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In nowadays society, the number of persons travelling by airplane raised significantly.

In this situation, normally the number of flights rose, but this category of transportation was not indemnified against certain problems, meaning the loss and deterioration of luggage, refusal to board, the delay of annulment of flights.

In certain situations, these inconvenient were solved sometimes quickly, sometimes slowly, sometimes satisfactorily or not, but it is certain that the majority of passengers is not aware of its rights when dealing with cases similar to the ones above mentioned.

In this context, in this article we shall present the rights of passengers in each of the stated cases.

LOSS, DETERIORATION OR DELAY OF LUGGAGE

If the luggage handed-over at check-in were lost, damaged or they arrived in delay, the liability belongs to the flying company and the passenger has the right to a compensation of approximately 5,455 lei. But if the damages were caused by a default of the luggage, the right to compensation does not exist.

In respect of the hand luggage, if this is damaged during the trip, the liability belongs to the flying company only if the damage was caused by its fault.

On the other hand, if the luggage contain expensive articles there is the possibility that the passengers, in exchange of a fee, to request a larger compensation (over 5,455 lei). For this, they should address to the flying company to give a statement in respect of the content of luggage, the latest upon check-in. This does not supersede the possibility of passengers to conclude a private travel insurance, which sometimes may represent a satisfactorily cover.

REFUSAL TO BOARD

The refusal to board refers to the situation in which the passengers presented at check-in in due time, with a valid booking and all the necessary travel documents, but he was refused boarding due to over-booking or due to operational reasons, and he is not willingly renouncing his seat.

The right to compensation, the amount being calculated depending on the flight distance, as follows:
- 250 EUR for the flights of 1 500 kilometres or less;
- 400 EUR for all intra-communitarian flights of over 1 500 kilometres and for all the flights between 1 500 and 3 500 kilometres;
- 600 EUR for all the flights not regulated under (a) or (b) above.
If the flight operator redirected the passenger to another flight and he reached his final destination with a delay of 2 hours in respect of the distance provided by letter (a), 3 hours in respect of the distance provided by letter (b) or 4 in respect of the distance provided by letter (c), the value of compensation may be reduced by 50 %.

These rules are not absolute, and therefore, following a concrete evaluation it may be concluded that the passenger was unjustly refused boarding with the reason that he was late due to the fact that the first flight was delayed, respectively that he is not entitled to compensation due to the fact that he did not board for the leaving flight (two-way reservation).
The right to choose between:

The reimbursement, within 7 days, of the cost of the ticket together wit, if the case may be, a return ticket to the initial point of leaving, as soon as possible;
Redirecting towards the final destination, as soon as possible, or
Another reservation at a subsequent date.

Once chosen between the three possibilities, the flight company shall be exonerated of liability, with the exception of certain situations, as the one in which the operators does not leave the possibility of choosing between reimbursement and redirecting, but it unilaterally decides to reimburse the price of the initial ticket, therefore the passenger having the right to a supplementary reimbursement of the price difference between the initial and the new ticket, under comparable transport conditions.

The right to assistance

sodas
snacks
accommodation (if the reservation is made for the following day);
transport between the airport and the accommodation place;
2 telephone calls or 2 messages (telex, fax, e-mail).

If the flying company does not provide assistance and the passenger purchases his own soda and snacks, the flying company must reimburse the price thereof, as long as the expenses made were necessary, reasonable and adequate and, of course, provided that the invoices are kept as proof.

DELAY OF FLIGHT

If a flying company delays a flight after the provided schedule, as follows:

For two hours, for the flights of 1 500 kilometres or less;
For three hours or more for all intra-communitarian flights of over 1 500 kilometres and for all the flights between 1 500 and 3 500 kilometres;
For four hours or more, for all the flights not regulated under (a) or (b) above, the passengers shall have the following rights:
The right to assistance

The assistance supplied must comprise:
- sodas
- snacks
- 2 telephone calls or 2 messages (telex, fax, e-mail).
- accommodation (if the reservation is made for the following day);
- transport between the airport and the accommodation place;

Similarly, if the delay is of at least 5 hours, the passenger shall have the right to the reimbursement, within 7 days, of the cost of the ticket together wit, if the case may be, a return ticket to the initial point of leaving, as soon as possible .

It must be noted that, by the connected Clauses C-402/7 and C-432/07, Sturgeon & the others, ECLI:EU:C:2009:716, item 69, the Court decided that a delayed arrival of at least three hours, gives the same rights for compensation as the annulment, as we shall detail below.

This aspect must be interpreted in the sense that, in practice, even if a flight may be generally considered as annulled, for example when the flight number changes, the respective flight may be considered as delayed, not annulled, and this must be evaluated from case to case.

FLY CANCELATION

The annulment takes place, in principle, when the planning of the initial flight is abandoned, and the passengers of this flight join the passengers of a flight which was also planned, but independently of the initial flight. It is not provided that there must exist an express decision of annulment by the transporter and the display of a “delay” or “annulment” on the panels of departure flights situated in the airport or the announcement thereof by the personnel of the air transporter, is not of the nature to conclude that there existed a delay or annulment.

The notion of „annulment” covers also the case of an airplane which takes off, but due to whatever reason it is subsequently forced to land back in the departure airport, where the passengers of the respective airplane are transferred to another flights.

Moreover, a deviated flight by which a passenger arrives finally to an airport which is not the airport indicated as the final destination according to the initial travel plan of the passenger, represents an annulment, except for the following cases:

30 % of the price of the ticket for the flights of 1 500 kilometres or less, or
50 % of the price of the ticket for all intra-communitarian flights of over 1 500 kilometres, except for the flights between the European territory of the member states and the French departments overseas and for all the other flights between 1 500 and 3 500 kilometres, or
75 % of the price of the ticket for all the flights not regulated under (a) or (b) above, including the flights between the European territory of the member states and the French departments overseas.

