Firm Profile > Filip & Company > Bucharest, Romania

Filip & Company
EQULIBRIUM BUILDING, 2 GARA HERASTRAU
2ND DISTRICT
020334
Romania

Banking and finance Tier 1

Filip & Company advised Banca Transilvania in relation to the acquisition of Bancpost, including advising on due diligence matters, transaction structuring and regulatory matters. A further notable highlight was acting for the National Bank of Greece in its attempted sale of Romanian subsidiary Banca Românească. Practice head Alina Stancu Birsan is supported by Alexandru Birsan and Carmen Peli. Alexandra Manciulea has been promoted to counsel; senior associate Mirona Apostu is also recommended.

Capital markets Tier 1

Filip & Company advised Banca Transilvania in connection with the insurance and subsequent listing on the Bucharest Stock Exchange of euro-denominated unsecured subordinated tier 2 capital bonds. Practice head Alexandru Bîrsan led on the matter and was assisted by recommended senior associate Olga Niţă. In addition to acting on domestic and cross-border capital markets transactions, the team also provides regulatory and corporate advice and advised the Bucharest Stock Exchange on compliance and corporate structuring issues arising from its merger with Sibex – Sibiu Stock Exchange. Eliza Baias is an integral member of the team and has been promoted to partner.

Commercial, corporate and M&A Tier 1

Filip & Company acted for UK-based Kingfisher in its acquisition of Praktiker Romania, advising on due diligence, structuring and preparation and negotiation of the transaction documentation. Practice head Alexandru Birsan led on the matter; Carmen Peli and Alina Stancu Birsan are also names to note. The pair recently assisted Banca Transilvania with its successful acquisition of 99.15% of shares in Bancpost and all shares in ERB Retail Services and ERB Leasing. Cristina Filip is also a key member of the team and has experience handling mergers and acquisitions, joint ventures and commercial contracts.

Dispute resolution Tier 1

Filip & Company excels in competition, construction and corporate litigation and has particular energy sector expertise. Practice head Catalin Alexandru and recently promoted partner Mihnea Sararu represent RCS & RDS in a dispute with international film studios concerning internet movie piracy. Alexandru is also representing Hidroelectrica in challenging a fine levied by the National Energy Authority for the direct sale of electric energy on the Hungarian market; the matter is due a preliminary referral to The European Court of Justice. The recommended Alexandru Gosa has been promoted to counsel.

Employment Tier 1

Filip & Company assisted Pandora Romania with the structuring and revision of compensation and benefits policies and advised L'Oréal on specific disciplinary and performance issues. On the litigation front, practice head Ioan Dumitrascu acted for Artic in a dispute concerning disciplinary issues and health and safety matters. Industries of expertise include financial services, IT, automotive, pharmaceutical, agriculture and FMCG. Razvan Ionescu is recommended for handling contentious work.

Energy and natural resources Tier 1

Filip & Company is advising Greece-based Mytilineos Holdings on the process of booking capacity for the transit of natural gas through Romania, including assisting with procedural steps and liaising with the relevant authorities. It also advised nuclear services company, Amec Foster Wheeler, on its sale to Kinectrics and represented RCS & RDS in its challenge to the monopoly powers of distribution companies. Alina Stancu Birsan and Cristina Filip head the practice, which possesses knowledge of the oil and gas, renewables, co-generation and nuclear energy industries.

EU and competition Tier 1

Filip & Company acts in compliance matters and Competition Council investigations for clients from the oil and gas, pharmaceutical, TMT, retail, consumer goods, electronics and insurance industries. It assists Arctic Romania and Banca Transilvania with day-to-day competition issues, acting for the latter in relation to merger control proceedings following its acquisition of Bancpost. On the investigation front, practice head Cătălin Suliman represented Inform Lykos in the challenge of a decision made by the Competition Council. Senior associate Georgeta Gavriloiu is also singled out.

