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Taylor Wessing has announced that attorneys Jan Lazur and Juraj Frindrich have been appointed Partners in the firm’s Bratislava office.

Lazur is a member of the IP/IT group at Taylor Wessing and also advises within the firm’s Commercial and the Competition, EU & Trade team. He has a particular industry focus on Energy, Life Sciences, and Technology, Media & Communications. He received his degree in 2009 from the Faculty of Law of Comenius University in Bratislava, and began at Taylor Wessing that same year. He received an LL.M. from the University of Cambridge in 2011.

Frindrich is a member of Taylor Wessing’s Corporate, M&A, and Capital Markets team, and he specializes in Slovak and European corporate law, with an additional focus on Competition, EU & Trade, and Commercial matters. He has an industry focus on Financial Institutions, Manufacturing & Industrials, and Real Estate & Infrastructure. He joined Taylor Wessing in 2010, immediately after completing his studies at the Faculty of Law of Comenius University in Bratislava, and he received an LL.M. from the University of Vienna School of Law in 2014.

Tuca Zbarcea & Asociatii has advised the international media group Ringier on its majority stake acquisition of Imobiliare.ro —  Romania’s largest real estate portal. The sellers were assisted by Schoenherr on the deal.

Imobiliare.ro currently features over 103,000 real estate listings, which makes it the largest website on the Romanian online real estate market. The acquisition of an 87% stake in the portal by Ringier Romania from Realmedia Network S.A. –  Broadhurst Investments Limited, Kurt Gotz, and the Imobiliare.ro management is part of the global media group’s diversification strategy. 

The Tuca Zbarcea team assisting Ringier was led by Partner Dragos Apostol and included Senior Associates Ciprian Sararu, Roxana Pana, Gabriel Vasil, and Associates Gabriela Dinu and Veronica Sandar.

The Schoenherr team advising the sellers was led by Partner Madalina Neagu and included Attorneys at Law Alexandra Munteanu and Anda Tufan. 

The Banking Regulation and Supervision Agency (“Agency”) has recently published the Regulation Regarding Systemically Important Banks (“Regulation”) on the Official Gazette, dated February 23, 2016 and numbered 29633.

The Regulation has entered into force on the same date, as per its enforcement provision, Article 13. Our aim is to provide the reader with brief information as to the purpose and content thereof.

(i) Purpose of the Regulation

“Systemic risk” could be defined as “the risk that the failure of one system participant to meet its obligations in a system, causes other sound participants in that system to fail to meet their own obligations”.¹  Accordingly, a systemically important bank (“SIB”), or more broadly, a systemically important financial institution (“SIFI”), thus, would be an institution, whose distress or failure could pose a significant risk against the smooth functioning of the financial system.²  This has come to cause the “too-big-to-fail” phenomenon, which basically refers to when the possible threat of failure of a systemically important instution “leaves public authorities with no option” but to bail the relevant instution out using public funds in order to avoid financial instability and economic damage.³ This, many writers argue, creates moral hazard, as the relevant entities rely on the prior knowledge that the state would come to their rescue, thus continue taking excessive risks, which could lead them into financial distress.⁴ 

Accordingly, the Basel Committee on Banking Supervision, through Basel III, sought to increase “both the quality and quantity of the reserved capital base for internationally active banks, especially those considered as SIFIs”.⁵  The factors which the comittee takes into consideration when determining the SIFIs are the relevant entities’ size, complexity and systemic interconnectedness. 

The Agency and the Central Bank of the Republic of Turkey are both represented on the Basel Committee on Banking Supervision. Turkey also endorsed Basel III. Turkey’s adoption of Basel III started as of the year 2013, and was expected to be completed until the year 2019.⁶  That said, the Agency recently announced that Turkey was found to be compliant with respect to both risk-based capital regulations and liquidity coverage ratio regulations.⁷  The Regulation could be deemed as another step taken with the intention to complete the aforementioned process.

(ii) Content of the Regulation

Article 4 of the Regulation stipulates how to determine the SIBs and rules that an indicator-based approach shall be resorted to. It further rules that this approach shall take into consideration the relevant entities’ size, interconnectedness, complexity and non- substitutability.  

After setting out the method at Article 4, Article 5 rules that a general score shall be calculated with respect to the banks, and banks, whose general score exceeds the threshold score for systemic importance, shall be deemed to be SIBs under the Regulation. Article 5 further states that the SIBs, then, would be classified into three groups in accordance with their degree of systemic importance. The threshold scores, through which the determination and grouping of the SIBs shall be realized, are to be determined by the Agency.⁸  Although the general score of a bank is the main factor to be considered, the Agency is authorized to take into consideration other factors which it deems to have an effect on systemic importance.⁹ 

Article 7 of the Regulation stipulates that the Agency is authorized to amend the method, through which it determines the systemic importance of banks. That said, the principle is not to engage in such amendment within the first three years, as of the date the SIB’s were determined for the first time.¹⁰

Once the systemic importance of a bank is determined, and a bank is classified to be a SIB, it should maintain a SIB buffer for the year, following the year within which the determination as to its systemic importance was made.¹¹ 

Article 11 sets forth that the SIBs are to be determined in accordance with the consolidated data belonging to December 2014. Once the determination is made, SIBs should ensure compliance with the additional liabilities until 31 March 2016.

(First published in Mondaq on March 29, 2016)

1. Committee on Payment and Settlement Systems. “Central Bank Oversight of Payment and Settlement Systems”. bis.org. Bank of International Settlements (2005): 9. Web. 23 Mar. 2016. 
2. Peihani, Maziar. “Systemically Important Financial Institutions (SIFIs): An Analysis of Current Regulatory Developments”. Banking and Finance Law Review (November 2013). Web. 23 Mar. 2016. 
3. Financial Stability Board. “Progress and Next Steps Towards Ending “Too-Big-To-Fail” (TBTF), Report of the Financial Stability Board to the G-20”. fsb.org. Financial Stability Board (2 Sept. 2013). Web. 23 Mar. 2016.  
4. ibid; Kastrinou, Alexandra. “The Thin Line between Corporate Rescue and State Aid: An Overview of the Impact of State Aid Rules on the Banking Sector.” International Company and Commercial Law Review (2014). Web. 23 Mar. 2016; Boyd, Abigail S. “Bail-ins – Just Another Self-Fulfilling Prophecy?”. Banking & Finance Law Review (August 2012). Web. 23 Mar. 2016.   
5. Lee, Emily. “The Soft Law Nature of Basel III and International Financial Regulations”. Journal of International Banking Law and Regulation (2014). Web. 23 Mar. 2016.   
6. Ministry of the European Union, Turkey. “Memorandum on the Basel III Regulations Published by the Agency” (in Turkish). ab.gov.tr. Ministry of the European Union, Turkey, n.d. Web. 23 Mar. 2016.
7. The Banking Regulation and Supervision Agency, Turkey. “Press Release” (in Turkish). bddk.org.tr. The Banking Regulation and Supervision Agency, Turkey, 16 Mar. 2016. Web. 27 Apr. 2016.
8. Article 5(1) of the Regulation.
9. Article 5(2) of the Regulation.
10. Article 7 of the Regulation.
11. Article 8(1) of the Regulation.

By Gonenc Gurkaynak, Managing Partner, Nazli Nil Yukaruc, Partner, and Gozde Kitapci, Associate, ELIG, Attorneys-at-Law

Moroglu Arseven has announced two Counsels being promoted to Partner within the firm: Gokce Izgi and Ezgi Baklaci — both part of the firm’s intellectual property team.

Izgi joined the firm in 2009. Before that she worked as a Lawyer-Trademark and Patent Attorney for OFO Ventura Ltd Sti for 3 years and a half. Earlier still she was a trainee lawyer with Yazici Law Firm.

Baklaci also joined the Moroglu team in 2009 from OFO Ventura, which she had worked for 1 year and a half at the time of the move. Before that she was a Legal Intern with Gunes Law Firm.

Isik Ozdogan, head of the firm’s IP practice commented: “Their respective promotions to Partner are well deserved and the result of them each displaying their dedication to our clients, going above and beyond on a daily basis. I look forward to continuing to work alongside Gokce and Ezgi in their new roles.”

Popovici Nitu Stoica & Asociatii has advised Chimpex on the signing of a EUR 27 million loan agreement with BCR. The bank was assisted by Nestor Nestor Diculescu Kingston Petersen on the deal.

Established in 1971, Chimpex is a port terminal operatoring company for loading / discharging / storing based in Constanta, the main Romanian port by the Black Sea. Chimpex will use the loan to build a new grain terminal with a capacity of 200,000 tons in the Port of Constanta. The terminal will have an operating capacity of over 3.5 million tons of grains per year (wheat, barley, corn, rapeseed, sunflower, etc.) and will allow simultaneous unloading from trains, trucks, and barges and loading to PANAMAX vessels up to 63,000 tons. The loan contract was signed on March 11 and has a duration of 10 years. 

The PNSA team was coordinated by Partner Bogdan Stoica and Managing Associate Codrin Luta. 

Advising BCR, the NNDKP team was led by Partner Valentin Voinescu and included Senior Associates Maria Hoaghia and Stefan Ionescu.

Cobalt has advised Practica Venture Capital on its EUR 1.5 million investment in East West Agro — a leading agriculture machinery and spare parts seller in the Baltics — which also received another EUR 4.5 million investment from Swedbank.

According to a Practica Capital press release, the investment by Practica Capital and Swedbank “enabled EWA to become an authorised dealer of US agricultural machinery brand Massey Ferguson, which the company expects will boost its growth.”

East West Agro CEO Danas Sidlauskas said in a statement that the capital injection has solved any funding problems the company faces in the next few years, provided it does not materially exceed its projected growth.  

Practica Capital Partners Petras Miciunas stated: “Opportunity to invest in East West Agro seemed attractive for us, because of many factors: Massey Ferguson is a world known brand; company executives are young and ambitious, and they’ve already managed to achieve great results in Lithuania’s agriculture market; all the products that company offers are well-balanced and very attractive for majority of agriculture machinery buyers. In addition, the history and traditions of agriculture in Lithuania sets a great foundation for the company to grow in this market. We expect a long-term successful collaboration with this company.” 

Practica Capital is a venture capital firm established in 2011. The firm manages the EUR 8 million Practica Seed Capital fund the EUR 16 million Practica Venture Capital fund, both established under the JEREMIE initiative, managed by EIF, and financed from the EU Structural Funds under 2007-2013 Economic Growth Operational Programme of Lithuania. The funds provide early and later stage financing to Lithuanian SMEs focusing on innovative businesses with high-growth potential.

Cobalt did not reply to inquiries about the makeup of its team or counsel for East West Agro on the deal. 

Cross border procurement via centralised purchasing bodies

In light of a general shortage of budget funds in the public sector, contracting authorities intend to bundle and pool their purchasing quantities to gain positive efficiency and pricing effects. According to Austrian procurement law (not having implemented procurement Directives 2014) contracting authorities have different tools allowing them to bundle their purchasing volume by cooperating with other purchasing bodies, such as the establishment of centralised purchasing bodies (“CPB”) which acquire supplies or services for (other) contracting authorities, or award public contracts intended for contracting authorities. CPBs can either act as wholesaler/reseller by conducting a procurement procedure in order to buy supplies or services and subsequently resell the services / products to other contracting authorities or acting as intermediaries. The legal consequences are significantly different when acting as a “reseller” or as an “intermediary”. While resellers act using their own names and on their own behalf, “intermediaries” act in the name and on behalf of the contracting authorities; CPBs act as agent for the contracting authorities, which become the principal parties of the contract. Therefore CPBs who act as intermediaries have to follow the respective material and procedural rules applying to the respective contacting authorities.

Even if the Austrian procurement law expressly provides for the possibility to rely on purchasing activities of CPBs in different Member States, the law does not – contrary to the 2014 Directive – provide for more specific rules in relation to the applicable (national) provisions in case of a joint award of contract by authorities from different Member States. Hence, in situations where CPBs conduct a procurement procedure on behalf of several contracting authorities from various Member States (in their function as intermediary), the identification of the applicable procurement regime becomes a core issue.

The ruling of the Administrative Court of Vienna

In its decision of 9 February 2016, the Administrative Court of Vienna (“Court”) found itself in a situation where it had to rule on a contestation against a tender procedure conducted by a German CPB under German (public procurement) law.

In the case at hand, a German (hospital) purchasing group initiated a tender procedure for the supply of medical devices to its member hospitals. Since at least one member of the purchasing group was an Austrian hospital operator the tender covered the supply of medical devices to Austria (lot 1) and the supply of medical devices to Germany (lot 2). The volume of the German lot exceeded the volume and value of the Austrian lot significantly. The hospital purchasing group expressly stipulated in the tender documentation that the procedure would be conducted under German public procurement law and the competent court in Germany shall be the court of jurisdiction. A potential bidder filed an appeal against the tender and took the case to the Administrative Court of Vienna in Austria (“Viennese Court”) by claiming – besides the illegality of the choice of a negotiated procedure – that the tender was discriminatory and would lead to a circumvention of the Austrian appealmechanism. The claimant argued that the Viennese Court had jurisdiction (irrespective of the controversial specification in the tender documentations) as the contracting authority (at least in relation to the Austrian lot) was an Austrian hospital operator seated in Austria / Vienna.

At first the Viennese Court confirmed that according to the tender documents an Austrian hospital operator (instead of the German CPB) qualifies as contracting authority in relation to the devices to be supplied to Austria (lot 1). Following the tender documentation the hospital operators should become the principal partners of the supply contracts being subject of the tender. According to the appeal mechanism and the respective procedural law the Viennese Court is competent to rule on procurements of contracting authorities seated in the region of Vienna, the Court further confirmed its competence to rule on the case at hand.

The Court further concluded that even if the German purchasing body would qualify as CPB (which was not sufficiently clear at that stage), the complaints mechanism of Austria would be applicable as the purchasing activities in relation to the Austrian lot are attributable to the Viennese contracting authority.

However, so far Austrian contracting authorities only openly considered relying on this possibility to cooperate with foreign CPBs (especially in the field of medical devices), but left this opportunity all in all unused. This situation changed most recently.

Consequences

Even if the Court did not provide a decision on the merits of the case (since the German CPB immediately withdrew the procedure once the procedure had been challenged), the case raises some interesting questions in relation to the competence of national authorities to rule over tender procedures conducted by CPBs as agent for contracting authorities seated in different member states:

The jurisdiction of Austrian procurement review authorities depends – in a simplified scheme – on the control over the respective contracting authorities. Contracting authorities under the control of the city of Vienna are subject of the review competence of the Viennese Court. If the tender procedure is conducted in the name of several contracting authorities being controlled of different states (such as Tirol and Vienna) the share of contract value shall be decisive. However, the Austrian law does not provide for a conflict resolution rule for situations where contracting authorities of different Member States involved in a procurement procedure. In the case at hand the German CPB acted as agent and combined the procurement needs of contracting authorities seated in Austria and Germany by simply dividing the tender into two lots. As the relevant procedural law does not provide any explicit rule for such a situation the Viennese Court simply referred to the “Austrian” lot when establishing its jurisdiction. In fact the issue seems to be more complex than that since the German Courts could also have established their jurisdiction in relation to the “German” lot by solely referring to the respective lot: this raises the questions whether two separate lots of a single tender procedure can be subject of different jurisdictions? In order to avoid such a conflict of national laws it seems necessary to apply certain “assignment” rules for the designation of the applicable procurement legislation and the legislation on remedies when it comes to joint procurements of CPBs. The application of the Austrian “main value” rule per analogism in the case at hand would have caused most likely a final jurisdiction of the responsible court in Germany.

