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Poland’s Lawmore law firm has represented Prowly sp z o.o. in its acquisition of PLN 4.5 million in investment from Internet Ventures FIZ — part of the MCI Capital private equity group — and the Bluerank online and mobile advertising agency. Internet Ventures FIZ was advised by Kancelaria Rapala, and Bluerank was advised by Lubasz i Wspolnicy.

Prowly, which was founded in 2013, operates a B2B platform offering a set of tools to build an audience around a brand or company. This is the second round of financing for the rapidly growing startup. According to Lawmore, “with the next round of funding Prowly will be able to start an intensive international expansion and develop its products.”

The Lawmore team consisted of Partners Paula Pul and Michal Kulka.

The Kancelaria Rapala team was led by Managing Partner Krzysztof Rapala, and included Agnieszka Dancewicz.

Managing Partner Dominik Lubasz led the Lubasz i Wspolnicy team advising Bluerank.

Sorainen Lithuania has advised the Lithuanian telecommunications company Tele2 on obtaining limited electronic money institution licensing, which allows provision of payment services and issue of e-money in Lithuania.

Tele2 became the first telecommunications company in Lithuania to obtain an electronic money institution licence along with the right to provide a much wider range of payment services, including issue of electronic money. Tele2 will now have additional tools to create a package of new services for its clients.

This process of issue of an electronic money institution licence was specific as Tele2 had to shift from a payment institution licence to an electronic money institution licence.

Sorainen assisted Tele2 with preparing documentation for its application and represented the company in communication with the financial supervisory authority, the Bank of Lithuania. The firm’s team was led by Partner Tomas Kontautas and Associate Arturas Asakavicius.

On November 3, 2015, the Russian President signed Federal Law No. 297-FZ on the Jurisdictional Immunities of a Foreign State and the Property of a Foreign State in the Russian Federation (the “Law”).

The Law entered into force on January 1, 2016.

To implement the provisions of the Law, the Ministry of Justice of the Russian Federation has drafted amendments to the Civil Procedure Code of the Russian Federation (the “CPC”), the Arbitrazh Procedure Code of the Russian Federation (the “APC”), the Code of Administrative Court Procedure of the Russian Federation and Federal Law No. 229-FZ on Enforcement Proceedings dated October 2, 2007. These corresponding amendments also entered into force on January 1, 2016.¹

The key aspects of this Law are as follows:

• The Law establishes a single principle of the relative immunity of a foreign state for all types of court proceedings in Russia.
• The Law specifies cases of waiver of immunity from suit.
• The Law lists legal relationships with respect to which a foreign state does not possess immunity from suit.
• The Law establishes a legal framework of immunity from measures of constraint and enforcement of judgement.
• The Law sets forth a list of property that is deemed connected with the exercise of sovereign powers by a foreign state.  
• The Law provides for the restriction of jurisdictional immunities based on the reciprocity principle.

Below we briefly review the key provisions of the Law and related issues.

LEGAL FRAMEWORK OF JURISDICTIONAL IMMUNITY PRIOR TO ADOPTION OF THE LAW

The jurisdictional immunity of a foreign state and its property includes three types of immunity: (1) immunity from suit (immunity from participation in court proceedings), (2) immunity from measures of constraint and (3) immunity from enforcement of judgement.

Prior to the enactment of the Law, statutory regulation of the jurisdictional immunity of foreign states was based on Art. 251 of the APC and Art. 401 of the CPC. Pursuant to Art. 401 of the CPC, foreign states were granted absolute jurisdictional immunity. At the same time, under Art. 251 of the APC the jurisdictional immunity of a foreign state was relative (functional or limited) in nature (i.e., the immunity was granted only if the foreign state was a party to a matter in controversy as sovereign).

The question of relative jurisdictional immunity was also raised in court practice, in particular in the case of Oleynikov v. the Russian Federation² and with respect to the Schneerson Library case.³

The principle of relative immunity was also enshrined in the UN Convention on Jurisdictional Immunities of States and Their Property, adopted on December 2, 2004 (the “UN Convention”), which Russia has signed, but not ratified. Because an insufficient number of instruments of ratification have been deposited, the UN Convention has not yet come into force. Therefore, the matter of the jurisdictional immunity of states is decided by each legal system as it sees fit.

LEGAL FRAMEWORK OF JURISDICTIONAL IMMUNITY AFTER ADOPTION OF THE LAW

Most of the provisions of the UN Convention have been reflected in the Law. In addition, the Law provides for a number of special provisions, in particular, the reciprocity principle.

