Negotiations with opposing parties in legal disputes

Governing Law of Contracts signed with a Romanian party

As the Romanian Civil Code allows the parties to establish the content of a contract, it is obvious that in the case of an international contract, they could choose the applicable law in the contract.

The Law stipulates the applicable law must be expressly mentioned or result in a clear manner from its content or circumstances. There are two methods for the parties to express their will: an explicit choice (through the actual mentioning of this information in the contract or annex) or a tacit choice. The elements used for deducting an eventual tacit choice of the parties are the following:

  • using legal notions or institutions specific only to a certain Legal System.
  • reference to a procedure used only in a certain country can place the contract in that Legal System;
  • signing the Contract in a certain language can indicate a choice of the parties, however this is not regarded as highly relevant;
  • choosing a specific Court of Law in a state is not regarded as highly relevant. 

If the parties have not expressly or tacitly designated an applicable jurisdiction governing the contract, the Court will have to make a decision in this sense, based on objective criteria.

The main criteria is applying the law of the state which the contract has stronger ties with. This is a more recent solution, an influence of the Anglo-Saxon law (the notion regarded as “proper law”). For example, a contract is stronger related to the law of the state where the debtor has – on the date the contract is enforced – his/her/its legal domicile/headquarters.

The secondary criteria will be applying the law of the location where the contract is signed. In the case the contract is signed by parties through correspondence, it is considered to be signed in the state of the party which has initiated the offer to contract, offer which was accepted

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The main management structure of the company in Romania is the general meeting of associates / shareholders. The constitutive act establishes the rules for convening and adopting decisions and whether the exercise of the vote can be delegated by special mandate by the associate / shareholder who cannot take part in the meeting. In the limited liability company, each shareholder entitles the holder to one vote in the respective meeting. The general meeting of associates has the following main obligations: ✓ to approve the annual financial statement and to establish the distribution of the net profit. ✓ to appoint the administrators and the censors, to revoke / dismiss them and to discharge them, as well as to decide to contract the financial audit, when it is not obligatory, according to the law; ✓ to decide the pursuit of the administrators and censors for the damages caused to the company, designating also the person in charge to exercise it; ✓ to modify the constitutive act.
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The limited liability company is the most common form of company in Romania, being the legal entity that best serves the interests of investors both from the point of view of the reliability of the activity, and from the perspective of its management. The limited liability company is abbreviated "SRL" in Romania and is the equivalent of the American limited liability company Limited Liability Company (abbreviated to LLC) or the German economic structure "Gesellschaft mit beschränkter Haftung" (abbreviated to GmbH), or the structure called "limited" , the structure used in most Latin American states.
The limited liability company is characterized by:
✓ the character intuitu personae, which means that this economic structure is based on the trust between the associates;
✓ the division of the share capital into fractions called shares, which cannot be negotiable securities;
✓ the liability of the associates is limited to their contribution to the share capital.
The limited liability company may also have a single partner, natural or legal person, of Romanian or foreign nationality, who will be the owner of all shares. Instead, the maximum number of associates is 50 people.
At present, the Romanian law no longer conditions the subscription and payment of a certain amount as share capital.
Through registration, the company acquires legal personality, becoming, under the law, a collective subject of law. The conclusion given by the judge is sent, ex officio, to the Official Gazette of Romania for publication at the expense of the company and to the Financial Administration in whose territorial area is the main headquarters of the company for fiscal registration, mentioning the registration number in the Trade Register .

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