On the other hand, the transporter has the obligation to publish the following message in the area of registration of passengers, so it may be clearly visible to them, in as many relevant languages as possible, on paper or electronically: In case of a refusal to board or in case your flight is annulled or delayed with at least two hours, please request at the boarding gate or at the registration office a note stating your rights, especially regarding compensation and assistance.

Moreover, the transporter which refuses the boarding or which annuls a flight, shall present to each passenger a written communication in which there shall be provided the norms for compensation and assistance according to the Regulation (EC) No. 261/2004 of 11 February 2004 for the establishment of certain common norms in the field of compensation and assistance of passengers in case of refusal to board and the annulment or extended delay of the flights and for the abrogation of the Regulation (EEC) no. 295/91. Moreover, the transporter shall present an equivalent written communication to each passenger affected by a delay of at least two hours. The passenger must also be provide, in writing, the coordinates of the national institution responsible with the enforcement of the above mentioned regulation in respect of the flights on the airports located within their territory and the flights from a third country towards these airports, this institution being in Romania, the National Authority for Consumers Protection.

***

Distinctly, we state that the transporters are exonerated of liability if they prove that a certain event was caused by extraordinary circumstances which could not be avoided even though they took all the possible measures, but, on one hand, a compensation is always due in case of refusal to board and the air transporters cannot validly justify a case of refusal to board and be exempted from the payment of compensation to passengers, by invoking extraordinary circumstances, and on the other hand, the technical problems do not represent the extraordinary circumstance, unless it is proved to be incident to the normal exercise of activity of the respective air transporter and that it falls outside the effective control thereof due to its nature and origin.

Last but not least, we state that in this present article we did not take into account the provisions of the Council Directive 90/314/CEE of 13 June 1990 regarding the packages of services for travels, trips, holidays and touristic circuits, these being unaffected.

On 8 June 2017 the Working Party established under Article 29 of Directive 95/46/EC (“WP29”, being an independent European advisory body on data protection and privacy) published a revised opinion (the “Opinion”) which makes a new assessment of the balance between the legitimate interests of employers and employees’ reasonable expectation of privacy by indicating the risks posed by new technologies and undertaking an assessment of proportionality.

Surveillance of internet use at work is not at the discretion of the employer.

At a time when technology has blurred the boundary between working and private life and when some employers allow the use of company equipment for their employees’ personal use, others allow employees to use their own devices for work, whilst other employers allow both, the right of employers to maintain a proper working environment, and the employee’s obligation to perform their proper duties, does not justify the unfettered review of electronic communication by employers.

Specific rules to ensure the protection of rights and freedoms in respect of processing employees’ personal data in the context of employment

WP29 has provided guidelines for the legitimate use of new technology in a number of specific situations, detailing suitable and specific measures to safeguard human dignity, legitimate interests and fundamental rights of employees.

According to these, employers must comply with the fundamental principles of data protection and also must take note of the following when processing personal data in the employment context:

Fundamental rights – the fact that an employer owns the electronic devices does not exclude the right of employees to secrecy of their electronic communications and correspondence and also related location data. Tracking the location of employees through their self-owned or company-issued devices should be limited to where it is strictly necessary for a legitimate purpose.
The European Court of Human Rights (the “ECHR”) stated in 2016 in Barbulescu v. Romania that “the delicate character of the present case is significantly heightened by the nature of certain of the applicant’s messages. They referred to the sexual health problems affecting the applicant and his fiancée. This subject pertains to the core of the applicant’s private life and requires the most intense protection under Article 8.
Other than this sensitive data, the messages also dealt with other personal information, such as his uneasiness with the hostile working environment. The employer accessed not only the professional Yahoo Messenger account created by the applicant, but also his own personal account. The employer had no proprietary rights over the employee’s Yahoo messenger account, notwithstanding the fact that the computer used by the employee belonged to the employer. Furthermore, the employer was aware that some of the communications exchanged by the applicant were directed to an account entitled “Andra loves you”, which could evidently have no relationship with the performance of the applicant’s professional tasks. Yet the employer accessed the content of this communication and made transcripts of it against the applicant’s explicit will and without a court order”.
The Opinion states that in principle, in order to avoid this type of intrusions into the private life of employees, those sections of a device which are presumed to be only used for private usage (e.g. the folder storing photos taken with the device) should not be accessed;
Consent – given the dependent relation between employees and their employer, employees are almost never in a position to give, refuse or revoke their consent freely. This unequal position gives rise to exceptional situations where employees give free consent only when there are no consequences whatsoever connected to acceptance or rejection of the offer;
Legitimate interest – the Opinion states that the legitimate interest of employers can sometimes be invoked as a legal ground, but only if the processing is strictly necessary for a legitimate purpose and the processing complies with the principles of proportionality and subsidiarity.
For example, the ECHR considers that the implementation of the internet use policy at the workplace must be guided by the principles of necessity and proportionality in order to avoid the situation where personal data collected in connection with legitimate organisational or information-technology policies are used to check employee behaviour. Prior to implementing any specific monitoring measure, the employer should assess whether the benefits of the measure outweigh the negative impact on the right to privacy of employees and of third parties with whom they communicate.
Data collection, access to and analysis of conversations, including metadata, without employee consent may only be permitted with exceptional judicial authorisation, since employees suspected of violating policy in disciplinary or civil proceedings should not be treated less correctly than those who are suspects in criminal proceedings.
Only well-founded surveillance of well-founded suspicions of policy violations is admissible. Unrestricted general monitoring is clearly excessive in investigating employees – the least intrusive monitoring techniques should be preferred. Since blocking communications on the internet is a last resort, filtering mechanisms can be considered to be more appropriate. The data collected cannot be used for any purpose other than the original one, and must be protected against alteration, unauthorised access and other forms of abuse. For example, the data collected should not be made available to other non-targeted employees. When no longer needed, personal data collected must be deleted.
Prior to the use of any monitoring tool, a proportionality assessment should be made to consider whether all data are necessary, whether this processing outweighs the general privacy rights that employees also have in the workplace and what measures must be taken to ensure that infringement on the right to private life and the right to secrecy of communications are limited to the minimum extent necessary;
Transparency – Policies and rules concerning legitimate monitoring must be clear and readily accessible. Employees should be informed about data which the employer collects about them and the purpose of any processing of this data which is envisaged or carried out;
Proportionality and data minimisation – Any intrusion on employees’ privacy must be a proportionate response to the risks faced by an employer. The information should be stored for the minimum amount of time needed and whenever information is no longer needed, it should be deleted.

