Monthly Archives: November 2020

CorralRosales > 2020 > November

Idealex – Teleworking and Information Security

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DATE: 24-11-2020

CORRALROSALES IN THE NEWS:

-Rafael Serrano

MEDIA: Idealex

Our associate Rafael Serrano has written an article in the Idealex about ‘Teleworking and Information Security’ due to the large increase in people changing their way of work because of the pandemic. In his article, Serrano analyzes “the risks of telework related to one of the main assets of companies -information- and to provide efficient technical and legal tools to mitigate these risks”.

As detailed in the article, it is more difficult for an employer to know how the company’s information is handled by staff teleworking since he is not in the same place as his employees. Thus, he must pay greater attention to the protection of the information and labor tools provided. To do this, the employer must take appropriate security measures for this new situation.

“In this sense, information security must comply with three essential parameters: integrity, confidentiality and availability. Integrity implies that the information is correct, and has not been deleted or modified without the authorization of the owner. Confidentiality refers to the fact that the information can only be accessed by people who are authorized to access it. Lastly, availability means that information can be accessed when needed. ”Says Serrano.

Employers must take legal and technical measures to protect the information from any danger that may arise based on the three parameters described above.

The technical measures include the use of programs, systems, or devices aimed to preserve the information. The legal measures include the use of “the different instruments to have a complete information protection policy” by employers.

It is important to preserve the value of the company’s information.

If you want to read the full article, click here

Arbitration in investment contracts

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The economic crisis, worsened by the pandemic, has forced Ecuador to place greater emphasis on its interest in attracting national and foreign investment. Several measures and mechanisms have been designed to achieve this objective. Among these mechanisms, the investment contract draws the attention of several investors since it offers stability in tax incentives[1] and, tax stability for contracts that exceed US $ 100 million, and large-scale mining projects. Another feature of the investment contract, which attracts investors, is the possibility of using arbitration as a dispute resolution mechanism.

In August 2018, the Law for Productive Development, Attraction of Investments, Employment Generation, Stability and Fiscal Balance amended the Code of Production, Trade and Investment (COPCI) in order to force the State to agree to arbitration to resolve disputes generated in investment contracts[2] and also to agree to arbitration in investment contracts that exceed US $ 10 million[3].

The first unnumbered article included after article 16 of the COPCI provides: “Investment contracts.- The Ecuadorian Government shall agree to national or international arbitration to resolve disputes generated through investment contracts, in accordance with the Law.”

As a general rule, in order for two or more parties to be able to submit their disputes to the arbitration jurisdiction, the manifestation of that will is required. Unless stipulated in international instruments, article 42 of the Arbitration and Mediation Law requires the express authorization of the Office of the Attorney General for an entity of the Ecuadorian public sector to submit to international arbitration. In light of this, it is worth asking, could the Attorney General refuse to accept arbitration as a mechanism for the resolution of disputes in investment contracts? In an investment contract without an arbitration clause, is the State obliged to submit to arbitration a dispute arising from that contract?

In cases of disputes between investors and countries with legal provisions similar to those mentioned above, investment arbitration case-law favors arbitration. In the award of jurisdiction for the case of Tradex Hellas S.A. v. Republic of Albania, the arbitration tribunal considered that the consent of the State to submit disputes to arbitration jurisdiction was included in its legislation, when it stated:

“… although consent by written agreement is the usual method of submission to ICSID jurisdiction, it can now be considered as established and not requiring further reasoning that such consent can also be effected unilaterally by a Contracting State in its national laws the consent becoming effective at the latest if and when the foreign investor files its claim with ICSID making use of the respective national law. Therefore, the 1993 Law together with Tradex’s Request for Arbitration must be considered as sufficient consent (…).”[4]

In the case Zhinvali Development Ltd. v. the Republic of Georgia the court found that despite the absence of a written arbitration agreement between the parties, the Georgia Investment Law contained a written offer to submit the dispute – among others – to the jurisdiction of ICSID, and that this constitutes written consent:

