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PwC Legal’s Highlights 2021

COPYRIGHT PROTECTION 

THE REPRODUCTION COMPENSATION SAGA | STATE LIABILITY 

Ten organizations representing artistic creators entered into an agreement with the Government, as a result of which the Government reimbursed the artistic creators a total of 2.85 million euros. This compensation is for allowing private copying during the period of January 1, 2019 to March 31, 2021. The compensation is payable under EU’s Infosoc Directive, but it was not paid in Estonia due to lack of corresponding national legislation.


COPYRIGHT PROTECTION 

FREE USE OF MUSICAL WORKS 

We represent one of the largest private hobby schools in Estonia in a dispute concerning the application of an exemption for the free use of musical works in a private educational institution. This is a dispute on a matter of principle, it has caused passionate debates and has been reviewed by the  Supreme Court twice already. 


PROTECTION OF BLOCK CHAIN TECHNOLOGY AND PUBLIC HEALTH

ESTONIAN VACCINATION CERTIFICATE PLATFORM 

GuardTime, a creator of cyber security solutions, completed the VaccineGuard vaccination certification platform on which the Estonian vaccination certification system was built. The opportunity to be involved in the creation of key solutions that change the world is always an extremely inspiring and eye-opening experience. Our contribution helped this major project move on swiftly while avoiding excessive red tape. 


DIGITAL SOCIETY

INTERNATIONAL DIGITAL SECURITY | ID CARD

We helped the international digital security company Gemalto AG (Thales Group) find solutions for resolving unprecedented disputes concerning Estonian electronic identity cards with the Republic of Estonia. 


DIGITAL SOCIETY

LEGAL ADVISOR FOR E-RESIDENCY 

PwC is a long-term legal and tax advisor of the Estonian e-Residency team. For the purposes of maintaining Estonia’s good reputation as a successful e-state and in the interests of the e-residency program itself, it is of utmost importance to maintain both high service standards and impeccable reputation of businesses that provide services to e-residents.


INDUSTRY

A MAJOR TRANSACTION IN THE ESTONIAN DEFENSE INDUSTRY 

We helped to complete a major transaction in the Estonian defense industry, advising the German company Krauss-Maffei Wegmann on the acquisition of 24.9% of Milrem Robotics, one of the flagships of the Estonian defense industry, which is showing strong growth.


INDUSTRY

STRUCTURAL CHANGES

We advised Krimelte OÜ, one of Europe's leading manufacturers of construction chemicals, in several projects concerning changes in the group's structure. After the acquisition of the company by the management board, Krimelte has invested a great deal in reorganizing their structure. Krimelte's wide international reach was supported by our teams of legal advisors in a number of countries.


INDUSTRY

EXPORTER OF THE YEAR 2021 | GLOBAL SUCCESS

We advised SRC Group AS, the star of Estonian industry operating in the maritime sector in shipbuilding and repair, who won this year’s “Exporter of the Year 2021” award from the state. This Estonian company operates simultaneously on several continents and PwC Legal's international network has greatly contributed to its success on a daily basis.


FORESTRY

FAIR COMPENSATION | EUROPEAN COURT OF HUMAN RIGHTS

In some cases, the restrictions relating to nature conservation may be so strict that they constitute a loss of ownership for the owner. The European Court of Human Rights is resolving a complaint concerning fair compensation to private forest owners for nature conservation restrictions that prevent them from managing their forest.


FORESTRY

STATISTICS | ACCESS TO ENVIRONMENTAL DATA

In order to obtain insight on forests, changes therein, and cutting activities, a statistical forest inventory is conducted periodically. The data obtained from the nationwide test plots are used for the development of forest policy. Several environmental organizations have seized courts to get access to the location data of permanent test plots. This would allow them to check the reliability of the base data and the statistical generalizations made thereon.


ENVIRONMENTAL PROTECTION

DEFORESTATION ON NATURA 2000 SITES

We represent Eesti Metsa Abiks (EMA), one of Estonia's most active environmental organizations, in a dispute concerning the deforestation on Natura 2000 sites. The central issue in the dispute is whether extensive deforestation is an activity that requires an appropriate environmental impact assessment to be carried out before it can be authorized. According to the Attorneys-at-Law of PwC Legal who represent EMA in court, this is one of the most important environmental disputes of this decade.


TRADE

JOINING OF ESTONIA'S LARGEST WEB STORES 

In cooperation with other PwC colleagues, we advised Hansapost OÜ on a transaction in which Mid Europa Partners, the leading investment fund in Central Europe, created the largest e-commerce business in the region that covers Estonia, Latvia, Lithuania, and Finland.


