Category: Corona

The Most Important Rules Of Lease Agreements For Office And Business Premises, During The State Of Emergency

Posted on by Lisa Fortmüller

In order to prevent the spread of the coronavirus pandemic (COVID 19), a number of restrictive measures have been imposed, which also have a significant impact on tenancies. As a result of the restrictions, the home office has become commonplace, office buildings have become depopulated, a significant number of stores have been open for a limited time, their turnover has decreased significantly, however, leases still exist. The question rightly arises as to what rights and obligations the landlord and the tenant have in the current situation, whether the rent can be reduced and what rules apply to the termination of the tenancy.

Until 30 June 2020, a prohibition on termination will apply to some lease agreements

According to the newly released government decree, from the declaration of a state of emergency there is a prohibition on termination of the lease agreements until 30 June 2020, for the most endangered sectors, such as tourism, catering, entertainment, gambling, film, performing arts, event management and sports services. The prohibition on termination may be extended by the government until the end of the state of emergency.

Does this mean that non of the tenancy can be terminated at all?

No. This means that the leases of business premises belonging to the indicated sectors cannot be terminated by unilateral termination during the prohibited period, which in our opinion applies to all types of termination, thus both the so-called ‘ordinary’ and ‘extraordinary’ (immediate) termination. Of course, it is still possible for the parties to terminate the contract by mutual consent.

What about the lease agreements on office spaces? Does the prohibition on termination apply?

If the office spaces in question do not belong to any of the economic sectors listed in the government decree, so it is typically not a commercial business, the prohibition on termination does not apply to these leases. However, termination of these leases may not be the most economically viable option in the long run, so a temporary amendment to the lease should be considered, in which favourable conditions can be laid down for both landlords and tenants.

Can the tenant demand a reduction or waiver of the rent?

The Civil Code stipulates that no rent is payable for the period during which the tenant may not use the thing for reasons beyond his or her own interest. In view of the restrictive measures introduced due to the coronavirus pandemic, the remission of rent can only occur in a very narrow scope. It can only take place if the restriction imposed directly affects the operation of the rental property and makes it impossible to use it. If the restrictions only indirectly affect the use of the rental property, but do not make it impossible, the tenants are not released from their obligation to pay the rent.

Furthermore, the parties may deviate from the cited provision in the lease agreements with the same will, so it is worth examining the concluded agreements, because if the lease agreement excludes the applicability of this provision, the tenant cannot rely on the cited provision and refuse to pay the rent.

However, a reduction in the rent requires an amendment of the contract based on the mutual agreement of the parties. Under the contract amendment, the parties can agree on a number of provisions that will alleviate their situation (e.g. rent reduction, subsequent rent settlement, extension of the lease term, etc.). Mutually agreed amendments to the contract are in the interests of both the tenant and the landlord. Although it currently appears that a contract amendment will bring more favourable changes to the legal relationship for tenants, a contract amendment by mutual agreement may also be more economical for landlords. If the obligations of the tenant are left unchanged, there is a high risk that the tenants will become economically paralysed and will be liquidated. In such case, the landlord’s claims against the tenant might be enforced up to the amount of the contractual guarantees only.

Possibilities of holding general meetings and members’ meetings during the state of emergency II.

Posted on by Lisa Fortmüller

As from April 11, 2020, a lately issued Hungarian government decree regulates how members’ meetings and general meetings should be held during the state of emergency. The new government decree also overrides the relevant provisions of the Civil Code and the articles of association of companies and other legal entities.

What additional rights does the government decree give to the management?

In the first part of our summary of this newest government decree, we have already explained the increased „freedom” of the management regarding corporate decisions.

In many company’s case, the adoption of the annual financial report under the Hungarian Accounting Act is due in the near future. Pursuant to the interim regulation introduced by the government decree, the management is entitled to decide on the approval of the company’s financial report and the use of the after-tax profit. Moreover, the management can take emergency measures during the state of emergency, which would normally fall within the competence of the decision-making body.

These are very far-reaching decisions. Aren’t the hands of the management tied?

Yes: the decisions mentioned before can only be taken if a meeting of the decision-making body cannot be held, either by the participation of the members by electronic means or by voting in writing.

