Hospitality Law in Azerbaijan
As soon as I received a job offer from a Hotel Management Company with the largest portfolio in the South Caucasus, the first question flashed through my mind was that what do hospitality lawyers essentially do? While doing preliminary research, firstly I found a source that described the hospitality law as the legal and social practice concerning the treatment of individuals who visit an establishment, meaning restaurants, hotels, motels, and other public accommodations. Another one stated that the hospitality law governs and regulates the activities of the professionals, guests & other related entities.
However, my four years of tenure as a de-facto in-house legal counsel at the Hotel Management Company proved that such definitions are far from being explanatory enough. Below I intend to present a broader insight on the scope of the law that is practiced by the hospitality industry stakeholders.
Accordingly, hospitality law in Azerbaijan can be elaborated as follows:
Legal professional is involved in reviewing, commenting and advising the License/Franchise and (or) Management Agreements within the framework of hotel/restaurant development projects. These agreements are mostly executed for the term of 20-30 years and are very difficult to withdraw from. Therefore, negotiating the License/Franchise and (or) Management Agreements is arguably the most important practice where a hospitality lawyer must take the lead and spend most of the resources in order to facilitate the best possible deal for the owner.
Another hospitality-specific instrument is the Sales Agreement that mainly implies individual accommodation, group, agency, and event sales agreements. Due to constant change of the guest markets and the industries they represent (e.g., group of medical professionals), these agreements must by regularly reviewed and adjusted in accordance with the necessity.
Procurement of goods and services are also crucial part of the daily hotel and restaurant operations. Any deficiency in quality, timely delivery, etc. and any other breach of the supplier obligations might end up with decreased customer satisfaction, which in its turn will affect the revenues. Therefore, the hospitality lawyer must frequently review and revise the purchase agreement templates in order to minimize the risks of any shortage.
As a long-established hospitality tradition hotels and restaurants replace their General Managers from time to time. GMs might also voluntarily or involuntarily change their workplaces due to reasons applicable to any other employees in the labor market. Lawyers under such circumstances must support the employer to ensure the smooth transition of the management to avoid operational interruption.
Additionally, large hotel and restaurant ownerships occasionally require changes in corporate structures. Changes tend to include multi-practice legal matters, such as corporate legal solutions, allocation of labor, etc. In-house counsel’s contribution in these projects is pivotal to prevent any loopholes.
- Hotel Development
Acquisition transactions are conventional part of the hospitality ownership. It is quite common that owners acquire title over another property or an owning company to expand their business. Hospitality lawyers play an important role in different stages of these transactions, such as, due diligence, contract negotiation, etc.
- Intellectual Property and Copyrights
The hotels that are managed by the global management companies operate Food and Beverage (as well as Spa, etc.) outlets under international brands. This is also the case applicable to managed/franchised stand-alone or chain restaurants. Under relevant agreements owners are always required to register the IP rights over the Hotel or F&B brands to ensure that they’re protected. The same practice can also be followed by the owners that are not contractually obliged to ensure the security of their brands.
Hotels and restaurants provide entertainment services, such as, playing music, or broadcasting TV channels in the rooms or public areas. Whether music playlists are purchased from approved vendors, as it is the case for branded hotels, or they are created by the hotels and restaurants themselves, an agreement with the accredited Public Association(s) must be reached to pay the relevant royalties. Owners must also sign broadcasting agreements only with the distributors that maintain necessary license to re-distribute private TV-channels for commercial purposes.
All aforesaid fall within the scope of in-house legal team, which must protect the owner from potential lawsuits or penalties.
- Industry-specific regulations
As the hospitality industry was hit by the COVID-19 the most, hotels and restaurants were subject to severe scrutiny to minimize the risks of infection. The government was consistently adopting or amending multiple cross-cutting COVID-19 regulations depending on the pace of the spread of the coronavirus. As the businesses were subject to heavy penalties for breaching the regulations, hotel and restaurant owners as part of their daily routine had to follow the developments to adjust their operations with the new rules. Hospitality lawyers were one of the key parts, and as the liaison between the regulators, clients, and the business they represent, they were responsible for making sure that their businesses generate revenue by strictly following the laws.
- The common practice
Aside from the hospitality-related disciplines, hotels and restaurants practice the areas of law that are relevant to any business, including but not limited to:
Death, certain fraud, theft, etc. cases require the involvement of law enforcement and hospitality lawyers step-up to ensure the proper cooperation.
Labor and HSE:
Hotels and restaurants tend to have complex labor structures due to variety in employee positions, number of employees, organizational chart, workplace characteristics, etc. Such structures are sometimes accompanied with challenges that need legal solution.
