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Numbers (More or Less) Positive The general sense of optimism seeping through the Hungarian economy was given a further boost by almost all the recent macroeconomic headlines; until Monday, that is, when the figures for government debt levels came out. 03

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Nick Kós, country managing partner of PwC Hungary, talked exclusively to the Budapest Business Journal about the economy over the past year and the months to come, changes within his own company, and the global megatrends set to impact Hungary in the near− to mid−term future. 10-11

BUSINESS

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Numbers (More or Less) Positive The general sense of optimism seeping through the Hungarian economy was given a further boost by almost all the recent macroeconomic headlines; until Monday, that is, when the figures for government debt levels came out. 03

SPECIAL REPORT

Ready to be Big in Europe

Value Still Matters

No matter how unfriendly the economic environment has been lately for banks in Hungary, Russia’s market leader, Sberbank rather sees opportunities on the horizon. Mark Arnold, CEO of the group’s European division talks about optimism, digital strategy, and market expectations. 12

The days are surely gone when a law firm could charge whopping hourly rates to its clients just because it was a member of a fancy global brand. The post-crisis era, therefore, has called for a whole range of innovative fee schemes. 14-15

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A Row That Benefits No-one As it has battled its way through the financial crisis, Hungary has relied on European Union money to fund at the very least a sizeable chunk of practically every major infrastructure development it has undertaken, from renovating Margit híd to building the M4 metro line. Without that money, virtually nothing would have been built.

A similar story is true at a societal level. Hungary relies to a large extend on the European Economic Area Grants for funding non−governmental organizations. The money is provided by Norway (responsible for about 97%), Liechtenstein and Iceland, which as non−EU members do not contribute to economic stability funds. It funds 12 programs supporting four priority areas: strengthening civil society; improving the well being of children at at−risk youths, increasing the competitiveness of green enterprises; and enhancing research cooperation.

For the current period (2009−14) EUR 153.3 mln has been allocated to Hungary, almost EUR 12 mln of which has been paid out. But, for now, disbursements through nine of the programs have been halted.

The crux of the matter seems to be that the Hungarian government either does not approve of, or does not trust the Hungarian Environmental Partnership Foundation (Ökotárs Alapítvány), the fund operator, claiming it is linked to the green LMP party (something both deny). To make matters worse, oversight was transferred from the now defunc National

Development Agency to the Széchenyi Programiroda a state− owned company. The original agreement insists (as it does for every other beneficiary country) that any government oversight be through a central ministry only.

The Hungarian decision, which dates back to January of this year, prompted an exchange between Budapest and Oslo.

State Secretary János Lázár wrote on April 14 to express concern about the selection process of the NGO fund operator.

In his response Vidar Helgesen, Norway’s Minister of EEA and EU Affairs, wrote “in the Hungarian version of the letter, you suggest a political agenda from the donor’s side in the selection of the fund operator”, accusations he said he found “rather surprising”, adding “the Government of Norway has not been engaged in supporting, financially or otherwise, any party political activities in Hungary.” Helgesen noted the appointment of a fund manager had been a joint decision, and was in the Memorandum of Understanding signed in November 2011. The fund operator had further been chosen through an open tender process.

It is a row that seems entirely unnecessary, and largely of Hungary’s own making. According to Helgesen, “If the Hungarian Government now shows a willingness to find a solution, there will be no major impact on the implementation of programs and projects in Hungary.” Let us hope so; EUR 153.3 mln is a lot of money.

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Ruffling Feathers for Electoral Gain With the exception of those from the extreme right, Hungarian politicians have been surprisingly adroit at walking the Trianon tightrope; certainly compared to the average Hungarian in his (or her) local kocsma with a pálinka or two in him (or her).

As a right of passage, each newly elected leader since the change of regime has declared himself to be “Prime Minster of 15 million Hungarians,” in a nod to those now cut off from the motherland by the tides of time and history. But it has pretty much ended there.

And that makes Viktor Orbán’s first address to parliament this time round stand out. He called for autonomy for ethnic Hungarians in the region, and particularly the estimated 200,000 living in Ukraine.

It prompted an entirely predictable twitter−storm, and more unusually, a public rebuke from Poland’s leader Donald Tusk. Poland is far enough away from Hungary not to have a sizeable Hungarian population of its own, so Tusk was not irked on that front. Poland, like Hungary, does share a border with Ukraine, however. Tusk said Orbán’s comments were “most unfortunate” and suggested the inaugural speech in parliament was “not the right place or time for such statements”. This was, he insisted, a time for Ukraine’s neighbors to show solidarity. He promised to personally tell Orbán of his criticism when they met at the GLOBSEC

global security meeting in Bratislava, “even if it ruins the atmosphere”. Hungary and Poland are both part of the Visegrád Four group of countries (the others being Czech Republic and Slovakia) and are generally allies, the V4 having been quite active recently, including on Ukraine.

Kyiv, meanwhile, summoned the Hungarian ambassador to explain the comments, and the following day Foreign Minister János Martonyi sought to ease tensions by saying that Hungary was not demanding “territorial autonomy” but “self−administration” and noted, “Autonomy can be different, as we have already said, personal, cultural, territorial‥” Which makes it even odder, then, that Orbán should return to the theme on public television on Friday evening, saying, “Ukraine can be neither stable, nor democratic if it does not give its minorities, including Hungarians, their due. That is, dual [Hungarian] citizenship, collective rights and autonomy.”

So what is at play here? Well, Fidesz does have a track record of promoting greater ties with the diaspora – though it has never called for reunification –, and it was the party that pushed through constitutional changes that allowed dual citizens living abroad to vote in national elections. Secondly, and more pertinently, the European elections are just around the corner. Orbán understands Hungarians better than most, and knows that standing up for the rights of the ethnic kin plays well at home, just as he knows it annoys neighboring governments. Clearly he feels a few ruffled diplomatic feathers are worth the risk.

Orbán understands Hungarians better than most, and knows that standing up for the rights of the ethnic kin plays well at home, just as he knows it annoys neighboring governments. Clearly he feels a few ruffled diplomatic feathers are worth the risk.

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The general sense of optimism seeping through the Hungarian economy was given a further boost by almost all the recent macroeconomic headlines; until Monday, that is.

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That was when the National Bank of Hungary (MNB) reported that Hungary’s gross consolidated government sector debt, calculated at nominal value and in line with the so−called Maastricht methodology, had risen to HUF 24,904 billion or 84.6% of gross domestic product at the end of March 2014, a near all−time high. The debt ratio had been at 79.2% at the end of 2013.

The figures were somewhat of a surprise, but the government wasted no time is sending out soothing mood music. National Economy

period the state had acquired assets. Other observers were not so sure. “The numbers published‥ by the central bank, however, do not underpin that statement,” wrote Portfolio. hu. “Net debt (which is an indicator lowered by the state’s receivables and assets) does not show a decrease, either. On the contrary, it has been rising since 2011.”

Hungary’s debt ratio has only been higher once before (and then only by about 0.9%), in mid−2010. That followed comments made in relation to Greece by prominent Fidesz party members, which sent the forint tumbling.

BETTER FIGURES

Output of Hungary’s industrial sector rose an unadjusted 10.6% in March from the same month a year earlier, as reported by the Central Statistics Office (KSH). The increase accelerated from 8.2% in February.

Adjusted for the number of workdays, output was up 8.1%, nearly level with the

New statute for National Bank of Hungary National Bank of Hungary is celebrating its 90th anniversary by adopting a new operating statute. That central bank explained, “In accordance with statutory requirements, the management of the MNB strives to contribute to social welfare by pursuing a responsible monetary policy and promoting a predictably operating financial system that ensures the sustainable growth of the Hungarian economy. Without prejudice to its primary objective, the central bank supports the economic policy of the government using the instruments at its disposal, geared towards full employment and growth … Cooperation between the government and the central bank could be a key driver for launching economic growth.”

Ministry State Secretary Gábor Orbán, told national wire service MTI that “independently from first quarter data published on Monday showing a jump in consolidated government− sector debt, Hungary’s public debt is following a decreasing trajectory.”

Orbán, said the ministry is emphasizing financial stability and thus “is financing the public debt in a secure way.” He laid the blame for the increase in public debt at the door of a $3 billion forex−based debt issuance that “will pay for maturities this year”.

The state secretary insisted that central government has, in fact, already repaid £500 million in debt (approximately €613.3 million) last week, with another €3 billion reportedly slated for repayment by the end of the fall. “During the year, there may be ups and downs but what is important is the level of debt at year’s end,” he added, somewhat obviously.

Before the figures were published on Monday, the Prime Minister himself was insisting on May 16 that the debt ratio could still be regarded as declining because in that

8.2% increase in February. In a month−on− month comparison, seasonally, and workday, adjusted output increased 0.4%, following a 1.4% rise in February.

Erste senior analyst Gergely Gábler said the strong performance of the industrial sector in March was likely to prompt an upward revision in the bank’s projection for full−year growth of 5.5%. K&H Bank chief analyst Dávid Németh said the data shows the support of the recovery in Western Europe, noting that 60% of industrial output is exported.

FIRST INCREASE

Vehicle manufacturing output increased a reported 28.3% y.o.y. in March; output in computer/electronics manufacturing was up 1.6%, the first observed increase since March 2011, and buoyed the 20% rise in consumer electronics. Other notable increases were seen in chemical production (up 26.4% y.o.y.) and pharmaceutical production (up 25.1%).

According to KSH, industrial export sales rose 11.9% y.o.y. for Q1 and by 14.7% in

March. Transport equipment exports jumped 26% over March 2013. The good news prompted the National Economy Ministry to speculate that the country’s GDP growth could exceed the 2.3% projection in the updated Convergence Program this year by up to 0.6 percentage points. The ministry said “The favorable outlooks are based in equal measure on data from industrial and construction sector order stock, the gradual improvement of business confidence and the increase in propensity to make investments.”

National Economy Minister Mihály Varga told journalists that the Q1 data confirmed that reaching 2.5% GDP growth in 2014 “is not unachievable”.

LESS WELCOME

One unexpected (and possibly less welcome) development was the fact that Hungary’s consumer prices dropped 0.1% in the 12 months to April. The 12−month consumer price index (CPI) fell below 100% for the first time since 1968, said Borbála Mináry of the KSH, but it could not be classified as ‘deflation’, because it was only the first month in which prices had dropped, and the fall was slight.

Analysts polled by business daily Napi Gazdaság had been expecting the April 12−month CPI to come in at 0.2%. (Consumer prices for the month alone rose 0.1% from the previous month after increasing 0.2% month− on−month in March.)

Prices had fallen in all main product groups year−on−year, with the exception of beverages and tobacco, where taxes pushed up prices. Food prices fell by 0.5%, clothing prices were down 1.4%, consumer durable prices fell 0.5% and household energy prices by 10.3%. Prices in the category of other goods, including fuel fell 0.6% year−on−year.

Indicative of the drop were farm gate prices, which fell 10.2% year−on−year in March.

Prices of crops fell 14.7% y.o.y. due to an improved harvest, while prices on livestock and animal products were down 1.0%. For the first quarter of 2014, farm gate prices fell 11.6% y.o.y. as crop prices dipped 17.1% and prices of animal product decreased 0.3%.

Analysts at Erste Bank said headline inflation was under their estimate for a 0.2% y.o.y. rise in April. They put average annual inflation at 0.7% for this year. ING Bank chief analyst András Balatoni also said the headline figure came as a surprise, adding that he had estimated a 0.1% increase in prices in April.

He still thought CPI would climb to around 2% by year−end, he added.

MNB deputy governor Ádám Balog admitted the inflation figures could cause concern. In response to a question on the current inflation rate in Hungary, Balog said that the recent wave of low inflation figures in the country “have surprised Europe and even the MNB,” adding that this was a problem throughout Europe. “I do not feel at ease with these developments,” he said, adding that the European Central Bank was also apparently nervous.

MACRO Speaking X of figures The Budapest Business Journal presents the most important macro data of the past fortnight.

HUF 470 bln Retail food sales in Hungary rose 3% to HUF 470 bln in December− March from the same period a year earlier, data from market researchers Nielsen shows. In volume terms, sales were up 4% during the period; sales in outlets larger than 2,500 square meters in floor space accounted for 29% of total turnover.

34.2% Output of Hungary’s construction sector rose 34.2% year−on−year in March, accelerating from a 29.6% increase in the previous month, the Central Statistics Office (KSH) reported. Output rose for the 14 month in a row. Adjusted for the number of workdays, output also rose 34.2% in March. In a month− on−month comparison, output growth slowed to 1.7% from a 12.7% increase in February.

3.5% Hungary’s first−quarter GDP growth accelerated to 3.5% year− on−year, up from 2.7% in Q4 2013, the KSH reported May 16. The rate was the highest registered since a 3.7% increase in Q4 2006. London analysts had put the y.o.y. rate well over 2%, with some saying it could match Q4 growth.

Source: Central Statistical Office

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But whichever they [ethnic Hungarians] stand up for, they need to know, as well as the Ukrainians, that the Hungarian state will throw its full weight behind ethnic Hungarians’ push for autonomy in Ukraine.

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Prime Minister Viktor Orbán, speaking on public TV, reopens the debate on autonomy.

Catholic Bishop János Székely, Lutheran Bishop Pál Lackner, Zoltan Radnóti of the Federation of Jewish Communities in Hungary (MAZSIHISZ) and Rabbi András J. Megyeri of the Unified Hungarian Israelite Community (EMIH) at a Holocaust Year roundtable discussion in the Dialogue House in Budapest on Wednesday (May 21).

ECONOMY BUSINESS CONFIDENCE IMPROVES The biannual gauge of business confidence by the Hungarian Chamber of Commerce and Industry’s (MKIK) Economy and Business Research Institute (GVI) rose by seven points from October to 30 points in April. Businesses’ outlook has improved as the climate for doing business gets better and there is less uncertainty, said MKIK chairman Lászlo Parragh.

While outlooks have improved, fewer businesses expect to make investments and more see order stock falling. Still, more businesses expect to make new hires. The survey results are based on responses from 2,606 businesses, who responded from a sample of 16,000.

MNB TO CUT BASE RATE FURTHER Hungary’s negative CPI figure may prompt Hungary’s central bank to cut its policy rate further, or at least keep the current 2.50% rate on hold for an extended period, London−based emerging markets economists said after a much softer−than−expected set of CPI data for April had been released on May 13. Headline year−on−year CPI dropped 0.1% last month, the first negative consumer inflation figure since 1968. Forecasts by London−based analysts had ranged from zero to 0.3% year−on−year CPI growth. JP Morgan’s economists said after the data release that they cut their 2014−15 average CPI forecast by 0.4 percentage point

to 0.3% and 2.5%, respectively, as inflation is tracking well below the MNB’s latest forecast.

MONTHLY SUCCESSFUL BUSINESS PRIZES AWARDED National Economy Minister Mihály Varga presented the Prize for Successful Business, a monthly acknowledgement, to three Hungarian companies at a ceremony on May 15. Electronic components maker EPCOS, which recently announced a HUF 10.5 bln capacity expansion at its base in Szombathely, was named ‘investor of the month’ and frozen foods company MIRELITE MIRSA ‘SME of the month’. OptoForce, which makes tactile sensors, took the prize for ‘start−up of the month’. The Prize for Successful Business was presented for the first time last August.

DOMESTIC HUNGARIANS NOT PRICE SENSITIVE Most Hungarians say price is the most important factor they consider when making purchases, but a survey by market researcher NRC shows just one−fourth actually choose the cheapest product to buy. NRC said most active shoppers buy the brands they are familiar with. Brand loyalty, price−to−value ratio and good sense were more important considerations than the cheapest price for most Hungarians between the ages of 18 and 59.

DECLINE IN GAS, ELECTRICITY CONSUMPTION

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HUF

150 bln Worth of the banker and food industry magnate Sándor Csányi, according to the annual ‘100 Richest’ ranking compiled by business news website Napi.hu. Csányi has now topped the four years in a row.

Gas consumption of Hungary has been in decline for several years, according to figures from the Energetics and Public Utilities Regulatory Office illustrates.

Gas consumption decreased to approximately 8.5 billion cubic meters last year from 11.3 billion in in 2010.The decline in the consumption of electricity is less marked, last year’s 34.26 TWh, down from 35.38 TWh in 2010.

MORE RYANAIR FLIGHTS, FEWER DESTINATIONS Irish discount airline Ryanair will increase its outbound fl ights from Budapest to 71 from 69 in its winter schedule. The added fl ights will serve Barcelona, Dublin and London, Ryanair Sales and Marketing Manager Katarzyna Gaborec announced in Budapest on May 13. However some still unnamed destinations will see the number of fl ights decrease, and all told, the number of cities that can be reached from Budapest via Ryanair will also decrease, to 12 from 14, Gaborec said. €111 MILLION SUPERLASER PROJECT APPROVED A €111 million investment for the construction of a superlaser center at the University of Szeged has been approved by the European Commission. The grant is issued from the European Regional Development Fund (ERDF). The center is the third part of the “Extreme Light Infrastructure” (ELI) pan−European Laser research hub. According to the Commission, the investment will provide a major boost to the research capacity of Europe by

attracting scientists to Hungary and creating valuable networks for Hungary within business and the scientific world. Hungary jointly won funding in the European Union’s Extreme Light Infrastructure (ELI) project with the Czech Republic and Romania.

POLITICS PARLIAMENT TO DEBATE UTILITY PRICE CUTS IN SPRING? Governing Fidesz wants Parliament to debate and approve a bill on cutting utilities prices in the industrial sector during the spring session, Fidesz MP Szilárd Németh stated on Friday. Tasked with heading up the process of lowering utility costs, Németh explained in local news daily Magyar Hírlap that “a bill on transforming the utilities sector into a non−profit one must be carefully drafted.”

NINE MINISTRIES MAKE UP NEW GOVERNMENT After the election of Viktor Orbán as Prime Minister of Hungary, the third Orbán government was inaugurated and will work with nine ministries, according to a proposal submitted to parliament on May 17. The full list of ministries are: Prime Minister’s Office, Ministry of the Interior, Human Resources Ministry, Ministry of Agriculture, Ministry of Defence, Ministry of Justice, Ministry of External Economy and Foreign Aff airs, National Development Ministry and Ministry of the National Economy. The proposal takes effect from June 6.

Photo: Kallos Bea / MTI

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62% OF ROMANIAN PATIENTS PAY MEDICAL STAFF The level of informal payments in Romania’s healthcare system is rampant, with more patients paying bribes in the public sector although such payments have also been made in private healthcare chains, a new survey commissioned

by Aspen Institute Romania suggests, according to a report by news site Business Review. In order to get more attention during treatment, 62% of the respondents admitted to making informal payments or giving gifts to medical staff. Most of the payments (83%) were made in public sector institutions, while the private sector had 7%. The survey by Exact Cercetare si Consultanta research firm – which was carried out online and had a sample of 1,154 respondents – says that 15% of the patients pay between RON 50 (€11) to RON 100 for better care, while 31% of them pay over RON 200.

EUROPEAN CENTRAL BANKS RENEW GOLD AGREEMENT A group of 21 European central banks said on May 19 they have no plans to sell “significant” amounts of gold over the next five years. In a joint statement, the central banks of the 18 eurozone nations, the European Central Bank and the central banks of Switzerland and Sweden said: “Gold remains an important element of global monetary reserves,” adding, “The signatories will continue to coordinate their gold transactions so as to avoid market disturbances.” The new five−year agreement replaces a similar pact between central banks that expires on September 27, 2014. The previous deal, agreed in August 2009, committed the central banks to sell no more than 400 tons per year and no more than 2,000 tons in the five−year period.

EIB TO PROVIDE €300 MILLION FOR RURAL DEVELOPMENT IN ROMANIA The European Investment Bank will provide a €300 million loan to finance priority projects under the Romanian Rural Development Program for 2007− 2013. The initiatives include afforestation, improvement of forest management and protection and small−scale rural and agricultural infrastructure investments.

“The EIB loan will finance the upgrading of the environmental performance of more than 44,000 farms and improvement of the management of some 2,400 forestry holdings. It will also support erosion mitigation works on 60,000 hectares as well as anti−flood measures in more than 1,000 communities, thereby reducing the risk of disasters such as the recent flooding in southern Romania,” Mihai Tanasescu, EIB Vice−President was quoted as saying news site Romania−Insider.

POLAND Q1 GROWTH FASTEST IN TWO YEARS Poland’s economy grew at the fastest pace in two years in the first three months of the year, preliminary figures from the Central Statistical Office in Warsaw showed on

May 15. Gross domestic product rose an unadjusted 3.3% year−on−year, after a 2.7% expansion in the fourth quarter of 2013.