In addition, the legislature intends to set limits on the “emergency measures” of the management as a guarantee: accordingly, the management (i) may not, as a general rule, amend the articles of association, (ii) decide on the dissolution of the legal entity without a successor, (iii) nor may it decide on the transformation, merger or division of the company.

An additional restriction is that (iv) additional payments or other capital injections may be ordered by the operational management of the legal entity only with the prior written consent of the members/founders. In the case of company forms where company law imposes a minimum capital requirement (i.e. in the case of limited liability companies and public limited companies), (v) the management may not decide to reduce the subscribed capital.

Can members hinder management decisions?

Yes, this is possible before the measure in question is taken; the management may not take a decision if in their written opinion, the majority (at least 51%) of members holding more than 25% of the votes object to the proposed decision of the management. (If the legal person has a member having majority influence or a qualified majority, such member can block the measures of the management on its own.)

What happens if the tasks of the management are not performed by one person but by a body?

Like in the case of decision-making bodies, the government decree intends to enable the widest possible use of electronic means in decision-making processes in the case of management acting as a body. If there is no agreed procedure for the use of modern means of communication (or deviates from the government decree), the chairman of the board (deputy in case of impediment) and ultimately the member requested by the management are entitled to determine the rules of meeting and decision-making. It is important that written consultation and decision-making can also take place by electronic message exchange (i.e. by e-mail).

These facilitations should apply not only to the decision-making of the board of executive officers, but also to the decision-making of the supervisory board (or, if one exists, the audit committee).

What happens to mandates that expire during the state of emergency?

If the mandate of the executive officer of the company expires during the time of the state of emergency, his/her position shall last until the 90th day after the end of the state of emergency. The executive officer shall perform duties during this period. The cited rule applies ex lege, i.e. without a decision of the decision-making body.

If the executive officer resigns, he/she shall still perform his/her duties during the emergency or for 90 days after its termination. The same is true if the mandate is for a fixed term and the fixed term would expire during the state of emergency.

On the other hand, the mandate of the executive officer shall terminate if he/she is removed from office by the supreme body or if a reason for exclusion or conflict of interest arises. It goes without saying that in the event of the death of executive officer, the mandate cannot be maintained either, the just implemented interim rules do not bring change in this, of course.

It is important to emphasize that in the above time interval – similarly to the rules described for the executive officer – the mandate of the permanent auditor does not expire, and the permanent auditor is also obliged to perform duties during this time.

Possibilities of holding general meetings and members’ meetings during the state of emergency I.

Posted on by Lisa Fortmüller

How can corporate decisions be made during the pandemic?

Government decree about holding members’ meetings during the state of emergency

Restrictive measures imposed due to the coronavirus pandemic pose companies to many difficulties. The current situation requires not only financial considerations, but the need for seamless legal operation of the companies also calls for the use of solutions that are not often used otherwise. In our article we briefly overview what decision-making alternatives does the current Hungarian legal system offer to avoid personal contact.

Holding events and gatherings has been prohibited in Hungary since mid-March in general, and the convening of the main bodies of companies has not been named as an exception in the relevant government decree.

As from April 11, a new government decree is in force regulating how to hold members’ meetings and general meetings during the state of emergency. The new government decree overrides the relevant provisions of the Civil Code and founding documents of companies and other legal entities in certain aspects. The decree deals with how decision-making bodies, such as general meetings, members’ meetings and boards of trustees can make decisions during the limited curfew implemented in the course of the state of emergency.

Who is affected by the regulation?

The decree applies to both legal and non-legal entities. So, the scope of the ones affected includes, among others, general partnerships and limited liability companies, and public limited companies, cooperatives, associations and foundations. However, the government decree does not apply if the decision-making body is not prevented from taking a decision in compliance with the rules on meeting restrictions. Nevertheless, the provisions of the decree may be applied even in such cases on a voluntary basis.

Is there a case where the decision-making rules under the government decree apply even if the meeting could otherwise be held under the movement restriction rules?

Yes, if the number of members of the decision-making body is not more than five and decision-making can be made in the manner specified in the government decree. In the case of a decision-making body with more than five but not more than ten members, the majority of members with a majority of votes may request the management to initiate decision-making under the rules of the government decree, while in case of a decision-making body of more than ten members, the management can initiate it on its own.

How should the meeting be held under the regulation?