TRADE

RETAIL RESTRICTIONS | ANALYSIS OF LIQUOR STORES

At the request of the Tallinn City Government and in cooperation with PwC Advisors we analyzed potential retail restrictions at points of sale specializing in the sale of alcoholic beverages. We established whether it was legally permissible for a local government to restrict the sale of products other than alcoholic beverages in liquor stores with the objective to protect minors by limiting their exposure to alcohol.  We assessed the compliance of the proposed measures with national law and European Union law based on the fact, inter alia, that assortment restrictions may be in conflict with the principle of the free movement of goods.


TRADE

LEASE AGREEMENTS

We advised Linette AS, which has been producing lingerie in Estonia for decades and also operates lingerie stores, on various issues related to lease agreements.


LITIGATION

DISPUTE ON REFUTING FALSE INFORMATION

We successfully represented Sass Henno, a writer, in a lawsuit against Marti Kuusik, a former Minister, who demanded that Henno refute allegedly false information in an article in which Henno offered Karin Kuusik support to escape the vicious circle of domestic violence. As a result of a two-year litigation, the former Minister withdrew his claim against Henno and also agreed to pay Henno’s proceedings costs in the amount of 21,600 euros.


LITIGATION

RAIL BALTIC | EXPROPRIATION

In order to build the Rail Baltic railway line, the Government must first reach agreements with landowners to acquire their land in the prospective railway corridor. If no agreement is reached, the property will be expropriated. We represent a client in court in a dispute concerning the principles for calculating the expropriation fee.


LITIGATION

THE SCANDALOUS VEB FUND | COMPENSATION

In 1992, $64 million of Estonian entrepreneurs' money remained in Russia's VEB Bank. In 2010, a judgment was handed down obligating the Republic of Estonia to establish a procedure for paying financial compensation to VEB Fund certificate holders.  However, this has not happened, and the creditors have been dismayed at the state’s lack of action. We represent certificate holders in their claim for the enforcement of the judgment.


TRANSPORT

ANALYSIS | ORGANIZATION OF RAIL TRANSPORT

At the request of the Ministry of Finance and in cooperation with PwC Advisors, we analyzed the possibilities and expediency of connecting the management of railway infrastructure and the organization of rail transport with other modes of transport. As a part of the legal analysis, we assessed the legal feasibility and limitations of the four possible development scenarios in accordance with national, international, and European Union law governing the railway sector.


TRANSPORT

LITIGATION | STATE AID 

Damage caused upon administration of justice is subject to compensation but only under highly exceptional conditions. However, according to the case law of the Court of Justice of the European Union, state liability must not be excessively limited if the damage was caused by a breach of EU law. This also applies if the damage was caused upon administration of justice by the highest court of a Member State. We represent a maritime transport company in court in a claim for damages against the state, arising from the failure of the Supreme Court to resolve a claim based on breaching the standstill clause.


PUBLIC PROCUREMENT

VICTORIES IN DEFENSE PROCUREMENT

We successfully represented foreign companies in the public procurement of ammunition, red dot sights, and surveillance equipment. Clients were given the opportunity to continue competing for contracts with a value above the international threshold. PwC Legal has long-term experience in defense procurement, and we can assess both the perspective of the contracting authority and that of the tenderer.


PUBLIC PROCUREMENT

FINANCIAL CORRECTION CAN BE SUCCESSFULLY CHALLENGED

Even a minor mistake in organising a procurement can lead to the withdrawal of EU funding, but good legal aid can save the situation. We represent a large hospital in a financial correction dispute and have already been successful in two court instances.

 


PUBLIC PROCUREMENT

NO TO SLIPPERY TRAIN PLATFORMS!

We successfully represented Estonian Railways in the procurement dispute concerning the anti-slip treatment of platforms. Tenderers are often surprised that their poor work in the past can be used to their disadvantage in the next public procurements. We have repeatedly tested this legal basis for exclusion in court.


PUBLIC PROCUREMENT

FAIRER CONDITIONS IN PUBLIC TRANSPORT

Regional public transport runs on the basis of public service contracts. We helped Estonia's largest transport company to make their contract a fairer one.


PUBLIC PROCUREMENT AND INFORMATION TECHNOLOGY 

99.999% | FIVE NINES

The state-owned IT institution argued with an international group about whether the state-ordered technology essential for ensuring internal security must meet the 99.999% standard.


INFORMATION TECHNOLOGY

EMPLOYMENT LAW ISSUES | MOTIVATION PROGRAM

We advised Breakwater Technology OÜ, an IT-solution provider, on a number of day-to-day issues in employment law, we also helped them create a motivation program and drafted the necessary documents for its implementation.


INFORMATION TECHNOLOGY

NEW STRUCTURE | OPTION PROGRAMS

We advised Rush Street Interactive LLC, a US casino software developer, on setting up a new organizational structure in Estonia. Among other things, we assisted the client in creating option programs and in data protection issues.


