TO OUR READERS
Welcome to the 6 th edition of the DRInsider, the quarterly Newsletter of the Wolf Theiss
Dispute Resolution Practice Group. We are happy to once again provide you with
interesting news covering the various CEE/SEE jurisdictions in which we practice.
March 2017
AUTHORS
Given our extensive expertise in Business Crime matters, it should come as no surprise
that four articles deal with recent developments in this area, particularly regarding anticorruption, bribery and money laundering.
MARKUS HEIDINGER
Partner, WOLF THEISS Vienna
As the summer holiday season fast approaches, Austria has proposed a bill adopting the
new EU Directive on package travel and linked travel arrangements. Additionally, the
new Austrian law of succession which took effect in January sets out important changes
for testators.
NATASA LALOVIC MARIC
Partner, WOLF THEISS Belgrade
Further, we focuse on corporate litigation outlining a recent Austrian Supreme Court
decision dealing with the question of loyalty among shareholders of a stock corporation.
HOLGER BIELESZ
Partner, WOLF THEISS Vienna
LIGIA CECILIA POPESCU
Partner, WOLF THEISS Bucharest
DALIBOR VALINČIĆ
Partner, WOLF THEISS Zagreb
Last but not least, we are keeping a close watch on the major changes concerning class
action litigation in Poland!
PETR SYROVATKO
Counsel, WOLF THEISS Prague
Read inside to find out more.
CAROLIN ZIEGLER
Consultant, WOLF THEISS Vienna
Best regards,
PAWEL BUKIEL
Associate, WOLF THEISS Warsaw
VALERIE HOHENBERG
FLORIAN PECHHACKER
Counsel
Associate
STANISLAV CHERKEZOV
Associate, WOLF THEISS Sofia
BORNA DEJANOVIC
Associate, WOLF THEISS Zagreb
CRIMINAL LAW
MONEY LAUNDERING IN AUSTRIA
AND THE DILEMMA OF CROSSBORDER ELEMENTS
Money laundering is becoming more and
more important in several jurisdictions. The
reason is that money laundering cases
often include cross-border elements. In
addition, there are several EU regulations
and directives addressing this issue which
aim to combat money laundering with
detailed guidelines for various parties such
as banks and lawyers.
In Austria, several provisions contained in
various acts refer to money laundering. The
key
provision
is
Art
165
StGB
(Strafgesetzbuch, Austrian Criminal Code).
According to this provision, any person who
hides or conceals the origin of assets that are
the proceeds of a felony, an offence against
property or certain other criminal offences,
commits
money
laundering.
The
same
applies for any person who knowingly takes
possession,
stores,
invests,
administers,
FLORIAN HORAK
Associate, WOLF THEISS Vienna
GEORGI KANEV
Associate, WOLF THEISS Sofia
PAUL KREPIL
Associate, WOLF THEISS Vienna
LENKA KUCEROVA
Associate, WOLF THEISS Prague
NIKOLAUS LOUDON
Associate, WOLF THEISS Vienna
ROBERT MIKO
Associate, WOLF THEISS Bratislava
ANNA KATHARINA RADSCHEK
Associate, WOLF THEISS Vienna
ALEKSANDAR RISTIC
Associate, WOLF THEISS Belgrade
CHRISTINA BARZAL, PATRICK WINTER
Legal Trainees, WOLF THEISS Vienna
ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE
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transforms, utilizes or transfers to a third
favorable criminal laws do retro-activate
person any such assets.
certain controversial amendments of both
The provision lists several criminal offences
that
come
into
question
as
predicate
offences for money laundering; however, it
does not explicitly state under which law
the abuse of authority and conflicts of
interest laws, major concerns were raised on
whether corrupt politicians would benefit in
their ongoing trials and in the future.
these predicate offences shall be construed
The catalysts of the amendments in the
in order to
Ordinance included a 2016 ruling of the
assess whether an actual
predicate offence was committed for money
Constitutional
laundering.
(405/2016)
When it comes to cases with a cross-border
element,
this
question
is
critical.
For
instance, if assets are transferred from a
third country to Austria and it is uncertain
whether they originated from a crime that
was committed abroad, the question arises
under which conditions such an offence
committed abroad is to be considered a
predicate offence for money laundering in
Austria.
In a recent decision, the Austrian Supreme
Court clarified this question: An offence
committed and punishable abroad comes
into question as a predicate offence if it
mirrors a crime listed in article 165 StGB
under Austrian law (RS0130928).
