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Temporary injunctions in industrial property disputes are regulated in Slovene law by the Industrial Property Act (ZIL-1). Industrial property disputes include disputes relating to infringement and validity of patents, marks, and designs, but not copyright disputes, which are regulated separately. For issues that are not specially regulated in the sectoral law, general provisions on enforcement and securing of civil claims apply.

Conditions for Issuing

The owner of a right who requests a temporary injunction against an infringer must prove with a degree of probability (1) that he is the owner of the right, which also includes a proof on the validity of the right, and (2) that his right was infringed or that there is an actual risk of infringement.

Moreover, with a degree of probability the owner of a right must prove either (3a) a risk that enforcement of claims will be rendered impossible or rather difficult, or (3b) that damage difficult to repair will be incurred, or (3c) that the alleged infringer will not incur more severe unfavorable consequences due to the issuance of a temporary injunction than the consequences that the owner of a right would incur without the issuance, or (3d) that the alleged infringer will only incur insignificant damage if a temporary injunction is issued. Subsection (3a) is considered satisfied if claims are to be enforced outside the European Union.

Special Attention Should Be Drawn to Two Additional Statutory Conditions in Disputes Relating to Infringement of Patents. 

The owner of a patent must furnish a motion for issuance of a temporary injunction with a declaratory decision of the Slovenian Intellectual Property Office (SIPO), which proves that the patented invention has undergone a substantial examination (for instance a Slovene translation of an European Patent for the same invention). In fact, when granting a Slovenian patent, SIPO does not perform the substantive examination of novelty, inventive step, and industrial applicability of the invention.

Furthermore, the owner of a patent must file the motion within three months from the day he was informed of the alleged infringement. In practice this condition can raise difficulties, as the owner of a patent is required to act rapidly to avoid disputes as to when he is deemed to have been informed of the alleged infringement (for instance at the moment when a warning letter requiring further explanation was sent to the alleged infringer, or only after possible further explanation has been received, etc.). According to case law, the three-month term cannot start before a declaratory decision of SIPO is served on the owner of a patent.

The courts have lately often dealt with weighing unfavorable consequences for the owner of a right and the alleged infringer (subsection 3c above). In a recent decision the Higher Court of Ljubljana explained that the scope of business operations cannot be a relevant criterion in weighing unfavourable consequences (the owner of a mark was a multinational company, whereas the alleged infringer was a small restaurant). Yet in another decision it stated that it is not sufficient for the alleged infringer to refer to inability to subsequently prove the extent of damages; he should rather prove concrete circumstances, such as the higher scope of damage due to a higher turnover of a disputable medicine compared to the owner of a patent, or that the disputable medicine represents a decisive share in total business operations of the alleged infringer.

Claims

In his motion for issuance of a temporary injunction, the owner of a right may especially request that the court (1) prohibit the infringement and future infringements, and (2) order that the objects of infringement and/or the means that are exclusively or predominantly intended or used for infringement be seized, excluded from sales, and stored.

Also other claims by which the purpose of temporary injunction can be reached may be requested by the owner of a right. According to case law, however, a temporary injunction cannot compel the destruction of objects of infringement or infringement means, as the consequences of such a temporary injunction could not be remedied in case the claims are later rejected.

It is worth mentioning that a motion for issuance of a temporary injunction can include a claim for a fine when the alleged infringer fails to meet his obligations within a stipulated term, although the payment can only be requested for the benefit of the state budget and not for the benefit of the owner of a right.

Procedure for Issuing

As a rule, the District Court of Ljubljana – as the exclusive competent court — decides on issuing a temporary injunction only after it has served a motion for its issuance to the alleged infringer and the infringer has had an opportunity to react to it. If the owner of a right requests that a temporary injunction be issued without having previously notified the alleged infringer, he must further prove probable that any delay whatsoever in issuing a temporary injunction would result in damage difficult to repair.

In practice, one has to take into account that a procedure of issuing a temporary injunction at the District Court of Ljubljana can take several months, at least in more demanding cases. Once it is issued, the alleged infringer may file an objection with the same court, and if he fails, he may file an appeal with the Higher Court of Ljubljana. 

Although the law does not explicitly exclude any means of evidence, applicable case law emphasizes that appointment of an independent court expert will only be possible in exceptional circumstances. On the other hand, particularly in more technically demanding (mostly patent) disputes, judges (who are lawyers without any technical background) will often decide on the basis of expert opinions that can be submitted by the parties.

Conclusion

In the past years we have seen progress towards a more benevolent attitude of the courts towards the owners of rights (which is evident for instance from the above-mentioned viewpoints of the Higher Court of Ljubljana), yet temporary injunctions against alleged infringers are still not easily obtainable in Slovenia. The courts adhere to a relatively restrictive interpretation of statutory conditions referring especially to a key decision of the Constitutional Court of the Republic of Slovenia from 1998 which stipulated strict limitations for issuance of regulatory temporary injunctions.

By Luka Grasselli, Senior Associate, Odvetniki Selih & Partnerji

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

With its landmark Decision No. 4658/2012, the First Instance Court of Athens called on Greek telecommunication companies to impose technological measures in order to block access to certain IP addresses which contain unauthorized content. For the first time in Greece, Internet Service Providers (ISPs) were ordered by a court to intervene and take measures against unauthorized online copyright activities. Decision No. 4658/2012 constitutes a well-reasoned and important judicial precedent for similar cases of copyright infringement taking place through the Internet.

The local (Greek) Collective Management Organizations of the copyright holders and the holders of related rights, acting jointly, filed for injunctions before the One-Member First Instance Court of Athens against all Greek telecommunication companies, seeking to block access to the  websites by Internet users.

The Court ruled that converting a copyrighted work to digital form, uploading it, and making it available through a URL were clearly infringing activities which prejudiced the rights of the copyright holders. By simply accessing the sites, Internet users were able to download and view the particular copyrighted works. It was the Court’s view that the mere possibility that Internet users could download the works (regardless of whether they  actually viewed the unauthorized content or not) was sufficient to call for copyright protection.  

