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10 July 2024

Understanding Romanian legal system

Navigating the legal landscape of Romania is crucial for anyone engaging in business or legal matters within the country. As a member of the European Union, Romania has a robust legal framework rooted in civil law tradition, offering both opportunities and challenges. This comprehensive guide explores key aspects of Romanian law, from business formation and property rights to recent legal developments and practical tips for compliance. Whether you are a local entrepreneur, an international investor, or a legal professional, understanding Romanian law is essential for success.

 

Romanian law Romania legal palace of justice

 

Step into the world of Romanian law and discover the intricacies of its legal landscape. From civil law to criminal law, Romania has a rich legal system that is both complex and fascinating. In this article, we will delve into the ins and outs of Romanian law, providing you with valuable insights into its history, structure, and key principles. Romanian law is rooted in the civil law tradition, with influences from German, French, and Italian legal systems. Understanding the foundations of this system is essential for anyone seeking to navigate the legal terrain in Romania. We will explore the different branches of Romanian law, including constitutional law, administrative law, and commercial law, shedding light on the unique aspects of each. Whether you are a legal professional, a business owner, or simply curious about the legal framework in Romania, this article will provide you with a comprehensive overview of the country's legal landscape. Join us as we embark on a journey through Romania's legal system and unravel the complexities that shape the country's laws and regulations.

 

Understanding the Legal Landscape in Romania: An Overview of Romanian Law

 

Romania, a member of the European Union, boasts a complex and evolving legal system. The country's legal framework is rooted in civil law tradition, similar to that of many other European nations. Understanding the intricacies of Romanian law is crucial for businesses, legal professionals, and individuals navigating legal matters in the country. This article aims to provide a comprehensive overview of the key aspects of Romanian law, including its historical background, current legal system, and important legal considerations.

 

Historical Background of Romanian Law

 

The Romanian legal system has undergone significant transformations over the centuries. The modern legal framework began to take shape in the 19th century, influenced by the Napoleonic Code. The influence of the Soviet legal system during the communist era also left its mark. However, since the fall of communism in 1989, Romania has made substantial efforts to align its legal system with European standards.

 

The Foundation of the Romania legal system: The Constitution as the main law in Romania

 

The cornerstone of Romania's legal framework is its Constitution. This document establishes Romania as a unitary state, outlining the separation of powers between the executive, legislative, and judicial branches. It enshrines fundamental rights and freedoms, ensuring a just and democratic society.

 

The Constitution of Romania serves as the supreme law of the country, outlining the fundamental principles and structures that govern Romanian society. Adopted in 1991 and amended in 2003, this key legal document is essential for understanding Romania's political, legal, and social framework. In this article, we delve into the core aspects of the Romanian Constitution, its historical background, key provisions, and its role in shaping the nation.

 

The current Constitution of Romania was adopted on December 8, 1991, following the fall of the communist regime in 1989. This marked a significant transition from a totalitarian state to a democratic republic. The 1991 Constitution established the foundational principles of democracy, the rule of law, and respect for human rights. In 2003, significant amendments were made to align with European Union standards ahead of Romania's accession to the EU in 2007.

 

The Constitution of Romania is the cornerstone of the country's legal and political system. It embodies the principles of democracy, human rights, and the rule of law, shaping the governance and societal values of Romania. Whether you are a legal professional, business owner, or citizen, understanding the Constitution is crucial for engaging with the Romanian legal system and participating in the nation's democratic processes.

 

By providing a robust framework for governance and protecting fundamental rights, the Romanian Constitution continues to evolve, addressing new challenges and reinforcing Romania's commitment to democracy and the rule of law.

 

Unveiling the Legal Sources of the Law in Romania

 

Understanding the various sources of Romanian law is paramount. Here's a breakdown of the key legal instruments:

 

  • The Constitution: The ultimate legal authority, outlining the nation's core principles.

 

  • Laws: Enacted by Parliament, these laws address specific legal matters in detail. You can find them on the official government portal, Portal Legislativ [Portal Legislativ website in Romanian] (pro tip: use the search function for keywords in English).

 

  • Government Ordinances: Elaborate on existing laws and provide further regulations.

 

  • Ministerial Orders: Issued by individual ministries, these offer specific directives within their respective areas.