Court
of
Romania
indicating
that
(CCR)
the
text
"improperly fulfils his/her duties" regarding
abuse of authority was constitutional solely
if construed as ''infringing the law". The CCR
recommended a further clarification on this
issue by the Parliament while the courts
adapted
their
practice
by
requiring
prosecutors to indicate the infringement of
the
relevant
statutory
provisions
when
claiming abuse of office.
Abuse of authority and conflicts of interest
are not officially part of the "corruption
crimes" section of the CC. They are part of a
distinct category called ''crimes relating to
the office conduct" and proved to be
borderline to corruption in the sense that
their
occurrence
often
indicates
the
incidence of a corruption crime as well.
The decision is no surprise but it shows once
more, that awareness about money
laundering, particularly when cross-border
elements are involved, can never be too
high.
Hence, they are important to the general
anti-corruption efforts in Romania.
The
i.
NIKOLAUS LOUDON
Associate
main
controversial
amendments
included:
More
lenient
imprisonment time
for
abuse of office, from 2-7 years to 6
months-3 years or fines, thus diluting the
deterrent effect. The statute of limitation
[email protected]
for
criminal
liability
is
shortened
accordingly (from 8 to 5 years).
ROMANIA'S CONTROVERSIAL
AMENDMENTS TO ANTICORRUPTION LAWS FINALLY
REPEALED
ii. Abuse of office shall no longer be a
criminal offence if loss is under RON
200,000
(approx.
EUR
45,000),
thus
triggering the closing of many pending
In early 2017, the newly elected Romanian
criminal cases, the release from prison of
social
convicted
democratic
government
tried
to
persons
and
potentially
enact Government Emergency Ordinance
encourages multiple abuses under the
13/2007 (the Ordinance), amending the
threshold.
Criminal Code (CC) and the Criminal
Procedure Code (CPC).
The
Ordinance
did
prohibited from holding public office,
achieve
partial
harmonization with EU requirements and
legitimate
iii. Convicted persons can no longer be
recommendations
of
allowing
for
morally
controversial
persons to hold public office.
the
Constitutional Court. However, since more
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iv. More lenient sentences for regime of
abuse
committed
by
discrimination,
Recently, the constitutional order of the
VbVG
was
reviewed
by
the
Austrian
from imprisonment of 2 - 7 years to
Constitutional Court (VfGH). In its decision,
1 month - 1 year or fines.
the VfGH came to the conclusion that
v. Abuse by issuing or approving statutory
acts is eliminated, virtually allowing for
enacting
laws
based
on
racial
discrimination.
vi. The
constitutional rights are not infringed by the
VbVG.
The
VfGH
argued
that
the
Austrian
legislature, in accordance with international
controversial
elimination
of
the
phrase “business relations” in conflicts of
interest scenarios allows for civil servants
to favor former employers, business
partners etc.
requirements, had to provide "effective,
adequate
and
discouraging
sanctions"
against accountable companies to prevent
criminal acts. Thus, a new category within
the criminal law was established, which
drops the principle of liability. Of course,
vii. Whistleblowing must occur within 6
months rather than any time within the
limitation period of the criminal liability.
The proposed amendments were highly
controversial because they were not passed
through a normal parliamentary procedure
but through a summary, emergency one
(when no urgency actually existed) with
little public debate and analysis among the
such provisions which allow for third-partyliability
have
to
comply
with
the
actions which are outside of its sphere of
interests or influence. In cases where the
connection
interests
of
or
a
company's
influence
is
sphere
in
of
adequate
correlation with the conduct of an employee
In
amendments
considered
a
regarding the regime of abuse of authority
committed
unlawfully
and conflicts of interest in the newly
According to the decision of the VfGH, this is
introduced Ordinance were considered by
the case with regard to the VbVG because a
the public as substantially watering down
company only becomes liable when the
the force of the initial regime of these crimes
criminal act was committed for its benefit or
which are still very relevant in Romania,
due to a breach of the company's duties.
and ultimately caused substantial public
Furthermore, a decision- maker has to
upheaval.
commit the criminal act alone or the
new
the liability of a company, if such conduct is
Consequently, the Ordinance was repealed
and new legislation is expected in the near
future to address the public concerns.
commission
of
criminal
a
act
and
and
criminal
act
was
culpably.
by
an
employee was enabled by the company's
negligence.
the repeal of the VbVG by the VfGH would
have been considered as a step back in
combating corruption in Austria. For some
[email protected]
other reasons, the repeal of the VbVG would
have
PUNISHMENT WITHOUT GUILT?
