Category: Uncategorized

On 19 April 2016 the Bulgarian Council of Ministers published a draft for the new Concessions Act (the “Draft CA”), which will replace the current framework regulating concessions and PPPs in Bulgaria.

The Draft CA comes at a time when several significant concession procedures are to be launched in Bulgaria, including the concession of Sofia Airport, the concession of the Sofia Urban Heating. The new law will transpose into Bulgarian legislation the provisions of Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (“Concessions Directive”). This was a good timing for the Government to thoroughly review the current legislative framework and to adapt it to provide more clarity and flexibility on awarding concessions, the concession process, and on the cooperation between the public and the private sectors. The current Concessions Act, which is to be repealed, has been in place since 1 July 2006.

WHAT IS NEW?

The Draft CA will apply to three categories of concessions:

• works concessions,
  
• services concessions, and
  
• concessions for use of municipal or state property.

While the first two types of concessions are also covered by the Concessions Directive and the current Bulgarian legislation, the concession for use of municipal/state property is not. The decision to establish a framework for use of state and municipal property is not new and derives from the status granted under the Bulgarian Constitution to the public state and public municipal property. The new approach, however, is related to the application of concessions regime also to the use of any other type of state and municipal properties.

Concessions for extraction and use of natural resources, which are currently included in the scope of the Concessions Act, will be excluded from the scope of the new framework and will be subject to regulation under the Natural Resources Act¹.

The current Concessions Act sets the open procedure as the only procedure for award of concessions. Under the Draft CA, an approach similar to the Public Procurement Act, which came into force only recently on 15.04.2016, is followed. For concessions with values over the Concession Directive threshold (e.g. currently EUR 5,225,000.00), the Draft CA provides the choice between an open procedure, a competitive procedure, and a competitive dialogue.

Concessions terms are also subject to debates and changes. The current framework allows up to a 35 year concessions term, with the possibility for extension by one third of the initial term under limited circumstances. The Draft CA follows the Concessions Directive, and does not provide for a maximum term. The term of a concession will be determined based on the subject of the concession, the prices of services to be provided under the concession and the time a concessionaire would be reasonably expected to recover its investments. The duration of the concession should not, however, affect the market and impede competition.

The lack of maximum terms could benefit larger infrastructure projects, such as ports and airports as well as hospital or prison PPPs, however, as fiercely debated in the public space, these should not be perceived as hidden privatizations or sale of important public assets.

An exception to the general rule for the duration of concessions will apply to the concessions for use of municipal or state property. They will have a different regime and will be granted for up to a maximum concession period of 25 years.

The Draft CA also addresses the possibility a concessionaire to be a new project company (an SPV) or a public-private company. The joint liability under the concession contract for the shareholders of an SPV is maintained. In case of a public-private company, the public partner will have blocking rights on material minority protection decisions, such as amendments to the articles of association, reduction of increase of the registered capital.

The Draft CA does not envisage adoption of secondary Rules for Application of the Act, as the Draft CA itself is deemed sufficiently detailed. However, the Council of Ministers will further play an active role in shaping the regulatory framework. For example, the Council of Ministers will set in a secondary ordinance the financial and technical requirements and parameters of various types concessions, i.e. it is to still be expected what would be the approach of the Council of Ministers to determine the economic balance for the concessions.

With the entry into force of the Draft CA, the Agency for Privatization and PostPrivatization Control may be tasked, on a case by case basis, by the Council of Ministers/ Municipal Council to supervise the implementation of concessions. The aim is announced to be enhancement of public control over the most important concessions, by way of transferring such oversight to an administration with relevant experience and resources.

NEXT STEPS

On 19 April 2016 a 14-day period began for public discussions, which will end on 3 May 2016. All interested parties may submit their comments and proposals to the Council of Ministers via its website. This is an important opportunity for stakeholders to raise their concerns and constructive proposals in writing.

Subject to stakeholder comments, the Council of Ministers could modify the Draft and shall submit it for internal coordination between Ministries and State Agencies before the Council of Ministers votes the final text to be submitted to the Parliament.