What are the risks?

Given the fact that nowadays modern technologies enable employees to be tracked over time, in workplaces and their homes, through many different devices such as smartphones, desktops, tablets, vehicles and wearables, there is a high risk that the legitimate interest of employers in the improvement of efficiency and the protection of company assets will turn into unjustifiable and intrusive monitoring.

It may not have been widely appreciated that new technologies and the evolution of existing technologies have the potential to result in severe risks to the privacy of employees, even in simple and familiar situations such as those described below.

Processing operations during the recruitment process and in-employment screening

Employers should not assume that, merely because an individual’s social media profile is publicly available, they may process such data for their own purposes. Prior to the inspection of a social media profile, the employer should take into account whether the social media profile of the applicant related to business or to private life. The employer should collect and process personal data relating only to job applicants to the extent that the collection of such data is necessary and relevant to the performance of the job for which the applicant has applied.

Employers should refrain from requiring an employee or a job applicant to give access to information (i.e. information regarding friends, opinions, beliefs, interests, habits, whereabouts, attitudes and behaviours) that the employee shares with others through social networking, even though employers have (or can obtain) the technical ability to screen employees very easily through social media.

Monitoring ICT usage at the workplace

Employers monitors electronic communications in the workplace for the purpose of detecting potential data breaches, data loss prevention and other risks or potential infringements. However, simply because employees are expected to use online applications made available by their employer which process personal data, this does not mean that employers are permitted to collect information regarding employees without their consent.

In the absence of a proper internal policy on the use of the Internet in relation to work, internet surveillance at work “runs the risk of being abused by employers acting as a distrustful Big Brother lurking over the shoulders of their employees, as though the latter had sold not only their labour, but also their personal lives to employers. In order to avoid such commodification of the worker, employers are responsible for putting in place and implementing consistently a policy on Internet use along the lines set out above. In so doing, they will be acting in accordance with the principled international law approach to Internet freedom as a human right” [Barbulescu v. Romania case – ECHR].

Monitoring of home and remote working

Nowadays it is very common for employers to offer employees the option to work remotely, from home and in transit. This involves the employer issuing ICT equipment or software to the employees which, once installed in their home on their own devices, may enable them to have the same level of access to the employer’s network, systems and resources that they would have if they were in the workplace.

Given this, employers may think there is a justification for using software to log keystrokes and mouse movements, screen captures (either random or at set intervals), applications used and to enable devices such as webcams and collect footage therefrom. The processing involved in such technologies is however disproportionate and an employer will need to demonstrate a well-grounded legitimate business interest (e.g. preventing breaches of data security) for monitoring and recording an employee’s keystroke and mouse movements.

Conclusion

The Barbulescu v. Romania case presents an important view of the European Court of Human Rights, which clarifies in detail the limits within which employees can be monitored at work. In this sense, employers must be able to justify and express a legitimate reason and interest for monitoring.

Employers must be extremely careful about how they respect the fundamental rights and privacy of their employees and also about how they obtain employee consent.
But moreover from the legal point of view, employers need to focus on reviewing their employment contracts, in order to ensure that employee consent can be given unconditionally and, equally, that such consent can be freely revoked.
This paper has been prepared for information purposes only and on the basis of legislation in force at the time of writing. It does not constitute professional advice. Any decision to take or to refrain from taking any action should on specific written professional advice.
Neil McGregor is the managing partner of McGregor & Partners. He may be contacted at neil.mcgregor@mcgregorlegal.eu

Romania has now been a member of the EU for ten years and, notwithstanding that its progress in preventing corruption is still being monitored by the EU, I was initially surprised to hear that proposed changes to the law about “abuse of office” – what is commonly referred to in English as “graft” – were becoming a political issue. The actual situation does not appear to be as straightforward as press reports may have suggested.

The crux of the issue is Art. 279 of the Criminal Code, relating to the offence of “abuse of office”. This may be translated as follows:

A public functionary who, in the exercise of office does not discharge acts or who discharges them improperly and thereby causes damage or harm to the rights or legal interests of an individual or a legal person, shall be punished with 2 to 7 years’ imprisonment and deprivation of the right to hold public office.
A public functionary who, in the exercise of office restricts the exercise of a right of any person or places such person in a situation of inferiority based on race, nationality, ethnic origin, language, religion, sex, sexual orientation, political affiliation, wealth, age, disability, non-contagious disease or HIV / AIDS, is subject to the same punishment.

Two points to notice from this are:

the wording “…discharges them improperly…” (in Romanian: “…îl îndeplineşte în mod defectuos…”); and
the minimum punishment of two years imprisonment and mandatory deprivation of the right to hold public office.

I understand that an explanation for Emergency Ordinance 13/2017 – notwithstanding that it was decided in an unusual manner at the end of January 2017 by the government – was that it was in fact needed to address a problem with the wording of Art. 279 following a ruling of the Constitutional Court. Readers will be aware that Emergency Ordinance 13/2017 was withdrawn and did not come into force.

What the Constitutional Court said…

Last summer, the Constitutional Court through its Judgement 405/2016 ruled that Art. 279 is partially unconstitutional. This ruling took effect as long ago as 8 July 2006. In particular, the Constitutional Court decided that Art. 279 is constitutional only insofar as the expression “…discharges them improperly…” is interpreted to mean “…discharges them in breach of the law…” (in Romanian: “…îndeplineşte prin încălcarea legii…”). In coming to this conclusion, it appears that the Constitutional Court considered (at paragraph 76 of its Judgement) that criminal offences can only be created by laws or government ordinances and that parliament cannot have intended all actions or inactions of public functionaries to have constituted abuse of office, regardless of the gravity of the offence.

