Budapest Business Journal 2911 by Business Publishing Services Kft.

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

HUF 1,850 | €5 | $6 | £4

BUSINESS JOURNAL BUDAPEST

VOL. 29. NUMBER 11

JUNE 4 – JUNE 17, 2021

SPECIAL REPORT

Legal Services

SPECIAL REPORT

Legal Services Market Talk: A Cautious Reopening The old cliché used to have it that law firms were the most traditional of businesses. Yet, A.I. and digitalization are already here. The BBJ asked a number of the leading lawyers in Hungary how they view the market as we head out of the pandemic. 12 SPECIAL REPORT

A.I. set to Send Shockwaves Through the Lawyer’s World Artificial Intelligence can certainly help save time, but it requires a totally different mindset, one leading lawyer warns. And in the process, might trainee attorneys miss out on vital training? 22

Cooking up a Storm

SOCIALITE

Warming up With the Pre-Raphaelites On a recent unseasonably cold and rainy Sunday, David Holzer took refuge in the Pre-Raphaelite exhibition at the Hungarian National Gallery, featuring pieces from the Tate Britain collection and the Victoria and Albert Museum in London. It was his first visit to an art gallery in more than a year. 30

NEWS

2nd Reading Lifts GDP, Analysts’ Projections In light of the second reading of Q1 gross domestic product data, analysts have toned up their growth projections for the year; however, they warn that the pandemic still poses risks to the Hungarian economy. In the meantime, the central bank has hit a more hawkish tone. 3

N ES BUSI

Austrianborn celebrity chef Wolfgang Puck talks exclusively to the BBJ about the muchanticipated opening of his Spago restaurant in the Matild Palace, a Luxury Collection Hotel. It will be the first opening for the 40-year old brand in Europe; the restaurateur says he is excited about the culinary journey that lies ahead.7 BUSINESS

Interactive Brokers Eyes Regional Expansion Interactive Brokers targets rapid growth in terms of clients and staff globally and regionally, founding chairman Thomas Peterffy tells reporters in Budapest. The Hungarian unit has become a member of the Budapest Stock Exchange as part of plans to expand across the region from its Budapest base.  8

2|1

News THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Kálmán Béres, Zsófia Czifra,

Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Bálint Szőnyi, Zsófia Végh. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu

Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14, Building A, 8th floor. Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential. The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

BBJ-PARTNERS

The meteorological summer has officially started, the sun is shining, and there are more people in the office than I have seen since before Christmas; for once, the arrival of June feels like a more significant step-change than the coming of spring. We are surely past “emerging shoots” metaphors by now, but the fact that the second reading of the Q1 GDP data was an improvement of the first underscores how resilient the Hungarian economy is. Broadly speaking, the picture looks very promising indeed. Like most journalists, I am a professional skeptic when it comes to most things, but it is hard not to read the tea leaves positively right now. That said, a dash of caution is no bad thing, for there are still risks out there. To quote British Prime Minister Boris Johnson, who met with Hungary’s Viktor Orbán in London last week, “We’re not out of the woods yet.” Quite so, although he was speaking earlier in the crisis when he said that, and we are most certainly nearer “broad, sunlit uplands” than deep, dank, impenetrable forests. What are those risks? Well, let me lay out three for you. Firstly, Hungary has such an open economy that, while being way ahead of everyone else might seem like an attractive prospect, the country desperately needs its trade partners, most especially from Europe, to be doing well enough themselves to sell imports and buy exports. In truth, this is probably the least worrisome of my trinity of threats. A more real concern is threat number two: that we grow so fast it just fuels inflation, already bubbling away a little above the National Bank of Hungary’s mid-term target of 3%. Credit taken out while the interest rate was close to zero looks less attractive as rates rise. And will households be so willing to spend on large ticket items when the cost of filling the weekly shopping basket is heading north? The central bank has already signaled it is becoming more hawkish and may well be ready to intervene on that front at its June policymakers’ meeting.

The third threat isn’t directly economic at all, although, as we all know by now, it certainly can shut down growth, and that is the coronavirus itself. Hungary has run a remarkably effective vaccination campaign. Whatever you think about the Chinese and Russian jabs (I, for one, have been critical because it is not clear whether these “Eastern vaccines” will be accepted for international travel), adding them to the mix of alternatives offered has certainly speeded things up. That is especially so in the light of problems with the EU’s own procurement plans. All of that said, there do seem to be suggestions from some leading infectologists that further progress, now more than half the population has been vaccinated at least once, will inevitably slow. Against this, the realization that the first two cases of the Indian variant have been detected in Hungary should give pause for thought. Our third wave was driven by the arrival of the more transmissible Kent variant from the United Kingdom. Although the data is not yet conclusive, this Indian mutation may be more virulent still and has already supplanted the Kent strain in parts of Britain as the dominant form of the coronavirus. Some U.K. scientists are sufficiently worried to be warning of a potential new wave there and urging the British government not to further ease restrictions this month. The message seems clear to me; to protect human health and economic livelihoods, the vaccination campaign has to continue among the younger cohorts and the skeptics (and for once I am not one, in this case). Perhaps even more so, we need to ensure developing nations get fair access to vaccinations as quickly as possible because we really are all in this together. Robin Marshall Editor-in-chief

Photo by Fortepan.hu / Hungarian Museum of Technology and Transport

VISIT US ONLINE: WWW.BBJ.HU

THE GRAND SUMMER REOPENING

THEN & NOW

A JAS-39 Gripen fighter of the Hungarian Air Force prepares for take-off at the military airport of Kecskemét on June 1, 2021, on a training flight. In the black and white image from the Fortepan public archive, German Messerschmitt Bf 109B fighters are parked on display during the opening ceremony of Budaörs airport in 1937.

Photo by MTI / Sándor Ujvári

BBJ

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

News///macroscope

2nd Reading Lifts GDP, Analysts’ Projections Alike

In light of the second reading of Q1 gross domestic product data, analysts have toned up their growth projections for the year; however, they warn that the pandemic still poses risks to the Hungarian economy. In the meantime, the central bank has hit a more hawkish tone. ZSÓFIA CZIFRA

Hungary’s first-quarter GDP growth was even more significant than the data showed at the first reading. As it turns out from the final data published by the Central Statistical Office (KSH) on June 1, the Hungarian economy expanded by 2% in the first three months of the year on a quarterly basis, as opposed to the 1.9% stated in the first release of the data two weeks ago. According to the latest numbers published by the KSH, the volume of GDP lessened by 2.1% in Hungary in the first quarter of 2021 compared to the corresponding period of the previous year. Looking at seasonally and calendar adjusted and reconciled data, the economy’s performance rose 2% higher than in the previous quarter and was 1.6% lower than in the corresponding quarter of last year. The performance of industry increased by 3.4%, within which that of manufacturing grew by 4.1% compared to the same period of the previous year. Among manufacturing branches, the most significant contributor to the growth was

Foreign Trade Product Turnover in Hungary, billion forints (at current prices)

January-March 2021

export

import

While economic projections are becoming increasingly optimistic, inflation risks are mounting. In April, the consumer price index reached 5.1%, more than one percentage point higher than the upper limit of the central bank’s target. Unsurprisingly, the Monetary Council of the National Bank of Hungary (MNB) has already hinted at the possibility of a rate change. At its latest rate-setting meeting, it openly sent a hawkish message while, for the time being, keeping the base rate at 0.6% and also held all other instruments steady, in line with market expectations.

balance

Source:

the increase in the making of electrical equipment. The value-added of construction lessened by 2.4%, while that of agriculture grew by 2.5% compared to the corresponding period of the previous year, KSH said. The gross value added of services decreased by 3.5% in total on a yearly basis. Not surprisingly, the highest falls were in accommodation and food service activities (–47.7%), as well as transportation and storage (–11.1%). On the expenditures side, the actual final consumption of households lessened by 3.7% compared to the same period of the previous year. Household final consumption expenditure, representing the largest proportion, decreased by 4.8%. The volume of social transfers in kind from the government became 1.3%, and the actual final consumption of the government was 10.4% higher. As a result of the above trends, actual final consumption became 1.6% lower.

Promising Picture

When looking at seasonally and calendar adjusted and reconciled data compared to the last quarter of 2020, the picture is rather promising. The performance of the economy grew by 2%, in terms of production, construction showed an outstanding 6% growth, while industry and services grew by 3.1% and 2.2%, respectively. “When we saw the positive surprise in the first reading of data, at first we attributed it to the investment activity. We were wrong, as investment

data showed a contraction on a quarterly basis,” said ING Bank head analyst Péter Virovácz, emphasizing that final consumption increased in spite of the strict restrictions due to the pandemic; thus, it might have added to the growth. Another surprise was the industrial production, which, although it showed uneven performance, also contributed to the Q1 GDP data. The performance of the construction industry also surpassed expectations, Virovácz added. All in all, the latest forecast by ING Bank predicts a massive 7.4% annual growth rate in 2021; if that happens, it would be the fastest growth rate based on current calculation methods. The next quarter might bring growth on both a yearly and a quarterly basis, thinks Gábor Regős of Századvég Gazdaságkutató Zrt. Quarterly growth might be supported by the easing of restrictions, while annual expansion might benefit due to the low base effect of last year.

Risks Persist

As for the whole year, Hungarian GDP could grow by 5% or at an even faster pace, Regős says. However, risks due to the coronavirus persist and should not be underestimated. The fact that the KSH modified its first reading of the data for the better shows that the Hungarian economy is continuing to catch up, says K&H Bank head analyst Dávid Németh. According to him, annual GDP growth might even exceed 6% this year.