REAL ESTATE AND CONSTRUCTION

DAILY LEGAL ADVICE

Colonna Varahaldus OÜ is one of the leading commercial real estate investors in the Baltics. We are proud of our continued cooperation in the field of property law whereby we advise Colonna on a daily basis.


REAL ESTATE AND CONSTRUCTION

SALES NEGOTIATIONS | TRANSACTION

We advised Ensto Ensek AS, which develops and manufactures reliable and smart electrical equipment for electric power distribution networks and buildings, on the sale of its Taevakivi property to LHV pension funds.


REAL ESTATE AND CONSTRUCTION

DAILY LEGAL ADVICE

We share the mission of Espak Ehitustööd OÜ, which has 25 years of experience in the construction sector, that work must be done quickly and with high quality. We are very glad of our shared values and the fact that we continue to be their partner and help them solve legal issues.


REAL ESTATE AND CONSTRUCTION

LITIGATION | RENTAL WORK

We represented companies of the construction sector in court in a tax dispute worth more than three million euros. The central issue in the dispute, which reached the Supreme Court, was whether a construction company was liable for the tax arrears of a temporary employment agency when using temporary workers. It was also debated whether the temporary work relationship could in correspond to the characteristics of an employment relationship and thus yield the same legal consequences. The courts found that in determining the nature of the work relationship it was relevant whom the employees considered to be their employer.


REAL ESTATE AND CONSTRUCTION

NEW HOMES | INNOVATION 

A short drive from Tallinn, on Pärituule Road in the scenic Neeme village, 40 innovative modular houses will soon be built under the leadership of Pärituule Residentsid OÜ, whom we helped to draw up the design and construction contract. The modular houses built by Kodea OÜ stand out in terms of technological innovation and an excellent price-quality ratio.


REAL ESTATE AND CONSTRUCTION

HIGH SPEED INTERNET ACROSS ESTONIA

We advised Corle OÜ, which operates in the construction of power and telecommunication networks and the management of energy projects, in the preparation of complex construction contracts, so that better and faster internet access would become available to thousands of companies and households across Estonia. 


REAL ESTATE AND CONSTRUCTION

PROCEEDING FOR A BUILDING PERMIT

Helland Baltic OÜ, a producer of high-quality solid and glued oak and birch furniture and furniture details in Pullapää, Lääne County, has expanded production. We advised the company in the proceeding for a building permit for the expansion of the production building, and in negotiations with their neighbors and Haapsalu City Government.


REAL ESTATE AND CONSTRUCTION

ADVISING TRANSACTIONS 

Providing daily legal advice to Elon OÜ, one of the fastest growing real estate development companies in Estonia, on issues related to real estate development, including conducting pre-acquisition legal audits, and drafting and negotiating purchase and construction agreements. 

 


REAL ESTATE AND CONSTRUCTION

THE MOST EXPENSIVE SITE IN ESTONIA

We advised the real estate company Maakri KVF OÜ on the sale of one of the most expensive sites in the capital of Estonia, located in an area of high-rise buildings in the heart of Tallinn, between Maakri, Lennuki and Kuke streets. The site was bought by the company Teine arendus OÜ, which belongs to the owners of Capital Mill OÜ, a major developer on the Estonian real estate landscape.


REAL ESTATE AND CONSTRUCTION

THE MOST DESIRED RENTAL HOMES IN TALLINN 

We advised Linnakodu OÜ, one of the largest and fastest growing real estate funds in Estonia offering the most desired rental homes in Tallinn, on real estate financing issues, so that they can offer rental services on even better terms.


MAINTENANCE OF PROPERTY 

TRANSACTION | ACQUISITION OF A COMPETITOR 

We advised Stell Eesti AS, a property maintenance and management company, on the acquisition of OÜ Kyyrix, its competitor providing cleaning services and supplies. As a result of the transaction, Stell became the largest provider of property maintenance services in Southern Estonia.


CRYPTOCURRENCY

TOKENIZATION OF MATERIALS

We advised Potion Labs OÜ, a cryptocurrency company, on the tokenization of materials to non-fungible tokens (NFT-s) under the  innovative Decentralized Finance (DeFi) solution and on legal and regulatory issues pertaining to private and public placement of tokenized instruments.


CRYPTOCURRENCY

TOKENIZATION OF CARBON PROJECTS 

We advise E-Agronom OÜ, a cryptocurrency company, on leaving Solid World DAO, the blockchain-based carbon offset credits market, to achieve sustainable development goals. This includes advising them on the tokenization of carbon projects into non-fungible tokens (NFT-s), and legal and regulatory issues pertaining to private and public placement of tokenized instruments.


CRYPTOCURRENCY / FINANCIAL REGULATIONS

NEW CRYPTOASSETS ON THE XCHANGE PLATFORM

We analyzed various cryptoassets (MANA, OCEAN, OXY, AXS, DYDX, FIL, MIR, MKR) to establish whether they could be classified as securities or e-money, and whether these cryptoassets were reliable enough to be traded on the platform of xChange - one of Estonia’s largest cryptocurrency exchanges.