“Here, at the time that the Claimant filed its Request for Arbitration on December 3, 1999, there was (a) no bilateral investment treaty in force between Ireland and Georgia and (b) no written agreement between the Parties that submitted disputes to ICSID jurisdiction. Accordingly, the question becomes whether Article 16(2) of the 1996 Georgia Investment Law, in spite of Article 19 of the earlier 1994 Georgia Concession Law, did constitute Georgia’s written offer to submit this dispute to ICSID, which offer was later accepted by the Claimant when it commenced this arbitration.”[5]

In the case of Southern Pacific Properties (Middle East) Limited v. the Arab Republic of Egypt[6], the arbitral tribunal concluded that the phrase “shall be resolved”, referring to disputes, is a mandatory provision.

In light of these arbitration awards, the provision contained in the first unnumbered article included after article 16 of COPCI has two characteristics. The first is a mandatory provision for the State and, the second is an offer to submit to arbitration, which can be made effective at the time of initiating an arbitration procedure.

In conclusion: there are solid legal grounds for determining that any dispute arising from an investment contract should be submitted to arbitration jurisdiction, even if the respective contract does not contain an express convention on that matter.

[1] Specifically, stability in the exoneration of the Tax on the Outflow of Foreign Currency for the distribution of dividends and importation of capital goods for the term of the contract

[2] First unnumbered after article 16 of the COPCI

[3] Second unnumbered after article 16 of the COPCI: “Arbitration.- For investment contracts that exceed ten million dollars of the United States of America, the State must agree to national or international arbitration in law, in accordance with the law. […] ”

[4] Decision on Jurisdiction Tradex Hellas SA v Republic of Albania, ICSID ARB /, 1996

[5] 94/2Zhinvali Development Ltd. v. Republic of Georgia ICSID Case No. ARB / 00/1, 2001

[6] Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, ICSID Case No. ARB / 84/3,

Jimmy Rodríguez
Associate at CorralRosales
jirodriguez@corralrosales.com

Criterios Digital – The registration of a color as a trademark

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DETAILS

DATE: 29-10-2020

CORRALROSALES IN THE NEWS:

-Katherine González

MEDIA: Criterios Digital

Katherine González, one of our associates whose field of specialty is Intellectual Property, has written an article for the medium “Criterios Digital”. In her article, she analyzes the possibility of registering a color as a trademark in the Andean Community.

Her article begins by offering a brief description of what a brand is to guide the reader on what to read next: “A brand is any sign capable of graphic representation, which can distinguish a product or service in the market.

“It also informs that “the Andean community norm provides for the possibility of registering as a trademark a color delimited by a shape, or a combination of colors. Thus, it is possible to register a trademark made up of only one color as long as it is included in some line, shape, or silhouette. Though the trademark shouldn’t fall in any of the grounds of irregularity provided for in the Law.”

As reported by the Andean Community Court of Justice, the use of color must be arbitrary so that, in this way, the business origin can be identified through it.

In the article, González clarifies that if the color is not delimited in any way, it can not be registered since a single person cannot be allowed to own a color as such; this would give a person “an inordinate competitive advantage” and “would significantly affect the access of third parties to the market.”

Later in her article, our associate points out that when examining the registration of a trademark made up of a color, the Intellectual Property Office must take the following things into account: the applicable legal elements, the real context of the market in which the trademark, once registered, will begin to work, and “the principle of primacy of reality”.

If you want to see the full article, click here.

Lexology Getting The Deal Through – Tax Controversy 2021

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DATE: 17-11-2020

CORRALROSALES IN THE NEWS:

-Andrea Moya

-Francisco Rosales

MEDIA: Lexology Getting The Deal Through

Lexology Getting The Deal Through (GTDT) published the eighth edition of Tax Controversy and Andrea Moya and Francisco Rosales, partners of CorralRosales, prepared the Ecuadorian chapter.

In the chapter, they answer essential questions related to tax law in Ecuador, especially the different mechanisms taxpayers have to challenge administrative acts issued by the Tax Authorities such as tax assessments or tax settlements. Additionally, they respond to questions about the legislation, the way it is organized and how to ensure compliance with tax laws and regulations, among other aspects.