It was the first time a Greek court had implemented the legal provisions of Article 64 A of Copyright Law, which transposes Article 8 par. 3 of Directive 2001/29 into Greek Law, and provides that injunctions may be applied against intermediaries whose services are used by a third party for illegal activities. According to the ruling of the Court, ISPs clearly fall within the meaning of “intermediaries” since they provide the necessary means to third parties for committing copyright infringement and therefore an injunction may, in principle, be granted against them. 

The Court held that imposing restrictions to specific webpages does not contradict a constitutional right of freedom. It was particularly taken into account that the blocking of Internet access in the case before it was not general, but applied only to specific websites and infringing actions. Therefore, the imposition of technological measures against the ISPs was regarded as necessary to minimize the negative effect for the persons affected, and proportional, as the benefit would be greater than the damage caused.

The technical experts’ report provided by the applicants referred to two basic techniques of blocking access to the specific websites: (1) Internet-Protocol and/or domain-name-level access blocking; and (2) DNS-level access blocking. The use of these  techniques, in combination, was regarded by the Court as an appropriate and effective technical measure which is easily achievable and has no adverse effects on the functioning of the Internet in general and the quality of the services provided to Internet users

According to the Court’s decision, specific blocking measures imposed on ISPs, following the issuance of a judicial decision as required by Greek law, are not in principle disproportionate to nor incompatible with fundamental rights such as a person’s right to participate in the information society. 

The position of ISPs in the operation of the Internet in general is crucial since they secure and provide access for Internet users to the entire online environment. Whether such access should be restricted or not, and under which exact circumstances, is a matter that must be examined by the judicial authorities always in concreto. It is left to the courts to achieve, in each and every case, an appropriate balance between the fundamental rights of the opposing parties. However the Court of First Instance of Athens, with its decision, created a significant judicial precedent in favor of  copyright and related rights’ protection.

Greek copyright law provides a very severe and pro-copyright legal framework, according to which unauthorized copying, reproduction, and exploitation by any means or form, wholly or partially, of an original intellectual property work constitutes a civil and criminal offense, punishable with imprisonment of one to ten years and pecuniary penalty of EUR 3,000-60,000.

By Irini Daroussou, Partner, A.&K. Metaxopoulos and Partners Law Firm

By Tamara Bubalo, Associate, Karanovic/Nikolic

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Many elements of a modern law practice would be completely foreign to practitioners from past eras. Fax machines have come and gone, as have pagers, typewriters, and other tools at one time considered first revolutionary, then indispensable. In that context, trying to predict which particular elements of a modern practice are truly permanent is fool-hardy. But it is difficult, to say the least, to imagine a successful law firm operating without a website anytime soon.

Law firms wanting to present themselves as sophisticated and confident players need to have an attractive site that identifies them as such to the world. Firms should be confident enough to identify the members of their team on their website, and aware enough of the importance of modern marketing principles to make articles and other forms of thought-leadership available. These sites should be simple and attractive, without sacrificing content and detail. Needless to say … some respond to this challenge better than others.

At CEE Legal Matters, we know something about putting together an attractive, popular, and  informative website. Thus, in a spirit of admiration and approval for a job well done, we’re going to review the websites of leading regional Corporate/M&A law firms (excluding those firms whose websites have a similar design to those of international firms they are affiliated with) to determine which, in our opinion, is the best in each of the 24 markets we cover, and which therefore qualifies as a CEE Legal Matters Top Site. For this first issue, we reviewed sites in Turkey and Ukraine.

First, each firm’s website will be checked for four “objective” elements that we believe every law firm that is successful, respected, and both fully confident in its business model and fully prepared to serve foreign and English-speaking clients should have: Professional and polished English, sufficient for an international clientele (4 points); Full identification of all lawyers in the firm, from junior associates up to partners (4 points); Contact details provided for all partners in the firm (5 points); Articles and other forms of thought-leadership (3 points). Second, the editors of CEE Legal Matters will evaluate each website and award between 0-5 points on the following: User friendliness; Content; Detail; “Je Ne Sai Quoi” (a catch-all category to capture unquantifiable over-all effect). Finally, all three scores will be combined into a grand total out of the maximum 56 points.

TopSite Award – Turkey

 

The best website of those reviewed in Turkey was that of Cakmak Attorneys at Law, which scored an impressive 51 points – including maxing out at 16 points on the objective criteria (a distinction shared in Turkey by only Kolcuoglu & Demirkan and ELIG). The Cakmak website remains simple and clear without sacrificing any necessary information, and has an impressively collection of articles and other forms of thought-leadership available for viewing. The firm also demonstrated its confidence both in the abilities and loyalty of its lawyers (itself a strong demonstration of the firm’s confidence in its brand) by providing contact details for the entire team, including associates. While containing few bells and whistles, the site is essentially flawless.

Partner Zeynep Cakmak said she was “delighted to learn” of the award, and she made a point of acknowledging the significant contribution of Jeremy Steel of Visual Communications Design, who did the actual designing. Cakmak explained that, with Steel, the firm had aimed “for a simple, user-friendly website which at the same time gives strong messages to the outside world about who we are and what we do as a law firm that has a long-standing and reputable history in Turkey.” She concluded, simply, that “I believe we have reached our goal.” We at CEE Legal Matters agree.

 

Second place in Turkey – and first place among the firms in Istanbul – was the website of Kolcuoglu & Demirkan, which received 48 points. K&D’s website also received the maximum possible number of “objective” points. It also combines simplicity of design and detailed contents (including substantial thought-leadership and contact details for its entire team) in an attractive and easy to use combination. Separate contact details were provided not only for all associates, but even for separate back office functions – one of the only websites we saw that provided this useful information.

