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Category Archives: General

Swedbank caused damage to its client through the forced conversion of rubles

In March, after the imposition of sanctions against Russia, Estonian banks announced that they would soon cease ruble transactions. Swedbank gave its clients a short notice to decide what to do with their Russian ruble balances.

One customer suffered significant losses due to the rushed decision and now plans to seek compensation. Jevgeni Smorodin was one of Swedbank’s clients who was forced to make a quick decision on how to deal with their rubles. According to him, he had very few options. Specifically, Swedbank forced him to convert his money. The bank sent a notice to the client stating that due to the urgency, immediate action should be taken when the exchange rate for converting rubles to euros was 1:139. As a result of this transaction, the client lost nearly 10,000 euros. While currency risks can materialise with any currency, in this situation, the bank violated the client agreement by allowing only a few days for decision-making.

LEXTAL Attorney at Law and Partner Ksenia Kravtšenko comments on this situation:

Our practice has seen similar cases related to forced ruble conversions at unfavorable rates. We see the rights for clients to demand legal remedies in cases of breach of contract by the credit institution, including filing damage claims.

Regarding the sanctions against Russia, the European Commission explains that there is no direct prohibition on making money transfers to or from Russian counterparts unless such transfers fall under specific sanctions (including cases where the counterparty’s account is held in a sanctioned bank, the counterparty is listed in a sanctions list, or the payment represents payment for a sanctioned product) and do not exceed established limits. Similarly, European citizens and legal entities are not prohibited from holding, for example, ruble deposits in European Union credit institutions if a client still considers it a good investment and the bank offers such a service.

It should not be ignored that by converting at an unfavorable rate, which may have been in effect for a shorter period than the notice period for changing the contract, the bank reduced its obligations to the client in euro equivalent. It is worth noting that one of our client’s credit institutions, which performed the same maneuver, justified its actions by concern for preserving the client’s money, which seems particularly cynical.

When filing a damage claim, the client must prove the following: the validity of the contract at the time of the breach, the breach by the bank, the existence of damage, a causal link between the breach of the contract and the resulting damage, as well as foreseeability of the damage for the bank.

Regarding clause 1.2.5 of Swedbank’s contract, the wording related to “exceptional circumstances,” “compelling reasons,” etc., allows for the interpretation that a self-interested party may exploit. Generally, this paragraph refers to changes in the interest rate or other financial service-related payments by the credit institution – this right of the credit institution is explicitly provided for in the law.

This contract clause does not justify immediate currency conversion as it excessively and disproportionately infringes on the client’s rights.

In this case, the burden of proving the existence of a basis for immediate termination of the contract lies with the party that did not comply with the notice period. This party must act diligently and consider, among other things, the other party’s legitimate interests.

If such haste results in harm to the other party that could have been avoided or reduced by complying with the notice period, it is unlikely that the existence of a basis for immediate termination can be proven.

Additionally, it is essential to note that such a clause generally contains standard terms of the contract with the bank (meaning the client cannot influence their content). If it has been used to cause harm to the client, the client has the right to demand the invalidation of the clause and its non-application in such a situation.

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Vacation days calculation

LEXTAL Partner and Attorney at Law Kristi Sild is an expert who has been working in the field of employment law for decades and provides detailed explanations regarding the planning of vacations.

What should be done when an employee submits a vacation request that includes a public holiday, and the last day of the vacation falls on a Friday? Can the vacation be extended to Saturday and Sunday since it cannot end on a Friday?

Various factors may come into play in different situations, but the general rule is that the employee takes the entire main vacation at once. If the employee prefers to take a vacation in separate parts, it can only be done by prior agreement with the employer. In this case, one part of it has to be at least 14 consecutive days, and the employer is not obligated to divide the remaining main vacation into parts shorter than seven days (Employment Contracts Act § 68 (5)). In this case, the question is whether the employer will allow vacation periods and their duration. There is no explicit prohibition in the law stating that the vacation cannot end on a Friday.

Are employees required to plan and schedule all their vacation days in advance, or can it be done continuously? How far in advance should the employer be notified?

Vacation scheduling is the employer’s responsibility (Employment Contracts Act § 69 (2)). If it has not been done on time or if some vacation days have not been entered into the schedule, the employer must provide the employee with a vacation at the time requested by the employee, who must give written notice at least 14 calendar days in advance.

Is submitting a vacation request always mandatory, regardless of whether it has been planned in advance or arises at the last minute?

If the vacation is already entered into the vacation schedule, there is no legal obligation to submit a vacation request. A vacation request (in paper or digital form) should be submitted if the vacation has not been entered into the vacation schedule.

If an employee has entered vacation into the schedule but decides to change or cancel it, should the request still be submitted in paper or digital form?

If an employee has entered vacation into the vacation schedule but later decides to change or cancel it, the respective request should be submitted in either paper or digital form. The vacation schedule can only be changed by mutual agreement between the employer and the employee. Under the Employment Contracts Act § 69 (6), the employee has the right to interrupt, postpone, or prematurely terminate vacation due to significant personal reasons, mainly temporary incapacity for work, maternity leave, or participation in a strike.

If one vacation period must be 14 days long (continuous), can the remaining vacation days be divided into no less than 7-day periods?