“When we saw the positive surprise in the first reading of data, at first we attributed it to the investment activity. We were wrong, as investment data showed a contraction on a quarterly basis.” Looking ahead, however, the MNB stated that the upside risks to inflation associated with supply disruptions, higher commodity prices, and recovering activity had risen recently. Therefore, it struck a somewhat more aggressive tone than in its previous communiqué, stating that it stands ready to “tighten monetary conditions in a proactive manner to the extent necessary in order to ensure price stability and to mitigate inflation risks.”

Numbers to Watch in the Coming Weeks On June 4, the day this paper is published, KSH will release April retail trade data. The following week will see two important macro figures: first, KSH will shed light on the April performance of Hungary’s industry on June 8, followed by the May consumer price index the next day. On June 15, we will discover how much the construction sector contributed in April to second-quarter GDP growth.

4|1

News

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

5 Millionth Hungarian Vaccinated as Indian Variant Arrives in Hungary

Coronavirus ///roundup of China’s Sinopharm COVID vaccine arrived in Budapest on May 21, Minister of Foreign Affairs and Trade Péter Szijjártó said in a video message posted on Facebook. While in China on May 31, Szijjártó reported that an agreement had been reached which would allow the National Vaccine Plant Hungary is building at Debrecen (231 km east of Budapest) to be outfitted for production of Chinese COVID vaccines. Meanwhile, an additional 330,000 doses of the COVID vaccine developed by Pfizer and BioNTech arrived in Hungary on May 25.

NICHOLAS PONGRATZ

The five millionth Hungarian had been inoculated against the coronavirus by Saturday, May 22, which triggered a further easing of pandemic restrictions, Prime Minister Viktor Orbán said in a video posted on his Facebook page. With more than half of the population inoculated, mask-wearing is no longer required nor the maintenance of social distancing outdoors in public areas. Additionally, the evening curfew has ended, and restrictions on opening hours for businesses have been lifted. However, masks remain compulsory in public spaces where people immune to the coronavirus intermingle with those who are not, for example, in shops and on public transportation. Anyone can attend outdoor events of up to

500 people

without restriction; however, entry to events with more participants or indoor events requires a COVID immunity certificate. As restrictions ease even further, Hungarians must still be wary of becoming infected by the coronavirus, particularly those that have yet to be vaccinated. Emphasizing the need for this warning, the country’s chief medical officer Dr. Cecília Müller told a pandemic press briefing on May 25 that the fast-spreading Indian variant of the coronavirus has been identified in Hungary, according to koronavirus.gov.hu. Müller said one of the two cases had already recovered, without serious symptoms, while the other was being

Syringes containing the Chinese Sinopharm coronavirus vaccine prepared for use at the Szent György University Teaching Hospital in Fejér County, Székesfehérvár, on June 2, 2021. Photo by MTI / Tamás Vasvári treated in hospital but did not require a ventilator. Curiously, she added that neither of the patients had traveled abroad, and surprisingly a probe could not determine the source of their infections. According to a weekly survey by the Central Statistical Office (KSH), the ratio of Hungarians who have firm plans to get vaccinated or have already received their first jab stands close to 68%. The rate for the week ending May 16 is up from just 15% when KSH started conducting the surveys in the first week of December.

Vaccine Options

The high vaccination rate among Hungarians can largely be attributed to the broad selection of vaccines

available in the country. Hungary’s use of Chinese and Russian COVID jabs in its vaccination rollout has saved the country more than HUF 500 billion as pandemic restrictions could be eased earlier, State Secretary Tamás Menczer claimed at a conference in Zalaegerszeg (225 km southwest of Budapest by road) on May 20, according to origo.hu. Menczer noted that four million people in Hungary had been inoculated against the coronavirus by April 30 and that without Chinese and Russian vaccines, that number would not have been reached until “the second half of July.” Of these “Eastern” vaccines, the last shipment of Russia’s Sputnik V vaccines had been delivered to Hungary on May 11, while the last of five million jabs

Curiously, Müller added that neither of the patients [to have caught the Indian variant of the coronavirus] had traveled abroad, and surprisingly a probe could not determine the source of their infections. For those already vaccinated, immunity certificates will enable them to enjoy amenities, such as dining indoors or attend events like the concerts mentioned above. The question remains whether immunity certificate holders will be able to use them to travel abroad over the summer. Thus far, agreement has been reached that immunity certificates issued in Hungary will be accepted in Bahrain, Croatia, the Czech Republic, Georgia, Moldova, Mongolia, Montenegro, Romania, Serbia, Slovenia, and Turkey.

Top Healthcare Executives in Hungary 2021 A behind-the-scenes look at some of the most influential Healthcare Executives in Hungary, their leadership, philosophies and successes. Top Healtcare Executives in Hungary 2021 is a Budapest Business Journal publication Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at www.budapestbusinessjournal.com

• Provides an essential overview of how Hungary’s healthcare market operates. • Get an insight into the most significant developments in 2020, and a look at what is in store for 2021. • Get to know the key personalities in the Hungarian healthcare sector. • Read personal accounts from the country’s top healthcare executives detailing how they got into the business and some of their proudest achievements, among other things.

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

WHO’S NEWS

Do you know someone on the move? /// Send information to news@bbj.hu

CMS Appoints Competition Partner Budapest International law firm CMS announced the appointment of Szabolcs Szendrő as a partner and head of competition in Hungary. Szendrő has been working at CMS for more than seven years, leading major antitrust cases, including in-depth market analyses and representation before authorities and courts. He participates in domestic and cross-border mergers, cartel and abuse-of-dominance investigations, EU-level competition cases, state aid investigations, and consumer protection procedures. He provides legal advice and preliminary legal/ economic analyses on a wide range of competition law-related issues.

Szabolcs Szendrő Before joining CMS, he worked for the Hungarian Competition Authority (GVH) as the senior legal counsel in the merger division, where he led in-depth investigations and actively contributed to legislative and regulatory measures. Szendrő is a member of the Association of Competition Economics and the Hungarian Association of Competition Law (Magyar Versenyjogi Egyesület). He is on the steering committee of CMS Antitrust Associates. Erika Papp, the managing partner at CMS Budapest, said, “Szabolcs has greatly contributed to the rapid development and growing market recognition of our competition team. With two partners – Dóra Petrányi and Szabolcs Szendrő - in the team, the practice demonstrates increased strength and further cements its leading position on the market.” Dóra Petrányi, partner and CEE managing director, noted, “On his promotion, I will hand over the leadership of our five-strong, Tier 1-ranked competition team, which has proved its leading role in the country: for several years, no major competition law proceedings have taken place in Hungary without CMS’ involvement. His promotion reflects not only the invaluable contribution

he has made to the firm but also our commitment to further invest in the competition practice.” Of his appointment, Szendrő remarked, “I am delighted, honored, and equally excited about taking on the role of a partner and leading our top Competition practice. With Dóra and myself, we will be the only international team in Hungary where two competition partners are actively involved in matters.”

always done together and wish them continued success in the future.” Yoshinobu will continue his career in the marketing division of Suzuki Motor Corporation’s global automotive business unit in Japan.

Libot Returns to Take Over at K&H Group Guy Libot, former chief financial officer at KBC Group, has been appointed CEO of K&H Group in Hungary.

New CEO at Helm of Magyar Suzuki From May 1, Atsumi Masato has replaced Abe Yoshinobu at the helm of Magyar Suzuki Zrt. Masato joined the Suzuki Group in 1987 after graduating in economics at Nagoya University in Japan. Over the course of his career, he has held various positions, including president of Suzuki International Europe GmbH, managing the group’s entire operations in Germany. From 2018, he continued as chief human resources officer of the Japanese parent company. Before his appointment in Hungary, the 57-year-old manager was responsible for passenger car sales in Europe. “In line with the automotive industry’s international climate protection and sustainability goals, Suzuki Motor Corporation is focusing on greener production and vehicle use worldwide. Following the guidelines of our parent company, we want to follow this path in Hungary in the coming years. After the introduction of hybrid vehicles in 2019, Magyar Suzuki will continue to strive to produce models in Esztergom that will make environmentally conscious driving accessible to as many people as possible,” says Masato.

Atsumi Masato Outgoing CEO Yoshinobu notes, “We’ve had many challenges and even more successes over the past five years here in Esztergom, Suzuki’s third-largest plant after Japan and India. I would like to thank my colleagues, partners, and suppliers for the constructive and forward-looking work we have

Guy Libot Libot has extensive international experience in the financial sector, having worked in various parts of the world and having held several positions within KBC Group. He is also familiar with Hungary, having headed the corporate banking division of K&H Bank here for four years as deputy CEO from June 2006 to September 2010. The Hungarian authorities have already approved Libot’s appointment. “I am delighted to return to Hungary. I enjoyed my time in Hungary for more than 10 years, so I am delighted to accept this appointment to work here again and to further contribute to the development of K&H,” he said. “Of course, during that time, both the banking group and the country have changed and [been] enriched a lot. I intend to continue the work I have started to ensure that K&H continues to strengthen its market position, to be a reference in innovation, and to continue to play an active role in financing the Hungarian economy,” comments Libot. He holds a Master’s degree in Applied Economics from UFSIA, Belgium, and a Bachelor’s degree in Commercial Engineering. He started his career at KBC (Kredietbank) in September 1987 and became head of the Los Angeles office in 1990. He then headed the Rotterdam network office in 1992 and was appointed branch manager of KBC Bank in Singapore in 1995. In June 2000, he was appointed CEO of KBC Bank’s Dutch unit, and from 2003 to 2006, he was deputy CEO of Kredyt Bank, KBC’s Polish subsidiary. He was then deputy CEO of K&H Bank in Hungary from June 2006 to September 2010. He was appointed head of Central European banking at KBC’s headquarters in Brussels and promoted to CEO in

News | 5

May 2011. From December 2013 until September 2017, he was responsible for the internal audit of KBC Group. David Moucheron, the former CEO of K&H Group, has been appointed by the KBC Group board of directors to the KBC Group executive committee. He was also named the new CEO of KBC Bank Belgium.

