New Trade Regulations in Serbia: Paving the way to the digital market?

On 22 July 2019, Serbia enacted a new Law on Trade, as well as some important amendments to the Law on E-Commerce. The new trade regulations in Serbia are an attempt to keep pace with European legislation and the comparative practices of other countries, with the applicability of some provisions postponed until the country officially becomes a part of the European Union. However, such regulations did not turn a blind eye to the existing regulatory framework in Serbia. On the contrary, the amendments were drafted and rendered so as to follow and reflect the changes made in other regulations which occurred in recent years (e.g. the Law on Inspection Supervision, The Law on Electronic Document, etc.).

Below is a brief overview of the most important novelties introduced with the latest changes:

New Forms of E-Commerce

The Law on Trade explains, so-called, remote commerce in more detail, which still includes both e-commerce and other types of remote commerce. Within e-commerce, certain additional business models, which already exist in practice, are now explicitly recognised by the law:

  • e-commerce conducted via web shop;
  • commerce conducted via an electronic platform which connects consumers and salespersons, but often provides payment and delivery services itself; and,
  • dropshipping, which allows the consumers to order products or services through a web shop or electronic platform, while receiving such products or services from manufacturers or wholesalers directly.

Extended Territorial Scope

Besides the new models, remote commerce is now defined in more detail, extending the application of the Law on Trade to foreign entities as well, under certain conditions. Although such an extension seemed inevitable in light of the rapid development of the global market, the manner in which it was introduced will likely result in a number of ambiguities. The main provision stating that the Law on Trade applies to entities engaged in commerce in Serbia remains unchanged. However, non-resident entities performing remote commerce are now deemed to do so on Serbian territory, and are therefore subject to the law, if they target the consumers in Serbia.

This targeting is considered to exist, in particular, if:

  • Serbian language is used or the prices are indicated in Serbian dinars (RSD); and,
  • the trader offers delivery of its products to Serbia (“We ship to Serbia”).

On the other hand, the Law on E-Commerce limits the applicability of Serbian laws to the providers of information society services having their registered seat in Serbia (meaning that, a contrario, they do not apply to non-residents). However, since the Law on E-Commerce and the Law on Trade overlap to a large extent, as both cover e-commerce, the interplay between their territorial scope provisions is not sufficiently coherent. The simplest interpretation could lead to the conclusion that all foreign entities conducting commerce on the global market and targeting Serbia, among other jurisdictions, would need to comply with a comprehensive set of Serbian rules, including those from the Consumer Protection Law. Needless to say, this would result in an extremely heavy burden, such as the need to label all the products/provide information on the services in Serbian, maintain certain documentation and records in accordance with Serbian laws, comply with Serbian rules on price indication, conduct sales and other trade incentives, direct marketing etc. Moreover, the enforceability of such requirements would also be controversial at this moment, especially considering the fact that foreign companies cannot be held liable for offences committed in Serbia, unless they have a representative office or business unit in the country.

Validity of Agreements in Electronic Form

Another big step towards embracing digitalization was made by introducing a general provision declaring all electronically entered agreements valid, save for specific situations when the law imposes certain forms for such agreements in order for them to be valid (e.g. solemnization before the notary public) or other limited exceptions.

This provision also existed in the previous E-Commerce Law, but the exception from its application has been redrafted to ensure a more coherent approach.

Labelling

The labelling requirements remained generally the same as before, with certain obligations stipulated in more details and with greater clarity, such as with respect to remote commerce, the obligation to make the required information directly and continuously available prior to the purchase, reiterating that all the mandatory information needs to be provided in Serbian.

In addition, a new requirement to mark products with machine readable marks (GTIN identification, QR code etc.) was introduced, with its applicability postponed until 31 January 2020, in order to provide companies with time to adjust their activities.

Price Indication

Concerning price indication, general rules remained pretty much the same, ensuring that customers can receive adequate and correct information about the final price of the goods, inclusive of VAT and any other taxes or charges, without the need to ask for assistance. The price needs to be expressed in Serbian dinars, with certain exceptions – e.g.  for tourism services related to foreign countries, vehicles, real estate etc. In the case of e-commerce targeting both Serbian and foreign consumers at the same time, the price may be expressed in different currencies, so that the consumers may opt for the currency of their choice, provided that the price for consumers accessing e-commerce from Serbia must initially be expressed in dinars.

Sales Promotions and Incentives

Concerning incentives designed to attract consumers to purchase products or services, the Law on Trade now includes a more detailed regulation of their various forms. This should enable the implementation of the appropriate EU rules and eliminate issues that regularly arose previously with their interpretation in Serbian practice. For example, the law now includes a definition of each of these forms, the duration/timing of a seasonal sale and action sale, specific restrictions related to advertising of these incentives – e.g. that a specific sale percentage may only be expressed if at least one fifth of all products on sale are offered under that percentage, etc.

Liability

Even though the upper limits for fines remained the same – up to RSD 2 million, i.e. approx. EUR 17,000, the supervisory authorities have been expanded. Now the inspection is also entitled to conduct so-called mystery shopping, in case of a suspicion that commerce is being conducted by a non-registered entity or without the issuance of invoices. In such a case, an inspector may approach the defaulting subject disguised as the consumer, and spot and record the irregularities.

In addition, the existing safe-harbour defences prescribed for providers of information society services, which (under certain conditions) exclude their liability for third parties’ messages, data and links they transmit, store or display, have now been upgraded to address the issues noticed in previous practice. As a result, service providers are now obliged to remove the infringing or otherwise unlawful content without delay, but no later than two business days after receiving the request from the competent authority or third party. In case the request is submitted by a third party, the providers of information society services can also challenge it before the competent authority if they believe the content is in line with the law.

The service providers transmitting the users’ electronic messages are now required to keep data on the users, and especially their IP addresses, for the duration of the service and at least 30 days afterwards.

What the future brings?

Considering their scope, obviously these changes will affect the large majority of companies doing business in Serbia. As always, practice will be the final judge of whether the changes have been adequately structured, or left with loopholes and ambiguities which may significantly impede their applicability.

The latter seems more probable at the moment, which is why we should all keep our eyes wide open and focus on the road ahead.

 

 

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.