Andrea with more than 10 years of experience, and Francisco with 40 years of trajectory, offer a precise point of view on the status of tax-related issues in Ecuador.

“There are two typical procedures that the tax authority applies to review a tax return: a difference notice and a tax assessment procedure.

The difference notice is a fast-track assessment procedure by which the tax authority notifies the taxpayer of any differences found in the tax return compared with information available to the tax authority and gathered from third parties […].

The tax assessment procedure is initiated with a formal notice issued by the tax authority by which it requires information from the taxpayer and from third parties and issues a draft of the tax assessment. Likewise, the taxpayer may either pay the amount established by the authority or provide sufficient evidence to challenge the differences noted by the tax authority within 20 working days. If the tax is not paid or if the tax authority considers that the differences have not been duly justified it will issue a formal tax assessment.” indicated our partners for the publication of GTDT.

If you want to see the full chapter, click here.

New employment agreement modalities

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The Ministry of Labor (“MdT”) has regulated the following employment agreement modalities:
1. PRODUCTION AGREEMENT
(MDT-2020-220) 
– Sector: Productive sectors.
– Term: For the duration of the work, service, or activity to be performed; continuously or discontinuously, for up to 1 year, renewable for an additional year. If this period is exceeded, the employment relationship becomes an open-term agreement. A 90 day trial period may be agreed.
– Work day: The working days will be carried out as part-time or ordinary with a maximum of 40 hours per week that may be distributed in no more than 6 days a week. If the activities require uninterrupted services, the parties may agree on consecutive days of up to 20 successive working days.
– Termination of the agreement: It will end upon the conclusion of the term or the contracted activity. If the unilateral decision of the employer terminates the employment relationship before the agreed term, the worker will be entitle to severance.
– SUT registration: Within a period of 15 days upon its execution.
2. SPECIAL AGREEMENT FORTOURISM AND / OR CULTURAL AND CREATIVE SECTORS
(MDT-2020-221)
– Sector: Tourism, cultural and creative.
– Term: For the duration of the work, service, or activity to be performed; continuously or discontinuously, for up to 1 year, renewable for an additional year. If this period is exceeded, the employment relationship becomes an open-term agreement. A 90 day trial period may be agreed.
– Work day: The working days will be carried out as part-time or regular with a maximum of 40 hours per week that may be distributed in no more than 6 days a week. If the activities require uninterrupted services, the parties may agree on 20 to 70 consecutive days. Shifts that exceed 20 continuous days must be registered in the Ministry of Labor.
– Termination of the agreement: It will end upon the conclusion of the term or the contracted activity. If the unilateral decision of the employer terminates the employment relationship before the agreed term, the worker will be entitle to severance.
– SUT registration: Within a period of 15 days upon its execution.
3. ENTREPRENEURSHIP AGREEMENT
(MDT-2020-222)
– Sector: Employers registered in the National Registry of Entrepreneurship (RNE).
– Term: Up to 1 year, renewable up to the term of registration in the RNE. If this period is exceeded, the employment relationship becomes an open-term agreement. A 90 day trial period may be agreed.
– Work day: The working days will be carried out as part-time or regular with a maximum of 40 hours per week that may be distributed in no more than 6 days a week. If the activities require the provision of uninterrupted services, the parties may agree on consecutive days of up to 20 successive working days.
– Termination of the agreement: It will end upon the conclusion of the term. If the unilateral decision of the employer terminates the employment relationship before the agreed term, the worker will be entitle to severance.
– SUT registration: Within 15 days upon its execution along with the certificate issued by the RNE.
4. AGREEMENT FOR YOUNG PEOPLE
(MDT-2020-223) 
– Sector: All sectors.
– Agreement for young people: Work agreement aimed to  promote the employment of young people up to 26 years of age.
– Agreement for young people: under academic education: The purpose of this agreement is to promote the employment of young people up to 26 years old who are studying at any educational level. Their remuneration may not be less than US$333.32.
– Work day: The working days will be carried out as part-time or regular with a maximum of 40 hours per week. If the activities require the provision of uninterrupted services, the parties may agree on consecutive days of up to 20 successive working days.
– Term: For the duration of the work, service or activity to be carried out; continuously or discontinuously, for up to 1 year, renewable for an additional year, or until the worker reaches 26 years of age. If they exceed this period, the employment relationship becomes an open-term agreement. A 90 day trial may be agreed.
– Termination of the agreement: It will end upon the conclusion of the term or the contracted activity. If the unilateral decision of the employer terminates the employment relationship before the agreed term, the worker will be entitle to severance.
– SUT registration: Within a period of 15 days upon its execution.