As a next step, the Draft CA shall be submitted to and debated and voted by the Parliament. The Draft CA will be subject to two votes in the Parliament and be published in the State Gazette before it enters into force. Once it enters into force the current Concessions Act, adopted in 2006, and the Public-Private Partnership Act will be repealed. In order to harmonize the legislation already in place, the Draft CA will also introduce amendments to more than 30 existing legislative acts of the Parliament.

COMMENT

One of the officially announced goals of the amendment to the existing concessions regime is to promote development of concessions in Bulgaria and incite investments in projects otherwise difficult to be implemented exclusively with public funds. Indeed, until now concessions were used in Bulgaria mainly for existing facilities or services and no large projects have been awarded for development of new facilities and infrastructure. The proposed amendment to the concessions regime is long-time awaited. This first step in formulating more flexible approach to enticing investors to participate and develop new major infrastructure in Bulgaria has some further way to go and is far from being incontestable.

Should the Draft CA be adopted quickly, it will probably be immediately subject to vigorous test with the forthcoming procedures for concession of Sofia Airport and Sofia Urban Heating, which are both expected to the be the first upcoming major concessions in Bulgaria.

The text was only published yesterday and detailed analysis is needed to assess the new framework and its practical implementation. There are already question marks on certain provisions, such as transitory and final provisions envisaging the application of the new framework to already awarded concessions with respect to their execution, amendment and termination as long as the new regime does not explicitly contradict the agreements.

An active involvement from the business in the present public discussions procedure, before the Draft CA is submitted to the Parliament, as well as during the discussions in working groups in the Parliament, will be of great importance to assure the good intentions will be implemented into practical solutions.

By Anna Rizova, Partner, and Oleg Temnikov, Senior Associate, Wolf Theiss

1. Natural Resources Act, published in State Gazette issue No.23/12.03.1999 

The Berlin office of Freshfields Bruckhaus Deringer has advised Vattenfall on the sale of its German lignite operations to Czech energy company EPH with its financial partner PPF Investments, which the firm describes as “the largest and most complex transaction in the European energy sector this year.” Hengeler Mueller advised EPH on the deal.

EPH’s acquisition represents a quarter of German electricity generation and the bulk of formerly East German opencast mines. It includes all of Vattenfall’s lignite assets in Germany: The Janschwalde, Boxberg, Schwarze Pumpe power plants, and Vattenfall’s 50% stake in the Lippendorf power plant, as well as the Janschwalde, Nochten, Welzow-Sud and Reichwalde open cast mines and the recently closed Cottbus Nord mine.

According to Freshfields, “the divestment represents a major step in Vattenfall’s shift towards more sustainable production.” The firm reports that, “with this transaction Vattenfall underscores its ambition to be one of the leaders in the new energy landscape and take an active part in Germany’s ‘Energiewende.’ By concluding the deal, Vattenfall’s CO2 exposure is reduced from more than 80 million tonnes to less than 25 million tonnes per year.”

The Freshfields team was led by Berlin-based Corporate Partner Annedore Streyl and Regulatory Partner Wolf Friedrich Spieth. The team also consisted of Corporate Partners Tobias Larisch and Stephanie Hundertmark, Competition Partners Ulrich Scholz and Andreas von Bonin, and Employment Partner Boris Dzida, as well as Corporate Associates Lars Meyer, Martin Schaper, Lennart Schramm, Carlos Katins, Konstantin von Richthofen, Sophia-Antonia Bir, and Albina Veeser, Regulatory Associates Niclas Hellermann, Thomas Voland, Sebastian Lutz-Bachmann, Dirk Bohler, Friedrich Gebert, and Caryl Walter, Real Estate Associates Philipp Jehle, Conny Bickmann, and Katja Walkhoff, Competition Associates Markus Bohme, Margret Schellberg, and Sebastian Pritzkow, and Employment Associates Christian Reinhard and Patrick Wendler.

The Hengeler Mueller team advising EPH on the transaction consisted of Partners Daniel Wiegand, Steffen Oppenlander, Dirk Uwer, Matthias Scheifele, Christian Hoefs, and Thorsten Mager, Counsels Daniel Zimmer and Jorg Meinzenbach, and Associates Philipp Dornbach, Sebastian Meul, Benedikt Laufer, Thomas Krawitz, Martin Radtke, Moritz Rademacher, Deniz Tschammler, Christian Hausser, Susanne Walzer, and Marius Marx.

The EPH in-house legal team consisted of General Counsel Marek Spurny and Ondrej Novak. 

The Nove firm — a complex business disputes boutique consisting of former Sorainen attorneys Andrus Kattel, Veikko Puolakainen, Kristjan Tamm, and Urmas Volens — has opened its doors in Tallinn.

“Nove’s motto is less, but better,” explains Nove Partner Urmas Volens, who is also an Associate Professor in the Faculty of Law at the University of Tartu. “We will never start measuring our work by quantity. Our goal is to ensure that every client is guaranteed the attention of a Nove Partner.”

Nove claims that its pricing model will not be based on the traditional hourly billing method. According to Volens, “considering our extensive experience in legal services, in most cases we are able to offer a project-based fixed-fee arrangement that allows the customer to already get a clearer picture of possible costs in the early phases. This also motivates us to work within the agreed framework.” 

In addition to assisting its clients in resolving complex business disputes once they’ve started, in both pre-court and legal proceedings, Nove expects to help its clients avoid them.  “As the best disputes are those that never happen, Nove also offers legal services which aim is to prevent disputes – drafting and negotiating contracts and corporate documents,” Volens adds.

Andrus Kattel worked for eight years as a lawyer in one of Estonia’s leading insurance companies, If P&C Insurance, between 2001 and 2014 he was a member of the insurance litigation committee, and for the past ten years he worked with Sorainen. According to Nove, “Andrus has extensive experience in the field of insurance disputes, having represented clients in several major court cases in Estonia. He has also represented clients involving transport and maritime law, real estate and construction law, and tort law.”

Veikko Puolakainen has worked in the legal field since 1998 with experience as a corporate lawyer as well as an attorney in a smaller and medium-sized law office. He spent the last six years with Sorainen. According to Nove, “Veikko is particularly focused on civil and administrative litigation, and has represented clients in all court instances in the Republic of Estonia. An important part of his work has revolved around different disputes related to the law of obligations, real estate and construction law. Veikko is also highly experienced in disputes concerning bankruptcy and enforcement proceedings.”

Kristjan Tamm has worked in the legal field since 2004, starting out in the construction field, as, prior to studying law, he obtained a bachelor’s degree in construction and worked as a civil engineer and later as the head of an engineering and construction company. According to Nove, “thanks to this he has, in addition to good knowledge in the legal field, extensive experience and expertise with technical questions concerning engineering and construction.” The firm reports that, “Kristjan specializes in protecting the rights of clients in the field of construction concerning litigation procedures as well as contracts. His professional knowledge is extra handy when collecting and assessing evidence for court. In addition to concerns related to construction, Kristjan also focuses on other aspects of contract law and tort claims, as well as the protection of minority shareholders and the responsibility of members of the management body.”

Finally, Urmas Volens has been practicing law since 1998, when he started as a specialist in the Ministry of Justice, Private Law Division. He worked in different positions in the Ministry of Justice, including as Deputy Secretary General for Legal Policy from 2006–2009. He spent the past six years as a litigator at Sorainen, where he was the head of the Real Estate and Construction Team. According to Nove, “Urmas specializes in more complex disputes, in particular in the fields of corporate law, real estate and construction law and contract law. Relying on his extensive experience, Urmas also advises clients in real estate transactions and questions related to corporate law.”

Paksoy has advises Nurol Yatirim Bankasi A.S. on the issuance of USD 10 million Tier 2 notes due 2026. King & Spalding acted as counsel on English law aspects of the deal.

The issuance is Basel III compliant and qualified as Tier 2 capital pursuant to Article 8 of the Regulation on Equities of Banks.   

The firm’s Capital Markets team was led by Partner Sera Somay, with assistance from Associate Pinar Tuzun. 

King & Spalding did not reply to our inquiries on the matter.

The Moscow office of AstapovLawyers has announced that on April 11th, 2016, the firm merged with Luxury Retail Consulting, a luxury brands focused agency, with Daria Goulko, Luxury Retail’s Managing Partner and CEO, joining AstapovLawyers as Partner and Head of the new Luxury Retail Practice, which will operate under the AstapovLawyers brand.

According to AstapovLawyers, “Luxury Retail Consulting was founded as a firm of advisers offering overall support to luxury retail brands entering or already operating in Russian and CIS markets.  LRC boasts unique expertise in setting up businesses, creating and implementing all key policies and procedures, launching local legal processes, negotiating and formalizing boutique, office, and storeroom leases, pursuing a brand’s interests in boutique construction and pre-opening phases, protecting brands from illegal use, generating an efficient document base to serve the brand’s interests in employer-employee relations, training staff on laws and regulations, assisting in resolving employer-employee conflicts, and representing brands during government-initiated audits and legal actions and in other matters.”

The firm reports that Goulko “has more than 12 years of experience of being a trustful adviser for various luxury brands and five years of in-house work as Head of Legal and HR at Christian Dior Couture Russia & CIS.” Before joining Christian Dior Couture, Goulko worked in the Swiss legal bureau Eckstein & Partner, and before that as Managing Partner at the Trust Contact law firm. She graduated from O.E. Kutafin Moscow State Law Academy and Maurice Thorez Moscow State Linguistic University.

Finally, AstapovLawyers reports, “the transaction is the first of its kind in the company’s history,” calling the combination “a unique strategic opportunity.”

BPV Grigorescu Stefanica has advised the Dent Estet chain of dental clinics and its founder, Oana Taban, on the acquisition of a majority stake in Dent Estet by private healthcare services provider MedLife. Popovici Nitu Stoica & Asociatii advised MedLife on the deal, which awaits the approval of the Competition Council. The purchase price was not disclosed.

Following the acquisition, Oana Taban, the founder and Managing Partner of Dent Estet, will stay in those positions and will head the new dentistry arm of MedLife. In a statement, Mihai Marcu, President of MedLife’s board of administration, explained the reason for the company’s investment. “In the next period we want to extend the Dent Estet group by at least one to two units yearly, as we are aiming to turn dentistry in one of the six business lines of MedLife, alongside the hyperclinics, laboratories, hospitals, maternities and pharmacies.”

Dent Estet, which was founded in 1999, reported a turnover of EUR 5.5 million in 2015. The group has six clinics in Bucharest and one in Timisoara. 

“Dent Estetis the market leader in dentistry in Romania and a unique organization in terms of its business model, in a field usually populated by small practices, with only a few dental chairs,” explained Partner Catalin Grigorescu, who co-led the firm’s team on the deal along with Partner Daniel Stefanica. Other members of the bpv Grigorescu Stefanica team included Senior Associate Alina Melcescu, among others.

The Popovici Nitu Stoica & Asociatii team was led by Managing Partner Bogdan Stoica and included Managing Associate Andreea Hulub, Senior Associate Irina Vasile, and Associates Ruxandra Visiou and Elena Bisca.

YukselKarkinKucuk (YKK) has announced that Mustafa Dakin, who was Head of Istanbul’s Provincial Tax Administration for many years, has been appointed the firm’s new Head of Tax, with Mustafa Sevgin joining as Deputy Head.

According to YKK, Dakin worked in the Ministry of Finance as Account Expert for 11 years, where he carried out many tax audits of large taxpayers, mostly in the industrial production, banking, and medical sectors. Later on he worked as the Deputy Head and then Head of the Istanbul Provincial Tax Administration for six years. YKK reports that “he has extensive knowledge and nineteen years of experience in tax audit, administration, and regulation matters including tax litigation, transfer pricing, taxation of corporate restructuring, VAT, stoppage, temporary tax refund, writing of advance ruling, tax debt restructuring and collecting, and human resources.”

In addition, YKK announced that Mustafa Sevgin, the former Chief Supervisor of Chair of Revenues, joined the firm as Deputy Head of Tax Department. Sevgin worked in the Ministry of Finance as a tax inspector for 9 years, where, according to YKK, “he carried out several tax inspections and audits mostly on large taxpayers and later on he worked as an executive at national level in the Revenue Administration for 6 years and in the meantime, he took charge in several law, secondary regulation, [and] ruling projects in Tax. He participated in drafting of several tax laws and personally led drafting tax rulings and regulations including e-invoice, [and] e-books. He also took charge in work groups within OECD on behalf of Revenue Administration and gave seminars on various subjects. He has extensive experience in tax litigation, tax procedures, transfer pricing, and other taxation matters.”

Falsified Medicine – in the best case they are not effective, in the worst case they are a cause of death.

Yet the range is rather broad: Illegal pharmaceuticals sold as generic drugs composed of active substances still subject to patent protection; sub-standard drugs which are produced in a way that they do not meet best manufacturing practices – in particular with respect to purity of substances and content of active substances – culminating in adulterations where the composition was manipulated. Besides reports of eye witnesses from manufacturing sites in emerging and developing countries in which rats and other small animals scrimmage and where, inter alia, also polluted water was used for production, there were recently again reports regarding both falsified as well as expired, re-packed pharmaceuticals which reportedly entered the supply chain. Those medical products included pharmaceuticals used in connection with a number of carcinosis in Austrian hospitals: ex post it is de facto not possible to verify whether a patient received a falsified anticarcinogenic drug, whether the treatment had the desired effect, and whether side effects can be related to falsifications. It can no longer be denied that falsified medicine is a global phenomenon which is steadily growing and which constitutes a global threat. Although by far not limited to intangible property rights issues (piracy of products) legislation is only slowly taking one step after the other. 

Already more than 25 years ago the World Health Organization (WHO) made first efforts to strengthen international co-operation in fighting against falsified medicine. Already back than there had been pressure for creating a legal framework in order to take separate criminal prosecution against the manufacturing and the distribution of falsified medicine. The global criminal law convention against falsification of medicine proposed by the WHO was never signed – apparently due to varying opinions of different countries. 2011 in Moscow, in the course of the presentation of an international convention ready for signing – the MEDICRIME CONVENTION – the project to take criminal law action against falsified medicine was finally realised: until now, 21 countries signed it and the convention entered into force at the beginning of this year. At the same time at EU-level the Directive 2001/83/EC was amended by the Directive 2011/62/EU providing for the prevention of falsified medicine being released for free circulation. In Austria, those two legislation documents with respect to pharmaceuticals were already implemented by the Federal Law Gazette I 2013/48 which came into effect on 13 March 2013. In particular additional crimes were included into the Pharmaceuticals Act (Arzneimittelgesetz – AMG) regarding falsified medicine: the falsification of medicine with the intention to leave them to a third or with the intention to offer, procure, let, store, import and export thereof is to be punished with imprisonment of up to 3 years, and in case of committing such crime on a commercial basis with imprisonment of up to 5 years. Yet illegal manufacturing, import and export, offering, letting or procurement of narcotics which exceeds the threshold (e.g. > 3 g heroin/15g cocaine) are already subject to an imprisonment of up to 5 years and in case of such crime being committed on a commercial basis, up to 10 years. If one considers that falsification of medicine yields much higher profits as illegal drugs as, e.g., heroin or cocaine, it is not astonishing that more and more criminal organisations discovered that business for themselves and serve that business with their relating criminal organisation and professionalism. It is evident that the prosecution and prevention of falsification of medicine is not facilitated. Safety warnings like “Users and pharmacists are requested to especially turn their attention on the pharmaceuticals concerned before using and preparing them.” do yet produce hardly the desired relief. Additionally, the processing of some falsifications is that professional that they may be identified hardly or only by using special methods. Based on the Directive 2011/62/EU the European Medicines Verification Organisation (EMVO) was launched in 2015 in order to implement a European E-verification system for pharmaceuticals by means of a “Data-Matrix-Code”. The hope remains that these new efforts and their implementation contribute to better put an end to falsification of medicine. Euro notes are protected by more than 8 integrated security features against counterfeiting – additionally to strict criminal law provisions. One is tempted to believe that money is still our greatest asset…

