Category: Austria

Emmanuel Kaufman has a unique profile: An Argentinian lawyer and commercial and international investment arbitration specialist who has spent the last 12 years in two of the leading law firms in Austria. He has spent the last three and a half years as a partner at Knoetzl, where he focuses on complex arbitration proceedings in the construction, telecommunications, IT, gaming, and soft-beverages industries.

CEELM: Run us through your background, and how you ended up in your current role with Knoetzl in Austria.    

Emmanuel: I obtained my law degree at the University of Buenos Aires in the Argentine Republic, and I am admitted to the Bar of the City of Buenos Aires. Before starting my career in international arbitration, I worked as legal counsel at the Senate of the Argentine Republic.

For personal reasons, in 2007 I relocated to Vienna, Austria and began working at 

Wolf Theiss, where I stayed until 2015. I initially started there as a legal trainee and left as Senior Associate. In January 2016, I took on the challenge to start as a Partner in Knoetzl. It was a very exciting time and a great opportunity to start something new and unique that gave me the chance to be part of a major dispute resolution law firm – with a truly international flair – from its very beginning. From the beginning of my career in Austria, I worked with Florian Haugeneder, also a Partner in Knoetzl. We have worked together for almost 12 years now and have built a solid and effective team. Together with Patrizia Netal, also a Partner at Knoetzl, we have established a reputed arbitration practice spanning commercial, construction, international and investment arbitration. 

CEELM: Was it always your goal to work in Austria?

Emmanuel: This a difficult question. I have to confess that, no. I moved to Vienna because my wife is Austrian. We meet during the Willem C. Vis International Commercial Arbitration Moot in 2006. Love is the reason I ended up in the beautiful city of Vienna. 

CEELM: Tell us briefly about your practice, and how you built it up over the years.       

Emmanuel: Knoetzl is Austria’s first specialized dispute resolution powerhouse dedicated to arbitration, litigation, alternative dispute resolution, business crime, and corporate crisis. Together with Florian Haugeneder and Patrizia Netal we focus on international arbitration while Bettina Knoetzl and Katrin Hanschitz focus on litigation and white-collar crime.

In the last five years, I have focused my career in construction and investment arbitration. The construction practice area focuses mainly on complex engineering projects in the CEE and SEE regions (energy and infrastructure sectors) and the investment arbitration practice in Latin America as well as CEE and SEE. My Latin American background has also helped me to build a practice supporting Austrian companies doing business in Latin America. 

I think one of the pivotal elements of building my practice was my interest in the actual business of my clients beyond legal aspects and cooperating closely with clients from the very beginning. This has helped to build up my own reputation and acquire the necessary skills to actively engage in business development activities. I also have always been grateful about the experience I gained by working with Florian Haugeneder and Christoph Liebscher as well as other colleagues in the previous and current law firms. Working with them has helped me to reach the position I currently have. 

CEELM: How would clients describe your style?    

Emmanuel: I like to think that the clients like my hands-on approach on the matters, my analytical skills, and my passion about my cases. I think that this is the best that describes me in short, and I am very humbled that it is also reflected in various legal rankings. 

CEELM: There are obviously many differences between the Argentinian and Austrian judicial systems and legal markets. What idiosyncrasies or differences stand out the most?

Emmanuel: While there are differences between the legal system of Austria and the Argentine Republic, I must say that the first book that I read at the University in the Argentine Republic is “Pure Theory of Law” by the Austrian jurist Hans Kelsen (which was difficult to read since the edition I used was translated from English and not directly from German). Thus, I want to think that there is a connection between the legal education of both countries. Moreover, both countries belong to the civil law family and display many commonalities. 

In practical terms, I think that the major difference between both legal systems is how the judiciary works. I find the Austrian judiciary extremely expeditious while in Argentina court proceedings – even execution – tend to have a very long duration. 

I also find it very useful that in Austria there is only one instance competent to deal with the setting aside proceedings of the arbitral awards. This is something that gives an edge to the countries that aim to be major seats of arbitration.

CEELM: How about the cultures? What differences strike you as most resonant and significant?    

Emmanuel: I think one of the major cultural difference is how formal the legal profession is in Austria. I come from a country that it is more informal in the communication among lawyers. This was at the beginning something that I needed to adapt to.

In addition, punctuality is also a difference between both countries. In Argentina, time is more “flexible.” A delay of 10-15 minutes is accepted. When I come back to Argentina, I am always the first one to arrive everywhere.  After 12 years in Austria, in Argentina people joke that I have become more Austrian than Argentinean. 

CEELM: What particular value do you think a senior expatriate lawyer in your role adds – both to a firm and to its clients?

