Resolving commercial disputes typically involves several key steps, which can vary based on the specific circumstances of the case and the preferences of the parties involved. Here’s a general outline based on standard legal practices, but remember, the specific procedures may vary, especially based on jurisdictional nuances and the nature of the dispute:
Pre-litigation Negotiation: Often, parties attempt to resolve their disputes through negotiation before resorting to formal legal proceedings. This can involve direct communication between the parties or negotiation through legal representatives.
Mediation or Arbitration: If direct negotiation fails, parties might opt for mediation, where a neutral third-party mediator assists in finding a mutually agreeable solution. Alternatively, parties might choose arbitration, a more formal process where a neutral arbitrator or panel makes a binding decision on the dispute.
Litigation: If alternative dispute resolution methods fail or are inappropriate, the dispute may proceed to litigation. The steps typically include:
Filing a Complaint: The plaintiff files a complaint with the competent court, outlining the dispute and the relief sought.
Service of Process: The complaint and summons to appear in court are delivered to the defendant.
Response: The defendant submits an answer, responding to the allegations and possibly raising counterclaims.
Discovery: Both parties exchange evidence, conduct depositions, and gather information pertinent to the case.
Pre-Trial Motions: Parties may file motions to resolve or narrow down the issues, or possibly dismiss the case before it goes to trial.
Trial: If the dispute is not resolved through motions, it proceeds to trial. Both sides present their evidence and arguments.
Judgment and Appeal: The court renders a decision. Parties may appeal the decision to a higher court if they believe there has been a legal error.
Enforcement of Judgment: Once a final judgment is issued (and any appeals are exhausted), the prevailing party may need to take steps to enforce the judgment, especially if the losing party does not voluntarily comply with the court’s decision.
Settlement at Any Stage: It’s worth noting that the parties can agree to settle the dispute at any stage in this process.
For the most accurate and legally sound advice, it’s crucial to consult with a Croatian attorney or lawyer who specializes in commercial law. If you have specific queries or need detailed information about a particular aspect of commercial dispute resolution, feel free to ask!
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To open a company in Croatia involves a series of legal steps designed to ensure that your enterprise operates in compliance with national regulations. Here’s a step-by-step guide to navigating the legal framework for establishing a business in Croatia:
When you decied to open a company in Croatia, first choose on the type of business entity. Common forms include:
Draft the necessary founding documents, which typically include the Articles of Association or a Decision on Establishment (for single founders). For a d.o.o., a notary public must notarize the signatures on the founding documents.
Submit the application for registration to the Commercial Court’s registry (Trgovački sud). This process includes registering the company’s name, its business address, details about the founders, and the scope of business activities.
Every company in Croatia needs to obtain an OIB for legal and tax purposes. This will be done simultaneously with the registration at the Commercial Court.
After receiving the court’s decision and OIB, open a corporate bank account. A minimum capital is required, depending on the type of company:
Register your business with the Tax Administration to obtain a VAT number if your company’s turnover is expected to exceed 60.000 EUR in a calendar year. Even if not mandatory, voluntary VAT registration can be beneficial.
If your business will have employees, register them with the Croatian Health Insurance Fund (HZZO) and the Croatian Pension Insurance Institute (HZMO). Here are some tips on what to include in empyloment agreements.
Depending on the type of business activities, various permits and licenses may be required. These can range from safety permits to industry-specific licenses.
Ensure compliance with all legal and financial reporting requirements. This includes annual financial statements, tax returns, and other regulatory filings.
If your business will process personal data, ensure compliance with the General Data Protection Regulation (GDPR) and the Croatian Personal Data Protection Act.
The process of starting a business in Croatia is structured to streamline legal and administrative procedures. However, it is advisable to seek legal counsel to navigate the specifics pertaining to your business sector, ensuring compliance with all local and EU regulations. Engaging with legal professionals can provide valuable guidance through each step, helping to mitigate risks and laying a strong foundation for your business venture. A detailed guide on how to start a business in Croatia can be found here.
If you are abroad, find out here how to open a Company in Croatia remotely.
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The Supreme Court of the Republic of Croatia (Supreme Court) has on December 17th 2020 published the decision No. Rev-1111/2020 under which the State Attorney Office revision has been rejected, regarding decisions of lower courts which have granted public service employees rights for a salary increase during 2016.