Neumann Made Head of Lufthansa Systems Hungária Stephan Neumann replaced Michael Herrmann as managing director of Lufthansa Systems Hungária on May 1. “While both the weaknesses and strengths of companies have been amplified by the pandemic crisis, strengths can and should be built on even in volatile times like the current one,” says the company’s newly appointed MD. Neumann believes that the Hungarian subsidiary should seize the opportunity to be an engine of transformation. Neumann’s aim is not only to strengthen the company’s role within the international group: he also wants the Hungarian subsidiary to provide Lufthansa Systems with as much support as possible to become a significant player in the global IT market. The main focus will be on joint IT development and application operation in cooperation with Capture GmbH, an Austrian-Hungarian software company that has been a strategic partner of the Hungarian company for a decade.

Stephan Neumann Neumann joined Lufthansa Systems in January 2000, with many years of industry experience in airline navigation products and successful pilot training. At Lufthansa, he held positions as team and group manager in sales, customer relations, and later project and customer. Since 2017, he has been responsible for the operational management of the international group’s product management area, and in this capacity, he has already established close cooperation with the team in Hungary, the company notes. The retiring Herrmann acted as managing director of Lufthansa Systems Hungária from July 2018. Over the course of his career, he worked in various management positions at the Lufthansa Group for more than three decades.

6|1

News

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Panattoni Enters Hungarian Logistics, Industrial Park Market Panattoni, one of the largest regional and European logistics and industrial park developers, which has had a significant presence in the Czech Republic and Poland in recent years, has announced the opening of an office in Hungary. GARY J. MORRELL

Previously a notable absence in the Hungarian market, the company has already secured two projects in the Budapest area. This adds to other regional industrial developers and park operators such as Prologis, CTP, and VGP. Additionally, national operators such as NIPÜF (the National Industrial Park Operator and Developer), Wing, CPI, ConvergenCE, and HelloParks, are active in an increasingly attractive Hungarian industrial market with strong demand and the lowest vacancy in Central Europe.

Hungary. There are few, if any, logistics buildings with more than 5,000 sqm of available contiguous industrial space and an overall vacancy rate of 2.6%.

Development Revival

Panattoni Park Gorzow Wielkopolski in Poland by international developer Panattoni. “As with other countries of the region, the global pandemic has had little impact on the Hungarian real estate warehouse and industrial sector. The country is also set to benefit from new trends that were strongly evident last year, including the growth of e-commerce,” explains Robert Dobrzycki, CEO of Panattoni. “It could also benefit from the fact that many Asian companies are looking for alternative locations for warehouses and production plants since many automotive companies are now located in the country. In addition to that, Chinese finance is being used for the construction and modernization of a high-speed railway between Budapest and Belgrade, which will connect the Balkans with

a special transport route to the now Chinese-owned Piraeus seaport in Athens,” he points out. “Thus, Hungary is becoming an increasingly important bridgehead for the Chinese in Europe and a gateway into Western countries. Upon the completion of this project, the country will be in a strong position to be able to compete with major logistics hubs across Europe,” Dobrzycki adds. The total modern industrial stock in the Budapest area stands at

over

2.4 million sqm,

according to the Budapest Research Forum, consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson

“In response to the high demand levels seen in 2020, a revival of development activity is in evidence, and an improved amount of new space will be delivered in 2021/2022 amounting to nearly 300,000 sqm of industrial space; 37% of the 2021 pipeline is already pre-let,” comments Cushman & Wakefield Hungary in its Industrial Snapshot for the first quarter. By way of comparison, Poland has 2.3 million sqm of industrial space under construction with a vacancy rate of 7%. The Czech Republic has more than 9 million sqm of class “A” industrial space across the country, with an overall vacancy rate of 3.6%, according to JLL. Panattoni has delivered 12 million sqm of space in Europe over the past

years,

including its first BREEAM “Excellent” accredited building at Panattoni Park Sosnowiec, in Poland. The company also achieved BREEAM “Outstanding” accreditation for its park in Cheb in the Czech Republic. The company aims to achieve emission neutrality for all its buildings by 2025. Sustainability has become a central concern for industrial developers and park operators. The Hungarian branch of Panattoni is headed by László Kemenes, the former country manager at Prologis in the country and an industrial consultant at CBRE. He will be responsible for the whole development process, from site acquisition and investment to the commercialization of the projects and transfer to tenants.

Real Estate Review Property Hungary 2021

is available now! SECTOR OVERVIEWS DETAILING: ARCHITECTURE • HOTEL • INDUSTRIAL • INTERIOR FIT-OUT • INVESTMENT • OFFICE • RESIDENTIAL • RETAIL • SUSTAINABILITY • URBAN DEVELOPMENT

Order: Business Publishing Services Kft. +36/1 398-0344; circulation@bbj.hu

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Business

“I must say, they were totally willing to spend the money to do it the way we wanted. You know, if someone buys me a pink suit, I’m probably not going to wear it,” he laughs.

The Attraction Of Budapest

Trust, Collaboration, and Hospitality to Underpin Spago Budapest For celebrity chef Wolfgang Puck, the much-anticipated opening of his Spago restaurant in Budapest represents something of a regional homecoming. It will be the first European eatery for the 40-year old brand and its Austrian creator. ROBIN MARSHALL

When the Budapest Business Journal spoke with Puck on Friday evening our time, he was just starting his day in California. For now, he is letting his team of chefs and managers establish the restaurant. If that suggests a surprising degree of trust, Puck says that is part of the secret of his success. “It would be sad if I had not trained some people who are really good, who I really trust after all these years. One of the reasons we have a great relationship and I have people with me for many years is because they feel I trust them, they feel it is a collaboration, and they have a lot of input too.” Under the agreement Puck has signed with the owners of the Matild Palace, his team will be responsible for the Spago Restaurant, the Matild Cafe and Cabaret (a re-imagining of the historic

• Matild Palace, a Luxury Collection Hotel, Budapest is due to open in June. • Spago Budapest is also due to open in June. • The Matild Café and Cabaret is due to open in September.

Belvárosi Kávéház that originally opened in 1901) and The Duchess rooftop bar. Of Spago, he says: “We want to be a neighborhood restaurant. Yes, maybe a little luxurious, but also I want local people to be able to come to Spago and feel totally comfortable.” The aim will be to mix the restaurant’s Californian background with local ingredients and create a fresh take on traditional dishes. Having worked in France and then moved to America in the early 1970s, Puck made his name with his first Spago restaurant, which he opened in 1982. Budapest will be the sixth outlet to bear that name, joining others in Turkey, Singapore, Hawaii, Beverly Hills, and Las Vegas. His culinary empire includes other restaurants (perhaps most notably Chinois in Santa Monica and the Cut chain in the United States, London, and the Middle East), products, and a catering business that, among other things, creates the dinner for the Oscars. Aside from trust in his chefs, Puck says the key to his success is understanding the art of hospitality. “Even when I grew up and worked in Austria and France, there were very few chefs who were also in the hospitality business, which means they go out, talk to the guests, do things to make them feel good,” the master chef explains.

Worth Every Penny

“For me, it is not just what we cook for them, how we serve them. In the end, it is how we make the guests feel when they leave our restaurant. They say, ‘Well, we spent a good amount of money, but it was well worth every penny. They treated

me like I was the most important person in the restaurant,’” Puck continues. “That is what makes Spago so successful for so many years. How can you have a restaurant after 40 years be sold out every night? I think longevity is really the hardest part. So many restaurants come and go. I remember the restaurants in Los Angeles that were famous [when I first opened]; they are all closed down. Yet, somehow, we are thriving and doing as well as ever.” So much so, in fact, that Puck says 2019 was their best year to date. He puts that down to much hard work. He likes to change his menus to freshen things up, although the firm favorites stay in place. “We have to work on it to stay interesting. That’s why we have a good mixture of tradition and innovation. We have to keep certain things on the menu because people remember those, and for them, that’s the restaurant. But, if we don’t have something new, the younger people won’t come.” This is the mix he is promising to bring to Budapest, a process that he estimates began about 18 months ago. “When the idea came up with the owners of the Matild Palace, they came to us because they loved our restaurant in Istanbul. They said, ‘We have bought this beautiful old palace in Budapest; it is much nicer looking than what you have in Istanbul.’” The detailed work has been ongoing for about six months and has included remodeling the kitchen layout and ordering tableware that meats the restaurateur’s exacting standards, but Puck is full of praise for the owners.

Puck says he doesn’t have great childhood memories of Austria, an although he says he has many friends there, he is not a frequent visitor to the country of his birth. Consequently, he says he knows very little about Hungary, but that is part of the attraction. “This is really interesting because it is not a place I know well yet, and I love to go to new places, so that I can learn about the culture, I can learn about the people, I can learn about the food. To me, life is a place where, OK, I can teach some people some things, but I am still willing to learn and absorb and be interested in what is new, what is different for me.” Is Budapest a stepping stone to more Spago restaurants in Europe? “It could be that this will be the only one. I do not know the future. Who would have thought I would go to Budapest before I go to Vienna. If the right situation airs, we might do it. If it doesn’t, we won’t. If we are really successful in Hungary, I can see some Austrians will be jealous and come to me and say, ‘Wolfgang, it is time to open something in Austria.’ I never had a grand plan. It was always very organic.” The name Spago was actually the idea of Giorgio Moroder, the Italian composer, songwriter, and record producer who has been dubbed the “Father of Disco” and is credited with pioneering euro disco and electronic dance music.

Wolfgang Puck Puck was looking for an investor to come in with him to open the first restaurant and had been explaining the concept to Moroder. Moroder explained that the name meant a string with no beginning and no end, a concept Puck loved. In the end, the musician invested in another restaurant, which did not succeed, but the two remained friends, and Puck used the name anyway. “If he had told me it was the slang for spaghetti, which it is, I would have said ‘No!’”

8|2

Business

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Interactive Brokers Central Europe Eyes Regional Expansion From Budapest Interactive Brokers eyes rapid growth in terms of clients and staff globally and regionally, founding chairman Thomas Peterffy told reporters at a Budapest press conference. From left, Thomas Peterffy, founding chairman of Interactive Brokers Group, and Miklós Hanti, CEO of Interactive Brokers Central Europe Zrt.

GABRIELLA LOVAS

The broker announced on June 1 that its Hungarian unit had become a member of the Budapest Stock Exchange as part of its strategic plans to expand in Central, Eastern, and Southeastern Europe from its Budapest base. Post-Brexit, the company started serving Western European clients from Ireland and Eastern Europeans from Hungary. The Hungarian entity, Interactive Brokers Central Europe Zrt. (IBCE), aims to hire some 100 staff initially to serve both Hungarian and regional clients. Interactive Brokers has already been operating a software development subsidiary in Budapest for 13 years with around 50 developers. “This unit is looking to grow and hire more developers, but it is difficult to find talented people,” Peterffy told reporters. IBCE has already acquired 20,000 new customer accounts and transferred the investments

In 10 to 20 years, Interactive Brokers, which has 1.4 million clients now, wants to reach 80 million clients worldwide, and within that, up to about 1.5 million in this region, Peterffy said. As of November 30, client accounts worldwide had grown 52% from the previous year, with more than 80% of the expansion coming from outside the United States.

Profit Margins

“We are very comfortable because our profit margin is about 65% pre-tax,” Peterffy said. “As volume increases, the profit margin will rise. On the other hand, we have to launch new products to assure that we remain the broker of choice for sophisticated customers and that is going to cost us money. We expect the profit margin to remain over 60%.” He said that he never really looks at profit margins by geography because Interactive Brokers’ pricing is the same of everywhere. The only difference is that the overheads are higher in certain places than in others. In Hungary, the Central and Eastern European clients with some overheads will be roughly the same as USD 3 billion in assets to the Hungarian unit. in Ireland, relative to the transaction

40,000

value, and in both countries somewhat more than in the United States. When asked how he sees the involvement of younger generations in trading and investment, he said that this is a good trend because it makes young people learn how capitalism, the economy, and companies work. They will also understand how businesses can be evaluated and how their value might change. The pros, Peterffy argues, outweigh the cons, adding that all investments carry risks, especially if the investors have not done their homework beforehand. There is a new emerging trend for attracting younger people after U.S. broker Fidelity Investments launched an account for teenagers in May. “There is a slight chance that the U.S. dollar and other paper currencies will lose their value,” said Peterffy. “That’s why I thought three or four years ago that everybody should invest

less than

of their total assets in bitcoin and gold. This is what I did, too, but I think it was stupid

because bitcoin is nothing, just a mathematical formula.” Speaking of market outlook, Peterffy sees prices increasing everywhere and thinks that the stability of the United States is in danger. Central Europe will perform way better than America in the coming three years. As prices are lower than in Western Europe and the States, he sees an excellent possibility for players to invest money in the region. “We might try to launch new ETFs or revamp the old ones here,” he added.

“We are very comfortable because our profit margin is about 65% pre-tax. As volume increases, the profit margin will rise. On the other hand, we have to launch new products to assure that we remain the broker of choice for sophisticated customers and that is going to cost us money. We expect the profit margin to remain over 60%.” Peterffy, who emigrated from Hungary to the United States in 1965, said that he had two reasons to open a business in Budapest. It is cheaper to hire Hungarians than Western Europeans, and Hungarians are skilled at computer and software development. A second reason is that he wanted to repay the country because he grew up and received an education here. He says he learned everything he needed to know for a successful career in Hungary. Interactive Brokers has USD 9.7 bln in equity capital, USD 28 bln in market capital, and some USD 340 bln in client equity. The broker offers clients worldwide the ability to invest in stocks, options, futures, currencies, bonds, and funds on 135 markets in 33 countries from a single integrated investment account.

Ask for the Budapest Business Journal’s daily English-language premium newsletters

NOW Ask for a ten-day trial!

and get the latest news about Hungary, the region and the energy industry direct to your email intray early each work morning

Contact: circulation@bbj.hu

· Tel.: +36/1/398-0344

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Active vs. Passive Investing Business owners often wonder: if they were to sell their business, what would they do with their money? To answer this question, an understanding of passive vs. active investing would be helpful. Les Nemethy and Francois Lesegretain start by defining terms, analyzing some relevant statistics, and looking at some implications of the rise of passive investing.

Business | 9

The Corporate Finance Column

20-year Return Comparison of Active and Passive Funds Best Fund Average Fund Index Best Passive Average Passive

*Asia Pacific ex Japan

Europe ex UK

Japan

* Indices used: FTSE All-Share, FTSE World Asia Pacific ex japan TR GBP, FTSE World Europe ex UK TR GBP, S&P 500 TR and FTSE Japan TR.

The managers of the vehicle purchase and sell the individual securities to make sure they conform to the fund’s policy. The investor still has a significant responsibility here because choosing an asset class (e.g., commodities, emerging markets, precious metals, etc. ) may have more effect on returns than stock picks.

Maximized Returns

Passive investing first became part of While active investing is the art of the American investors’ portfolio in 1976, picking stocks in the hope of beating when John Bogle, then CEO of Vanguard, the market, passive investing is enabled retail investors to buy a basket an “investment strategy that aims to of stocks that represented the market maximize returns by minimizing buying without buying every single stock. It was and selling. Index investing is a common a revolutionary idea at the time. passive investing strategy whereby While active investing is the art of investors purchase a representative picking stock in the hope of beating the benchmark, such as the S&P 500 index, market, passive investing is a long-term and hold it over a long time horizon,” strategy that removes the investor from according to investopedia.com. the need to pick stocks. Instead, he or she In September 2019, passive equity can buy a fund (e.g., an Exchange Traded funds overtook active funds in the Fund, commonly referred to as an ETF or United States for the first time. Even a mutual fund). For example, there are activist hedge fund managers allocated ETF’s that reflect the performance of the some USD 50 billion to index funds in S&P 5000, or the Russell 2000, emerging 2017, typically where an ETF may play a market indices, Junior Gold Miners, etc. niche role within an activist strategy. Sometimes the weightings are tied to In today’s low yield world, paying the weightings of the stocks within the even a percentage point or two of assets index; sometimes, the fund manager deployed on management fees may have decides on weightings. The investor an enormous effect on net portfolio must still determine what asset class returns. This is the main reason why he or she wishes to purchase and then passive investing outperforms active buy into a passive investment vehicle. investing more often than not.

According to Morningstar, in 2019, investors saved USD 6 bln in fees by investing passively. Only 23% of active funds topped the average of their passive rivals over a 10-year period ending in June 2019. As the chart below shows, if you invest in the best activist fund, you outperform passive investing by a country mile, but if you are invested in an average activist fund, passive investment vehicles will outperform. The passive asset management industry is dominated by Blackrock and the Vanguard Group, which had a combined asset under management of about USD 13.6 trillion in 2019. In March 2021, BlackRock hit an all-time high with USD 9.01 tln in assets under management, according to pionline.com. The trend towards passive management is expected to grow further.

‘Free Riders’?

Imagine if every publicly listed company were 100% owned by truly passive investors. There would be nobody to exercise shareholders’ rights and provide corporate governance. In this respect, you might say that passive investors are “free riders” of the financial system. However, there is some evidence that passive managers are becoming more active in environmental, social, and governance decisions within their holdings, Morningstar.com reports.

Source: trustnet.com

Nevertheless, when the “Big Three” (BlackRock, Vanguard, and State Street) are the largest shareholders in 88% of S&P 500 firms, it raises systemic questions as to whether these entities are “too big to fail.” One also has to wonder how effectively they can exercise corporate governance, each being invested in many hundreds of entities. Every investor has to decide on the optimal mix between passive and active investing, depending on their knowledge of finance and markets, time available, etc. Practically speaking, it is a relief for most individuals that relatively good returns may be reached (e.g., outperforming most active investors) by investing in passive funds that save time compared to active stock-picking and save money compared to investing in active funds. However, if your objective is to beat the market, make your own investment decisions or seek out the best possible active manager and take your chances.

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. A former World Banker, he is author of Business Exit Planning (www.businessexitplanningbook.com) and a past president of the American Chamber of Commerce in Hungary.

Your essential Guide to Investing in Hungary including articles looking at the benefits available, case studies, EU funding, and commercial property investment.

AVAILABLE TO ORDER NOW Order: Business Publishing Services Kft. +36/1 398-0344; circulation@bbj.hu

10 | 2

Business

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Scope Group Issues SPO on SunDell Estate Green Bond Framework

Hungary’s Gov't Approves Hydrogen Strategy Hungary’s government has approved the National Hydrogen Strategy, State Secretary for the Circular Economy, Energy and Climate Policy Attila Steiner said on his social media page on May 20, as cited by state news agency MTI. Steiner called the approval of the strategy a “big step in the direction of an innovative, sustainable and green economy”. He added that hydrogen

technology could help Hungary achieve carbon neutrality by 2050 while giving the economy a boost at the same time. Steiner noted that he had discussed the economic significance of hydrogen technology and possible frameworks for cooperation with his counterparts from the Czech Republic, Poland and Slovakia at a meeting on Wednesday. Cooperation in the area will be a priority issue when Hungary takes over the revolving presidency of the Visegrad Group (V4) from July 1, he added.

Poland Ordered to Halt Lignite Mining at Turów Poland must immediately stop mining lignite coal at the Turów mine operated by state-run PGE, the European Union’s top court said on May 21, handing a win to the Czech government which had sought an order to stop the mining activities. The Court of Justice of the European Union (CJEU) ruled that the previous 2026 license for Turów had infringed EU laws because it was granted without an environmental assessment, Euronews and Reuters reported. “It appears sufficiently likely that the continuation of lignite mining activities at the Turów mine before the final judgment is delivered is likely to have negative effects on the level of groundwater in Czech territory,” the court said in a statement. The Czech Republic filed a lawsuit in February calling for a halt to activities at the mine, located near the Czech and German borders, saying Warsaw had violated EU law by extending mining at Turów until 2026. In January, the German city of Zittau, just across the border from

Turów, also took Poland to the same court on the same grounds. Nonetheless, the Polish government last month extended a concession to allow mining at Turów to continue until 2044, prompting the European Commission to say the region will not receive money from the EU’s flagship green transition fund. Poland’s Prime Minister Mateusz Morawiecki said on May 24 that Warsaw would keep the massive Turów brown coal mine open despite an order issued last week by Europe’s top court to suspend extraction there. “We do not foresee the closure of the mine and we will not allow it, because this could put Poland’s energy security at risk,” Morawiecki told reporters. According to Morawiecki, “4-7% of Poland’s electricity production is linked to the Turów mine”. The premier also said Poland would seek talks with neighboring Czech Republic and “present new arguments to the Court of Justice” in connection with its ruling. Poland relies on coal for around 70% of its energy, by far the highest proportion in the EU.

Mining machines operating in the Turow lignite opencast mine in Poland. Photo by Lukasz Barzowski / Shutterstock.com

Scope ESG Analysis, a member of Germany's Scope Group, has issued a second-party opinion (SPO) of Hungarian property developer SunDell Estate's green bond framework, according to an announcement on the website of the Budapest Stock Exchange. Scope ESG Analysis assessed SunDell's green bond framework to align with the 2018 Green Bond Principles (GBP) of the International Capital Markets Association (ICMA) and assigned it a "leaf score" of two of three leaves. "SunDell's four green project categories and criteria align with selected real estate standards and we consider SunDell to contribute to the targets of the Paris Agreement and EU Taxonomy," Scope ESG Analysis said. In a separate disclosure, SunDell said the SPO confirms that the issue of green bonds "are a realistic possibility for drawing in resources in future, making possible the launch and construction of further projects." The property firm noted that its developments are among the top 15% of Hungarian real estate a ssets based on the European Union's Energy Performance of Buildings Directive.

Regional Roundup Fund Backed by EBRD, EU Invests in Armenia’s Renewable Energy Sector Private equity fund Amber Capital Armenia, supported by the European Bank for Reconstruction and Development (EBRD) and the European Union, has acquired Solis, an Armenian solar plant operator, to build and operate a 4-MW photovoltaic solar power plant in Aragatsotn, western Armenia. The facility is expected to be operational by the end of 2021 and generate 7.5 GWH (gigawatt-hour) of clean energy per year, resulting in 3,200 tonnes of avoided CO2 emissions annually. The power plant will contribute to Armenia’s green recovery and create around 50 jobs in construction and plant operations. Ameriabank provided financing towards the project, the EBRD said.

Bosnia’s Serb Republic, Serbia lay Cornerstone for Buk Bijela HPP Bosnia’s Republika Srpska (Serb Republic) entity and Serbia have launched construction of the 93.5-MW Buk Bijela hydro power plant (HPP) on the river Drina, the entity’s government said, according to news poertal SeeNews. HPP Buk Bijela, some 12 km upstream from the town of Foca in eastern Bosnia, is scheduled to be completed in five years, and produce 332 GW (gigawatt) of electricity per year. It is estimated it will cost some BAM 382 million (USD 238 mln). It is the first of three planned HPPs within the Gornja Drina (Upper Drina) hydropower system. The construction is jointly financed by the energy utilities of

the Republika Srpska (one of two autonomous entities forming Bosnia and Herzegovina, the other being the Federation of Bosnia and Herzegovina) and Serbia.

ENGIE Romania Buys 5.46 MW Solar Park The Romanian unit of French power company ENGIE said on May 20 that it has completed the acquisition of a 5.46 MWp (megawatt-peak) operational PV (photovoltaic) park from a company owned by two German investors, local news portal SeeNews says. The transaction is a new step towards the expansion of the company’s installed capacity for renewable energy production, both through organic growth and acquisitions, ENGIE Romania said. The value of the deal was not disclosed. Located in the village of Nenciulesti, in the southern county of Teleorman, the solar park was put into operation in 2014 and has since produced some 42 GWh (gigawatthour), the equivalent of the annual electricity consumption of 25,000 households. ENGIE Romania currently operates 113 MW of wind and PV capacities.

Developers Toast 1st Phase of Ukrainian Wind Farm The developers of the 500-MW (megawatt) Zaporizhia wind farm in southeast Ukraine have commissioned the first 98 MW phase of the project. LongWing Energy SCA, VLC Renewables Fund 1 (VLCR), a Jerseybased fund established by Low Carbon and Vitol to invest in renewable energy generation and GE Energy Financial Services (EFS) said phase one comprises twenty-seven 3.6-MW GE turbines. Electricity generated by the project will be sold through a power purchase agreement (PPA) to Ukrainian state enterprise Guaranteed Buyer at a set feed-in tariff (FiT). Phase one was sponsored by LongWing and VLCR with GE EFS as a preferred equity investor. Senior debt financing of USD 150 million was provided by the US International Development Finance Corporation (DFC), the country’s development bank, formerly known as the Overseas Private Investment Corporation. (source: reNEWS.biz)

Masdar Wins Solar Double in Uzbekistan The Abu Dhabi Future Energy Company (Masdar) has won tenders for two key solar power plants in Uzbekistan, being implemented through a publicprivate partnership (PPP), reported news portal TradeArabia.com. According to the report, Masdar has secured deals for two photovoltaic plants in the Jizzakh and Samarkand regions. The Ministry of Energy of Uzbekistan has announced that Masdar was awarded the project in the Jizzakh region for its lowest bid to supply solar power at USD 0.01823/kWh (kilowatt-hour), while it won the Samarkand project for its lowest offer of USD 0.01791/kWh.

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Special Report Photo by Artem Samokhvalov / Shutterstock.com

Legal Services

How are Hungary’s law firms responding to the gradual reopening of the economy, what are the lasting impacts from the pandemic on legal practice, and what challenges does A.I. pose to the profession?

Legal Services Market Talk: Work Pace Maintained Amid Cautious Reopening 12 2nd EU Report Monitors Rule of Law Progress in Hungary

14

Looking to Build Cooperation in the Customers’ Best Interests

16

AI: a Deceptive aid set to Send Shockwaves Through the Lawyer’s World

22

12 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Legal Services Market Talk: Work Pace Maintained Amid Cautious Reopening The old cliché used to have it that banks and law firms were the most traditional of businesses. Yet FinTech is rapidly expanding in the former, and A.I. and digitalization in the latter. The Budapest Business Journal asked a number of the leading lawyers in Hungary how they view the market as we head out of the pandemic. ROBIN MARSHALL

For many, the COVID crisis has accelerated the pace of change. Zoltán Hegymegi-Barakonyi, managing partner at Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law, says his team plan to return to a normal operation by the end of the summer. “I believe that remote work should remain the general rule until sufficiently high immunity rates are achieved,” he says “We all look forward to regaining our ‘lost freedom,’ but clients as well as lawyers have realized that a significant part of their work can be completed remotely, more efficiently,” he says. Although some team members periodically worked remotely prior to the first lockdown, he is in no doubt that “the pandemic accelerated our digital transformation.” He cites a recently installed video conferencing technology in the office. “It was tested with great success when a Hungarian client had to participate in an online arbitration hearing in the U.K. I am sure that we will use such equipment more frequently, instead of attending meetings or hearings in person. Therefore, I also expect much less travel in the future, which should positively impact the environment,” Hegymegi-Barakonyi says.

András Posztl, country managing partner of DLA Piper Hungary, says the pandemic has “triggered a tsunami in law firms’ attitude to technology.Satya Nadella, the CEO of Microsoft, has said that the first three months of the pandemic created as much progress in digital adoption as the previous five years. We believe that more than 90% of legal work can be done remotely,” he adds. Although such views are common, they are by no means unanimous. “I do not see the link between COVID and digitalization of work,” insists Zoltán Nádasdy, co-head of Noerr & Társai Iroda. “The latter is a trend, which had started in certain advisory fields much earlier than COVID appeared. This will definitely continue; however, in certain fields, software and machines cannot yet substitute human brain and creativity.” The latter is an important point, because “Legal advisory is a people business, which requires personal interactions. Video calls could provide a platform for keeping the communications running, but they cannot substitute the trusted atmosphere a personal meeting can create. Also, business networking needs personal meetings, conferences, etc.,” he argues. Erika Papp, managing partner at CMS Cameron McKenna Nabarro Olswang LLP Hungary, sees both sides of that argument. “During the pandemic, we realized that you can work more and more effectively remotely,” she accepts. “There is perhaps only one exception that cannot be replaced digitally and virtually: that is that the legal business is always a business of trust, and some work requires face-to-face meetings with clients, and sometimes face-toface negotiations for large transactions. Nevertheless, law firms still have to invest in remote working technology because it will continue to be part of how we work in the future,” she believes.

Erika Papp Indeed, it will also shape the workspace. Papp says her firm has had several internal discussions about how

a digital office should look, in order to “create a space to which all of our colleagues can happily return.” Posztl, of DLA Piper, agrees with that sentiment. “We think the office will turn from a workplace into a ‘culture space’ where people can bond, socialize, and share, creating a strong corporate culture. Hence, when we are moving back, we shall offer alternative ways of working,” he explains. András Szecskay, managing partner at Szecskay Attorneys at Law, is yet another straddling the divide between remote and office working. “We make every effort to create a lively environment in the office because we believe it adds a lot to our best output,” he says. “I believe it is important that every expert in the firm feels heard, whether they have a well-founded, safety-based concern or simply that they enjoy the comfort of working from home.”

Zoltán Hegymegi-Barakonyi

addition, our renewable energy practice has also been very busy lately and our finance team as well,” she says. Szecskay paints a broadly similar picture, saying bank financing is back on track. “We see a lot of regulatory related inquiries from financial service providers expanding both geographically and in terms of services offered,” he adds. Ferenczi sees M&A interest in specific sectors, including IT, pharma, energy and industrials. “Financing is clearly on the rise. Other trends, partly induced by the pandemic, also continue, such as clients taking a strong interest in all aspects of employment law, including its overlap with privacy matters.” Nádasdy says real estate and manufacturing are back on track. “Banks are optimistic and ready to lend; lending conditions were tight during the pandemic but are now more flexible again, almost at levels before pandemic.” He adds that there is strong interest in the restructuring sector and the nonperforming loan sector. As for upcoming trends, Kinstellar’s András Posztl Ferenczi says the challenges and opportunities arising from the European Green Deal will be key. Kristóf Ferenczi, managing partner of Kinstellar Budapest, like all the others interviewed here, is happy that a return to the office is possible, but says it must be carefully managed. “The first group of fully immunized colleagues is now in the process of returning with a hybrid arrangement, to be followed by the next group a few weeks later. Setting the right parameters for those working in and returning back to the office is a constant challenge, requiring re-calibration every now and then,” he notes. As for what the law firms are working on, Papp says she thinks several sectors (and therefore legal practice areas) will grow this year despite the current pandemic. She lists employment law and Kristóf Ferenczi employee-related litigation matters, AI, cybersecurity, data protection, GDPR, competition law matters, and specific commercial contracts. “The fundamental shift to a sustainable “Contrary to our expectations, our M&A future, involving the net zero aspirations, team has been very busy during the build-up of renewables, green financing, pandemic. Banks never stopped lending focus on ESG, e-mobility, role of partly because the National Bank of hydrogen in the economy etc., will Hungary created an environment that profoundly reshape the businesses of was favorable for bank lending. In many of our clients,” he says.

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Zoltán Nádasdy Szecskay makes the point that “Hungary is a relatively small market for law firms; any sort of major consolidation may bring unwanted conflict which puts a question mark over the overall benefits of consolidation.” Ferenczi, however, takes a different tack. “It continues to be my view that the Budapest legal market calls for further consolidation. The firms with clear strategy for and well-founded long-term commitment to this region will likely act as consolidators,” he argues. Asked what is happening with the backlog of court cases, Szecskay sees an interesting dichotomy. Technology and experience was one limiting factor, he says. “More importantly, most judges prefer in-person court hearings, which I tend to agree with, since face-to-face argumentation adds a lot to the decision-making process. It’s just like a live concert: You need to feel the atmosphere!”

The courts are now fully operational and busy, but he doubts online hearings will be continued unless absolutely needed. Arbitration, however, is another matter. “I regularly act as an arbitrator and have experienced that the advantages of the virtual world are welcomed by the counsels. In international arbitration, the parties have to travel to attend hearings and most people are not confident yet to do so. In this case I could imagine that online hearings are here to stay, and I fully support this.” When we spoke with the law firms last year, there was a genuine concern there could be a big uptick in businesses facing liquidation. Has that threat materialized, been avoided, or merely kicked into the long grass? Papp says mass liquidations and restructuring have not happened, yet, because the government has repeatedly extended the loan moratorium and the banks have not stopped lending. “Additionally, we have to mention that new legislation is being prepared, and some is already out, which will make it even easier for businesses to survive this difficult and challenging period and restructure themselves in the right way,” she says. Nádasdy agrees, noting that the loan moratorium and state support have helped a lot of businesses stay above water. “Thus, until now, we have not experienced a general liquidation wave spreading around. However, once the moratorium ends, companies with unsustainable business model or structural issues (so-called “zombie firms”) may face a cliff edge,” he warns.

András Szecskay

Our Legal Services Market Talk Panel • ERIKA PAPP, managing partner, CMS Cameron McKenna Nabarro Olswang LLP Hungary

• KRISTÓF FERENCZI, managing partner, Kinstellar Budapest

• ANDRÁS POSZTL, country managing partner of DLA Piper Hungary

• ZOLTÁN NÁDASDY, partner and co-head, Noerr & Társai Iroda

• ZOLTÁN HEGYMEGI - BARAKONYI, managing partner, Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law

• ANDRÁS SZECSKAY, managing partner, Szecskay Attorneys at Law

INSIDE VIEW

The Labyrinth of FDI Screening Judit Budai

Adrienn Tar

Senior Partner

Partner

Szecskay Attorneys at Law

As the global economy develops, to be made within 10 days of signing FDI screening rules are having a the purchase or establishment deed. renaissance worldwide. COVID-19 The minister has the discretion to even helped evolve the sophistication assess whether a transaction violates of local market protection rules, the national security interests of enabling states to keep an eye on Hungary. If this is considered to be strategic industry assets and the the case, the minister can issue a ownership of operating companies. prohibiting decision, which can be The complexity of such regulations contested at the Budapest Capital also derives from COVID emergency Regional Court. That court can only “lawmaking,” where there is not much establish the non-compliance of the time and resources to place the rules decision based on the underlying in the legal framework clearly. procedural rules and may revert the In this article, we do not dare to claim procedure to the minister. that we can give our readers Ariadne’s If no application is made, the red ball of thread to find their way out acquisition or foundation cannot be of the Labyrinth; instead, we aim to effectively registered, and there may provide you with the “dos and don’ts” be a fine of HUF 1 million in the case we have experienced so far. of individuals or HUF 10 million in Since January 1, 2019, Act LVII of 2018 the case of legal entities. Exercising on the Control of Foreign Investments ownership and operational rights Offending the National Security of are prohibited too. The ministry Hungary (“FDI Screen Act I”) has been in can investigate within five years force. Essentially, this pre-implemented from gaining information on the Regulation (EU) 2019/452 of the transaction. The obliged person European Parliament and the Council may need to alienate the unlawfully of March 19, 2019, and established a acquired stake or assets to which the framework for screening foreign direct state has preemption rights. investments into the Union, a regional Since May 2020, the Hungarian response to U.S. protection measures. Government has introduced a special Originally, this rule sought to keep an COVID FDI Screening measure, which is eye on investors from outside of the regularly debated by the legal community EU, EEA, and Switzerland, when they in Hungary. Act LVIII of 2020 (“FDI Screen aimed to acquire, directly or indirectly, Act II”) extends to all non-EU investors at least a 25% stake (or 10% in listed intending to acquire at least 10%, and entities) in a local company, or establish EU investors aiming to gain influence a company/branch, or modify its activity, (basically a majority control) above an or right of operation of infrastructures, acquisition value of HUF 350 million. facilities, and assets essential for Here the scope of the decision is in the activities within several areas. hands of the Ministry of Innovation and These were: Weapons and Technology when the target company/ ammunition, military technology asset is a strategic Hungarian company and equipment production; dualor operation. This rule is also applicable use product production; intelligence until the end of 2021 and operates along tools production; banking, payment similar lines as FDI Screen Act I. Here the investment, and insurance services; discretion of the minister is based on certain utilities, inclusive of electricity, the fundamental economic, strategic gas and water services; electronic interests related to the operability communications services; and specific of networks and equipment and the electronic information systems of security of continuous supply from the state bodies and municipalities. point of view of the national economy, A COVID emergency Government where it is not regulated by sectorial Decree from 2020 extended this legal regulation of the EU or national law. regulation to investors from within To sum up, each M&A or the EU until the end of 2021. One restructuring transaction involving transaction already known to be caught foreign parties remain subject to by this ruling is the contemplated VIG careful assessment under FDI Screen acquisition of Aegon. Act I. and II. until the end of 2021. FDI Screen Act I entitles the Hungarian Ministry of Interior to advance acknowledgment of the effectiveness of a contemplated acquisition or establishment of a company or operation right within the www.szecskay.com above scope. The notification needs

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

Papp, of CMS, agrees, and expects environmental law and sustainable finance will “become increasingly important in the near future.” What about the law firms themselves; is consolidation on the market a possibility? Noerr’s Nádasdy does not think so, saying the firms “clearly have a positive outlook.” Papp agrees: “Many have done very well during the pandemic, so we do not see any reason for consolidation or pulling out [...] we believe that law firms will come out from this situation even stronger than before.”

Special Report | 13

14 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

2nd EU Report Monitors Rule of Law Progress in Hungary The European Commission has promised to publish an annual report on rule of law adherence across its member states. But ahead of the second such study next month, Éva Kaszap finds that NGOs complain about the lack of specific recommendations, while the Hungarian government says its opinions were ignored.

ÉVA KASZAP

The rule of law concept comprises an array of shared values, responsibilities, and universal principles that are fundamental to sustaining international peace and security. Practically, it means that no one is above the law. Democratically elected government ministers, lawyers, police officers, or mayors must follow the same rules. The European Union is also based on the rule of law, which helps create its common identity. Independent courts that guarantee the protection of fundamental right and civil liberties, as well as a free media, are all recognized as the base for democratic societies. However, concerned that these values are not equally applied in all EU member states, the European Commission established the European Rule of Law Mechanism in 2019. It aims to promote the principle by focusing on development and awareness in four areas: the justice system; the anti-corruption framework; media pluralism and freedom; and institutional issues linked to checks and balances. Based on dialogue with national authorities and stakeholders, the European Commission says it will prepare a rule of law report each year, including remarks for each member state. Published for the first time in September 2020, the report identified substantial problems in all four fields in Hungary. Regarding the independence of the Hungarian judicial system, the EC acknowledges the efficiency and high level of digitalization in Hungary. But it also expressed concerns over how the four-tier court system has been restructured since 2011, undermining its independence, the report claims. It finds it worrisome that, despite its explicit mission to serve as a watchdog, the National Judicial Council faces trouble in

File photo shows European Commission Vice-President Frans Timmermans speaks during a media conference on strengthening the rule of law in Brussels on April 3, 2019. Image by Alexandros Michailidis / Shutterstock.com counter-balancing the power of the President of the National Office for the Judiciary. According to the paper, judges and lawyers have recently been subject to negative narratives in the progovernment media, undermining public trust and confidence in the justice system.

Not Objective

The report highlights that the system of judicial bonuses is not objective and transparent enough, raising concerns about the possibility for the authorities managing the courts to award bonuses to judges on a discretionary basis.

European Commissioner for Justice and Rule of Law Didier Reynders. Photo by Alexandros Michailidis / Shutterstock.com Some elements of the prosecution service also raise concerns, according to the paper. The Prosecutor General, for example, may remain in office after the expiry of his or her mandate, which is also outside the standard procedure and gives ground to political influence. On anti-corruption issues, the EC says that in Hungary, these competencies are shared among different bodies, and there has been no determined action to prosecute corruption involving highlevel officials, according to the report. “The strategic anti-corruption framework does not include actions in areas relevant for corruption prevention, such as political

party financing, asset disclosure, or regulation of lobbying,” the report informs. When it comes to media pluralism, the report highlights that nominations in the Media Council are designed to favor the ruling party. The creation of the “Central European Press and Media Foundation (KESMA) increased media concentration to a dangerous level. KESMA unites some 500 portals, including two TV channels and almost all the regional print titles in Hungary,” it says. The report emphasizes a of transparency in media ownership regulations and the growing political influence of the government through the unfair distribution of state advertising budgets. Furthermore, the paper points out that in Hungary, public access to information is often hindered, and journalists are frequently barred access to certain public events. Media outlets that do not support government narratives face systemic obstruction, the report claims, citing the cases of anti-government radio station Klubrádó and news portal, Index.hu. When it comes to the system of checks and balances, the EC paper says that in Hungary, the use of public consultations and impact assessments has diminished; in practice, these are rather formal and symbolic.

Proportionality

With the declaration of the “state of emergency” in response to the COVID19 pandemic, the government was granted the right to set aside any law by decree, while certain emergency measures raised questions regarding their necessity and proportionality. New rules on the constitutional complaint procedure were introduced, allowing administrative authorities to challenge before the Constitutional Court judicial decisions that have already become final. The report raises concerns about the fact that the reaccreditation of the

Commissioner for Fundamental Rights was deferred and that Hungarian civil society remains under pressure, especially when critical of the government. On May 17-18, the European Commission held a high-level conference to promote the rule of law and follow-up on challenges identified concerning the COVID-19 pandemic and those highlighted in the commission’s first report. A second rule of law report is expected in June. In shaping its second report, the EC says it has collected written inputs from a wide range of stakeholders, including academics, journalists, judges, and civil society organizations, to deepen its country-specific knowledge. Hungarian NGOs, however, identified several points they felt were missing from the report, highlighting, among other things, that it “does not include recommendations for the national governments on how to tackle the problems revealed,” according to helsinki.hu, the website of the Hungarian Helsinki Committee. “It does not cover the non-transparent nature of the case allocation system at the courts. Similarly, it does not address public procurement rules that allow for diverting EU funds, the corrupt system of informal payments in the public health system, and the governmental takeover of the public service media,” helsinki.hu adds. Meanwhile, the Hungarian government says it provided what it considers a detailed, objective, and factual analysis to the EC. However, it complains that the commission ignored Hungary’s contribution in many parts. From its perspective, the judiciary in Hungary is independent, the anti-corruption framework is effective, the media landscape is plural, and the system of checks and balances is guaranteed, a 30-page analysis posted on the website of the Hungarian Ministry of Justice insists.

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

PRESENTED CONTENT

Devil in the Details for Digital Markets and Digital Services Acts Company executives who still tremble at the work required to meet the EU’s GDPR data protection requirements a couple of years ago may wish to look away; the European Commission is again on the digital regulation warpath. ROBIN MARSHALL

It isn’t imminent, as we are still at the early stages of what will likely be an 18-month process at least, but the effects will be profound. At the heart of the debate surrounding the initiative are opposing Szabolcs Szendrő views matters from views of the best way to regulate the market. the competition law perspective and is Broadly speaking, the Digital Services a freshly appointed partner and head Act (DSA) will focus broadly on all of competition at CMS. “For me, the participants of the online value chain, difference is that the DMA is about market while the Digital Markets Act (DMA) will structure and access, whereas the DSA is target the so-called gatekeeper platforms about behavior, who can do what,” he says. of the Big Tech internet giants; in other Digging a little deeper, Petrányi says words, the DMA has Silicon Valley in its you can make a superficially benign sights, whereas Hungarian companies are interpretation of both the DSA and the DMA. more likely to be impacted by the DSA. Strong Purpose “If I had to summarize it in one sentence, DSA is about fake news, about “They do serve two very strong purposes. The first is creating a safer digital space illegal/potentially harmful content. protecting the fundamental rights of all users; DMA is more about the platforms, and especially the gatekeeper platforms. This everybody wants that. The second is as undisputed as the first, and that is fostering has a Silicon Valley impact for sure,” innovation, growth, and competitiveness. says Dóra Petrányi, partner and CEE Of course! Yes, where can I sign? When managing director at law firm CMS. you look into the details.… Well, let’s say This is very much her territory; she the devil is in the details,” adds Petrányi. heads the technology, media, and Part of that devil lies in the fundamentally telecommunications (TMT) and data different approach taken by U.S. and EU protection practices as well as being a regulators. The Americans have historically partner of the competition team in the been happy to adopt a laissez-faire Budapest office.

Szabolcs Szendrő, Partner, CMS.