The latest pace of growth was the fastest since the first quarter of 2012, when the economy expanded 3.7%. Poland is set to outperform the European Union’s largest post−communist members this year and in 2015, according to a spring forecast by the European Commission. On a seasonally adjusted basis, GDP grew 3.5% from the previous year, following 2.5% increase in Q4. Sequentially, the economy grew a seasonally adjusted 1.1% in the quarter, after a 0.7% expansion in the final three months of 2013.

ROMANIA SETS 2019 AS TARGET DATE TO JOIN EURO AREA, MINISTER SAYS Romania has set January 1, 2019 as its target date for joining the euro as the country meets almost all adoption criteria, Budget Minister Liviu Voinea said. Voinea informed the other member states about Romania’s plan during a meeting of the European Union’s finance ministers in Brussels. The target date is also included in the country’s convergence program that will be sent to the European Commission in the coming days. The largest eastern EU members, including Poland, Czech Republic and Hungary, have abandoned euro−adoption targets as their economies reeled from the global economic crisis and confidence in the currency was shaken.

Romania is setting out to follow Slovenia, Slovakia, Estonia and Latvia into the bloc, while Lithuania is aiming to join next year.

Romania’s economy expanded 5.4% from a year earlier in the fourth quarter, the fastest since 2008, boosted by industry, exports and a bumper harvest.

CEE ATTRACTS €1.4 BLN OF PROPERTY TRADING IN Q1 Central and Eastern Europe saw almost €1.4 billion of real estate investment during the first quarter of 2014, according to global property adviser JLL. This represents a 19% increase compared to the first quarter of 2013. Poland remained the dominant regional market with a 69% share (€940 mln) of the total CEE volume, followed by Czech Republic (16%), Slovakia (5%), Hungary (4%) and Romania (1%), with Bulgaria, Croatia, Serbia and Slovenia making up the remaining 5%−plus.

FIAT TO INVEST $784 MLN ON POLISH FACTORY UPGRADE Italian carmaker Fiat Chrysler plans to invest PLN 2.36 billion ($784 million) to upgrade its Tychy factory in southern Poland where it plans to start production of the all−new B−class car, Polish Puls Biznesu daily reported. The planned investment should be made by the end of 2017 and will include upgrading production lines, as well as new technology purchases, according to the newspaper, which cited the Polish Fiat press office as its source. The Italian carmaker is to

hire 420 new employees on top of the current 3,000 in Poland.

EBRD: IMPROVED OUTLOOK ON CEE, BALTICS DAMPENED BY RUSSIAUKRAINE CRISIS The countries of Central Europe and the Baltics are enjoying an improvement in their outlook thanks to a stronger recovery in the euro zone and improving domestic demand, the European Bank for Reconstruction and Development said on its website. The latest EBRD economic report sees average growth of the region at 2.3% in 2014. Nevertheless, the outlook is being dampened by the Russia−Ukraine crisis and its impact. Several central European countries are also dependent on Russia’s gas and oil.

MOLDOVA TO SIGN EU ASSOCIATION AGREEMENT IN JUNE European Union President Herman Van Rompuy invited Moldova to sign a key economic and political deal with the EU on June 27, warning against external pressure on the country in remarks aimed at Moscow. Van Rompuy, visiting the country on May 13, said Chisinau would be able to sign the Association Agreement next month, in a move that will likely infuriate Russia. “I look forward to welcoming Prime Minister [Iurie] Leanca in Brussels on 27 June to sign our joint Association Agreement,” he said. Moldova initialed an association agreement with the European bloc in November, angering Moscow, which has backed its Russian−speaking breakaway region of Transdniestr.

UKRAINE TO GET EBRD CASH TO BOOST ECONOMY The European Bank for Reconstruction and Development will use Ukrainian investments to help the ex−Soviet republic recover as riots and bloodshed threaten to split the nation, said the lender’s president, Suma Chakrabarti. The London−based EBRD, which has a portfolio of holdings worth €4.7 billion ($6.5 billion) directed mainly toward Ukrainian private business, will complement a $17−billion aid package from the International Monetary Fund approved this month. Foreign aid will help the country pay its debts as the government undertakes unpopular measures, such as the phasing out of natural−gas subsidies.

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Hungarian Firms Shortlisted for Women in Business Law Awards Five law firms from Hungary have been shortlisted for the Euromoney LMG Europe Women in Business Law Awards 2014: bpv JÁDI NÉMETH Attorneys, CMS Cameron McKenna, DLA Piper, Kinstellar, and White & Case.

The awards are being held for the fourth time in 2014, and will be presented at a gala evening in The Dorchester, London on Wednesday, June 18. Last year bpv JÁDI NÉMETH Attorneys won the country award for Hungary, with CMS Cameron McKenna picking it up in 2012 (in that same year, partner Dóra Petrányi was named Best in TMT). The inaugural winner of the national title was Szecskay Attorneys at Law in 2011.

Euromoney Legal Media Group (part of Euromoney Institutional Investor PLC) comprises a wide range of leading legal publications including International Financial Law Review, IFLR1000 (the guide to the worlds’ leading financial law firms), International Tax Review, and Expert Guides.

Individual practise area awards recognise the best in anything from aviation to white collar crime. The firm awards will celebrate the best initiatives for gender diversity, innovation, minority women, mentoring, work−life balance, pro bono work and talent management, as well as best in region and best in country.

Euromoney LMG will reward the best in−house teams as well as individual in−house women attorneys. Other awards include ‘Outstanding Practitioner’ and ‘Lifetime Achievement’ awards, as well as a number for ‘Rising Stars’.

The nominations are based on preliminary research and submissions.

Fore more legal news, background and lists, see our Special Report, pages 13−30.

BBJ

2Business COMPANY NEWS

News for this page is taken from the Budapest Business Journal’s daily briefing, Hungary A.M.

Speaking at the general meeting of the Hungarian Association for Innovation yesterday, National Economy Minister Mihály Varga promised that his government will “do everything in its power to help Hungary turn into not only a production but an innovation center.” More specifically, Varga indicated that the current administration has set a goal of 20 world−class innovation centers to be in operation in Hungary by 2018 and at least 30 by 2021. Varga also stated that, whereas in the 2007−2013 European Union budget period, some 16% of EU funding was devoted to economic development, the next six−year period will see approximately 60% (or HUF 4 trillion) going to this area.

British Telekom Headcount Reaches 1,000

(Left-right) Rogier Bronsgeest, President, Global Customer Service Operations at BT Global Services; Andor Faragó, General Manager BT European Service Center; Elaine Budd , COO for BTGS Europe; Mihály Varga, Minister of National Economy; and Jonathan Knott, British Ambassador to Hungary

OTP Profit Plunges 48% on Ukraine, Russia Losses OTP Bank’s consolidated Q1 after-tax profit plunged 48% to HUF 5.9 bln from the same period a year earlier on losses at its businesses in Ukraine and Russia and growing risk costs, an IFRS earnings report published on May 16 shows. OTP booked a HUF 7.5 bln loss in Ukraine and a HUF 4.7 bln loss in Russia. In the base period, the Ukrainian and Russian businesses generated after-tax profit of HUF 1.6 bln and HUF 7.7 bln, respectively. OTP noted the “high probability of a fragile business environment for the rest of the year” in Ukraine and put the unit’s potential full-year loss at HUF 10-20 bln. It said the Russian unit “may not provide a positive contribution to the group’s net earnings” because of a slowerthan-expected decline in risk costs, weaker lending activity and lower profitability due to “benign macroeconomic performance”.

A breakdown of earnings by subsidiary, shows that, with the exceptions of the units in Ukraine and Russia, all of OTP’s main foreign businesses were in the black in Q1.

OTP’s core business in Hungary had aftertax profit of HUF 33.9 bln, up 55%.

The number of Hungarian employees of British Telecom has reached 1,000 and the company plans to increase its headcount still further, BT told journalists in Budapest on May 9. The company plans to hire a further 150-200 highly-qualified young employees in the next 12 months for its European Service Center based in Hungary. BT’s offices in Budapest and Debrecen serve more than 3,000 international clients including leading multinational companies, providing a wide range of customer management, financial and business administration services.

National Economy Minister Mihály Varga said BT’s efforts to provide more services with higher added value and to increase the number of its employees fits in well with the government’s economic and job creation goals. Rogier Bronsgeest, president of BT’s Global Customer Service Operations, said Hungary is an excellent business location because of the availability of a highly qualified, innovative workforce with good foreign language skills.

The Budapest−based research and development center of German engineering giant Bosch has hired its 1,000th development engineer, the company said. The R&D center will be further expanded by 2015. One in nine Bosch employees in Hungary are college graduates working in research and development, Javier Gonzalez Pareja head of the Hungarian Bosch group said in a statement. Bosch opened a starter motor and generator development center in Miskolc at the end of March, where it plans to invest €2 mln by the end of 2017. The group has nine subsidiaries in Hungary.

Wood−based panel manufacturer Falco on May 8 inaugurated a €40 mln particle−board factory in Szombathely, west Hungary. Falco board Chairman Tibor Novák said that the company received government support through the New Széchenyi Plan’s Economic Development Operative Program to cover about one−sixth of the cost of the investment. Novak noted that the Austrian−owned company hired 12 new employees to work at the factory.

The company employs a total of 250 workers. The green Politics Can Be Different (LMP) party and about 30−40 local residents held a demonstration outside the new facility factory during the inauguration ceremony claiming that the plant emits potentially hazardous amounts of sawdust into the environment on the eastern outskirts of the city of Szombathely, news agency MTI reported.

FHB Mortgage Bank had after−tax profit of HUF 1.15 bln in the first quarter of 2014, compared to losses of HUF 1.6 bln in Q1 of 2013 on rising revenue from interest and fees and improved trading results, FHB’s consolidated IFRS report for the period published May 15 shows. FHB had net interest income of HUF 5.2 bln in Q1, up 22.3%, and net income from fees and commissions of HUF 1.3 bln during the period, up 49.7%. FHB had net trading result of HUF 1.1 bln i n the first quarter of 2014, up from net trading result of HUF 328 mln a year earlier. FHB had operating costs of HUF 3.8 bln in Q1, down 4%. FHB is an Equities Prime−category issuer on the Budapest Stock Exchange.

Widening margins caused Magyar Telekom’s profits to swell in the first quarter, the company’s consolidated IFRS report shows. MT’s net income

rose to HUF 4.8 bln in Q1 from HUF 1.7 bln in the same period a year earlier. According to estimations of analysts net income was more than HUF 3 bln. Earnings per share came to HUF 4.6 for the period. Revenue fell 3% to HUF 151.9 bln, but direct costs dropped at triple that rate, declining 9.5% to HUF 53.9 bln. Operating profit was up 13% at HUF 16.1 bln.

Financial losses narrowed by HUF 1.7 bln to HUF 6 bln. In a breakdown of revenue, MT said turnover from its mobile business edged up 0.2% to HUF 73.4 bln. Fixed line revenue dropped 4.1% to HUF 51.8 bln. Turnover from the system integration and IT segment dropped 5.9% to HUF 13.2 bln and revenue from MT’s non−core energy services business was down 11.9% at HUF 13.5 bln because of lower gas consumption due to the mild winter, the company said.

Hungarian oil and gas company MOL will begin paying the company’s annual dividend on June 5, the compamy announced on May 12. MOL will pay HUF 60 bln in dividends this year, up from HUF 46 bln in 2013 and HUF 45 bln in 2012. MOL said that it would announce the dividend per share on May 23. The 2014 dividend will be composed of a regular dividend of HUF 47 bln and a special dividend of HUF 13 bln amounting to one−quarter of the gain stemming from the liquidation of company subsidiaries. MOL is an Equities Premium−category issuer at the Budapest Stock Exchange.

Finland−based Nokia is investing HUF 3 bln (€9.9 mln) at its research and development center in Budapest, company and government officials announced on May 14, a move that will increase employment at the company by 150 to nearly 1,400. The Hungarian central government will contribute a grant of HUF 211 mln to the investment.

German steelmaker Wuppermann on May 13 signed an agreement on some HUF 40 bln (€130.64 mln) of investments at the site of the Győr− Gönyű port on the Danube. Wuppermann will build a galvanizing plant at the site, along with warehouse and office space. The investment will save Hungary from forfeiting European Union support earlier used to develop the port, because the funding was contingent on the utilization of the site in west Hungary.

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2 Business

Budapest Business Journal | May 23 – June 05

How Hungarian Companies are Affected by the Ukrainian Crisis Russia is the biggest partner of Hungary outside of the European Union. Ukraine is the second most important if you disregard the EU. Hungarian corporations are tied in hundreds of ways to both Russia and Ukraine; the conflict between the two will touch everybody, but each company is affected in a different way.

The Budapest Business Journal investigates the impact of the Ukrainian crisis upon various Hungarian firms.

ANDRÁS ZSÁMBOKI

Hungary imports fossil fuels worth EUR 8 billion from Russia annually. That accounts for 80% of Russian imports to Hungary. Besides the sheer size of that figure, the fact that the Russian partner enjoys a practically monopolistic situation represents a particular problem. If Russia drops out, Hungary cannot easily replace its energy in the short run, and the country may experience power shortages.

GAS Aleksey Miller, CEO of Russia’s giant gas corporation Gazprom, says the company will stop gas export into and across Ukraine on June 1 because of disputes over Ukraine’s unpaid gas bills.

The trans−Ukrainian Urengoy−Pomary− Uzhgorod pipeline is called Brotherhood (Bratstvo). Through it, Russia provides gas to the entire Central European region from Slovakia through Austria to Southern Germany. If Brotherhood is shut down, the gas supply to Hungary will stop entirely. Hungary consumes eight million cubic meters of natural gas annually. Some 80% of that arrives from Russia through Brotherhood. As Ukraine has access to the pipe as well, the quantity of gas that travels across the country is impossible to separate from the amount of gas that is consumed inside it. That means the only way Russia can prevent Ukraine from receiving gas is by blocking gas transmission across Ukraine altogether.

“Fertilizer manufacturing company Bige would not be affected by the stopping of the Russian gas transport,” István Blazsek, CEO of Nitrogémúvek (Bige Holding’s fertilizer unit) told the BBJ. As he points out, the gas purchases of his company have been diversified, and the supply of methane gas, necessary for production, can be ensured entirely by purchasing from Western Europe. “Our gas purchases are considered a sensitive issue, and as such they are company secrets,” Blazsek added. Bige is the largest gas consumer within Hungary; it is responsible for 8% of Hungary’s total gas consumption. The other big consumers are large energy providers.

Previously, gas distribution was divided between MOL’s subsidiary FGSz and

E.ON Gas Storage. These companies, however, have been nationalized by the Hungarian state and, according to the BBJ’s information, strategic as well as commercial gas reservoirs are being currently filled up at a rapid pace.

CRUDE OIL On May 5 this year, Russian oil company Transneft stopped crude oil transport through the Friendship (Druzhba) oil pipeline, which also carries crude oil to Hungary. Igor Dyomin, spokesman for the Russian monopoly, denied that stopping the crude oil transport has anything to do with the Ukrainian crisis. “Our company is carrying out maintenance and conservation works at the moment,” Dyomin told Reuters news agency. When the BBJ put the question to Hungarian gas and oil giant MOL, it denied that Transneft’s decision endangers the supply of oil products to Hungary. “The MOL group acquires raw materials necessary for its refineries from four different sources, which ensures the security as well as the continuity of the supply. The supply line in question only plays a complementary role in the field of purchasing raw materials,” MOL’s press department says. An expert unwilling to be identified considered it worrisome, however, that out of MOL’s four refineries the biggest, the Danube refinery at Százhalombatta, processes nothing but Russian crude oil, and the second biggest in Bratislava also relies largely on crude oil of Russian origin. “In the property rights dispute between the Hungarian and the Croatian governments, MOL’s bargaining position may be substantially undermined by the fact that the INA−operated Adria pipeline is the only escape route for MOL if the Russian oil pipe is shut down,” our expert witness told the BBJ. STOCK MARKET JITTERS According to the quarterly report of OTP Group, the corporation achieved HUF 5.8 bln in revenue after taxation in early 2014, which is 48% less than in the same period last year. According to OTP’ report, the drop is due to the subsidiary banks’ decreasing profit contributions. “Our Ukrainian subsidiary’s 2014 Q1 loss was HUF 7.5 bln, which, projected onto the whole year, might amount to HUF 20 bln.

OTP’s management expects the Russian− Ukrainian conflict to be solved within a relatively short time. Ukraine will then step on the road to consolidation. In case it does not, and the situation escalates,” so the report goes, “it could seriously jeopardize the profitability of the whole group.” OTP has already been forced to close down its Crimean branches in Sebastopol, Symferopol, and Kerch.

In its release report, Gedeon Richter amended its originally expected turnover for its Eastern markets, including Russia and Ukraine. It now thinks the company’s full income will decrease by 6% in 2014. “In Russia, our turnover expressed in rubles could decrease by 5%, which, because of the foreign exchange situation, may in fact amount to a 20% drop expressed in euros,” Zsuzsa Beke, Gedeon Richter’s director responsible for press and public relations said. As far as Ukraine is considered, Richter reckons with a 35% turnover loss.

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2 Business

Budapest Business Journal | May 23 – June 05

The Art of Being What can the corporate world and startups learn from each other? More than a dozen company representatives from century old multis to garage− stage newbies tried to answer that question at the Budapest Business Journal’s conference on business innovation. Entitled ‘Master And Pupil’, held in the Gerbeaud House and backed

by Telekom and Deloitte, the event attracted more than 100 participants. Veronika Pistyur CEO, Bridge Budapest was the moderator of the conference.

MÁTÉ NYUSZTAY

GPS FOR STARTUPS Péter Balogh, founder and CEO of NNG (one of the most successful Hungarian

Balogh identified three main challenges NNG faced as a startup: a lack of infrastructure, team and management.

They didn’t have sufficient electric power, for instance, but they had an equally hard time to a round up a big and capable team – now they work with 12 headhunter companies. When you grow to become a multi−garage company, you face another problem: not enough leaders. So you need to grow upwards as well as downwards, while trying to keep your hierarchy as flat as possible. Another challenge is the size itself: “When you have a crew of up to 20, everybody knows everything. Above that number it doesn’t work, information gets lost; you need to structure your communications. When your team reaches 80, you get factions, which can develop into little empires – parties with conflicting interests – by the time your staff grows to 250. That’s where work structuring becomes a real challenge. With 600−700 employees, you face independent business units, which is when you have to introduce standards to maintain quality and to avoid wasting money.”

One thing is for sure: all startups will get a slap in the face after a while, and if it’s not lethal, they may go on to become a corporation. “We got one, we survived it, but still maintained our startup culture.”

OPPORTUNITY KNOCKS Levente Balogh, CEO of the Szentkirályi mineral water company presented another example of success in a totally different field. It started with a coincidence. “On one side there was a friend who produced 0.2 liter bottles, which he couldn’t sell, on the other side there was Lufthansa, looking for a mineral water bottle provider

startups, which gained world fame for its navigation software Nav N Go) sees a huge competitive advantage in the mathematical and engineering skills in Hungary, which is why we have had six big startup successes in software business recently, he says, but zero in football.

NNG’s goals weren’t grandiose. “All we wanted was to have mom and dad drive in peace, arrive at wherever it was they were going on time, without fighting over where to turn.” That said, to “navigate the world” was quite a big target, though it doesn’t seems so remote now that NNG1s products are in more than 100 countries. Success, Balogh noted, was based on some basic ideas.

“In this business, nothing is impossible or rather: the exponential technological development described by ‘Moore’s law’ means that anything that previously seemed impossible can always be solved.”

Sponsors:

from our region. It turned out this specific bottle was the only type that would fit in the trays on their flights. And I filled them with Szentkirályi.” Balogh also sees the company’s success partly as a result of breaking some basic rules. “Early revenues were not spent on machinery, or office buildings. Instead, I spent the money

on marketing.” Thus they generated a huge demand for mineral water, so much so they could not keep up with demand.

When revenues enabled developments, he bought the most expensive machinery, but by the time he sealed the deal, even that wasn’t enough, so he bought even more hardware, and then found there was not enough room left to store the water.

Now Szentkirályi owns a complete logistic center, storing five million liters of water daily, serving the domestic market (not so little considering eight liters of mineral water are consumed every second), and 45 other countries to date.

LET THERE BE LIGHT Ottó Gecser, president of Personal Branding Institute, former CEO of Brokernet and AXA, advises all companies,

to decrease to 15 years by 2025. This means that Google will be pulling up the average within a few years, so it is definitely not a young startup anymore.