Real estate and construction Tier 1

Transactions, construction contracts, developments, project management and high-end leases are particular strengths for Filip & Company. The team recently assisted a local Romanian developer with the sale of three office buildings in Bucharest comprising a gross leasable area of over 100,000sqm. Also on the transaction front, practice head Oana Badarau advised Skanska on the sale of an office building in the Campus 6 office complex as well as on the development and leasing of future office projects in Bucharest. Recently promoted partner Ioana Roman is recommended alongside transaction specialist Francisc Peli. Since publication, a number of team members moved to Peli & Partners.

Restructuring and insolvency Tier 1

Recent highlights for Filip & Company include a number of insolvency proceedings and restructuring deals. Ioan Dumitrascu heads the practice, which has industry-specific knowledge and frequently acts for clients in the energy and natural resources, financial services, telecoms and FMCG sectors.

TMT Tier 2

Telecoms provider RCS & RDS is a key client for Filip & Company; it instructed the team in the acquisition by its Hungarian subsidiary of Invitel Távközlési Zrt, a key operator in the Hungarian telecoms market. The group, headed by Alexandru Birsan, is particularly knowledgeable of the IT sector, advising a Romanian business management consultant on a joint venture agreement with a Turkey-based IT company.

PPP and procurement Tier 3

At Filip & Company, the team had an active year handling energy-related projects. Practice head Alina Stancu Birsan acted for Societatea Nationala Nuclearelectrica in relation to the development project of units three and four of the Cernavodă nuclear power plant. Work included the establishment of a joint venture with China Nuclear Power Corporation.

 

The firm

Filip & Company is a full-service business law firm, ranked in the first tier of top-quality legal services providers in Romania.

Filip & Company team of lawyers exercise commanding professional expertise in their areas of specialisation, blending deep knowledge and understanding of Romanian law and jurisprudence with the wealth of experience accumulated in mandates covering the majority of innovative, complex and large transactions and projects in the Romanian market over more than 15 years.

Areas of practice

Filip & Company provides a comprehensive range of legal services. Its key practice areas are: mergers and acquisitions, general corporate, real estate, energy, projects, finance (which includes capital markets and banking), EU law and competition, commercial, labour, TMT and dispute resolution.

The M&A and corporate team unites lawyers who have had major roles in the majority of the top M&A transactions of the past ten years. The team’s experience includes: private and public M&A, private equity transactions, privatisations, restructurings, mergers, spin-offs, creating and implementing management structures, financial assistance, corporate governance matters, compliance by public companies with listing rules, disclosure obligations and special approvals, structuring of different classes of shares and specialist advice on other complex matters.

The real estate practice specialises in highly complex projects where multi-sectorial experience, in-depth knowledge of the real estate specificities and the ability to manage multiple legal work-streams simultaneously are essential. The real estate team has the ability and experience to cover all legal services ancillary to real estate business, from land acquisitions, financing of real estate projects, development and project management, construction contracts and lease agreements to the most complex of exit transactions.

The energy team assembles a wealth of experience and a background in both Romanian and international work, which is very difficult to match in Romania, in areas such as: development of new projects, acquisitions of energy companies, privatisations of the major Romanian energy companies and financing schemes for the energy sector.

The competition team has wide-ranging experience in both antitrust and state aid matters, having assisted in some of the landmark competition cases in Romania.

The commercial team regularly advises on complex commercial agreements, concessions and public procurement.

The capital markets team has extensive experience in complex capital markets transactions, both domestic and international, including domestic and international IPOs, high-yield bonds, convertible bonds, structured finance and complex derivatives advice.

The projects team is familiar with complex project financing structures and has been involved in a wide variety of projects from nuclear and renewables to motorways and mining.

The labour practice regularly advises on complex matters from reorganisations and collective lay-offs to management packages and employee incentivisation.

The dispute resolution team is skilled in complex litigation, international arbitration, tax, competition, labour, fraud and regulatory disputes, complex settlements and pre-dispute situations.

