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Legal challenges in light of coronavirus (COVID-19) – additional measures by 16 March 2020

Situation with the corona virus is changing daily, and below you will find additional important legal information, updated until 16 March 2020. This contribution will cover the measures of the Ministry of Economic Development and Technology (“MGRT”), measure prohibiting the sale of goods and services to consumers, public procurement rules, possible insolvency law updates and some additional measures.

Measures of MGRT

There is no doubt that the country’s actions to curb the spread of coronavirus will have significant economic effects. It is therefore crucial to highlight the measures being prepared by the MGRT, which will be able to assist companies that are or will still face liquidity and economic difficulties. MGRT states that it monitors the situation at national, European and global levels and will approach the problem with a two-stage system. The first stage includes immediate intervention measures that can be implemented in a short period of time, and the second stage identifies strategic actions that will help to establish broken supply chains. Specific measures currently in preparation are:

– preparation of the emergency law for the preservation of jobs. The Government of the Republic of Slovenia has already adopted the text of the emergency law and is currently undergoing urgent consideration in the National Assembly. The law is intended to help maintain jobs in companies operating in most affected industries. The draft law provides for partial reimbursement of wage compensation for workers who are temporarily unable to be provided with work by the employer and also for cases where workers are prevented from performing work due to a quarantine decision by the Minister of Health and the employer cannot enable such worker to work from home due to objective reasons (in the latter case, the draft law stipulates that the entire burden of compensation is borne by the Republic of Slovenia) – more information on the draft law can also be found at: https://www.gov.si/novice/2020-03-12-interventni-zakon-za-ohranitev-delovnih-mest/.

– SID Bank and Slovenian Enterprise Fund (“SPS”) credit lines will become available. Financial products within SID Bank will be available from April 2020, about which we already wrote in a post dated 13 March 2020. MRGT, together with SPS, is developing measures that will be available to micro, small and medium-sized enterprises in an indicative total amount of EUR 115 million. Some SPS measures are already available, others will be available from 20 March 2020 and 27 March 2020 respectively.

– Companies will be at least partially reimbursed for a fair or event that has been cancelled or rescheduled to a later date (provided that company did not have insurance for the cancellation risk). Also, MGRT intends to co-finance participation in a digital fair or event.

– MGRT also mentions the possibility of enforcing the provisions of the Act Governing Rescue and Restructuring Aid for Companies and Cooperatives in Difficulty, which can only be used as an intervention measure, and only for companies or cooperatives that have a significant systemic role for the country or sector. Up to EUR 6 million is available under this measure.

– Emergency law is being drafted to supplement the solutions to enable more flexibility when performing work, what also includes working from home. Such work is already envisaged by the existing ZDR-1, but the draft law will add to the aforementioned possibilities. Regarding the regulation of working from home in times of exceptional circumstances, the Ministry of Labor, Family, Social Affairs and Equal Opportunities has also published additional explanations, which can be found on this link: https://www.gov.si/novice/2020-03-05-delo-na-domu-in-odrejanje-drugega-dela-v-izjemnih-okoliscinah/

Prohibition on the sale of goods and services to consumers

Pursuant to the Communicable Diseases Act, the Government of the Republic of Slovenia on 15 March 2020 issued a decree temporarily prohibiting the offer and sale of goods and services directly to consumers in the territory of the Republic of Slovenia (Decree on temporary prohibition of offering and selling goods and services to consumers, Official Gazette of the Republic of Slovenia no. 25/2020 “Decree“), with certain exceptions, from 16 March 2020 until revocation.

The Decree lays out the following services as examples of prohibition: accommodation services, restaurant services, wellness services, sports and recreation services, cinematic services, cultural services, hairdressing services, cosmetic services, pedicure services and gambling services. It should be noted that the list is not complete and applies to all services and selling of goods to consumers not explicitly included in the permissible exceptions under Article 2 of the Decree. The prohibition does not apply to distance sale of goods and services (as stipulated by Article 43 of ZVPot). A distance selling contract is a contract concluded between a company and a consumer on the basis of organized distance selling or a system of provision of services without the simultaneous physical presence of contracting parties, run by a company using exclusively one or more means of distance communication for the purpose of the conclusion (such as the Internet or telephone) until and including the time when the contract is concluded. On this basis, companies can also continue to offer goods and services that are not considered essential goods, as well as online sales and telephone sales, and a contract concluded using such means must also be deemed concluded (which will also depend on individual sales model and terms and conditions of the company). Today, the Slovenian government published explanations regarding the application of the Decree online, answering some of the most frequently asked questions. The Government of the Republic of Slovenia explained that under the Decree only home delivery, as opposed to personal collection, is permitted for all forms of distance selling, as the purpose of the Decree is to restrict the movement of the general population and contain the COVID-19 epidemic.

The Decree also does not prohibit the offering and sale of goods and services, which is set as an exemption in other decrees adopted by the Government of the Republic of Slovenia in order to curb the COVID-19 epidemic. Also, to the following legal entities or goods and services are not prohibited:

– grocery stores, including the sale of agricultural produce on the farm,
– pharmacies,
– medical and orthopedic stores,
– the garden and agriculture program in stores,
– agricultural stores,
– gas stations,
– banks,
– the post,
– delivery service,
– newsstands and kiosks for the sale of newspapers and magazines, and
– other emergency services which ensure public safety and health.

