Red era reforming
3 October 1998
6 January 2014
21 May 2014
3 October 2013
12 February 2014
17 July 2014
Neil McGregor on trying to keep up with Romania's law makers post Ceausescu. Neil McGregor is senior resident lawyer at Sinclair Roche Temperley in Bucharest.
This my second year as senior resident lawyer at the Bucharest office of Sinclair Roche & Temperley. Sinclair Roche is one of only two City firms with permanent offices here. The others include two Canadian firms, four US firms and a French firm.
Most of my work involves assisting foreign investors in the Byzantine world of Romanian bureaucracy. Romania is recovering from more than 40 years of communist rule, culminating in the overthrow of Nicolae Ceausescu in 1989. It is the second largest market in central and eastern Europe but has suffered from the slow and uncertain pace of reforms since 1989.
Although rich in natural resources and with a well-educated population, Romania has so far attracted less foreign investment than some of its neighbours. Romanian law has historically been heavily influenced by the civil law systems and is codified, although there are also newer specific laws.
A good working knowledge of Romanian corporate capital markets, competition, privatisation and commercial law is essential, but lawyers also need to work closely with Romanian colleagues, both in-house and externally. Clients' expectations have to be managed to take account of the realities of doing business in Romania.
From simple company incorporations to major transactions, legal work tends to take longer and to involve more effort than would be expected in the UK. Patience and a sense of humour are essential, particularly when the law is changed so frequently and remains so uncertain. A good example of this is the law on foreign investment. A new, more reformist government came to power at the end of 1996 and set out to accelerate the privatisation process, for which foreign investment is vital.
On l9 June 1997 the Foreign Investment Emergency Ordinance was published in Monitorul Oficial (rough equivalent of the London Gazette) and so came into force on that day. This seemed to offer fairly attractive incentives to foreign investors and provided that detailed regulations for its complete implementation would be presented to the government for approval within 30 days.
Entitlement to some of the incentives offered was to be evidenced by a certificate issued by the Romanian Development Agency (RDA). When faced with enquiries from clients wanting to take advantage of the ordinance, I went to the RDA to get confirmation that the types of investment proposed would qualify for incentives and that they would issue the necessary certificate. The reply was that without the norms, they could not say for certain.
The norms did not appear until 29 December some six months later. On 30 December another emergency ordinance appeared, the effect of which was to abrogate most of the Foreign Investment Emergency Ordinance, including those sections which contained the incentives.
The Romanian authorities are not keen to issue white papers or other drafts of proposed legislation and lawyers frequently find legislation being altered overnight. Even when an emergency ordinance is published, that is not the end of the story.
Emergency ordinances are subject to cancellation and amendment by Parliament. We may therefore find that emergency ordinances which are in force are approved with amendments at a later date. Add to this the reported decisions of the Constitutional Court on whether the laws or ordinances are constitutional. When asked recently by my Romanian language teacher to name the Romanian papers which I read most frequently, I named Monitorul Oficial in all seriousness.
Other essential reading that has appeared in Monitorul Oficial recently includes a republished, extensively amended, company law, a new emergency ordinance on privatisation (which has abolished the RDA) complete with norms, approving law and constitutional court decision, and the norms to the Direct Investment Emergency Ordinance (itself emergency ordinance number 92 of 1997).
Hopefully the flow of legislation will cease once the backlog of reform has been cleared but for the moment probably only change is constant. At present keeping up with legislative developments in Romania is like running on quicksand.