 

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DISCLAIMER: The preceding text has been prepared for general information purposes only. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any given situation requires the specific opinion and view of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Conditions for filing customs import declarations

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On November 4, 2020 the National Court of Justice issued a ruling within the judicial process 17751-2020-00001 by which it declared that the Regulation SENAE-SENAE-2019-0049-RE (Regulation) issued on June 26, 2019 by the General Director of the Customs Authority was void.

The Regulation established that importers were not able to file customs import declarations if they had any unpaid obligations with the Tax or Customs Authorities. The National Court of Justice resolved that this condition could not be established by a regulation, since it exceeds the legal power of the general director of the Customs Authority.

Once the Regulation has been declared void, importers may file customs import declarations even if they have outstanding obligations with the Tax or Customs Authorities.

 

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DISCLAIMER: The preceding text has been prepared for general information purposes only. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any given situation requires the specific opinion and view of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Reform of the codification of regulations issued by SERCOP

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By Regulation No. RE-SERCOP-2020-0111 of September 23, 2020, the Regulation No. RE- SERCOP-2016-0000072 was amended (hereinafter, the “Regulation”), replacing Chapter II of Title VIII, relative to the “ACQUISITION OF DRUGS OR STRATEGIC GOODS IN HEALTH THROUGH A SPECIAL REGIME”. The main aspects of this reform are the following:

1. The Corporate Reverse Auction procedure is regulated for the selection of suppliers of drugs or strategic health goods (hereinafter and collectively, the “Products”) for the acquisition of the Products.

2. The Corporate Tender procedure is regulated for the selection of service providers for the storage, distribution and delivery or dispensing of drugs or strategic health goods (hereinafter, the “Services”) for contracting the Services.

3. It is established that the suppliers that participate in corporate purchase procedures must declare that they have no connection with other participants.

4. The attributions of the Inter-Institutional Committee are regulated, mainly  in the preparatory and contractual execution stage of the procedures for the acquisition of the Products and the contracting of the Services. This Committee is different from the Technical Commission, which will act in the pre-contractual stage.

5. As a result of the Corporate Reverse Auction and Corporate Tender procedures, the respective corporate framework agreements will be signed and the Products and Services will be included in the virtual directory of SERCOP´s Portal of PUBLIC PROCUREMENT  (hereinafter, the “Directory”), for their acquisition or contracting, respectively, through purchase orders.

6. It is established that the termination of a corporate framework agreement will not necessarily generate the sanction of a non-compliant contractor.

7. The obligations of the suppliers of the Products or Services are regulated, without prejudice to those established in the specifications of the selection procedure, the corporate framework agreement and the purchase orders. In the case of Service providers, the following obligations stand out:

7.1. The provision of a “continuity of service guarantee” that ensures the Services’ provision, even in the event of early and unilateral termination of the respective corporate framework agreement.

7.2. The implementation of a technological solution to monitor the Products’ route in real-time.

7.3. The implementation of a technological solution for the registration, administration, and control of stock and inventories in collection centers, warehouses, pharmacies, medicine cabinets, and other units or areas necessary to comply with the Services.

7.4. The creation of tickets for Products not delivered in health establishments for causes attributable to the supplier. Through the tickets, the patient will be able to withdraw the Products in the private pharmacies network associated with the supplier  at a national level or with those subject to a previously signed agreement.

