which dismissal is based, i.e., within one year after the day of onset of the respective facts (so-called statute of limitations); therefore it is important that the decision on dismissal or other measure is issued to the employee within the stated deadlines.

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 Lara Maksimovic, Senior Associate, PR Legal

NKO Partners has advised Sopharma on its acquisition of Pharmanova. Radovanovic Stojanovic & Partners advised the seller.

According to NKO, the acquisition is “structured in three steps; the first having just being closed under which Sopharma acquired a 25% interest in Pharmanova. This stake will be increased to 75% within one year, and to 100% within two years.”

Pharmaceutical company Sopharma is headquartered in Sofia, Bulgaria. Founded in 1991, Pharmanova is a Serbian pharmaceutical company. 

The NKO team was led by Partner Djordje Nikolic and included Partners Branko Jankovic and Djuro Otasevic.

The RSP team was led by Partner Sasa Stojanovic and included Partner Anja Tasic and Attorneys at Law Djordje Vicic and Zivko Kovacevic.

Kinstellar and Schoenherr have announced that PowerChina’s acquisition of a 51% stake in the Vetrozelena wind farm from CWP Europe has now closed.

As reported on May 9, 2023, the SOG Law Firm (now Kinstellar in Serbia) advised PowerChina Resources while Moravcevic Vojnovic and Partners in cooperation with Schoenherr advised the seller on what Kinstellar describes as “currently the largest acquisition in the Serbian renewables sector.”

The Kinstellar team included Partner Radovan Grbovic, Senior Associate Aleksa Bosnjovic, and Junior Associate Jelisaveta Folic.

The Schoenherr team was led by Partners Vojimir Kurtic and Matija Vojnovic and included Partner Srdjana Petronijevic, Attorney at Law Zoran Soljaga, and Associates Luka Milosevic, Zeljko Loci, and Zoran Kobal.