“…the Court finds that at present, any act or omission of a person who falls within the qualities required to be subject to the criminal offence, regardless of the gravity of the offence, may fall within the scope of incrimination. This finding leads the Court to be reluctant to appreciate that this was the true intention of the legislature when it incriminated the act of abuse of office. This is particularly so since the Court notes that the legislature identified and regulated at the non-criminal legislative level the necessary instruments to eliminate the consequences of acts which, although falling within the criminal offense of abuse of office under the current rules, are not so serious as to carry criminal penalties.”

(in Romanian: “…Curtea constată că, în prezent, orice acţiune sau inacţiune a persoanei care se circumscrie calităţilor cerute subiectului activ, indiferent de gravitatea faptei săvârşite, poate intra în sfera normei de incriminare. Această constatare determină Curtea să aibă rezerve în a aprecia că aceasta a fost voinţa legiuitorului când a incriminat fapta de abuz în serviciu. Aceasta cu atât mai mult cu cât Curtea constată că legiuitorul a identificat şi reglementat la nivel legislativ extrapenal pârghiile necesare înlăturării consecinţelor unor fapte care, deşi, potrivit reglementării actuale se pot circumscrie săvârşirii infracţiunii de abuz în serviciu, nu prezintă gradul de intensitate necesar aplicării unei pedepse penale.”)

So, there has certainly been a problem with the formulation of the offence of “abuse of office” since the summer of 2016.

What Government Emergency Ordinance 13/2017 would have changed…

How far would the new government’s Emergency Ordinance 13/2017 have addressed this issue had it come into force? Emergency Ordinance 13/2017 would have changed Art. 279(1) to read as follows:

A public functionary who, in the exercise of office, willingly commits an act in violation of an express provisions of any law, ordinance or emergency ordinance of the Government or does not fulfil an act required by the express provisions of any law, ordinance or emergency ordinance of the Government and thereby causes material damage exceeding 200,000 lei or damage which can be qualified as serious, certain and effective to the rights or legal interests of natural or legal persons, as regulated and guaranteed by the legislation in force, shall be punished with 6 months’ to 3 years’ imprisonment or with a fine.

Also, a new Art. 279(3) was to have been added, confirming that neither Arts. 279(1) nor 279(2) were to apply to the issue, approval or adoption of normative acts (a very wide term encompassing any kind of official regulation).

Leaving aside any criticisms of the manner in which Emergency Ordinance 13/2017 was enacted and the absence of any period of public consultation on it, it can be noted that Emergency Ordinance 13/2017:

appears to have addressed the comments of the Constitutional Court in Judgement 405/2016 by stating that the relevant act or inaction had to breach a law, government ordinance or government emergency ordinance;
applied a further limitation based on the value of the damage caused, as being either more than 200,000 Lei (approximately €44,000) or causing serious damage to the legal rights of individual or legal persons;
reduced the penalties for the offence by reducing terms of imprisonment (the maximum term being cut to less than half of the previous maximum term) and allowing for a fine, rather than imprisonment;
removed the mandatory disqualification from holding public office for persons convicted of the offence; and
removed normative acts from the scope of the offence – a rather startling omission, given the extent to which the actions of public authorities are conducted through normative acts and particularly since this exclusion was also intended to apply to acts motivated by discrimination which is unlawful in other contexts.

The periods for commencing a prosecution and for securing a conviction, from the date of the alleged offence, were also to be reduced.

When is the abuse of a public office (as an average person would understand it) not a criminal offence?

Notwithstanding the cancellation of Emergency Ordinance 13/2017, it appears that the earlier judgement of the Constitutional Court is having effects. A recent example of this can be seen in the appeal by the former General Secretary of Hunedoara County Council to the Court of Appeal in Alba Iulia against conviction for abuse of office (4754/97/2016). According to a press report, this case involved the selection process for a public official and the Court of Appeal, citing the Constitutional Court’s Judgement 405/2016, decided that since the duties which had not been properly discharged did not relate to matters covered in a law, government ordinance or emergency government ordinance (they were covered by a government decision), no offence of abuse of office had been committed.

Comment

It is understood that the government is to introduce legislation in parliament to make changes to the Criminal Code. It can only be in Romania’s interests for such changes to receive cross-party support and not become a political issue. However, what changes should be made to the Criminal Code?

Too trivial a matter to worry about?

Coming from a country in which there has recently been a press report of a conviction for theft of a person who picked up and kept a £20 note found on the floor of a shop, the approaches of the Constitutional Court and of the government to the offence of abuse of office both appear surprising. Whatever may be thought of the decision in the UK to prosecute the theft of a £20 note described above, it is reassuring to note that a disproportionate penalty was not imposed (in this case, a conditional discharge and an order for payment of £175 in compensation and costs).

By contrast, an offence of abuse of office in Romania which caused loss of only £20 would have attracted a minimum sentence of two years’ imprisonment, as Art. 279 stands. In these circumstances, it is perhaps understandable why there may be moves to limit the scope of the offence of abuse of office.

The decriminalisation of what may be argued to be trivial acts however appears to me to be the wrong approach to this problem.

Placing form above substance

In the case of the Constitutional Court’s judgement, it appears that anything which does not involve a breach of a law or of a government ordinance is to be regarded as too trivial to merit being classified as a crime (and attracting the minimum two-year imprisonment). This approach may be criticised as placing form before substance, particularly given the amount of regulation in Romania which is not contained in laws or government ordinances. I doubt that cases such as the Court of Appeal decision mentioned above will give observers much faith that public corruption is being tackled effectively.