Law office Bistrović was engaged in the upper dispute as the plaintiff’s court representative.
Considering that the Supreme Court has in previous similair revisions rejected revision proposals, this decision can be viewed as a rejection of all legal arguments used by the government for defaults in payment of the increased salary in 2016.
Details of this decision can be found on the Supreme Court official webpages:
Annual leave is often associated with various problems and confusion, both in terms of when to use it and in cases of termination of employment contracts. In any case, it is good to know the following:
1. Full annual leave
The right to annual leave is acquired after 6 months of uninterrupted employment in a particular calendar year. For example, if a worker was employed on May the 1st 2020, the employer will have to provide that worker with full annual leave for 2020, under condition that the employment lasts at least until the end of November the 1st of 2020. Thus, full annual leave is possible to achieve even though the employment in that calendar year lasted significantly less than a year.
The minimum full annual leave for one year is 4 weeks. Calculated in days, if you work 5 days a week then you have 20 days of annual leave. If you work 6 days a week, then you have 24 days of annual leave.
2. Proportional annual leave
The right to proportional annual leave is acquired in situations when the employee does not have 6 months of uninterrupted employment in a particular calendar year. For example, if a worker is employed on November the 1st 2020 and continues to work until May the 1st 2021, that worker will not be entitled to full annual leave even though he has worked continuously for more than 6 months. This is because these are two different calendar years, so such worker will be entitled to a proportional annual leave of 2/12 of the full annual leave for 2020 and 5/12 for 2021.
3. Compensation for unused annual leave
In certain cases, employment is terminated before the employee has been able to use all of his remaining days of annual leave. According to the Labor Law, in such cases the employer must pay the employee compensation for each day of unused leave. It is necessary to know that the notice period counts during the annual leave in case the employee is released from work during the notice period. Therefore, in practice, two situations often occur: (a) in the event of dismissal, the employee will spend his unused annual leave during the notice period, or (b) the employee and the employer enter into an agreement to terminate the employment immediately, without notice period, but the employer pays the worker compensation for unused annual leave.
4. Schedule of use of annual leave
Each employer is obligated to publish the schedule of annual leave no later than June the 30th of the current year. If the employer fails to do so, or if he violates other regulations regarding annual leave in general, he risks committing a serious offence with a large fine. When determining annual leave, the employer must also take into consideration the time when the worker is able to take leave (eg. the worker’s family circumstances), so that determining annual leave is not a strictly unilateral right of the employer.
If the annual leave is used in parts, in the current calendar year it must be used for at least two weeks continuously, unless otherwise is agreed in writing between the employee and the employer. The so-called old annual leave must be used by June the 30th of the following year, and if the worker doesn’t do so even though the employer has allowed him to use such leave, the worker loses that right forever.
5. Which regulation to apply?
Annual leave is regulated by the Labor Law as the so-called general employment law, however, many employers have special rules on annual leave included in employment contract, working regulations or collective agreement.
If annual leave is regulated by several different regulations, it is often a question which regulation is applicable. In labor law applies the principle that the so-called most favorable right, that is, the most favorable regulation is being applied to workers. This means that in relation to a specific issue, that is, a specific right, between several possible regulations, it should be applied the regulation that regulates this right in the most favorable way. This so called “Cheery picking” – combinations and application of several possible regulations to a particular right. This would not constitute an obligation of the employer or the right of the employee, but such combinations could also be considered under condition that the employer and the employee have agreed on this.
Other
Labor law is a very complex area of law that includes a number of regulations that need to be analyzed. In addition to all the above, in the case of checking the annual leave, it is always necessary to check what exactly is written in the employment contract, the working regulations, other internal acts of the employer and the collective agreement, if applicable. Also, for the purpose of accurate case analysis, it would be advisable to consult with a lawyer specialized in labor law.
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The information in this article do not constitute legal advice in relation to a specific legal issue, but rather general legal information published for information purposes.