There are two ways. Either the meeting may be held with the participation of the members by electronic devices, or a decision may be taken in writing without holding a meeting on the initiative of the management, even if the articles of association does not provide for these possibilities and conditions.

Decision making without holding a meeting

Hungarian company law provides an opportunity for companies – excluding public limited companies – to make decisions without holding a meeting. Decision-making without holding a meeting serves as a possible alternative for the members to vote from home, as it does not require personal appearance. It is important to emphasize, however, that this is a written decision-making process in practice (for example voting by letter or email), so it is not the same as holding a meeting by electronic communication devices.

The decision-making may be initiated by the management by sending a draft of the resolution to the members. Members shall be given a period of at least fifteen days to send their votes to the management unless it is otherwise provided in the articles of association. In decision-making without a meeting, the decision-making process is effective if at least as many votes are sent to the management as would be necessary for a quorum if the members would hold the meeting.

Holding meetings by electronic communication devices

Company decisions can also be made online. In this case, participation shall be provided by means of an electronic communication device which allow the identification of members and mutual, uninterrupted communication between members. If the articles of association do not provide the rules for meeting held by electronic devices the management is entitled to establish these rules and communicate them to the members. The management must determine the electronic devices and IT applications that can be used and, if the management does not know the members (representatives) personally, the method of proving their identity.

Before the meeting, it is recommended to make a “test call” with the members of the company so that everything can be done smoothly during the decision-making process and the meeting can be held validly. Meetings can also be held on the nowadays popular applications like Skype, Zoom, Microsoft Team or Jitsi. It is important that the decisions taken and everything which was said at the meetings should be recorded so that they can be recalled later. All this means that there is no need to make a written record, it is only important that what is said on the meetings should be recallable in the future.

In conclusion, the current Hungarian legal system, in particular the new government decrees offer companies a number of choices how members should avoid personal contact in their decision-making. The new government decree also defines the cases when the management may decide on certain matters within the competence of the general meeting, the members’ meeting, regulates the operation of the executive bodies separately, and also contains additional rules concerning public limited companies. We will analyze these issues in our next publication.

Some important questions nowadays in Hungary: Conversion of business methods, employee’s leave, suspension of business activity for small and mid-sized enterprises

Posted on by Lisa Fortmüller

Conversion of regular business methods into ordering and contracting by telephone

The spread of the coronavirus poses new challenges for businesses that have so far been using primarily personal contact or paper-based methods during their activities. Many would introduce processing orders and making contracts by telephone in their administration to replace personal contact. In our newsletter, we represent the most important legal aspects should companies consider such conversion of their business methods.

The first question is how detailed the tenderer must describe the content and elements of the contract in the telephone contracting process in order for it to be validly concluded. In order for the contract to be valid, the essential elements of the contract must be agreed by the parties. Such material elements are typically the amount of the product or service, the payment deadline, the main features of the product or service, or the method of payment, but it varies from contract to contract as to what may qualify as a material item. Many companies already enter these essential elements into their contracts in accordance with their general terms and conditions (GTC) and regulate their details therein.

We would also recommend this method as a starting point for regulating telephone and online contracts, as it is the simplest form of detailed and prudent contracting. When concluding a telephone contract, it is always necessary to inform and draw the customer’s attention to the detailed knowledge of the GTC and the terms of purchase.

Recording telephone conversations

Another important aspect of telephone order is the matter of voice recording. Most customer services record calls and a machine voice automatically notify customers thereof. This can later be important to a business, if we think about what happens if the customer claims to have been invoiced for a different amount than the amount of the order, or if he/she received a different product. Recording the telephone conversations serve as a perfect solution in the event of a dispute, as the voice recording has probative value if it is lawfully recorded.

According to the information provided by the Hungarian National Authority for Data Protection and Freedom of Information, telephone conversations can only be recorded and stored pursuant to the mandatory requirements of law or upon the prior consent of the person concerned as data subject.

However, in addition to the consent of the data subject, it is a further condition that the data subjects are to give their consent after being duly informed of the purpose, duration and conditions under which the conversation will be recorded, stored and used. For this purpose, a statutory privacy statement published on the company’s website and accessible to all may be appropriate. However, data management must always remain within the necessary framework and be capable of achieving the desired purpose.