Linking criminality to value of the (actual) loss

On the other hand, the approach in Emergency Ordinance 13/2017 of decriminalising acts causing damage of 200,000 Lei or less appears to be equally unwise, quite apart from any question of whether or not that amount is a “trivial” sum. If the same logic and approach were applied to, for example, simple cases of theft, it is hard to imagine that it would be taken seriously. One can also wonder whether cases involving damage of 200,000 Lei or less might be prosecuted as attempts to commit abuse of office involving a loss of more than 200,000 Lei…

Taking the politics out of the fight against corruption

It is quite easy to see how a minimum punishment of two years’ imprisonment may be seen as disproportionate for “trivial” offences of abuse of office, and how some people might argue that the prosecution of such “trivial” offences is motivated by political reasons.

I hope that rather than decriminalising “trivial” cases of abuse of office, parliament will instead depoliticise them. I believe that this could be done by abolishing the minimum penalty of two years’ imprisonment and allowing the courts to impose proportional penalties for less serious offences. The UK’s Bribery Act 2010 sets no minimum penalty for individuals and, for example, a conviction of attempting to bribe a driving examiner was punished by a suspended sentence of two months’ imprisonment.

Romania needs to demonstrate that the problem of corruption is taken seriously and to ensure that laws are in place which enable improper conduct to be proportionately penalised. A system based on decriminalising petty crime – whether based on the value of the damage caused or on the precise legal mechanism which has been used to enact the requirements which have been breached – is unlikely to achieve this. The prevention of graft by public functionaries really should not be a political issue and it is to be hoped that parliament will amend the law in a way which meets the approval of most Romanians and of interested foreign observers.

Even with the little which we know about how Brexit will look and how it will happen, we certainly know that apart from the political social and economic environment which will be affected by Brexit, there is serious uncertainty about the future of the law relating to intellectual property (“IP”) rights, particularly European Union-wide registered IP rights – such as the European Union Trade mark, Unitary Patent, the European Union Patent and the Community design.

As the key word when we discuss about Brexit is uncertainty, we believe that Brexit has no immediate consequences on European Union Trademarks (“EUTM”) and on Community designs, as at this moment the legal position and detailed intentions of the UK government are uncertain.

If you are wondering what Brexit will bring in respect of EUTM and Community designs…

As many companies have portfolios of IP rights, which they are keen to protect in the European Union and, of course, in the UK – which is one of the most important territories on Europe’s business map – you can imagine how great is the uncertainty regarding how an EUTM or a Community design will give legal protection in the future.

No IP business will be pleased to have to undertake two registration procedures to protect their trademark over the same territory, respectively the rest of the EU and the UK, instead of a single procedure. When a sole EUTM registration secures rights throughout the entire EU territory (including the UK), things are much simpler.

EU Council Regulation no. 40/94 created a way for an owner of an EUTM to protect its trademarks and gain an exclusive trademark right over the entire territory of the European Union. The unitary character of trademark protection means that an EUTM cannot be valid only in some of the European Union states, but its protection is valid in all European Union states.

For example, a company can register an EUTM in a member state, through a single application to the Intellectual Property Office. The European registration will give the applicant the exclusive right to use the EUTM in the European Union, which allows it to prevent all unauthorised third parties from using the similar or identical trademarks in that territory.

If you are curious and wish to find out what a less happy outcome of Brexit for the EUTM and Community designs might look like – this might be that the EUTM and the Community design would no longer be recognised in the UK. It has been said that after Brexit, the EUTM and the Community design would no longer be protected in the UK. However in reality, the only certainty is that there is uncertainty about what will happen after Brexit happens.

A common sense solution it would be if the UK grants the owners of EUTMs and Community designs the right to register the former EUTM and designs in UK at the national level, where this registration retains the original filing date of the European IP right. Another solution would be to maintain the validity of registered EUTMs and Community designs in the UK, and therefore to develop a mechanism which will allow the conversion of EUTMs and Community designs into national trademarks/designs in the UK.

How will European Patents and Unitary Patents be affected by Brexit?

The European Patent Convention (“EPC”) is a multilateral treaty which establishes the European Patent Office (“EPO”). European patents are granted for some or all of the contracting states to the EPC. They are, or may be, enforceable in Bosnia & Herzegovina, Montenegro, Morocco and the Republic of Moldova as well.

The UK after Brexit might have the same status under this treaty which Switzerland and Turkey have, as both are not EU member states, but have adhered to the EPC. As uncertainty surrounds the relationship between the UK and the European Union after Brexit, it might be possible that the UK will have a similar relationship to the EPC, as Turkey and Switzerland have.

The Unitary Patent on the other hand, does not become a set of national patents which are validated in each Member State where protection is requested, but gives its holder a unique patent protection in all 26 Member States of the EU. It simplifies the process by offering an alternative to patent protection and dispute settlement. Unfortunately the bad news is that the Unitary Patent will probably be affected by Brexit.

Other downsides of Brexit over IP rights

If you are an IP owner seeking to obtain an injunction to protect your rights, you may find yourself forced to introduce separate actions in both an EU member state and also in the UK. After Brexit, you may therefore need to pay more enforcement costs than is the case at present.

What will happen to the description of the EU territory before Brexit, which can usually be found in IP documents such as assignments, licenses, non-disclosure agreements or co-existence agreements? This describes the EU territory as it was composed before Brexit, including the UK.

But as the UK will no longer be a part of the EU after Brexit. To correspond with the geopolitical reality, all such documents concluded before Brexit will probably need to be carefully amended and properly reviewed to ensure that the defined territory covers the remaining EU and the UK.

Another sensitive matter after Brexit will be that EU regulations and directives will no longer automatically apply in the UK. Much will depend upon the final deal reached between the UK Government and the EU, and the extent to which the British legislation which reflects EU legislation is changed.

So what is to be done? This is the question.

The best advice would be to wait and observe further Brexit developments and learn more about the legislative proposal in respect with the existing EUTM and other registered IP community rights.

