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Ridesharing Through Digital Platforms Regulated in Romania

Ridesharing Through Digital Platforms Regulated in Romania

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After a period of uncertainty arising from the absence of any regulations related to ridesharing activities through digital platforms, which included a tumultuous series of strikes and protests by traditional cab service providers in major Romania cities, on June 25, 2019, the Government of Romania passed Government Emergency Ordinance 49/2019 on Ridesharing by Cars with Drivers.

Emergency Ordinance 49/2019 specifically refers to taking into account “innovative transport intermediary solutions.” generated by the current “technological progress of the information society,” and to the ordinance’s passing being necessary, as Romania is a member state of the European Union, to align the country’s legislation with the requirements set out from the December 20, 2017 ruling of the Court of Justice of the European Union in the Asociacion Profesional elite Taxi v. Uber Systems Spain SL case.

In the Asociacion Profesional elite Taxi case, the court found that the services provided by Uber were not an “information society service, but rather “a service in the field of transport,” and that, consequently, Uber and other similar providers would have to comply with the national rules of each EU Member State on transport services and/or intermediation services in the field of transport. Thus, Romania could no longer afford to postpone the regulation of ridesharing services through digital platforms.

And, indeed, the Government of Romania gladly took over this regulatory challenge, and imposed endorsement requirements, obligations, and penalties for all actors involved in the provision of ridesharing services through digital platforms. In this article, we deal with what the ordinance defines as being the (ridesharing) “digital platform operator.”

According to the ordinance, the digital platform operator must be a “legal entity,” and thus, individuals or other forms of associations are, at least as the ordinance is current worded, banned from carrying out such services. In addition, although in its initial version the ordinance provided that “non-resident digital platform operators” had to have a “branch” registered in Romania (i.e., a corporate body without legal personhood), it was amended on November 10, 2019, and the text of the ordinance now provides that such non-residents have to have a “subsidiary” registered with the Romanian Trade Registry. This means that the digital platform operator must incorporate a Romanian company that has distinct legal personhood from the foreign mother company, such as, for instance, a Romanian limited liability company, a joint stock company, etc.

Furthermore, an entity which is a digital platform operator must obtain a technical endorsement from the Romanian Ministry of Communications and Information Society for the digital platform through which the ridesharing services are provided. After February 1, 2020 (unless a further extension is granted through subsequent amendments), the intermediation of ridesharing through a digital platform for which no such technical endorsement exists may incur an administrative fine of between 50,000 to 100,000 Romanian lei (approximately EUR 10,600-21,200), with criminal liability also potentially applicable. In addition, offenders will be prohibited from carrying out any type of economic activity on the territory of Romania through independent software for two years.

The technical endorsement, which is granted upon the payment of a tax of RON 100,000 (approximately EUR 21,000), is valid for 24 months and is in valid throughout Romania. The ordinance states no fewer than fifteen cumulative conditions that must be met by the digital platform in order to qualify for the technical endorsement, including the holding and displaying of information, electronic invoicing, data protection compliance, and the mandatory availability of information in the Romanian language. Even the breach of one condition will lead to the termination of the technical endorsement by the Romanian Ministry of Communications and Information Society.

The regulation of the activity of the ridesharing digital platform operator under the ordinance means that operators who breach obligations involving regards quality insurance, cyber-security of the digital platform, admission/elimination of ridesharing operators/drivers/cars/passengers, etc., will face severe penalties.

However, these penalties will be applicable only after February 1, 2020, as digital platform operators and other actors involved will benefit from a grace period until then.

By Ioana Sebestin, Leader of Transportation and Logistics Practice, and Gabriela Zudor, Associate, Peterka & Partners Romania

This Article was originally published in Issue 6.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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