limited liability companies and other forms
companies,
criminal
acts
may
be
penalized
committed
by
for
their
employees or decision-makers based on the
Act
on
Corporate
Criminal
Liability
("Verbandsverantwortlichkeitsgesetz,
VbVG").
major
problems
because
beyond criminal law, the punishment of
As of 1 January 2006, stock companies,
of
caused
Everybody knows the picture of poor
souls sitting in front of one-armed
bandits gambling their fortunes away
– may it be in shady "gambling caves"
or even decadent casinos. As much as
you pity those individuals, you can
see how they are the perfect target
audience (or victims) for gambling
providers. But a recent decision by the
Austrian Supreme Court is set to thwart
such plans.
According to the court, people who
suffer from pathological gambling
addictions aren't in the state of mind to
make reasonable decisions when near
gambling opportunities of any kind.
While exposed to their weakness, they
lack the strength of will to resist the
urge and may commit themselves to
unfavorable obligations. Therefore,
Also from the angle of creditor protection,
LIGIA CECILIA POPESCU
Partner
A person suffering from a gambling
a gambling provider.
Thus, a company may not be penalized for
or decision maker, it is possible to constitute
such
Addicts: Easy prey for gambling
providers?
addiction challenged a contract with
requirement of objectivity.
specialists on the proposed changes.
essence,
HIGHLIGHTS FROM
THE AUSTRIAN
SUPREME COURT
companies has been common for a long
time. The best example of this is the Antitrust
Law. As of August 2016, it is possible under
Antitrust Law for the Financial Market
Authority to impose a fine of 15% of the
they lack the legal capacity to
conclude gambling contracts in such
moments of exposition, provided that
their addiction is severe enough and
pathologically confirmed. This
determination is made on a case by
case basis. Furthermore, the Supreme
Court emphasized that those affected
with a gambling addiction are still
legally competent to conclude
contracts of any sort as long as they
are not in a gambling environment
while doing so. (3 Ob 243/16f)
annual turnover in cases of market abuse.
In accordance with European Union law,
Patrick Winter
such regulations may not be contested by
Austrian Constitutional Law. All other cases
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may be considered unconstitutional. The
in
VfGH avoided such a dilemma with its
regulations, with a prescribed imprisonment
recent decision.
of six months to five years as well as
By all accounts, the VfGH may have the
opportunity to take a stand whether the
imposition of such fines have to be reserved
to courts in the near future.
the
relevant
competition-protection
potential monetary fines. However, the
charged person may be free from the
liability if he or she meets the requirements
of the leniency policy defined under the
competition-protection
regulations.
Therefore, there are some useful options to
HOLGER BIELESZ
Partner
the person charged which makes for an
interesting mix of competition and criminal
law legal principles.
[email protected]
FLORIAN HORAK
Associate
These and other respective amendments to
the Criminal Code are aimed at developing
a more coherent and effective approach to
battling the ever changing forms of modern
[email protected]
crime. As it is too early to draw any
conclusions on the consequences of the
NEW AMENDMENTS TO SERBIAN
CRIMINAL CODE BRING LONGAWAITED CHANGES
amendments, it will be interesting to see
what results they will bring once they come
into force.
As of 1 June 2017, an improved and
modernized Criminal Code will come into
NATASA LALOVIC MARIC
Partner
force in Serbia.
While most of the amendments concern
[email protected]
existing
ALEKSANDAR RISTIC
Associate
criminal
offences
and
aim
to
provide a clear definition and grounds for a
unified
interpretation
of
the
same
in
practice, some amendments mark an end
[email protected]
to an era of an outdated understanding of
commercial crime. Thus, acts of issuance of
checks and use of payment cards without
coverage,
business
deceiving
buyers,
authorizations
abuse
and
of
monopoly
abuse have been decriminalized, while new
commercial
criminal
offences,
such
commercial
bribery,
commercial
as
fraud,
abuse of business confidence, commercial
embezzlement,
abuse
in
privatization
procedures and conclusion of restrictive
agreements
have
been
introduced
as
criminal offences with potential penalties.
As a prime example, the criminal offence of
concluding
restrictive
agreements
has
drawn significant interest and attention
among practitioners and participants in
trade,
given
a
high
complexity
of
competition issues and their dependence on
interpretation
protection
from
the
authority.
This
competitioncriminal
act
applies to any person in a commercial
entity that executes a restrictive agreement
that is not exempted from the bans defined
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CORPORATE
LITIGATION
DUTY OF LOYALTY AMONG
SHAREHOLDERS OF AN AUSTRIAN
STOCK CORPORATION?