 

The Structure of the Romanian Legal System

 

Romania's legal system is divided into several branches, each with its own set of laws and regulations. The main branches include:

 

  • Constitutional Law: The Romanian Constitution, adopted in 1991 and amended in 2003, serves as the supreme law of the land. It outlines the fundamental rights and freedoms of citizens, the structure of government, and the principles of the rule of law.

 

  • Civil Law: Governed by the Civil Code, civil law in Romania deals with matters such as contracts, property, family law, and inheritance. The Civil Code was extensively revised in 2011 to modernize and harmonize it with EU standards.

 

  • Criminal Law: The Criminal Code and the Criminal Procedure Code regulate criminal law in Romania. The legal system emphasizes the protection of individual rights and the principles of fairness and justice in criminal proceedings.

 

  • Commercial Law: Romania's commercial law is designed to regulate business activities, including company formation, contracts, bankruptcy, and intellectual property. The Commercial Code and various other laws govern these aspects.

 

  • Labor Law: Labor law in Romania is aimed at protecting the rights of employees and ensuring fair labor practices. The Labor Code, updated periodically, covers employment contracts, working conditions, and dispute resolution mechanisms.

 

  • Administrative Law: This branch of law deals with the organization and functioning of public administration in Romania. It includes regulations on public services, administrative procedures, and the relationship between citizens and administrative authorities.

 

Key Legal Considerations in Romania

 

Business law in Romania (Formation and Regulation): For foreign investors and entrepreneurs, understanding the legal requirements for establishing and operating a business in Romania is crucial. The process involves registering with the Trade Register, obtaining necessary licenses, and complying with tax regulations.

 

Property right: Property law in Romania protects the rights of property owners and regulates transactions involving real estate. Foreign individuals and companies can acquire property in Romania, but there are specific conditions and restrictions, particularly concerning agricultural land.

 

Employment Law in Romania: Employers must navigate the complexities of Romanian labor laws to ensure compliance with employment contracts, working hours, health and safety regulations, and employee benefits.

 

Taxation in Romania: Romania has a comprehensive tax system, including corporate tax, value-added tax (VAT), income tax, and social contributions. Businesses and individuals must adhere to tax regulations to avoid penalties and legal issues.

 

Dispute Resolution in Romania: The Romanian legal system offers various mechanisms for resolving disputes, including litigation, arbitration, and mediation. Understanding the appropriate method for dispute resolution is essential for efficient and effective outcomes.

 

Key Components of the Romanian Legal System

 

1. The Constitution. The Constitution of Romania, adopted in 1991 and amended in 2003, is the supreme law of the land. It outlines the fundamental principles of the state, the organization of government, and the rights and duties of citizens. It serves as the foundation for all other laws and legal practices in Romania.

 

2. The Judiciary. The judiciary in Romania is independent and comprises several levels of courts, each serving specific functions:

 

  • High Court of Cassation and Justice (Înalta Curte de Casație și Justiție): The highest court in Romania, it ensures the uniform interpretation and application of the law. It handles cases involving high-ranking officials and appeals from lower courts.

 

  • Courts of Appeal (Curțile de Apel): There are 15 Courts of Appeal in Romania, which handle appeals from lower courts and some serious cases in the first instance.

 

  • County Courts (Tribunalele): These courts are present in each of Romania's 41 counties and the municipality of Bucharest. They handle more serious civil and criminal cases, as well as appeals from local courts.

 

  • Local Courts (Judecătoriile): These courts handle the majority of civil and criminal cases at the first instance level.

 

3. The Constitutional Court. The Constitutional Court of Romania is a distinct entity tasked with ensuring that laws and governmental actions comply with the Constitution. It has the power to: review the constitutionality of laws and government decrees; resolve jurisdictional disputes between public authorities; ensure the protection of fundamental rights and freedoms as outlined in the Constitution.

 

4. The Public Ministry. The Public Ministry, headed by the Prosecutor General, is responsible for upholding the rule of law and ensuring justice in criminal matters. It oversees the prosecution of criminal cases and represents the state in legal proceedings. The Public Ministry includes: the General Prosecutor's Office: Handles cases of national significance and Prosecutors' Offices attached to Courts of Appeal, County Courts, and Local Courts: These offices conduct criminal investigations and prosecutions at various levels.