Gunes Ergun, the new General Manager at Kolcuoglu & Demirkan, explained that the firm’s decision to identify its entire team on the website represents an acknowledgement of the contributions each and every member makes to the firm’s success, as, “they are the faces of our values and the owners of all our achievements.” And although Ergun conceded that the colors on the firm’s website “are quite sober,” she explained that “they also give a hint about the way we offer our services to our clients; we do our best to provide the most valuable legal advice to our clients while keeping our reasoning solid and transparent.”

The firm has plans to make the website even stronger soon. Ergun says that, “among our plans is to add an HR page, where applications can be submitted in a more standard form, making things easier for both applicants and our HR team.”

TopSite Award – Ukraine

 

The CEE Legal Matters review of the top-ranked M&A websites in Ukraine resulted in a solid victory for Vasil Kisil & Partners, with 50 points. 

The Vasil Kisil & Partners website serves as a superior example of how to direct viewers to information about specific practices and experts, as the site’s search function allows visitors to view lawyers either by practice area (with names, seniority, and contact details provided for each member of the group, from junior associates up to partner), or by role. Recent deals and accomplishments are broken down by sector and practice as well, and a large number of publications and newsletters are available on the website. 

Yuliia Chervonooka, VKP’s Public Relations Director, expressed appreciation at the recognition. She explained that the site was launched last year, and that the firm’s objective in creating it was to provide clients “with valuable content such as recent trends, legislative and regulatory changes that can affect their business as well as to make it as user-friendly as possible.” And she pointed out that, “high interest in the new web-site is demonstrated, in particular, by a 40% increase in a number of unique users visiting the English version (according to Google Analytics).”

 

Sayenko Kharenko’s website came in second of those reviewed in Ukraine with 47 points, and though it does not identify the firm’s associates – the only of the four websites featured in this issue to lack one of the “objective” criteria – the site was is extremely strong in all other ways.  Of particular mention are the site’s identification of experts both by practice area and by sector, its detailed summary of recent deals, and its unique “about us” option that presents information in colorful and compelling ways and invites visitors to participate in a survey. If Sayenko Kharenko’s website were to identify the firm’s associates – let alone include their contact details – it would be truly exceptional.

Iryna Khymchak, Head of Sayenko Kharenko’s Marketing and BD Department, commented that “we aimed to create a website that will actually engage a visitor, holding his/her attention and, ultimately, inspiring that person to contact the firm.” She stated that the firm “believes that a web-site is a powerful online communication tool, and we want to always talk back to our visitors, that is to make sure that our web-site is at all times new and relevant.”

Interview with Cigdem Dayan, the Chief Legal Counsel at ING Bank Turkey.

   

Cigdem Dayan

 CEELM: You started your career at Yapi ve Kredi. How did you get to ING?

CD: I started with Yapi ve Kredi in 1990, June, as a lawyer. And step by step I moved higher. And lastly I worked for Yapi Kredi as a Senior Vice President, and 2006, February, I transferred to Oyak Bank as an Executive Vice President. ING bought Oyak Bank shares, and one year later, the name was changed.

 CEELM: Why did you move to Oyak Bank?

CD: Koc Group bought Yapi Kredi and the structure was not clear. And the job that Oyak Bank offered me seemed a better opportunity for me.  

 CEELM: You never worked in a law firm. Some people think that working in law firms provides a basic level of training and exposure to a wide range of work, and that is useful for training and experience and development. Do you regret not having that experience, or was it not so important for you?

CD: I didn’t prefer it, because in 1990, Yapi Kredi was like a school. I learned lots of things at Yapi Kredi. I had the chance to see different cases, and it is a big bank, so …

 CEELM: Was it a big legal team?

CD: Yes. Working in a big bank gave me an opportunity to see interesting and different cases, and I gained a lot of experience.

 CEELM: So in some ways it was like a law firm – you got to learn a lot of different things?

CD: Yes. It was like a big law firm.

 CEELM: Does that mean that coming out of university you knew you wanted to work in banks?  That’s all you’ve done.  Did you know you wanted your career to be as a banking lawyer?

CD: When I went to university I thought I would stay in academia.  My professor wanted to work with me.  But I waited a long time for an open position.  Nearly one year I waited. At that point I thought, “maybe I’ll try to work outside,” and I applied to banks. Yapi Kredi called me, and I accepted their offer, and six months later a position opened at the university, and my professor called me – but I said “no, I like it here. I prefer to work with the bank.” [laughs].

 CEELM: So you didn’t think, “I’m going to be doing this for the next 20 years of my life”? You liked it, and …

CD: First I thought, “maybe five years will be enough for me.” [Laughs]. “Five years later I’ll move.”  But I couldn’t do it.

 CEELM: You’re still here.

CD: Yes, I couldn’t do it. Because I  do like it.

 CEELM: That’s my next question. How would you describe what you do?  I know you’re the Chief Legal Counsel.  But what do you do? What is your role in the bank, in your own mind?

CD: I and my colleagues are interested in all cases, all law suits all litigation against the bank or by the bank and legal follow-up, labor law, and consultancy, and all branches and the head office.  So we are interested in all of the bank’s legal issues. Of course sometimes we take a … oh, how can I explain … for instance, the Capital Markets Board is a very special area, and Competition Law is a very special area, and we have a consultant – an outside consultant to help with those matters.   

 CEELM: I want to ask a few questions about how you work with outside lawyers. How do you decide what work you keep inside the bank and what work you give to external counsel? When do you give work to external counsel?

CD: Two reasons. One is, if the subject is “specific” and requires a different expertise – for instance, as I mentioned before, matters involving the Capital Markets Board or Competition Law. These are very specialized areas, and Intellectual Property law is another one. We have external counsels to assist us on these subjects. Also for enforcement of non-performing loans, we work with outside law firms. Not counsel. Law firms. Not only in Istanbul. In different cities.

 CEELM: You have law firms in these cities you work with?

CD: Yes, local law firms. We prefer to work with local law firms.

