Category: Serbia

Karanovic & Partners has advised Teva Pharmaceuticals on the sale of its Serbian factory, Zdravlje Leskovac, to Frontier Pharma and the Baystone Group. BDK Advokati and Go2Law advised the buyers on the deal.

The Karanovic & Partners team included Senior Partner Dragan Karanovic, Partners Milos Jakovljevic, Bojan Vuckovic, and Goran Radosevic, and Senior Associate Sava Draca.

BDK Advokati’s team included Senior Partner Vladimir Dasic, Counsels Dragoljub Sretenovic and Bisera Andrijasevic, and Associate Jelena Zelenbaba.

Go2Law’s team was led by Hugh Owen.

In line with the latest estimates, the ore reserves in Serbia are valued at 200 billion dollars. After copper ores, the most significant metal ores are lead and zinc ores which are currently exploited in 5 active mines. Great attention has been brought to the excavation of jadarite, a mineral containing lithium and boron, at a location near the river Jadar, which is estimated to contain ten percent of the total lithium supplies discover throughout the world so far.

Mining and geological exploration represent one of the most important sectors of Republic of Serbia’s economy and the primary goal of amendments to the Law on Mining and Geological Exploration (hereinafter: Draft Law), whose adoption is expected any time, is further development of this area, as well as attracting investments, quicker entry into exploration, and subsequently into exploitation.

The Law proposal anticipates first and foremost a significant acceleration of the procedure of issuing approvals and the option of electronic submission of entire documentation for the parties. For example, the expected effect of amendments is that, instead of the current 150 days, the approvals be issued in just 15 days which would increase the efficiency of the entire procedure tremendously. 

Further on, the Law introduces significant novelties regarding environmental protection in accordance with Republic of Serbia’s adopted goals of the in the direction of establishing climate-neutral development before year 2050. Certain members of the public find these novelties to be insufficient. Specifically, as emphasized by the environmental protection associations, should the new Law be adopted, the damage to the environment will be enormous, having in mind that the Draft Law fails to prescribe adequate compensation, creating a possibility for detriment through loss of water resources, land, oil erosion etc.

In addition, a crucial element related to the scope of mining considers the increase of the mining lease which in Serbia is one of the lowest in Europe. Bearing in mind that mineral resources represent a public good of Serbia’s citizens, the mining lease rate is prescribed by the Law on Fees for use of Public Goods. The basis for mineral lease is the income which the company has generated from exploited or sold mineral raw materials, and the rates for the mineral lease are determined in percentages and are currently among the lowest in Europe.

The Draft Law finally introduces an expert and professional authority which shall be competent for verification of mineral raw material resources and reserves. Further on, the Draft Law anticipates the reduction of exploration rights duration from the maximum eight years to five years. The intention is to prevent an extended use of an area by an entity which has not demonstrated serious intent regarding geological explorations and exploitation of mineral raw materials.

Finally, the Draft Law introduces for the first time the option of concluding an investment agreement, i.e., an agreement concluded by the Republic of Serbia, represented by the Serbian Government, and investor in the exploitation of mineral raw materials.

By Milos Vulic, Partner, Vulic Law

While the numbers of infected and vaccinated persons are on the rise, we wonder why the Republic of Serbia still lacks the smartphone application for tracing contacts with infected persons.

The launching of this application entitled “Covtakt” was announced in August 2020 and its commissioning was expected soon after. However, this did not happen, while the public was left to wonder whether the launching was given up or it was simply delayed.

According to the Oxford University research, digital contact tracing could slow or even stop coronavirus transmission. The first applications for contact tracing and citizen warning were available in the first months of the pandemic and they were aimed at protection of citizens’ health, while also serving as an important tool for crisis management and planning of epidemiologic measures.

The application of new technologies for health purposes is no novelty, but privacy risks that are by default entailed by application of such technologies are no novelty either. This is why these applications need to fulfil strict requirements with regard to personal data protection, particularly having in mind that the health information are considered as special types of personal data in terms of Article 54 of the Law on Personal Data Protection and their processing is only exceptionally permitted.

What do we know about Covtakt app?

Just like in other cases, Covtakt was technically developed by the state, i.e. the Office for Information Technologies and eGovernment of the Government of Serbia. As announced, the data controller would in this particular case be the Institute for Public Health Batut.

Fundamental principles that the app should be based upon are voluntary nature – which means that its application is not mandatory i.e. anyone can choose to install it on their phone and delete it at any moment, and solidarity – which means that the success of the app depends on citizens’ readiness to install it, since it requires that more than 60% of population uses it to be worthwhile.