8. It is mandatory for the contracting entities that make up the Integrated Public Health Network (“IPHN”) to acquire the Products and contract the Services through the Directory. Only when the Product does not appear in the Directory, these entities may avail themselves of other contracting procedures.

9. It is established that the contracting entities of the IPHN will centralize the acquisition of the Products. Each IPHN health subsystem must define the entity or administrative body (contracting entity) that will be responsible for the centralized generation of purchase orders, in accordance with its planning.

10. It is the obligation of the contracting entities of the IPHN to contract the Services before the acquisition of the Products, except in cases of  contracts related to small amount and emergencies, or when the Products are received by donation.

11. Contracting entities that do not belong to the IPHN will not be obliged to verify and acquire the Product or contract the Services through the Directory. These entities may directly use other procedures provided by law.

12. The public contracting entities that are not part of the IPHN will preferably use the Institutional Reverse Auction procedure for the selection of suppliers and acquisition of the Products. The contracting entities that are part of the IPHN may use this procedure as long as the amount exceeds the one established  for a small amount procedure, and the Products are not available in the Directory for direct purchases.

 

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DISCLAIMER: The preceding text has been prepared for general information purposes only. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any given situation requires the specific opinion and view of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Regulation of simplified stocks corportations (S.A.S.)

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By Resolution No. SCVS-INC-DNCDN-2020-0015 issued on September 14, 2020, and published in the Special Edition Number 1071 of the Official Registry of September 25, 2020, the Superintendency of Companies, Securities and Insurance issued the Regulation of the Simplified Stock Corporations (S.A.S.)

The main aspects of the Regulations include

1. The determination of the legal existence of a S.A.S. starts with its registration in the Registry of Companies of the Superintendency of Companies, Securities and Insurance.

2. The shareholders of a S. A. S. will only be responsible for the amount of their respective shares, unless they expressly waive it in writing.

3. The impossibility of negotiating it´s own shares in the stock market. Notwithstanding being able to negotiate shares issued by other mercantile societies or other negotiable securities, according to the law of the matter.

4. The incorporation of the Simplified Stock Corporations will be done through private documents unless the assets contributed require a public deed. In this case, the public deed must be registered in the corresponding Registry Office.

5. The process of electronic incorporation of the S.A.S. is hereby established, and the SCVS is required to keep its online system open so that all users can access consultations, certifications, and access all the relevant corporate information of the S.A.S.

6. Foreign companies that are founders and shareholders of a S. A. S. must present a certificate of incorporation and legal existence issued by the authority of the corresponding country. The capital of the foreign company must be represented in shares, participations or nominative papers.

7. The document of incorporation of the S.A.S. will have a presumption of stability, enforceability, and execution. Consequently, it may not be revoked, cancelled or annulled, unless expressly provided by competent Judge.

8. It shall establish the rules of the capital and shares of the S.A.S., their organization, statutory reforms, reorganization, dissolution, liquidation, reinstatement and cancellation.

The Regulations of the Simplified Stock Corporations also govern, among other things, the procedure for the resolution of corporate conflicts, causes of voluntary removal of shareholders, payment of dividends, presentation of corporate/financial documentation, management reports, and balance sheets, removal of shareholders, digital corporate books, and the liability of the shareholder before the company for the abuse of his voting rights, when seeking his own benefit or that of a third party.

 

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DISCLAIMER: The preceding text has been prepared for general information purposes only. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any given situation requires the specific opinion and view of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

The regulation that controls the agroindustrial chain of psychoactive cannabis or hemp and hemp for industrial comes into effect

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October 19th, 2020, the Ministry of Agriculture issued the Ministerial Agreement No.109-2020, which regulates the  IMPORT, PLANTING, GROWING, HARVEST, POST HARVEST, STORAGE, TRANSPORTATION, PROCESSING, MARKETING AND EXPORT OF NON PSYCHOACTIVE CANNABIS OR HEMP AND HEMP FOR INDUSTRIAL USE. This Ministerial Agreement entered into force upon its signing.