One of the main challenges ‘old’ companies face these days is the digital revolution, he added. By 2025, more than

not only to startups, to “be hungry, be mad.” One of the anecdotes Gecser shared was about Fotexnet, which bought the former Hungarian household shop chain (the only one in the socialist era), selling a wide range of household commodities, from paintbrush to detergents. After renaming it Azur, they made two major innovations, both involving the CEO’s personal intervention: the first was washing the shop windows every morning, instead of every month, the second was changing the light bulbs inside the display windows. “The boss checked every shop window every night, and if he saw even a single bulb was not working, he would instruct the managers personally.” The point is you need to be there personally, you need to be ‘flat’, or you’ll become the sort of corporation of your nightmares.

DON’T PANIC The world’s third largest company is not a big corporation – so what is Google then?

Definitely not a startup, though it still behaves like one, says Szabolcs Szelei, marketing director of Google Hungary.

He says the average age of the world’s top 500 companies is now18 years, compared with 62 in the 1960s, and this is predicted

seven billion people will be online via 50 billion devices, which will drastically reshape the business landscape. Every company will have to redefine itself in the digital space. Naturally that is much easier for a new, innovative company than a 180−year−old company.

As for startup success recipes, Szelei thinks one of the main obstacles is the lack of financial models, lack of a good management skills and of exit experiences. Also he sees a danger in startups’ anti−corporate attitude. “We

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2 Business

Budapest Business Journal | May 23 – June 05

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Flat and Mad in the system, and weren’t expected to use their minds. The peak was the invention of HR, Záboji said with irony.

But if you own your company, you have a totally different approach, he added, reflecting on the ‘flat’ theme. You start to think more about what to spend on, you have different priorities to someone with a traditional big corporation career.

Záboji adds that an idea is worth nothing on it’s own, without a capable team, but you also need management experience, parental guiding, something which even Google got at the start, when they looked for someone who actually knew how to build up a company.

THE ART OF FAILING Anton Kovach, ShiwaForce CEO also believes in team spirit, or rather mini team spirit. If you put 6−8 people in a group, they will take responsibility and start to think and act like entrepreneurs. The company chief said it was vital to have the flexibility to learn from the ‘grown−ups’. What he sees as a problem in Hungarian startup field is the fear of failure. “Everyone’s educated to become perfect, instead of learning need to find the ideal balance between big corporation’s experience channeled to startups, which instead have an immense momentum.” Another piece of advice – taken from Google X−Lab’s Astro Teller – is that you don’t need to fear failures, instead you need to reward then. If you don’t, no one will dare to take risks, thus you eradicate innovation.

THERE IS NO RECIPE “We always look for the ultimate theory or recipe, but it doesn’t exist. Every company is unique, has it’s own DNA.” Introduced as the pope of Hungarian startups, Peter Záboji, president of European Entrepreneurship Foundation considers only one factor: entrepreneurial language and culture. Take the word startup: it’s sexy, it’s trendy, and it has helped renew the “worn” word entrepreneur. In the past 100 years the definition has changed a

lot. First it meant inventor, then market− creator, then mass−producer and so on.

Company structures have also developed and become more fragmented; in the 20th century workers were relegated to screws

AWARDING THE FITTEST The conference participants were also given an opportunity to get acquainted with the conference sponsors’ startup competitions.

Telekom’s kickstarter business app tender calls for participants to send a short video describing how their cloud−based app would help the everyday work of SMEs. The videos will appear on a ‘Business Wall of Fame’ and the

video which receives most votes, may be awarded prizes including an advertising campaign worth HUF 10 million provided

by Telekom: The tender is being run across six countries in the region, with the overall winner set to receives €80,000 for bringing its product to the market provided by the Krakow−based business incubator hub:raum. Further details available at www.sikerfal.hu.

Similarly, Deloitte’s ‘Technology Fast 50 in Central Europe’ competition is part of a global initiative to rank the fastest growing technology enterprises worldwide. The regional program is open to technology companies from 17 countries in the region that develop or own proprietary technology that contributes to a significant portion of the company’s operating revenues; or manufactures a technology−related product; or devotes a high percentage of effort to the research and development of technology. The winners will be selected

by Deloitte’s M&A Advisors, who are responsible for raising funds and finding strategic partners for emerging companies and working as advisors to private equity and venture capital funds. For further details check www.deloitte.hu.

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through failure. ShiwaForce’s big deals always started with something going horribly wrong. It’s not the failure that matters; it’s how you react to failure.

Hungarian companies should be more agile, adaptable, and open or they will never make it.

TAKE IT AND GO Be you a startup or a multi, the main question is whether you can maintain the entrepreneur mentality or not.

Vilmos Beskid, R&D director of Ericcson Hungary, said the 137−year−old giant had survived three technological revolutions where most of its old rivals had not, and the new ones are younger then 10 years. The reason Ericsson is still on the market is its ability for continuous, systematic innovation.

Beskid sees Ericcson as a huge corporations able to learn from startups: “We try to bring startup culture to our company, we let our teams loose in the sense of motivating them, let them feel the company is their own, take two weeks off and work on their ideas, in other words: take it and go”.

Soaring?

Register for the Deloitte Central European Technology Fast50 Program and fly even higher.

For details, please visit our website: www.deloitte.hu

© 2014 Deloitte Hungary

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10 2Business

Budapest Business Journal | May 23 – June 05

Getting the Right Message In a relatively rare interview, Nick Kós, country managing partner of PwC Hungary, talked exclusively to the Budapest Business Journal about the economy over the past year and the months to come, changes within his own company, and the global megatrends set to impact Hungary in the near− to mid−term future.

in a way that benefits the country. And that, of course, is a perfectly noble cause.

Q

What are you most and least optimistic about in terms of Hungary’s economy?

A: I am most optimistic about the fundamentals. If you go back two years or a little more and think where we were with the IMF loan, everyone was worried we wouldn’t get a new loan and the economy would collapse. We didn’t get a new loan, we paid the existing loan off early and the economy didn’t collapse. That ability to deal with major international challenges enables us to be more positive about future growth. Hungary is starting to get some recognition for the positive developments in its economy: the return of GDP growth, low inflation. The currency is remarkably stable, all things considered; unemployment is low. It is, fingers crossed, in a very good position to catch a wave of positive investor sentiment as we emerge from a period of deep doom and gloom amid the recession, both globally and in Europe.

On the less positive side, what the CEOs are telling us hasn’t changed. They fear the levels of uncertainty we have seen. We need stability and predictability in regulations.

We have seen laws and taxes changed at incredible speed, although our tax advisory business has clearly benefited from the latter! The government still has the ability to surprise negatively with its two−thirds majority. We would like to see it use that power positively.

ROBIN MARSHALL

Q

Q

We have a newly re−elected government: do you expect more of the same in terms of predictability and transparency in the economic environment, or are you looking for a more consensual approach over the next four year term?

A: I think most of the things the government wanted to do it has done, though if you look at energy, the banking sector, and foreign

Q Photo: Zoltán Vémi

As a professional services firm, PwC advises companies on doing business in Hungary and that puts you in a very good position to judge the economy. So how would you categorize the last 12 months? What is the mood among the CEOs you work with?

A: Go back a couple of years to when I first came back to Hungary and there was massive uncertainty. There were issues about how we were portraying ourselves as a country; the international press coverage was poor for us. Perhaps government communications have got better, and perhaps the international press has lost some interest. To me the fundamentals were always good: the geographic location, the quality of the workforce, the intellectual capital it represents. But these were lost in the rather bleak picture that was painted for a while.

When good things start happening and people get the right messages the Hungarian economy will respond quickly.

This is not Poland, it is a relatively small, export−dominated market and attracting investment is always going to be important in generating growth.

Of course there are a couple of areas of the economy where the approach is perhaps more punitive than in others, but Hungary is not seen as a massive black hole now.

Increasing numbers of potential investors are coming to us for support, and that is a very good sign that people see value in the market and are ready to invest.

Our annual CEO survey also showed a more positive mood. Something like 29% were ‘very confident’ about their company’s prospects for revenue growth in the next 12 months, 72% were ‘confident’.

Eighty−five percent were ‘confident’ about growth in the next three years. There is definitely a sense of a shift in terms of sentiment in the market. Some 45% are talking about increasing headcount.

That doesn’t mean there aren’t issues.

There are still very high taxes on employees, which are not conducive to increasing investment, but we really are quite positive.

currency loans, it seems the process is not yet finished.

Some of the fundamentals look very good, such as unemployment, and I say that irrespective of the fact there is an impact in terms of people leaving the country.

Perhaps that’s a new thing for Hungary, but for many countries around here, or for Ireland, for example, migration has been an issue for years. We know that has helped the figures, as have the numbers of fostered workers [people on government work schemes], but still, unemployment is 8.3% here; in Spain it is 25%, in Ireland it is 11.7%.

That has to be positive.

From the governmental point of view, it has been reelected strongly, the base fundamentals have moved in their favor, down to their actions in some cases, in other parts through good fortune. For the next government cycle, keeping the GDP growth going will be fundamental for them, and that means it will be beneficial for them to support the same things business wants:

growth. I don’t pretend to know what the government intends to do, but we need a period of stability in the country and I think it will be supporting business and investment

It has been a busy 12 months for PwC; how has the company performed?

A: Much like the economy, we have come through some difficult years. At times we have had to take actions we have not necessarily been pleased about, but that were necessary to protect the firm and its profitability.

We have now come to a position where we are happy with the business, there is an improved level of quality and, in general, it is now very robust. In some ways we have become a much more Hungarian firm, much more market− focused, though I think you could say the same for any of the Big Four firms.

We do not compromise on quality or integrity, and that would never be our intention, however we need to become somewhat more ‘human’. This is a people

Prime Numbers: Two Times GDP “Back before 2008 we were seeing 10, 15, 25% annual growth; I do not think those days will return,” warns Kós. That said, though, growth is very much on the agenda.

“Two times GDP is typically seen as a target. That is something we would see as a minimum for us; you would be expecting about 4-5%, and we’d like more than that. Some parts of our business should see double digit growth, the business as a whole possibly 7-10% if we really stretch to gain our strategic goals.”

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2 Business

Budapest Business Journal | May 23 – June 05

Making an Office a Home “People keep saying ‘If times have been so tough, how have you been able to move in here?’” says Kós of the newly renovated Eiffel Palace Office Building, in the heart of the capital’s central business district. “But actually, from a cost perspective, because of the use of space and the rental agreement, this commercially was a very sound decision.”

very green, and has won a number of awards.”

Indeed, it is expected to get double environmental certification (LEED Gold and BREEAM Very Good), which developers Horizon Development Kft. says would make it unique in Central and Eastern Europe.

“The real point is the impact of the building. It is much more open, much more informal. There’s lots of glass. People are walking around smiling and waving to each other. I’m excited to come to work here in the mornings.”

Renovations of the building were begun in March 2013 and finished by the end of that year. PwC moved in during March of this year. “It has a lovely balance,” says Kós. “It combines the old elegance of Budapest with modern needs. Everything is wireless and mobile. It is very much in tune with the technical demands of today. If it contributes to improving the image of Budapest’s financial district and the rejuvenation of District 5, I will be very happy.”

The eight story, 2,675 sqm building originally dates back to 1894, when it was built as the headquarters for the prominent daily Pesti Hírlap’s publishing But the benefits go way beyond a simple and print house (the plot was originally bought for improvement to the bottom line. the princely sum of 216,105 forints and 33 deniers).

And then there is environmental impact. “I am proud of the fact that the office was built to the highest standards; from a CSR perspective it is

trust in the reporting, which makes it easier to raise capital and drive sustainable growth.

We are seeing more companies move to an integrated reporting framework; in fact, we ourselves produce integrated reports.

Q

In April the European Parliament reached preliminary agreement on a revised directive and a new regulation on statutory audits, aiming to strengthen quality, reinforce independence, and improve supervision.

Do you welcome these moves, and how do you think this might play out in Hungary?

A: We support anything that creates more transparency, and strengthening statutory audits is good. However, I am not sure all of the changes as proposed will have the desired effect. In fact, they could actually reduce competition.

From our perspective in dealing with customers, we understand the threat of over familiarity, but we absolutely rely on our integrity and self−regulate very strongly. And the reality is that companies get the best service from people who understand their business.

It also concerns me that in order to attract the very best candidates I have to be able to offer a business that is interesting to them. If we go down the route of restricting firms to offering audits as a commodity, you lose some of that.

Photo: Tamás Novinszki

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business, therefore from that point of view our people are our product, with the knowledge, experience and skills they have.

The relationship with the clients is incredibly important, knowing them, understanding their needs, so you can offer the best solution, the solution they want rather than the one you want to give them.

We have emerged from the past couple of years much more capable of going to the market, of identifying opportunities and getting into a position to add value; that is positive for us and our clients. Now we have something more to offer. Purely financially, we still have some challenges on the revenue side, to grow revenue while maintaining profitability. But overall I am pleased with where we are, that we are well positioned to make the most of the journey that is to come.

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What does the next 12 months hold for PwC? How do you plan to grow market share and revenues?

A: As a firm we say we want to be loved in our markets, feared by our rivals, and envied by our own network. That has become something of a mantra for us.

There are three things we need to focus on, and have been doing so for the past two years: one, create relationships in our new reincarnation in Hungary; two, improve delivery, both the quality of the work we do and the offers we have so clients can find the right solutions; three, take pride in what we do. Fundamentally for us, our people are our weakest or strongest link; in the past we have not done enough to recognize what they do.

So now we make sure we celebrate our successes, often with our clients, by the way, but always with our people. If we do these three things, we will do very well with our existing customers but also in expanding our client base in Hungary.

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Before the elections the government started to hint it was happy to look at integrated reporting where it was appropriate, particularly for multinationals. Are you optimistic it will follow up on that, and in what time frame?

A: We have seen that when this government decides to do something, it generally does it. I can’t comment on a timeframe, but we would like to see progress in this area. We support it from the point of view of it building

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PwC is a global organization, able to gather information from all over the planet: what will be the next transformative global trend for business, and when might its effect be felt in Hungary?

A: We spend a lot of time looking at global megatrends, and there are three on the agenda: technological advances, demographic changes, and shifts in economic power.

In the mid− to long−term, if you look at the changes in demographics in the next 30 years, your manufacturing workplace and your markets will be in completely different locations. For us as an export economy it will become very important over time to know exactly whom we are competing with and to where we are exporting.

Mid−term, economic power shifts are already happening with the emergence of India and especially China as a retail destination, where the purchasing power of the Chinese middle class is rapidly growing. Businesses will need to attract a very different type of client base, with changes to their marketing strategy and so on.

Rapid technological changes will have a great impact and will be immediate. And historically Hungary has made an incredible contribution from that point of view. Think of Prezi, which transformed what was a fairly bland technology, or NNG; what it is doing, putting its sat− nav technology into cars directly, is amazing. This country is well set up to benefit from this trend, but businesses need to think how they will deal with it, and with the changing profile of business everywhere. We talk about digitalization a lot now.

So there are huge challenges ahead: changing markets; changing manufacturing and sales and distribution destinations; and massive technological challenges. Navigating through all that will take particular skill sets. And a strong nerve!

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2 Business

Budapest Business Journal | May 23 – June 05

Ready to be Big in Europe No matter how unfriendly the economic environment has been lately for banks in Hungary, Russia’s market leader, Sberbank rather sees opportunities on the horizon. Mark Arnold, CEO of the group’s European division talks about optimism, digital strategy, and market expectations.

LEVENTE HÖRÖMPÖLI-TÓTH

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Sberbank’s activities were restricted to Russia and the CIS until it acquired Volksbank International to use as a jumping board for expansion into the CEE region.

A: Russian investments are increasing significantly across the world. CEE is closely aligned through history, so it’s a natural progression. It is also important because of the EU banking license. The entity that was up for sale was not the best, but it had good coverage. It was small, easy to integrate and a great starting point to launch our European adventure.

Q

Your share amounts to a mere 2.02% of the Hungarian market.

How do plan to grow that?

A: Buying Volksbank International was the first investment, and buying small so that we can integrate is the right thing to do. We do want to get to a 5% market share overall in the region, and that’s where we are heading.

Now we are at 3.3% and ultimately we will grow into that position. Realistically, we need to be at 10% in order to be meaningful on the marketplace. We don’t want to be number 20 or 11; we need to be in the top five. We believe that there will be significant opportunities in the marketplace to grow.

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Why wasn’t a bigger player considered as an acquisition target? Raiffeisen was rumored to be leaving the country.

A: We have a lot of low−hanging fruit. Our market share is still small, but growing fast. There are rumors about every bank in the marketplace, so Raiffeisen is not unique in that. Thanks to the new teams we’ve put in place, we’ll be in a good position when the time is ripe. It’s probably a year or two before we can do that.

now at 3.3% for the region, the loan−deposit ratio went back from 140% to around 118%, profit was in the negative range, at EUR 300 million, now it’s plus six. We are on the right track. It clearly requires the right team, the right brand, and the right investment, but also big decisions such as digital banking.

STORY HIGHLIGHTS ■

Following the acquisition of Volksbank, Sberbank has ambitious plans for its European operation ■ The bank is optimistic about market opportunities for further expansion

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That would help you stay ahead?

A: In Russia, there’s a huge, tech− savvy population coming through.

Branches aren’t what people want anymore.

We have 21,000 branches, of which 18,000 are in Russia, but we are moving digital. The point will come when it will be become the norm not to go to a bank branch.

Q

The economic environment in Hungary is still not particularly friendly for banks; yet, you decided to enter the market. Is it because of that ‘low−hanging fruit’ you referred to?

A: It’s a key market that clearly has gone through troubles in the last couple of years. I think things will stabilize because they have

Mark Arnold has been head of the management board at Sberbank Europe AG since February 2013. He held several senior positions with GE’s different financial divisions between 1995 and 2010, in locations such as the UK, Portugal, Hungary, and South−East Asia. He served as CEO of Bank of Ayudhyia, Thailand, before his current position. He holds a marketing degree from Farnborough College and a diploma in marketing from the Chartered Institute of Marketing, as well as a BA in management studies from the University of Liverpool.. to. The focus that we have and what we’re looking at is Russian and CIS investments here and vice versa. We are the only bank that can probably do that. It’s not a niche, but a unique play that we have and others don’t. Economically, from the Hungarian perspective, things are turning the corner and I hope in the next couple of years things will change. On the other hand, Sberbank is here for the long−term. We are a bank with a 172− year history, we are not one of those entities that come and then disappear.

Sberbank’s International Operations The group’s bank divisions work in 22 countries in the CIS, Central and Eastern Europe, the United Kingdom, Switzerland, the USA, India, and China.

Sberbank’s international assets are bigger than the fourth biggest bank in Russia in terms of asset size, with a comparable number of branches.

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You sound optimistic; do you expect the sector specific special bank levy to be abolished?

A: I’m not that optimistic. Right now it’s probably needed from the taxation− related perspective. We don’t like it, but it’s something we have to accept. We have to base our models on the fact that it’s there. I hope it will disappear, but I don’t think it will in the short−term.

The report on the strategy results for 2009−2013 says that most of the company’s objectives have been achieved. Pushing down the operating cost/net operating income ratio was among the few exceptions.

A: One of the areas where we invested significantly is digital. Three years ago there weren’t too many using digital or mobile banking, by now there are thirteen million and eight million, respectively, among Sberbank Group customers. That requires costs. The other thing is the costs related to our Turkish acquisition, DenizBank with more than 20,000 employees. That wasn’t planned five years ago, so if you deduct that, we are pretty close.

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CV

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Rebranding took one and a half years. Did you expect it to happen faster?

A: In 2012 we had many issues to deal with.

There was a time line set till February 2014 to get the rebranding done under a contract with the previous owner for all of the countries concerned. Hungary happened to be the last one in the row, as we couldn’t do all at once.

We have new customers in the corporate arena, really big Hungarian entities. We have facilities, and we have conversations about even bigger ones that we couldn’t even consider two years ago. We’re changing more than just the outside and the logo.

Q

Sberbank’s paper on its strategic objectives for the next five years has set very ambitious goals, namely doubling the net profit and assets and pushing down the operational cost/net income ratio to the range of 40−43%.

A: It is ambitious, but realistic. Look at where we started. We were sub−2%, we are

According to the 2013 results, the specific weight of the group’s assets outside Russia will stand at about 12%.

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The number of clients in Sberbank’s international network exceeds ten million.

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Sberbank Europe AG manages a banking network of nine universal banks in eight Central and Eastern European countries: Slovakia, Czech Republic, Hungary, Slovenia, Croatia, Bosnia-Herzegovina, Serbia and Ukraine.

Sberbank prides itself on being a leading player in delivering innovative solutions.

A: I’d rather call it differentiation. If we added 30 more branches here, that would be the same as what we’ve done in the past. We have a small, but sufficient branch network. We can do something radically different without upsetting our other distribution networks. We can be a champion challenger to the existing banking model, whereas in Russia we are the incumbents: a different scenario, but the same story. The support of a strong parent is needed too. We are a group with a 40−50% market share, depending on what products you look at on the Russian market. We have the strongest capital base and the best returns globally.