Permits and licenses:
Lawyers are responsible for communication between their business and regulators to acquire permits and licenses as required by the law for the purposes of F&B operations, construction works, radio communication, etc.
The above-mentioned are the unexhaustive list of the hospitality lawyer’s practice. The hotel and restaurant owners are recommended to allocate sufficient resources for legal support to safeguard their business.
About the author
Ruslan Bayramov is a Founding Partner at Legalize Law Firm. For four years he was Group Legal Manager at the largest Hotel Management Company in the South Caucasus for its portfolio. During his term Ruslan led contractual negotiations with multinational hospitality companies, such as, Marriott International Inc., Accor Hotels, and Hyatt Worldwide. He is also specialized in corporate law, eCommerce, and AML/CFT Compliance. For further info about the author and Legalize Law Firm please visit https://www.legalize.az/en
Azərbaycan Yeni Nəsil Hüquqşünaslar Assosiasiyası İB "Praktiki Əmək Hüququ" adlı təlimə start verir
Azərbaycan Yeni Nəsil Hüquqşünaslar Assosiasiyası İB "Praktiki Əmək Hüququ" adlı təlimə start verir. Qeydiyyatdan keçmək üçün aşağıdakı linkə daxil olaraq məlumatlarınızı qeyd etməlisiniz. Məlumatları qeyd olunan iştirakçılarla AYNHA tərəfindən əlaqə saxlanılacaq və ətraflı məlumat veriləcəkdir.https://docs.google.com/.../1FAIpQLSczDcwNusF5ym.../viewformTəlimçi: Aygün ƏlizadəLEGALİZE Hüquq Şirkəti - Baş HüquqşünasBDU Hüquq fakültəsi - Doktorant, müəllimTəlimin günü və saatı: 3,6,10,13 May 2022, saat 15:00Təlimin müddəti 4 gün, hər bir təlim 2 akademik saatTəlimin ödənişi: 50 AZN , Tələbələrə (bakalavr) ödənişsizdir. Təlimin dili: Azərbaycan diliTəlimin keçiriləcəyi yer: Mirəli Qaşqay 28, blok 20, mənzil 2 (AYNHA ofisi)Təlimin sonunda iştirakçılara sertifikat veriləcəkdir. Təlimin mövzuları:Təlimin 1-ci günü1.Tanışlıq, Legalize MMC haqqında ümumi məlumat, təlimçi haqqında ümumi məlumat2.Əmək qanunvericiliyi haqqında ümumi anlayış3.İşə qəbul3.1. İşçinin şəxsi işi3.2. Ərizə, Əmr,Əmək müqaviləsi, əmək kitabçası3.3. yeni işçinin əmək fəaliyyətinə başlaması4.ƏM üzrə aidiyyatı maddələr5.İşə qəbulla bağlı nümunələr, praktiki izah6.Əmək müqaviləsi, Elektron hökümət portalı haqqında ümumi məlumatlar7. Əmək Münasibətlərinin Rəsmiləşdirilməsi8.Praktiki iş : 8.1.Əmək müqaviləsinin doldurulması qaydası 8.2.İşə qəbul zamanı kadr kargüzarlığı ,işçinin şəxsi işinin formalaşdırılması8.3.Əmək kitabçasının doldurulması qaydasıTəlimin 2-ci günü 1.İş və İstirahət Vaxtı 1.1. Tam iş vaxtı, həftəlik iş vaxtı1.2. Qısaldılmış iş vaxtı
Advance payment-related regulatory compliance risks
https://www.azernews.az/nation/192573.html Before agreement on the advance payment, businesspeople need to consider it not only as a contractual risk but also from a regulatory compliance perspective. Regulatory frameworkUnder the Regulations on “currency operations of residents of the Republic of Azerbaijan in foreign currency, and non‐residents in national and foreign currencies”, approved by the Decision of the Central Bank of the Republic of Azerbaijan, dated 28 November 2016, in case of an advance payment a document confirming import of the goods into the country (customs declaration) or a document confirming provision of the services (handover and acceptance certificate) need to be submitted to the bank. If these documents are not submitted to the bank within 2 years from the moment of the payment, or the pre-paid amount has not beed repaid, then the bank must submit all documents related to such advance payment to the Central Bank. In accordance with Article 430.4 of the Code on Administrative Offences, if within the specified periods relevant goods have not been imported into the country, works have not been performed or services have not been rendered in consideration of the currency paid in advance, for non-refund of the pre-paid currency from foreign country, officers are subject to a penalty from 10 % to 20 %, legal entities are subject to a penalty from 20 % to 30 % of the pre-paid amount. Real-life examples A local company in Azerbaijan entered into an agreement with its foreign counterparty and made a pre-payment in the amount of 100.000 USD without a bank guarantee. During the pandemic, both parties agreed in writing to terminate the agreement due to force-majeure and the foreign company undertook to repay 100.000 USD to the local company. Because of a failure to repay the pre-paid amount, an Azerbaijani company filed a claim in the courts of foreign jurisdiction where its claim was fully granted against the foreign company. Thereafter, during the enforcement phase, the officer of the foreign entity was subject to a penalty due to failure to enforce the court decision. So, Azerbaijani company has never received its money back. In addition to its contractual risk Azerbaijani company faced a regulatory compliance risk where the regulatory authority issued a protocol on