The Law lays down a single principle of the relative immunity of a foreign state, but compared to the current provisions on immunity contained in the APC and CPC, the Law provides more detailed regulation of a foreign state’s immunity from suit, as well as its immunity from measures of constraint and enforcement of judgement.

Legal Framework of Immunity from Suit

As a general rule, foreign states have immunity from suit in Russia. However, there are a number of exceptions envisaged by the Law.

Waiver of Immunity

A foreign state cannot invoke immunity from suit if it has expressly consented to the exercise of jurisdiction by a Russian court with regard to a specific proceeding. Such consent may be given by international agreement or other written contract, by a declaration before the court or by other notification of a Russian court.

In certain cases, a foreign state is deemed to have waived immunity from suit (if the foreign state institutes proceedings in a Russian court, if there is an arbitration agreement, if it makes a counterclaim, etc.).

A consent to or waiver of immunity from suit in respect of specific proceedings cannot be revoked. However, such consent or waiver does not affect the foreign state’s immunity from measures of constraint or enforcement of judgement.

Relative Immunity

Another exception follows from the principle of relative immunity, which means that a foreign state will not enjoy immunity from suit in Russia for disputes in connection with civil law transactions if such transactions are not related to the exercise of sovereign powers by the foreign state.

The Law directs Russian courts to take into account the nature and purpose of a transaction when deciding whether or not it is related to the exercise of the sovereign powers of a state, which assumes a certain level of discretion on the part of the court and could give rise to problems in the course of applying this provision in practice.

However, the parties to a civil law transaction may themselves agree that a foreign state has immunity from suit, even if the nature of the transaction is not related to the exercise of sovereign powers (Art 7, par. 2 of the Law). 

Limited Immunity

If a foreign state enters into certain legal relationships it will not possess immunity from suit. Examples include employment disputes, certain corporate disputes and certain disputes on rights to property and on intellectual property, as well as certain disputes related to damages.

Legal Framework of Immunity from Measures of Constraint and Enforcement of Judgement

Under the Law a foreign state enjoys immunity from measures of constraint and enforcement of judgement, other than where it has expressly consented to the adoption of the relevant measures or has reserved or otherwise identified the property in the event that the claim being heard is granted.

Furthermore, the property of a foreign state that is used and/or intended for use by a foreign state for purposes not connected with the exercise of sovereign powers is also not subject to immunity from enforcement of judgement.

The Law expressly sets forth a list of property that is deemed connected with the exercise of sovereign powers by a foreign state (property of diplomatic missions, consular posts, special missions and missions to international organizations; property of a military nature; property of the central bank; etc.).

Reciprocity Principle

The Law also states that all jurisdictional immunities of a foreign state may be restricted on the basis of the reciprocity principle.

In accordance with this principle, if a court hearing a specific dispute involving a foreign state establishes that Russia’s jurisdictional immunity is restricted in this foreign state, the court may ignore the jurisdictional immunity of such foreign state and hear the case on its merits. In these circumstances, measures of constraint may be applied and the court judgment enforced upon completion of the case.

The Law designates the Ministry of Foreign Affairs of the Russian Federation as the body authorized to decide matters on the granting of jurisdictional immunities in the Russian Federation and on its property in a foreign state.

In accordance with the corresponding amendments to the CPC (Article 417.9) and the APC (Article 256.9), in deciding to what extent jurisdictional immunity is granted to Russia in the foreign state, the courts shall rely on the evidence provided by the parties and the official opinions of state bodies, i.e., of the Ministry of Foreign Affairs of the Russian Federation.

Adoption of the Law is of practical importance for settlement of disputes involving foreign states in the Russian Federation.

1. Federal Law No. 393-FZ as of 29 December 2015.

2. ECHR Judgment dated March 14, 2013 in the case of Oleynikov v. the Russian Federation (Application No. 36703/04).

3. Judgment of the Arbitrazh Court of Moscow No. ?40-82596/13 dated May 29, 2014. 

By Alyona N. Kucher, Partner and Andrey A. Gorlenko, Senior Attorney at Law, Debevoise & Plimpton

Russian lawyer Sergey Kalinin has left Liniya Prava to join Egorov Puginsky Afanasiev & Partners as a Counsel and Head of Tax Practice in Russia. Kalinin has over 15 years experience advising on Russian and international taxation matters and represents clients in complicated tax disputes. His clients include VTB Capital, Rusnano, Russian Venture Company, Renova group, Fora-Bank, Bank of Moscow, VEB, Integra group, Inteko group, and Puratos.