Q

Any plans to head further West?

A: We are based in Austria where we now carry a full banking license.

And we’ll be opening a direct bank in Germany probably in August, with deposit gathering functions. It’s the confidence of the regulator in what we cleaned up as a legacy. We are moving forward.

Q

Are you targeting individuals or enterprises in Hungary?

A: We have all three segments: corporate, SMEs, and retail. It is corporate where we can advance the most. There’s leverage in the East we can provide.

Many manufacturers would like to enter the Russian market place and we can facilitate that as the largest bank there.

We want to build a stable platform in the bank to serve Hungarian growth. That’s what the team has been doing: driving that growth and making sure there’s a sustainable platform behind it.

BBJ

3Special Report Competitive, Able and Cost Effective

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Cut Backs Hit Law Students

International law firms have had to adapt to the post−crisis environment, applying flexible fee arrangements and putting ever more emphasis on added value that justifies their rates. Continuous training of staff is another must to stay ahead of the competition.

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Budapest Business Journal | May 23 – June 05

Value Still Matters International law firms have had to adapt to the post−crisis environment by applying flexible fee arrangements and putting ever more emphasis on added value that justifies their rates. Continuous training of staff is another must to stay ahead of the competition.

The days are surely gone when a law firm could charge whopping hourly rates to its clients just because it was a member of a fancy global brand.

The post−crisis era, therefore, has called for a whole range of innovative fee schemes.

Demand for the services of such international law offices hasn’t gone down dramatically. But that meeting room with the spectacular view does cost big bucks and the CEOs of the

STORY HIGHLIGHTS ■

International law firm seek to maintain competitiveness by flexible pricing and continuous staff training ■ The increasing role of the government has been reshaping the legal market in certain areas

corporate giants would find it hard to cut their deal of the year in a windowless downtown flat of some no−name attorney.

Richard Lock Partner Lakatos Köves & Partners The levels of activity, particularly in the M&A area, have increased significantly over the last year mainly due to the Hungarian government’s effort to increase its control over certain segments of the economy. As a result, foreign investors who acquired assets over the last 20 years are selling those assets. Another area where there’s a lot going on is investment protection related litigation, but we also detect signs of activity in the real estate market.

In the short− to medium−term there is a lot of work to be done for large investors who are seeking to exit the country. Over the longer−term investors carrying on with their business here will generate a large workload, but they might steer clear of sectors where the levels of regulation and potential political influence are high.

The key to remaining competitive is to provide a top−quality service that clients can see is worth paying for. Accordingly quality, training, stability and continuity are vital. Two ways in which we believe LKT is well placed to thrive in the current market are the fact that the overwhelming majority (95%) of our clients are foreign (or ultimately foreign owned) and that we do no work for the state or municipality related entities. Our international clients see and value that independence.

The entry into force of the new Civil Code has given rise to the need for all of our lawyers to familiarize themselves with it. In particular, as the new Code is more ‘principle based’, we are seeing many questions of interpretation arising. As such a system assumes a relatively sophisticated legal and business culture, we anticipate that there will be work deriving from its integration into the business culture.

Another leverage the international law firm scene has is their specialist expert teams that smaller legal companies simply can’t provide.

That strength is coupled with a constant urge to train staff in order to meet the high expectations of cream−of−the crop clients.

What the players of this market segment probably could not foresee was the emergence of a stronger− than−average government role in

the economy. That has reshuffled the cards on the table to a great deal, mostly in the field of energy, M&A and dispute resolution.

But all that seems to be under control, just like preparedness for the entry into force of the new Civil Code. And eyes are being kept peeled for the judicial interpretation of the new rules bound to shake up advisory work as such. LHT

Dr. András Dániel László, LL.M Partner Szecskay Law Firm The popularity of alternative fee arrangements (caps, fixed fees, etc.) instead of traditional hourly fee model continues. So does price pressure from certain clients, but high quality premium work is still appreciated through higher fees. A pick up in transactional work in certain sectors is noticeable. State activism affects the legal market in certain sectors, such as energy.

We benefit from special expertise in niche practice areas where we have traditionally been strong (biotech, IP, international arbitration) and we develop new capabilities to serve our clients (trusts, tax). We apply extra creativity to find mutually acceptable fee arrangements. Visibility is even more important than it used to be, but careful and selective PR work is necessary to maintain and build credibility and brand.

“We do not expect that the overall workload will substantially increase. Certain high value long−term commercial contracts are being re−negotiated to benefit from the possibilities offered by the new Civil Code. The same applies also to general terms and conditions. The flexibility of corporate rules will certainly affect corporate and M&A work, including restructuring existing structures, planning of transactions and paying increased attentions to fields where the new Code increases risks, such as a corporate officer’s liability. The introduction of trusts (fiduciary asset management) opens new possibilities. Dispute resolution may be more challenging given the lack of guiding practice in certain questions in the coming years.

Dr. Erika Papp Partner CMS Cameron McKenna LLP Hungarian Office I believe that in the years of recession many competitors have left the market or transformed their businesses forming some sort of loose cooperation, but now that business is picking up we expect new law firms appearing on a cross−border service basis.

Diversification and continuous learning and development are key to maintaining our competitiveness. There are new demands, new types of mandates and transactions these days that require continuous learning and development of skills from our people.

We follow a specialist approach rather than a generalist one and put high emphasis on training our staff both locally and internationally. As a result, we provide our staff with financial, marketing and people management training designed to meet the increasing needs of our clients. Client−care is particularly important as well. We aim to become trusted advisers to our clients providing a wide variety of value adds that may ease the increasing pressure in−house counsels may face.

“CMS has been preparing for the changes as a result of the new Civil Code for the past one and half years. We have advised on certain parts of the legislation, provided seminar series and several face−to−face training sessions for our clients, worked on campaigns, articles and newsletters, reviewed contracts, GTBs, agreements and aligned our forces in Czech Republic and Romania where, like Hungary, a new Civil Code has been introduced. So the majority of the work has been done before the Code has actually entered into force. I am also certain that new projects and mandates will surface as a result of further new amendments to and new interpretations of the Civil Code.

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Budapest Business Journal | May 23 – June 05

Dr. Kristóf Ferenczi Partner Andrékó Kinstellar From Kinstellar’s perspective, the long−enduring economic crisis has proven that our model as an independent international law firm operating in Central and Southern Europe and Central Asia was well set up to suit the changing legal market and our clients’ constantly developing requirements.

Covering seven jurisdictions, we have an insight into a number of quite similar legal markets, giving us confidence that developments on the Hungarian legal market are not unique.

The end to the traditional law firm hourly rates−based approach, constant pressure on fees, increasing appetite for alternative fee arrangements and the need to stay ahead of the competition are all part of a global phenomenon. Rather than competing merely on price, we have responded by adopting our strategy to the market, offering expertise in specialist areas that have become more in demand such as Restructuring & Insolvency and Compliance, Risk and Sensitive Investigations. There has been consistent top tier recognition of our core practice areas and our leading lawyers by the international legal directories.

Created from the Central European offices of a Magic Circle law firm, from the first day of Kinstellar’s operation we have dedicated substantial resources to our learning and development function. Key practices give regular firm−wide training where we also invite our clients’ in−house teams and international law firm friends to exchange thoughts on the most current issues. Such readiness to share knowledge is seen as a real added value by our clients.

We have closely followed the development process of the new Hungarian Civil Code and prepared for its entry into force as in other jurisdictions where similar developments have taken place, such as Czech Republic and Romania. Through dedicated client events, training and specific mandates we have assisted existing and new clients in connection with the changes brought by the new Code, which is clearly an interesting process.

Edward Keller Partner, Réczicza White & Case LLP From a cross border M&A perspective, Hungary continues to be a convergence story.

Deal structures and documentation have become increasingly sophisticated, complex and robust, bringing local legal standards to the level of the rest of Europe.

The greater economic uncertainty during these times has driven this trend, as transacting parties generally demand increased contractual protections in their transactions.

Our primary focus is cross border legal work where specialized international capabilities are required. We seek to maintain our competitive edge through delivering value to our clients while making sure that the best and most appropriate resources of the firm (whether locally or internationally) are available to them.

In our view, value does not always equate to having the lowest cost, and for this reason we do not seek to compete on the basis of price alone.

We do not expect the entry into force of the new Hungarian Civil Code to have a substantial impact on our workload and scope of tasks moving forward. Leading up to the introduction of the new Code on March 15 this year, we had a number of inquiries from clients requesting guidance as to how it will impact their business. We also held internal training and updated our form documentation to take into account these changes. Accordingly, most of the work directly arising from the new Code has already taken place. Naturally, as with any new code, certain aspects of it will only become cemented through practice, which may impact future work.

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Dr. István Szatmáry Counsel Horváth & Partners DLA Piper Not surprisingly, even large corporate clients have cut their legal spending and try to ‘in−source’ whatever they can. Individual and flexible fee arrangements, sometimes unusually frequent and as specific as possible reporting of the activities carried out by the law firm’s staff have become common in the past couple of years. On the other hand, we see signs of the transactional market becoming more active, leading to some recovery on the market.

Knowledge management plays a key role in performing better than before. The easy access to and availability of a law firm’s know−how is critical to saving time when advising clients; this has beneficial effects both on the hours spent on a matter and the quality of the advice given. Therefore, one of the key considerations is to convert the existing, in many cases fragmented knowledge of the staff members into a structured and readily available database that practitioners can use and further develop. This would improve efficiency.

The entry into force of the new Hungarian Civil Code has brought significant changes in virtually all fields of business law. DLA Piper has been preparing for these changes for more than a year and a dedicated task force of the firm has held various training sessions both for staff and clients. It has also become clear that the judicial interpretation of the new rules will also bring fresh dynamics into the advisory work and all client materials will need to be constantly scrutinized in light of the latest development of case law. The new, flexible rules will enable law firms to find better solutions for their clients; however, as long as settled case law is being shaped but not available, clients will need to be aware of the uncertainties they face when applying the new regime.

Dr. Iván Bartal, LL.M. Partner Oppenheim It is safe to say that the Hungarian legal market is currently dominated by well−established domestic firms, rather than international firms. It appears that, with a few exceptions, independent firms have been more successful in adapting to the changing environment in the whole region. As a country− specific development, the Hungarian state has become a significant player in the legal market, and the state’s increasing involvement resulted in a lot of new mandates primarily in the field of M&A, regulatory matters and dispute resolution.

Our competitive edge over international law firms is that we provide the same services and quality, but due to our independent status, we are able to offer more flexible pricing. Also, we place a great deal of emphasis on always improving our project management skills and standard processes. Oppenheim is highly ranked by all the leading ranking agencies (such as Legal500 and Chambers and Partners); furthermore, Chambers and Partners have just awarded us the title ‘National Law Firm of the Year, Hungary’. We find that our ever−improving market recognition provides a great basis for acquiring new clients and retaining old ones. Finally, we gradually expand the spectrum of our services to include areas where we see a potential for further growth.

Not only has the new Civil Code brought about a host of changes, but, to some extent, it also altered the framework of commercial law in which lawyers and clients alike had been working for decades. We believe that this will prompt clients, and especially corporate counsels, to request advice and assistance with revising general terms and conditions, standard contract forms, adapting corporate strategies and seeking clarity on various points of the new Civil Code.

Dr. Zoltán Hegymegi−Barakonyi, M.A., LL.M Managing Partner Kajtár Takács Hegymegi−Barakonyi Baker & McKenzie International law firms, similarly to other legal service providers, must work hard on improving their efficiency. Both multinational and domestic clients expect high quality legal advice at a competitive price. It is true for large transactions, legal disputes or smaller assignments, so−called commodity work.

High quality service at a competitive price is the expectation of our clients. In order to meet this expectation, a law firm must have the right legal experts who can give the specialized legal advice in a timely manner. There is no time and no money for a ‘learning curve’ in any legal matter. A law firm can be competitive if its legal advice is not only correct technically, but it is also commercial and helps the client to solve its business issues. Another important requirement in the digital age is that a lawyer must be very responsive.

The new Civil Code generates different types of mandates for law firms, including contract reviews and training for companies. Of course, companies in different industries require different kinds of assistance in connection with the new regime. The lawyer who has thorough knowledge of his client’s business and industry can give very useful ‘custom−made’ assistance, which helps a lot to ensure a smooth transition in connection with the contractual arrangements and operation of the company in question.

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Budapest Business Journal | May 23 – June 05

EXPERT OPINION

Settlement: a New Tool to Simplify Antitrust Proceedings Simpl Dr. Ákos Kovách Partner (Budapest) GIDE LOYRETTE NOUEL

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

A specific procedure will be implemented by the Hungarian Competition Act from 1 July 2014: undertakings under antitrust investigation may settle the case with the Hungarian Competition Authority if an agreement is reached as to the infringement, the undertaking’s liability for it and the maximum amount of fine to be imposed. This new procedural instrument aims at increasing efficiency, simplifying the procedure and optimizing the enforcement of antitrust rules by the Hungarian Competition Authority in order to free up resources to deal with more cases.

A EUROPEAN MODEL As with many other specific procedural features we know from competition law (dawn raids, leniency policy, etc.), the settlement process also finds its origins in EU law. Settlement was introduced at EU level in 2008, and since its introduction several cartel cases have been settled between the European Commission and undertakings. The most important benefits that can be obtained from settlement are twofold: crucial procedural economies for the European Commission and lower fines for the undertakings.

It can be concluded that settlement has been reached in various types of cases; however, there are specific factors that can be identified as elements for a successful settlement. These factors include number of parties involved, potential conflicting positions, and contestation of facts. Based on the experience gained by the European Commission, and taking into account the encouraging fact that settlement became a well-established instrument for cartel enforcement within a relatively short period of time, in European Commission Vice-President Joaquín Almunia’s opinion, as many as half of the cases may be resolved by settlement in the future.

HOW TO SETTLE? The new instrument will be fairly identical to the one already successfully tested at European level. The possibility for settlement will be available under the Hungarian Competition Act in cartel and abuse of dominance cases and will depend mainly on the intent of the Competition Council (the Hungarian Competition Authority’s decision-making body). Based on the investigation report and taking into account the factual background of the case and key evidence, the Competition Council may invite each party to confirm its interest in the settlement process in order to terminate the proceeding in a more efficient and quick manner.

It is important to note that settlement cannot be seen as an investigative shortcut.

Before the settlement process starts, the Hungarian Competition Authority shall have all sufficient elements to proceed with the case in a standard procedure. Moreover, settlement does not replace leniency, as settlement is not an investigative tool, and unlike leniency programs, settlement rewards all settling parties in the same manner.

A settlement discussion will be started between the Competition Council and the parties having confirmed interest to engage in settlement. The Competition Council will present its assessment of the case (infringement and legal qualification) as well as key evidence and will indicate the amount of fine to be imposed. If an agreement may be reached on these elements between the Competition Council and the interested parties during such discussions, a settlement declaration shall be filed by the interested party, which can be considered as a formal request to settle the case. As the settlement declaration is the backbone of further procedural steps, it must contain specific elements agreed upon during the settlement discussions such as: acknowledgement of the liability for infringement and involvement; summary of the infringing behavior and its legal qualification; indication of the maximum amount of fine the party would accept to be imposed; and confirmation that it has been duly informed of the Competition Council’s objections and it has had sufficient opportunity to make its view known. Furthermore, the settling party shall waive its right to request further access to the file or oral hearing and its right to launch an appeal against the final decision.

The settlement declaration can only be revoked if the preliminary opinion (statement of objections) issued by the Competition Council materially differs from the settlement declaration (e.g. the fine to be imposed would be higher than agreed). In this event, the case will again follow the standard way of procedure and the settlement declaration cannot be used as evidence in the proceeding. Otherwise, if the party confirms that the preliminary opinion corresponds to its settlement declaration, the Competition Council will proceed with the adoption of a final decision. In return for settling, the undertakings receive a 10% reduction of the fine that would normally be imposed in a standard procedure.

The new rules of the Hungarian Competition Act only draw up the main conditions of the settlement process and all additional details will be further elaborated by the practice of the Hungarian Competition Authority.

From Hunglish to Legalese: Terminologists in Action The EU Law Department of the Hungarian Ministry of Public Administration and Justice (KIM) and OFFI have launched a new pilot project together: a special team organized specifically for the continuous translation of new laws and other pieces of legislation. Its first big project will be the translation of the new Hungarian Civil Code.

ANDRÁS ZSÁMBOKI

“The Ministry of Public Administration and Justice wishes to offer a new service to those segments of the Hungarian public administration which apply Hungarian law to foreigners and foreign clients,” Endre Gáspár, senior officer at the EU Law Department of KIM told the Budapest Business Journal.

“We think that foreign companies operating in Hungary will benefit greatly from the new service; those who wish to start new enterprises here will also feel greater confidence toward the country if the current Hungarian laws are accessible in English.”

The first result of this effort is a revised and consolidated English translation of the Fundamental Law of Hungary, the terms of which has been brought in line with EU−terminology, and which is already available on the website of the Hungarian Government (www.kormany.hu/en). The novelty in the project lies in the fact that Hungarian legislation will be translated by one team of translators, whose joint work will ensure consistency in legal terminology. “So far, Hungarian laws have been translated mainly on an individual basis whenever it was necessary. The work was always done by outside teams of translators, non−affiliated with the public administration; it remained

the ministry’s task to harmonize their diverse terminologies with one another in the end,” Gáspár explained.

Due to the differences between the British common law system and continental legal systems like that of Hungary, translating Hungarian laws into English is a rather complex challenge requiring thorough terminology research. “In the EU’s own translation practice, the aim has been the creation of a so−called neutral terminology in English. This is reasonable as the terminology of the EU−legislation must be suitable to equally include and cover the traditional legal terms of every Member State of the EU,” Gáspár said, educating the BBJ in the intricacies of European legal translation.

The team of the Hungarian pilot project is, therefore, consciously building upon the foundations of already existing legal terminologies used in the EU and in the English translations of other national laws. “French and German comparative legal studies in particular have been very helpful to Hungarian terminologists,” Gáspár pointed out. As a by−product of the translation project, an extensive glossary is being developed as well, which is going to be included into the terminology database Termin, maintained by KIM on the internet: http://external.kim.gov.hu/eu−terminologia

What on Earth is Jogképesség?

The comparative approach is a common method for translating legal terms. It means that the translator tries to find a term having the same function in the legal system of the target language. However, certain legal institutions of the Hungarian legal system might be unknown in common law (or, indeed, in EU law), and thus there might not be a proper English denotation. In such cases, the English translations of the laws of other countries can be consulted for accepted equivalents. An ultimate solution for translating legal expressions can be to create artificial terms. However, this method may only be applied if the meaning of the newly created term is precisely defined and clear.

Basic terms in Hungarian law are for example, include “jogképesség, the capacity of every natural person (human beings) and legal person (such as companies) to have rights and obligations, and “cselekvőképesség”, the ability of human beings to acquire rights and incur obligations with their owns acts. Such terminological distinction is not established in common law, capacity in legal English can refer to both terms. However, these terms exist in German law (“Rechtsfähigkeit” and “Geschäftsfähigkeit”) with similar meaning. The English translation of the German Civil Code uses the literal translations “legal capacity” and “capacity to contract”, respectively. Based on this, “legal capacity” has been taken over for the translation of the Hungarian Civil Code as the equivalent for “jogképesség”.

Since “cselekvőképesség” implies not only contracting as in the German term, but also acting, the term “capacity to act” has been established as its English translation.

Legal systems are coherent and consistent systems, the parts of which (the pieces of legislation) can only be construed with regard and in relation to each other. These interrelations must be closely reflected in translations, otherwise logical connections within the legal system may be shifted or broken, resulting in misleading interpretations.

Legal texts, and especially authoritative legal texts like laws, are very different from ordinary texts. Their main features are the strict structural format and the usage of the so-called “legalese”, a style with often-archaic phrases and a specific technical vocabulary. Translating legal texts requires, beside a thorough knowledge of the law, appropriate familiarity with these features. However, even this is not always enough.

www.gide.com

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Budapest Business Journal | May 23 – June 05

17

Competitive, Able and Cost Effective According to the companies that produce the annual legal rankings reflected on the coming pages, Hungary remains a hugely competitive market, reflecting complaints the Budapest Business Journal heard from market players about intense pressure on fee costs.

BBJ STAFF

Chambers and Partners, the company behind both the Chambers Global and Chambers Europe tables, noted in its country overview that “the government has introduced regulatory legislation that is particularly hostile to foreign investors, especially in the fields of telecommunications and banking,” before adding, ironically, “However, these conditions have created work for Hungarian firms.”

In its analysis of the market place, Chambers notes, “The majority of players [‥.] are either home−grown boutiques or international firm spin−offs, although a number of international firms maintain a strong presence. There is fierce competition across all practice areas, and as a result, the

top Hungarian lawyers are seen as being amongst the most able and cost efficient in Central and Eastern Europe.”

Chambers Global spoke of “mercurial legislation” and “a raft of controversial legislative reforms” and that, too, chimed with comments attorneys made to us, under condition of anonymity, complaining that the hectic pace of law making had sometimes produced legislation that was either poorly thought through or failed to

link up with other rules and regulations, requiring later amendments.

The Legal 500, bemoaning a dearth on new−money deals, reports “many law firms have shifted their focus from new projects to restructurings and refinancings of existing transactions. The real estate market remained quiet, as did the energy sector, which has been badly hit by the government’s push to lower energy prices.”

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national law firm of the year, hungary (Chambers and Partners Europe Awards for Excellence 2014) www.oppenheimlegal.com

Noting that law firms with connections to the state had been kept busy during the 2012− 13 reporting period, Legal 500 added that those with “strong competition law practices also had an active year, with headline matters including the Hungarian Competition Office’s continuing cartel investigation into foreign exchange mortgage loans.”

Two Hungarian firms in particular were picked out by Chambers Europe: CMS Cameron McKenna was named Hungary Law Firm of the Year – International, with Oppenheim picking up the National award.

The citation for CMS read, “This impressive local office offers top−level services in a range of practice areas, and is particularly strong in banking, TMT, employment, projects & energy, and real estate mandates. The corporate department recently acted for A&N Media on the company’s strategic exit from its CEE portfolio.” Of Oppenheim it noted, “This office is celebrated for its outstanding competition and dispute resolution work.

The litigation team recently represented Agrikon in a EUR13.3 million dispute with a domestic bank. The firm’s employment team has developed its market standing of late, whilst the firm also includes market−leading individuals for projects and corporate work.”

The IFLR (International Financial Law Review) Law Firm of the Year award for Hungary for 2014 went to Réczicza White & Case LLP.

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Budapest Business Journal | May 23 – June 05

The Best Of The Best BELOW IS THE LIST OF INTERNATIONAL LAW FIRMS OPERATING IN HUNGARY THAT HAVE BEEN RECOMMENDED IN THE MOST AREAS OF LEGAL ACTIVITIES IN 2014 (IN TOP CATEGORIES OF VARIOUS RANKING BODIES, E.G. BAND 1 WITH CHAMBERS EUROPE AND CHAMBERS GLOBAL AND TIER 1 WITH LEGAL 500 AND IFLR 1000).

CHAMBERS GLOBAL 2014 BAND 1

CHAMBERS EUROPE 2014 BAND 1

LEGAL 500 2014 TIER 1

IFLR 1000 2014 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

3

8

8

3

22

1

6

8

2

17

1

2

7

2

12

3

5

3

1

12

1

5

4

1

11

1

3

5

-

9

1

2

4

-

7

1

2

2

-

5

1

1

1

1

4

-

-

3

-

3

1

1

1

-

3

-

1

1

-

2

-

1

1

-

2

CMS Cameron McKenna LLP

Réczicza White & Case LLP

Andrekó Kinstellar Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie

DLA Piper Horváth & Partners Oppenheim

Szecskay Attorneys at Law

Morley Allen & Overy Lakatos Köves and Partners

Nagy és Trócsányi Faludi Wolf Theiss

Jalsovszky Law Firm

C H A M B E R S G LO B A L 2 014 BAND 3

BAND 4

DLA Piper Horváth & Partners Lakatos, Köves and Partners Réczicza White & Case LLP

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Kővári Tercsák Salans FMC SNR Denton Europe Faludi Wolf Theiss

-

Corporate / M&A

CMS Cameron McKenna LLP DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Andrékó Kinstellar Lakatos, Köves and Partners Szecskay Attorneys at Law Faludi Wolf Theiss

Morley Allen & Overy Forgó, Damjanovic & Partners Oppenheim Szabó Kelemen & Partners

Erős Ügyvédi Iroda Squire Sanders (US) LLP Gide Loyrette Nouel - d’Ornano Kővári Tercsák Salans FMC SNR Denton Europe Nagy és Trócsányi Schönherr Hetényi

Dispute resolution

Nagy és Trócsányi Oppenheim Szecskay Attorneys at Law

CMS Cameron McKenna LLP Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Réczicza White & Case LLP

Lakatos, Köves and Partners Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

DLA Piper Horváth & Partners Sándor Szegedi Szent-Ivány Komáromi Eversheds

CMS Cameron McKenna LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Andrékó Kinstellar DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Réczicza White & Case LLP

-

-

LEGAL ACTIVITIES

BAND 1

Banking & Finance

Morley Allen & Overy Andrékó Kinstellar CMS Cameron McKenna LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Restructuring / Insolvency

BAND 2

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Budapest Business Journal | May 23 – June 05

PROMOTIONAL FEATURE

25 Years and Still Going Strong

BBJ: Your firm celebrates its 25th anniversary this year. What were the key milestones along this journey?

Gabriella Ormai: It all started out as a loose cooperation of a couple of lawyers in 1989, but since McKenna was in the country early, we started to work together quite soon.

The very first acquisition we got involved in was Associated Newspapers’ purchase of the Kisalföld regional newspaper from the Socialist party. Interestingly, 25 years later, when A&N Media Limited sold the paper, we were again the ones handling the transaction for them.

BBJ: What marked the end of chapter one in your firm’s story?

G:O: Our first period stretched to 1996, with many things going on such as the privatizations, in particular in the gas and electricity industry. That inevitably moved us to the next level of development, i.e. integration with McKenna on a closer basis.

The first CEE general meeting ever was in the meeting room of one of our flats that served as offices, and this led to a presence with 52 partners and 220 lawyers in CEE by now. That initial phase finally ended when we moved to the Bank Center, the top business venue at the time. The boom resulted in our staff numbers soaring. What began as a three-person venture had turned into a firm of 40 by 2000. Growth was continuous all the way until 2008; the only exception was a slight slow-down in 2001-2002, and we managed to achieve a slight growth even during the crisis years.

BBJ: So you had a very long period of boom, and then came the crisis.

STORY HIGHLIGHTS ■

CMS Cameron McKenna LLP Hungarian Office celebrates its 25-year-anniversary this year ■ Law firm tops rankings in terms of size and performance, but also prides itself on its charity efforts and exceptional staff and client satisfaction

G.O.: We built up our teams and practice groups before the recession. We accumulated a lot of specialist knowledge.

Our efforts were aimed at keeping our size in spite of the economy. Our property section especially suffered as transactions dried up. But then they turned to property litigation instead of development. The corporate team did a lot of restructurings, the banking section shifted to refinancing.

All our teams had regulatory and day-today practice in addition to the transactional ones and that helped.

BBJ: Do you share the optimism that the worst is over?

G.O.: Even during the crisis the good news was that 30 out of our 60 people were working in the so-called commercial and dispute resolution team involving a lot of specialist areas such as tax, employment, public procurement, life sciences, IT, IP, data protection and competition law that clients need on a day-to-day basis. And we built up a significant client base prior to the rainy days, and they stayed with us. We see more activity in the last six months, so we also believe that the recession may be over and very much look forward to a growing transactional activity.

BBJ: In which areas are you currently most active?

G.O.: Banks are busy cleaning their portfolios, trying to get rid of toxic assets, which has given us a lot of work lately. In the property sector, things are starting to happen. Investors are sitting on many assets, which sooner or later they are bound to do something about. TMT and life sciences sectors are also active.

BBJ: CMS Budapest holds several

CMS wins ‘Hungary Law Firm of the Year’ Chambers Europe Awards for Excellence 2014 We would like to thank all of our clients for making this possible... :Ƶ &ĂůĞŵŝŶĚĞƌŝƚ͕ ĂŶŬĞ͕ DĞƌĐŝ͕ ̪ĂĐ̨̛͕̍ dŚĂŶŬ LJŽƵ͕ njŝħŬƵũĞŵLJ͕ ĂŶŬĞ͕ ĂŬƵũĞŵĞ͕ DĞƌĐŝ͕ ,ǀĂůĂ͕ <ƂƐnjƂŶũƺŬ͕ DƵůƚƵŵĞƐĐ͕ ĂŶŬĞ͕ ĥŬƵũĞŵĞ͕ DƵůƚƵŵĞƐĐ͕ ,ǀĂůĂ͕ ůĂŐŽĚĂƌLJĂ͕ :Ƶ &ĂůĞŵŝŶĚĞƌŝƚ͕ ĂŶŬĞ͕ ̪ĂĐ̨̛͕̍ dŚĂŶŬ LJŽƵ͕ njŝħŬƵũĞŵLJ͕ DĞƌĐŝ͕ ĂŬƵũĞŵĞ͕ ,ǀĂůĂ͕ <ƂƐnjƂŶũƺŬ͕ DƵůƚƵŵĞƐĐ͕ dŚĂŶŬ LJŽƵ͕ ĥŬƵũĞŵĞ͕ ůĂŐŽĚĂƌLJĂ͕ :Ƶ &ĂůĞŵŝŶĚĞƌŝƚ͕ ĂŶŬĞ͕ DĞƌĐŝ͕ ̪ĂĐ̨̛͕̍ dŚĂŶŬ LJŽƵ͕ njŝħŬƵũĞŵLJ͕ ĂŬƵũĞŵĞ͕ DĞƌĐŝ͕ ,ǀĂůĂ͕ <ƂƐnjƂŶũƺŬ͕ DƵůƚƵŵĞƐĐ͕ ĥŬƵũĞŵĞ͕ ůĂŐŽĚĂƌLJĂ͕ :Ƶ &ĂůĞŵŝŶĚĞƌŝƚ͕ ĂŶŬĞ͕ DĞƌĐŝ͕ ĂŶŬĞ͕ ̪ĂĐ̨̛͕̍ dŚĂŶŬ LJŽƵ͕ njŝħŬƵũĞŵLJ͕ ĂŬƵũĞŵĞ͕ ,ǀĂůĂ͕ <ƂƐnjƂŶũƺŬ͕ DƵůƚƵŵĞƐĐ͕ ĥŬƵũĞŵĞ͕ ůĂŐŽĚĂƌLJĂ͕ ,ǀĂůĂ͕ :Ƶ &ĂůĞŵŝŶĚĞƌŝƚ͕ ĂŶŬĞ͕ ,ǀĂůĂ͕ DĞƌĐŝ͕ ̪ĂĐ̨̛͕̍ dŚĂŶŬ LJŽƵ͕ ĂŶŬĞ͕ njŝħŬƵũĞŵLJ͘ ĂŶŬĞ͕ njŝħŬƵũĞŵLJ͘

We couldn’t have done it without you.

awards as a law firm. In 2014, it was named the ‘Best International Law Firm in Hungary’ in the Chambers Europe Awards for Excellence.

G.O.: These country awards recognize a law firm’s pre-eminence in key practice areas in their jurisdiction. They take into account strategic growth, market feedback (clients and peers) and involvement in marketleading deals. The Chambers Awards are a great honor – this is the second time after 2012 that CMS Budapest has received such an award – and the fact that we excelled on the basis of our performance

Dr. Gabriella Ormai is the managing partner of the CMS Cameron McKenna Budapest office, dealing with Corporate and Commercial Law. Since 1996, the firm has operated as an integrated practice of CMCK and one of the country’s largest full service law firms. In 1997 Ormai became a partner of CMCK and from 1999 head of the Hungarian operation. Gabriella is strongly dedicated to corporate social responsibility and lends her professional skills extensively to several charities, including the board of directors of the Red Nose Clown Doctor Foundation.

makes us feel proud. Our more than 60 legal staff and around 50 highly trained support staff all work hard to maintain our positive reputation.

BBJ: Another area where CMS Cameron McKenna shines is in the promotion of gender equality. The Euromoney Europe Women in Business Law Award recognized these efforts, but the very fact that you, a woman, have the top position also speaks for itself.

G.O.: Yes, Dóra Petrányi won that prize in 2012 as Best in TMT and we won the Hungarian law firm award also that year.

In 2014 CMS Budapest is shortlisted again for the country award, but we will see the actual result in June. We don’t have a gender quota system, but actually five out of our ten partners are women. Firm wide we have a healthy ratio, although it is far from the ideal 50%.

BBJ: Your job description on the website says you “ensure efficient staffing and quality control as well as consistent delivery of services at all times”. What does your typical day look like?

G.O.: Most of the job is about integration.

With small firms, many things evolve and happen in a natural manner. Once you get bigger they need to be institutionalized. We have to make sure teams work together.

Clients mustn’t have the feeling, either, that they need to be in touch with too many people or explain their problems over and over again from the beginning. So if we have a change of personnel, the new person is brought up to speed quickly so that our clients won’t notice a thing. All in

CV all, my job is to ensure this is a nice place to work, which is apparently the case. I have also great support from my colleagues.

BBJ: You are about to face another challenge.

G.O.: Yes, from May 1, 2014 I was elected a board member of CMS Cameron McKenna. I am looking forward to this new task; it promises to be very interesting.

BBJ: A new partner was appointed recently.

G.O.: Yes, a German-qualified lawyer, Martin Wodraschke. He leads the German desk of the firm in Hungary and the CEE. BBJ: CSR ranks high nowadays in every large firm. What are your achievements in this regard?

G.O.: We already did corporate social responsibility duties when it wasn’t that big. Our first involvement was the Red Nose Clown Doctor Foundation back in 1996, and ever since then we have participated in several other efforts such the Eilika Habsburg Foundation, the Seedling Trust and we worked together with the British and Dutch Chambers of Commerce. It’s hard to list them all, but we have been in such a relationship with at least 25 partners. Another anchor is our link to NestT, which brings nonprofit firms to us whom they support. On a European level there exists another layer of solidarity among CMS offices, as it is regularly discussed which causes should get coordinated support.

BBJ: What about the Budapest Team?

G.O.: Our team is truly excellent in all regards, both at the lawyer and at the support level. We take it very seriously that people have a good time in the firm. There may be some fluctuations, which is normal, but whenever someone leaves they don’t do so because they didn’t like it here.

BBJ: Indeed, it takes a team to excel, but what would it be without clients?

G.O.: When we celebrated our 20th anniversary, thank-you badges were handed out to clients commemorating the fact they have been with us for ten, 15, or 20 years. In fact, there are some that are with us since the beginning. We will have a joint celebration with those who have their own 25th anniversary of establishment this year.

NOTE: ALL ARTICLES MARKED PROMOTIONAL FEATURE ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

The country’s largest international law firm, CMS Cameron McKenna LLP Hungarian Office (CMS Budapest) has been on the legal landscape for a quarter of a century. Founder and managing partner Gabriella Ormai talks to the Budapest Business Journal about the early days, and assesses the firm’s overall performance and future plans.

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Budapest Business Journal | May 23 – June 05

C H A M B E R S E U RO PE 2 014 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

Banking & Finance

Andrékó Kinstellar CMS Cameron McKenna LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Morley Allen & Overy DLA Piper Horváth & Partners Lakatos, Köves and Partners Réczicza White & Case LLP

Gárdos, Füredi, Mosonyi, Tomori Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Faludi Wolf Theiss

Capital markets

Morley Allen & Overy Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Andrékó Kinstellar DLA Piper Horváth & Partners Réczicza White & Case LLP

CMS Cameron McKenna LLP Gárdos, Füredi, Mosonyi, Tomori Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos Köves & Partners

Competition/Antitrust

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Oppenheim Réczicza White & Case LLP

Morley Allen & Overy Andrékó Kinstellar CMS Cameron McKenna LLP

Bán, S. Szabó & Partners Gide Loyrette Nouel - d’Ornano Szecskay Attorneys at Law

Corporate/ M&A

CMS Cameron McKenna LLP DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Andrékó Kinstellar Lakatos, Köves and Partners Szecskay Attorneys at Law Faludi Wolf Theiss

Morley Allen & Overy Forgó, Damjanovic & Partners Nagy és Trócsányi Oppenheim Szabó Kelemen & Partners

Dispute resolution

Nagy és Trócsányi Oppenheim Szecskay Attorneys at Law

CMS Cameron McKenna LLP Réczicza White & Case LLP

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Kálmán, Szilasi, Sárközy and Partners Lakatos Köves & Partners Siegler Law Firm / Weil, Gotshal & Manges LLP

Employment

CMS Cameron McKenna LLP Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie

DLA Piper Horváth & Partners Réczicza White & Case LLP Szecskay Attorneys at Law VJT & Partners

Forgó, Damjanovic & Partners Oppenheim Pál És Kozma Ügyvédi Iroda Szabó Kelemen & Partners

Intellectual property

Danubia Patent and Trademark Attorneys SBGK Patent and Law Offices Szecskay Attorneys at Law

CMS Cameron McKenna LLP Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Sár & Partners Attorneys at Law

Eördögh Bird & Bird Forgó, Damjanovic & Partners DLA Piper Horváth & Partners Lakatos Köves & Partners

Life sciences

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Réczicza White & Case LLP

CMS Cameron McKenna LLP Forgó, Damjanovic & Partners Law Firm Szecskay Attorneys at Law Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Private equity

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

CMS Cameron McKenna LLP Horváth & Partners DLA Piper

Lakatos Köves & Partners VJT & Partners

Projects and energy

Andrékó Kinstellar Ügyvédi Iroda CMS Cameron McKenna LLP Réczicza White & Case LLP Faludi Wolf Theiss

Budapest Law Firm No. 5000 DLA Piper Horváth & Partners Lakatos Köves & Partners Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Oppenheim

-

Real estate

CMS Cameron McKenna LLP Kővári Tercsák Salans FMC SNR Denton Europe Attorneys

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Réczicza White & Case LLP

Andrékó Kinstellar CHSH Dezsö & Partners Cerha Hempel Spiegelfeld Hlawati Gide Loyrette Nouel - d’Ornano DLA Piper Horváth & Partners Nagy és Trócsányi Szécsényi and Partners Szecskay Attorneys at Law Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Restructuring/Insolvency

CMS Cameron McKenna LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Andrékó Kinstellar DLA Piper Horváth & Partners Lakatos, Köves and Partners Réczicza White & Case LLP

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Faludi Wolf Theiss

Tax including tax consultants

CMS Cameron McKenna LLP DLA Piper Horváth & Partners Jalsovszky Law Firm

Andrékó Kinstellar Réczicza White & Case LLP Faludi Wolf Theiss

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos Köves & Partners Nagy és Trócsányi

Technology, Media, Telecommunications

CMS Cameron McKenna LLP Réczicza White & Case LLP

Bán, S. Szabó & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Morley Allen & Overy VJT & Partners

TMT / Film finance

DLA Piper Horváth & Partners

Kővári Tercsák Salans FMC SNR Denton Europe Attorneys

-

I F L R 10 0 0 2 014 TIER 1

TIER 2

TIER 3

Banking

Andrékó Kinstellar Morley Allen & Overy CMS Cameron McKenna LLP

DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Burai-Kovács & Partners Erős Law Firm / Squire Sanders (US) LLP Faludi Wolf Theiss Gárdos Füredi Mosonyi Tomori Nagy & Trócsányi Oppenheim Partos & Noblet in co-operation with Hogan Lovells International LLP Szecskay Attorneys at Law

M&A

Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie CMS Cameron McKenna LLP Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

DLA Piper Horváth & Partners Lakatos, Köves and Partners Morley Allen & Overy Nagy & Trócsányi Szecskay Attorneys at Law

Andrékó Kinstellar Burai-Kovács & Partners Erős Law Firm / Squire Sanders (US) LLP Faludi Wolf Theiss Gide Loyrette Nouel - d’Ornano Oppenheim Réti, Antall & Partners

Andrékó Kinstellar CMS Cameron McKenna LLP Réczicza White & Case LLP

Faludi Wolf Theiss Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Morley Allen & Overy Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Burai-Kovács & Partners Erős Law Firm / Squire Sanders (US) LLP DLA Piper Horváth & Partners Lakatos, Köves and Partners Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

Project finance

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Budapest Business Journal | May 23 – June 05

L EG A L 5 0 0 2 014 LEGAL ACTIVITIES

TIER 1

TIER 2

TIER 3

Banking & Finance

Andrékó Kinstellar CMS Cameron McKenna LLP DLA Piper Horváth & Partners Lakatos, Köves and Partners Réczicza White & Case LLP

Morley Allen & Overy Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Oppenheim Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP Szecskay Attorneys at Law

CHSH Dezsö & Partners Kővári Tercsák Salans FMR SNR Denton Europe Faludi Wolf Theiss Forgó, Damjanovic & Partners Gárdos, Füredi, Mosonyi, Tomori Gide Loyrette Nouel - d’Ornano Nagy és Trócsányi Partos & Noblet/Hogan Lovells Sándor Szegedi Szent-Ivány Komáromi Eversheds Schönherr Hetényi

Capital markets

Morley Allen & Overy Andrékó Kinstellar DLA Piper Horváth & Partners Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

CMS Cameron McKenna LLP Gárdos, Füredi, Mosonyi, Tomori Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Oppenheim Réczicza White & Case LLP

Partos & Noblet/Hogan Lovells Schoenherr Hetenyi Szecskay Attorneys at Law

Andrékó Kinstellar CMS Cameron McKenna LLP Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Oppenheim Réczicza White & Case LLP

Morley Allen & Overy Faludi Wolf Theiss Gide Loyrette Nouel - d’Ornano Schönherr Hetényi Szecskay Attorneys at Law

bnt Szabó Tom Burmeister bpv Jádi Németh Kővári Tercsák Salans FMR SNR Denton Europe Erös Üqyvédi Iroda / Squire Sanders (US) LLP Forgó, Damjanovic & Partners Horváth & Partners DLA Piper Lakatos, Köves and Partners Noerr Partos & Noblet/Hogan Lovells Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP Szabó Kelemen & Partners

CMS Cameron McKenna LLP DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Oppenheim Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Morley Allen & Overy Andrékó Kinstellar bpv Jádi Németh Erös Üqyvédi Iroda / Squire Sanders (US) LLP Faludi Wolf Theiss Forgó, Damjanovic & Partners Lakatos, Köves and Partners Nagy és Trócsányi Sándor Szegedi Szent-Ivány Komáromi Eversheds Szecskay Attorneys at Law VJT & Partners

bnt Szabó Tom Burmeister CLV Partners Csabai, Lindner and Varga Law Firm Kővári Tercsák Salans FMR SNR Denton Europe Eördögh Bird & Bird Gide Loyrette Nouel - d’Ornano Jalsovszky Law Firm PRK Partners Partos & Noblet/Hogan Lovells Réti, Antall & Partners Schönherr Hetényi Szabó Kelemen & Partners

Nagy és Trócsányi Oppenheim Szecskay Attorneys at Law

CMS Cameron McKenna LLP Faludi Wolf Theiss Forgó, Damjanovic & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP VJT & Partners

Morley Allen & Overy Andrékó Kinstellar bnt Szabó Tom Burmeister CHSH Dezsö & Partners Eördögh Bird & Bird Erős Üqyvédi Iroda / Squire Sanders (US) LLP Noerr Partos & Noblet/Hogan Lovells Szabó Kelemen & Partners

bnt Attorneys-at-law CMS Cameron McKenna LLP Forgó, Damjanovic & Partners Gide Loyrette Nouel - d’Ornano DLA Piper Horváth & Partners Oppenheim Szecskay Attorneys at Law

bpv Jádi Németh CLV Partners Csabai, Lindner and Varga Law Firm Kővári Tercsák Salans FMR SNR Denton Europe Eördögh Bird & Bird Faludi Wolf Theiss Noerr Sándor Szegedi Szent-Ivány Komáromi Eversheds Schöherr Hetényi Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP Szabó Kelemen & Partners TaylorWessing e|n|w|c Attorneys at Law

Competition

Corporate & M&A

Dispute resolution

Employment

Andrékó Kinstellar Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Réczicza White & Case LLP VJT & Partners

Energy

Andrékó Kinstellar CMS Cameron McKenna LLP Faludi Wolf Theiss Oppenheim

DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

bpv Jádi Németh Burai – Kovács & Partners Forgó, Damjanovic & Partners Law Firm Gárdos, Füredi, Mosonyi, Tomori Gide Loyrette Nouel - d’Ornano Lakatos, Köves and Partners Sándor Szegedi Szent-Ivány Komáromi Eversheds Szecskay Attorneys at Law

Intellectual property

Danubia Patent and Law Office LLC in coopertion with Sár & Partners SBGK Patent and Law Offices Szecskay Attorneys at Law

CMS Cameron McKenna LLP Eördögh Bird & Bird Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Oppenheim

Bogsch & Partners Forgó, Damjanovic & Partners DLA Piper Horváth & Partners Lakatos, Köves and Partners Réczicza White & Case LLP TaylorWessing e|n|w|c Attorneys at Law

Project finance

Andrékó Kinstellar CMS Cameron McKenna LLP DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Réczicza White & Case LLP Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

Morley Allen & Overy CHSH Dezsö Faludi Wolf Theiss Oppenheim

Gide Loyrette Nouel - d’Ornano Partos & Noblet/Hogan Lovells Szecskay Attorneys at Law

Real estate & construction

CMS Cameron McKenna LLP Kővári Tercsák Salans FMC SNR Denton Europe Attorneys Lakatos, Köves and Partners Réczicza White & Case LLP

DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Siegler Ügyvédi Iroda / Weil, Gotshal & Manges LLP

bnt Szabó Tom Burmeister Erős Üqyvédi Iroda / Squire Sanders (US) LLP Nagy és Trócsányi Oppenheim Partos & Noblet/Hogan Lovells Szabó Kelemen & Partners Szecskay Attorneys at Law

Technology, Media, Telecommunications

CMS Cameron McKenna LLP DLA Piper Horváth & Partners Réczicza White & Case LLP

Eördögh Bird & Bird Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Weil, Gotshal & Manges LLP VJT & Partners

Morley Allen & Overy Andrékó Kinstellar Bán, S. Szabó & Partners Faludi Wolf Theiss Forgó, Damjanovic & Partners Oppenheim Partos & Noblet/Hogan Lovells Sándor Szegedi Szent-Ivány Komáromi Eversheds

Tax

Andrékó Kinstellar CMS Cameron McKenna LLP Jalsovszky Law Firm Réczicza White & Case LLP

Faludi Wolf Theiss Gide Loyrette Nouel DLA Piper Horváth & Partners Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie Lakatos, Köves and Partners Nagy és Trócsányi

-

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22 3

Budapest Business Journal | May 23 – June 05

Cease Fire in MOL-INA L “Constructive atmosphere” is not something you hear often in the context of two countries that have been battling for influence over a good piece of the region’s energy sector for years. But that was how Hungary and Croatian energy company executives described their latest peace talks earlier this month. In reality the air is still filled with smoke, but the latest developments suggest a strategy−change on both sides, bringing the two countries largest energy groups closer to a truce. Either that, or they are reloading before the final battle.

MÁTÉ NYUSZTAY

The seeds of the conflict date back to when MOL – “the only significant Hungarian− based company on an international level” as Judit Barta, researcher at GKI Energy Research and Consulting Ltd., described it to the Budapest Business Journal – made huge efforts to gain a leading role in the region after it’s privatization in the 1990s. Its acquisitions, which included buying up shares in Croatian peer INA and later gaining management control in the energy group, were also part of a plan – backed by the Hungarian government – to “free themselves” from Russian stakeholders, as the expert noted.

The Croatian expansion (which started in 2003 with the purchase of a 25% share in INA, a stake that has almost doubled since) began as a partnership, but has descended into a diplomatic row between the two countries.

“In Croatia, they look at MOL like we looked at Surgutneftegaz [the Russian oil firm whose 21.2% stake in MOL was bought by Hungary’s government in 2011]: something to get rid of. So it’s a similar kind of freedom fight going on there,” Barta explained. This fight started ten years ago, when the then newly elected government of Ivo Sanader accused its predecessors of signing a non−transparent deal with the Hungarians. More questions were raised after the two parties signed an agreement on the divestiture of the gas business into a separate company and its sale to the government. This was amended ADVERTISEMENT

in 2009, allowing MOL management control, even though it didn’t have 50% of the company. This became the subject of several investigations in Croatia, but MOL still managed to raise its stake to 49.08% (Croatia has 44.84%, with the remaining 6.08% is owned by institutional and private stakeholders). These transactions were all subject to yet further investigations, after the Croatians filed a criminal report alleging money laundering.

The war got really ugly when Croatia pressed charges against MOL and other investors on suspicion of market manipulation and business fraud. In June 2011 the by now former Croatian PM Sanader was investigated on suspicion of abuse of office and taking a bribe of EUR10 million from MOL board chairman Zsolt Hernádi in return for allowing the Hungarian company to gain a dominant position in INA. Both denied the allegations, and the Hungarian authorities turned down the request for Hernádi to be questioned. An investigation was started on the Hungarian side, but was dropped after no evidence of any criminal activity was been found. Sanader, however, was sentenced to 10 years prison in November 2012 (he maintains it was a political trial).

An Interpol Red Notice and a European Arrest Warrant were issued for Hernádi in October 2013, but later withdrawn.

Last year the battle escalated into the international, rather than bi−lateral arena, when MOL turned to the International Center for the Settlement of Investment Disputes to defend its Croatian

MOL Chairman and CEO, Zsolt Hernádi, appearing at the Metropolitan Court of Budapest on May 14, in a private prosecution brought against him by a former MOL employee and shareholder in a case widely believed to be linked to the INA situation.

MOL Group announced on December 6, 2013 that Hernádi had been named as a defendent in the private prosecution, where the plaintiff claims that the loss of value in MOL shares was caused by alleged improper and unlawful behavior in connection with MOL’s acquisition of management rights over INA Industrij Nafte d.d., Zagreb.

The private prosecution follows a decision by Hungarian state prosecution not to bring a public case. MOL Group, which is not a party in the private prosecution, says it considers the court litigation “fair and independent” and “trusts the court to review the facts thoughtfully and in a most appropriate manner”. Its statement from the time added: “Mr. Hernádi has demonstrated already in the past to the MOL Board of Director’s full satisfaction why assertions are unfounded and the case is without merits.” investments, claiming the government hadn’t fulfilled its contractual obligations.

In 2014 two−party talks were resumed, apparently in a “much more friendly tone”, but the Croatians refused to continue without first settling the debate over management control. The “friendly tone” rapidly disappeared as the Croatian government filed a claim with the United Nations Commission on International Trade Law to settle the management rights dispute and cancel what it described as the “unlawful” 2009 agreement.

The story took another turn in April, when the Croatian government expressed its willingness to solve the dispute in a peaceful way. Possibly the most important step yet was taken by Croatian PM Zoran Milanovic (who came to power in 2011), saying this was a war he doesn’t want to fight anymore, adding that MOL had paid a lot of money for its shares – legitimating their control over INA. Earlier, MOL’s Hernádi had called on the Croatian state to change its approach to the dispute and made it clear that MOL was willing to keep its stake in INA if the regulatory environment remained favorable and predictable.

The ‘peace talks’ were resumed in May, but the only thing agreed on was the need to accelerate negotiations – in the above mentioned “constructive atmosphere” – but the main conflict over the control structure of INA and its gas branch is still unresolved. Zagreb

insists MOL has failed to invest enough in INA’s development and modernization since it became a shareholder, while MOL complains that Croatia is slow in issuing licenses for investment projects and cites Zagreb’s failure to take over INA’s gas trading business, as agreed in 2008 (and which inflicted major losses on INA). “We are ready to negotiate in good faith but not at any cost,” MOL’s chief executive József Molnár told journalists after the latest meeting.

TO SELL OR NOT “To sell or not to sell is a management issue, but it has to be settled, because a 49% share always leads to conflicts, and also because you can’t operate under constant political pressure,” warns Barta. For that reason alone she thinks MOL selling its Croatian stake remains a plausible decision. But any potential buyer would face similar problems: Croatia’s has two refineries: the one in Rijeka needs huge investment; the other in Sisak probably faces closure. Two refineries are one too many for such a small country, she noted, unless Russia could find a way to fill them, and Gazprom recently held talks in Zagreb. Gazprom might be a potential buyer, though the EU would not be very happy, but the expert wouldn’t exclude the possibility of an Arab buyer.

In January, Russian deputy PM Arkadiy Dvorkovic expressed the country’s interest in MOL’s stake in INA just two weeks after

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EXPERT OPINION

A Legal Row?

Changes in Contract Law Attorney (H), European Attorney (H) NOERR & PARTNERS LAW OFFICE

Photo: Bruzák Noémi / MTI

Hungary’s new Civil Code entered into force on March 15, 2014. The new law introduced a number of provisions, which requires a review of general terms and conditions and the model contracts used by businesses, as well as of the process of concluding contracts in general. As the legislative changes are too numerous to provide an exhaustive list of all the new rules here, this article focuses on the most important issues.

would want to return to the European energy market, which it left over a decade ago, while energy expert Miklós Hegedűs doubts further Russian expansion after recent events in Crimea, even though a Gazprom−deal would otherwise be beneficial for Hungary because of its access to European markets.

CEE PHENOMENON “Even if Russia manages to get a Chinese deal, it would take years to build out the needed infrastructure [for the Croatian refineries], so it is in their interest to ease the conflict with the EU, it is improbable they would take a risk because of INA,” Hegedűs told the BBJ. He sees a Central European phenomenon in all this, and one that is clearly visible in Hungary too. “This is a region−wide struggle to get the strategically important sectors back under national influence, or at least to gain more freedom of decision in the most important companies.” The expert doubts that the conflict has any relevance to the region’s energy supplies, as the given capacity will still produce for European markets, but the possible sale of MOL’s shares could weaken the company’s regional influence. Hegedűs adds that selling MOL’s shares is neither a very good, nor a very bad option, but is far better than this uncertainty. He expects a resolution this year, or things will start to get really costly.

CHANGE IN THE PROCESS OF CONCLUDING CONTRACTS Under the practice of the former Civil Code, a contract was entered into between two parties if one party accepted an offer made by the other without altering the content. Under the new Civil Code, if the other party makes amendments to non-material terms while accepting the offer, the contract is deemed to be concluded unless the first party promptly objects to the amended terms. Contractual terms will only be regarded as material if expressly declared as such by both parties.

BINDING PERIOD Under the new Civil Code, a party clearly indicating the intent to enter into a contract may specify the period for its offer to remain binding. This means that the party making the offer may specify the period until which the other party may accept the conditions offered in order to conclude the contract. The party making the offer may also expressly exclude such a binding period, making it possible to revoke the offer at anytime by stating that it is no longer valid.

INDUSTRY PRACTICES AS PART OF THE CONTRACT Under the provisions of the new Civil Code, all practices of the parties that have previously been applied between them in similar contracts have to be considered as part of the contract or in the industry concerned. Parties wishing to exclude this provision should expressly agree to do so in their contract.

EXCLUSION AND LIMITATION OF LIABILITY The former Civil Code allowed the exclusion or limitation of liability, although it was subject to value consideration and only in respect of slight negligence. Under the new Civil Code, it is possible to exclude or limit liability without consideration. Furthermore, liability can be excluded in respect of any negligent breach of contract.

CHANGE OF LIMITATION PERIOD The parties under the new Civil Code may agree on a limitation period exceeding five

years. This provision is significant because, under the new rules, a written notice can no longer interrupt a limitation period, only by a civil proceeding. Accordingly, applying a limitation period exceeding five years seems to be expedient in contractual practice.

APPLICATION OF GENERAL TERMS AND CONDITIONS Different rules apply if a party intends to use previously prepared and regularly applied model contracts or contractual terms (general terms and conditions). In such cases, certain terms and conditions specified in the new Civil Code cannot be applied in respect of consumers, who are typically private persons not competent in the matter concerned, as such terms and conditions are considered null and void.

GROSS DISPARITY IN THE VALUE OF A CONTRACT Under the new Civil Code, parties being legal entities may enter into a contract in consideration of a possible gross disparity in value. This prevents the future challenge of the contract on this account by an aggrieved party.

In respect of contractual relations involving gross disparity in value, it is advisable to include an appropriate clause in the model contracts.

CHANGE IN THE PROVISIONS OF SECURITIES The new Civil Code contains significant changes in the security system. Given the scope of this article, we only note here that the new provisions may necessitate a review of current contractual safeguards applied in model contracts.

LIABILITY FOR BREACH OF CONTRACT The new Civil Code introduces significantly stricter provisions in respect of parties breaching a contract. In the future, in order to be exempted from liability, it will not be sufficient to demonstrate that one has acted in a manner that can generally be expected in the given situation. Under the new provisions, the breaching party will only be exempted from liability if it is able to demonstrate that the breach was caused by circumstances that were beyond its control and could not be foreseen at the time of contracting.

NOERR BUDAPEST OFFICE: Noerr is a leading independent law firm with its principal offices based in Germany. Noerr has built the reputation of a premium international firm with a significant presence in Central and Eastern Europe, Western Europe and the United States.

Noerr has been active in Hungary since 1990, advising both domestic and international clients in all areas of business law. The firm in Budapest has built strengths across practices and sectors with specialization in the automotive, real estate, private equity and the life sciences sectors.

The Budapest office is headed by Zoltán Nádasdy and has a team of 15 lawyers advising in both Hungarian and German law matters.

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NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Dr. Bíborka Jójárt

the controversial Putin−Orbán agreement on expanding the Hungarian nuclear plant at Pak, which is being financed by Russia.

“I’m sure one of the Russian companies will be interested in the INA−shares which are proposed for sale,” he said. Croatian conspiracy theories suggested that Putin and Orbán had already agreed the deal, which would include Russian companies taking control of the refinery at Sisak and converting it into a gigantic oil and gas storage facility, while also investing large sums in Rijeka, developing it into the largest container port on the Adriatic.

Representatives of Rosneft held talks in Zagreb in March on a possible purchase of INA, and portfolio.hu reported last week that Gazprom’s leader had held talks with the MOL CEO. Perhaps coincidentally, the Unites States then appeared on the scene, officially as a negotiator. A high level American delegation held talks with government and company officials in Budapest and Zagreb in March, after which Hungarian daily Népszabadság reported that an American energy company could buy some shares so that MOL could stay in INA, which would mean a one−third split for the three parties – management rights would stay with the foreign investors, but Croatia would get more rights as well.

It’s not clear though whether Russia and the States are really that interested.

Barta thinks it improbable that America

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Budapest Business Journal | May 23 – June 05

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Budapest Business Journal | May 23 – June 05

Cut Backs Hit Law Students Hungarian media keeps hammering the same old message: there are so many law graduates in Hungary that even the corner greengrocer has a degree in law. Why would we need to train more? Education experts, however, point out that while 8−9 % of college graduates possess law degrees in the EU, that number is actually much lower in Hungary: only 3−4 % of all graduates come from law schools. What is more, among unemployed degree holders the legal profession is seriously underrepresented; after IT experts, law school graduates are the second most unlikely to be unemployed.

ANDRÁS ZSÁMBOKI

It is hard to tell whether law school graduates are too many or too few in number. In any case, the Hungarian government decided in 2012 to cut back on the number who could undertake the state− financed study of law. Before 2012, 4,000 state−funded students acquired law degrees annually; that dropped to a little more than 100 per year after 2012. As a result, “there was a huge decrease in the number of law school applicants after 2012. This, even in the short run, is going to have serious

consequences for the system of legal education, which used to be based on eight different law schools all around Hungary,” Attila Kormány, Assistant Professor of ELTE’s Faculty of Law told the Budapest Business Journal. “All the more so because the decrease affected the eight faculties of law in various ways: at ELTE in Budapest, the number of students decreased by one− third, while in Győr and Pécs, law schools are being threatened with extinction.”

There are other worries. “As a result of the government’s cut back, upward mobility, which is generally week in today’s Hungary anyway, will practically cease to exist in the legal profession,” Kormány commented.

Without state funding, one semester costs HUF 170,000−260,000. “As it is primarily the provincial laws schools which are threatened with being closed down; young law students from those regions will be faced with having to rent expensive apartments in Budapest if they are forced to study there.”

It is another question how the distribution of the state−financed students will be decided. “In the year when the new system was introduced, the 140 state−financed student positions were divided up between ELTE and Péter Pázmány University. This fact understandably provoked anger among the provincial universities’ law schools,” Marianna Nagy, Vice Dean of Educational Affairs at ELTE’s School of Law said. Since then, the system has been refined. The admission requirements are determined centrally, and whoever reaches a certain pre−determined score will get funded by the state and can chose at which university he or she wishes to study. The most talented applicants with

Full time students admited to law universities 2011

Source: FELVI

University

2013

Students (fully state−finenced)

2014 Tuition for a semester in HUF if not state−finenced

ELTE ÁJK (Budapest)

448 (356)

398 (83)

260,000

Pázmány JÁK (Budapest)

413 (106)

332 (11)

230,000

Károli ÁJK (Budapest)

162 (22)

69 (0)

215,000

DE ÁJK (Debrecen)

189 (54)

112 (8)

190,000

PTE ÁJK (Pécs)

135 (48)

110 (7)

185,000

Toltal

1889 (837)

1304 (133)

the best qualities tend to prefer the two big universities in Budapest, namely ELTE and Péter Pázmány: out of 133 student positions last year, 94 were realized in those two institutions.

“It is an unfortunate thing if a government suggests to young people that law degrees are redundant in that country. You can clearly observe the impact of such a policy in Hungary in the legal profession,” Nagy explained.

In the Hungarian admissions system, the maximum admission score one could reach was 500 points. Law schools used to require scores of 400, but that has recently fallen back to 360. Some have claimed that Hungarian universities keep lowering their minimum required scores in order to make it possible for rich students with mediocre talents to be admitted; otherwise they would work against their own financial interests. Nagy vehemently denied the allegation that state−funded students differ radically from family−financed

ones in terms of their talents. “We have many students who missed the mark only by a few scores. Although they pursue privately financed studies, their performance differs in no ways from the performance of state−funded students.”

SCHOLARSHIP FOUNDED It was in the interest of those students that leading Hungarian lawyers’ offices founded a scholarship. The Lippay Scholarship supports students who were just a few scores below the minimum level required for a state−funded education in law. In exchange, grantees agree to work for the sponsoring lawyers’ offices, which is a form of internship for them as well.

ELTE School of Law hopes that when this form of scholarship evolves further it will provide the necessary funding for 18 talented students every year, and promote social mobility at the same time.

If somebody has rich parents and he or she is ambitious enough, they may ponder whether it is at all worth

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position of Hungarian law students returning home from abroad. Most law scholars studying abroad are master’s students on Erasmus or Campus Hungary exchanges (80 to 100 students annually); as a rule, they study EU law or the legal systems of other countries in various European countries. Upon returning to Hungary, they are much sought after by international lawyers’ offices and by multinational companies, but also by Hungarian public administration, and can expect very competitive salaries. On the other hand, those students who become EU law experts also have good chances to find a job in Brussels, Strasbourg or Luxembourg. Besides masters−level Hungarian exchange students, there are also postgraduate students who study in PhD programs outside Hungary, specializing in particular fields such as international private law, insurance affairs, or banking law. They are generally held in high esteem on the Hungarian job market, and they tend to target very specific positions in their fields – but again, mostly in Hungary.

What Will Become of Them?

It is an oft-quoted statistic that in the 1990s, one-third of law graduates ended up in state-affiliated legal bodies, becoming judges, persecutors or public notaries. Another one-third became lawyers working in private lawyers’ offices, and the remaining one-third became corporate lawyers. The professors of law interviewed by the BBJ, however, suggest those figures are an urban legend; and even if there was some truth in them, the proportions are radically different today. “In the corps of judges and persecutors, there are very few openings; one can only apply for the positions of retiring colleagues. The market of the free legal profession shows signs of saturation as well.

Business life, however, can absorb law graduates in virtually unlimited numbers,” Marianna Nagy, Vice Dean of Educational Affairs at ELTE’s School of Law, explained. All the interviewed experts were reluctant to talk about exact proportions, but according to one source who asked not to be named, the proportion of judges, persecutors and public notaries within the legal profession has dropped to a mere 20%.

“Our most talented students still prepare to become judges and persecutors,” Csongor Herke, professor of law at the School of Law and Public Administration at Pécs University told the BBJ. That is in spite of the fact that they have to wait longest before they can find a position. “As judges’ and persecutors’ positions can only be applied for if somebody from those positions retires or quits, and job competitions are announced only once a year or every half year, candidates have to sit and wait for a relatively long time,” Nagy agreed.

Approximately one-quarter of law graduates become freelance lawyers. According to the data of the Chamber of Lawyers, the membership of the Chamber – now around 9,000 – is still dynamically on the rise. “It is difficult to distinguish between free lawyers and corporate lawyers. The free legal profession still has such high prestige that corporate lawyers too strive to obtain free lawyers’ cards. Of course these people never see real courtrooms,” István Szabó, Vice Dean of Education at the School of Law and Public Administration of Péter Pázmány Catholic University told the BBJ.

EXPERT OPINION

State-owned Entities in Private M&A Transactions Characteristics and Stumbling Blocks Dr. Pál Szabó Senior Associate SIEGLER ÜGYVÉDI IRODA / WEIL, GOTSHAL & MANGES LLP

The Hungarian state has recently become a very active player in the Hungarian M&A arena. But are there substantial differences in transaction dynamics when state entities are involved?

D

espite the economic slowdown and lingering market uncertainties, there has been a lively past 12 months in terms of M&A activity in the Hungarian market, with a number of complex transactions going on in a variety of industry sectors. Without a doubt, the Hungarian state was prominent in a significant portion of the big-ticket M&A activity in Hungary during this period, with state-owned companies such as MVM (Hungarian Electricity Works) and agencies such as MNV (Hungarian National Asset Management Company) making major acquisitions. This article seeks to highlight some of the characteristics (and sometimes ‘stumbling blocks’) that could be seen in transactions where the Hungarian state has acquired strategic assets.

The energy and utilities sector is currently characterized by the exit of Europe’s leading electricity and gas companies, such as RWE or E.ON, where, due to a challenging market environment created mainly by recurring rounds of cuts in household utility rates, the Hungarian state has become the only ‘bidder’. MOL (Hungarian Oil and Gas Company) divested its gas storage facility business in Szőreg, where the acquirers were the Hungarian Carbon-Hydrogen Storage Association and the Hungarian Development Bank. In the TMT sector, the Hungarian state agreed to re-acquire ownership of Antenna Hungária, a provider of terrestrial broadcasting, telecommunications and network services. These deals are part of a series of transactions through which the state is acquiring (or reacquiring) ownership of public utilities and other strategic assets with a clear aim in the utilities sector of creating a non-profit utilities service provider with the ability to cut energy prices to one of the lowest levels in Europe.

In these transactions, state-owned enterprises (SOEs) act in the same way as strategic investors do and negotiations circle around the same types of issues as in the case of non-state-owned market players.

Whether there are political expectations or handshakes taking place in the background,

SOEs enter into transactions carefully considering all the risks and exposure and with a view to adequately protecting their interests; the same way private investors do.

Private market players (especially, where the sale of the asset is part of a private equity exit) tend to become jittery when dealing with SOEs and try to minimize their exposure to long pre-completion phases and conditions precedent where the risk of an easy ‘walk away’ is inherent. Adequate comfort with the availability of funds, reducing legislation risks and making sure that they do not remain ‘on the hook’ postcompletion are obviously of paramount concern for sellers involved in these deals.

The scope of representations and warranties varies. It is also true in these types of deals that one usually tries to adapt to the situation, whether there is private equity seller on the other side (as is ultimately the case in the Antenna Hungária deal) or complex controlling rights are attached to a minority stake (as happened in the Főgáz transaction).

Therefore, there are no particular trends what can be expected in this respect – issues and processes involved vary from deal to deal.

Even if SOEs are involved, regulatory and antitrust issues must be factored into the deal timeline. Assets may be qualified as ‘strategic’ by a government decree making it unnecessary to obtain approval of the Hungarian antitrust authorities, but even in these cases foreign antitrust approvals may need to be sought. Other typical legal issues arise in terms of transparency requirements, confidentiality versus the right to public information, language, governing law and jurisdiction.

Slower internal approval processes of SOEs could affect deal dynamics, though counter examples have been seen on the market where complex transactions were negotiated and signed rapidly.

To the extent any trends can be anticipated, the Hungarian state will most likely continue its ‘shopping spree’ regarding strategic assets. However, there is also optimism about the return of strategic investors to the region as well as big corporates like MOL or OTP Bank continuing outbound investments.

Overall, experts envisage a slow but steady recovery in the M&A market in the region over the coming quarters.

www.weil.com

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

paying a EUR 900 tuition fee (and renting an apartment on top of that) in Budapest, or it is more reasonable to apply to the University of Vienna or Humboldt University in Berlin. “At the moment, the Hungarian educational system does not have surveys about the number of students who gain admission to universities abroad, and start their studies in other countries,” István Szabó, Vice Dean of Education at the School of Law and Public Administration at Péter Pázmány Catholic University told the BBJ. What Hungary has is a career monitoring system run by a background company called Educatio, affiliated with the Ministry of Human Resources; according to their surveys, humanities students study abroad in the largest numbers via student exchange programs, and law students come second.

On the other hand, relatively few law graduates work abroad compared to graduates of other schools. The two phenomena seem to contradict each other at first sight, but the explanation is in fact simple: it lies in the good job market

25

3

Budapest Business Journal | May 23 – June 05

WWW.BBJ.HU

26 3

Budapest Business Journal | May 23 โ June 05

Law firms with international affiliations NAME OF ASSOCIATE NON-HUNGARIAN LAW FIRM OR COOPERATION NETWORK WORLD HQ ESTABLISHED

NO. OF OFFICES WORLDWIDE YEAR HUNGARIAN OFFICE ESTABLISHED

TOP LOCAL EXECUTIVE ADDRESS PHONE FAX EMAIL

CMS Cameron McKenna LLP London 1779

58 1989

Gabriella Ormai 1053 Budapest, Kรกrolyi utca 12.

(1) 483-4800 (1) 483-4801 budapest@cms-cmck.com

DLA Piper UK LLP London 2006

79 1988

Andrรกs Posztl 1124 Budapest, Csรถrsz utca 49โ 51.

(1) 510-1100 (1) 510-1101 budapest@dlapiper.com

)UHVKร HOGV %UXFNKDXV Deringer LLP London 1743

28 2007

Ulrike Rein 1053 Budapest, Kรกrolyi utca 12.

(1) 486-2200 (1) 486-2201 RIร FH#RSSHQKHLPOHJDO FRP

White & Case LLP New York 1901

39 1991

Istvรกn Rรฉczicza 1061 Budapest, Andrรกssy รบt 11.

(1) 488-5200 (1) 488-5299 โ

EuroJuris, Legalink, Legus, TerraLex, World Service Group, Dorda Brugger Jordisโ Best Friends, Biolegis โ โ

ยป

Andrรกs Szecskay 1055 Budapest, Kossuth Lajos tรฉr 16โ 17.

(1) 472-3000 (1) 472-3001 info@szecskay.com

CHSH Cerha Hempel Spiegelfeld Hlawati Vienna 1921

8 2004

$WWLOD 'H]Vล Tamรกs Polauf 1011 Budapest, )ล XWFD ยฒ (1) 457-8040 (1) 457-8041 RIร FH#FKVK KX

Pricewaterhouse Coopers Legal LLP London 1999

100 (approx.)

2000

Lรกszlรณ Rรฉti 1055 Budapest, Bajcsy-Zsilinszky รบt 78.

(1) 461-9888 (1) 461-9898 rap.central@hu.pwclegal.com

Baker & McKenzie LLP Chicago 1949

75 1987

Zoltรกn Hegymegi-Barakonyi 1051 Budapest, Dorottya utca 6.

(1) 302-3330 (1) 302-3331 budapestinfo@bakermckenzie.com

OTHER

BUSINESS LAW

SECURITIES

ARBITRATION

PRIVATIZATION

M&A

ENVIRONMENT PROTECTION

MEDIA

EMPLOYMENT

EU

COMPETITION

ENERGY

BANKING AND FINANCE

TAX

REAL ESTATE

COMMERCIAL

LEGAL SPECIALITY AREAS NO. OF PARTNERS IN HUNGARIAN OFFICE ON MAY 1, 2014

NO. OF TRAINEES IN HUNGARY ON MAY 1, 2014

COMPANY WEBSITE

NO. OF ATTORNEYS (WITH LICENSE TO PRACTICE) IN HUNGARY ON MAY 1, 2014

RANK

Ranked by no. of attorneys (with license to practice) in Hungary

CMS CAMERON MCKENNA LLP HUNGARIAN OFFICE www.cms-cmck.com 1

44

18

11

DLA PIPER HORVร TH & PARTNERS LAW FIRM www.dlapiper.com/hu/hungary 38

2

4

7

OPPENHEIM www.oppenheim.hu 38

2

6

13

Rร CZICZA WHITE & CASE LLP www.whitecase.com/budapest 30

3

6

8

SZECSKAY ATTORNEYS AT LAW www.szecskay.com

4

5

27

&+6+ '(=6ล e6 7ร 56$, ร GYVร DI IRODA

24

3

6

16

10

โ

www.chsh.hu

5

Rร TI, ANTALL ร S Tร RSAI ร GYVร DI IRODA PRICEWATERHOUSECOOPERS LEGAL

24

12

7

www.retianantallpartners.hu

KAJTร R TAKร CS HEGYMEGI-BARAKONYI BAKER & MCKENZIE LAW FIRM 6

www.bakermckenzie.com

23

9

11

1992

WWW.BBJ.HU

NO. OF OFFICES WORLDWIDE YEAR HUNGARIAN OFFICE ESTABLISHED

NAME OF ASSOCIATE NON-HUNGARIAN LAW FIRM OR COOPERATION NETWORK WORLD HQ ESTABLISHED

OTHER

BUSINESS LAW

SECURITIES

ARBITRATION

PRIVATIZATION

M&A

ENVIRONMENT PROTECTION

MEDIA

EMPLOYMENT

EU

COMPETITION

ENERGY

BANKING AND FINANCE

TAX

REAL ESTATE

COMMERCIAL

LEGAL SPECIALITY AREAS NO. OF PARTNERS IN HUNGARIAN OFFICE ON MAY 1, 2014

NO. OF TRAINEES IN HUNGARY ON MAY 1, 2014

NO. OF ATTORNEYS (WITH LICENSE TO PRACTICE) IN HUNGARY ON MAY 1, 2014

RANK

COMPANY WEBSITE

27

3

Budapest Business Journal | May 23 – June 05

TOP LOCAL EXECUTIVE ADDRESS PHONE FAX EMAIL

20 1991

David Dederick 1054 Budapest, Szabadság tér 7.

(1) 301-8900 (1) 301-8901 david.dederick@weil.com

62 1996

Tamás Szabó 1132 Budapest, Váci út 20.

(1) 288-8200 (1) 288-8299 tamas.szabo@sz-k-t.hu

35 1991

Péter Lakatos 1075 Budapest, Madách Imre út 14.

(1) 429-1300 (1) 429-1390 mail@lakatoskoves.hu

7 2008

Csilla Andrékó 1054 Budapest, Széchenyi rakpart 3.

(1) 428-4400 (1) 428-4444 marketing@kinstellar.com

600 1991

Péter Berethalmi 1126 Budapest, Ugocsa utca 4/B (1) 487-8700 (1) 487-8701 EXGDSHVWBRIÀFH#QW KX

75 (min.)

2006

-XGLW .ŃYiUL Tamás Tercsák 1055 Budapest, Bajcsy-Zsilinszky út 78.

Eiffel Palace 6. emelet (1) 880-6100 (1) 880-6199 budapest@dentons.com

39 1991

ÉNRV (UŃV 1051 Budapest, Széchenyi István tér 7–8.

(1) 428-7111 (1) 428-7100 budapest@squiresanders.com

14 2007

Zoltán Faludi 1085 Budapest, Kálvin tér 12–13.

(1) 484-8800 (1) 484-8825 budapest@wolftheiss.com

»

István Gárdos 1056 Budapest, Váci utca 81.

(1) 327-7560 (1) 327-7561 postmaster@gfmt.hu

SIEGLER ÜGYVÉDI IRODA / WEIL, GOTSHAL & MANGES LLP www.weil.com 7

22

5

2

Weil, Gotshal & Manges LLP New York 1931

International Alliance of Law Firms London 1990

Clifford Chance London 1987

SZABÓ, KELEMEN ÉS TÁRSAI ÜGYVÉDI IRODA www.sz-k-t.hu 22

7

3

4

–

LAKATOS, KÖVES AND PARTNERS ÜGYVÉDI IRODA www.lakatoskoves.hu

20

8

9

ANDRÉKÓ KINSTELLAR ÜGYVÉDI IRODA

8

5

Kinstellar 19

4

3

NAGY & TRÓCSÁNYI ÜGYVÉDI IRODA 10

www.nt.hu

18

5

10

–

–

–

Lex Mundi Houston, USA 1989

DENTONS / Salans FMC SNR Denton Europe LLP – 1978/2013

Squire Sanders (US) LLP Cleveland 1890

Wolf Theiss Rechtsanwälte GmbH Vienna 1957

.ł9É5, 7(5&6É.

SALANS FMC SNR DENTON EUROPE ATTORNEYS www.dentons.com 16

11

»

2008

www.kinstellar.com

2

4

(5ł6 h*<9e', ,52'$ SQUIRE SANDERS (US) LLP www.squiresanders.com 15

12

2

4

–

FALUDI WOLF THEISS ÜGYVÉDI IRODA www.wolftheiss.com 15

12

12

GÁRDOS, FÜREDI, MOSONYI, TOMORI ÜGYVÉDI IRODA www.gfmt.hu

15

6

1

3

7

–

–

–

–

–

–

ADVOC, ELA –

»

1992

WWW.BBJ.HU

NO. OF OFFICES WORLDWIDE YEAR HUNGARIAN OFFICE ESTABLISHED

Noerr LLP Munich 1950

16 1990

Zoltรกn Nรกdasdy Jรถrg Menzer 1011 Budapest, )ล XWFD ยฒ (1) 224-0900 (1) 224-0495 recepcio@noerr.com

Eversheds LLP London 2004

52 1987/1999

ร gnes Szent-Ivรกny 1026 Budapest, Pasarรฉti รบt 59.

(1) 394-3121 (1) 392-4949 RIร FH#HYHUVKHGV KX

Conference Bleue Alliance โ 2006

ยป

Kornรฉlia Nagy-Koppรกny Istvรกn Varga 1051 Budapest, Vigadรณ utca 2.

(1) 302-9050 (1) 302-9060 knplaw@knplaw.com

Allen & Overy London 1930

43 1993

Zoltรกn Lengyel 1075 Budapest, Madรกch Imre รบt 13โ 14.

(1) 483-2200 (1) 268-1515 budapest@allenovery.com

โ

bnt attorneys - at - law โ โ

10 2003

Antal Levente Szabรณ 1143 Budapest, Stefรกnia รบt 101โ 103.

(1) 413-3400 (1) 413-3413 info@bnt.hu

BWSP, Globalaw โ 2012/1994

6 2002

Arne Gobert 1061 Budapest, Andrรกssy รบt 10.

(1) 270-9900 (1) 270-9990 RIร FH#JISOHJDO FRP

NAME OF ASSOCIATE NON-HUNGARIAN LAW FIRM OR COOPERATION NETWORK WORLD HQ ESTABLISHED

TOP LOCAL EXECUTIVE ADDRESS PHONE FAX EMAIL

OTHER

BUSINESS LAW

SECURITIES

ARBITRATION

PRIVATIZATION

M&A

ENVIRONMENT PROTECTION

MEDIA

EMPLOYMENT

EU

COMPETITION

ENERGY

BANKING AND FINANCE

TAX

REAL ESTATE

COMMERCIAL

LEGAL SPECIALITY AREAS NO. OF PARTNERS IN HUNGARIAN OFFICE ON MAY 1, 2014

NO. OF TRAINEES IN HUNGARY ON MAY 1, 2014

COMPANY WEBSITE

Budapest Business Journal | May 23 โ June 05

NO. OF ATTORNEYS (WITH LICENSE TO PRACTICE) IN HUNGARY ON MAY 1, 2014

RANK

28 3

NOERR & Tร RSAI IRODA www.noerr.com 12

15

4

3

โ

Sร NDOR SZEGEDI SZENT-IVร NY KOMร ROMI EVERSHEDS LAW FIRM www.eversheds.com 15

12

4

7

KNP LAW NAGY KOPPANY VARGA AND PARTNERS www.knplaw.com 14

13

13

MORLEY ALLEN & OVERY LAW FIRM

14

6

7

3

2

โ

โ

www.allenovery.com

14

BNT SZABร TOM BURMEISTER LAW FIRM

13

3

5

โ

www.bnt.eu

2007

BWSP GOBERT AND PARTNERS www.gobertpartners.com 14

13

5

3

WWW.BBJ.HU

–

7

–

7 1997

Chrysta Bán Péter S. Szabó 1051 Budapest, József nádor tér 5–6.

(1) 266-3522 (1) 266-3523 RIÀFH#EDQVV]DER KX

–

PRK Partners s.r.o. advokátní kancelár Prague 1993

4 2010

Ágnes Fábry 1024 Budapest, Fény utca 16.

(1) 336-0443 (1) 336-0444 budapest@prkpartners.com

Schönherr Rechtsanwälte GmbH Vienna 1950

14 2008

Kinga Hetényi 1024 Budapest, Buday László utca 12.

(1) 345-8778 (1) 345-8777 RIÀFH KXQJDU\#VFKRHQKHUU HX

–

Mackrell International Woking, UK 1987

160 1990

András Moldován 1051 Budapest, Dorottya utca 1.

(1) 328-6010 (1) 328-6011 info@moldovan.hu

Hogan Lovells International LLP London, Washington 1899/1904

46 2006

Jnr. László Partos 1051 Budapest, Vörösmarty tér 7–8.

(1) 505-4480 (1) 505-4485 RIÀFH#KRJDQORYHOOOV FR KX

Gide Loyrette Nouel A.A.R.P.I. Paris 1920

17 1993

Eszter Kamocsay-Berta Ákos Kovách 1051 Budapest, Széchenyi István tér 7–8.

(1) 411-7400 (1) 411-7440 hungary@gide.com

–

International Lawyers Network Westwood, USA 1988

90 1999

Pál Jalsovszky 1124 Budapest, Csörsz utca 41.

(1) 889-2800 (1) 886-7899 RIÀFH#MDOVRYV]N\ FRP

–

Prae Legal Cologne 2013

150 1989

János Burai-Kovács 1062 Budapest, Andrássy út 100.

(1) 354-4300 (1) 354-4399 RIÀFH#EXUDL NRYDFV KX

–

MSI Global Alliance London 1990

125 1992

Alice Dessewffy 1061 Budapest, Andrássy út 43.

(1) 413-3340 (1) 413-3341 RIÀFH#GHVVHZII\ FRP

Rödl & Partner GbR Wirtschaftsprüfer, Steuerberater, Rechtsanwälte Nürnberg 1977

bpv LEGAL – 2006

Gleiss Lutz Rechtsanwälte Stuttgart 1949

www.bansszabo.hu

15

FÁBRY ÉS TÁRSAI LAW FIRM

12

4

4

–

–

–

–

–

–

NAME OF ASSOCIATE NON-HUNGARIAN LAW FIRM OR COOPERATION NETWORK WORLD HQ ESTABLISHED

TOP LOCAL EXECUTIVE ADDRESS PHONE FAX EMAIL

OTHER

BUSINESS LAW

SECURITIES

ARBITRATION

PRIVATIZATION

M&A

ENVIRONMENT PROTECTION

MEDIA

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EU

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ENERGY

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TAX

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COMMERCIAL

NO. OF PARTNERS IN HUNGARIAN OFFICE ON MAY 1, 2014

LEGAL SPECIALITY AREAS

NO. OF OFFICES WORLDWIDE YEAR HUNGARIAN OFFICE ESTABLISHED

12

NO. OF TRAINEES IN HUNGARY ON MAY 1, 2014

15

BÁN, S. SZABÓ & PARTNERS LAW FIRM

NO. OF ATTORNEYS (WITH LICENSE TO PRACTICE) IN HUNGARY ON MAY 1, 2014

RANK

COMPANY WEBSITE

29

3

Budapest Business Journal | May 23 – June 05

www.prkpartners.com

SCHÖNHERR HETÉNYI LAW FIRM www.schoenherr.eu 15

12

5

2

MOLDOVÁN & CO. ATTORNEYS www.moldovan.hu 11

16

16

PARTOS & NOBLET IN CO-OPERATION WITH HOGAN LOVELLS INTERNATIONAL LLP

11

2

6

2

3

–

–

–

–

www.hoganlovells.com

GIDE LOYRETTE NOUEL - D'ORNANO IRODA www.gide.com 10

17

5

3

JALSOVSZKY ÜGYVÉDI IRODA www.jalsovszky.com

10

17

18

BURAI-KOVÁCS ÉS PARTNEREI ÜGYVÉDI IRODA

9

4

1

1

5

–

–

–

–

–

–

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–

–

–

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–

www.burai-kovacs.hu

DESSEWFFY ÉS DÁVID VALAMINT TÁRSAIK ÜGYVÉDI IRODA www.dessewffy.com 9

18

18

SÁRKÖZY RÖDL & PARTNER ÜGYVÉDI IRODA RÖDL & PARTNER ÜGYVÉDI TÁRSULÁS www.roedl.com

9

1

2

3

2

–

–

–

–

–

–

–

–

–

–

BPV JÁDI NÉMETH ATTORNEYS AT LAW 19

www.bpv-jadi.com

7

4

3

94

»

7 2000

Sándor Sárközy Stefan Sieferer 1062 Budapest, Andrássy út 121.

(1) 814-9880 (1) 814-9898 budapest@roedl.hu

Andrea Jádi Németh 1051 Budapest, Vörösmarty tér 4.

(1) 429-4000 (1) 429-4001 budapest@bpv-jadi.com

WWW.BBJ.HU

19

BĂ NKI AND PARTNERS LAW FIRM IN COOPERATION WITH TAYLORWESSING E | N | W | C NATLACEN WALDERDORFF CANCOLA RECHTSANWĂ&#x201E;LTE GMBH www.taylorwessing.com

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23 1995

Orsolya BĂĄnki 1051 Budapest, Dorottya utca 1.

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NO. OF PARTNERS IN HUNGARIAN OFFICE ON MAY 1, 2014

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NO. OF OFFICES WORLDWIDE YEAR HUNGARIAN OFFICE ESTABLISHED

19

COMPANY WEBSITE

LEGAL SPECIALITY AREAS

NAME OF ASSOCIATE NON-HUNGARIAN LAW FIRM OR COOPERATION NETWORK WORLD HQ ESTABLISHED

19

Budapest Business Journal | May 23 â&#x20AC;&#x201C; June 05

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RANK

30 3

WALDE, FEST Ă&#x2030;S TĂ RSAI Ă&#x153;GYVĂ&#x2030;DI IRODA

7

4

3

19

7

5

2

18 1999

Attila Fest Zsolt Walde 1055 Budapest, Kossuth Lajos tĂŠr 13â&#x20AC;&#x201C;15.

(1) 381-0000 (1) 381-0001 RIĂ&#x20AC;FH#ZDOGHIHVW KX

40 2010

Rupert VĂĄrnai Zsolt Zamostny 1037 Budapest, Montevideo utca 10.

(1) 887-8288 (1) 887-8381 RIĂ&#x20AC;FH#YDUQDL HX

Alfa International Chicago 1980

Luther Rechtsanwalts GmbH Cologne 1992

Yingke Law Firm Beijing 2001

â&#x20AC;&#x201C;

TELFA London 1989

30 2002

Tibor Bihary 1026 Budapest, PasarĂŠti Ăşt 83.

(1) 391-4491 (1) 200-8047 RIĂ&#x20AC;FH#ELKDU\EDODVVD KX

Bird & Bird LLP London 1846

26 2008

RichĂĄrd EĂśrdĂśgh 1054 Budapest, SzabadsĂĄg tĂŠr 14.

(1) 799-2000 (1) 799-2088 budapest@twobirds.com

Bolton May London

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2008

ZoltĂĄn Martonyi 1051 Budapest OktĂłber 6. utca 4.

(1) 999-0140 (1) 267-6390 info@boltonmay.com

Norton Rose LLP London 1794

30 1998

KĂĄroly Varga 1065 Budapest, Bajcsy-Zsilinszky Ăşt 53.

(1) 302-9090 (1) 302-9092 halcsi@t-online.hu

â&#x20AC;&#x201C;

Studio Legale De Capoa e Associati Bologna 1986

6 2000

Krisztina SallĂł 1055 Budapest, HonvĂŠd utca 38.

(1) 312-1683 (1) 269-2999 sallo-decapoa@mail.datanet.hu

Warwick Legal International Network London 2001

57 1997

Thomas A. Squarra 1016 Budapest, Avar utca 8.

(1) 474-2080 (1) 474-2081 info@squarra.hu

www.waldefest.hu

YINGKE VĂ RNAI ZAMOSTNY Ă&#x153;GYVĂ&#x2030;DI IRODA

145 2000

ZoltĂĄn ForgĂł GĂĄbor Damjanovic 1123 Budapest, AlkotĂĄs utca 17â&#x20AC;&#x201C;19.

(1) 214-0078 (1) 214-0080 RIĂ&#x20AC;FH#IGODZ KX

â&#x20AC;&#x201C;

www.fdlaw.hu

19

125/76 2003

Marianna Csabai 1126 Budapest, Tartsay Vilmos utca 3.

(1) 488-7008 (1) 488-7009 info@clvpartners.com

www.yingke.com

BIHARY, BALASSA Ă&#x2030;S TĂ RSAI Ă&#x153;GYVĂ&#x2030;DI IRODA www.biharybalassa.hu

6

20

20

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SQUARRA & PARTNERS Ă&#x153;GYVĂ&#x2030;DI IRODA

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Bringing Graphic Design to Film

The young Hungarian ‘graphic designer for film’ who has been quietly making a name for herself among the giants of Tinsel Town.

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Bringing Graphic ‘Just because you’re a genius doesn’t mean you’re Hungarian,’ apparently read a legendary sign on the office wall of Samuel Goldwyn, the leading studio boss for much of Hollywood’s golden period. Legends aside, the impact of Hungarian genius on Hollywood filmmaking is well documented. Oscar−winning directors such as Michael Curtiz and George Cukor are well known. But behind−the−scenes specialists, such as computer artist Charles Csuri and post−production color wizards Mark and Áron Jászberényi, may be more telling of modern Hungarians’ contribution to the global film industry. In the same spirit, a young ‘graphic designer for film’ has been quietly making a name for herself among the giants of Tinsel Town.

JACOB DOYLE

One day in the early 2000s, bored with her art studies at university, Alexandra Miklos boldly knocked on the office door of makeup and special effects designer Ivan Poharnok and proceeded to ask him to teach her to design figures for film. His response was to test her. She passed his test by designing an elaborate Seahorse, which won both Poharnok’s approval and that of his team. An apprenticeship followed, which lasted some two−and−a− half years – wherein Alex learned a lot about making masks – until 2005 when she graduated from university and got her first ‘big break’.

Steven Spielberg had come to town to film ‘Munich’ and Alexandra was hired to work as a graphic assistant. For the next four months, she found herself working harder than she ever had before, pushing her talents and acquiring skills that continue to serve her.

“Spielberg has a different level of work,” she says. “He has his own group and they all work together very well. They kept me busy. I designed plenty of street signs for Paris and Rome. I had to dress up English double−decker buses with adverts and posters and recreated general airport

signs for the Tel Aviv Airport set, along with general building signs and badges for the Munich Olympic village.”

Spielberg’s group welcomed her contributions and the director met with her several times during the filming to review her work. From that point forward, her career found definition.

“The role of graphic artists in film is new in Hungary,” said Alexandra.

“Previously, production designers did the work of graphic designers.”

This work includes the design of all those details that underpin the credibility of each scene: the names on shop windows, a restaurant menu, even a tattoo.

Since ‘Munich’, a steady flow of design work has come Alexandra’s way including such films as ‘A Good Day to Die Hard’ with Bruce Willis, ‘Hellboy 2’ and the Lionsgate/A&E network series ‘Houdini’ with Adrien Brody, and ‘Dracula’, which premiered in the United States on NBC last September. “’Houdini’ and ‘Dracula’ were both gifts for my life and career,” she says. “I could finally design, not just produce.” She designed the exterior of Gypsy caravans, including period signs on the caravans.

She “adored” the opportunity to design

and recreate that world of the 1890s, and she liked that both ‘Houdini’ and ‘Dracula’ were Hungarian−themed films.

“It was great to learn about Houdini’s life and history,” she said.

‘Hellboy 2’ has been her favorite project so far. She got to design a number of Troll world street signs as well as Troll manuscripts, which involved designing a Troll alphabet and many Troll world maps.

She also designed a New York street scene built as a set in an Etyek studio.

She says the hardest film she made was ‘A Good Day to Die Hard’ in 2012. She worked as lead graphic artist and there were four people working under her. “It was a very bad movie to work on,” she said. “The final result was poor and there were lots of struggles and indecision, and

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Gourmet Festival: Only the Best One of the best Hungarian gastro-events, Gourmet Festival, is awaiting fans between May 30 and June 1. Guests will get a taste of Hungary’s best restaurants, wineries, and pastry shops. While the main focus was goulash last year, this time chefs will re-create the well-known Hungarian rakott krumpli (layered potato casserole) in a unique way, alongside their own specialties.

Gourmet Festival, organized by Sziget Cultural Management, has proven over the years that it showcases the best. In 2013 more than 100 exhibitors were part of the festival program and more than 12,000 visitors tried out the specialties. This year more guests and more exhibitors are expected at the three-day event.

Founder Károly Gerendai says Gourmet Festival is the ultimate destination for those who would like to taste the bestsof Hungarian cuisine at one place at one time. “Our selected and special showcase introduces the most important masters from all around the country and it is an honor that many of them only come to our event,” he said.

The organizers are once again inviting all the important actors of the Hungarian gastro world, but this year the local representatives of international cuisine types will also appear.

This way those Hungarian restaurants focusing on a thematic international cuisine will have the chance to show their tastes.

This year quality street food will also appear at the festival.

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Design to Film BOX OFFICE It is impossible to quantify Alexandra Miklos’ contribution to the films she has worked on, but what she does helps create the overall feel of a film, and that, in part feeds into the success of a piece.

Film

Year

Estimated Budget

Worldwide lifetime boxoffice

‘Munich’

2005

$70 mln

$130,358,911

Hellboy II: The Golden Army’

2008

$85 mln

$160,388,063

‘A Good Day to Die Hard’

2013

$92 mln

$304,654,182

Source: Box Office Mojo

conflicts between the director and the star. The personnel were required to work double, because of these conflicts.”

Perhaps her finest hour came when she was called on to work for director Wes Anderson on a commercial for Prada Candy perfume shot in Budapest.

She created shop signs and detailed graphics for a Parisian arcade. “His style is amazing,” she said of the Director. “I’m really proud to have worked with him. I consider him a mentor and would love to work with him again.”

For now she remains Budapest−based, but she acknowledges it may not always be so. In the near term, Alexandra will work on another American film to be produced in Hungary. “It’s a six month ADVERTISEMENT

project,” she says. “I’ve been hired to work as the lead graphic artist.”

In the longer−term, Alexandra says she is “naturally” open to working on international film projects abroad, admitting that the pay scale in Hollywood is considerably higher than in Hungary, even if working here on projects destined for global screens. “My future plan is to establish myself as an internationally− recognized graphic artist for film.”

As her career has advanced, Alexandra acknowledges that her success has come by devoting what she does best to the needs of the industry, which hearkens back to another supposed Goldwynism: ‘It’s not enough to be Hungarian to make films, you also need talent.

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BOOK REVIEW

Is Your Best Yet to Come?

There are thousands of books out there promising to help you ‘get rich quick’ or find short cuts to success. ‘Never Too Late To Be Great’ is not that kind of book.

Instead, it is about the power of ‘thinking long’. Bestselling author and motivational speaker Tom Butler−Bowdon exposes the myth of instant success and shows us that, contrary to popular belief, people, companies, products and ideas invariably need a long time to realize their potential.

Butler−Bowdon argues against the prevalent opinion that many billionaires find ‘overnight success’. The reality is that it takes many years of work and effort to achieve important goals. He highlights the ‘ten−year rule’ – as referred to in Malcolm Gladwell’s book ‘Outliers’ – which suggests that significant achievements rarely happen without a decade of intense work and practice in any given area.

‘Never Too Late To Be Great’ is made up of nine chapters with titles such as ‘Warming Up’, ‘Life Isn’t Short’, ‘The Long View’, and ‘The 40 Factor’. They explain how increasing longevity gives us multiple chances to

succeed, how what we have done so far may have set the scene for future developments, and how many people – usually without intention – save their best for last.

If your productive life is from age 20 to 80 and you are 35 years old, you have 75% of your productive life ahead of you. What is more, you don’t have to keep on doing what you’ve always done, Butler−Bowdon explains.

He provides many examples of successful ‘late bloomers’, from Ray Kroc (of McDonalds fame) to Estee Lauder to Claude Monet, and suggests exercises that you can do that will help you think and plan for the long−term.

At the age you are now – whatever age that may be – many famous and remarkable people were only just finding their stride. ‘Never Too Late To Be Great’ offers inspiration for the impatient or disheartened to stay the course, and gives reassurance to us all that we have more time than we think to achieve our goals. “You do not have to race against time,” writes Butler−Bowdon, “because everything is unfolding as it should. The best is still ahead of you, and whatever you have done so far in life, chances are you have just been warming up.”

NEVER TOO LATE TO BE GREAT

by Tom Butler−Bowdon Published by Virgin Books ISBN 9780753555309 Available to order through www.hungaropress.hu

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Building Bridges Between Cultures The repertoire of 2014 Budapest Summer Festival is versatile and lively, in keeping with the open− air season. The London Globe’s ‘Hamlet’, Benkó Dixieland Band and ‘Aida’ are not a mismatch – in fact they may work better to entice a wider audience than traditional theaters do. Teodóra Bán, managing and art director of Szabadtéri Színház, the organizer of the festival, talked about the highlights of the upcoming season.

ZSÓFIA VÉGH

Q

How have the programs changed in the past couple of years?

A: Theater is a genre that is in a state of constant change: it keeps searching for something new. It also tries to show something different and involve new audiences. The physical features of the two open−air venues in Budapest define what performances fit in them. The Margitsziget Open−air stage is the place for large−

scale, classy plays. Városmajor Open−air stage offers more intimacy, it allows for prose, musicals, and children’s plays. This selection is in line with the goal of summer theaters: to be as varied, as appealing and involve as many people as possible, whom we can keep. To do this, quality performances, good actors and some uniqueness – that is, only we put on a play on – are necessary.

Q

People’s tastes are changing too. There seem to be a shift towards lighter plays.

A: I don’t think that would be a problem at summer theaters. They are not necessarily the place for directors aiming for self− realization. Still, we have put on stage several plays that live up to the standards of the program of traditional theaters with ease. Light entertainment is present in our schedule, but only quality plays. ‘Carmen’, for example, will be performed.

Q

Are tickets sold out at the same pace for an opera as they are for a Buena Vista Social Club concert?

A: The interest in ‘István, a király’ (‘Stephen, the King’, an opera directed by Szabadtéri Színház) was really great. It is also a question of program policy: opera being less popular, we need to make it more enticing and accessible. So we offered

tickets for that at a more affordable price.

There are expensive items; Buena Vista is, yet the Moscow Ballet is not that dear.

Q

How do you compile the program?

A: We start off a year ahead; I already have some offers on the table for the 2015 season, we already know the highlights. We have a casting team who visits theaters but we also encourage theater heads to send us their offers. We also contact foreign theaters to include them in the program. We have been lucky this year, with London Globe’s and the Russian Ballet.

We have one of the most sought−after Carmens in Israeli−born mezzo−soprano Rinat Shaham, while Brazilian−Italian star tenor Thiago Arancam will play the Egyptian general in ‘Aida’ and will perform for the first time in Hungary.

Q

Is there anything that you feel has been missing from the program?

A: Not really. The performances we have been keen to sign we did eventually. As a director of a summer theater, what I have found most rewarding is the ability to invite and cooperate with various theaters.

Theater is more than pure entertainment: we learn about our history, we get to know contemporary plays; it is as essential a part of culture as music or architecture.

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Restaurants FINE

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This is an extract from Fine Restaurants, the Budapest Business Journal’s Restaurant Guide 2014 (www.facebook.com/fine.restaurants).

To order your copy of the publication, which costs HUF 2,990, send an email including contact details to Andrea Bognár, bognar.a@amedi.hu

We both worked in Italy – as a maître d’ and as a chef – and as people who love being there. Time went by and, after a brief two− and−a−half year detour via New York, home was waiting. So we returned. First we created a corner bar, then a corner pizzeria, and then Anyukám Mondta restaurant (literally translated: ‘My Mother Said’). The matter of ovens is fundamental – like the primary theme in a jazz tune – upon which you can improvise superbly with vegetables, meat, fish and others. All the food has the ‘my mother said’ character for example the homemade pasta in the consommé. But my mother is like ‘Woman’s Own’ or like a literary character – she never makes a mistake. The bread is as homemade as the snail’s own house – we knead it at night, bake it in the morning and serve it fresh at lunch. The desserts are also homemade, homey Hungarian and homey Italian. My mother said, among other things. Mamma ha detto fra l’altro.

Manager: Szilárd Dudás, Chef: Szabolcs Dudás

Address of restaurant: 3680 Encs, Petőfi út 57. · Telephone number: +36 (46) 587−340 · Telephone number for reservations: +36 (46) 587−340 E−mail address: anyukammondta@gmail.com · Website address: www.anyukammondta.hu · Name of manager: Szilárd Dudás · Name of chef: Szabolcs Dudás Opening hours: Wednesday–Saturday: 11:00–22:00, Sunday: closed · Number of places: 60 Year of establishment: 2009 ADVERTISEMENT

Photos: Árpád Pintér

Anyukám Mondta Restaurant