The application is designed to work on basis of Bluetooth technology instead of tracking the phone location. If two persons who installed the application were in contact for more than 15 minutes, the application will notify them if any of them is infected with the coronavirus in the following 14 days and register that information in the application. The identity of the infected person would not be disclosed to the receiver of notification, which is certainly a good solution because such information is not necessary for achieving the contact tracing purpose.

Based on the above, one could say that Covtakt was developed, at least in part, in accordance with the European Commission recommendations enacted back in April 2020, which are based on the following principles:

• Installation and use of contact tracing and warning applications should be exclusively voluntary;
• The principle of data minimization – only the data necessary for service provision shall be collected and nothing more than that;
• The applications should use proximity data on basis of Bluetooth technology;
• The tracing app should not require or use location information;
• Contact tracing applications should not trace moving of persons;
• Data should not be stored longer than necessary – 14 days;
• Data should be protected by state-of-the-art techniques, including encryption;
• The apps should be deactivated as soon as the pandemic is over.

What we still don’t know about Covtakt is whether the data protection impact assessment has been implemented or planned, considering that it is mandatory for processing of special types of data by virtue of Article 54, para. 4, item 2) of the Law on Personal Data Protection.

Data collected through contact tracing apps being used for other purposes – the example of Singapore

Singapore was among the first states to start using the contact-tracing apps. “TraceTogether” is the app installed and used by 80% of Singapore population of around 6 million people.

Although it was initially announced that the data would be used exclusively for fight against coronavirus, at the beginning of January 2021 a news was published claiming that police can access the data collected through the app and that such data were used for investigating [at least] one murder.

Naturally, such actions caused concerns about citizens’ privacy, however Singapore did not give up the use of data in police investigations. Soon afterwards, it was decided that the data collected through this app can be used for investigating several serious crimes, including strict penalties for unauthorised use of data. It remains to be seen how the state would abide by the new self-imposed limitations, like the first ones it enacted.

(Ab)use of data and their processing for other purposes by responsible authorities should not represent grounds for not using the new technologies for allowed purposes in the future, however it does signal a need for stricter control of application of personal data protection rules and a need for active role of independent supervisory authority in the field of personal data protection.

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 Ivana Ruzicic, Managing Partner, PR Legal

Karanovic & Partners has advised MTU Aero Engines, a German aircraft engine manufacturer that develops, manufactures, and provides service support for military and civil aircraft engines, on the construction of a new maintenance-repair-and-overhaul-facility in Serbia.

The Karanovic & Partners team was led by Senior Partner Marjan Poljak and Senior Associate Ana Lukovic.

Former Karanovic & Partners Lawyer Stefan Petrovic has left the firm to launch Petrovic Legal in Belgrade.

According to Petrovic, Petrovic Legal is a “corporate law firm that connects corporate with criminal law and is the first law firm in Serbia that mainly deals with areas of corporate crime.” According to him, the firm “offers clients legal services related to the reaction to already committed criminal acts, as well as to criminal compliance, as a prevention. Besides [that], Petrovic Legal also provides other services in the field of commercial law.”

Founding Partner Stefan Petrovic specializes in corporate criminal law, tax, and banking & finance. He began his legal career with Karanovic & Partners in 2019, immediately after attaining his Bachelor’s at the Faculty of Law of the University of Belgrade, and he also worked at the Faculty of Law as a Teaching Associate.

In addition to Stefan Petrovic, Petrovic Legal’s team includes one senior associate and three associates.

According to Branko Gabric, General Counsel at Air Serbia in Belgrade, we are living in historic times. He reports that the unprecedented pandemic, as well as the subsequent vaccination process, has greatly affected not only the aviation industry, but also the legal sector in his country.

“Only the fittest and the most adaptable will survive this situation,” Gabric says, explaining that the final answer to the crisis in the aviation sector lies not in legislation, but rather on the nimbleness of every company in it. Oddly enough, despite the drop in air travel, Gabric reports that there has never been as much work for in-house legal teams as now. At the same time, he says, companies have become more cost-sensitive and are looking to cut corners where possible, posing real challenges to the legal profession in his country. An adequate response, in his mind, would be to change the modus operandi. “Legal departments had been perceived as a part of the ‘back office’ prior to the pandemic,” he says. “The time has come for the legal sector to stand shoulder-to-shoulder with the ‘front end’ of each company, to become more business-oriented, and more agile.” To that end, he says, the future is digital, and technology will play a more prominent role in the everyday life of lawyers.