Also from the strategic point of view, if you have a business interested in protecting trademarks in UK, the advice of the IP professionals would be to consider registering an application at national level in UK, in order to avoid the uncertainties which may come after Brexit.

We have UK legal expertise and will be more than happy to study your case and find the best possible way to protect and maintain the protection of your intellectual and industrial rights in the context of Brexit.

Do you know if the signatory of the agreement has the legal authority to represent your business partner?

How about if the asset that you wish to purchase or that may be mortgaged in your favour is owned by the prospective seller or mortgagor and is free from (other) encumbrances?

Have you checked that your prospective business partner – or the people behind it, if it is a company – are not involved in any activities that may trigger your company’s corporate liability for associated persons (Section 7 of the Bribery Act 2010)?

For more information regarding the consequences of triggering corporate liability for corrupt practices please click here.

Having accurate information regarding your business partners is essential in general, but even more so if you are considering doing business in a foreign country. Romania is no exception to this.

In the early stages of your discussions with the prospective business partner however, acquiring detailed information concerning the respective company, business or property can prove to be difficult. This is understandable (up to a point) – you would probably also not wish to provide full access to your company and its corporate and financial details to a stranger claiming a business interest.

On the other hand, proceeding to conclude the envisaged agreement is not advisable in absence of proper investigation.

If you are considering becoming a simple shareholder (or even an angel investor) or acquiring all the shares in a Romanian company, you would perform a legal and financial due diligence on the target company first. However, this is a step to take when you have already gathered enough information regarding the relevant company to justify incurring the costs for the due diligence exercise. In other words, you will not wish to spend money for legal and financial due diligence in respect of all prospective companies that you may consider entering into business with.

Alternatively, you may just be considering making an investment in the form of a loan or concluding an agreement for the purchase of assets or performance of services with a Romanian counterparty. In such situations, you will most likely not perform a full due diligence on the prospective Romanian business partner.

What is the solution then?

Having information regarding the corporate and financial standing of the relevant company from the publicly available sources will help assess whether it is advisable to proceed to the next stage of performing a legal and financial due diligence and initiating the negotiation of the envisaged transaction’s terms and conditions.

Such a measure is advisable in order to identify and then create the mechanisms to mitigate the existent risks.

Five publicly available information sources

1. THE COMMERCIAL REGISTRY

Companies House in the UK,
the Central Business Register in Denmark (Centrale Virksomhedsregister (CVR)),
the Chamber of Commerce in the Netherlands (Kamer van Koophandel),
the Common register portal of the German federal states (Gemeinsames Registerportal der Länder),
the Register of Commerce and of Companies (Registre du Commerce et des Sociétés) in France.

What types of information can be obtained?

Apart from the identification details (name, number of registration with the Commercial Registry, sole registration code), the information that can be obtained from the Commercial Registry refers to:

(a) the current corporate status of Romanian companies:

value of subscribed and paid share capital, value of shares;
data regarding the shareholders and their shareholdings;
registered office and legal basis thereof, including its respective duration;
data regarding the directors and date of their appointment;
main and secondary objects of activity;
secondary offices and the corresponding legal basis, including the validity thereof.

Such information is included in listings and ascertainment certificates issued by the Commercial Registry – either through their offices or online via the –e-services portal (on the basis of a subscription and against payment of a tax/search).

Specific searches may be made by reference to natural persons to find the companies in which they hold the position of director or shareholder.

(b) the history of corporate registrations that were made in respect of Romanian companies since incorporation until the date of the search.

The results of such searches mention the previous shareholders and directors of the company, the date since the current shareholding and management is in place, as well as all the other corporate changes and updates that have been made since incorporation.

To put it differently, you will know the main elements concerning the relevant corporate changes that were registered in relation to your prospective Romanian business partner or target company.

Depending upon the envisaged transaction, you may wish to have more information about the relevant company or about particular corporate elements concerning it.

In this respect, it is important to know that more details regarding specific or all the corporate changes made in respect of the relevant company may be obtained by applying for full copies of the documents submitted to the Commercial Registry in relation thereto. Such documents include: full copies of articles of association, resolutions of the general meetings of shareholders and of the board of directors or directors, agreements regarding the assignment of shares, etc.

How can this information be relevant to you?

If you intend to conclude an agreement for the sale or purchase of goods or services, then a listing will give you information regarding the directors of the respective company and in some cases some elements regarding their prerogatives. In many situations the information found in a listing is not sufficient and a review of the articles of association of the respective company is necessary. Reading the provisions thereof may prove to be essential. For example, the articles of association may provide financial limitations to the prerogatives of the directors to conclude agreements on behalf of the company and that the envisaged agreement may require the approval of the general meeting of shareholders.

By getting a simple online listing you may also find out that your prospective Romanian business partner or target company is subject to the insolvency procedure. Consequently, you will need to find out if the envisaged transaction falls under the category of current operations allowed under the insolvency law, whether the respective company benefits from the self-administration right or not and various other elements related to the insolvency procedure under Romanian law to decide how to proceed further.

Of course a full legal review of all documents that may be obtained from the Commercial Registry is usually part of a full due diligence on a target company in case of a proposed purchase of shares, but a preliminary quick review of these may provide answers that will either support the decision to move forward with the potential transaction or change your mind alltogether.

Similarly, in case the proposed transaction refers to the conclusion of an agreement of sale of assets or services, it is nonetheless advisable to have a preliminary check of your prospective business partner.

To summarise, obtaining information from the Commercial Registry is a good place to start the preliminary investigations on your prospective business partner in Romania.

2. MINISTRY OF PUBLIC FINANCES

The most significant elements of the financial situations submitted by the Romanian companies can be viewed on the website of the Ministry of Public Finances.

Such available information includes the turnover, the profit or the loss registered by a company in the previous year but also the figures corresponding to the older financial situations (including in respect of 2010 – older financial situations may be requested from the Commercial Registry). You will thus be able to make a preliminary analysis of the company’s business financial elements and their recent evolution.