From the above summary, it is pointed out that there are relatively many legal obligations associated with lawfully recording telephone orders, but its introduction in accordance with the law can be a long-term solution for businesses. Of course, our summary does not cover all aspects of regulatory design, we have only highlighted some important issues.

Independent 14 days of the employee’s leave

This time, we draw attention to a lesser-known provision of Hungarian labor law that may be useful for companies where it is not feasible to work from home, or which are forced to shut down temporarily as a result of preventive government measures.

Granting leave by the employer

Employers generally seek to treat the current situation fairly, within the limits of economic reasonableness, and to avoid, as far as possible, dismissing workers. If the employer is unable to meet its employment obligation, it seems an obvious solution to grant leave to the workers concerned.

The „14 days rule”

Leave is generally granted by the employer, but the parties must pay attention to certain restrictions. Such a restriction is that, unless otherwise agreed, the leave must be granted in such a way that the employee is released from his/her obligation to work and to be available for at least fourteen consecutive days once per calendar year.

Unless otherwise agreed, if the employer is forced to grant leave to its employees anyway, they can use the current situation to fulfill their obligation described above.

Idle time/Downtime

If the employer is unable to meet its employment obligations, i.e. to give work to its employees during the working hours, we are talking about downtime/idle time. In this case, the employee is still entitled to the base salary or, if he or she was entitled to a wage supplement according to his or her position, the employer is also obliged to pay it to him or her. An employer may be released from its payment obligation only if it can prove that it was unable to fulfill its employment obligation for an unavoidable external reason.

By external reason we mean all the reasons that fall outside of the scope of interests and powers of the employer, and the employer could not prevent or eliminate, and this was not to be expected from the employer. However, we would like to draw your attention to the fact that we cannot automatically talk about the occurrence of force majeure at the same time as the introduction of the state of emergency. At present, no „general quarantine” has been ordered, so in theory the employer would still be able to employ the employee if the employer can provide the employee with safe and healthy working conditions.

Suspension of the business activity

Entrepreneurs subject to KATA taxation (a special form of simplified taxation applicable to certain small and mid-sized enterprises, entrepreneurs in Hungary) who have not been exempted from paying their KATA tax  , but who cannot generate income in the present situation, should consider suspending their business activities. , The suspension of the business activity must be communicated towards the tax authority, the local government responsible for the local business tax and to the competent professional chamber. During the break, these small and mid-sized enterprises still have to pay a small amount of monthly contribution to social security.

Updated – Criminal Law: Review of the main measures provided by the state of emergency decree

Posted on by Ana Pandelea

The state of emergency initially instituted in Romania until 14 April has been extended for an additional 30 days as of 15 April 2020. Some additional measures have also been included regarding the criminal proceedings and we have listed below an updated review of their impact:

1. Criminal investigation activity has been slightly relaxed and although it can be particularly performed regarding the cases indicated in the decree and the cases considered urgent by the prosecutor, there is not anymore provided a specific restriction regarding the other cases. Essentially, the criminal investigation activity will be focused on:

  • cases in which preventive measures were ordered or proposed, cases regarding the protection of victims and witnesses, cases for applying medical safety measures and cases in which the victims are minors;
  • criminal investigation activities and evidence related activities the delay of which would endanger obtaining of evidence or catching the suspect/defendant and preliminary hearing activities, as well as imposing precautionary measures;
  • cases which are urgent given the purpose of the national state of emergency, cases regarding offences against human life, as well as urgent cases considered as such by the prosecutor and cases concerning flagrant offenses, cases in which preventive measures have been ordered, cases regarding appeals against enforcement of punishment, cases concerning appeals against precautionary measures, cases regarding international judicial cooperation in criminal matters, cases which include measures to protect victims and witnesses, cases regarding medical security measures, cases regarding crimes against national security, cases regarding acts of terrorism or money laundering
  • solving the cases in which the criminal investigation was completed before the institution of the state of emergency, verifying the resolutions by the hierarchical superior prosecutor and solving the complaints against criminal investigation measures and activities.

The competent courts can be notified with an indictment or with an agreement of guilt plea only regarding cases mentioned al let. b above.

During criminal investigation phase, the Judge of freedoms and wrights will rule on the requests, proposals, complaints, appeals and any other notifications regarding the cases mentioned al let. a-d above.