That will come as a substantial change in Serbia, where, he says, a lot of the work is still done on paper. In addition, he adds that the structure of work itself will have to change so as to become more efficient and less time-consuming.

For Air Serbia, Gabric says, around 80% of its flights are focused on Europe. Since most of the EU is still under strict lockdown, Air Serbia has frequently had to adapt its flight itinerary, favoring certain routes, and providing stimulus to its passengers. “Serbia’s decision to reintroduce possession of valid PCR tests for foreigners entering the county in December 2020 was, without question, the right decision in terms of fighting the COVID-19 outbreak,” he says, but he adds that it brought additional challenges to the already burdened industry. However, he notes, with the advancement in vaccination globally, the situation might soon change. “We are eagerly monitoring the vaccination process and we are hoping that air travel will go back to normal soon.”

Furthermore, Gabric reports that on March 9, 2021, Air Serbia became one of the first European airlines to introduce the IATA Travel Pass — a mobile application that helps passengers organize their flights in line with testing and vaccination rules imposed by different countries. Gabric describes the platform as a “potential game-changer,” and says that “it is always interesting to be a part of the global initiative and to work jointly on something that can finally move things from where they are at the moment.”

Originally reported by CEE In-House Matters.

Roaming charges in the Western Balkan region will be abolished from 1 July this year, in accordance with the Regional Roaming Agreement (“Agreement”) signed in 2019 at the second Western Balkans Digital Summit in Belgrade.

In this way, Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia, Albania and Kosovo are following the path of the EU Member States that abolished roaming charges a couple of years ago and whose citizens can exchange calls, messages and data at equal cost regardless of the country they are in. The abolishment of roaming charges will certainly bring large savings to the economy, since costs of telecommunication services of economic entities doing business primarily in the region are not small.

Previous roaming prices

Provisions of the concluded Agreement stipulate that from 1 July 2019 until 30 June 2021 the price of calls, SMS and data transfer would be formed by increasing the price of services in the home network by adding a pre-defined amount that does not exceed the sums stipulated in the Agreement. Accordingly, the price for one minute of call under the Agreement may not exceed RSD 22.4, the price for one message RSD 7, while maximum price for data transfer is RSD 21.4, all without VAT.

The Agreement also stipulates gradual reduction of roaming prices in several phases starting from 1 July 2019, then from 1 January 2020 and from 1 July 2020, so that full abolishment of roaming charges in the Western Balkan region would be achieved by 1 July 2021.

Roaming charges were so far reduced once in six months and the last average price for one minute of call for outgoing calls was around 11 dinars.

Also, data transfer per MB has been reduced from around 30 dinars to around 4 dinars.

From 1 July 2021, roaming in the region as “roam like at home”

The provision of the Agreement referring to complete abolishment of roaming charges in the region will finally start to apply from 1 July 2021. The price of calls, SMS and data transfer in roaming in the Western Balkan region will be the same as the price paid by citizens in their home networks. This is the way the European principle of so-called “roam like at home” will be applied.

Roaming charges in the EU

It was also announced that the plan for reduction of roaming charges between the region and the EU will be prepared by the end of 2021.

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 Natalija Djukic, Associate, PR Legal

The Serbian government has continued to upgrade the legal framework for granting State aid, having recently adopted a Regional State Aid Regulation. A new State Aid Control Act has been in force in Serbia since early 2020 and the process of harmonising bylaws with the new law is underway.

The Regional State Aid Regulation sets down detailed conditions and criteria for the compatibility of State aid designed to promote the economic development of areas with a low standard of living and to facilitate the development of certain economic activities or certain economic areas in Serbia. The new Regulation improves the existing arrangements and makes several new additions, which include the following:

• Regional State aid compatibility criteria have been set down, such as transparency and incentive effect.

  The transparency criterion implies that regional State aid is deemed compatible if the precise amount of the gross monetary equivalent can be calculated in advance.

  Regional State aid is deemed compatible if it has an incentive effect. In order to be considered to have an incentive effect, applications for State investment aid must be submitted to the grantor before work on a project commences.

• The Regulation lays down in detail the methodology for setting the maximum State aid intensity, namely;
  • up to 50 % of eligible costs in level 2 areas of the nomenclature of statistical territorial units, the GDP per capita of which is less than or equal to 45 % of the EU-27 average;
  • up to 35 % of eligible costs may be allocated for areas where GDP per capita ranges from (or is equal to) 45 % to 60 % of the EU-27 average;
  • up to 25 % of eligible costs for areas where GDP per capita ranges from (or is equal to) 60 % to 75 % of the EU-27 average.