Likewise, the prohibition does not apply to the sale and offering of goods to persons who are not considered consumers in accordance with the law (i.e. B2B transactions).

The Decree entered into force today, March 16, 2020, at midnight and will remain in force until the reasons for the measures cited therein have ceased, which will be determined by the Government of the Republic of Slovenia by a decision published in the Official Gazette of the Republic of Slovenia. During the course of today, we can also expect NIJZ’s recommendations regarding restrictions on the number of consumers who may be in the same business premises where goods and services are offered and sold, which are not prohibited under the Decree. The limit will be determined by the size of the individual business premise.

The introduction of the Decree raises some interesting issues that providers of goods and services will face in practice, such as:

1) Adequate separation of goods and services, which, in accordance with the Decree, are allowed to be offered and sold from prohibited ones

To the extent that providers of mixed goods and services (both prohibited and permitted under the Decree) will want to continue to offer goods and services that are permitted under the Decree, they must take appropriate measures to ensure a strict separation of access goods and services which are not allowed to be offered.

2) Restaurant services

Even before its entry into force, some restaurant service providers had decided to limit their offer to delivery only (especially through Wolt and eHrana delivery platforms) and to personal pickup of food and drinks. The provision of sale of food and beverages through delivery services will also be allowed in the future in accordance with the Decree. In accordance with the explanation provided by the Slovenian government, personal collection and take-away services are not permitted, regardless whether the purchase of the food and beverages would be considered as distance selling contract.

3) Impact on contractual obligations of dealers and service providers

The Decree will undoubtedly affect the actual fulfilment of the obligations of dealers and service providers, in terms of contractual relations with both customers and their suppliers. The contractual parties will be able to acquire certain additional rights or obligations in accordance with the express contractual provisions, and we have already written about the impact of the general contractual law provisions in our contribution dated 13 March 2020.

Notice regarding information on urgent public procurements related to SARS-CoV-2 virus

The Ministry of Public Administration published on the eJN portal (Electronic Public Procurement) their position on public procurement and urgent public procurements, related to the procurement of emergency protective equipment to mitigate the effects of the SARS-CoV-2 coronavirus. In its position, the ministry explains that the Public Procurement Act (ZJN-3) provides for certain important exceptions out of reason of necessity and also a lighter regime to submit procurement. The Ministry draws particular attention to the provision of Article 46 (č) of the ZJN-3, according to which the contract may be concluded by direct negotiations without prior publication due to extreme urgency (which may not be attributable to the contracting authority). In addition to the above, the Ministry also draws attention to the provisions of Article 27 of the ZJN-3, which provides for certain exceptions to the application of public procurement rules. We will update our opinion regarding the interpretation of ZJN.3 and any possible exemptions.

Discussions on the possibility of postponing the presumption of insolvency referred to in Article 14 of the ZFPPIPP

Although such an amendment has not yet been adopted or confirmed, discussions are also underway on the possibility of a legislative amendment enforcing the suspension of the presumption of insolvency under Article 14 of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (ZFPPIPP). Currently we cannot yet talk about persistent illiquidity since the period in which the debtor would not be able to meet its obligations is not yet long enough (Article 14(1) ZFPPIPP). However, in a period of two months different situations could arise that would constitute legal presumptions of persistent illiquidity, namely:

– rebuttable presumption of persistent illiquidity under Article 14 (2) ZFPPIPP (two months delay in payment of 20% of liabilities; not possible to execute enforcement in 60 days; if the debtor does not have a bank account in Slovenia and has not settled a debt in 60 which is part of an enforcement proceedings; 2 months delays of liabilities arising out of compulsory settlement; etc…) and

– irrebuttable presumption of persistent illiquidity under Art. 14. (4) ZFPPIPP (two-month delay with salaries to employees, up to the minimum salary; with payment of taxes and contributions from salaries;)

At Jadek & Pensa, we are actively involved in the debate on the possibility of postponing the insolvency presumption and will promptly inform you of any changes.

Other measures

It is also worth mentioning that the Government of the Republic of Slovenia issued a Decree on the allocation of unlicensed doctors, which included secondary doctors and specialists in the implementation of measures for the prevention, control and elimination of the consequences of the COVID-19 infectious disease epidemic.

In addition, the Government of the Republic of Slovenia has revoked the validity of the Decree on the Prohibition of traffic with Protection Means, which entails that traffic with protection means for protection against the new COVID-19 coronavirus is no longer prohibited. The regulation also sets a maximum price for safety, protective and other healthcare equipment, which means that companies cannot set a price higher than the price set with the Decree for these products (which is the highest retail price in force on the market as of 14 March 2020). The Decree covers the following goods: FFP2 type masks, FFP3 type masks, surgical masks, goggles, tyvek protective clothing, waterproof protective clothing, nitrile or latex protective gloves, 50 ml disinfectants, 500 ml disinfectants, ventilators for intensive treatment, portable oxygen systems and contactless body temperature meters.

By a decree, the Government of the Republic of Slovenia also temporarily prohibited public transport in the Republic of Slovenia.