 CEELM: Do you select the firms that you work with yourself?

CD: My colleagues – some of my colleagues – go to different cities in all over Turkey, to check the law offices we engage with, their office space, their equipment, how many people work with them.

 CEELM: These are some of your colleagues?

CD: Yes, I have an investigative team.

 CEELM: Really? That investigates the law firms?

CD: Yes. After we start to work with an external lawyer, for instance one year later, my colleagues make a visit plan. 

Interview with Cigdem Dayan, the Chief Legal Counsel at ING Bank Turkey.

   

Cigdem Dayan

 CEELM: You started your career at Yapi ve Kredi. How did you get to ING?

CD: I started with Yapi ve Kredi in 1990, June, as a lawyer. And step by step I moved higher. And lastly I worked for Yapi Kredi as a Senior Vice President, and 2006, February, I transferred to Oyak Bank as an Executive Vice President. ING bought Oyak Bank shares, and one year later, the name was changed.

 CEELM: Why did you move to Oyak Bank?

CD: Koc Group bought Yapi Kredi and the structure was not clear. And the job that Oyak Bank offered me seemed a better opportunity for me.  

 CEELM: You never worked in a law firm. Some people think that working in law firms provides a basic level of training and exposure to a wide range of work, and that is useful for training and experience and development. Do you regret not having that experience, or was it not so important for you?

CD: I didn’t prefer it, because in 1990, Yapi Kredi was like a school. I learned lots of things at Yapi Kredi. I had the chance to see different cases, and it is a big bank, so …

 CEELM: Was it a big legal team?

CD: Yes. Working in a big bank gave me an opportunity to see interesting and different cases, and I gained a lot of experience.

 CEELM: So in some ways it was like a law firm – you got to learn a lot of different things?

CD: Yes. It was like a big law firm.

 CEELM: Does that mean that coming out of university you knew you wanted to work in banks?  That’s all you’ve done.  Did you know you wanted your career to be as a banking lawyer?

CD: When I went to university I thought I would stay in academia.  My professor wanted to work with me.  But I waited a long time for an open position.  Nearly one year I waited. At that point I thought, “maybe I’ll try to work outside,” and I applied to banks. Yapi Kredi called me, and I accepted their offer, and six months later a position opened at the university, and my professor called me – but I said “no, I like it here. I prefer to work with the bank.” [laughs].

 CEELM: So you didn’t think, “I’m going to be doing this for the next 20 years of my life”? You liked it, and …

CD: First I thought, “maybe five years will be enough for me.” [Laughs]. “Five years later I’ll move.”  But I couldn’t do it.

 CEELM: You’re still here.

CD: Yes, I couldn’t do it. Because I  do like it.

 CEELM: That’s my next question. How would you describe what you do?  I know you’re the Chief Legal Counsel.  But what do you do? What is your role in the bank, in your own mind?

CD: I and my colleagues are interested in all cases, all law suits all litigation against the bank or by the bank and legal follow-up, labor law, and consultancy, and all branches and the head office.  So we are interested in all of the bank’s legal issues. Of course sometimes we take a … oh, how can I explain … for instance, the Capital Markets Board is a very special area, and Competition Law is a very special area, and we have a consultant – an outside consultant to help with those matters.   

 CEELM: I want to ask a few questions about how you work with outside lawyers. How do you decide what work you keep inside the bank and what work you give to external counsel? When do you give work to external counsel?

CD: Two reasons. One is, if the subject is “specific” and requires a different expertise – for instance, as I mentioned before, matters involving the Capital Markets Board or Competition Law. These are very specialized areas, and Intellectual Property law is another one. We have external counsels to assist us on these subjects. Also for enforcement of non-performing loans, we work with outside law firms. Not counsel. Law firms. Not only in Istanbul. In different cities.

 CEELM: You have law firms in these cities you work with?

CD: Yes, local law firms. We prefer to work with local law firms.

 CEELM: Do you select the firms that you work with yourself?

CD: My colleagues – some of my colleagues – go to different cities in all over Turkey, to check the law offices we engage with, their office space, their equipment, how many people work with them.

 CEELM: These are some of your colleagues?

CD: Yes, I have an investigative team.

 CEELM: Really? That investigates the law firms?

CD: Yes. After we start to work with an external lawyer, for instance one year later, my colleagues make a visit plan. 

Political stability within a market has always been at the top of the list of investor criteria. But after three months of turmoil, public protest, and sporadic violence, Ukraine’s political system is anything but calm. CEE Legal Matters reached out to Ukrainian practitioners to see how they expect the upheaval to affect their M&A practices in 2014.

Business as Usual?

According to Denis Lysenko, Partner and Head of the M&A Practice at Vasil Kisil & Partners, the last quarter of 2013 had the market buzzing over the expected signing of Ukraine’s association agreement with the EU, which was generating “substantial interest in both investments towards Ukraine and of domestic companies towards outside the country”.  As the world knows, that plan was dropped unexpectedly, catching even the political and economical elite by surprise, and triggering the popular backlash that the media has been covering for the last few months. 

 

Mykola Stetsenko, Managing Partner, Avellum Partners

Despite the sudden change, the month of December did not necessarily worry M&A lawyers in the country. “Until probably December the political turbulence meant business as usual in Ukraine. Political life here has never been boring, so people were accustomed to it. Granted, it was not helping much to make the country look more attractive but to some extent, businesses were not affected and it was not the key issue that investors were taking into account at the time”, states Taras Dumych, Kiev’s Office Managing Partner at Wolf Theiss. 

At the same time, Vladimir Sayenko, Partner at Sayenko Kharenko, emphasizes that the situation on the ground is not really as violent as portrayed in the media. Yes, there are protests in parts of the city but “walk for 5 minutes away from it and you will find yourself in a serene environment where children are happily playing outside.”