 

5. The Legal Profession. The legal profession in Romania includes judges, prosecutors, lawyers, and notaries, each playing a vital role in the legal system:

 

  • Judges: Appointed based on merit, judges are responsible for adjudicating cases impartially and upholding the law.

 

  • Prosecutors: Part of the Public Ministry, they conduct criminal investigations and prosecute offenders.

 

  • Lawyers: Providing legal representation and advice, lawyers must be members of the Romanian Bar Association.

 

  • Notaries: Authorized to authenticate legal documents and transactions, ensuring their legality and validity.

 

Key Legal Principles of the Romanian Law System

 

Romania's legal system is governed by several core principles:

 

  • Rule of Law: The principle that all individuals and institutions are subject to and accountable under the law. The rule of law refers to the principle that all individuals and institutions, including the government, are subject to and accountable under the law. It ensures that laws are clear, applied uniformly, and enforced impartially. In Romania, the rule of law is enshrined in the Constitution and forms the basis for a fair and just society. The rule of law is fundamental to democracy, governance, and the protection of rights in Romania. By upholding the principles of legality, impartiality, and accountability, Romania fosters a fair and just society where laws are respected, and justice is accessible to all. As Romania continues its journey towards strengthening the rule of law, stakeholders across sectors play a crucial role in promoting transparency, combating corruption, and ensuring that legal frameworks support democratic governance and economic growth. For businesses, citizens, and legal professionals alike, understanding and supporting the rule of law in Romania is essential for fostering trust, stability, and sustainable development in a dynamic European context.

 

  • Separation of Powers: The division of government responsibilities into distinct branches to prevent any one branch from exercising the core functions of another. The principle of separation of powers is fundamental to democratic governance, ensuring checks and balances among different branches of government. In Romania, the separation of powers is enshrined in the Constitution and plays a crucial role in upholding the rule of law and safeguarding democratic principles. The separation of powers is a cornerstone of democratic governance in Romania, ensuring accountability, protecting rights, and promoting effective governance. By upholding the principles of independence, checks, and balances, Romania fosters a fair and just society where laws are respected, and the interests of the people are prioritized.

 

  • Judicial Independence: The judiciary operates independently from the other branches of government, ensuring fair and impartial justice. Understanding judicial independence in Romania is crucial for ensuring fair and impartial justice within its legal system. As a democratic nation and member of the European Union, Romania upholds the principle of judicial independence to safeguard the rule of law and protect fundamental rights. Judicial independence refers to the principle that the judiciary should be free from undue influence or interference from other branches of government, political entities, or private interests. It ensures that judges can adjudicate cases impartially, based on the law and facts presented, without fear of reprisal or external pressure.

 

Recent Legal Developments of the Romanian law

 

Romania's legal system continues to evolve, with ongoing reforms aimed at improving efficiency, transparency, and alignment with EU standards. Recent developments include efforts to enhance the independence of the judiciary, combat corruption, and streamline administrative procedures.

 

  • Judicial Independence and Anti-Corruption Measures. Efforts to enhance the independence of the judiciary and combat corruption are ongoing. These reforms aim to strengthen the rule of law and ensure fair and impartial judicial proceedings.

 

  • Digital Transformation. Romania is embracing digital transformation in its legal system, with initiatives to streamline administrative procedures and improve access to legal services through digital platforms.

 

  • Environmental Legislation. In response to growing environmental concerns, Romania has introduced new regulations and policies aimed at promoting sustainable development and environmental protection.

 

Practical Tips for Navigating Romanian Law and Legal System

 

Seek Professional Legal Advice. Given the complexities of Romanian law, it is advisable to seek professional legal advice when dealing with legal matters. Local legal experts can provide invaluable insights and guidance.

 

Stay Informed About Legal Changes. Romania's legal landscape is dynamic, with frequent updates and changes. Staying informed about legal developments is crucial for ensuring compliance and making informed decisions.

 

Understand Cultural and Legal Nuances. Understanding the cultural and legal nuances of Romania can help in navigating legal matters more effectively. Building strong relationships with local partners and stakeholders can also be beneficial.

 

Business Structures in Romania legal system

 

For businesses, comprehending the legal structures available is crucial. Here's a look at the most common ones: Sole Proprietorship (PFA), Limited Liability Company (SRL), Joint Stock Company (SA) and Branch Office.