The Regulation states that until the regional aid map is drafted, the Republic of Serbia is to be deemed an area whose GDP per capita is less than or equal to 45 % of the EU-27 average.

Taking a page out of the EU’s rules on Regional State Aid, a formula for setting the maximum amount of aid for large investment projects (the initial investment eligible costs of which exceed EUR 50m) is being introduced.

In addition, the Regional State aid for investments that exceed the maximum intensity for large investments can be compatible if it meets the supplementary conditions (e.g. it is proportionate, it contributes to an objective of common interest, there is a need for state aid intervention, the positive impact on trade between the EU and Serbia prevails over the negative effects, etc.).

• Regional investment aid is granted for initial investments related to the establishment of new enterprises, capacity expansion, production diversification and significant changes in the entire production process.
• Regional operating aid is regulated in detail and includes aid to reduce the operating costs of undertakings operating in sparsely populated areas.

This Regulation further approximates Serbia’s legal system with the EU state aid control system. It will also impact the way in which foreign direct investments in Serbia will be able to receive State aid. On that note, the Regulation on determining criteria for granting the incentives for Attracting Direct Investments, which relied on previous regional State aid arrangements, is expected to be amended soon. In that context, the new rules and upcoming changes to the legal framework for investment support should remain uppermost in the minds of potential investors, both those who plan to invest in Serbia as well as those who already have and intend to expand their investments.

By Srdjana Petronijevic, Partner, and Zoran Soljaga, Attorney at Law, Schoenherr

Growing industrial cannabis as a business activity in the Republic of Serbia is not a new phenomenon. The act that specifically regulates this area is the Law on Psychoactive Controlled Substances adopted in 2010 with its amendments in 2018 (“Law”). Besides the aforementioned Law, the Rulebook on Growing Industrial Cannabis adopted in 2013 (“Rulebook”) regulates it in more depth, meaning the business of growing industrial cannabis has been in the books for around a decade.

Even though growing industrial cannabis is allowed and regulated, the number of people in that particular industry is not very high. The reason for this could be the fact that there is a stigma paired with a lack of knowledge surrounding this activity.

The main difference between two widely known varieties of cannabis, Industrial Cannabis (Cannabis Sativa L.) and Cannabis Indica, is that the latter one features a high content of a psychoactive substance – tetrahydrocannabinol, colloquially known as THC. The psychoactive effect of THC substance is the reason why growing the Cannabis Indica plant is, in many countries, forbidden.

On the other hand, the CBD substance, which is found in industrial cannabis, does not have the THC-given psychoactive effect, making it legal for growing and production. The Cannabis Sativa L. may even contain THC substance but for a plant to be considered specifically industrial cannabis, it is required that the THC substance is at a very low rate, no more than 0.3%.

The relevant law and bylaw regulate the growing and cultivation of industrial cannabis by stipulating the competent authority for issuing the industrial cannabis growing permit, as well as the permit-issuing procedure, entities that can request the said permit, the seed that is to be used in production, etc.

One of the restrictions for the industrial cannabis seed is that it needs to be registered in the Registry of Producers of Seeds, Seedlings, Mycelium of Edible and Medicinal Fungi (“Registry”). In the Registry, there are five already registered varieties, Novosadska konoplja, Fedora 17 s, Helena, Marina, and Monoica. Hence, the growth of Industrial Cannabis is made possible using one of these aforementioned seeds without going through the procedure of seed registration, which takes two years.

Another restriction for the industrial cannabis seed involves the activities for which it can be used. Activities permitted by the Rulebook include the production of fiber, production of seeds for animal nutrition, processing, testing of seed quality, trade, and production of seeds for their further propagation.

Finally, as a look into the future of possible uses of industrial cannabis, many suggest its use as a biofuel and its potential in helping combat the issues we are facing with climate change. What is to be done with that potential, remains to be seen and verified. 

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

By Milos Velimirovic, Partner, and Aleksandra Bijeljac, Trainee, Samardzic, Oreski & Grbovic

Karanovic & Partners has advised Continental Teves, a German multinational tire manufacturer and supplier, on various state incentives and on the lease of land, lease agreements, construction contracts, and design and project management agreements.

The estimated value of the entire project is EUR 140 million.

Karanovic & Partners’ team was led by Partner Petar Mitrovic and included Senior Associates Ana Lukovic and Milorad Gajic.