2. The activity in the preliminary chamber and court trial shall be suspended during the state of emergency, except for:

  • cases in which the urgency is justified by the purpose of instituting the national state of emergency
  • urgent cases considered as such by the judge of the preliminary chamber or by the court, as well as
  • cases indicated in the decree (flagrant offenses, preventive measures, appeals against enforcement of punishment, appeals against assets seizure measures, international judicial cooperation, measures regarding the protection of victims and witnesses, medical security measures, offenses against national security, terrorism or money laundering).

During the state of emergency, in the cases mentioned above and given the specific circumstances, the courts can set short hearing terms, including from one day to another or even on the same day. Criminal liability statute of limitations is suspended during the state of emergency:

  • in the cases where criminal investigation is not performed and
  • in the cases where criminal proceedings are suspended.

Suspension operates legally, without the need to issue an ordinance or a ruling for this purpose

3. The consent for communication of procedural documents in criminal cases by electronic mail is presumed and, if needed, the judicial bodies will urgently request by telephone the e-mail addresses for communication of documents.

4. Time limits for communication of ordinances, for submitting a complaint and ruling regarding such complaints (other than those provided at point 1 above) are interrupted. Time limits for submitting appeals in criminal cases (except for the cases tired in accordance with the Decree) are interrupted. Once the state of emergency ends, a new time limit of the same duration will commence.

5. The hearing of individuals deprived of their liberty shall be made through videoconference.

6. If there are available means, the hearing of other persons shall be made through videoconference as well, if they agree.

7. Public tenders for sale of the movable assets seized in the criminal proceedings are suspended, except for the ones performed through electronic means

8. During the state of emergency, the assets in respect of which precautionary measures have been imposed may be commandeered, according to the Law no. 132/1997 if they are necessary to prevent and combat the spread of COVID-19 infections. Criminal investigation and criminal trial are performed according to the Criminal Procedure Code, with the possibility, if necessary and depending on the evolution of the situations generated by the state of emergency or its effects, to establish special rules regarding the procedure for the investigation and trial of the crimes committed during the state of emergency. or taking advantage of this condition, as well as in the case of flagrant offenses.

9. The defendants under a preventive measure such as judicial supervision or on bail shall not present themselves before the supervision body or judicial body which ruled the measure. For the supervision of the defendant, the designated body will go to the defendant`s domicile according to the supervision plan or whenever it is considered necessary.

10. Within 10 days as of the end of the state of emergency, the judge / court will take measures for setting the hearing dates and for performing procedural activities.

The Decree also provides measures regarding the Prosecutor`s Offices and courts` activity in the case when these units are prevented to function. In this respect it is provided that some of the cases pending before these judicial bodies might be investigated/tried by an equal Prosecutor`s Office or court.

There are provided measures regarding the enforcement of the punishments and deprivation and non-deprivation of liberty measures, some activities related to their enforcement being suspended during the state of emergency. Also, exercising certain rights of the incarcerated or arrested individuals was suspended, while the time for telephone and online conversations was correspondingly increased.

Beware of Significant Provision in the Agreement on Providing Contribution from the Antivirus Programme

Posted on by Gabriela Fuchsová

We would like to draw your attention to the relatively significant, albeit hidden, provision contained in the agreement (“the Agreement“) concluded between the Labor Office of the Czech Republic and an employer that applies for provision of a state contribution as compensation of wages paid to its employees under the Antivirus Programme (see our newsletter “Compensation Package for Employers Adopted by the Government of the Czech Republic”).

In Article IX. of the Agreement entitled “Settlement”, it is set out that by concluding the Agreement, all claims of the employer against the state for damages caused by the relevant emergency measures of the government are settled when it comes to damages arising from the employer’s statutory obligation to pay wage compensation to employees due to obstacles to work incurred during the period for which the employer is entitled to the contribution.

For employers, this is to exclude the possibility of simultaneously drawing money for wage compensation from the Antivirus Programme and to claim damages from the state in the future caused by adopted emergency measures regarding wage compensation paid by the employer using its own money.

If employers receive a state contribution of 80% of wage compensation paid to employees under regime A, then by entering into the Agreement, they undertake to waive the claim towards the state for reimbursement of the remaining 20% of the wage compensation. This applies equally to regime B employees, i.e. their employers receive a contribution of 60% of the wage compensation paid out and for the remaining 40%, the state requests a waiver of the right to reimbursement to which the employer might otherwise be entitled from the state.