 

Maria Orlyk, Local Partner in Ukraine’s, CMS Reich-Rohrwig Hainz

Even taking the fish-eyed lens of the media and a not-uncommon element of political upheaval into account, however, the consensus seems to be that in January, real signs for concern appeared. The Prime Minister resigned on January 28, uncertainty with regards to the state budget and public financing for the year became apparent, and the national currency underwent a considerable drop in value. As this point most people agree that 2014 is likely to be an extremely challenging one for the M&A market in the country.

The Invisible Hand at Work

“Aggravating political instability is obviously influencing business and the investment climate in general”, explains Sayenko. He goes on to say that “we can already see that unstable Ukraine has become a lot less attractive to foreign investors. Even excessive regulatory pressures on business which we saw in the past years were a lighter investment constrain than political instability.” 

 

Margarita Karpenko, Managing Partner Ukraine, DLA Piper

According to Margarita Karpenko, DLA Piper’s Office Managing Partner in Kiev, the uncertainty in the market has resulted in potential investors either suspending transactions or revisiting the commercial terms of existing deals to accommodate for the increased risk. At the same time, the market is witnessing more and more businesses trying to pull out. 

However, the current political and social turmoil makes even withdrawal difficult Mykola Stetsenko, the Managing Partner at Avellum Partners, points to instances such as Raiffesen Bank having a hard time identifying a buyer willing to gamble on the market at the moment. 

In fact, Dumych projects that M&A in the Banking industry will be amongst the hardest hit: “Banking and all the industries where there is a strong element of foreign currency leverage are under greater pressure because investors are concerned about the national currency losing ground, which would mean that capital or long-term debt will be devaluated after the purchase.”

 

Vladimir Sayenko, Partner, Sayenko Kharenko

Another industry that stands to be heavily affected is FMCG. Stetsenko points out that during unstable times “people simply tend to save” meaning that premium FMCG companies will feel the blow. However, Sayenko argues, “it will be the small and mid-sized businesses that will be hit the worst, as they largely depend on short-term consumer behaviour and cannot wait for the country to recover”, especially since many of them target the Russian market and how that relationship will evolve is uncertain.” 

At the end of the day Karpenko makes the point that any deal, irrespective of industry, is driven by commercial considerations that factor in the risk level of the market and, as a result, it is likely that every M&A transaction in Ukraine in the current climate will see investors willing to pay less than before to accommodate the increased risk.

There is Always Some Form of M&A Work 

 

Denis Lysenko, Partner and Head of M&A, Vasil Kisil & Partners

However, now all potential buyers are shying away from the market. For example, Lysenko points to Asian countries that tend to be far less sensitive to political conditions and are showing real interest. He does, however explain that, while politics might play less of a role, they “still look at the macro-economics involved and currency developments meaning they will probably be quite reluctant for a while.” He further explains that certain cash-rich domestic buyers should not be left out of the equation since they are not tied to external financing and thus less susceptible to currency fluctuations. Stetsenko further substantiates this. He expects to see a significant amount of consolidation amongst domestic players as a result of the current instability, especially in agribusiness. 

Maria Orlyk, Local Partner in Ukraine’s CMS Reich-Rohrwig Hainz office, points out that investors from Russia, one of Ukraine’s largest sources of foreign investment, remain enthusiastic about the country. Sayenko agrees. He explains that “As the largest historical partner of Ukraine, Russia is likely to play an important role not only on politics in the country, but also on the business environment” and that “large Russian business groups may also participate actively in M&A activity, buying distressed assets in Ukraine not only when this is economically feasible, but also when the Russian government encourages them to do so for political reasons.”

And investors from countries other than Asia and Russia may be interested as well. Graham Conlon, Global Co-Head of International Private Equity and Head of Corporate and M&A in Ukraine at CMS Cameron McKenna, explains that it really depends on the industry: “While investors are naturally keeping a close eye on the situation and things can move quickly in terms of investor confidence, arge energy companies,  for example,  are quite used to operating in jurisdictions  like Ukraine, and hence have the risk appetite to work through crises such as these.”

 

Taras Dumych, Managing Partner Ukraine, Wolf Theiss

Lastly, even to the extent traditional M&A slows down during and in the months immediately following the current crisis, Ukrainian lawyers expect to see an uptick in other types of work as a result of current conditions. Sayenko sees an opportunity in the larger number of distressed asset sales likely to occur, though these transactions will take place at a fraction of the value they had when those assets were originally purchased, and the question of whom the buyers will be is still unclear. At the same time, Stetsenko, foresees an increase in M&A disputes work as a result of potential buyers trying to revisit prices to accommodate the increased risk and having to resort to challenging along the lines of breach of warranties should the price adjustment formulas in the contract not apply.. Also linked to disputes, Dumych explains that clients are paying “far more attention to force majeure clauses since people understand the chance of these occurring is relatively higher these days.”

What Will 2014 Bring?

 

Graham Conlon, Global Co-Head of PE and Head of Corporate and M&A in Ukraine, CMS Cameron McKenna

As Conlon puts it, “nobody has a crystal ball to tell how well things will progress.”  Sayenko as well, when asked what he advises clients to do in this climate, answers: “as a lawyer, I try not to give political advice.” The general consensus among all the partners we spoke with is that what the market will look like in 2014 depends almost entirely on the political class – one of the most volatile elements in the country at the moment. As a result, when we spoke with Karpenko, she admitted to being particularly unexcited at the prospect of initiating the “almost impossible task” of planning a budget for this year. 

Seen from the outside, Ukraine holds a lot of potential and stands to capitalize on it immensely if it stabilizes. Conlon has a final word. “What Ukraine is currently going through is both exciting and scary at the same time.  Ukraine is the last big emerging market in Europe, and  it has not seen anywhere near the  level of  investment that has flown into other like countries in the past two decades. If this crisis results in something positive therefore, then the potential upside is unfathomable.” 

For every international law firm that decides to make a tactical withdrawal from or a strategic restructuring in CEE, there’s another that decides the time is right to expand their presence in the region. And two American law firms, with two very different models, have recently added CEE experts to their teams and taken significant steps towards expanding their presence and capabilities in Europe’s emerging legal markets.

“I think if you look at our clients in the sectors of financial services and private equity and venture capital, our clients continue to expand their reach globally. Both clients we’ve represented in the UK and US look at that region as a growth region. So for example the insurance and reinsurance industry and the insurance broker industry is very excited about that region and sees Turkey as a natural hub in which to expand services. We know from our private equity and venture capital teams that that is a place that is ripe for inward investment” — Alan Levin, Chairman, Edwards Wildman

   

Alan Levin, Chairman, Edwards Wildman

Edwards Wildman Launches “Hub-and-Spoke” Strategy in CEE

In May of 2012 Edwards Wildman adding long-time CEE expert Ted Cominos to its team. Cominos, whose expertise in and contacts throughout CEE are well-established, helped the firm open an office in Istanbul in September of last year, where it now works in strategic cooperation with the Turkish Ismen/Gunalcin law firm. Edwards Wildman thus became the first American or English firm since White & Case in 1985 (and the first since the 1989 fall of the Iron Curtain) to make its first CEE office in Istanbul, a demonstration of that market’s emergence as a regional hub. 

Cominos brings a long-standing passion for CEE and extensive experience in the region to Edwards Wildman. He was Linklaters’ Head of Private Equity for Central & Eastern Europe and a leader of the firm’s famous CEE “Flying Team” based out of Bucharest in the mid-2000s, and then applied his substantial expertise and contacts for two years with CMS Cameron McKenna before joining the 600+ lawyers working at Edwards Wildman. 

In May of 2012 Edwards Wildman adding long-time CEE expert Ted Cominos to its team. Cominos, whose expertise in and contacts throughout CEE are well-established, helped the firm open an office in Istanbul in September of last year, where it now works in strategic cooperation with the Turkish Ismen/Gunalcin law firm. Edwards Wildman thus became the first American or English firm since White & Case in 1985 (and the first since the 1989 fall of the Iron Curtain) to make its first CEE office in Istanbul, a demonstration of that market’s emergence as a regional hub. 

And the new Istanbul office – the firm’s only on continental Europe – is the firm’s 12th overall, including eight in the United States, plus London, Hong Kong, and Tokyo. Cominos explains that the firm’s strategy is carefully considered. “We’re not going to be a firm that’s going to be in all places globally, but we will choose good strategic centers in which to service our clients globally, and between London and Hong Kong, Istanbul is the most natural center for us to have a presence and to build upon.” And, he notes, the firm is hardly the first to notice the unique positioning and potential of Turkey. “A lot of the multinationals and IFIs have taken the same view that Istanbul is the ideal financial center from which to cover the region from. The IFC’s second office is there, a number of multi-nationals have put their regional headquarters in Istanbul because it’s a great hub to jump from and it’s a growing financial center. A lot of banking and other financial relationships are being headquartered out of Istanbul now.”

   

Ted Cominos, Partner, Edwards Wildman

Edwards Wildman Chairman Alan Levin is confident in the move as well, despite the recent political upheaval in Turkey. “We believe that having established a foothold in Turkey allows us to continue to serve Central Europe, Eastern Europe, the Middle East and Africa out of that area,” Levin declares, and “we are happy we are there.” He’s not unaware of the political turmoil in Turkey at the moment, but he isn’t overly concerned. “We believe there is a difference between what’s going on there politically and the economic reality of a region that’s growing. So we continue to be committed and we continue to commit resources to that region to grow the practice.”

And despite not having offices in other CEE markets, Cominos is emphatic about Edward Wildman’s reach and commitment to serving clients throughout the region. He says, referring to the firm’s Istanbul office, “we’re only a few months into this office but I think over the next six months there’s going to be a big ramp-up on our regional strategy. And we want to make that point clear to everybody. It’s not just a presence in Turkey. We’re not going to compete with just Turkish law firms, we’re going in to have a good hub-and-spoke strategy here, where we can really cover a number of markets on high-end, premium cross-border deals or complex issues and service it well without big investment in other countries.”

And indeed, Cominos is excited about Edwards Wildman’s success in serving clients across the region in the almost two years since he joined the firm, noting that “last year we had deals in Greece, Romanic, Serbia, Bulgaria, Turkey, etc., and this year we’ve already got deals tee’d up in Egypt, Romania, Bulgaria, Serbia, Moldova, Czech Republic, and a smattering of things going on in Africa and the Middle East.”  

He may find himself running into a familiar face in some of those markets – one, like Cominos’, now associated with a new firm.

“It started with a trickle in 2012, it’s building up in 2013, and I expect it will really start to hit the ground in 2014 – there’s been a huge interest from our clients, from investors – Western investors – in developing markets, and specifically Africa and Central and Eastern Europe. And the reason for that is it’s not as competitive a market, there’s still attractive pricing, and with the accession of so many Central and Eastern European countries into the EU, which gives an overlay of legal framework and regulation, there’s a little more comfort with the legalities of the local countries, and yet, you’re still getting enough of the return that it’s an improvement over Western Europe”> — Denise Hamer, Partner, Richards Kibbe & Orbe

Richards, Kibbe & Orbe Extends Reach from London and Vienna

   

Denise Hamer, Partner, Richards Kibbe & Orbe

Whereas Edwards Wildman has over 600 lawyers working in 12 offices around the world and can trace its pedigree back to the 19th century, Richards Kibbe & Orbe has 90 lawyers working in 3 offices and is approximately 20 years old. But the ability to see and respond to opportunity is not solely a function of size, and RK&O is confident the time is right to expand its reach into CEE as well.

In January 2014 Partner Denise Hamer joined RKO, thus giving that firm a well-established CEE expert of its own as it expands its distressed debt and secondary loan market expertise further east. Hamer herself specializes in finance, distressed debt, financial restructuring, and special situations, with a particular focus on developing markets. She has more than two decades of practice in the region, and before joining RK&O she worked in Societe Generale, Citigroup, and BAWAG. Most recently she was with regional powerhouse Schoenherr in Austria.

Though Hamer will officially be based out of RK&O’s London office, she will also be using Austria as a second base to manage her CEE practice. 

Richards Kibbe & Orbe founding Partner Jon Kibbe is excited about having a lawyer with Hamer’s experience and skill leading their practice in emerging markets. According to Kibbe, “we had worked with Denise obviously when she was at Citigroup and at Bawag, we knew her well, and she is the ideal candidate not only to grow the existing Western European business, but to expand our restructuring and insolvency practices and know-how to CEE.”

And Hamer’s knowledge of and passion for the opportunities in CEE was immediately obvious to Kibbe. “The thing that was exciting to us about Denise was her investment thesis on CEE.” he says. “It’s where her heart is.” He laughs that, “when I first met her I said ‘if I had a million dollars and I was a hedge fund, where would you tell me to put that money?’ She just smiled and rolled up her sleeves and said: ‘One word: Slovenia!’”  Kibbe was impressed. “I did not expect that answer … and it is the answer that makes an awful lot of sense if you understand our desire to be in markets that are emerging and where legal expertise counts, and that is very attractive to many of our clients who want to be off the beaten path a little bit, in to partner with a law firm that sourcing new opportunities, ideas, and themes.”

For her part, Hamer believes Central Europe’s time in the spotlight is now. “We recognize that our clients are chasing yield, and reward is correlated to risk, and therefore, the higher risk regions offer the greatest opportunities for return. So there is definitely, and has been since around 2009 a focus of US investors on Europe, and most recently, since around 2011 and 2012 and 2013, there has been a focus of people investing in Europe on Central and Eastern Europe. And so being very prescient and seeing this, Richards Kibbe have recognized that there is a great opportunity for us as well to support our clients, and we should follow them to Europe, and with my hire, we’re following them even beyond London. 

   

Jon Kibbe, Partner, Richards Kibbe & Orbe

We’re following them into Central and Eastern Europe. And in some cases leading them, to be honest. Because once they get comfortable with the entire risk profile, or at least they identify the risk profile, they’re comfortable to make investments there.”

Hamer doesn’t think RK&O’s smaller footprint in Europe is going to be a problem. For one thing, Hamer has an extensive network of local firms she’ll be working closely with throughout the region, and decades of experience working in an international role – she jokes that: “I’ve lived on planes my whole life, and you’d be surprised what great Christmas gifts you can get at Duty Free.” And she’s confident about her ability to serve as a conduit for RKO’s “very deep well of knowledge about what our western clients’ goals and objectives are, what their economics are, what sort of investments they’re looking at, what sort of returns they hope to achieve.” In any event, Hamer is excited about the flexibility RKO’s model provides her. “I’m really not keen to establish a huge team, because I think that lean-and-mean is the way to go now. Our clients want it, and we want it.”

Hamer has hit the ground running, and she helped prepare and organize a February “teach-in” in the firm’s New York office on distressed investing in CEE, featuring experts in the shipping, mining and Central and Eastern European real estate markets. And Kibbe explains that the firm’s clients have already taken notice of their increased capability. He says that “a number of hedge fund client have raised their hands and said ‘Eastern Europe is going to be interesting.’ We are hoping it is a solid trend … it makes a lot of sense for us.”

Of course, talk to ten different law firms, with ten different client bases, ten different internal structures, and ten different philosophies, will get you – at least – ten different strategies for how best to serve clients around the world, and  – at least – ten different opinions about where best to allocate resources.  But as far as Hamer is concerned, the developing markets of CEE are where the action is. “I’m kind of a contrarian,” she says, and “my whole perception of the world is contrarian. And where other people see risk, I see opportunity. And the issue is not to be afraid of the risk. It’s simply to identify the risk. And to optimize the deal in spite of the risk.”

The international Eversheds Law Firm has published its third in a series of reports focusing on the future of the global legal market. Titled “21st Century Law Firm: Inheriting a New World”, the new report looks specifically at what the next generation of lawyers wants from their future careers and from their employers, and how they see the profession ten years from now.

   

Krzysztof Wierzbowski, Managing Partner of Wierzbowski Eversheds

The firm spoke to some 1800 young lawyers (23-40 years old) around the world to take a snapshot of the sector’s future leaders.

The responses revealed a driven, ambitious, and mostly satisfied group of young professionals. While they have much in common with previous generations, the report found, there is a great deal they would like to change. 

The report found that young lawyers feel the partnership model is out of step with modern business practices, and they would like to reshape the legal profession in key areas so it becomes more like a commercial business. Engaging and connecting with clients is key. In Europe, 71% of young lawyers would like to become partner, while 29% do not have this ambition. For CEE countries the number hoping to make partner rises to 78%. 

On average for all regions, the majority (68%) of lawyers still want to become a partner, although there is an important gender variation: 77% of men want to make partner compared to only 57% of women.

By far the majority of negative comments were directed at law firms’ focus on billings. Many are averse to hourly billing and the pressures it creates to work longer hours, regardless of efficiency or value to the client. These negative aspects of law firm culture were also felt to hinder positive teamwork, creativity, and innovation at law firms.

Young lawyers believe innovation is needed. They are excited by how technology will transform the practice of law and help them achieve better results, more quickly, and in different ways. The report states a belief in the fact that this generation will use technology and new business models to work more smartly and more effectively for clients.

According to Krzysztof Wierzbowski, Managing Partner of Wierzbowski Eversheds in Poland, “the global trends described in the report are also observed in the CEE legal services market. Young professionals strive to manage their time in a way that allows them to combine family life, personal interests and professional career. One of the key aspects of business success is not only recruiting the best experts, but also skillful managing of human resources, such that employees can fulfill their potential in all areas. This approach results in an increase of their effectiveness and creativity at work.”

