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New legislation in the spotlight

LAST YEAR saw multiple elections in Slovakia, among which the general election was undoubtedly the most important. The pre-election campaigning and jockeying among political parties likely had an effect on the quantity of legislation advanced by legislators in the Slovak parliament. Nevertheless, a considerable number of new laws or significant amendments were enacted that are already having an impact on Slovak society. The Slovak Spectator asked five local law firms to comment on what they see as having been the most significant legislation adopted last year or early this year.

LAST YEAR saw multiple elections in Slovakia, among which the general election was undoubtedly the most important. The pre-election campaigning and jockeying among political parties likely had an effect on the quantity of legislation advanced by legislators in the Slovak parliament. Nevertheless, a considerable number of new laws or significant amendments were enacted that are already having an impact on Slovak society. The Slovak Spectator asked five local law firms to comment on what they see as having been the most significant legislation adopted last year or early this year.

Though the attorneys at the law firms had wide-ranging lists, the amedments to the Act on Public Procurement and to the Civil Code, the latter requiring publication of public contracts, were often cited as significant changes.

The Slovak Spectator spoke to Ľubomír Leško, attorney at law at Peterka & Partners, attorneys Juraj Gyarfáš and Martin Magál from Allen & Overy Bratislava, Peter Kubovič, managing partner at Hagyari, Kubovič & Partners, attorney Ján Azud from Ružička Csekes, and attorney Vladimír Kordoš from Sovova Chudáčková & Partner about recent legislation enacted in Slovakia.

The Slovak Spectator (TSS): Which were the most significant laws enacted in Slovakia last year?


Ľubomír Leško (ĽL): The main influence in 2010 was from the parliamentary election, which affected the adoption of new laws. In enterprise, the Trade Licensing Act was considerably amended by repealing concessions and introducing the possibility to take all steps required to establish a company in only one place. Registering companies (or changes related to them) with the commercial registries has also been slightly simplified by enabling deeds to be served in electronic form. Under a contract concluded between the Ministry of Justice and the Chamber of Notaries, it has been possible since July 2010 for a notary to obtain extracts from the Commercial Register. The procedure should be cheaper, more accessible and faster than it currently is at the registry courts.

The former government of Robert Fico adopted the new Act on Consumer Credit and the Act on Unfair Terms in Commercial Relations between Customers and Suppliers of Goods, which are groceries. These acts impose additional obligations on entrepreneurs.

Important laws adopted by the 2010 Slovak Parliament include the amendment to the Act on Value Added Tax which has temporarily increased VAT to 20 percent. The Act on Collective Bargaining has also been amended, removing the possibility for the Ministry of Labour, Social Affairs and Family to force the extension of collective agreements to employers who are not party to them, previously perceived as an adverse step against employers and employment in Slovakia.

Laws of greater impact that are currently being prepared include amendments to tax, social security and health insurance contributions and a new Building Act. In employment, a major amendment to the Labour Code is being drafted, which will introduce changes to some major conditions such as working time, the probationary period and the notice period.

Juraj Gyarfáš (JG) and Martin Magál (MM): We regard the amendment introducing obligatory publishing of contracts (Act No. 546/2010 Coll.) and the Act on Services in the Internal Market (Act No. 136/2010 Coll.) as the most important legislation adopted last year.

Peter Kubovič: In the field of consumer protection there was an important Act on Consumer Credit (Act No. 129/2010) enacted in 2010, which transposed the related EU directive from 2008. The importance of this act lays in refining the method for calculation of the annual costs percentage, in tightening sanctions for incorrectly calculated annual costs percentage which is disadvantageous to a consumer, and in setting obligations for each intermediary in consumer credit to meet the conditions required of financial agents.

LAST YEAR saw multiple elections in Slovakia, among which the general election was undoubtedly the most important. The pre-election campaigning and jockeying among political parties likely had an effect on the quantity of legislation advanced by legislators in the Slovak parliament. Nevertheless, a considerable number of new laws or significant amendments were enacted that are already having an impact on Slovak society. The Slovak Spectator asked five local law firms to comment on what they see as having been the most significant legislation adopted last year or early this year.

Though the attorneys at the law firms had wide-ranging lists, the amedments to the Act on Public Procurement and to the Civil Code, the latter requiring publication of public contracts, were often cited as significant changes.

The Slovak Spectator spoke to Ľubomír Leško, attorney at law at Peterka & Partners, attorneys Juraj Gyarfáš and Martin Magál from Allen & Overy Bratislava, Peter Kubovič, managing partner at Hagyari, Kubovič & Partners, attorney Ján Azud from Ružička Csekes, and attorney Vladimír Kordoš from Sovova Chudáčková & Partner about recent legislation enacted in Slovakia.

The Slovak Spectator (TSS): Which were the most significant laws enacted in Slovakia last year?


Ľubomír Leško (ĽL): The main influence in 2010 was from the parliamentary election, which affected the adoption of new laws. In enterprise, the Trade Licensing Act was considerably amended by repealing concessions and introducing the possibility to take all steps required to establish a company in only one place. Registering companies (or changes related to them) with the commercial registries has also been slightly simplified by enabling deeds to be served in electronic form. Under a contract concluded between the Ministry of Justice and the Chamber of Notaries, it has been possible since July 2010 for a notary to obtain extracts from the Commercial Register. The procedure should be cheaper, more accessible and faster than it currently is at the registry courts.

The former government of Robert Fico adopted the new Act on Consumer Credit and the Act on Unfair Terms in Commercial Relations between Customers and Suppliers of Goods, which are groceries. These acts impose additional obligations on entrepreneurs.

Important laws adopted by the 2010 Slovak Parliament include the amendment to the Act on Value Added Tax which has temporarily increased VAT to 20 percent. The Act on Collective Bargaining has also been amended, removing the possibility for the Ministry of Labour, Social Affairs and Family to force the extension of collective agreements to employers who are not party to them, previously perceived as an adverse step against employers and employment in Slovakia.

Laws of greater impact that are currently being prepared include amendments to tax, social security and health insurance contributions and a new Building Act. In employment, a major amendment to the Labour Code is being drafted, which will introduce changes to some major conditions such as working time, the probationary period and the notice period.

Juraj Gyarfáš (JG) and Martin Magál (MM): We regard the amendment introducing obligatory publishing of contracts (Act No. 546/2010 Coll.) and the Act on Services in the Internal Market (Act No. 136/2010 Coll.) as the most important legislation adopted last year.

Peter Kubovič: In the field of consumer protection there was an important Act on Consumer Credit (Act No. 129/2010) enacted in 2010, which transposed the related EU directive from 2008. The importance of this act lays in refining the method for calculation of the annual costs percentage, in tightening sanctions for incorrectly calculated annual costs percentage which is disadvantageous to a consumer, and in setting obligations for each intermediary in consumer credit to meet the conditions required of financial agents.

Out of other important legislative changes it is possible to mention those which are, in a certain way, of a ‘breakthrough’ character as they have brought into Slovak legislation new – even though these are common abroad – legal institutions. These are, for example, criminal liability of legal entities (in cases of their participation in organised crime) which was implemented into the Criminal Code, or the legal institution of joint custody of parents for children in cases of divorce which was added to the Family Act.

Ján Azud: We consider this to be the Amendment to the Act on Public Procurement and mandatory publication of public contracts.

The main objective of amendments to the Act on Public Procurement adopted in 2010 and earlier this year was to increase transparency and make sure that public funds are spent in the most efficient way. The law has been changed seven times since 2009. In 2010, the most important amendments introduced an obligation to publish tender committee members' names and a right of a public authority to request bidders to identify all their shareholders.

A tendency towards more transparency in public procurement peaked early this year when an amendment to the Public Procurement Act was passed into law with effect from April 1, 2011. This amendment aims to further increase competition and improve the business environment by introducing certain mechanisms believed to prevent manipulation of tenders. It is expected that it will make public procurement more attractive to a higher number of entrepreneurs, which will lead to lower prices for the public sector.

The recent amendment introduced several changes with potentially big impact on the process of procurement and on investors interested in making business with the public sector in Slovakia. Thresholds triggering various forms of procurement were significantly lowered to make more contract awards subject to more stringent conditions. The so-called non-priority services with lower transparency standards were totally abandoned. Frequent disqualification of bidders during a prequalification stage based on formalities should be addressed by introduction of an obligation by public authorities to ask for an explanation or submission of additional documents when suitability cannot be confirmed based on initial documents. Short listing in restricted procedure may only be done based on conditions which are justified in writing in a contract notice. The minimum number of participants in a restricted procedure set out by a public authority was increased from five to 10. The amendment reintroduced the right of the Public Procurement Office to challenge contracts awarded in violation of procurement rules. Moreover, this right was vested with any prosecutor with a one-year statute of limitation. Last but not least, an important change with significant impact on foreign investors was introduced with respect to private entities receiving public funds. Any private business such as an investor receiving investment aid from the state to buy technology or carry out construction work for a new plant in Slovakia will have to comply with procurement rules and act as a contracting entity.

The Slovak government's ambitions to tackle problems associated with public procurement are
apparently not fully satisfied with the recent amendments and the Ministry of Justice is preparing a completely new public procurement act to be advanced later this year or early next year.

With regards to mandatory publication of public contracts, parliament adopted an amendment to the Civil Code effective from January 1, 2011. It introduces mandatory publication of contracts awarded by public authorities, including state-owned companies. Transparency and more efficient spending were key drivers of this piece of legislation. Depending on the public authority in question, contracts are published on a central online register or on the respective public authority website. This law has a significant impact on the process of entering into public contracts, as any agreement involving state funds or disposal of state property cannot become effective until published in a prescribed way, plus one day.

Vladimír Kordoš (VK): We see several significant laws adopted in Slovakia in 2010. These are the revision to the Civil Code (Act No. 40/1964 Coll.) and the Act on Free Access to Information (Act No. 211/2000 Coll.) which introduced the duty to publish contracts made with ‘the state’. Another important piece of legislation is the revision to Act No. 40/1993 Coll. on State Citizenship of the Slovak Republic, whose aim was to introduce another way to lose state citizenship into the Slovak legislation. According to the current wording, a citizen of the Slovak Republic loses Slovak citizenship, ex lege, as a consequence of obtaining citizenship in another state.

We consider as important also the new Act No. 136/2010 Coll. on services in the internal market, with the objective to liberalise services and remove inadequate, ungrounded, and discriminatory obstacles to the provision of services. The act is based on Directive 2006/123/EC on services in the internal market.

Another piece of legislation we would mention is the amendment to the Criminal Code enabling criminal prosecution of legal entities, which parliament passed on April 27, 2010, after more than 10 years of discussion and several attempts by the legislature. It was mainly motivated by Slovakia’s international and European obligations. The possibility to prosecute a legal entity is currently established in principle in most European countries, while its definitions vary from one country to another. Differences are to be found especially with respect to the conditions for criminal liability, which also include criminally-relevant conduct of a legal entity.

Act No. 140/2010 Coll. on Unfair Terms in Commercial Relations between Customers and Suppliers of Goods, effective on May 1, 2010, is another significant, recently-adopted piece of legislation. It aims mainly to prevent chains of stores from abusing their dominant position towards suppliers.



TSS: Which of these laws are having, or will have, the biggest impact on Slovak society in future years?


JG and MM: When assessing impacts on Slovakia’s society in future years we expect that the Act on Services in the Internal Market will impact the country’s economy the most.

VK: We consider these to be the amendment to the Civil Code (Act No. 40/1964 Coll.) and the Act on Free Access to Information (Act No. 211/2000 Coll.) which introduced regulations for more transparent and economical handling of public assets and funds in the form of a duty to publish contracts with ‘the state’. Its impact on the economy will lay in the fact that such contracts, which are all contracts with the state or state institutions, will be public and terms will be more easily checked. This will consequently affect creation of prices as well as behaviour of competition, which will have information about prices and other contractual terms. Simultaneously, since the price for goods or services provided to the state will be known publicly, this may affect also the price for goods or services in differing markets other than those in which the state or a state institution is the procurer.


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