The aforementioned approach by the state and the ‘settlement’ appear logical in relation to the amount of the state contribution granted. On the other hand, we consider the waiver of any compensation from the state in relation to the part of the compensation paid by the employer using its own money to be really pushed here by the state.

In addition, the application for the contribution itself is silent as to any exclusion of future claims for damages in connection with the Agreement entered into and the payment of the contribution to wage compensation. Employers fill out this application through a web application that automatically generates the application after filling in, together with the Agreement to be concluded with the Labor Office of the Czech Republic. Thus, in an automatically generated Agreement, employers may not even notice a provision limiting their right to compensation from the state. Also, employers do not have a real opportunity to change the wording of the Agreement in any way and must accept the agreement if they wish to draw money from the Anvitirus Programme.

It is also important to note that the state has not yet informed employers of this restrictive provision. This requirement is also neither reflected in any way in the conditions for receiving contributions in the announced Antivirus Programme, nor in the Employer Manual that was published afterwards.

The Agreement concluded by the employer with the Labor Office of the Czech Republic is a so-called adhesion contract as the draft Agreement is unchangeable and the employer has no possibility to change its content in any way if they want to receive the state contribution. In addition, employers can be considered to be the weaker party in relation to the state, among other things because the employer usually applies for a state contribution in an acutely critical economic situation.

The Civil Code stipulates that a provision of an adhesion contract which is particularly disadvantageous for the weaker party (without a reasonable reason) is invalid. We believe that the conclusion regarding invalidity should also apply to the aforementioned ‘settlement’ clause in the Agreements. In this respect, however, the courts will have the final say in the event of a dispute with the state.

Perhaps a positive factor is that the state acknowledges its liability for the damage caused by the measures adopted, otherwise the authorities would not insert the provision on ‘settlement’ and ‘waiver’ into the draft Agreements.

Please do not hesitate to contact us if you have any questions regarding the right to compensation from the state arising from the adopted measures in crisis or otherwise.

Changes to leases due to the law to mitigate consequences of the COVID-19 pandemic

Posted on by Lisa Fortmüller

As expected, the German Parliament and Federal Council have passed a law to mitigate the consequences of the COVID-19 pandemic. The law applies to both entrepreneurs and consumers as well as to commercial and residential tenants.

In general, landlords can terminate leases, if tenants are in arrears with their rents for two consecutive dates. Another reason for terminating leases is when the tenants are arrear with their rent in an amount equal to the total of the rent for two months during a period extending over more than two months.

What has changed?

The new law to mitigate consequences of the COVID-19 pandemic is limiting these termination rights temporarily as follows: if tenants are not able to pay their rent between 1 April 2020 and 30 June 2020 due to the COVID-19 pandemic, landlords cannot terminate leases. This period will possibly be extended until 30 September 2020, depending on whether the COVID-19 pandemic will continue to have a significant impact on social life or not.

What are tenants required to do?

In the event of a dispute, tenants must prove that their arrears are based on the COVID-19 pandemic. This can be done, for example, by means of a certificate of state aid or a certificate of reduced income or loss of earnings. Commercial tenants must indicate that the operation of their businesses has been prohibited or significantly restricted due to the COVID-19 pandemic.

For how long are the termination rights excluded?

The ban on termination for arrears from this period is valid until 30 June 2022. This means that tenants can remedy their arrears until 30 June 2022. Therefore, the law does not affect the tenants’ obligation to pay, but only allows them to fulfil their obligation later.

The right to terminate leases due to other reasons than the COVID-19 pandemic remains unaffected.

Updated – The activity of the National Trade Registry Office and of local trade registry offices

Posted on by Ana Pandelea

The state of emergency instituted in Romania was extended for a period of 30 days as of 15 April 2020.

During the state of emergency, the activity of the Trade Registry Office continues as regards the registration of amendments regarding legal and natural persons registered with the trade registry. Such activity will be carried out by electronic means or through correspondence, on paper.

The affidavits can be submitted with the trade registry as private deeds or in electronic form, without any other further formality.

The signature specimen, where the case, can be legalized by the notary public, certified by a lawyer or signed under private deed, and can be submitted with the trade registry, without any other further formality.

……………………………………………………………………………………………………………………………….