Among the provisions included in this Ministerial Agreement, article 22 establishes the Licenses that have to be obtained by those who wish to engage in the following activities:

• Import and Commercialization of Non-Psychoactive Cannabis or Hemp Seeds, or Non-Psychoactive Cannabis or Hemp Cuttings, or Hemp Seeds for Industrial Use. (LICENSE 1)

• Growing and Production of Non-Psychoactive Cannabis or Hemp Seeds, or Non-Psychoactive Cannabis or Hemp Cuttings, or Hemp Seeds for Industrial Use. (LICENSE 2)

• Cultivation of Non-Psychoactive Cannabis or Hemp. (LICENSE 3)

• Cultivation of Hemp for Industrial Use.
(LICENSE 4)

• Non-Psychoactive Cannabis or Hemp Processing and Non-Psychoactive Cannabis or Hemp Derivatives production. (LICENSE 5)

• Plant breeding and / or Germplasm and Research Banks. (LICENSE 6)

• Acquisition of Derivatives and / or Biomass or Non-Psychoactive Cannabis flower or Hemp, or Hemp Biomass for Industrial Use, for Export. (LICENSE 7)

Who can obtain these licenses: entities, cooperatives, associations or communes, universities legally constituted and / or domiciled in Ecuador, which may develop one or more activities provided for in the Regulation.

The minimum extension of land, depending on the type of crop which may be cultivated gradually according to the Agricultural Production Plan approved by the National Agrarian Authority, is the following:

• Hemp for Industrial Use – 5 hectares.
• Non-Psychoactive Cannabis or Hemp – 5 hectares in the open field and 2 hectares in greenhouse.

The period in which the above-detailed minimums must be met may not exceed 5 years from the first crop.

License for the Planting and Production of Non-Psychoactive Cannabis or Hemp Seeds, or of Non-Psychoactive Cannabis or Hemp Cuttings, or of Hemp Seeds for Industrial Use – minimum extension 0.5 hectares.

Licenses for Plant Breeding and / or Germplasm and Research Banks will not be subject to a minimum surface area.

The Ministerial Agreement establishes general and specific requirements for each type of license.

The general requirements are:

a. Application form for Licenses of Non-Psychoactive Cannabis or Hemp, or Hemp for Industrial Use.

b. Copy of the Taxpayer Registry (RUC), which must include the activity or activities to be carried out by the Applicant, information that will be verified on the website of the competent authority.

c. Copy of the statutes of the entity, public entity, cooperative, association or commune, legally constituted, whose objective includes the activities to be carried out by the Applicant.

d. Notarized copy of the appointments of the legal representatives.

e. Affidavit issued by the legal representative of the applicant, granted before a public notary, with the detail of the activities that will be carried out for this purpose, which must be related to the application.

f. Criminal record certificate of the Applicant’s legal representative, its directors and partners, shareholders or members who have a stake greater than 6% of the company’s capital stock, through which it will be verified that they have not been declared criminally liable through a final conviction, for drug trafficking, money laundering, corruption and related crimes. In the event that the shareholders or partners are entities, the certificate of the last individuals in the chain of ownership must be filed, except if those entities are registered in a Stock Exchange, or in the case of an investment fund. In the case of foreign entities, they must file the equivalent document issued by the competent authority of the country of origin; duly legalized.

g. Document in which the organizational structure of the applicant and its members is detailed. In the event that the shareholders, partners or members are legal persons, the last natural persons in the chain of shareholders or partners of legal persons must be disclosed, except if those legal persons are registered in a Stock Exchange or in the case of an investment fund.

h. Form of legality and destination of funds.

i. Proof of payment of the government fee corresponding to the type of license applied, as detailed in the corresponding tariff list.

Here you can access the Ministerial Agreement N° 109-2020

 

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DISCLAIMER: The preceding text has been prepared for general information purposes only. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any given situation requires the specific opinion and view of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES