As Europe begins a tentative re-opening following several difficult months of quarantining, social distancing, and working-from-home, we spoke to CMS’s Warsaw-based Employment Partner Katarzyna Dulewicz and Vienna-based Dispute Resolution Partner Daniela Karollus-Bruner for their perspective on the process.

According to the 2019 CEE By the Numbers issue of the CEE Legal Matters magazine, almost two third of all lawyers and almost half of all partners at ranked Romanian law firms are women. As Romania’s population, economy, and (therefore) legal market are much larger than its chief competitors in both categories, its achievements in this area are particularly significant. Romania’s most prominent female managing partners insist that, indeed, sexism, in the Romanian legal industry, is essentially a non-factor.

The Romanian labor market before the COVID-19 pandemic was very competitive. On the one hand, foreign companies closely monitored the opportunities of a developing market and local labor force, while on the other hand, the tradition of people traveling abroad in pursuit of happiness and the flood of young and bright minds out of the country had spread enough to make recruitment a difficult process and to significantly affect the labor market in general.

The decade that just ended brought significant changes to the banking landscape in Romania. The banks were pushed to restructure their loan portfolios, consumer litigations increased exponentially, the cost of business increased, and Fintech companies started (although timidly) to take a slice of the pie. Populist legislation was enacted to protect consumers years after banking services were contracted. And a wave of acquisitions forced by the increased costs led to changing rankings at the top of the banking sector.

The pandemic caused by the new coronavirus (SARS-CoV-2) has profoundly challenged all justice systems, including Romania’s. The country’s judicial bodies had to quickly assimilate and implement numerous special measures instituted as a result of the state of emergency, followed by the state of alert that was declared at a national level.

On June 18, 2020, the President of Romania promulgated a law amending the Labor Code, two years after the country adopted legislation increasing the sanctions for employers who do not comply with the legal requirements for overtime work. According to the new amendments, the fine for non-compliance in such cases is between EUR 310-620. The amended provisions entered into force on June 21st 2020.

Regardless whether you are a new start-up hoping to become the next “unicorn” or a renowned international corporation, Romania’s ever-changing business and legal environment will impose various issues and hurdles upon your organization’s compliance and ethics culture. From BP’s USD 20.8 billion fine for the Deepwater Horizon accident, to Volkswagen’s USD 14.7 billion fine for false diesel emissions, to Airbus’ USD 4 billion fine for bribery and corruption, keeping a company on the right side of the law and reducing employee malfeasance is always a challenge. 

The COVID-19 outbreak showed that technology lies at the backbone of our society and that the role of electronic communications services and networks in supporting our economic, educational, and social needs has increased exponentially.

The Romanian Government has recently brought important amendments to the energy regulatory framework by way of the new Government Emergency Ordinance no. 74/2020, effective May 19, 2020. According to the new regulations, new energy producing facilities, both renewable and conventional, commissioned after June 1, 2020, would be allowed to sell their output outside the current centralized energy market, at negotiated prices, with the observance of competitive rules. The amendment is intended as an exception to the general principle set out by Energy Law no. 123/2012 that transactions with electricity are carried out on the competitive market, in a transparent, public, centralized, and non-discriminatory manner.

M&A practitioners, fund managers and CEOs are living a 2020 that is rich in experiences. Of course, we all hoped this to be the best year since the 2008 crisis.

Something Needs to Be Done

A popular meme these days is “<<2020 is the year I am going to…>> 2020: <<Hahaha. No.>>”.

The Spring of 2020 was about to blossom when the world got trapped in a global shutdown as a result of the COVID-19 pandemic. The private sector tried to adapt by activating continuity plans. Working from home and interacting online with colleagues and customers has become the new paradigm for service businesses. In addition to a wide range of social distancing restrictions designed to contain the virus (including closing down or significantly limiting public access to many commercial, government, and leisure facilities), Romanian authorities have instituted various specific temporary relief measures, such as unemployment benefits; moratoria on consumer and corporate debt, business rent, and utilities expenses; state aid schemes representing loan and guarantee facilities for small and medium-size enterprises (SMEs); guarantees for mortgage loans; filing deferral for tax returns and rescheduling of income and property tax; and waivers of mandatory insolvency filing  and extension of certain stages in pending insolvency cases.

On February 11, 2020, CEE Legal Matters reported that Filip & Company, working with Freshfields Bruckhaus Deringer, had advised RCS & RDS / Digi Communications N.V. on its issuance of two series of senior secured bonds with a total value of EUR 850 million. Clifford Chance Badea and Cleary Gottlieb Steen & Hamilton advised the lead arrangers, which included Citibank, ING Bank N.V., and UniCredit Bank S.A.

The new version of the Moldovan Civil Code, which came into force pursuant to the Law to Modernize the Civil Code and to Amend Certain Legislative Acts 133/2018 (the “Law”), reformed several features of the private law and turned out to be a real challenge for all kind of individuals and organizations, from natural persons and entrepreneurs to public authorities.

The COVID-19 pandemic has revealed a certain degree of inflexibility and lack of vision with regard to employment regulations and rules, especially in Eastern Europe, where countries which were slower to adjust than their Western European counterparts. Unfortunately, Moldova was no exception, and Moldovan businesses have frequently found themselves in positions where there were no obvious legal and commercial options available to their specific situation during this pandemic. 

The time is gone forever when our lawyers would sit down in a physical data room to dig through tons of documents provided by the target’s head of legal or corporate secretary. We will miss the personal contact, but it’s fair to say that the due diligence process has become more streamlined and efficient in Moldova, making it possible to shrink the timing of M&As and close deals in weeks rather than months.

A Fortunate or Unfortunate Positioning