Article posted on Mar 23, 2020:

The state of emergency was instituted in Romania for a period of 30 days as of 16 March 2020 (i.e. the date when Decree No. 195/2020 establishing the state of emergency in Romania was published in the Official Gazette).

During the state of emergency, the activity of the National Trade Registry Office and of the local trade registry offices continues as regards the registration of amendments regarding legal and natural persons registered with the trade registry. Such activity will be carried out by electronic means, based on the request for registration of the amendments and documents attached to it in electronic form, having incorporated, attached or logically associated the extended electronic signature.

act legal continues to provide assistance regarding the registration of amendments with the trade registry, by using extended electronic signature.

Updated – Disputes: Civil and administrative disputes currently registered with the courts

Posted on by Ana Pandelea

The state of emergency initially instituted in Romania until 14 April has been extended for an additional 30 days as of 15 April 2020. Additional measures have also been enacted with respect to the courts’ activity.

We have listed below an updated review of the impact the state of emergency will have on civil and administrative disputes currently registered with the courts:

1. Only especially urgent matters will be addressed by the courts; the list will be established by the management committees of the High Court of Cassation and Justice or of the courts of appeal, as applicable, for disputes within their respective jurisdiction. The courts will observe the following rules:

  • time limits will be set on short notice, i.e. for the following day or on the same day;
  • hearings may be held by videoconference and documents may be communicated by e-mail or fax;
  • the new measures enacted on 15 April provide for logistical aspects on the conduct of hearing by videoconference and set in place a series of obligations for the courts who have jurisdiction in the areas where the parties, their representatives and other participants to the trial (the Participants) are located (which may be different from the court hearing the matter); thus, upon request from the court hearing the urgent matter, the courts who have jurisdiction at Participants‘ locations will: (i) proceed to their identification in accordance with the applicable legal provisions, through a judge appointed by the president of the court to this end and (ii) provide them with all the necessary audio-video equipment for the purposes of the audio-conference hearing;
  • throughout the process for the implementation of the measures mentioned above there is no obligation to draw-up specific minutes (such as the ones required for rogatory commission measures);
  • when possible, the statements of claim, appeals, as well as any other procedural documents addressed to the court, for which the law requires the written form and which are not submitted directly during the hearing, will be filed by electronic means;
  • urgent cases may be adjourned upon request; if the request is dismissed, the court is bound, however, to adjourn the ruling and allow written statements by the parties, either ex officio or upon party`s request.

2. Civil cases which are not particularly urgent are automatically suspended during the state of emergency, without the need to file any formal request to this effect (such as a request to adjourn or change the hearing date);

3. At the end of the state of emergency, proceedings in non-urgent matters will be resumed ex officio; within 10 days as of the end of the state of emergency the courts will take measures for setting the hearing dates and summoning of the parties;

4. Time limits for filing appeals running at 14 April 2020 (i.e. the date when the state of emergency was instituted) are interrupted and new time limits with the same duration will run as of the date when the state of emergency ends;

5. Appeals already filed in non-urgent matters will be referred to the competent courts after the state of emergency ends;

6. Statutes of limitations and time bars do not begin to run and, if already commenced, are suspended for the duration of the state of emergency;

7. If due to the COVID – 19 pandemic, the number of judges necessary to form the panel in a hearing cannot be assured, the president of the court or his substitute orders the participation of judges from other divisions of the court, appointed by lot; and

8. During the state of emergency the drafting and notification of court decisions as well as the filing of new court applications and any other activities continues,  subject to the observance of sanitary discipline rules in force during the state of emergency.

How to Employ Foreigners During the State of Emergency?

Posted on by Gabriela Fuchsová

In connection with the COVID-19 pandemic, the government adopted a series of crisis measures which have an immediate impact on the employment of foreigners and their work in the Czech Republic.

These include:
(i) a ban on entry for foreigners to the Czech Republic and a ban on leaving the Czech Republic; and
(ii) suspension of the reception of new visa applications and applications for temporary and permanent stays in the Czech Republic, as well as the suspension or discontinuation of proceedings regarding previously submitted visa applications or applications for stays in the country.

The above crisis measures have a major impact on employers who employ foreigners from third countries (i.e. countries outside the EU/EEA and Switzerland). However, the projects and supplies of entrepreneurs who do not directly employ any foreigners but who use the services or supplies from foreign subcontractors can be also significantly influenced by these measures. In order to minimize the negative consequences of the above-mentioned prohibitions, we have prepared a brief overview for you of selected specifics related to the employment of foreigners at the time of the state of emergency.

