Dispute Resolution Insider - sixth edition

ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 1 TO OUR READERS Welcome to the 6th 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. 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. 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. 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. Last but not least, we are keeping a close watch on the major changes concerning class action litigation in Poland! Read inside to find out more. Best regards, VALERIE HOHENBERG FLORIAN PECHHACKER Counsel Associate 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, AUTHORS MARKUS HEIDINGER Partner, WOLF THEISS Vienna HOLGER BIELESZ Partner, WOLF THEISS Vienna NATASA LALOVIC MARIC Partner, WOLF THEISS Belgrade LIGIA CECILIA POPESCU Partner, WOLF THEISS Bucharest DALIBOR VALINČIĆ Partner, WOLF THEISS Zagreb PETR SYROVATKO Counsel, WOLF THEISS Prague CAROLIN ZIEGLER Consultant, WOLF THEISS Vienna PAWEL BUKIEL Associate, WOLF THEISS Warsaw STANISLAV CHERKEZOV Associate, WOLF THEISS Sofia BORNA DEJANOVIC Associate, WOLF THEISS Zagreb 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 March 2017 ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 2 transforms, utilizes or transfers to a third person any such assets. 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 these predicate offences shall be construed in order to assess whether an actual predicate offence was committed for money laundering. 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). 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. NIKOLAUS LOUDON Associate [email protected] ROMANIA'S CONTROVERSIAL AMENDMENTS TO ANTICORRUPTION LAWS FINALLY REPEALED In early 2017, the newly elected Romanian social democratic government tried to enact Government Emergency Ordinance 13/2007 (the Ordinance), amending the Criminal Code (CC) and the Criminal Procedure Code (CPC). The Ordinance did achieve partial harmonization with EU requirements and legitimate recommendations of the Constitutional Court. However, since more favorable criminal laws do retro-activate certain controversial amendments of both 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. The catalysts of the amendments in the Ordinance included a 2016 ruling of the Constitutional Court of Romania (CCR) (405/2016) indicating that 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. Hence, they are important to the general anti-corruption efforts in Romania. The main controversial amendments included: i. 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 for criminal liability is shortened accordingly (from 8 to 5 years). 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 criminal cases, the release from prison of convicted persons and potentially encourages multiple abuses under the threshold. iii. Convicted persons can no longer be prohibited from holding public office, allowing for morally controversial persons to hold public office. ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 3 iv. More lenient sentences for regime of abuse committed by discrimination, from imprisonment of 2 - 7 years to 1 month - 1 year or fines. v. Abuse by issuing or approving statutory acts is eliminated, virtually allowing for enacting laws based on racial discrimination. vi. The controversial elimination of the phrase “business relations” in conflicts of interest scenarios allows for civil servants to favor former employers, business partners etc. 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 specialists on the proposed changes. In essence, such new amendments regarding the regime of abuse of authority and conflicts of interest in the newly introduced Ordinance were considered by the public as substantially watering down the force of the initial regime of these crimes which are still very relevant in Romania, and ultimately caused substantial public upheaval. Consequently, the Ordinance was repealed and new legislation is expected in the near future to address the public concerns. LIGIA CECILIA POPESCU Partner [email protected] PUNISHMENT WITHOUT GUILT? As of 1 January 2006, stock companies, limited liability companies and other forms of companies, may be penalized for criminal acts committed by their employees or decision-makers based on the Act on Corporate Criminal Liability ("Verbandsverantwortlichkeitsgesetz, VbVG"). Recently, the constitutional order of the VbVG was reviewed by the Austrian Constitutional Court (VfGH). In its decision, the VfGH came to the conclusion that constitutional rights are not infringed by the VbVG. The VfGH argued that the Austrian legislature, in accordance with international 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, such provisions which allow for third-partyliability have to comply with the requirement of objectivity. Thus, a company may not be penalized for actions which are outside of its sphere of interests or influence. In cases where the connection of a company's sphere of interests or influence is in adequate correlation with the conduct of an employee or decision maker, it is possible to constitute the liability of a company, if such conduct is considered a criminal act and was committed unlawfully and culpably. According to the decision of the VfGH, this is the case with regard to the VbVG because a company only becomes liable when the criminal act was committed for its benefit or due to a breach of the company's duties. Furthermore, a decision- maker has to commit the criminal act alone or the commission of a criminal act by an employee was enabled by the company's negligence. Also from the angle of creditor protection, the repeal of the VbVG by the VfGH would have been considered as a step back in combating corruption in Austria. For some other reasons, the repeal of the VbVG would have caused major problems because beyond criminal law, the punishment of 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 annual turnover in cases of market abuse. In accordance with European Union law, such regulations may not be contested by Austrian Constitutional Law. All other cases HIGHLIGHTS FROM THE AUSTRIAN SUPREME COURT Addicts: Easy prey for gambling providers? A person suffering from a gambling addiction challenged a contract with a gambling provider. 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, 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) Patrick Winter ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 4 may be considered unconstitutional. The VfGH avoided such a dilemma with its recent decision. 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. HOLGER BIELESZ Partner [email protected] FLORIAN HORAK Associate [email protected] NEW AMENDMENTS TO SERBIAN CRIMINAL CODE BRING LONGAWAITED CHANGES As of 1 June 2017, an improved and modernized Criminal Code will come into force in Serbia. While most of the amendments concern existing 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 to an era of an outdated understanding of commercial crime. Thus, acts of issuance of checks and use of payment cards without coverage, deceiving buyers, abuse of business authorizations and monopoly abuse have been decriminalized, while new commercial criminal offences, such as commercial bribery, commercial 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 from the competitionprotection authority. This criminal act applies to any person in a commercial entity that executes a restrictive agreement that is not exempted from the bans defined in the relevant competition-protection regulations, with a prescribed imprisonment of six months to five years as well as 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 the person charged which makes for an interesting mix of competition and criminal law legal principles. 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 crime. As it is too early to draw any conclusions on the consequences of the amendments, it will be interesting to see what results they will bring once they come into force. NATASA LALOVIC MARIC Partner [email protected] ALEKSANDAR RISTIC Associate [email protected] ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 5 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 ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 6 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. The pending lawsuits have just seen a new development before the Constitutional Court. 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. 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. 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. DALIBOR VALINČIĆ Partner dalibor.val[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. ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 7 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 8 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 9 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"). 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. 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 HIGHLIGHTS FROM THE AUSTRIAN SUPREME COURT 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 explanation of the risks and possible 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 ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 10 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 annakatha[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 are excluded from being witnesses. 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] ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 11 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] LEGAL NOTICE OWNER, EDITOR, PUBLISHER WOLF THEISS Rechtsanwälte GmbH & Co KG Attorneys at Law, Schubertring 6, 1010 Wien T: + 43 1 515 10, F: + 43 1 515 10 25 [email protected]; www.wolftheiss.com Commercial Registration Number: FN 403377 b; Commercial Registration Court: Commercial Court Vienna; PURPOSE OF BUSINESS: legal advice and services provided by lawyers PURPOSE OF PUBLICATION: legal knowledge and services provided by Wolf Theiss ALBANIA AUSTRIA BOSNIA & HERZEGOVINA BULGARIA CROATIA CZECH REPUBLIC HUNGARY POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA UKRAINE 12 HEAD OF DISPUTE RESOLUTION PRACTICE GROUP CLEMENS TRAUTTENBERG Partner [email protected] ALBANIA E. [email protected] T. +355 4 2274 521 AUSTRIA E. [email protected] T. +43 1 515 10 BOSNIA & HERZEGOVINA E. [email protected] T. + 387 33 953 444 BULGARIA E. [email protected] T. +359 2 8613 700 CROATIA E. 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