Emmanuel: We live in a more interconnected world than ever. Companies doing business in CEE and Austria come from different countries and regions. Thus, it is important that law firms know how to handle different styles and cultures. In my view, an international team of lawyers like ours (we have lawyers with Bosnian, Serbian, Russian as well as Argentinean backgrounds) helps to build bridges to provide for a better understanding of cultural differences. 

For example, I think that companies that have a dispute in a particular region – either CEE or Latin America – find it useful to have people on the team that understand the different idiosyncrasies and markets. I can see this with my colleagues – like Selma Tiric, who comes from Bosnia and Herzegovina and studied law in Austria. She has an edge for dealing with Bosnian clients. This has also proven an advantage for me when dealing with clients with disputes in Latin America. 

CEELM: Do you have any plans to move back to Argentina?         

Emmanuel: Never say never but after 12 years in Austria, I find it difficult to think about coming back to Argentina. Although I miss Buenos Aires, I enjoy living in Vienna and working in CEE.  This has helped me to build a career in international arbitration in a region where there are not many Latin American lawyers are based. In addition, my life center is based in Austria. One year ago, I became the father of a wonderful son.

CEELM: Outside of Austria, which CEE country do you enjoy visiting the most, and why?         

Emmanuel: I have to say that I am very impressed by the capital of Bosnia and Herzegovina, Sarajevo. In another life I would have been a history professor and I think that Sarajevo marked the history of the world in the 20th century. I also enjoy going to Belgrade and the Croatian coast in the summer. 

CEELM: What’s your favorite place to take visitors in Vienna?  

Emmanuel: I think that in summer to visit the park of the Schoenbrunn palace is a must in Vienna and then have a very good local white wine while enjoying typical Austrian food in one of the many wine gardens in Grinzing.

This Article was originally published in Issue 6.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Under Austrian law, incorrect land register entries may trigger public liability. But the Austrian Supreme Court recently held that such incorrect entries only create public liability claims for of a certain group of people, thereby potentially increasing the risk management costs of mortgage-backed loans.

Background: Past Market Practice

To perfect a mortgage under Austrian law, the mortgage must be registered in the land register, a public register kept with local courts. As this registration triggers a fee of 1.2% of the secured amount, Austrian banks sometimes accept mortgages that are signed but not registered. The mortgage is then only registered if the debtor’s financial situation deteriorates. To ensure the mortgage can still be registered in the first rank, the bank will agree on a negative pledge with the debtor and will check the land register before granting the loan and regularly thereafter. Banks therefore heavily rely on the land register being complete and correct. A new decision by the Austrian Supreme Court limits public liability for incorrect entries, significantly impeding this practice. 

The Case

In 2000 a woman transferred real estate to her nephew with a prohibition on encumbrance and sale in favor of the nephew’s son. Although corresponding land register entries were then filed and approved by the land register court, the court failed to actually register the prohibition on encumbrance and sale, while registering all other approved entries. Thirteen years later, the nephew assumed personal liability for a bank loan granted to his company. Prior to granting the loan, the bank merely checked the land register for encumbrances and relied on the status in the land register, which wrongly showed that the real estate was unencumbered.

In 2014 the bank wanted to enforce its claims by obtaining an attachment on the real estate. While the court approved the bank’s lawsuit upon registering the bank’s rights in the land register, it noticed that the prior prohibition on encumbrance and sale granted in 2000 had not been properly registered. The court then corrected its past error and retroactively registered the prohibition on encumbrance and sale granted in 2000 in its original rank, i.e., with priority to the bank’s rights. The bank filed a public liability lawsuit for damages, arguing that it would not have granted the loan had the original prohibition on encumbrance and sale been registered correctly. 

The Court’s Decision

The Austrian Supreme Court found that an erroneous non-registration of an approved land register entry, as a violation of the obligation to keep the land register accurate and complete, in principle constitutes public liability. However, even if such a provision is violated, not everyone is entitled to rely on the register’s accuracy and completeness. Only a person who either already has rights registered in the land register or is aiming to constitute such rights is protected by the court’s obligation to keep the register accurate and complete. As the bank did not try to register any right in the land register when the loan was disbursed, the bank was not considered a protected person, and the Austrian Supreme Court therefore denied the bank’s claim for public liability. 

Summary and Open Question

Following this decision, banks that only check the register for prior encumbrances but do not actually register their mortgage may no longer rely on the register’s accuracy and completeness. In the future, banks will have to weigh the risk of an inaccurate or incomplete register against the costs of registering the mortgage when granting a mortgage-backed loan.

Banks may now consider registering the mortgage only for a low amount to be considered a protected person. It is not clear whether banks that do so are protected in the amount of the entire loan or only of the registered mortgage.

By Miriam Simsa, Partner and Philipp Kalser, Associate, Schoenherr Austria

This Article was originally published in Issue 6.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.