In order to carry out the activity of wholesale supply of electricity in the Republic of Serbia, it is first necessary to fulfil a number of regulatory requirements, including obtaining a licence for wholesale electricity supply from the Energy Agency of the Republic of Serbia and the corresponding codes (REMIT code, EIC code), registration through the NERA portal with Elektromreža Srbije, and membership in the SEEPEX exchange.

Consequently, the entire procedure becomes administratively complex and requires a significant amount of time for its completion, even with professional expert assistance.

To make matters worse, the procedure becomes more complex when the application for obtaining the licence is submitted by a foreign legal entity.

Namely, in order for a legal entity to obtain a licence for carrying out the activity of wholesale electricity supply in the Republic of Serbia, it is necessary for it to fulfil the following conditions:

1. That the applicant is registered and carries out the activity of electricity supply in a Contracting Party of the Energy Community or the European Union;
2. That the applicant fulfils the financial requirements for carrying out the energy activity;
3. That the director, i.e. the members of the management bodies, have not been finally convicted of criminal offences related to the performance of economic activities;
4. That the applicant has not been subject to a measure prohibiting the performance of the activity or, if such a measure has been imposed, that the legal consequences of the measure have ceased;
5. That no bankruptcy or liquidation proceedings, i.e. compulsory liquidation proceedings, have been initiated against the applicant.

Regarding the fulfilment of the above-mentioned conditions, the applicant submits the relevant evidence established by the applicable regulations of the Republic of Serbia, which, at first glance, seem to provide rather clear and unambiguous guidelines for all legal entities intending to submit an application for the issuance of a licence.

However, what does practice say?

In practice, two important problems have emerged.

First, a more detailed analysis of the applicable regulations of the Republic of Serbia leads to the conclusion that these regulations actually define rather imprecisely the evidence confirming the fulfilment of the conditions for the issuance of a licence. Consequently, the competent authority often interprets the regulations in greater detail and itself specifies what may be considered adequate evidence. In practice, this means that there is no single rule for all applicants with regard to the submission of evidence, but rather each party submits evidence ad hoc, i.e. what evidence the competent authority will request depends on the particular case.

This consequently leads to the second problem. Namely, when deciding on an application for the issuance of a licence, the competent authority, in addition to often interpreting the regulations in greater detail and itself specifying what may be considered adequate evidence, literally applies the “form over substance” rule when assessing the submitted evidence, strictly adhering to the literal interpretation of the relevant provisions, without the possibility of deviation.

Although such a formalistic approach may be understandable from the perspective of legal certainty, the difficulties in its application are particularly pronounced when it is necessary to adapt foreign documentation and procedures to the domestic regulatory framework. Differences in legal systems; documentation; deadlines; and the methods of its issuance often make it difficult to fulfil the form prescribed by domestic regulations, even when, in substance, there is no dispute regarding the content or authenticity of the documentation.

Additionally, in practice, a challenge also arises in connection with the electronic documentation of foreign legal entities. Namely, although such documents are duly signed in accordance with the regulations of the country of origin, the domestic competent authorities are often unable to technically verify such electronic signatures, i.e. they are unable to authenticate and validate the document and the signatory. An additional problem is created by the fact that a foreign electronic signature is not considered a qualified electronic signature within the meaning of domestic regulations, and consequently, such documents are not accepted by the competent licensing authority, and applicants are instructed to submit additional forms of documentation, which further prolongs and complicates the procedure.

Although we have successfully handled more than fifteen applications of this type for our clients, almost without exception we encountered the same challenge, namely the rigid insistence on form, which in most cases, when deciding on applications submitted by foreign legal entities, objectively cannot be fulfilled due to differences between legal systems, i.e. the absence of one-hundred-percent conformity between foreign documents and domestic documents. Therefore, it is often necessary to adopt a creative yet practical and pragmatic approach to resolving this administrative problem, and finding an acceptable solution in practice prolongs the procedure and creates additional administrative obstacles. All of the above indicates the need for a systemic solution that would enable a more flexible approach in situations where it is obvious that the substantive requirements have been fulfilled, but the form deviates due to objective differences between legal systems. In this regard, we believe that improving the regulatory framework in this segment, through clearer guidelines or the adaptation of regulations, would significantly contribute to the efficiency of procedures and the legal certainty of all participants. Until then, it remains up to experts and participants in the procedure to continue, through practice and argumentation, bridging the gap between form and substance, and success in this essentially depends considerably on the agility, creativity, and persistence of the legal advisers engaged by the applicants.