Telenor has hired Andras Losonci as Legal Counsel within the Commercial Legal team.
Losonci returns to Hungary after a year and a half with UPC DTH in Luxembourg where, as Legal Counsel, he was responsible, among other things, for the coordination of the company’s legal matters in the CEE region (with a focus on Hungary, the Czech Republic, and Slovakia).
Prior to that he was a lawyer with CMS between 2012 and 2016 and a junior associate with DLA Piper from 2011 to 2012.
In order to replace Hungarian Act 1994 of LXXI on Arbitration, a new act on arbitration has been enacted by the Parliament on 30 May 2017. According to the explanatory memorandum, the new act is intended to create an attractive investment environment for the foreign companies. It is also beneficial for the Hungarian companies, as quicker and more professional form of arbitration could encourage the foreign companies to initiate the arbitration procedure in Hungary, which would be more cost-efficient for Hungarian companies.
The most important innovation of the new act is that it establishes the exclusive competence of Permanent Court of Arbitration operating at the Hungarian Chamber of Commerce and Industry in all commercial matters which fall within the competence of an arbitration court in Hungary. The new act contains provisions on the election procedure and the rights of the members of the management body of the Permanent Court of Arbitration. Besides this court, with the exception of the Sport Permanent Court of Arbitration and the Permanent Court of Arbitration operating at the Hungarian Chamber of Agriculture, other permanent courts of arbitration will cease to exist.
By Levente Csengery, Partner, KCG Partners Law Firm
Sar & Partners is reporting that, in the nearly two-decade long patent dispute with Adidas in Hungary, the country’s Supreme Court has now ruled, on appeal, that the lower court’s ruling regarding the amount of unjust enrichment to be returned to firm client Laszlo Oroszi — the developer of Adidas’s Predator Precision and Predator Mania football shoes, who patented the ribbed top of the shoes in 1996 — should stand, although the specific reasoning for the award was incorrect.
Oroszi brought an action against Adidas Budapest Ltd. in 2002, seeking a declaration of patent infringement and other measures. In its decision of November 8, 2016, the Metropolitan Court of Appeal of Hungary obliged Adidas Budapest Ltd. to return four times the amount of its enrichment plus interest since March 23, 2002 to Oroszi (as reported by CEE Legal Matters on November 25, 2016). The Metropolitan Court of Appeal based its decision on the assumption that the football shoes were entirely protected by the patent, and thus that Adidas was obliged to return the entire amount of its enrichment. According to a Sar & Partners spokesman, the Supreme Court, however, in its recent ruling, held that the patent did not protect the entire shoe, but nonetheless that because “the invention had such a large significance, both in functionality and economically … it entirely covered the amount of enrichment achieved in sales.” According to Sar & Partners, “consequently the [Supreme Court] found no reason to decrease the amount to be returned as enrichment but this time the reason for it was the 100% cover ratio of the invention.”
Oroszi was represented by both Sar & Partners and the Danubia Patent and Law Office.
Hugh Owen, long-time Partner at Allen & Overy, has announced that he is retiring from the Magic Circle firm and will practice independently as Go2 Law going forward. Owen will continue to operate out of Slovakia, where he has lived since 2000 — though since November 2013 he spent the majority of his time working in A&O’s Budapest office.
Owen obtained his law degree from Kings College London, University of London in 1992 and first joined A&O in 1994 as a trainee. He did a secondment in Prague in 1995, and qualified in London in 1996. According to him, “I returned to Prague in 1998, and in 2000 went to Bratislava where I assisted in the opening of the office. I started then to work in Romania and Bulgaria, soon afterwards expanded to include the former Yugoslavia, and then set up and headed the SEE desk. In 2008 I spearheaded the successful opening of our associated office in Romania. In 2015 I became head of the Ukraine Desk and recently assisted in launching a new Baltic desk. I have been a partner since 2004.”
Among the many large-scale corporate and commercial transactions throughout CEE Owen has worked on over the years are a number of privatizations in Slovakia and Romania. He specializes in private equity, including advising on the acquisition by AIG Capital Partners of a controlling stake in Bulgarian Telecommunications AD, which, at nearly EUR 2 billion, represented the largest M&A transaction ever in Bulgaria and one of the largest leveraged finance transactions in Central & South Eastern Europe.
Owen will officially retire from Allen & Overy on July 31, 2017, though he expects to retain a professional relationship with the firm going forward, albeit in a different form. “My consultancy is non-exclusive,” he says, “but the expectation is that for now my main client will be A&O.”
Among other contributions, Owen wrote the Guest Editorial for the October 2014 issue of the CEE Legal Matters magazine.
Editor’s Note: After this article was published, Hugh Owen sent the following statement to CEE Legal Matters: “It has been a real pleasure to work with exceptional colleagues at A&O across the globe and in CEE, working for a Magic Circle firm for nearly quarter of a century. I am looking forward to this next stage of my career, where I will continue to work with many of my A&O colleagues and A&O’s relationship firms in C&SEE and the Baltics, focusing on English law M&A.”
Linklaters has advised Budapest Airport and its shareholders on the amendment and extension of its existing EUR 1.4 billion debt facilities, with Dentons Budapest working alongside and advising on Hungarian law. Allen & Overy in London and Faludi Wolf Theiss in Budapest advised the lenders and security agent Bayerische Landesbank on English and Hungarian law, respectively.
Amended in compliance with Budapest Airport’s concession arrangements, the transaction successfully enabled the company to exchange junior debt with pari passu debt. According to Linklaters, the amended facility, which constitutes “a significant vote of confidence in the company” includes “several highly bespoke features such as a liquidity facility and note issuance facility within a single facility amendment.” Linklaters reports that “the deal also included new institutional investors and the EBRD funding for 10 and 15 year terms, as well as a large swap restructuring. BLB continues as Agent.”
According to Linklaters, “the deal was completed within a relatively short period of five months from first negotiation to closing, which was a great achievement for all parties concerned given the complexity, bespoke nature of the new features added to the existing facility and the large number of counter-parties.”
The Linklaters team was led by Infrastructure Partner Ian Andrews and Structured Finance Partner Julian Davies, supported by a team of over 20 Linklaters lawyers across three jurisdictions, including Subir Rajadhyaksha on the core financing and James McGivern on the swaps.
The Dentons team was led by Partner Istvan Reczicza, with Partner Milan Kohlrusz and Associate Katalin Zsebik working on concession-related aspects. Partner Gergely Horvath and Associates Gabriella Pataki and Bence Boszormenyi worked on the financing aspects.
The Allen & Overy team in London was led by Conrad Andersen, Tim Conduit, and Seonaid Todisco.
The Wolf Theiss team was led by Managing Partner Zoltan Faludi, working with Senior Associate Melinda Pelikan and Associates Zsofia Polyak and Diana Boross-Varga, with Senior Associate Janos Pasztor and Associate Alexandra Toth advising on tax matters.
Rothschild acted as financial adviser to Budapest Airport.
Editor’s Note: This article has been updated to clarify the roles played by Allen & Overy and Wolf Theiss in their representation of the lenders.
A new act on Prevention and Combating of Money Laundering and Terrorist Financing will enter into force, replacing the anti-money laundering act currently in force, on 26 June 2017. The new act is intended to implement the provisions of the EU Directive 2015/849 (i.e. the 4th Anti-Money Laundering Directive).
The regulation method of the scope will change; i.e. instead of listing the activities concerned, the new act specifies the organizations and service providers which shall apply the statutory provisions. From the perspective of the service providers falling within the scope of the new act, one of the most beneficial provisions is that they will be allowed to complete the identity verification by electronic means, contrary to the current law, under which the client identification might only be carried out personally in written form. Another innovation of the new act is the establishment of a central database for storing the data of the beneficial owners. Furthermore, a stricter sanction regime will be introduced, as the amount of the penalties will increase significantly (e.g. for financial institutions from HUF 500 million to HUF 2 billion). In order to ensure the compliance with the new provisions, companies shall revise their internal policies by 30 September 2017.
By Eszter Kamocsay-Berta, Partner, KCG Partners Law Firm
As of 1 July 2017, an amendment to the Bankruptcy and Liquidation Proceedings Act will enter into force, aiming at close the loopholes and consolidating the case law. The amendment clarifies the provisions on the disputing of the claim by the debtor and on the statutory requirements of the payment reminder to be sent by the creditor. The regulations on the option right and the transfer of rights and claims for security purposes will also be amended.
Furthermore, the rules of raising an objection in case of the measure or failure of the liquidator violating the laws will also be changed, for example, the deadline of the submission of the objection from 8 to 15 days. The amendment revises the rules of the action brought for the establishment of the liability of the directors of the company in case the directors have not acted with regard to the interest of the creditors and as such, the assets of the company decreased or the complete satisfaction of the creditors’ claims may be frustrated. The amendment also clarifies the conditions for exemption from the liability of the directors.
In addition to the amendment of the Bankruptcy and Liquidation Proceedings Act, other acts will also be changed such as the Stamp Duty Act and the Company Registration Act.
By Rita Parkanyi, Attorney, KCG Partners Law Firm
“The Buzz in Hungary,” according to Wolf Theiss Budapest Partner Janos Toth, “is two things: The recent activity in the solar energy sector in the country and work resulting from new legislation within the EU for data protection and anti-money laundering.”
Speaking on the first subject, Toth notes that the significant indications that the Hungarian government is intending to develop solar (photovoltaic) projects has generated a great deal of interest in potential investors in the first half of this year, even though, he says “nothing has closed yet.” Still, he says, project owners are to finalize the initial rounds of regulatory licensing with Hungarian energy regulator, “and now that the deadlines are approaching the market has become very vibrant with strategic and financial investors.” According to Toth, “the projects that are in the forefront of investor interest still qualify under the old renewable compensation system, which includes some very beneficial compensation schemes in terms of both length and the amount of compensation available, so everybody who has interest in this particular field is focused on trying to get as much volume as possible in terms of licensing from the energy regulator, which would allow them a nice ROI.”
Photovoltaic projects have not been particularly active in Hungary for the past decade, Toth reports — unlike in the Czech Republic and Romania, for example — but last year the government began putting more “pure” emphasis on solar. According to Toth, “that’s really made the market excited. Obviously some of these projects are not viable, but these will be weeded out by the market, if not the regulator. But a considerable amount of these projects will likely go into the implementation phase, bringing upheaval to the Hungarian renewable market, which has been silent lately.” And, he says, “from a general policy perspective it’s a sign that Hungary has decided to catch up with the rest of Europe.”
Unsurprisingly, Toth reports, “lawyers who are able to consult with clients on this regulated field are busy with due diligence and joint venture creation mandates.” There’s obviously a heavy real estate element on such projects, so property lawyers are active as well.
The other Buzz, according to Toth, is more regional in nature: An uptick in compliance work. “What we see,” Toth says, “not only in Hungary but in all of the countries in our region, is businesses coming to us with regional requests for audits, reviews, analysis of their processes and systems, and consulting on how to ensure compliance.” Toth draws specific attention to the EU’s new Anti-Money Laundering Directive and the widely-reported data protection regulation (the GDPR).
The deadline for implementation of the EU’s 4th AML directive, according to Toth, lapsed at the end of June, and “some of the countries in the region have still not implemented the legislation locally.” Toth points out the significant impact of the new rules on affected industries, as companies in “the traditionally regulated industries like the financial sector, and insurance, but also lawyers, notaries, and even traders of goods and businesses involved in customer/client sales over a certain transaction value need to update or in some instances entirely reshuffle their operations.” According to Toth, clients who are now required to disclose ultimate beneficiaries are especially concerned about this. “And the devil is in the details,” he says, “as national parliaments have to regulate this themselves — so this will change from country to country. In some countries the tax authorities will keep the information, in some the registry of companies will handle it.” Other relevant and controversial questions involve “how third parties can get access to such beneficiary owner information, and in what circumstances.” According to Toth, “this is all very sensitive.”
Hungary implemented the Directive with its June 2017 Anti Money Laundering Act, but Toth warns that “the law says that the central registry of ultimate beneficial owners would be set up and operated under a separate piece of law — but that separate law has not been created yet. So we’re generally compliant, but how the central registry will work is not clear yet, and we probably won’t see that law created during the summer months when parliament has no sessions.”
Turning to data protection, Toth notes that businesses still have some time to implement the GDPR requirements, but he says “they’re starting to realize how pressing this will become in a few months, and we’re already seeing the prudent business operations starting to review their data privacy processes to see if there are any changes required for compliance.”
Finally, Toth says, “I can also mention that, in Hungary as across Europe, the M&A market — which was unexpectedly slow during the first half of the year — is coming back. The reasons may be multi-fold, but it appears that, after a relatively silent first half of the year, general interest in the M&A market is back.” Toth says that “mid-market deals are picking up everywhere and in all sectors — manufacturing, real estate, trade and services, etc.” The Wolf Theiss Partner admits that “this is encouraging” as it “means that there’s real potential for a good year in 2017 after all, following a really good year in 2016.”
Lakatos, Koves and Partners has provided Hungarian law advice to Mid Europa Partners in relation to the IPO of Waberer’s International Nyrt., one of Europe’s largest haulage and logistics companies. White & Case acted as international legal advisor, and Shearman & Sterling and Kinstellar represented the Mandated Lead Arrangers.
Trading of Waberer shares on the Budapest Stock Exchange started on July 6, 2017 in the Equities Prime category. With a market capitalization of approximately HUF 90 billion, Waberer’s is the sixth largest company on the Budapest Stock Exchange. Waberer’s IPO is Hungary’s biggest public listing in more than a decade.
LKT’s team, consisting of Managing Partner Peter Lakatos, Counsel Pal Rahoty, and Associates Balazs Fazakas, Judit Zalan-Lipak, Balazs Kantor, and Gyula Ratz, advised Mid Europa on all Hungarian law aspects throughout the IPO process, including in relation to the preparation of the stock exchange prospectus and assistance in the regulatory approval and BSE listing processes.
The White & Case team consisted of Partners Petr Hudec, Philip Broke, and Ian Clark, Local Partner Eva Svobodova, and Associate Erik Illmann.
Editor’s Note: After this article was published, Kinstellar confirmed that Citigroup and Berenberg had acted as Joint Global Coordinators and Joint Bookrunners on the IPO, with Erste Group and Renaissance Capital also acting as Joint Bookrunners. Erste Group acted as Lead Manager of the Hungarian Public Offering. The Kinstellar team acting as Hungarian legal counsel to the Joint Global Coordinators and Joint Bookrunners was led by Managing Partner Csilla Andreko and Managing Associate Akos Mates-Lanyi.
Jeantet has announced that Balazs Kutasi has been appointed Local Partner in the firm’s Budapest office.
Kutasi, who specializes in dispute resolution, started his career within the European Union Department of the Ministry of Justice of Hungary. In 2010 he joined Allen & Overy, and in 2014 he moved to the Budapest office of Gide Loyrette Nouel, which transferred over to Jeantet in November 2015.
“By his appointment as local partner, Jeantet’s Paris Office honored Balazs Kutasi’s involvement in several sensitive and high-value litigations and employment cases,” said Jeantet Budapest Managing Partner Francois d’Ornano, “and at the same time strengthened the position of the Budapest office in the local market. ”