Category: Serbia

AP Legal has advised Inn-Flex on its acquisition of Parir Print. Sole practitioner Tomislav Stankovic reportedly advised the sellers.

Inn-Flex is an Italian company with a portfolio of flexible packaging products used in different industries.

Papir Print is a Serbian company operating in the areas of flexible packaging for the food industry, packaging for beverages, and pharmaceutical products.

The AP Legal team included Managing Partner Aleksandar Preradovic and Senior Associates Dusan Preradovic and Jovan Cirkovic.

On 27 June 2024, the Constitutional Court of Serbia issued a Decision initiating proceedings to assess the constitutionality of the Gender Equality Act. This decision implies that all activities undertaken based on the said Act, including executing individual acts and actions, are suspended until a final decision on its constitutionality is rendered.

Since the Constitutional Court has yet to issue a ruling in the initiated proceedings, the Ministry for Human and Minority Rights and Social Dialogue organized a webinar on the application of the Gender Equality Act following the issuance of the Constitutional Court’s Decision.

A key piece of information presented by the Ministry during the webinar was that, due to the suspension of activities based on this Act, employers and public authorities are relieved of the obligation to adopt individual acts prescribed by the Gender Equality Act and its subordinate regulations. Given that the non-adoption of individual acts in accordance with the Act is currently not subject to sanctions, the Ministry informed webinar participants that, until the Constitutional Court issues its final decision, there will only be a recommendation directed to employers and public authorities to adopt these acts to update data on the implementation of gender equality across the Republic of Serbia.

Public authorities and employers who choose to submit individual acts will only do so for the period from 1 January 1 to 26 June 2024.

The Ministry emphasized during the webinar that, as of 1 January 2025, a new application will be launched on the Ministry’s website, enabling employers and public authorities to electronically submit data and documentation. Consequently, the submission of annual reports and other documents to the Ministry will be exclusively conducted electronically, eliminating the need for postal submissions.

Through this application, employers and public authorities will be able to record data on gender equality implementation via “Form 1,” with the option to update the entered data subsequently.

Considering the potential technical challenges during the initial phase of using the application, the Ministry has decided to extend the deadline for submitting annual reports to 30 January 2025.

By Marko Ilic, Senior Associate, and Dimitrije Stepanovic, Associate, JPM & Partners

NKO Partners has advised Dr Max on its acquisition of VIVA Pharm pharmacy chain.

VIVA Pharm pharmacy chain is headquartered in Valjevo and consists of 20 retail units throughout Serbia.

In 2024, NKO Partners advised Dr Max on the acquisitions of the Ivancic i Sin Pharmacy Chain in Serbia (as reported by CEE Legal Matters on December 10, 2024), the Miletic Plus pharmacy chain (as reported by CEE Legal Matters on May 21, 2024), and Pet-Sar Farm (as reported by CEE Legal Matters on February 15, 2024). In 2023, the firm advised Dr Max on the acquisitions of Melem Pharmacy (as reported on December 1, 2023), the Dr Ristic pharmacy chain (as reported on November 9, 2023), the Uniprom pharmacy chain in Zajecar (as reported on October 4, 2023), Nova Pharm (as reported on March 28, 2023), Beolek (as reported on March 9, 2023), Cvejic (as reported on January 31, 2023), as well as AU Medis Lek (as reported by CEE Legal Matters on January 6, 2023).

The firm had also advised the Dr Max Group on its acquisition of several other pharmacy chains in Serbia in 2022, including Pancevo-based AU Kod Suncanog Sata and Veliko Gradiste-based AU Selic (as reported on October 11, 2022), Belgrade-based K-Pharma (as reported on June 8, 2022), the Janja pharmacy chain (as reported on March 28, 2022), and the Zlatni Lav pharmacies (as reported on January 5, 2022).

The NKO Partners team included Partners Djordje Nikolic and Branko Jankovic.

The National Assembly of the Republic of Serbia in its session held on 27 November 2024 adopted a new Strategy on Energy Development until 2040 with the Projection until 2050 („Strategy“).