Specifics of Entry of Foreign Workers into the Czech Republic During the State of Emergency

There are several exceptions to the general ban on entering the Czech Republic and the ban on traveling out of the country during the state of emergency which can be applied in the case of arrival of foreign workers. One of them is an exception for workers who regularly cross the borders of the Czech Republic for the purpose of work (so-called cross-border workers). This exception is most often mentioned in relation to Czech employees commuting to work to Germany and Austria, but it can also be used the other way round (i.e. in relation to foreign workers coming from neighboring countries to work in the Czech Republic).

Although this exception applies in particular to workers who normally commute to work in a neighboring state daily or at regular intervals, it can also be used for the arrival of employees of foreign suppliers or subcontractors for the implementation of an international project (e.g. in the construction industry). However, it should be mentioned that these workers must be workers from neighboring countries of the Czech Republic. Moreover, these cross-border workers (commuters) must meet several prerequisites which differ according to the state from which they enter the Czech Republic. Therefore, it is always necessary to consider carefully whether this exemption is applicable in a particular case, all the more so since the rules for applying this exemption have changed several times in the state of emergency.

Another exception to the ban on entry for foreigners in the Czech Republic is the exception for employees of critical infrastructure services. This is an exception for foreigners who are to carry out urgent or emergency servicing of critical Czech infrastructure – i.e. infrastructure that is so important that any disruption of its functioning would have a serious impact on the security of the state, security of basic living needs of the population, human health or state economy. It follows from the above that only a limited group of entities will be able to benefit from this exemption (in addition to critical infrastructure operators, also certain major suppliers to such operators). The advantage of this exemption is that, unlike some of the exceptions for cross-border workers, it neither provides for a minimum period of stay nor for a maximum distance of the place of work from the borders.

In this context, it should be emphasized that the possibility of using any exemption from the ban of entry at the time of the state of emergency must always be assessed individually. For the application of individual exceptions, it may be decisive e.g. the worker’s domicile, the content of the employment contract or the activity to be performed by the worker in the Czech Republic.

Specifics of Employment of Foreigners from Third Countries During the State of Emergency

Currently, receipt of applications for residence permits is suspended at embassies of the Czech Republic. As a result of this measure, foreigners from third countries wishing to work in the Czech Republic can obtain a work permit, but they cannot receive a residence permit that is absolutely necessary for employment in the Czech Republic.

If foreigners are already working in the Czech Republic, then they can continue to work here during the state of emergency. This applies even if their work permit expires before the state of emergency ends. The validity of a work permit is automatically extended after certain conditions have been met, up to a period of 60 days from the date of expiry of the state of emergency. Also, foreigners whose residence permit expires during the state of emergency are entitled to remain in the Czech Republic for the duration of the state of emergency.

Foreigners working in the Czech Republic can change their employer during the state of emergency at any time. However, the change can only be made if (i) the new job is registered in one of the relevant central records of vacancies for foreigners maintained by the Labor Office of the Czech Republic or (ii) a new work permit is obtained. In view of the above, it is recommended to employers who are currently interested in employing foreigners to focus primarily on recruiting foreigners already residing in the Czech Republic.

If an employer is forced to terminate or not prolong their employment relationship with a foreigner due to the economic impact of the pandemic, they are asked by the Ministry of Labor and Social Affairs to assist such employees with registration of the status of a job seeker on the website of the Ministry of Labor and Social Affairs, or to provide them with assistance in dealing with the situation (e.g. assistance to return to their country of origin). If the employer fails to comply with this obligation, the employer is at risk of limiting participation in or exclusion from government migration programs.

We have extensive experience with the issue of employment of foreigners (including the application of individual exceptions to the ban on foreigners entering the Czech Republic during the state of emergency). We regularly monitor all restrictions and obligations arising from the crisis measures issued in connection with the state of emergency. We will be happy to provide you with legal assistance in this matter.

If you have any questions regarding the employment of foreigners, not necessarily only during the state of emergency, please contact Lenka Droscová lenka.droscova@randalegal.com or Jakub Adámek jakub.adamek@randalegal.com.