Directive 2014/27/EU provides some clarification in relation to the applicable procurement law in case of cross border activities of CPBs. According to Art 39 (3) the national (procurement) law at the seat of the CPB shall apply for the provision of centralised purchasing activities of CPBs. Hence, under Directive 2014/27/EU (“Directive”) the choice of German procurement law for conducting the public procurement procedure would have been appropriate for the procedure conducted be the hospital purchasing group in Germany. It goes without saying that such rules of assignment of jurisdiction might encourage contracting authorities to try to circumvent stricter review mechanisms by engaging CPBs seated in other Member States. In this context Art 39 (1) clearly provides for an anti-circumvention provision when it comes to use CPBs to avoid the application of mandatory provision of the national law which the contracting authorities are subject to. However, the Directive lacks on any express rule on the applicable legislation on remedies. As it may be feared that even after implementation of Directive 2014 contracting authorities and bidders will still face certain risks and legal uncertainties in relation to procurement procedures conducted by CPBs the adoption of a new and precise remedies Directive seems to be solely a question of time.

By Johannes Stalzer, Counsel, Schoenherr

Former PwC Lawyer, Olga Mitkina has taken on the role of Director of Corporate Law Department with Expert Discovery — a Russian company focusing on forensic, audit, and legal services.

Mitkina worked for PwC for over 6 years leading up to 2013, following which she worked on different projects for the last 3 years as a freelance lawyer. Before that she worked as a Lawyer for Total E&P Russie. Earlier experience includes working for FKP Sojuzplodoimport and OOO Sojuzpatent.

Commenting on her move, Mitkina told CEE Legal Matters: “I am happy to join Expert Discovery as a Director of Corporate Law Department, because Expert Discovery gathers unique professionals in forensics, law, audit, and investigation, who are graduates of the best universities in the world and have extensive experience in ‘big four’ companies and in different industries. I believe that both the deep expertise and the diversified backgrounds of our team will bring Expert Discovery success and that our company will become indisputably recognized as a capable business rival of the top tier foreign companies providing similar services on the Russian market.”

Musat & Asociatii has represented the Financial Supervisory Authority of Romania (ASF) in a dispute with Rst Media.

The initial claim was brought by Rst Media, through its General Director Radu Soviani, who sought damages amounting to over RON 1 million from the ASF. The claim was based on several public acquisition contracts between Rst Media and the ASF regarding PR management services.

The Magistrates of the Bucharest Court of Apeal ruled to overturn a first instance court ruling in favor of Rst Media.

The Musat team that prepared the ASF file in the case consisted of Managing Counsel Pauna Neculae and Senior Associate Valeriu Solcanu.

Fort’s Tallinn office has advised Digital Mind, which the firm describes as “one of the leading business technology experts and change management partners in the Baltics,” on the acquisition of a business unit from Nortal, the largest Estonia-based IT company.

According to a Fort press release, Rinalds Sluckis, CEO of Digital Mind, “regards the acquisition as a strategic step closer to the goal of establishing Digital Mind as the top Enterprise Content Management and Business Analytics solutions provider in the Baltic Sea region. Digital Mind has successfully completed over 100 projects in Enterprise Content and Process Management and Automation, Business Analytics and other fields for clients such as: Siemens Russia, DNB Bank, ABLV Bank, Latvian Railways, Ergo, and other leaders in multiple industries.”

Fort carried out legal due diligence and provided assistance in establishing the local partnership and drafting the purchase agreement and other transaction documentation. The firm’s team was led by Estonian Partner Kuldar-Jaan Torokoff, supported by Attorney Margus Koiva and Associate Veronika Selge from our Tallinn office and Associated Partner Ramona Miglane from the firm’s Riga office.

Torokoff informed CEE Legal Matters that Nortal had been advised by its internal legal department in the transaction.