CEE Legal Matters

Category: Austria

  • Wolf Theiss Provides Austrian Assistance to Gleiss Lutz on Enterex International’s Takeover of AVA Group

    Wolf Theiss Provides Austrian Assistance to Gleiss Lutz on Enterex International’s Takeover of AVA Group

    Wolf Theiss has provided Austrian assistance to Gleiss Lutz, lead counsel to Enterex International Limited, a Taiwan listed company, on its takeover of the AVA Group from Haugg-Kuhlerfabrik GmbH.

    AVA is the Haugg Group’s distribution network as well as the brand under which the extensive range of engine and vehicle cooling systems are sold. The product portfolio includes cooling radiators, condensers, intercoolers,  heaters, compressors, fans, dryers, evaporators, and valves. AVA has companies in the Netherlands, France, Italy, the UK, Denmark, and Austria. 

    Enterex manufactures and sells radiators, condensers, intercoolers, evaporators for passenger cars, pick-ups, trucks, tractors, and generators, and exports to North America, Latin America, Europe, Japan, Australia, New Zealand, Asia, the Middle East, and South Africa. Headquartered in Tainan City, Taiwan, Enterex International Limited was founded in 1984.

    With the instruction coming via the Taiwanese law firm of Lee & Li, Gleiss Lutz acted as lead counsel and, as such, was responsible for coordinating the work of the various law firms involved, namely Gide Loyrette Nouel (France), Chiomenti Studio Legale (Italy), Macfarlanes (UK), Houthoff Buruma (Netherlands), and Wolf Theiss (Austria).  

  • CHSH Launches New Real Estate and Construction Department

    CHSH Launches New Real Estate and Construction Department

    CHSH has announced the January 1, 2017 launch of its new Real Estate & Construction department.According to CHSH, “the department’s primary focus is on national and international construction projects and real estate transactions, project development, rental and lease agreements, real estate disputes, claims management and construction litigation.”

    The new department is headed by Partner Peter Vcelouch and includes Partners Manfred Ton and Mark Krenn, Senior Associates Matthias Nodl and Christoph Reiter, and Associate Elisabeth Stocker. The CEE Real Estate Practice Group, which specializes in advising clients on real estate transactions in Central and Eastern Europe, is part of the new department and will continue to be headed by Mark Krenn.

    “We’re extremely pleased to announce the establishment of our Real Estate & Construction department,” said Peter Vcelouch. “This represents a significant step towards strengthening our real estate and construction practice and underscores the growth in this area of law.” 

  • “Snowball” Swaps in Cross-Border Context

    The aspect of the choice of law governing an agreement in view of mandatory rules of a jurisdiction other than that of the governing law but to which a transaction is somehow connected has become relevant in a number of pending derivatives litigation cases across various European jurisdictions.

    Recently, the English Court of Appeal confirmed a first instance judgment concerning two Portuguese companies which entered into an English law governed ISDA Master Agreement with an English jurisdiction clause (Banco Santander Totta SA v Companhia Carris de Ferro de Lisboa SA & ORS [2016] EWCA Civ 1267). The aforesaid decision provides some interesting guidance on the inter-correlation between the selected contractual law on one hand and the mandatory laws of another jurisdiction on the other hand.

    The case relates to seven interest rate swaps entered into between Portuguese public sector transport companies (the “TCs”) and a Portuguese bank (the “Bank”), where the TCs were the fixed rates payers and the Bank was the floating rate payer. An additional feature of the structure was that upon a move of the interest rates outside upper or lower barriers, the fixed rate payable by the TCs had a spread added to it. As a result of this arrangement combined with the near zero reference rates, the interest rates payable by the TCs increased dramatically from 2009 onwards so that they were in the range of 30% to 92% (the so called “snowball” effect). Following this increase, the TCs ceased to make payments in 2013.