The TMT team advises the leading telecommunications, media and IT players on acquisitions and finance projects as well as in relation to interconnection, complex contracted structures and regulatory compliance matters.

 

Department Name Email Telephone
Corporate and M&A Cristina Filip
Corporate and M&A Alexandru Birsan
Corporate and M&A Ioan Dumitrascu
Banking and finance Alina Stancu Birsan
Banking and finance Alexandru Birsan
EU law and competition Catalin Suliman
Energy and natural resources Cristina Filip
Energy and natural resources Alina Stancu Birsan
Commercial Ioan Dumitrascu
Commercial Cristina Filip
Projects Alina Stancu Birsan
Labour Ioan Dumitrascu
Dispute resolution Catalin Alexandru
TMT Cristina Filip
TMT Alexandru Birsan
Number of lawyers : 71

Romania

1. Overview

With a robust GDP growth of 3.6% in 2015 and a forecast of 4.2% for 2016, Romania is well on its way as one of the fastest-growing economies in the EU.

In doing so, Romania relies on more than its traditional advantages, such as being the largest market in south-eastern Europe and second largest in the CEE region, at the crossroads of the major routes linking Europe, the Middle East and the Commonwealth of Independent States trade routes, rich in natural resources, and having a well-skilled and relatively inexpensive work force.

In addition to these, Romania’s growth has been driven by recent wage increases, fiscal relaxation, a stable currency and, last but not least, by EU cohesion and agriculture funds of over €32bn, received in the period 2014-2020. The rate of absorption of these funds is expected to improve significantly compared to the previous period.

In February 2016, the European Commission published its forecasts for Romania, predicting strong growth amid fiscal relaxation and certain financial risks. The Commission points to stable investor confidence and continued growth in local currency lending as the main factors helping to sustain private investment growth. According to the Commission, domestic demand is set to remain the driver of growth in 2016 and 2017.

The fiscal deficit is likely to increase in 2016, mainly because of tax cuts and wage increases in the public sector. These will, in turn, help boost private consumption to a European forecasted increase of 6.9% year on year. At its turn, public spending on investments will likely focus on infrastructure, transport and the environment.

On the political stage, the end of 2015 saw the resignation of the social-democratic government and the appointment of an interim technocratic government led by Dacian Ciolos, a former European Commissioner.

Anti-corruption efforts and results continue to increase with the National Anti-Corruption Directorate being at the forefront prosecuting high profile businessmen and politicians.

Romania’s growth perspective fosters a business environment filled with opportunities (section 2), set against a modernised, flexible and hopefully stable legal background (section 3), making it easier for foreign investors to enter the market and generate value (section 4).

2. Business opportunities

2.1 Public sector – infrastructure works

Romania’s growth has traditionally been challenged by its outdated infrastructure, which remains underdeveloped relative to the volume of goods and passengers transiting in Romanian territory.

An important opportunity for change was in July 2015, when the European Commission accepted Romania’s General Transportation Masterplan, a strategic document that defines and prioritises Romania’s transport infrastructure investments for the next 15 years.

Furthermore, also in July 2015, the European Commission approved the Large Infrastructure Operational Programme, which sets out the utilisation of EU funds for the transport, environment and energy sectors for 2014-2020.

Another incentive for infrastructure development comes from the opportunity for Romania to organise some of the 2020 European Football Championship’s matches. Yet this is subject to UEFA’s requirement that Romania modernise the motorway and railroad connections to the west, the urban transportation system in the capital, Bucharest, and several sport arenas.

At the same time, from the perspective of environment infrastructure, €3bn are available in EU funds that municipalities can apply for, by the end of 2016, in relation to water and wastewater construction or rehabilitation projects.

In the field of energy, the national oil and gas transport operator Transgaz plans to build the pipeline network needed to take over the gas to be extracted from the Black Sea and further distribute it towards Western Europe.

2.2 Private sector – M&A transactions and commercial activity

Romania’s main economic sectors are agriculture and automotive, with automotive contributing by far the most to Romania’s exports. In addition to these, dynamic areas in 2016 will likely include banking, IT, business services and tourism.

The M&A market has seen an increase in activity in 2015 compared with 2014. In 2016, one should expect the most active sectors to remain the same.

In banking and financial services, one might expect the exit of a number of international banks and sale of their Romanian businesses. The consolidation trend should continue in healthcare, as well as in agribusiness. Office space development will make the headlines in real estate transactions, while retail and residential will continue to struggle.

Other sectors expected to see M&A activity include IT and retail.

3. New legal framework

The enactment in 2011 of a new Civil Code, replacing the almost 150-year-old preceding one, has since been complemented by a new Civil Procedure Code in 2013, new Criminal and Criminal Procedure Codes in 2014, a new Insolvency Law in the same year, as well as a new Tax Code and Tax Procedure Code in 2015. Last but not least, a brand new public procurement legislation is on the verge of being enacted. The criminal legislation has been renewed in 2014 as well.

As a salutary counterpoint, one should note the relative stability of the Romanian Company Law, which has undergone rather few changes in the last 10 years, compared to other legal areas.

3.1 Civil procedure

The new Civil Procedure Code is a milestone in the reformation of Romania’s judiciary. It carries out a systematic and thorough review of the dispute resolution mechanisms. It aims to make the proceedings more efficient, primarily by reducing the duration of civil litigation cases either by amending and modernising existing procedures or introducing new ones.

For instance, procedural postponements in the initial phase of the litigation are now significantly reduced as the first hearing is set only after both parties have made their initial submissions and have exchanged most of the evidence they intend to rely upon. In practice, this has been very useful and courts and parties alike now have greater predictability and control over the duration and development of the proceedings in the first tier of jurisdiction.

Other mechanisms for reducing the duration of cases include the right to use electronic means of communication in a number of situations, the right to file a complaint if the case is unnecessarily delayed by the court itself, or certain limitations to the access to extraordinary appeals.

On the negative side, a new filtering procedure has been instituted for higher appeals heard by the High Court of Cassation and Justice. The aim was to strike out higher appeals not meeting minimal standards. Unfortunately, it has had the opposite effect: while the grounds for rejection at this stage are purely formal, all higher appeals are now delayed for very long periods before getting through the filter and being heard by the High Court.

Another novelty of the new Civil Procedure Code is the High Court’s possibility to issue mandatory guideline rulings interpreting the law on novel matters. In time, this will have a positive impact on the harmonisation of the legal practice, which is currently well known for being contradictory and unpredictable.

The enforcement of court rulings (and arbitral awards as well) has been streamlined by eliminating a redundant phase, which required a formal verification that the relevant ruling was capable of being enforced.

3.2 Insolvency

The new Insolvency Law unified previously disparate insolvency and pre-insolvency procedures under one roof and reduced both the number of insolvency cases and their duration.

The new law set a debt value minimal threshold for the debtor’s own application to open insolvency, thus reducing abusive claims by defaulting debtors looking to avoid enforcement.

It also set a deadline of one year for drafting the final creditors’ table and moved the valuation of the debtor’s patrimony to an incipient phase of the procedure, which had the effect of shortening the overall duration of the insolvency procedure.

Other useful novelties concern the insolvency of groups of companies and encouraging the financing of insolvent companies by granting the financier a super-privilege over the debtor’s assets.

3.3 Fiscal legislation

The beginning of 2016 brought the resetting of the fiscal legislation through the enactment of the new Fiscal Code and Fiscal Procedure Code. These will hopefully bring some stability and predictability into an otherwise ever-changing fiscal landscape.

The Fiscal Code introduces a number of measures aimed at improving the collection of budgetary revenues. In this context, one of the most important measures set forth by the new Fiscal Code is the decrease of the standard VAT rate from 24% to 20% as of 1 January 2016 and to 19% as of 1 January 2017. The dividend tax also dropped to 5% (and can even be reduced to zero under certain circumstances).

The new Fiscal Code also includes a different re-assessment of excise duties, direct taxes (ie profit tax, income tax, local taxes and duties) and social contributions (ie mandatory social contributions and health contributions).

At its turn, the new Fiscal Procedure Code introduced a system of penalties designed to incentivise voluntary compliance and dissuade tax evasion.

3.4 Public procurement

By 18 April 2016, Romania should have transposed the new 2014 EU Directives on public procurement; on procurement by entities operating in the water, energy, transport and postal services sector; and on the award of concession contracts. The transposition deadline has not been observed. Fortunately, it still seems feasible to have the new legislation enacted in May 2016. By the time this material was drafted, the primary legislation pack had been approved by the government and undergoing Parliamentary proceedings, while secondary legislation had been drafted and submitted for public debate.

The law maker’s new vision separates the existing field of regulation into four laws covering ordinary public procurement, utilities contracts, concession contracts and remedies.

The various award procedures provide tighter deadlines, easier filings (the draft laws regulate the use of electronic means), more streamlined processes and should reduce the overall duration of the contract award process.

The available award criteria now includes the lowest cost, which will be determined based on the life-cycle costing, for instance. For contracts involving intellectual activities and complex activities, the only award criterion available will be the best price-quality ratio, excluding the best price and the lowest cost.

Before launching the procedure, contracting authorities may conduct preliminary market consultations to prepare the procurement and inform economic operators of their procurement plans and requirements.

Another noteworthy novelty is that procurement procedures for lower-value contracts (up to approximately €5m for works; for supplies and services, €132,000 for ordinary procurement and €400,000 for utilities contracts) may be subjected by the contracting authorities to a simplified procedure with shorter deadlines and where the selection criteria are restricted to the lack of exclusion grounds, the suitability to pursue the professional activity and the similar experience demonstrated by prior contracts.

In the light of the Directives, the exclusion grounds have been detailed to include, for instance, the situation where the economic operator has been previously involved in competition distorting practices in relation to public procurement.

With regard to utilities contracts procurement, the draft law finally acknowledges the difference between contracting authorities and contracting entities, affording more flexible regulations to the latter.

In its turn, the draft remedies law seeks to reduce litigation in terms of number of cases and duration. One tool in pursuing this objective is the contestant’s obligation to post a bond before seeking a court ruling to stay the procurement procedure or the execution of the contract.

3.5 Criminal legislation

The new Criminal Code and Criminal Procedure Code of 2014 replaced the communist-era versions. New business-related crimes have been regulated (distortion of public tenders, breach of trust by defrauding creditors) and the criminal liability of legal persons has been clarified. The new Criminal Code notably provides for the transfer of criminal liability in case of merger or spin-off of the legal person.

The new Criminal Procedure Code is expected to lead to faster-paced criminal investigations and criminal trials.

From an investor perspective, these new Codes will hopefully increase the sanitisation of the business environment.

4. Investing in Romania

4.1 Setting up, operating and divesting from a company

The Romanian Company Law has been aligned with the EU legislation through the implementation of the Company Directives.

Of the corporate structures available, in practice the joint stock company and the limited liability company are very widely used. Typically and save for regulated sectors such as banking and insurance, the minimum share capital is of some €20,000 for joint stock companies (of which at least 30% should be paid upon incorporation) and some €45 for limited liability companies. Limited liability companies are rather loosely regulated, which in practice translates at the same time into flexibility and uncertainty.

Companies can be managed either by a sole director or by several directors which, in the case of joint stock companies, form a board of directors. The two-tier system (supervisory board and managing board) is also available. There is no restriction in terms of nationality for shareholders or managers, which can be natural and legal persons alike.

Although unregulated, instruments such as joint venture agreements and shareholders agreements are often used in practice. Unless mirrored by the company’s articles of association, these agreements may be difficult to enforce against new shareholders.

As a principle, shareholder liability is limited to the share capital contribution. Unlimited liability is possible in certain conditions provided by the Company Law or Insolvency Law, such as the shareholder’s abusing the limited nature of its liability.

Shares may be freely divested in joint stock companies or between existing shareholders of a limited liability company. In the latter case, transfer of shares to third parties requires the approval of shareholders holding at least 75% of the share capital and may only be implemented after a 30-day period during which creditors may oppose the transfer. In practice, if the company has debts towards the state budget, fiscal authorities are likely to file oppositions and delay the process. Recent legislative changes have also clarified and simplified the procedure for pledging and enforcing shares in limited liability companies.

4.2 Dealing with authorities

4.2.1 Trade Registry

The Trade Registry ensures the publicity of various events – from registration to deregistration – in the life of companies, some freelancers and other entities.

Companies will find that the Trade Registry tends to be rather formalistic, especially when it has to deal with more sensitive or complex operations. Clerks will closely scrutinise the details of the documentation filed, which should be carefully prepared.

While the process is meticulous, it is also time-efficient. Any filing with the Trade Registry should, and in practice generally is, resolved within three business days (save for mandatory legal delays for the protection of creditors and other third parties). Clerks are, however, entitled to request additional clarifications and supporting documentation, which may delay the registration process.

4.2.2 Competition authority

The Romanian Competition Council (RCC) is in charge with the enforcement of antitrust, and merger control unfair competition legislation. The RCC also has the role of national contact authority on state aid matters between the European Commission, and the state aid suppliers and their beneficiaries.

The RCC is a very active authority and follows closely the trends and practice of the European Union. In merger control cases, the RCC usually takes between two and three months to clear a merger raising no dominance concerns. However, the parties may often be able to accelerate the procedure by consulting with the RCC prior to the filing. This informal approach is also useful to clarify various aspects and afford the parties a better visibility into the transaction schedule. Most of the RCC’s decisions have been issued in the first phase of the procedure, without going into the investigation phase, while no merger prohibition decisions have been issued since 2001. On the other hand, the RCC looks closely at and sanctions gun-jumping practices – failure to notify a transaction and implementation before obtaining clearance.

On the antitrust side, the RCC has scrutinised several markets with sensitive political and economic impact at the end-consumer level, including the distribution and retail sales of pharmaceutical products, the distribution and retail sale of various fast-moving consumer goods, the distribution of prepaid mobile telephony products and the electronic communications sector in general, self-regulated sectors of professionals activities (accountants, notaries), as well as the construction and energy sectors.

After having investigated a significant number of vertical agreements, the RCC seems to have shifted its focus towards horizontal practices, and particular attention is placed on the scrutiny of public procurement procedures. In the investigation of bid rigging practices in public tenders, the RCC works closely with criminal authorities.

Moreover, the RCC implemented an electronic communications platform for whistle-blowing, through which information and tips on anticompetitive practices may be transmitted to the authority while the anonymity of the platform’s user is guaranteed.

The RCC’s fervent activity and the bitter fines that could follow an investigation make a strong case for implementing compliance trainings and programmes. At the very least, compliance training could constitute a mitigating circumstance, reducing the fine applied by the RCC.

4.2.3 Environment protection authorities

In Romania, state authorities specialised in environmental protection matters are mainly the Ministry of Environment, Waters and Forests. It acts as the main body with authority at national and county levels, local environmental protection agencies and the National Environmental Guard, and is in charge of investigation and control activities in the field.

Environmental protection procedures can sometimes be seen by investors as rather cumbersome, as some of the required steps that need to be undertaken are lengthy and are at times subject to the authorities’ discretion.

Depending on the impact of an activity on the environment, most of the environmental permits held by investors (such as the environmental or the IPPC authorisations) can be seen as imposing diverse and numerous compliance measures, which are closely monitored by the Environmental Guard. On the other hand, the fact that most environmental permits are very comprehensive and detailed is also seen as a useful way for investors and their compliance teams to keep a close eye into the environmental requirements and expectations, and their compliance timetable.

The authorities responsible at local or county level may sometimes have different views on the way in which the environmental legal framework law should be read and applied, although recent years have brought some positive perspective on the competence, care and diligence with which environmental authorities carry out their duties.

4.3 Hiring and dismissing employees

Though successive legislative changes aimed to provide greater flexibility in employment relationships, they continue to be strictly regulated and leaning towards the employee.

Individual labour agreements (ILA) are concluded in writing and typically for an indefinite period of time. Pre-employment checks are allowed if limited to a specific scope and purpose. An ILA should have a job description appended to it. Job descriptions are often missing in practice, which makes it difficult to sanction an employee for poor performance or dismiss them on disciplinary or economic grounds.

EU citizens may be employed under the same conditions as Romanian nationals (save for certain additional formalities with the Romanian Immigration Authority regarding the right to stay in Romania). Non-EU citizens are required to obtain a work permit in advance and can only be hired under certain conditions. Romanian law also allows foreign employees to be seconded to Romania for a limited period of time.

The minimum salary of some €240 will increase as of 1 May 2016 to some €280.

Working time is regulated in detail. As a rule, no overtime work can be performed without the employee’s consent. Overtime is compensated for with paid time off in lieu, or, if that is not possible, with an additional allowance to the salary.

The dismissal of an employee can only occur in very particular situations and in all cases the employer must follow strict procedural rules. This is very important as otherwise the court will annul the employment decision and order full compensation in favour of the employee. Employment litigation is not subject to judicial stamp duties and therefore inexpensive for employees. At the same time courts tend to be employee-friendly, while the burden of proof rests with the employer.

4.4 Securing obligations and enforcing contracts

Obligations can be secured and enforced by contract clauses and setting up guarantees. If these fail, creditors can resort to litigation and, eventually, to insolvency.

As first steps in securing the performance of contract obligations, Romanian contract law allows default interest and penalty clauses, whereby the parties predetermine the value of the damage caused by non-performance.

The law also allows setting up real and personal guarantees, and placing mortgages over movables and immovables. The latter are constituted through registration with the Land Book, while the former should be registered in a public electronic archive so as to be effective against third parties and gain priority ranking. It is noteworthy that mortgages on receivables can be enforced by claiming direct payment from the underlying debtor.

If contracts turn on a litigious path, the vast majority of cases are settled in courts through litigation. The duration of court proceedings has shortened with the application of the new Civil Procedure Code, but there are still many improvements to be made, especially in complex cases. Also, after a setback in the wake of a corruption scandal involving the President of the local Chambers of Commerce and Industry, arbitration appears to making a recovery, with a new court – the Bucharest International Arbitration Center – being set up by the American Chamber of Commerce. Mediation is rarely used in practice.

Creditors with due and uncontested receivables may resort to the swift procedure of payment summons which works well in practice. The law also allows creditors to preserve their debtor’s enforceable assets by asking the court to order attachments or garnishments. Posting a bond is normally required.

Once the creditor obtains a final ruling, enforcement is made by bailiffs, who are public officers acting under the control of the Ministry of Justice. Enforcement based on a court ruling as enforceable title may be challenged on formal grounds only for alleged irregularities in the enforcement procedure, but not on the merits.

Besides court judgments and arbitration awards, other enforceable titles include loan agreements concluded with banks or, under certain conditions, notary authenticated contracts, including the obligation to pay an amount of money.

The final resort is the debtor’s insolvency, but, in practice, though recent improvements have been made, insolvency and bankruptcy procedures take a lot of time while unsecured creditors risk an incomplete recovery or even no recovery at all.