Facts: The plaintiff is a shareholder with less
than 0,1 % of the shares in the defendant
Austrian
stock
corporation.
In
the
shareholders' meeting of 20 March 2015 of
the defendant stock corporation, the plaintiff
had protested against resolutions passed
with a majority vote to the effect that only
10 % of the balance sheet profits of more
than EUR 10 Mio would be paid out as
dividend. The nominal difference for the
plaintiff as shareholder would amount to
EUR 7,42. The plaintiff filed suit requesting
that the court declare the contested
shareholders' resolution void and order that
the entire balance sheet profits be paid out
as dividend.
Court of First Instance: The State Court of
Krems, as court of first instance, rejected the
claim and held that it would be vexatious
and an abuse of rights by the plaintiff to
force the defendant to pay out an amount
of more than EUR 10 Mio as dividend just for
the plaintiff to receive EUR 7,42 as his pro
rata dividend.
Court of Appeal: The Vienna Court of
Appeal overruled the court of first instance
and declared the shareholders' resolution to
pay out only ten per cent of the balance
sheet profit void. But the court rejected to
actively order the company to pay out
EUR 10 Mio as dividend.
Supreme Court: The Austrian Supreme Court
on appeal by both parties rejected both
appeals and held:
1. The articles of association of a
corporation are to be constructed
objectively and in line with sections 6
and 7 of the Austrian General Civil
Code. The rule of objective construction
of the articles of association also applies
to corporations where about 95 % of the
shares are held by two families only.
2. In the absence of a provision in the
articles of association granting the
shareholders' meeting the right to decide
on whether or not to pay out dividends
from balance sheet profits, the entire
balance sheet profits are to be paid out
by the corporation and the shareholders'
meeting has no right to decide
otherwise.
3. Each shareholder has the right to contest
a shareholders' resolution, irrespective of
his share in the company. A shareholder
in a stock corporation has no duty to
exercise his voting right primarily in the
interest and to the benefit of the
company. To the contrary, within the
principles of bona fide and bonos mores,
each shareholder may pursue his own
interest. In general and in the absence
of any limits laid down by the law, no
shareholder is under an obligation to
subordinate his interest in the pay out of
dividends to the interest of the company
to carry forward balance sheet profits.
4. There are no increased duties of loyalty
among shareholders in family held
corporations, at least not when shares
may also be acquired by outsiders.
5. The fact that a shareholders' resolution is
successfully overruled by the court does
not by itself mean automatically that a
shareholders' resolution to the contrary
has been passed. In such cases, the
court may not simply replace the
resolution successfully contested by such
other resolution requested by the
contesting shareholder. Rather, the
shareholders' meeting has to resolve
again on the issue.
MARKUS HEIDINGER
Partner
[email protected]
BANKING
LITIGATION
CROATIAN CONSTITUTIONAL
COURT RULES ON SWISS FRANC
CONSUMER LOANS
Even though Swiss franc denominated
consumer
loans
caused
disputes
throughout most of the CEE, the situation
seems to be developing more rapidly in
Croatia. Banks have first been sued by
consumers
for
the
alleged
unfair
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5
contractual provisions on the principal
currency and interest rates, which was
followed by the Government's legislative
intervention into the existing contractual
relationships between the banks and their
customers.
Consumers welcomed this decision as a
victory against the banks. However, it
should be emphasized that the Supreme
Court's decision was repealed only due to
the unsatisfactory elaboration of the court's
reasoning.
The pending lawsuits have just seen a new
development before the Constitutional
Court.
Further developments in these lengthy and
exhausting
judicial
proceedings
are
expected shortly, since the Supreme Court
already announced that the repeal
procedure will commence soon.
A consumer association originally filed a
collective lawsuit against the largest
international banks operating in Croatia,
claiming that contractual clauses dealing
with currency and variable interest rates
were unfair and should be deemed null and
void. The Croatian courts initially concluded
that due to a lack of clarity about the
parameters used for setting the interest
rates, banks have indeed illegally applied
variable interest rate clauses. Nevertheless,
the courts determined that the CHF currency
clauses were valid.
Since neither side was satisfied with the
ruling, both the consumers and the banks
filed their constitutional complaints. In
December 2016, the Constitutional Court
rejected the complaint of the banks and
upheld that of the consumers, repealing the
part of the earlier ruling dealing with the
currency
clauses.
However,
the
Constitutional Court's ruling is based
predominantly on formal grounds.
Namely, the Supreme Court, being the final
court to review the issue prior to the
constitutional complaint, held that, unlike
the variable interest rate clauses, currency
clauses were not subject to the intelligibility
and fairness test established under EU law
because they had been widely used in
practice and, as a consequence, the effect
of the currency clauses was well known to
everyone involved. The Constitutional Court
held that, even though the Supreme Court
was entitled to apply this legal standard
differently,
it
failed
to
adequately
substantiate
its
reasoning
why
the
intelligibility and fairness test should be
applicable and relevant only in relation to
the variable interest rate clauses, but not in
relation to the currency clauses.
Moreover, the Constitutional Court also
determined that the Supreme Court failed to
justify why it rejected the requests for
seeking a CJEU's preliminary ruling on the
interpretation of the EU law on those points.
DALIBOR VALINČIĆ
Partner
[email protected]
BORNA DEJANOVIC
Associate
[email protected]
CLASS ACTION
LITIGATION
NEW LAW MAY UNLOCK CLASS
ACTION LITIGATION IN POLAND
New regulations on class actions are being
contemplated by the Polish Parliament. If
accepted, they will simplify the procedure
and contribute to the growth of class action
litigation in Poland.
At the beginning of March, the Lower House
of Polish Parliament accepted a bill
introducing major changes concerning class
action litigation in Poland. Despite political
differences, the bill was accepted with only
a single vote against it. We expect that the
new law will come into force in the
upcoming months.
Why change?
Class actions were introduced into Polish
law in 2010. Soon it became clear that the
set of rules governing this procedure was
seriously flawed. The proceedings last too
long, are easily obstructed and grossly
ineffective. What is more, only a few types
of claims are subject to a class action. For
these reasons, a representative suit is a rare
sight in Polish courts.
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Risks and opportunities
This is supposed to change once the new
law comes into force. The proposed
regulations are designed to speed up the
proceedings and make them less formal
and easier to conduct. They also allow for
more types of claims to be pursued through
a class action, most importantly those
stemming from a breach of contract. As a
result, we can expect a significant increase
in the number of class action cases,
including those conducted in a B2B setup.
However, simplifying the procedure comes
with a price. Perhaps the most contentious
part of the new rules concerns weakening
the procedural position of a defendant. In
order to accelerate the proceedings, it was
necessary to limit the defendant's rights to
contest court decisions regarding the
admissibility of a class action and the
composition of a class. It remains to be seen
whether these changes will disrupt the
equilibrium between the parties.
The anticipation
We are eagerly anticipating the new law to
be adopted and enter into force. It may
bring new exciting opportunities for lawyers
specializing in the field of dispute resolution.
And who knows, maybe the next Erin
Brockovich movie will be made in Poland.
PAWEL BUKIEL
Associate
[email protected]
IT LITIGATION
OWNER OF SOCIAL MEDIA PROFILE
IS LIABLE FOR OTHER USERS'
POSTINGS
In a recent Austrian Supreme Court
decision (6 Ob 244/16z), a Facebook user
was held liable for offensive postings by
other users on his profile.
Readers of comment sections on social
media profiles usually assume that postings
by other users do not necessarily reflect the
opinion of the profile's owner. In most cases,
readers also do not assume that postings by
other users are deliberately provoked by the
profile's owner. Consequently, profile owners
are often held not liable for insulting
postings on their profile under damages
provisions stipulated in the Austrian Civil
Code. However, they may be held liable
under provisions of the Austrian Code on Ecommerce (ACEC).
According to current Supreme Court
jurisprudence, owners of social media
profiles qualify as host providers pursuant to
Section 16 of the ACEC. In this regard, it
does not matter whether the content shared
is made available in return for payment or
free of charge.
Section 16 of the ACEC sets forth that host
providers cannot be held responsible for
unlawful content or offensive information
entered by other users when those users are
not acting under the provider's authority or
control. However, a host provider must
immediately remove or delete offensive
information upon learning of or awareness
of such information.
Therefore, the liability of host providers for
the postings of other users depends on the
provider's duty to timely remove the
offensive information. In 2004, the Austrian
Supreme Court held that a removal within a
one week period is too late (6 Ob 178/04a).
Whether certain postings can be considered
offensive – and therefore trigger the duty of
removal – is measured by the ability of a
lay person in legal terms. According to
established case law of the European Court
of Human Rights (ECtHR), it is crucial that
issued statements are supported by
substantial facts. The limits of acceptable
criticism must not to be overstepped.
For social media users that reach a large
number of people such as well-established
corporations, it is essential to monitor the
online
activities.
One
should
not
underestimate the possibility of liability that
can result from other users' postings,
especially if the postings result in damage to
another's image or reputation.
PAUL KREPIL
Associate
[email protected]
ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE
7
DEBT RECOVERY
NEW ALTERNATIVE METHOD FOR
RECOVERING DEBTS IN THE
SLOVAK REPUBLIC
On 1 February 2017, a new legal act on the
dunning proceeding (Act on dunning
proceeding) came into force in the Slovak
Republic. The Act sets out a new
alternative proceeding for debt recovery (in
Slovak: upomínacie konanie).
In an explanatory statement to the Act on
dunning proceeding issued by the Ministry
of Justice of the Slovak Republic (Ministry)
and author of this legal code, it was pointed
out that the new law was adopted in order
to meet the need to speed up the procedure
for payment of outstanding pecuniary
claims of creditors using electronic means.
However, the traditional way of bringing a
civil action in a written form before the court
remained unchanged.
The concept of the dunning proceeding is
based on a submission of proposals in the
form of a standardized electronic sheet,
which may be easily downloaded from the
website of the Ministry. The standardized
format of the sheet allows the automatic
processing of information into the systems of
the court and should ensure a proper
completion of every single act, and thus
avoid
vague
and
incomprehensible
proposals.
For the purposes of the dunning proceeding,
a
separate
legal
department
was
constituted under the District Court Banská
Bystrica which is the only respective court
for this type of proceeding.
It should also be noted that the Act on
dunning proceeding sets forth a list of
certain grounds on which a proposal shall
be considered inadmissible, such as: the
applicant nor his legal representative have
not activated an electronic mailbox (please
see: http://www.wolftheiss.com/knowledge
/client-alerts-newsletters/detail/mandatory
electronic-mailboxes-for-legal-entities/). In
addition, the plaintiff must pay the court fee,
the amount of which was determined by
the legislature in the sum of 50% of the rate
provided for in the traditional proceeding.
Once the dunning proceeding is initiated by
filing an electronic proposal, which may not
be considered as inadmissible, is free from
defects and the court fee is dully paid, the
court shall issue a payment order within 10
business days.
ROBERT MIKO
Associate
[email protected]
ARBITRATION
CONSUMER DISPUTES EXCLUDED
FROM ARBITRATION AND NEW
REQUIREMENTS FOR ARBITRATORS
IN BULGARIA
On 27 January 2017, a bill amending the
Bulgarian Civil Procedure Code entered into
force (the Bill). Among other things, the Bill
does the following: (i) reduces the scope of
competences of arbitration courts by
excluding consumer disputes from the
jurisdiction of arbitration courts with no
exceptions, and (ii) sets new requirements
for the organisation of activities for the
arbitration courts. The primary focus of the
Bill is on consumer protection addressing
some long-lasting issues with the notorious
"pocket arbitration courts" by attempting to
limit their authority.
An initial reading of the Bill leads to the
conclusion that some, if not all, of the aims
of the Bill related to consumer protection will
be achieved.
Apart from that, some provisions of the Bill
may potentially create difficulties regarding
the day-to-day activities of arbitration
institutions.
In brief, some of the practical impacts of the
Bill are:
▪
For the first time, qualification criteria for
arbitrators are introduced – arbitrators
may only be (i) sui juris mature persons,
(ii) with acquired higher education, (iii)
not convicted for a criminal offence
subject to public prosecution, (iv) having
at least 8 years of professional
experience
and
(v)
high
moral
character. Because these requirements
are too general, they may lead to
dubious interpretations. For example,
there are no specific criteria for
professional experience or the fields in
ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE
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which the arbitrator should be an
expert. Further, it is unclear how the
experience is to be proven.
▪
Arbitration courts must keep an archive
with all completed cases for ten years
after rendering awards. After the 10th
year, only award and settlement
agreements
should
be
kept.
In
combination with the obligation to
ensure remote access to the court files for
the
parties,
the
data
keeping
requirements
aim
to
ensure
transparency and accessibility to the
arbitration files. The Inspectorate at the
Minister of Justice is authorised to
exercise
control
over
arbitration
institutions and arbitrators from now on.
It can also initiate examinations for
compliance with the provisions of the
Bulgarian International Commercial
Arbitration Act. However, it remains
unclear whether, and if applied, how
the controlling functions will be
applicable to international arbitration
institutions or arbitrators.
The Bill also provides that current pending
arbitration
proceedings
under
nonarbitrable disputes should be terminated
with immediate effect. However, the Bill
does not shed light as to the effect of such
termination in terms of already paid fees
and/or the fact that the proceedings were
initiated based on mutual consent of the
parties. It remains to be seen how the above
issues will be addressed in practice.
STANISLAV CHERKEZOV
Associate
[email protected]
GEORGI KANEV
Associate
[email protected]
EU-LAW
NEW DIRECTIVE ON PACKAGE
TRAVEL AND LINKED TRAVEL
ARRANGEMENTS
On 31 December 2016, the new EU Directive
on package travel and linked travel
arrangements (EU No. 2015/2302) came
into force.
The main aim of the new Directive is to
ensure important consumer rights especially
in cases where travel services are offered or
sold via the internet. In order to take into
account the possibility to combine travel
services in many different ways, the new
Directive extends the concept of "package"
and also broadens the scope to linked travel
arrangements.
Therefore the new Directive defines
package as a combination of at least two
different types of travel services, such as
carriage of passengers, accommodation for
non-residential purposes or the rental of cars
or other motor vehicles for the purpose of the
same trip or holiday. The package may
either be combined by one trader (prearranged packages) or individually selected
by the customer before a single contract on
all services is concluded ("customized
packages").
HIGHLIGHTS FROM
THE AUSTRIAN
SUPREME COURT
The new Directive also applies to linked
travel arrangements which are services that
are purchased from separate traders
through linked online booking processes
where the traveler's name, payment details
and e-mail address are transmitted from the
trader with whom the first contract is
concluded to another trader or traders and
a contract with the latter trader or traders is
concluded at the latest 24 hours after the
confirmation of the booking of the first travel
service ("click through arrangements"). In
cases
where
there
are
significant
impairments on rendering one of these
services, the customer is entitled to enforce a
number of rights, such as requesting to be
taken home in cases where the booked
hotel is under construction at the time the
customer arrives. Alternatively, the trader
may
offer
an
equal
or
better
accommodation
or
has
to
pay
compensation.
explanation of the risks and possible
Further, this Directive also sets forth a
number of important consumer rights with
regard to information requirements. In order
to comply with the pre-contractual
information duties, the trader who can be
the organizer or the retailer needs to inform
the customer about all main characteristics
of the travel services, all necessary contact
information of the trader, the total price of
the package including all taxes and
additional fees, charges or other costs, the
arrangements for payment and the
The moving spiral
In November 2016, the Austrian
Supreme Court published a decision,
showing a general tendency of doctors
being held liable for medical
malpractice because of deficiencies
regarding the informed consent
process. The process requires an
complications of a treatment or
procedure. The latter being the more
frequent cause for rulings against
physicians.
In this particular case, the plaintiff had
a contraception-spiral inserted by her
gynecologist. However, the
gynecologist did not specifically
explain the possibility that the spiral
could move into the abdomen.
Following the lege artis treatment, the
spiral moved to the plaintiff's abdomen
and grew together with the small
intestine. The contraception-spiral had
to be removed by surgery.
The Austrian Supreme Court
acknowledged the argumentation of
the Appeal Court, according to which
the movement of the spiral is a typical
treatment-risk. The doctor must inform
the patient about the respective risks,
regardless of the rate of occurrence.
Additionally, the package insert of the
contraception-spiral, which was not
handed over to the patient, should be
within the state of knowledge of a
medical specialist. A decent and
dutiful gynecologist would have
informed the patient about the risk, as
stated by the Austrian Supreme Court.
(1 Ob 138/16z)
Christina Barzal
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minimum number of persons required for
the package.
Further, the Directive extends a customer's
right to terminate the contract free of charge
in cases where the price of the package
travel contract is increased by more than
8%. In order to ensure that travelers are fully
protected against the trader's insolvency,
the Directive foresees the trader's obligation
to provide security for the refund of all
payments made by, or on behalf of, the
traveler, as well as for the traveler's
repatriation.
All Member States of the European Union
have to adopt and publish the laws and
regulations necessary to comply with this
Directive by 1 January 2018. These laws
shall apply at the latest from 1 July 2018.
On 28 February 2017, the Austrian Ministry
of Justice published a bill adopting the
Directive by implementing an Act on
package
travel
and
linked
travel
arrangements (Pauschalreisegesetz). The
wording of this Act literally corresponds with
the Directive but still may be altered or
amended before it is passed by the Austrian
Parliament. Currently it is not known when
this Act will enter into force.
ANNA KATHARINA RADSCHEK
Associate
[email protected]
PRIVATE CLIENTS
NEW AUSTRIAN LAW OF
SUCCESSION – IMPORTANT
CHANGES FROM THE TESTATOR'S
PERSPECTIVE
On 1 January 2017, the amendment to the
Austrian law of succession went into force
and applies to the succession of persons
who died since then.
The amendment provides new formal
requirements for testaments. However,
former depositions upon death continue to
be valid. A testament that is not made by
handwriting, e.g. written on the computer,
or set up by a lawyer or notary, has to be
signed personally and confirmed before
three witnesses. What is new is that all
witnesses have to be simultaneously
present. In addition, the testator now must
add the phrase: “This is my last will”. This
shall increase counterfeit protection. Also
new is that the witnesses’ names and
surnames and dates of birth have to be
recorded in the document. The witnesses
also have to sign the document with an
additive that indicates their capacity as
witness (e.g. “as requested witness”). They
further have to be capable to be a witness.
Biased are all persons who benefit from the
depositions upon death as well as spouses,
parents, children, siblings and relatives by
marriage in the same degree. Another new
change is that civil partners and partners of
beneficiaries
witnesses.
are
excluded
from
being
The
debarment
from
succession
is
expanded. Debarred is not only a person
who has committed a criminal offence
against the deceased but also a person who
has committed a criminal offence against
the deceased’s estate, e.g. in cases of
embezzlement, destruction or theft of estate
objects and unauthorized withdrawals. New
is that the testator can disinherit a person
who has committed a criminal offence
against the spouse, civil partner or partner
of the deceased, who has caused
psychological grief to the deceased or has
gravely breached obligations resulting from
the legal relationship between parents and
children. Another change is that the testator
(only personally) can abolish debarment
and disinheritance by forgiveness. This can
be done expressly or implied, e.g. by
appointing the person as heir.
The possibility to reduce the reserved shares
of legal heirs is expanded. The reserved
shares can be reduced by half, if a family
relationship never existed between the
testator and his/her child. Now, the
reduction is also permitted if a family
relationship did not exist over a long period
before the death of the testator. According
to the legislative materials, estrangement of
at least ten years is required. New is that the
reduction of the reserved shares is also
possible in respect of the testator’s spouse or
civil partner. Altogether, the amendment
provides more flexibility to the testator.
CAROLIN ZIEGLER
Consultant
[email protected]
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INSOLVENCY LAW
CHANGES TO CZECH INSOLVENCY
LAW – RESTRICTION OF THE
CREDITORS' RIGHTS?
On 14 February 2017, the president of the
Czech Republic signed a comprehensive
amendment to the Czech Insolvency Act
which will enter into force on 1 July 2017,
and will significantly affect a vast number
of insolvency institutions.
The purpose of the amendment is to lessen
the administrative burden on the courts,
protect
against
unjustified
'frivolous'
insolvency petitions (literal Czech translation
is
bullying
petitions),
enhance
the
transparency of insolvency proceedings
and regulate the advisors providing services
in the area of debt relief.
Since the most criticized part of the
amendment deals with changes to creditors'
rights, we will address them here.
Limitation of the voting rights of creditors
forming a concern with a debtor
The creditors forming a concern with the
debtor will lose their ability to influence
whether
the
debtor
will
undergo
reorganisation or go into bankruptcy.
Auditors' / Experts' confirmations, proof of
ultimate beneficial ownership
The creditors will be required to support their
claims against the debtor with an expert's
opinion or confirmation issued by the
auditor or tax advisor, if not already having
the claim acknowledged by the debtor or
decided upon by the court. In cases where
the creditors acquire the claim in the last six
months before the commencement of the
insolvency proceedings or after the
commencement, they will also have to
submit evidence of their ultimate beneficial
owner.
Negative presumption of bankruptcy
If the amount of due debts does not exceed
the amount of readily available resources
by more than 10%, the debtors will be able
to defy the insolvency petition filed by the
creditor.
Preliminary assessment of the insolvency
petition
If the insolvency court doubts the
justification of an insolvency petition filed by
a creditor, it can decide to postpone
publishing the petition in the insolvency
register. This is a main tool against the
frivolous insolvency petitions.
The above changes are just a taste of what
the amendment to the Czech Insolvency
Act brings and only time will tell if the
reservations expressed by its critics are
justified.
PETR SYROVATKO
Counsel
[email protected]
LENKA KUCEROVA
Associate
[email protected]
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