Interview with Adam Hornyanszky, the Counsel for International Operations & Business Development at Beres Pharmaceuticals.

   

Adam Hornyanszky

 CEELM: Let’s start by telling our readers a bit about Adam Hornyznszky and his background.

AH: While many think as of me as a lawyer first and foremost, my actual first degree was in Business Administration. Only once I graduated in this field did I start law school. After receiving my law degree and passing the bar exam I worked briefly as a trainee for an international firm but quickly found out that I was missing the business side of things. 

 CEELM: Indeed, you were lucky to find a role that allowed you to leverage both your business and legal training with Beres Pharmaceuticals. What does your current role entail exactly?

AH: My official title is that of “Counsel for International Operations & Business Development”. Specifically, I am responsible with identifying and approaching potential partners outside of Hungary, following which, I need to use my legal training to negotiate and draft those international business development contracts. I do not consider myself a General Counsel really. I am more of a “special counsel” due to this dual nature of my role. 

I have to say, I love my current role as I suspect I would get bored if I were only exposed to one of the two dimensions. When I worked as a trainee in the international law firm I mentioned, I hated not seeing the business part as well. Not being truly exposed to the clients we were advising meant I lacked a thorough grasp of the operations of the business. Here I am fully immersed. I understand our business from A to Z and I am not exposed strictly to dry and boring legal work. Instead, I get the opportunity to truly understand what we do, how our business works, what our partners’ business models are and I get the opportunity to develop creative business solutions that create a win-win situation for everybody, which I then translate into a legally binding agreement. 

 CEELM: Since you mentioned it, what is Beres Pharmaceuticals’ business model and what work does it entail for you?

AH: When it comes to our international business, we have two working models. The first is opening up representative offices, such as in Romania and Ukraine, where we employ our own marketing and sales team on the ground. It made sense to follow this model in these two markets out of historical considerations. Because our flagship product, the Beres Drops, acts as an immune strengthener, especially useful for cancer patients undertaking chemotherapy, it became highly popular in Ukraine following the Chernobyl disaster. In Romania, the product, so popular in Hungary, gained a lot of traction due to the considerably large Hungarian minority present in the country. 

The second model, and the one we use a lot more often, is a natural one in light of the fact that, despite its flagship product being an internationally recognized brand, Beres Pharmaceuticals is still a mid-sized, family-owned, Hungarian company. Since the founding family wanted to avoid international financing, we chose to expand in other countries by finding partners on the ground that have a strong track record in launching products in those markets. This is the approach we took in a number of markets, including Russia, Belarus, Slovakia, Lithuania, Albania, Serbia, Montenegro, Macedonia, Vietnam, Mongolia, and others. 

The specific nature of the partnership does vary. In some cases, we look at deals where we offer them a good wholesale price on top of which they add their margins to cover their marketing and sales costs on the ground. Others include co-branding of our products with other Pharma companies on the ground. Lastly, deals might include licensing of our products to be sold completely under the partner’s name, which may or may not include clauses to our own branded products to exist in that specific market. At the same time, the scope of the partnerships differ as well as we cannot force upon our partners our entire pallet of about 70 products, especially since it is usually they, with expertise on the ground, who will know what the market will be most receptive towards.

As to what that means for me, I am the sole person responsible for managing all of these partnerships, as I mentioned, starting from identifying the best possible partners to negotiating and closing the agreements and following up on their accurate implementation.

 CEELM: I assume this is where you legal training comes in particularly useful.

AH: Yes, and no. It is definitely incredibly useful to be able to have the exploration of potential partners and the first approach under the same umbrella with negotiating the specific terms and drafting the actual contracts. In the latter, it is obviously that my knowledge of corporate and contractual law is quite useful but there are rarely other areas of law that I still use on a day-to-day basis. 

There are, of course, other legal aspects that Beres needs to address from tax to debt recovery and even, on rare occasions, litigations but those tend to be outsourced to external counsels. What is particularly useful is the dual nature of my qualification as it allows me be at the center of both of the mentioned aspects.

 CEELM: Your role entails interacting with a lot of CEE markets. Which ones do you find to be the most challenging and why?

AH: I would have to point to Ukraine on this topic. It is particularly difficult to work in the market these days due to the current unrest, but even in the past few years, the market posed quite a few challenges. Constant legislative changes are difficult to stay on top of and each new government, and there have been quite a few, likes to “pick on” the pharmaceutical industry to address any existing budget deficits. It is difficult for an international company to operate such uncertain waters, especially when you dedicate yourself to stay within the legal framework without having envelopes flying around as we do. It also makes sense that it is one of the main markets we look at since we have an actual representative office there. 

 CEELM: What about jurisdictions where you are looking to set up partnerships in?

AH: Those are a different story. The challenge there is not operating in the market itself since the operational aspects of running the business are the partners’ to deal with. The challenge that we have in these instances is the same irrespective of the market we deal with, which is to identify the right partner. This is a critical aspect long before anything else since we need to identify players that we will feel comfortable building a long-term relationship with. We always look at securing such agreements for at least a five year period making the discovery of potential partners stage by far the most important one. 

 CEELM: As a last thought, is there any change from a legislative perspective that you would like to see implemented because it would help Beres Pharmaceuticals develop further?

AH: Since almost all of our products are registered over the counter/food supplement products, most of the regulatory frameworks under which most pharmaceutical companies operate do not affect us. Even in terms of R&D/developing new products, Beres has a “well-established use” approach where we use standard active ingredients that have already been tested in different combinations. This means that, even R&D regulations generally, not just those applicable to the industry, rarely affect our daily operations.

In light of this, it is actually my business side, rather than my legal one that can see how the company can grow. I understand that, in light of our products, elements affecting us are general market factors such as supply and demand. In fact, this is also evident in the fact that, unlike most companies in the industry that employ former doctors within their marketing/sales teams for example, we tend to hire people coming from the FMCG industry.