One part of the vacation must be 14 days long (continuous). Regarding the remaining main vacation days, the employer can refuse to divide the vacation into parts shorter than seven days. However, shorter vacation periods are allowed by mutual agreement between the parties.

Source: Äripäeva teabevara nõuandekeskus: https://teabevara.ee/nouandekeskus

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LEXTAL’s Public Law team won a case regarding the determination of the local school in Tallinn

LEXTAL’s Public Law team has once again won a significant case regarding the determination of the local school in Tallinn against the Tallinn Education Department. Behind this successful outcome were LEXTAL Partner Margus Reiland and Lawyer Mats Volberg.
The situation started with a sister and a brother going to first grade in the fall, with one of them successfully passing the entrance exams for Tallinn 21st School, while the other child did not. Tallinn 21st School is the closest school to both children, located about 500 meters from their home. Naturally, the parents applied for the second child to be admitted to the same school based on the regional principal, but their request was not taken into account in the decision-making process.

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LEXTAL x Blocktrade

LEXTAL provided legal guidance to an innovative digital asset platform Blocktrade in the successful launch of their new token BTEX, which has already raised over 5 million euros.

Blocktrade is widely recognised in the digital asset industry for its transparency, security, and user-friendly approach. Recently, the platform introduced its own token to offer enhanced value and benefits to both existing and future users. LEXTAL’s experienced attorneys played a vital role throughout the project, delivering consistent and comprehensive legal support.

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Work related accident compensation by the employer

LEXTAL Partner and Attorney at Law Kristi Sild is an experienced expert in employment law. She explains how an employer is required to compensate for damages in the event of a work accident and how to declare the paid compensation.

Is compensation for a work accident always required to be paid to the employee (whether due to the employee’s negligence or the employer’s negligence)?

The employee is entitled to compensation for health damage caused by a work accident per the extent prescribed in the Law of Obligations Act (LOA § 14 (5) point 6). Generally, suppose the employer has violated their occupational health and safety obligations. In that case, the employee has the right to claim compensation for the expenses arising from the health damage and non-pecuniary damages resulting from the work accident. In a court dispute, the court also considers the employee’s contribution to the occurrence of the damage. Suppose the work accident occurred partially due to the employee’s negligence or disregarding safety measures (e.g., failure to use prescribed personal protective equipment). In that case, the court may reduce the compensation proportionally to the extent that these circumstances or risks contributed to the damage.

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LEXTAL has a new Partner

LEXTAL recently promoted an attorney at law, Ksenia Kravtšenko, to partner. Ksenia has done remarkable work as the Head of the International Private Law group at LEXTAL. She has also been acting as a representative for clients in civil and commercial litigation for years. In business law, her most prominent project has been the liquidation proceedings of Versobank, which provided her with unique experience in both legal and managerial aspects.

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We held a hybrid seminar on 8th March 2023 on the new MiCA Regulation that is available to watch here

The legislation concerning crypto-assets has always been fragmented between different states in the EU. Having a crypto exchange license in one of the EU countries does not mean that it would be automatically legal to operate in another EU state as well. Whereas some countries like Estonia were the pioneers of crypto legislation, many others have been lacking behind and have further exacerbated this fragmented state.

The above is about to change. There will be a new EU regulation covering crypto-assets law in all EU Member States. The regulation is titled “MiCA” –­ Markets in Crypto-Assets Regulation. The regulation aims to create a uniform European legal framework for cryptocurrency services, including virtual currency service providers. MiCA will apply directly and uniformly in all Member States and will have a significant impact on the crypto market, dealing with licensing, the environmental impact of the crypto industry and the issuance of crypto-assets.

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New Commercial Register Act enters into force

As of February the 1th this year, the Commercial Code will change, and the new Commercial Register Act will enter into force. Below, we present some aspects that current and future business owners should keep in mind.

  • The minimum share capital requirement of 2500 EUR for a private limited company shall be abolished. It shall not be possible anymore to establish a company without initial share capital contribution;
  • The supervisory capacity of the Commercial Register registrar shall be improved;
  • Starting from 01.03.2024, it will be possible to reserve a business name for six months and to apply for making an entry in the commercial register on a specific date with good reason;
  • Starting from 01.09.2023, the data of shareholders of private limited companies shall be considered as registry card data, and the list of shareholders shall be maintained by the registrar of the Commercial Register.

More information can be found in this article (in Estonian) https://lextal.ee/ariseadustik-muutub/

The exact text of the Commercial Code and Commercial Register Act is located here:

Commercial Code

Commercial Register Act

If you have any questions, please get in touch with us on the contact page.

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The Employment Contract Act is renewed

Recent amendments to the Employment Contracts Act modernized the organization of working time and on-call time. The category of an EMPLOYEE WITH INDEPENDENT DECISION-MAKING CAPACITY has been added.

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Meet our new team member: Oliver Grauberg

Our team is expanding, and our dispute resolution department acquired an excellent attorney in January. Allow us to introduce: our new colleague, lawyer Oliver Grauberg.

Oliver has obtained a master’s degree in law (specialization in IT law) from the University of Tartu and complemented his studies in the field of cyber protection. Oliver has been a member of the Bar Association since September 2020. After becoming an attorney, he worked in another law firm and as an advisor to the Ministry of Economic Affairs and Communications.

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