administrative offence and submitted the same to the respective court. There was a penalty risk up to 30 % of the pre-paid amount. Judicial practiceAlthough formal wording of the above provisions do not envisage circumstances in which a person is excluded from the liability, the Constitutional Court interpreted (which interpretation is binding in nature) Article 430.4 of the Code on Administrative Offences and in its Decision dated 28 February 2020 stated that import of the goods or provision of services may be subject to delay for the reasons out of control of a person (for instance, force-majeure, accidents, customs control/inspection etc.). Therefore, the courts should take into consideration all circumstances of the case that may exclude a liability of a person. Recently, we represented our client in the court on the same subject-matter where our objection was fully granted and the court terminated the proceeding on the administrative offence. Conclusion and our recommendationsTo sum up, an advance payment without a bank guarantee is double-risky. It creates not only contractual, but also regulatory compliance risks. To avoid this risk, it is advisable to make an advance payment only based on a bank guarantee in the equal amount, so in case of any contractual breach a suffering party could be able to fully receive its money back. We also recommend to engage a professional lawyer in case the regulatory authority commences administrative offence proceeding. About the author: Fuad Gashamov is a professional lawyer with over 12 years of experience in consulting industry. He mainly specializes in dispute resolution, real estate, contracts, regulatory, intellectual property and compliance. He is the founding partner at Legalize Law Firm. He is the member of the Bar Association since 2014. For more information about the author please see the following link: https://legalize.az/en/team/fuadgashamov
What should an entrepreneur pay attention to in a trademark?
When creating a trademark, entrepreneurs in many cases do not take into account the requirements of the relevant legislation on trademark registration.One of the common cases in practice is that the trademark is already well known on the market, the entrepreneur has not yet registered it, submits an application for registration a little later than the start of activity, and when applying for registration is denied due to non-compliance with the relevant requirement.What should an entrepreneur pay attention to when creating a trademark?Words, personal names, letters, numerals, figurative elements, shape of the goods or their packaging, combinations of colors as well as any combination of such signs may be registered as trademarks.A purpose of the trademark is to distinguish goods or services provided by one entrepreneur from goods or services provided by another entrepreneur.A trademark consisting of a word conditionally refers to the name of the enterprise, surnames, names, other words or set of words, advertising labels. Icons consisting of words processed in standard fonts can be used in any graphic spelling, but if the sign is indicated in unusual fonts that are not used or unknown in the country, its transliteration and translation into the state language or etymological explanation is required.In what cases may the trademark registration be refused?We inform entrepreneurs that they will be refused from registration of the following trademarks:Signs that are to designate the kind, quality, quantity, intended purpose, value of the goods or services or their other characteristics and also place of origin of the goods and the time of their production;Trademarks which are not related to the origin of wines and spirits, but contain a geographical indication identifying them;Signs that are consisted of expression that are contrary to public order, morality and ethics, of any elements that can inflict damage to the reputation of the personality, religious and state symbols;Trademarks which consist exclusively of signs or indicators used in the trading activities of the Republic of Azerbaijan for many years;Trademarks that may confuse the consumer, notably as to the nature, quality or geographical origin of the goods or service.In case of refusal of registration, the entrepreneur is either forced to change the already well-known sign, or does not change and continues to use it without registration. In this case, the entrepreneur may face certain business risks in the future.For this reason, entrepreneurs are advised to take into account the requirements of the relevant legislation before creating a trademark and reduce the business risks that they may face in the future.About the author: Emin Musayev is a lawyer who specializes in intellectual property, contracts, and corporate law and currently works at Legalize Law Firm. For more information about the author please see the following link: https://legalize.az/team/emin-musayevhttps://www.azernews.az/region/194977.html