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Leadell Pilv Victorious in Precedent-Setting Estonian Case

Leadell Pilv Victorious in Precedent-Setting Estonian Case

Estonia
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Leadell Pilv has represented Urmas Nisuma, one of the owners of the Hotel Parnu, in a dispute with business partner Ado Sepa and OU Linden Hotell, which Sepa controls involving allegations that Sepa and his company had taken over effective control of Hotel Parnu from Nisuma and lefyt him out of both the profits and day-to-day business of the hotel.

According to Leadell Pilv, after almost four years of proceedings, the Court ruled "that OU Linden Hotell, which operates the hotel, must relinquish its possession on the hotel, all the keys and cards, and must turn over the profit earned in the past four years."

The firm describes the judgment as "an important precedent that is likely to influence future legal practice in Estonia." According to Leadell Pilv, "if until now a board member could without any substantial risk take everything from a company that was entrusted to him and it was sufficient to avoid responsibility that the transactions were not done directly with himself but his company, then this is no longer the case. The National Court stated that a transaction done between a company and another company owned by the board member is legally the same as if the transaction were done with the board member himself. The National Court said that such a transaction requires consent from the owners and without the owners’ consent only common everyday deals can be made. The same was upheld by the circuit court that decided that the rental agreement that allowed A. Sepa to take control of the hotel is void and must be overturned. Hopefully this case will have a positive effect on Estonian commercial law and legal practice as a whole."

Urmas Nisuma was represented by Leadell Pilv Attorney-at-Law Tambet Laasik.