In practice, we often see the occurrence that employers treat an employment contract as a template that needs to be signed in order to fill out a certain form and so that the worker can start working. Later, it often turns out that, deficiencies in the employment contract cause problems, as well as complex and long-lasting labor disputes. In this text we will not explain which provisions the employment contract must have in accordance with the Labor Law, but we give a summary of some very important clauses that are often ignored:
In many employment contracts we often see that the workplace is concisely defined with just a few words, for example “salesman” or “warehouseman” and similar, without more detailed description of the actual jobs that the worker should perform. This is fertile ground for disputes over what actually enters the job description of the workplace, which causes frustrations on both the employer’s side and the worker’s side. If the employer doesn’t have the so-called establishment plan or other form of job catalog in which each job is described in detail, it is recommended to describe as detailed and precise as possible which jobs are included in the job description of a workplace, and always use formulations such as “and all other jobs that are necessary or usually related to that ”.
The value and sensitivity of data and information has increased significantly in the age of digitization and information technology, and with the entry into force of regulations such as the GDPR, any employer can face very high fines for any unauthorized disclosure of classified and unauthorized data by his employee. In addition to the data protection measures that must be applied by each employer (for example, security software, password setting, encryption, etc. data protection methods), it is recommended that the employment contract specifies all data protection rules that the employee must follow, or refers to the relevant internal acts. Also, prescribing pre-determined sanctions (for example, contractual penalties) for violations of this type can have significant preventive effects.
Many companies started by having an employee build a certain network of business contacts after a certain amount of time spent with the old employer, after which he resigns, opens his own company and takes with him certain number of customers, clients or contacts from the previous job. In practice, we see relatively small number of clauses that protect employers from such actions by their employees. Such protection can be achieved, for example, by a contractual non compete clause for a certain time, during which period the employee cannot engage in the activity of the employer, but there are a number of other provisions and measures that employers can use for this purpose.
Namely, salaries do not have to be explicitly agreed in the employment contract, but it is possible to agree in a special contractual provision that the employee’s salary will be determined in accordance with the working rules or other internal act of the employer (for example, rulebook on salaries). In this way, the employer can achieve a higher level of control over the business costs of, especially in times of sudden crises. Such provisions should be very clear and agreed in detail in order to maintain a certain level of equality in employment, as well as to provide for mechanisms for the protection of workers.
To most, if not every employer, the goal is to have the most competent and educated worker. In order to achieve this goal, it is necessary to invest certain funds in further education of employees during employment. In such situation, the employer must contractually secure the funds paid for the purpose of education or training of the employee, otherwise the employer risks that the employee after obtaining a higher degree of educational or professional qualifications simply moves to another job with a new employer. Such protective contractual provisions must also be contracted very precisely and carefully, always making sure that the worker’s rights to movement and freedom of work are not too restricted.
Other
Labor law is a very complex area of law that contains a number of regulations that need to be analyzed. In addition to all the above, in the case of drawing up and contracting an employment contract, it is always necessary to check what the existing and potentially future legal restrictions are. Also, for the purpose of a precise analysis of the legality of each contractual provision, it would be advisable to consult a lawyer specialized in labor law.
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The information in this article does not constitute legal advice in relation to a particular legal issue, but general legal information published for information purposes
The Labor Law and the case study of Croatian courts apply very strict formal rules that must be followed when terminating an employment contract. Sometimes terminations of employment contracts are essentially valid, but they still fall in court due to procedural errors. It is always necessary to pay attention to the following:
There are different types of dismissals that depend on the specific facts of each case. If the employer gives a business-related dismissal, that is, cancels due to technical excess, change of organization or introduction of new technology, the employer must prove in court that due to these changes the need for a certain job has really ceased. If he fails to do so, he bears the risk of losing the dispute. If, however, the employment contract is terminated because of the employee’s mistakes, the difference between wrongful and extraordinary dismissal must be understood, and in addition, it must be proven in court that the employee is genuinely guilty of violating the employment contract.
The validity of the reason for cancelation from point 1 must be described in detail in the explanation of the decision to dismiss, otherwise the employer bears the risk of losing the dispute. In practice, we often encounter terminations of employment contracts that are insufficiently reasoned, which is why the employer in the end cannot prove the validity of the reasons for termination. For this reason, it is extremely important that any decision to terminate the employment contract is thoroughly explained and in detail.
Every employer that employs over 20 workers must have an established workers’ council, or a trade union commissioner in the function of the workers’ council. Before making a decision on dismissal, the employer must necessarily consult with the workers’ council on dismissal, by submitting to the workers’ council a draft decision on termination of the employment contract, as well as the reasons for termination of the employment contract. The failure of the employer to do so automatically leads to the unlawfulness of the decision to terminate the employment contract.
When an employer who employs over 20 workers gives the so-called business-related dismissal (often called technical excess) the employer cannot terminate the employment contract with anyone, but is obliged to adhere to the so-called social criteria. Social criteria are applied to the so-called comparable workers, that is, workers working in the same or similar jobs. Social criteria are divided according to the years of service, age of the worker and his support obligations that are on his burden.
For example, a worker who is 58 years old, has 30 years of service and still has to support a sick wife could not be legally dismissed if the employer could have terminated the employment contract with a younger worker with less work experience and no support obligations. In certain cases, it is possible to prescribe performance as an additional criteria for dismissal, but such criteria should not be intended to circumvent the use of social criteria. If the rules described here are not followed, the employer bears the risk of losing the litigation.
If the employer gives the so-called extraordinary dismissal, that is, dismissal due to the most serious violations of the employment contract, the employer is obliged to give such dismissal within 15 days since the day when he learned of the reasons for such dismissal. This means that the employer must prove in court not only that the employee has indeed roughly violated the obligations under the employment contract, but also that he must prove the exact moment when he learned of such facts. It is only for this reason that many, otherwise quite justified dismissals, have fallen in court.
On the other hand, if the employee wants to protect his rights and contest the dismissal in court, the employee must, within 15 days of receiving the decision on dismissal, submit the so-called request for protection of rights. If the worker does not do so, he loses the right to contest the termination of the employment contract forever. After submitting a request for protection at work, the employee has a further 15 + 15 days to challenge the dismissal in court, otherwise he loses the right to challenge the termination of the employment contract forever. In practice, many workers lost otherwise well-founded lawsuits precisely because of the violation of the stated deadlines.
Other
In case of termination of the employment contract, it is always necessary to check what exactly is written in the Work regulations and the Collective Agreement, if it applies. It would also be advisable to consult with a lawyer specialized in labor law for the purpose of a thorough analysis of the case.
If you have any questions regarding this article feel free to contact us at:
The information in this article does not constitute legal advice in relation to a specific legal issue, but rather general legal information published for information purposes.
As domestic and global digitalisation of all social systems is accelerating, especially as a result of the social distancing measures resulting from the Covid-19 crisis, we can foresee the increasing use of electronic signatures and electronic documents in general, in business and legal transactions. In 2014, the European Union adopted the so-called eIDAS Regulation (Electronic Identification Authentication and Signature), which aims to create the conditions for secure electronic transactions between EU Member States, whereby electronic signatures are playing an important role.
An electronic signature is defined by the eIDAS Regulation as “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign“. To put it simply, electronic signature is a way of digitally signing documents that, to some extent and under certain conditions, replaces the traditional handwritten signature. In the Republic of Croatia, the use of electronic signatures in business is regulated by several regulations, such as the Electronic Document Act, but the main regulation is the eIDAS Regulation.
eIDAS Regulation establishes the legal framework for the application of electronic signatures and distinguishes simple, advanced and qualified electronic signature.
2.1. Simple electronic signature
Ordinary or simple electronic signature („SES“) is any type of signature in a digital environment whereby the signatory expresses his / her consent to the contents of the document he / she signs. This can be a simple click on a menu button, selecting a specific checkbox, or copying a scanned pdf signature to a specific document. Ordinary electronic signatures are not regulated in detail by the eIDAS Regulation, and it is recommended that such signatures are not used on important high value documents. Such signatures cannot be used before state authorities, such signatures cannot prove the identity of the signatory, nor can the validity of such signatures be verified. In practice, one could say that the security of such signatures is the same as registering by email and setting a password.
2.2. Advanced electronic signature
Advanced electronic signature („AdES“) is an electronic signature that must meet the following requirements:
The European Telecommunications Standards Institute has developed international standards for various AdES formats, making PAdES an advanced electronic signature for PDF, XAdES for XML, and CAdES for CMS signatures.
Advanced electronic signatures can be used, in practice, to sign online contracts, letters, e-mails or other digital documents, and as such in legal proceedings are considered as proof that a particular person has signed a certain document – even if they do not meet all the requirements for so-called qualified electronic signature.
2.3. Qualified electronic signature
Qualified electronic signature („QES“) is legally equalized with a handwritten signature, which means that legally, a document that contains QES will be equally legally credible as the document with handwritten signature. Technically speaking, QES is actually an advanced electronic signature that is created using a qualified electronic signature creation device (called a QSCD cryptographic device) and is based on a qualified certificate for electronic signatures. A qualified certificate is an electronic certificate that represents the electronic identity of an individual and is issued by a so-called trusted service provider, ie an organization that meets the technical requirements for issuing such digital certificates (for example, Financial Agency in the Republic of Croatia).
Qualified electronic signatures are used today, for example, to sign all types of submissions to the courts through e-communication, and it is expected that the use of QES will eventually extend globally to the entire public and private sector.
A qualified electronic signature based on a qualified certificate issued in one Member State is recognized as a qualified electronic signature in all other EU countries. The use of QES can significantly accelerate and increase the security of international transactions based on electronically concluded contracts, especially since the ability to forge signatures is significantly less than with the handwritten signatures, and any QES can be easily validated.
There are numerous free online services, such as in the Republic of Croatia – Fina Validator, or across the EU – Trusted List Browser or DSS Demonstration WebApp, to which a document containing an electronic signature is simply uploaded and then the online service performs the validation function. If the electronic signature is valid, then the validation service will display the identity of the signatory, the time of signing, the format and the signature form.
Therefore, authentication of electronic signatures is free, simple and extremely fast, which until now has not been the case with authentication of handwritten signatures, because in the case of contesting handwritten signatures, graphical expert evaluation is carried out, which is extremely slow and very expensive.
Advanced and qualified electronic signatures should be used where their use is required by law or when risk analyzes indicate their need.
In Republic of Croatia, it is very likely that all legal entities will have QES from September 1, 2020, since all legal entities in the Republic of Croatia are in accordance with Art. 118 (3) of the Code of Civil Procedure is required to request access to e-communication with the courts. If the legal entity did not have QES, it would still be able to access the e-communication system but would not be able to independently sign and upload the documents to court, which required QES.
There are numerous public service providers for electronic signatures (for example, Financial Agency in the Republic of Croatia), but also private companies who can also be authorized issuers of electronic signatures (for example, DocuSign).
When choosing the provider for such services, it is recommended to check if the electronic signatures are in accordance with the eIDAS Regulation and if the provider is on a list of authorized providers (so-called Trusted Service Provider). This can be easily verified by typing the name of the service provider on the online service „Trusted List Browser“ of the European Commission, so if the service provider is on that list it means that it complies with the eIDAS Regulation.
Another point to pay attention to is the purpose of using an electronic signature. For example, certain government electronic services require specific types of electronic signatures, and it is therefore necessary to check such conditions before purchasing.
The last remaining restriction in the Republic of Croatia relates to documents for which a notarization on paper is required by law or other regulation, in which case electronic documents cannot be used. However, given the increasing trends in the digitalization of society and the judicial system, legal changes are expected that will allow notaries to issue electronic certificates or solemnizations of contracts and documents, or in some cases to abolish the need for notarization, given the security and convenience of using new technologies. Such developments will certainly contribute to a significant acceleration and simplification of all legal proceedings.
If you have any questions relating to this article please don’t hesitate to contact us at:
The information in this article does not constitute legal advice in relation to a specific legal issue, but rather general legal information published for information purposes.
An association is a form of free and voluntary organization of several natural or legal persons for the purpose of promoting, protecting or exercising certain rights, goals or beliefs (cultural, sports, humanitarian, educational, etc.), without the intention of gaining profit. If you have decided to achieve your ideas through an association, below are some guidelines that can help you.
The procedure of founding and registering of an association begins with a founding assembly of an association. But, before the founding assembly, it is necessary to determine the founders of the association and basic information of an association
1. Founders
The association can be founded by at least 3 people, physical or legal persons. The Law on Associations stipulates that the founder also may be a minor with the age of 14 and an adult deprived of legal capacity in the part of concluding legal affairs, but both with the prior consent of the legal representative or guardian.
2. Basic information of an association
Basic information of an association are determined in the statute of an association. Each association must have a statute as its basic general act. Before the founding assembly it is necessary to draft a proposal of the statute so that it could be discussed on the founding assembly, and so that the decision on adopting of the statute could be made. The mandatory part of the content of the statute is prescribed by Article 13, paragraph 3 of the Law on Associations, and paragraph 4 of the same article prescribes what other provisions the statute may contain (optional part of the content). When drafting a proposal of the statute, we recommend to study the previous legal provision on content of the statute so that you don’t miss anything important.
3. The founding assembly
After drafting of a proposal of the statute and all the information about the association are determined, the founding assembly can be held. The minutes of the founding assembly must be made, on which daily agenda is determined. The daily agenda should cover a few main points, such as:
4. Registering in the register of associations
The person authorized to represent the association submits to the competent administrative body, on whose territory is the headquarters of an association, an application for registering in the Register of Associations. The application for registering in the register of associations is submitted in two identical copies with all the necessary and prescribed attachments (which are stated on the application itself) and it is necessary to pay an administrative fee in the amount of 35.00 HRK of the state stamps, which should be put on the application.
After considering the application for registration and determining the compliance of the Statute of the Association with the law and the validity of other attachments submitted with the application, the competent body for the registration of associations in the Register of Associations will make a decision on registering in the Register of Associations. The competent administrative authority is obliged to issue a decision on the application for registration within 30 days since submitting of a duly filed application for registering.
5. After registration
Once the registration of an association has been done successfully, it is necessary to make a seal of the association, to register in the Central Bureau of Statistics for classification and determining the registration number, within 30 days from getting a decision on registering in the Register of Associations, and after that it possible to open an account in a selected bank.
Conclusion
Following these steps and instructions, the process of founding and registering an association can be very simple and does not take long. All relevant regulations as well as the forms required for the association’s registration can be found on the web pages of the Ministry of Administration of the Republic of Croatia.
If you can’t manage to form an association yourself, an attorney can help you do that through a power of attorney.
Authors:
elena.musak@odvjetnik-bistrovic.hr
mislav.bistrovic@odvjetnik-bistrovic.hr
On April 18th 2020, the Act on supplementing the Act on Enforcement on monetary assets (hereinafter: Act) is legally effective. This Act will seek to ease the position of natural persons under enforcement due to Covid-19 crisis. Below we present the Government’s proposed measures aimed at making it easier for individuals who bear the negative consequences of the current situation. Here is a summary of legislative changes:
1. FINA shall suspend enforcement of funds on the accounts of natural persons during the course of special circumstances. As an exception to this, FINA will carry out the enforcement procedure if, during special circumstances, the condition for transferring the funds seized before the occurrence of the special circumstances, occurs.
2. The enforcement is being suspended for 3 months.
3. There will be no default interest during the special circumstances and FINA will not calculate the default interest determined on the basis of payment for the period of special circumstances
4. The suspension of enforcement shall not apply to:
5. After the suspension of enforcement, if there is no basis for payment on which the execution of the enforcement is continued, the accounts of the debtor shall be unblocked in order to be able to dispose with his funds in the account.
6. FINA’s actions during special circumstances:
7. During the period of special circumstances, no time limit shall be applied for the duration of the account suspension, except for the time limit for the transfer of confiscated funds, which shall be calculated from receipt of the basis for payment to the Agency.
8. FINA will send an order for unblocking the account within 10 days, if the debtor does not have any basis for payment after the suspension of enforcement.
The Proposal supplements Art. 25 of the Law on Enforcement on financial assets with a provision on FINA’s irresponsibility for irregularities in the enforcement procedure, if it occurred because of incorrect or incomplete information provided by the obliged parties to submit data to the Single Register of Accounts or Data submitted by the competent authorities.
Authors:
On April 20, 2020, the Ministry of Justice issued a decision on eligibility for electronic communications in all municipal courts, all county courts and the High Commercial Court of the Republic of Croatia.
This is a crucial decision for the functioning of the justice system, especially in times of social distancing due to the Covid-19 crisis, for the following reasons:
The Ministry of Justice is expected to publish the said decision on its web site soon, and the news has been published by the Croatian Bar Association: