“These are interesting and challenging times right now for the legal and business community,” says Suciu Popa Managing Partner Luminita Popa, referring to changes introduced by the Romanian government at the end of 2018.
Among the most significant changes Popa highlights is Government Emergency Ordinance no. 114/29, which implements measures in the field of public investments and fiscal budgetary measures as well as amending normative acts and extending certain deadlines. According to Popa, the new piece of legislation affects the finance and energy sectors, which she calls among “the most important sectors of the economy” in Romania. She explains that, for energy companies, the measures are mainly split into two categories, with one affecting the liberalization of the gas and electricity market, forcing companies to sell at regulated prices or with price caps, and the other involving a new tax of about two percent of the previous year’s turnover for companies in the energy sector. “It is a significant figure,” Popa notes, pointing out that “we are talking about the energy sector, where turnover can be quite high.”
According to her, frustration has resulted not only from the changes, but also from the way they were introduced. “Frankly speaking, the amendments produced chaos,” Popa sighs. “They appeared without any prior consultation and were introduced in a short period of time.” This, she says, “creates significant disruption for the companies involved, and consequently for the lawyers, who are called to support their clients in addressing these measures.”
In addition, Popa explains, there are real questions about the constitutionality of the new ordinance. “As a piece of legislation covering a vast area, it interferes with EU laws already adopted by Romania,” she says. Currently a number of entities and experts are analyzing the law and assessing its impact, and affected parties are working to mitigate its consequences, facing what she describes as a potentially existential threat.
Popa explains that this is hardly the first time important laws have been adopted in Romania without allowing enough time for real review and comment. “The good thing is that, over time, the business community has endured, and the economy has found its way to a good shape,” she says. “so we are not overly pessimistic, but we are concerned about the challenges which are coming from different areas of legislation at the same time.”
The upcoming presidential elections in Romania scheduled to take place towards the end of 2019 and the EU parliamentary elections scheduled for May 2019 might also present challenges to the business and legislative environments, Popa claims. “Presidential elections do not mean changes in the government, but are a good indication of the country’s direction,” she notes. “Yet political disputes have led to legislative and judiciary blockages and we are hoping that cooperation between the executive and presidential powers in Romania will be more consistent than it has been in the past year.” She elaborates that the current political environment is characterized by controversy and debate, contributing to a perception of lack of legal stability and predictability.
Otherwise, Romania’s legal community is busy, according to Popa. “The legal market is quite settled,” she says, and although there might be firms facing organic changes caused by reorganization of certain practice areas leading to a decrease of the number of lawyers needed for these areas, she is not expecting major changes in the legal market in 2019. In the meantime, the Romanian Bar Association is expecting elections within a year, which she describes as an opportunity for the legal community and its management bodies to discuss how “to grasp the needs of the legal profession.”