Kalinin graduated from the law faculty of The State University of Land Use Planning. He holds a Ph.D. from the Graduate School of the financial faculty at Kutafin Moscow State Law University and an LL.M in international taxation from the Vienna University of Economics and Business. He is a permanent member of the Russian branch of the International Fiscal Association and the Moscow Bar Association.

“It is a great honour to join the Egorov Puginsky Afanasiev & Partners’ team,” said Kalinin, in a statement released by the firm. “Enhancing further development of the Firm’s tax practice is one of my key priorities. I am looking forward to working with Igor Shikow, EPAM key tax specialist and a market renowned expert, who will focus on project work and further strengthening of the German Desk within the tax practice.”

The Act on Central Registry of Temporary Limitations on Rights of Persons Registered in the Business Registry Agency (the “Act”) has entered into force on 7 January 2016 with a delayed application from 1 June 2016.

The Act envisages a unique central registry that shall contain all relevant information on legal entities, shareholders, directors, members of the supervisory boards or other corporate bodies, who have committed felonies, misdemeanors, administrative or other offences during the performance of their business activities (the “Central Registry”). The Act takes a novel approach at providing any interested party with crucial information regarding commercial and professional reliability of a company and its management.

Unfortunately, in Serbia, it is common for a director or shareholder to deliberately lead its company into bankruptcy, only to establish a brand new company, with the same or similar business activity within hours after bankruptcy of a previous company. Consequently, the director or shareholder starts off with a clean slate and continues to perform its activities almost uninterrupted and without any adverse consequences. On the other hand, creditors of the previous company remain with uncollectable claims. 

In order to put a stop to this devastating practice, the Act prescribes that directors, shareholders and other members of the company’s corporate bodies, may be sanctioned by temporarily losing, among others, the right to: (i) perform business activities, (ii) establish a new company, (iii) transfer shares, monies and similar. Needless to add, for the sake of legal certainty, these rights can only be limited by a valid decision issued by a competent authority.

The information on sanctioned persons will be published on the Business Registry Agency’s website, subject to exception in cases of natural persons (due to protection of privacy). It should be noted that the data registered in the Central Registry is presumed to be correct, unless proven otherwise in court proceedings. Furthermore, state authorities and other bodies with public authority shall have unrestricted access to the Central Registry while only the sanctioned persons may request an excerpt or confirmation on their limitation from the Central Registry. 

Overall, the Act represents a positive step forward towards a more transparent and competitive environment on the Serbian market. However, the real implications of the Act remain to be tested in practice when its application commences on 1 June 2016. 

By Marija Oreski Tomasevic, Partner and Igor Radovanovic, Associate, SOG / Samardzic, Oreski & Grbovic

CMS has advised the Czech investment company Redside on its acquisition of four office buildings in Prague from an unnamed German investment fund. The seller received legal advice by Schoenherr and Roedl & Partner. The transaction price was not disclosed.

The buildings involved were the Pfizer and BNP headquarters, Vysehrad Victoria, and Avenir Building E, all of which were constructed between 2004 and 2008 by UBM Bohemia, Skanska, and Immorent. The Pfizer and BNP headquarters are located in the heart of the Andel office hub in Prague, while Vysehrad Victoria is the most centrally located property within the Prague 4 submarket, and Avenir, bulding E is located next to the Galerie Butovice shopping center in the city’s Nove Butovice office hub. The buildings — possessing, in total, 24,660 square meters of gross lettable area — are modern and well-maintained with high technical standards and attractive designs. 

“This prime office portfolio is a great acquisition for our client Redside as it offers exposure to the most liquid and sought-after asset class in Czech investment market, it is leased to strong covenants and has always maintained a very high occupancy level,” said Tomas Berka, Senior Associate, Investment Services, Colliers International.

Redside was founded in 2012 as a joint venture of ASB Group and Arca Capital. Besides the real estate fund, its portfolio includes also qualified investor funds focused on private equity and renewable energy sources. 

The CMS Prague team consisted of Partner Lukas Hejduk, Senior Associates Petr Huk and Lucie Kislerova, Associates Petr Koral and Magda Nemcova, and Junior Associates Michal Samek and Tereza Maternova.

Neither Schoenherr nor Roedl & Partners responded to inquiries about their work on the deal. 

In addition to Schoenherr and Roedl & Partners, the seller received advice from CBRE, TPA Horwath, and Whitestar Real Estate, whereas — in addition to CMS — Colliers International, ASB, and Sentient represented Redside in the transaction.

Editor’s Note: After this article was published Schoenherr informed CEE Legal Matters that the seller, which it advised, was the Frankfurt-based TRIUVA (formerly IVG) real estate investment fund. The Schoenherr team consisted of Partners Martin Kubanek and Gabriela Porupkova, Associate Katerina Jancova, and Attorneys Miroslav Dudek and Otakar Fiala.