By Monika Hupfauf, Senior Associate, DLA Piper

Former Hogan Lovells lawyer Piotr Zawadzki has left that firm to join Linklaters as Senior Associate and Head of the TMT/IP practice in Warsaw.

According to Linklaters, “Piotr specializes in all aspects of intellectual property, new technology and media law, as well as data protection law. He has spent much of his career advising on copyright, industrial property rights and unfair competition and representing clients in their trade mark, industrial design and patent infringement litigation, including litigation before the Patent Office.” The firm reports that he ” has also led on a number of M&A-related matters, advising on intellectual property issues including copyrights, design rights, rights to trade marks, know-how, license agreements and rights to software. He has also advised on promotional campaigns involving sensitive consumer goods in both traditional and social media.”

Linklaters Warsaw Managing Partner Artur Kulawski commented on the new addition: “The telecommunication, media and new technologies sector is characterised by a highly dynamic investment market. This area is also subject to constant regulatory change. The knowledge and competence of Piotr, both in legal and business terms, will not only be of great benefit to our clients, but will also allow him to build strong leadership within the practice.”

Zawadzki joined Hogan Lovells in January of 2011, after spending the previous two and a half years at Salans (now Dentons). He obtained his law degree from the University of Warsaw.

Schoenherr, working together with Clifford Chance, Moscow, has advised Terim Limited (Cyprus) and 01 Group Limited (Cyprus) on their joint sale of a 26% participation in CA Immobilien Anlagen Aktiengesellschaft (“CA Immo”), listed on the Vienna Stock Exchange, to Immofinanz AG. CHSH advised Immofinanz on the deal and refinancing (a bank loan and the intended issue of a convertible bond), and on merger control issues.

By means of a share purchase agreement dated April 17, 2016, Terim Limited agreed to sell 25,690,163 bearer shares in CA Immo to Immofinanz, while 01 Group Limited agreed to sell Immofinanz four registered shares in CA Immo, which grant delegation rights to the CA Immo supervisory board. The transaction is subject to conditions precedent, in particular merger control clearance in Austria, Germany and other jurisdictions, as well as approval by the supervisory board of Immofinanz and approval of the management board of CA Immo for the transfer of the registered shares.  The purchase price amounts to EUR 23.50 per share. The total transaction volume is approximately EUR 604 million.  

In connection with Immofinanz’s acquisition of the CA Immo stake, EG Immobilien Europe Limited (Cyprus) has granted Immofinanz a call option to buy back those Immofinanz shares held by EG Immobilien Europe Limited 12 months after closing of the CA Immo stake acquisition, at the then prevailing market price, and subject to the regulations for share repurchases.   

The Schoenherr Team was led by Partner Christian Herbst, and included Attorney Maximilian Lang, Counsel Sascha Schulz, and Partner Volker Weiss.

CHSH states that Immofinanz’s acquisition “represents the first step towards what is planned to be the full consolidation of Immofinanz and CA Immo by way of a merger.” The firm describes it as “the largest M&A transaction of 2016 to date and will constitute a significant step towards the consolidation of listed real estate companies in Austria.” The CHSH team consisted of Partners Thomas Zivny, Albert Birkner, and Volker Glas, with merger control elements dealt with by Partners Bernhard Kofler-Senoner and Heinrich Foglar-Deinhardstein.