The first and main goal of the Strategy is the same as that of the previous energy strategy – energy security. Further goals are decarbonization of the energy sector, environment protection, improvement of energy efficiency, and establishing an economically competitive energy market. While drafting the Strategy and its goals, events that occurred since the adoption of the previous strategy were seriously taken into account, especially energy challenges which were (and some still are) present, including Russian-Ukrainian conflict, jeopardized supply routes, sabotages, accidents on important power plants in Serbia, etc. Also, international obligations of Serbia, contained in the Parise Climate Agreement and Sofia Declaration on the Green Agenda had an impact on the goals set out in the Strategy.

For achieving proclaimed goals, the Strategy foresees changes in the following fields: i) improvement in energy efficiency in consumption and production/distribution/transport of all kinds of energy, ii) decrease of loss in production/distribution/transport of all kinds of energy, iii) decrease usage of coal and increase usage of natural gas and RES for electricity production, iv) construction of storage systems for electricity and heat energy produced from RES, v) increase RES share in final consumption of energy, vi) usage of RES and heat pumps for production of heat energy, vii) digitalization of energy processes.

Electricity sector

Major changes in the energy sector are envisaged in the electricity sector due to the decarbonization principle. As Serbia is producing now cca 60% of its electricity from coal, it is envisaged that RES’s share in the total production portfolio will be increased to 45% by 2030, and 73% by 2040.

To achieve this ambitious goal, the plan is to have certain thermal power plants either put in reserve (and reinitiated when the need arises) or use them in decreased capacity. Until 2030 old thermal power plant Kolubara A will be put out of operation, while Morava may have the same fate or will be put in reserve. TENT and Kostolac, given their importance to the energy sector, cannot be subject to these measures. However, they will undergo installment of various filters (to decrease emissions of PM, NO2, SO2) until 2030. As per new thermal capacities, only block B3 in Kostolac with an installed capacity of 350 MW will be put into operation.

Natural gas power plants also have a certain impact on the electricity sector. Panonske TE-TO will be put out of operation, and it is planned to construct a new one in the vicinity of Novi Sad. It will be a cogeneration power plant with an installed power of 350MW for electricity and 100 MW for heat.

Speaking of hydropower plants, Đerdap 2, Potpeć, Vlasina, and Bistrica should undergo revitalization with a slight increase in capacity. New hydropower plants in Ibar (121 MW) and Morava (146 MW) should be constructed by 2040. Also, Bosnia and Herzegovina is planning joint construction of a power plant on Drina (212 MW) in which Elektroprivreda Srbije (“EPS”) should have 51% ownership.

As per variable RES (wind and solar), the Strategy envisages that the Republic of Serbia will have an installed capacity of 1.77 MW in wind power plants and 1.73 MW in solar power plants until 2030 (a total of 3.5 GW of variable RES capacity). The projection until 2040 is 3.6 GW of wind power plants and 7.37 GW of solar power plants (a total of 10.97 GW of variable RES capacity).

As the Strategy plans to decrease the usage of coal and increase the usage of RES in electricity production, the issue of a steady supply of reserved energy for balancing purposes arises. For this reason, a special place in the electricity sector has reversible hydro power plants, due to their role in the balancing of the electricity sector. The Strategy envisages as a priority the construction of reversible hydropower plant Bistrica (628 MW) by 2032. Also, Romania is planning to construct a new reversible hydropower plant Đerdap 3 (1.800 MW) by 2040.

In order for the grid to be capable of receiving new capacities, as well as to be aligned with the energy efficiency goal and decrease loss during transport and distribution of electricity, the Strategy envisages also 1) construction of a new and revitalization of existing internal grid infrastructure and 2) construction of regional grids such as Trans-Balkan Corridor and Pannonian Corridor.

The distribution grid should be also improved by reconstructing existing and constructing new transformer stations and grid as well as installing advanced management devices for the distribution grid.

Heat Energy

Currently, the heat energy sector is dominantly based on fossil fuels (coal and natural gas), while RES (biomass and biogas) has a share of 1.8% in total production. Also, the production and distribution systems are old.

For achieving goals set out by the Strategy, rehabilitation, and modernization of remote-control heating systems are envisaged together with usage of highly efficient cogeneration facilities and usage of heating pumps. Simultaneously, a decrease of fossil fuel, especially coal in the production of heat energy while increasing RES share, where applicable, is planned.