 

1. Sole Proprietorship (PFA): The simplest option, suitable for small businesses. Understanding the concept of sole proprietorship in Romania is crucial for entrepreneurs and small business owners looking to establish a business entity. As a form of business ownership, sole proprietorship offers simplicity and flexibility, but it also comes with specific legal and financial considerations.

 

Sole proprietorship, known as "Persoană Fizică Autorizată" (PFA) in Romanian, is a business structure where an individual (the sole proprietor) operates and manages the business as an extension of themselves. The business and the owner are considered one entity for legal and tax purposes, distinguishing it from other forms of business entities like partnerships or corporations.

 

Sole proprietorship in Romania offers entrepreneurs a straightforward path to start and manage their own business ventures. While it provides flexibility and autonomy, it also requires careful consideration of legal, financial, and operational aspects. By understanding the registration process, legal obligations, and practical implications, aspiring business owners can make informed decisions and navigate the complexities of entrepreneurship effectively.

 

Whether you are launching a new venture or expanding an existing business, sole proprietorship in Romania can be a viable option to pursue your entrepreneurial goals. By leveraging its advantages and mitigating potential challenges, entrepreneurs can establish a solid foundation for growth and success in the dynamic Romanian market.

 

2. Limited Liability Company (LLC): The most popular choice, offering limited liability protection for owners. Establishing a Limited Liability Company (Societate cu Răspundere Limitată, SRL) in Romania offers entrepreneurs a robust business structure with legal protections and operational flexibility. As one of the most common forms of business entities in Romania, an SRL combines advantages of limited liability and operational autonomy.

 

A Limited Liability Company (SRL) in Romania is a legal entity where the liability of shareholders is limited to their contributions to the company's capital. This business structure is favored by entrepreneurs for its flexibility, simplified governance, and protection of personal assets against business liabilities.

 

For more info regarding the limited liability company in Romania, please check our web article: https://roadvocacy.ro/limited-liability-company-romania

 

3. Joint Stock Company: Ideal for larger businesses seeking capital through public offerings. Establishing a Joint Stock Company (Societate pe Acțiuni, SA) in Romania offers entrepreneurs and investors a versatile business structure with distinct advantages and legal protections. As a widely recognized corporate form, SA provides opportunities for raising capital, facilitating growth, and operating at scale.

 

A Joint Stock Company (SA) in Romania is a corporate entity where ownership is represented by shares traded on the stock market. It is characterized by its ability to raise capital from shareholders through the sale of shares and its separation of ownership and management. SAs are suitable for large-scale enterprises seeking access to diverse sources of funding and operational flexibility.

 

​​4. Branch Office: A legal extension of a foreign company operating in Romania. Setting up a branch office in Romania offers foreign companies a strategic gateway into the European market, leveraging the country's favorable business environment and strategic location. 

 

A branch office is an extension of a foreign company that operates in Romania while remaining under the control and ownership of the parent company. Unlike a subsidiary, a branch office does not have a separate legal identity from its parent company but conducts business activities locally on its behalf.

 

Conclusion: Navigating Romania law for success

 

Navigating the legal landscape in Romania requires a thorough understanding of the country's legal framework, key legal considerations, and recent developments. Whether you are a business owner, legal professional, or individual dealing with legal matters in Romania, staying informed about Romanian law is essential for ensuring compliance and achieving favorable outcomes. As Romania continues to integrate with the European Union, its legal system will likely experience further transformations, making it crucial to stay updated on legal changes and developments.

 

By understanding the complexities of Romanian law and taking proactive steps to navigate the legal landscape, you can successfully manage legal challenges and seize opportunities in this dynamic and evolving country.

 

For any of your need regarding the Romania legal system or the Romanian law, feel free to get in touch with our english speaking attorneys at sorina@roadvocacy.ro (+40 744 65 09 50) or tudor@roadvocacy.ro (+40 723 77 37 59) or using the contact form on at www.roadvocacy.ro.

 

 

The blog of the Romanian lawyer

 

 

 

The Lawyer's corner is nothing else but a legal blog dedicated only for entrepreneurs and investors in Romania 

 

Weekly usefull posts about the investors' first steps in Romania, from the perspective of practicing business law, servicing our clients' needs and litigation, written and published by a Romanian litigation lawyer with over 15 years experience

 

 

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