CRYPTOCURRENCY / AML MEASURES 

MONITORING BITCOIN TRANSACTIONS 

Viljar Kähari, Attorney-at-Law and a Partner at PwC Legal, has conducted anti-money laundering and anti-terrorist financing seminars and talked about how and using which tools it is possible to monitor bitcoin transactions, which frauds have taken place and how they have been detected, and how cryptocurrency exchanges verify their transactions and customers. 


PREVENTION OF MONEY LAUNDERING

ESTABLISHMENT OF INTERNAL PROCEDURES 

We advised dozens of financial institutions and virtual currency service providers in drafting internal procedures for the prevention of money laundering and terrorist financing and the application of financial sanctions or bringing them into conformity with the applicable law, regulatory guidelines, and market practices. We ahelped to draft or amend the documentation pertaining to risk analysis, risk appetite, and the risk management model, and organized relevant training. We conducted thorough due diligence, whereby we studied how building client relationships, monitoring, transaction monitoring, employee training, reporting of suspected money laundering, and case handling actually take place.


FACTORING

CREDIT INSURANCE MUST COVER LOSSES

As a result of three years of litigation, our client does not have to repay to the bank an amount received under a factoring agreement nor do they have to pay the penalty for late payment. The disputed amount exceeded EUR 255,000. The dispute involved international freight transport, wherein the consignee refused to pay the bank for the claims transferred to them on the pretext that they had not received the goods. The court ruled that since the performance of the factoring agreement was guaranteed by credit insurance, it was unjustified to file a recovery claim against our client.


INVESTING 

CREATING A TRUST FUND STRUCTURE

We advised highly experienced representatives of the real estate and banking sector in establishing a trust fund structure for their new commercial real estate fund. The planned volume of the fund is 50 million euros.


BANK ACCOUNTS

(NOT) OPENING BANK ACCOUNTS FOR E-RESIDENTS 

At the request of the e-Residency team of Enterprise Estonia we analyzed together with consultants from PwC Advisors why opening bank accounts for Estonian e-residents is so difficult. We communicated with representatives of the Estonian Financial Supervision Authority, the Tax and Customs Board, the Police and Border Guard Board, Swedbank, Luminor Pank, Coop Pank, SEB Pank, and the Ministry of Justice. We mapped the obstacles and provided solutions that would reduce the uncertainty for the providers of the banking service when opening bank accounts for e-residents and facilitate cooperation and data exchange between public authorities and banks, in order to increase the risk management capacity and facilitate supervision.


FINANCING 

ACTING AS A SECURITY AGENT

For many years, PwC Legal has been providing the service of a security agent during the performance of major financing transactions. Last year, MUM Kodu and MUM Real Estate entered the market with a new and innovative real estate purchase service. We hold the collateral in the interests of the investors and where necessary, are ready to sell it.


FINANCIAL REGULATIONS

APPLICATION FOR LICENSES

We advise several companies in obtaining activity licenses from the Financial Supervision Authority, be those companies investment firms, payment institutions, e-money institutions, crowdfunding platforms or credit institutions. We also advised an e-money institution in commencing to provide a cross-border service. Since legal advice is only a small part of the whole process of applying for a license, then together with PwC's financial, tax and IT advisors, we also helped the client draft all necessary internal documents and test its IT-systems.


FINANCIAL REGULATIONS

ACQUISITION OF HOLDINGS 

We advised clients in the process of acquiring a qualifying holding in a credit institution, a credit provider and a payment institution. To this end, we performed due diligence, helped to draft the transaction documentation and, where necessary, communicated with the Financial Supervision Authority. 

 


BEING A PART OF THE SOCIETY

DEVELOPING THE FIELD OF FINANCE  

We participated in FinanceEstonia's working groups and helped to compile a guide for credit providers for assessing the money laundering risk, to amend the drafting of the legislative intent for regulating the positive credit risk, to provide comments on the proposed amendments in legislative acts pertaining to virtual currency, to reduce the administrative burden in preventing money laundering, and to provide a possibility for credit providers to obtain tax information from the Tax and Customs Board prior to making credit decisions.


FAIR ADMINISTRATION OF JUSTICE

HEARING OF A WITNESS

We took a big step forward to ensure a fair trial in tax disputes. The Supreme Court of Estonia agreed with our statement that the mere fact that a person had already given testimony or provided explanations in administrative or criminal proceedings could not justify not hearing them again as witnesses if they might have something important to add to their previous statements. Asking questions from witnesses is not just a privilege of the tax authorities. Hearing and questioning a witness by the court also complies with the principle under which the court must examine all evidence at first hand. This important principle has been repeatedly breached by the courts in recent years.


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