Energy Efficiency

The Strategy stresses out importance of improving energy efficiency in all consumer sectors. Thus, investments in thermal insulation of buildings (both public and private) are necessary as well as investments in more efficient heating systems. Also, in the traffic sector application of new EURO standards should be implemented, more usage of electric cars and electrification of public transport.

Natural Gas Sector

The Republic of Serbia does not have significant reserves of natural gas for exploitation, thus it is mainly import-oriented. For a long period, Serbia was supplied only by Russian natural gas via one route (Hungary), which is not favorable from the energy security perspective. The diversification of supply routes was improved by the construction of an interconnection pipeline Bulgaria border – Hungary border, but this also is used for Russian gas only. Recently, a new interconnection with Bulgaria (Niš-Dimitrovgrad) was constructed and put into operation, through which Serbia is supplied by Azerbaijan natural gas.

Although the supply routes are now more diversified compared to last decade, the Strategy envisages the construction of new interconnections with Romania, North Macedonia, Croatia, and Bosnia and Herzegovina.

Apart from interconnectors, it is necessary to invest in existing transportation systems as well as in distribution systems, including the installation of smart metering systems. Expansion of underground natural gas storage to 750 mil m³ is ongoing, with the possibility of additional expansion for 750 mil m³ more. Also, the Strategy considers the construction of new natural gas storage in Vojvodina.

Oil Sector

Same as for natural gas, the Republic of Serbia does not have significant reserves of oil on its territory, and is highly dependent on imports, so far mainly from the Russian Federation and using only one oil pipeline – Janaf. To increase the security of supply, Serbia together with Hungary initiated the construction of a new oil pipeline that will connect to the “Družba” international oil pipeline. The Strategy also considers the construction of new pipelines toward Drač and Solun to diversify supply routes.

To decrease imports, the Republic of Serbia should orient more toward the production of biofuel as well as oil shales. Also, by 2027 is planned to have oil capacity storage for 61 days for internal usage.

Coal Sector

Having in mind that the electricity sector is still mainly based on thermal power plants, and in the transitioning period toward greater usage of RES power plants, coal will be irreplaceable, the Strategy envisages investment in existing coal mines, as well as preparation of new ones to replace old and fully exploited mines as the time comes. Also, to avoid accidents in thermal power plants an integral system for management of coal quality should be implemented.

Lastly, the Strategy also recognizes the usage of hydrogen as green energy and nuclear energy (on which the moratorium was lifted by the latest amendments of the Energy Law).

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

The Law on Environmental Impact Assessment (“Official Gazette of the RS,” No. 94/2024) and the Law on Strategic Environmental Impact Assessment (“Official Gazette of the RS,” No. 94/2024) entered into force on 6 December 2024.

These laws were enacted to achieve greater alignment of national regulations with relevant European Union directives in the field of environmental protection – Directive 2011/92/EU, as amended by Directive 2014/52/EU, and Directive 2001/42/EC. Their implementation shall bring significant changes to environmental protection regulations, aiming to improve protection, enhance public participation, and increase administrative efficiency.

Ecological Network Area

A common feature of both the Law on Environmental Impact Assessment and the Law on Strategic Environmental Impact Assessment (“the Laws“) is the introduction of new terms such as “ecological network” and “acceptability for the ecological network,” enabling more precise alignment with the Law on Nature Protection (“Official Gazette of the RS,” Nos. 36/2009, 88/2010, 91/2010 – corr., 14/2016, 95/2018 – amended law, and 71/2021).

The appropriate assessment for the ecological network is an institute that was introduced into Serbian legislation back in 2010 under the Law on Nature Protection. However, in practice, it has not yet been fully implemented, as the required related regulation has not yet been adopted.

The ecological network is a coherent, functional, and spatially connected unit established for the conservation of habitat types of special importance for the protection, restoration, and/or improvement of damaged habitats, as well as for the conservation of habitats for wild species of flora and fauna. The appropriate assessment is a process in which the potential impacts of a project on the conservation and integrity of the ecological network area are evaluated.

The Laws address the relationship between the environmental impact assessment process and appropriate assessment for projects that may have a significant impact on the conservation and integrity of the ecological network area. For projects subject to strategic impact assessment or environmental impact assessment, the appropriate assessment is conducted as part of these procedures.

The Law on Environmental Impact Assessment prescribes that if a project might have an impact on conservation and integrity of the ecological network area, the main appropriate assessment procedure is conducted in accordance with the Law on Nature Protection, before the issuance of the decision granting consent for the environmental impact assessment study.

According to the Law on Strategic Environmental Assessment, the appropriate assessment is conducted for plans and programs that, either alone or with other plans, programs, projects, works, or activities, may have a significant negative impact on the conservation goals and integrity of the ecological network area. The preliminary appropriate assessment is carried out before the decision to draft the strategic environmental assessment is made. If the preliminary assessment shows that the project may have an impact on the preservation and integrity of the ecological network area, the main appropriate assessment shall be carried out before the preparation of the strategic impact assessment report.

Additionally, under the Law on Environmental Impact Assessment, the competent authority, when deciding on a request for an impact assessment for a project that may affect the conservation and integrity of the ecological network area, may decide that an impact assessment is not required only if, based on the conducted procedure and the decision made in the preliminary appropriate assessment, it is determined that the project will not have negative impacts on the conservation and integrity of the ecological network area.

The provisions of the Laws concerning the appropriate assessment will become applicable two years after the Laws entered into force. 

Law on Environmental Impact Assessment

The Law stipulates that, among other things, projects that, alone or together with other projects, may have a significant impact on the environment are subject to environmental impact assessment. It also includes projects that, alone or together with other projects, works, or activities, may significantly impact the conservation and integrity of ecological network areas.

This prevents a project proponent from intentionally dividing a project to avoid application of the Law (known as “splitting“) and also covers situations where multiple smaller projects, that individually don’t have significant impact, cumulatively create a significant effect (known as “small scale projects“).

This law also introduces that it is mandatory to obtain the opinion of the Ministry of Environmental Protection when issuing location conditions and it improves the coordination between the impact assessments and other project permits. The connection between the environmental impact assessment study and the decision granting the approval of the project is clearly defined. The environmental protection conditions and measures are now directly included in the decision that approves the project, ensuring that environmental protection is integral and mandatory throughout all phases of the project implementation.

Additionally, this law introduces longer deadlines for informing of public about submitted requests by the competent authority and for receiving feedback from interested parties, allowing active public participation through an electronic database and central web portal. This database, along with the central web portal will be established by the Ministry of Environmental Protection within three years of the Law’s entry into force.

Also, fines for legal entities and responsible persons within them who violate this law are increased, significantly raising the responsibility of project proponents when it comes to environmental protection.

Law on Strategic Environmental Assessment

The Law on Strategic Environmental Impact Assessment introduces several significant changes, primarily in terms of better coordination between various strategic plans and programs. This law mandates alignment with higher hierarchical levels, reducing the need for dual impact assessment processes. It allows the use of data from previously conducted strategic environmental assessment procedures when assessing significant impacts of plans that belong to the same hierarchical structure. This is a key innovation that contributes to reducing administrative burdens and increasing process efficiency.

Special focus is put on improving the quality of strategic environmental assessment reports through the formation of expert commissions that will provide opinions and comments, ensuring the accuracy and relevance of the assessments. These commissions will consist of experts from various fields such as water management, mining, energy, etc. This will significantly improve the quality of strategic assessments, as qualified experts can provide their comments on the draft strategic assessment reports, which will be considered by the competent authority for environmental protection when granting consent.

The new Law on Strategic Environmental Impact Assessment also introduces the mandatory electronic publication of all phases of the process, enabling easy access to documentation and information available in the draft plan and report on strategic environmental assessment. This approach ensures greater transparency and allows for active participation in the decision-making process. The Law also mandates the establishment of an electronic database and web portal by the Ministry of Environment.

Conclusion

The adoption of the new Laws on Environmental Impact Assessment and Strategic Environmental Impact Assessment marks a significant step toward aligning with European Union legislation and improving environmental protection in Serbia, substantially enhancing the quality of environmental protection procedures.

By Jelena Stankovic Lukic, Partner, Katarina Rosic, Senior Associate, and Jana Stanojevic, Associate, JPM Partners

Karanovic & Partners has advised the Serbian Entrepreneurship Foundation on partnership programs with the Swiss Agency for Development and Cooperation and ProCredit Bank.

According to Karanovic & Partners, the new initiatives are designed to strengthen small and medium-sized enterprises in Serbia. “The first initiative involves SEF’s collaboration with the Swiss Agency for Development and Cooperation, which has provided funding of CHF 2 million for SEF’s programs. The second is a partnership agreement between SEF and ProCredit Bank, which has joined the credit guarantee scheme to support selected manufacturing SMEs in Serbia. Both projects are part of the SME Hub initiative, funded by the Swiss Government which helps Serbian micro and SME businesses gain access to the financial resources and expertise needed to meet international standards and integrate into global supply chains.”

The Karanovic & Partners team included Partner Maja Jovancevic Setka and Associate Dimitrije Ilic.

Milorad Gajic has joined Radovanovic, Stojanovic & Partners as a Partner and the firm’s new head of the Real Estate and Construction practice group.

According to RSP, “Milorad brings extensive experience advising clients on complex matters related to both greenfield and brownfield investments, large-scale construction projects, property acquisitions, sales, high value leases, zoning and regulatory compliance, offering clients strategic guidance throughout every stage of their real estate transactions.”

Before the move, Gajic was an Attorney at Law with Karanovic & Partners between 2017 and 2024. Earlier, he was a Senior lawyer with JPM Partners between 2012 and 2017.

Although abuse of the right to a leave of absence due to temporary impairment for work (sick leave abuse) is explicitly stated in the Labor Law as grounds for termination, in practice, terminating an employment contract on this basis is very difficult, even when abuse is obvious. Beyond the fact that the concept of sick leave abuse is not legally defined, employers face a host of formal and factual obstacles when attempting to determine abuse, resulting in losses for both employers and the state, which often bears the cost in cases of long-term sick leaves.

Of course, it is understandable and justified to protect employees’ rights and interests, prevent pressure, intrusion into privacy or arbitrary questioning of the validity of sick leave by employers. On the other hand, legal certainty dictates the need for a clear legal pathway to prove and penalize sick leave abuse.

Namely, to protect employees’ privacy, employers no longer have information about the code of illness causing the employee’s work incapacity, which is understandable. However, the employer cannot obtain any information from the National Health Insurance Fund as to whether the employee is still on sick leave or not. By law, the employee is only required to submit an initial medical certificate to the employer to start the sick leave, but not the subsequent documentation that extends it (known as in Serbian “doznake” or follow-up certificates). Generally, it is in employees’ interest to submit these during sick leave in order to receive compensation, but this is not always guaranteed.

In other words, an employer can obtain all information about the employee’s illness only directly from the employee. The first potential issue for the employer is determining whether the employee is indeed on sick leave (or is unjustifiably absent from work) if the employee does not submit the follow-up certificate or report from the medical board extending the sick leave.

There is also an issue when there are indications that the sick leave was granted without adequate basis or is being abused (defined in legal practice as using it contrary to its intended purpose, behaving in ways inconsistent with the diagnosis and prescribed therapy, or hindering recovery). According to the Labor Law and Health Insurance Law, employers have the following legal recourse in such cases:

• requesting a reassessment of temporary work incapacity through the National Health Insurance Fund;
• referring the employee to a medical center chosen by the employer to determine sick leave abuse; and
• determining sick leave abuse in accordance with internal company policy

The first two options offer limited prospects for resolving this issue, as, in practice, doctors tasked with determining the invalidity or abuse of sick leave generally do not contradict their colleagues who initially approved the leave for employees. Additionally, doctors assessing sick leave abuse are bound by the medical documentation that served as the basis for granting the leave and by their examination of the employee as a patient. Depending on the diagnosis, employees can often cite various health problems or symptoms that are nearly impossible to objectively verify (e.g., anxiety, fatigue, drowsiness, workplace stress—commonly referred to as burnout, etc.). Therefore, it is unlikely that an employer will be able to establish sick leave abuse through medical evaluations. However, these procedures can still have a preventive effect in certain situations by discouraging future abuse.

As a last resort, the employer may attempt to establish sick leave abuse internally, based on the general act or company policy. It is advisable for company policy to include provisions that regulate the process of determining sick leave abuse (procedure, responsible entity, etc.) or to add such provisions if they are absent. Although not explicitly outlined in the law, this could involve forming a special committee to investigate the circumstances of sick leave abuse or hiring third parties (e.g., private investigators) to gather information, though judicial practice on this engagement is yet to be clearly defined. However, even all findings from such investigations, even if unequivocally pointing to behavior incompatible with sick leave, may not necessarily be accepted as proof of abuse by the court.