    Upon being sued by the Bank, the TCs advanced numerous defences, mainly under Portuguese (mandatory) laws, claiming, inter alia, lack of capacity, the swaps being unlawful games of chance, the obligation of their termination due to an abnormal change of circumstances and a breach of duties by the Bank under the Portuguese Securities Code.

    All of the aforesaid arguments were already rejected in first instance as the parties had agreed on English law as the governing law of the transactions and Portuguese law would, only be relevant if “all other elements relevant to the situation at the time of choice” were located in Portugal (article 3(3) of the Rome Convention, in the meantime replaced by the Rome I Regulation) which was, however denied by the first instance. In fact, the court derived the international elements from (i) the right to assign the transaction to a bank outside of Portugal, (ii) the use of standard international documentation, (iii) the practical necessity for the relationship with a bank outside of Portugal (for counter-hedging), and (iv) the international structure of the swaps market.

    The narrow interpretation of Article 3(3) of the Rome Convention/Rome I Regulation was reconfirmed by the Court of Appeal, which was emphasizing that the international elements which could be considered in this context were not merely those that might influence a court in its decision as to the applicable law in the absence of a choice of law.

    In addition, the choice of the forum also has an influence on the applicability of mandatory laws. In fact, had the action been filed before Portuguese courts, they could have applied certain of the raised defences under Portuguese law by virtue of article 9(2) (overriding mandatory laws of the forum) or article 21 (public policy of the forum) of the Rome I Regulation.

    In essence, the case is again a convincing example that the selection of law and forum matters and should be made with precaution.

    By Jasna Zwitter-Tehovnik, Partner, DLA Piper Vienna
  • DLA Piper Advises UBIS on Sale of eMoney Processing Activities

    DLA Piper Advises UBIS on Sale of eMoney Processing Activities

    DLA Piper has advised UniCredit Business Integrated Solutions (UBIS) on the sale of its card processing activities to the Italian technology company SIA group. The purchase price amounted to EUR 500 million. CHSH reportedly advised the SIA group in Austria on the deal.

    UBIS is a global service company of UniCredit with over 10,000 employees and offices in 11 countries. The primary objective is to consolidate and reorganize the operational activities within UniCredit group. The SIA group is a leader in the creation and management of technology infrastructure and services for financial institutions. The Milan-based group operates offices in Rome, Macerata, Brussels, and Utrecht. 

    The business unit sold by UBIS includes approximately 13.5 million payment cards as well as the management and operation of several thousand POS terminals and ATMs in Italy, Germany, and Austria. In addition, UBIS and SIA signed a 10-year outsourcing contract for the provision of emoney processing services.

    The DLA Piper team was led by Corporate Partners Christoph Mager (Vienna) and Goffredo Guerra (Milan). The Vienna-based team also included Partner Christian Temmel, Franz Althuber, and Sabine Fehringer, Senior Lead Lawyer Valerie Kramer, Senior Associates Michaela Wernitznig-Kittel, Johanna Holtl, Susanne Jetschgo, and Stefan Panic, and Associates Sarah Plasser, Tugce Yalcin, and Christoph Schimmer. 

    Editor’s Note: After this article was published, CHSH confirmed its involvement in the deal. The firm’s team consisted of Partners Thomas Trettnak, Heinrich Foglar Deinhardstein, Peter Knobl, Bernhard Kofler Senoner, and Johannes Prinz, Senior Attorneys Jakob Hartig and Armin Schwabl, Attorneys Michael Mayer and Susanne Molitoris, and Associate Andrea Harrich.

  • Crowd Investing: The New Investment Possibility in Austria

    Compared to its popularity in Anglo-American countries, crowd investing – which enables broad groups of investors to fund start-up companies and small businesses in return for equity – is still very young in Europe. If a crowd-invested business succeeds, then its value increases, as does the value of a share in that business. Neither banks, venture capitalists, angel investors, or other resources can fill the financing needs of start-up companies. Crowd investing can help to bridge this substantial financing gap. 

    Three years ago, the Austrian legislator changed the national securities law (KMG) and raised the threshold value for issues without a prospectus from EUR 100,000 to 250,000. Following this, the first crowd investing opportunity was offered to investors by a portal named 1000×1000, with the first issuer raising a total of EUR 170,500 after a nearly eight-week funding period. The amount clearly exceeded the initial threshold of the critical value for issues without a prospectus, indicating that issuers would have been constrained under the earlier regulation. Austria then adapted a new regulatory scheme and allowed issues of up to EUR 5 million without requesting a prospectus from the issuer. Austria the introduced another new law in 2015 (AltFG), which specifically regulates crowd investing and other alternative forms of investment. The law is meant to set a clear legal framework for crowd investing, making it more accessible to entrepreneurs and improving the protection for investors. As a result, in 2015 crowd investing platforms were able to generate USD 9 million for 44 start-up projects. 

    What benefit can crowd investing offer for smaller firms in Austria? To answer that question, it is important to note that information plays a crucial role in each financial market transaction. Information is however distributed asymmetrically between the contracting parties, with those who need capital having better information about their chances to succeed and repay than those who provide it. Due to this, the financial sector is subject to many laws and regulations designed to protect investors. Unfortunately, these rules impose high costs on companies, and complying with them can make a financial transaction too expensive for smaller firms, especially the obligation to prepare the costly capital market prospectus, along with other investor protections. Crowd investing paves the way around these rules and costs, offering start-up companies and small businesses a chance to join the market. 

    Another benefit of crowd investing over other forms of entrepreneurial finance is that it makes use of the “wisdom of the crowd.” The participation of many individuals can, in aggregate, generate information that often cannot be obtained from a single individual or investor. In the case of crowd investing, this crowd has also been known to make investment decisions rather than consumption decisions, which can be particularly useful. Furthermore, it gives investors an opportunity for high returns and a profitable enterprise value, while at the same time allowing individual investors to carry only a part of the business risk. If the company is not successful or becomes bankrupt, funders lose their investment but have no repayment obligation. (As a result, it may be prudent for investors to support several different projects, so that returns from other companies can compensate for a single failure).

    Crowd investing platforms – which can only be operated with a concession from the financial market supervisory authority or a business license – support businesses by providing the necessary know-how for investors who want to provide financial support for a specific project. These platforms are obliged to disclose all details of the businesses, including the legal form and location, as well as information about the owner and other shareholders with a minimum of 25% participation. In addition, they also have to publish the business registry number, the corporate purpose, and the current financial status. The disclosure obligation also includes publishing the selection criteria for the admission of the businesses to the platforms, as well as the nature, frequency, and amount of payments made by investors and issuers. Furthermore, crowd-investing platforms have to mention the risk of a lack of success. This indication must be set before the very first investment is made and must be confirmed by the issuers. Consumers also have the right to step back from the contract and recoup their investment within a two-week period. 

    To summarize, crowd investing in Austria not only offers an opportunity for start-up companies and small businesses to grow but also gives investors the chance to support them and receive the benefit for low risk. 

    By Christoph Urbanek, Partner, DLA Piper Weiss-Tessbach
    This Article was originally published in Issue 3.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
  • FWP Advises Ikea on Acquisition of Blue Building in Vienna from OBB

    FWP Advises Ikea on Acquisition of Blue Building in Vienna from OBB

    Fellner Wratzfeld & Partner has advised Ikea on its acquisition of the Blue Building at Vienna’s Westbahnhof railway station from Austrian Federal Railways (OBB). 

    According to FWP, “before the Swedish group purchased the property, ten interested parties had submitted bids. The contract was awarded to Ikea not only because it had been the highest bidder but also because the Swedish furniture giant makes the railway station’s shopping mall more attractive – it has been facing declining sales in the recent past. An innovative, eco-friendly concept should make it possible to do entirely without any car traffic. Westbahnhof station provides perfect connections to the public transport system. Ikea’s new concept is unique in the world and has been adapted to the lifestyle of city dwellers. The opening date has not been fixed yet.”

    The FWP team was led by Partner Markus Kajaba, who commented that, “our main concern was to ensure optimally increased chances of being awarded the contract after careful examination of the legal framework in the context of the call for tenders. Thanks to the excellent cooperation among all the stakeholders, we succeeded in achieving this objective.”

    FWP declined to provide additional information about the identity of the firm advising OBB on the deal.

  • FWP Advises Casinos Austria on Taking Aboard Novomatic

    FWP Advises Casinos Austria on Taking Aboard Novomatic

    Fellner Wratzfeld & Partners has advised Casinos Austria Aktiengesellschaft on taking aboard Novomatic AG.

    According to FWP, “more than one year after adopting the basic resolution, the general meeting of shareholders of Casinos Austria Aktiengesellschaft granted the necessary final approval of the transfer of 17.2% of the shares of Casinos Austria Aktiengesellschaft to Novomatic AG. MTB Privatstiftung now has the go-ahead for transferring its 17.2% share package to Novomatic AG, after more than a year following the consent given by the general meeting of shareholders of Casinos Austria Aktiengesellschaft in principle, yet subject to several conditions. The relevant approval was adopted by the shareholders at an extraordinary general meeting held on 14 December 2016. Prior to this, the numerous conditions imposed by the general meeting of shareholders in 2015 had to be dealt with and a dispute between bidders had to be resolved.”

    At sales revenues of EUR 3.6 billion, Casinos Austria and Oesterreichische Lotterien Group generated an operating income of EUR 100.45 million in the 2015 business year. This is up 45 percent from the previous year’s figure and represents the best result in the company’s 50-year history. 

    “Achieving this important intermediate objective was made possible by the excellent cooperation among all parties involved in the transaction and their advisors,” commented FWP Partner Markus Fellner, who led the firm’s team on the deal. “With a tight regulatory framework in numerous countries, a challenging shareholder structure and the existing competition between the companies involved, the transaction was an extra challenge.”

    The acquisition proceeds despite the Cartel Court’s negative first-instance ruling in merger control proceedings, which is currently under appeal and being reviewed by the Austrian Supreme Court, as, at 17.2%, it is below the threshold relevant under Austrian merger control law. As a precautionary measure taken in this respect, the indirect shareholding of Novomatic AG in Oesterreichische Lotterien Gesellschaft m.b.H. was reduced to half its current size.

    Speaking on the subject, FWP anti-trust expert Lukas Flener commented that “the proceedings under merger control law have been particularly challenging as regards advising the target and continue to be so. Although these proceedings are conducted autonomously by the acquiring party it still had to be ensured that the target can maintain its business secrets without being cut off from any information as the outcome of the proceedings has a material effect on the target.”

    In addition to Fellner and Flener, the FWP team included Attorney-at-law Irena Gogl-Hassanin.

  • Baker McKenzie Assists Amundi in Obtaining Marketing License in Austria

    Baker McKenzie Assists Amundi in Obtaining Marketing License in Austria

    Baker & McKenzie has assisted Amundi Immobilier in obtaining the first license for the marketing of a foreign real estate investment fund to private investors in Austria under the Alternative Investment Funds regime. The OPCIMMO fund, managed by Amundi Immobilier, was introduced in France in 2011. Now, it will be offered to private investors in another country for the first time. 

    The fund mainly invests in commercial real estate in ten different countries. As regards Vienna, the portfolio includes the 113-meter Florido Tower and the Solaris building in St. Marx.

    According to the EU directive regarding alternative investment funds, Member States are free to decide whether or not to admit cross-border marketing to private investors at all. The Austrian AIFM Act provides for this opportunity. “However, a precondition for the marketing license is among others that the foreign investment fund is comparable to a domestic investment fund,” said Baker & McKenzie Partner Dieter Buchberger. “Equivalence to domestic real estate investment funds primarily requires a comparable investment horizon and investor protection. In constructive exchanges the Financial Market Authority confirmed that the OPCIMMO is, in fact, comparable to an Austrian open-ended real estate investment fund.”

    Buchberger and his team had previously advised Amundi on the acquisition of Bawag P.S.K. Invest in 2014 (as reported by CEE Legal Matters on October 29, 2014). Since the admission of the OPCIMMO fund to the Austrian market, he has also advised Amundi Immobilier and Amundi Austria on the legal aspects of the marketing of the fund in Austria.

    In addition to Buchberger, the Vienna-based Baker & McKenzie team consisted of Partner Stephan Gross, Senior Associate Franz Josef Arztmann, and Associate Andrea Eigner.

    Image Source: flickr.com

  • Freshfields Advises UBS AG on Combination of Most of Its European Wealth Management Business into UBS Europe SE

    Freshfields Advises UBS AG on Combination of Most of Its European Wealth Management Business into UBS Europe SE

    Freshfields Bruckhaus Deringer has advised UBS AG on the combination of most of its European wealth management business into UBS Europe SE, a European company headquartered in Frankfurt am Main. UBS Europe SE was established through the cross-border merger of its Italian, Spanish, Luxembourg, Dutch, and German wealth management activities. With the merger taking effect on December 1, 2016, UBS Deutschland AG as the absorbing entity was converted into an SE.

    UBS Europe SE will be subject to the supervision of the Bundesanstalt fur Finanzdienstleistungsaufsicht (“BaFin”). Going forward, the operating business of the merged companies, which include the foreign branches of UBS (Luxembourg) S.A. in Denmark, Austria, and Sweden, will be continued through branches of UBS Europe SE.

    The multi-jurisdictional Freshfields team was led by Corporate Partners Thomas Bucker and Gunnar Schuster and included Vienna-based Corporate Partner Farid Sigari-Majd and Vienna-based Finance Partner Florian Klimscha, as well as Employment, Pensions and Benefits Partners Thomas Muller-Bonanni and Raquel Florez, Tax Partner Jan Brinkmann, and Corporate Partners Dirk-Jan Smit, David Franco, Javier Monzon, Nicola Asti, and Raffaele Lener. 

    Lead in-house advisers at UBS in Zurich were Saumya Bhavsar and Antonio La Verghetta. In-house advisers at UBS Deutschland AG in Frankfurt included Michael Fischer, Uwe Trafkowski, and Holger Hirschberg. 

  • Baker McKenzie Successful for Bombardier in Defense of Procurement Contract Award

    Baker McKenzie Successful for Bombardier in Defense of Procurement Contract Award

    Baker McKenzie is reporting that Austria’s Federal Administrative Court has upheld the decision by the passenger transportation subsidiary of Oesterreichische Bundesbahnen (OBB) to award a contract for new trains to Bombardier.

    According to a Baker McKenzie summary, the OBB had put out to international tender a framework agreement on the order of up to 300 local passenger trains with an estimated procurement volume of almost EUR 2 billion. On October 6, 2016, aircraft and railway manufacturer Bombardier was awarded the contract. Unsuccessful competitor Stadler Rail objected to the Federal Administrative Court, and on Friday, December 2, 2016, the award division, chaired by Hubert Reisner, found that the award to Bombardier was proper and justified.

    Bombardier was successfully represented in the matter by a Baker McKenzie team led by Senior Associate Franz Josef Arztmann in the review proceedings, which focused on the question of whether the OBB should have carried out an “in-depth tender pricing evaluation,” given Bombardier’s more favorable maintenance costs. “Within the scope of the proceedings,” said Arztmann, “we were able to prove that the maintenance costs are in line with market conditions, that there was no doubt as to the adequacy of the prices, and that Bombardier had, in fact, submitted the most favorable tender.” 

    Arztmann was assisted by Baker McKenzie Junior Associate Sandra Seldte in the proceedings.

    Stadler has not announced whether it plans to file an appeal against the administrative court’s decision.