In addition to financial elements, you will also have the possibility to see the fiscal status of the company (VAT tax payer, payer of tax on profit or tax on income – if the company is registered as a micro-company, as well as the number of its registered employees).

3. ELECTRONIC ARCHIVE OF SECURITY INTERESTS IN MOVABLE PROPERTY (THE “ELECTRONIC ARCHIVE”)

The Electronic Archive is the Romanian national evidential system of priority and publicity of the movable mortgages and related security interests. It is organised as a sole database, structured by reference to persons and assets.

Why is it important to check the Electronic Archive?

The general principle under Romanian law is that the publicity and priority of a movable mortgage is ensured by the registration thereof with the Electronic Archive. A registered and perfected mortgage is thus opposable to the other creditors of the mortgagor, to the persons that subsequently acquire rights over the mortgaged asset and to any other third parties.

As a general rule, where several creditors registered mortgages over the same movable asset, the mortgagee that was the first to register the mortgage with the Electronic Archive benefits from a higher rank and consequently from a more advantageous position in case of enforcement upon default of the debtor.

Having the information regarding such type of movable mortgages can prove to be an ally in making prudent business decisions in a number of scenarios.

In such respect, consideration is to be given to the general rule in Romanian law that the mortgagee may follow the mortgaged asset irrespective of the owner thereof and disregarding the real rights constituted or registered after the registration of the mortgage.

What types of information can be obtained?

Searches made on the Electronic Archive may reveal that the shares that you may be interested in acquiring are mortgaged to a bank for a credit received by the shareholder(s). This does not mean that you cannot proceed with the purchase of the shares, but you will need to reach an agreement with the seller(s), so that preferably when the transaction is completed you will become the owner of the shares, free from any encumbrances.

You may also find out that the company that you are considering entering into business with, or lending money to, has registered many movable mortgages (or a movable mortgage over its fonds du commerce) in favour of other creditors, banks and/or other companies. These may have as object equipment and machinery, cars and other vehicles, bank accounts, claims, intellectual property rights, etc. of the company.

The general rule is that if you purchase the mortgaged asset the creditor of the seller company will have the right to enforce its mortgage against you. Therefore, if you are considering making such a purchase, searches regarding the relevant assets may be made in the Electronic Archive to verify whether these have been mortgaged or not. Also a legal review is to be made as to whether your intended purchase falls under the category of excepted transactions (where the mortgage is transferred on the purchase price).

Unfortunately, many Romanians are still not familiar with the Electronic Archive and its purpose and only find out that their car, for example, had been mortgaged by the prior owner when faced with the enforcement proceedings initiated by the creditor through the judicial executor.

Maybe you do not wish to buy anything, but just are considering making an investment in the form of a loan to a Romanian company to carry out a project. Searches made with the Electronic Archive will provide a better preliminary understanding as regards some of the most significant assets of the prospective borrower company, if these are already mortgaged in favour of banks or other companies. Or you may find out that many assets are not owned by the relevant company, as it may have concluded leasing agreements in respect of the vehicles and machinery used in its operations.

On the other hand, the existence of mortgagees with earlier registered and thus higher in rank mortgages over assets that the borrowing company may be offering as security for the prospective loan represents a risk against which you should seek protection (e.g. a first rank mortgage on other movable assets of the borrower company or a first rank immovable mortgage).

Searches with the Electronic Archive can also provide an image of the loans or lines of credit obtained by your prospective Romanian business partner or target company and in respect of which the respective creditors registered their security interests.

4. LAND BOOK REGISTRY

In Romania the publicity of ownership rights and other real rights over immovable assets is achieved by registration with the land book registry.

This evidential system is organised by reference to assets and not persons. Therefore, on the basis of the address, cadastral number and land book registry number of the immovable asset an informative extract may be obtained from the competent land book registry in relation thereto.

What types of information can be obtained?

In a situation where you are interested in purchasing an immovable asset in Romania or such a property is offered to secure the repayment of the loan, an informative extract in its respect can be obtained directly from the land book registry office in the area where the property is situated.

Such document will show who is registered as owner of the property, as well as the legal basis of such registration (sale purchase agreement, donation agreement, etc.), whether any mortgages or other type of encumbrances or any pre-sale purchase agreement is registered in relation thereto.

It is important to remember however that the registrations with the land book registry do not validate a null agreement on the basis of which these have been made.

Thus, even if a sale purchase agreement is registered therewith and the informative extract that you obtain is seemingly clear of any issues, this does not mean that the ownership title is valid or that there are no legal issues in relation thereto.

Consequently, no acquisition of a real-estate property in Romania is to be made only on the basis of checking the land book registry.

In addition, a correct check of the ownership title implies that the entire chain of ownership documents be reviewed and not only the documents corresponding to the latest transfer of ownership.

5. WEBSITES OF THE COURTS

All Romanian courts publish information regarding the cases that they are reviewing on their websites, which are all part of a web portal that may be freely accessed.

Online searches regarding companies or natural persons can be made on the website of any court in Romania. The searches can be made at the level of each court.

What you should be aware of is that under Romanian law, the general rule is that the court in the jurisdiction of which the respondent has the registered office / domicile is competent in most cases. Therefore, checking the websites of the courts in the jurisdiction of which the Romanian company has the registered office is the first step to be taken.

Such searches might reveal that your target company or prospective business partner are or have been respondents or defendants in various court cases. Depending upon the number, object and where available the outcome thereof, your negotiations should be adjusted accordingly in view of ensuring a better protection for your investment, irrespective of the form thereof.

In conclusion, all the above-mentioned sources of information can strengthen your position when you are considering doing business in Romania or with a Romanian partner. They are public and (mostly) free. Therefore, do not hesitate to use the information that they provide prior to committing yourself to a project / business that you may later find out is not in your best interest. After all, it is much cheaper in terms of both time and costs to prevent, rather than to try to fix them later.

Anticorruption is a hot topic in Romania these days. The latest news from the National Anticorruption Direction (“NAD”) shows that corruption affects both the public and the private sector. What will the consequences be? We can only speculate but on the long run, the private companies could end up with a loss of profits, as the field of anticorruption becomes wider and there appears to be a need for anticorruption measures and adequate procedures to fight corruption.

Which are the current trends as regards the corporate anticorruption in Romania?

Currently NAD is highly recognised among the Romanian public due to the high profile criminal investigations, unlike the corporate liability which does not enjoy such high public exposure.

One might argue that the corporate liability for corruption allegations is not a very well known topic in Romania, despite the fact that the corporate liability is highly regulated. This aspect is also ascertained by the Report called Liability of Legal Persons for Corruption in Eastern Europe and Central Asia (the “Report”) ¹ , issued in 2015 by OECD Anti-Corruption Network for Eastern Europe and Central Asia Report. Briefly speaking, the Report mentions Romania to be the only country where the liability is established following the analysis of deficiencies in its corporate culture².

What is the practice abroad as per the trigger of the corporate liability for corruption and the consequences deriving therefrom?

First, it is useful to note the case of Innospec, the world’s last maker of tetraethyl lead³ that admitted bribing officials from Iraqi Ministry of Oil in order to be awarded the contract for toxic fuel additive. Following this corruption scandal, Innospec had to make a $40 million payment to British and American regulators.One would ask himself, why is this important, as many private companies face corruption allegations and have been convicted to this extent?

The novelty in this case is that Jalal Bezee Mejel Al-Gaood & Partner, a Jordan company who took also part in the tender, filled a claim in UK courts alleging that Innospec had been awarded the contract in Iraq as a consequence of engaging in corrupt practices and that following such corrupt practices, it lost business of around $26.5 million. Even if the judge clearly stated that “there was clearly criminal wrongdoing”⁴ the causality between bribery and the award of the contract in Iraq has not been clearly determined. Thus, the claimant was not awarded the claims it has been requested.

Even if the Jordanian company was not awarded the claims, this opens the box for claims to be made by private companies for loss of business resulting from corrupt practices.

Second, the case of a British company, Sweett Group PLC, convicted in the UK for corruption in the Middle East caused 70 redundancies when it closed down its Middle East and North Africa operation⁵ , in addition to fines and confiscation being imposed by the judge.

Coming back to Romania, no more than a few months ago, NAD announced that an important Romanian company (the “Company”) is investigated for corruption allegations. What could be the possible outcome of such an investigation?

In case the Company is convicted, various sanctions may be imposed, such as: fines, dissolution; suspension of the activity from 3 months to 3 years, or suspension of one of the activities related to the offence committed; closing of a workstation from 3 months to 3 years; ban on the participation to public procurement procedures for a period from 1 to 3 years; placement under judicial supervision; publication of the conviction decision . In addition, the liability of the management team as natural persons will be triggered, as per the relevant provisions of the Romanian legislation.

Coming back to Romania, no more than a few months ago, NAD announced that an important Romanian company (the “Company”) is investigated for corruption allegations. What could be the possible outcome of such an investigation?

In case the Company is convicted, various sanctions may be imposed, such as: fines, dissolution; suspension of the activity from 3 months to 3 years, or suspension of one of the activities related to the offence committed; closing of a workstation from 3 months to 3 years; ban on the participation to public procurement procedures for a period from 1 to 3 years; placement under judicial supervision; publication of the conviction decision ⁶. In addition, the liability of the management team as natural persons will be triggered, as per the relevant provisions of the Romanian legislation.

Moreover, it is possible for a company in a similar situation to be put on a “black list” and may itself lose business in Romania and abroad in the context of global business.

Without going into details as regards the development of this case, we are of the view that a similar case could be avoided in the future if companies were to pay a special focus on the measures to prevent corrupt practices, which opens the door for creating a cleaner and safer business environment.

What is to be done to ensure a cleaner business environment on the long run?

(I) It is advisable that an adequate anti-bribery policy is implemented, by adopting prevention measures against corrupt practices. Such policy should comprise among others:

a top level commitment, under the form of a declaration given by the board of directors or any other equivalent body/person, stating that the culture of the organisation does not accept any form of bribery.
various risk assessment procedures which are drafted and implemented in accordance both with the dimension of the company and with the type, size and location of its activities and/ or services performed.⁷
a clear whistle-blower policy in place and encourage the self-reporting.

(II) Trainings of employees should be organised with a view of informing and expanding the anti-bribery policy, followed by frequent monitoring and report.

(III) Companies should implement integrity standards together with the measures described by the Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, even if the respective company does not fall within the requirements imposed by this act.

(IV) Last but not least, consideration should be paid to including in the contracts anti-bribery clauses, the infringement of which might attract the automatic termination thereof, with no other formalities being necessary to this extent. Nevertheless, practical aspects regarding the enforcement thereof should be considered.

Based on the above, it is obvious that corporate liability is a reality in Romania with consequences which may derive therefrom, including the theoretical possibility for a company to make successful claims for loss of profit deriving from corrupt practices.

Corrupt practices have many faces and thus it is recommended that each company adopt clear prevention measures, which should be communicated “de facto” to its employees. These measures would diminish the risk of triggering its liability and/ or the liability of the management body.

¹ https://www.oecd.org/corruption/ACN-Liability-of-Legal-Persons-2015.pdf

² https://www.oecd.org/corruption/ACN-Liability-of-Legal-Persons-2015.pdf, page 22

³ http://vannin.com/news/pdfs/times-october13.pdf

⁴ Jalal Bezee Mejel Al-Gaood & Partner and Future Agencies Company Limited v Innospec Limited, Innospec Inc and David Turner (2014).

⁵ press reports in the Financial Times & the Shropshire Star

⁶ Romanian Criminal Code

⁷ https://www.transparency.org.uk/publications/diagnosing-bribery-risk/