For instance, according to legal precedents, if it is established that an employee appears in public places, travels, and generally behaves as if they are not sick, this may not be considered as sick leave abuse if the medical report does not explicitly prescribe rest or bed rest, or if this behavior does not prevent recovery. While this perspective has some basis, it places an unjustifiably high burden of proof on the employer, given that certain behaviors are clearly incompatible with sick leave regardless of the diagnosis or prescribed therapy. Additionally, according to the case law, even if an employee performs certain tasks during sick leave, whether the same or different from those for the employer (e.g., as a contractor or through external engagements), this may not constitute abuse if it is not proven that it hinders recovery.

As the employer does not have access to the employee’s medical documentation and cannot know the reason for the sick leave or the prescribed treatment, they are not in a position to prove that specific behaviors impede recovery, particularly with illnesses related to stress or neuroses, even when certain behaviors are clearly incompatible with sick leave.

Due to the lack of information and challenges in proving sick leave abuse, employers always face a certain risk when initiating termination proceedings on this basis.

Therefore, we recommend that each potential case of sick leave abuse be carefully analyzed with a mandatory review of current case law and that such grounds for termination be established primarily through internal procedures, aligned with the employer’s general act, which should contain appropriate procedural provisions (while not excluding proceedings before medical bodies in certain cases). In cases of termination based on sick leave abuse, a certain level of risk of subsequent legal challenges cannot be practically excluded (even when all circumstances strongly suggest abuse). This risk is sometimes significant, considering the potential length of court proceedings and the possible consequences.

This text is written for informational purposes only and does not constitute legal advice. We are at your disposal for any additional information.

By Milorad Glavan, Partner, DNVG Attorneys

Initially, the role of Office Managers in law firms was focused on administrative and organizational tasks, such as managing documentation, coordinating meetings, and ensuring the smooth operation of the office.

However, with the advancement of technology, high market demands, and changes in the work environment, this role has undergone significant changes. Today, the Office Manager is not just an administrator but a strategic partner contributing to the modernization and improvement of business operations.

Business Digitalization

Digitalization has become a key component of modern law firms. Legal process management software, electronic document archives, and data analysis tools enable more efficient work and faster decision-making. Office Managers play a crucial role in implementing these technologies, training employees, and monitoring their usage. These tools streamline administrative work, reduce costs, enhance data security, and enable real-time access to information and data.

Hybrid Work and Flexible Business Models

The COVID-19 pandemic accelerated the shift to hybrid work models, where employees combine working from the office and from home. Office Managers now play a key role in organizing and coordinating both work models. They are expected to ensure the smooth operation of all systems, adherence to deadlines, and work discipline, regardless of where employees are located.

Focus on Human Resources and Team Development

The role of Office Managers increasingly includes human resource management. In the legal sector, where deadlines are often tight, and pressure is high, they play a key role in maintaining a positive work atmosphere. Organizing team training and workshops has become part of their daily routine. Office Managers also often serve as mediators in resolving conflicts and creating employee retention strategies.

Environmental Sustainability of Offices

Environmental awareness, and consequently responsibility, is becoming an increasingly important aspect of business operations, including in law firms. Office Managers initiate projects to reduce paper usage, recycle, and implement sustainable practices, such as using energy-efficient devices.

Artificial Intelligence and Automation

Advances in artificial intelligence (AI) offer significant opportunities for automating administrative tasks. Automation frees up time for strategic tasks and enables faster and more precise work. However, with the development of these technologies, ethical issues arise, as well as the need for continuous training to ensure they are used correctly.

Future Challenges and Opportunities

The role of the Office Manager will continue to evolve as technology and the legal sector progress. Acquiring new skills and education will be key to success in this role. Office Managers will need to adapt to changes and proactively contribute to the improvement of business operations.

Conclusion

Office Managers in the legal sector are transitioning from administrative to strategic roles. With the development of technology, changes in work models, and an increased need for sustainable business practices, this position is becoming increasingly significant for the success of law firms.

The future presents new challenges but also opportunities for professional growth and development.

By Katarina Petrovic, Office Manager, PR Legal