Image Source: novebutovice.cz

Poland’s Forystek & Partners law firm reports that the Regional Court in Legnica has granted the request of its clients, 92 shareholders of Polcolorit S.A., to protect their claims against a decision made at a recent extraordinary general shareholders meeting.

Forystek & Partners Legal Counsel Przemyslaw Biedrawa, who led the firm’s team on the matter, explained to CEE Legal Matters that the Court suspended the operation of Resolution No. 23/2015 of the Extraordinary General Meeting of Shareholders Polcolorit S.A. dated 16 December 2015, which would rematerialize the shares of Polcolorit and withdraw the shares from trading on the regulated market, until the end of proceedings.

According to Biedrawa, “our law firm represents a group of 92 shareholders who are parties to the agreement of minority shareholders Polcolorit S.A., which is by far the most represented agreement created to protect the rights of minority shareholders in a public company in the history of the regulated market operated by the Warsaw Stock Exchange.” The 92 shareholders claim that Resolution No. 23/2015 is “contrary to law and good practice, and also violates the interests of the shareholders and Polcolorit S.A. itself.” 

The Court’s decision to suspend the resolution, Biedrawa claims, will allow it to hear and consider their challenges on the merits to the rematerialization of shares and delisting of the Company from Warsaw Stock Exchange. 

Schoenherr has invited Roman Perner, a Partner in the firm’s Corporate/M&A practice, to join the firm’s equity partnership.

According to the firm, “Perner has comprehensive expertise in advising Austrian and international clients on corporate law matters, particularly with regard to domestic and cross-border corporate mergers and re-organizations, as well as on M&A transactions.” Since joining Schoenherr in 2003, he has represented domestic and foreign clients in the industrial and banking sectors on corporate law matters, focusing on corporate reorganizations (both domestic and cross-border), as well as on M&A transactions. Most recently, he advised, inter alia, Oesterreichische Volksbanken-Aktiengesellschaft (OVAG) on the restructuring of the Volksbanken co-operative banking system and OVAG’s continuation as a wind-down entity (as reported by CEE Legal Matters on July 7 2015), as well as on numerous cross-border corporate reorganizations. Perner also had a leading role in both in the privatization of Aerodrom Ljubljana and its sale to the Fraport Group (as reported by CEE Legal Matters on September 9, 2015), and in the sale of a majority stake-holding in the Helios Group to Austria’s Ring International Holding (as reported by CEE Legal Matters on April 29, 2014).

Perner was admitted to the bar in Austria in 2008 and became a Partner at Schoenherr in 2011. He holds degrees from the University of Vienna (Magister iuris and Doctor iuris) and from the Vienna University of Economics and Business Administration (Mag. rer.soc.oec). 

“Roman Perner stands out not only on account of his being an exceptionally experienced expert in complex corporate law matters and transactions, but also due to his extraordinary dedication, knowledge and enthusiasm,” said Christoph Lindinger, the firm’s Managing Partner. “As an Equity Partner, Roman will continue to contribute to Schoenherr‘s overall success through his expertise and dynamism.”    

PHH has advised Harold Primat, a French investor who has been living in Switzerland for many years, on a EUR 2 million acquisition of 12% of the shares in Tractive GmbH, an Austrian company focusing on pet-wearable GPS and tracking devices. The initial shareholders of the company (including business angel Hansi Hansmann and the four founders of runtastic), whose stakes are reduced accordingly, remain on board.

Tractive was established in 2012 and currently employs 27 employees. So far, the company has delivered thousands of its pet tracking devices to more than 80 countries and managed to triple its turnover over the last year.

The PHH team was led by Partner Rainer Kaspar and included Associates Wolfgang Guggenberger and Ivana Dzukova.

Aleinikov & Partners has represented the Turkish company KOCA Insaat Sanayi ve Inracat Anonim Sirketi (the KOCA Construction Industry and Export Incorporation) on the recognition and enforcement of an arbitral award of the Arbitration Institute of the Stockholm Chamber of Commerce (AISCC) in the Republic of Belarus.

KOCA’s claims against an unnamed “large Belarusian company” in the AISCC ended with a judgment of USD 9 million in its favour.

KOCA, which was established in 1981, became active in aggregate production by 1985 and in ready-mixed concrete production by 1986. In 2005, the KOCA Group expanded its operations to introduce a stronger presence in the Gulf States and other countries with the establishment of regional offices. It currently has offices in Doha, in Minsk, and in Ashgabat (Turkmenistan) to oversee ongoing projects in each of these markets.