Special Report | 15

stunningly different approach. In an age of globalization where the gatekeeper platforms have global reach, it is very difficult to operate under a segmented regulatory environment,” she says. Be that as it may, the European Commission has decided to move ahead. These are very early days in what Szendrő admits is a “complex and hotly debated” area. CMS itself was involved in collecting advice and opinion for the Hungarian comments to the legislation proposals. “Certain parts [of the acts] should be changed because it must be much clearer; for example, the powers, the relationships within the authorities and institutions.” Petrányi points out that there is a political will in Europe behind the concepts of innovation and a safer online environment, meaning the pertinent questions now are how and when it is brought about. Szendrő agrees: “This is just a first step. Of course, there will be lobbying, but this is something that has a huge need behind it at the same time. They can maybe postpone, win some time, but this kind of regulation will take place Dóra Petrányi, Partner, CMS. sooner or later,” he says. CMS’ CEE managing director does admit to some concerns. “The two approach to regulation, letting the markets objectives are very noble, that is sort themselves out as set out by the indisputable. On the back of the success Chicago School of economic thought in of GDPR, there is a role for the DSA and the 1930s. The Europeans, on the other DMA in the European ecosystem. But hand, have been more interventionist to over-regulation can kill competition and try and secure a level playing field. European competitiveness very quickly. Szendrő says a good example of the It has to strike the right balance to leave difference is the 2014 Facebook acquisition room for both local specialties and global of WhatsApp. American regulators imperatives. I am an optimist by nature, approved the move easily at first, while and that is why I do think it can work, but the EU heavily scrutinized and imposed we should be very careful,” she warns. a procedural fine. However, the U.S. has since revisited its original position, bringing the two sets of regulators “They [DMA and DSA] serve closer together and Facebook now faces lawsuits in the U.S. that could force the two very strong purposes. sale of WhatsApp and Instagram. The first is creating a safer “Chicago School would say that there may be failures, but the market will digital space protecting the survive; there will be another gatekeeper fundamental rights of all in a few years. Look back 15 years, and there was more of Yahoo, and less of users; everybody wants that. Google,” he explains. The second is […] fostering “But Europe says we should help these newcomers instead of the gatekeepers. And innovation, growth, and I think this is an appropriate use of the competitiveness. When word because here is the problem; these gatekeepers are keeping the others out and you look into the details… restricting access to the market,” he outlines. Well, let’s say the devil “Maybe ensuring access will help a new startup that can be the next big is in the details.” player, but if we let the big ones kill the little ones on day one, there will be no new Google. Europe has said, ‘We want The European Commission has proved to give a chance to those newcomers, it can deliver effective legislation for and we will see how the other regulators complex matters: Petrányi describes follow,’” Szendrő says. GDPR, despite all the industry fears, as a The question of other regulators raises the specter of what Russia and China might model regulation. “Perhaps the biggest thing is that do. Petrányi says their attitude against data protection, access and ownership of data is there will be legislation at all; that such regulation can be enforced and take so different from the European approach that the two are not comparable systems. place in itself is a very strong message,” says Szendrő. “Not all the goals will be Stunningly Different achieved, but the main fact will be that “I wish there was a global digital sector there is an EU regulation that can be regulation because I don’t think it is modified over time and not the need to advisable that one continent has a build it up from scratch.”

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Looking to Build Cooperation in the Customers’ Best Interests In many respects, 2020 was a turning point in the history of the Hungarian Competition Authority (GVH). The organization now places more emphasis on cooperation and allowing companies to “make it up” to consumers, so much so that they may even be excused from paying a fine, Csaba Rigó, the newly appointed head, tells the Budapest Business Journal. ZSÓFIA VÉGH

BBJ: How has the coronavirus affected the work of the Hungarian Competition Authority? Csaba Rigó: Regardless of the pandemic, the organization reached a turning point last year. GVH, which celebrated its 30th anniversary, has adjusted its approach to infringements and unfair practices. We give companies the opportunity to cooperate and thus reduce the consequences of the violation. The firms subject to proceedings have the chance to compensate consumers and commit themselves to fair competition. In this way, they may even be exempted from paying a fine. BBJ: In what ways can companies cooperate? CsR: There are two stages in competition authority cases: the investigation (detection, evidence gathering) and the competition council procedure. The latter involves a review of the evidence by GVH and the company’s arguments and concludes with the decision of the Competition Council. Before that, GVH confronts

and, to get here, we had to modify our strategy considerably. In terms of fines, the HUF 2.5 bln imposed on Booking.com, the operator of the online booking portal, stands out. Regarding cartel cases, I would highlight how members of the Hungarian Association of Personnel Consultants dealing with temporary employment fixed their prices. They also made infringing clauses, which were also detrimental to the manpower supplied as they prevented them from getting better job opportunities and higher pay. The case involved 23 Hungarian and foreign companies. The authority did not only fine Hungarian companies but also foreign ones; one example was Alza, an online webshop, on which GVH imposed a fine of nearly HUF 900 mln.

“We are trying to make companies interested in revealing secret or hidden restrictions on competition, as there is a much stronger public interest in doing so than in imposing high fines.”

the parties with its stance. This is the last stage where companies can decide whether they want to cooperate or go to court after the decision has been made. One way of cooperating is through active redress: in this case, the company must make commitments to compensate for the competition problem, which is strictly controlled by the authority. Last year, we had several significant instances in which where businesses chose this path, including Tesco and Spar. The competition authority investigated Tesco-Global Áruházak Zrt. because it failed to make it clear that its website operated as an online shopping service and not as a web store. There is a significant difference between the two, as the chain store could not guarantee the delivery of the products it offered. Tesco failed to draw customers’ attention to this fact, and a large number of customers received, without prior warning, orders that had at least one replaced or missing product. During the proceedings, GVH accepted the voluntary commitment offered by Tesco of HUF 407 million to remedy the identified competition problem. The other major case concerned Spar. The company, which has significant market power, imposed unilateral conditions and charges on its suppliers. GVH set a fine of HUF 1.5 billion, but the chain made commitments in excess of that and will begin developing a

BBJ: To what extent does imposing fines deter companies from further offenses? CsR: A fine has a serious deterrent Csaba Rigó effect. At the same time, GVH is open to evaluating it within the legal framework if the infringement has new regional supplier system. An already taken place and the company investment worth HUF 1.7 bln will concerned is cooperating. For example, improve the sales opportunities of in a cartel case, the party that first small Hungarian producer-suppliers presents substantive, decisive evidence and create new jobs. and information and admits collusion may be exempted from the fine; in the BBJ: How much did GVH impose in case of the second party, the potential fines last year? fine may be halved. We are trying CsR: The competition authority to make companies interested in completed 106 competition supervision revealing secret or hidden restrictions procedures last year (up from 97 in on competition, as there is a much 2019); we also performed 69 merger stronger public interest in doing so than controls and dealt with 29 cases of unfair in imposing high fines. The extension commercial practice. We concluded four of this approach has been going on cases of anti-competitive/restrictive for years, not only here but also in agreements and four cases of dominance. the European Union. For example, the As a result of the proceedings, in European Commission often prohibits 2020, we imposed fines totaling nearly parties from further infringements but HUF 8.5 bln, the highest since 2013. does not impose fines. What may be In addition to the record amount “office-specific” is the extent to which of fines, the total compensation received GVH allows for cooperation. Openness by the authority exceeded HUF 2.1 bln. to collaboration on the part of the By comparison, its maximum organization has existed previously, value has been HUF 400 mln so far but not to such an extent.

A Wide Framework of Interest GVH does not only deal with consumer protection cases; investigating cartels, dominant positions, and merger opportunities also falls within its scope. Among consumer protection cases, the organization follows large-scale

matters affecting the market at a national level, while minor marketimportance issues are dealt with by government offices. Still, the protection of vulnerable consumer groups (children, the elderly, the sick) has always been a priority, GVH says.

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Regulating Digital World Requires Appropriate Legislation Trying to navigate the digital world without proper digital legislation is one primary reason why there are so many infringements related to commercial practices, consumer protection, or market dominance, legal experts tell the Budapest Business Journal. ZSÓFIA VÉGH

Special Report | 17 budgets and advertise frequently, businesses may be more likely to run into infringements due to more active communication. Despite that, it is still relatively uncommon for companies to hire an external expert to check their compliance unless it is a subject well beyond their scope. (Larger companies usually have in-house counsels.)

EU-wide Legislation

István Solt the authority is paying more attention to online marketplaces and shops and digital comparison tools. Due to their dynamics and the special characteristics of consumer decisionmaking, GVH has given priority to these markets and has launched proceedings against Big Tech companies such as Apple, Google, and Facebook.

Digitalization has reshuffled not only the way we shop and use services but the way businesses reach consumers. The Historic Fine fact that someone is not actually “there” gives ground to a lot of misinterpretation, Last year, the authority imposed the largest consumer protection fine in its history, HUF or worse, deception. 2.5 billion, on the Dutch-based booking site, The online world is an ideal space for Booking.com, which, among other things, someone to make claims that may not used aggressive, psychological pressure be entirely true, for example, having the to make users book as soon as possible. country’s broadest or fastest broadband Within this scope, GVH is also conducting coverage. Since the transition to online has taken place rapidly, legislation originally market analysis by looking at the role of crafted for the physical world could not keep data assets in online commerce. Another area the organization is up, and there are many unregulated areas. focusing on is commercial practices Advertising and sponsorship of related to so-called green advertising. influencers is one such area. It is not There is growing pressure on businesses regulated, and although the Hungarian to operate in an environmentally friendly Competition Authority (GVH ) has created recommendations, it can provide way; the number of environmentallyconscious consumers consider the guidance at best. For example, when impact of their consumption on our advertising products, an influencer must planet is also on the rise. mark with a hashtag at the beginning of The environmentally friendly and the post if it is advertising. sustainable nature of products and their “However, since this is not a law, in the production has become an essential element event of a dispute, the influencer may of competition alongside price and quality. argue that they have made it clear to “Applying a marketing or PR strategy their followers in other ways that the post in which a company presents itself as contained an advertisement and has a environmentally-friendly, responsible chance to win in court,” István Solt, senior for environmental protection, while associate in cooperation with act Bán & this is not reflected in its operations, Karika Attorneys at Law told the BBJ. or claims about its product or service “The court then rules on an individual cannot be substantiated, can be basis, as there is not a sufficient number assessed as unfair commercial of cases based on which precedent and practices,” Andrea Zenisek, head of governing law have been established,” GVH’s consumer protection office says. he adds. “Until comprehensive EU-wide The competition authority has and itemized domestic regulations are previously warned consumers about in place, lawyers are forced to resort to this type of misleading advertising, and creative interpretation of the law when last December it published a so-called discussing a case.” “Green Marketing” brochure to help The above is reflected by the cases businesses develop good advertising the GVH has been dealing with practices for environmental-friendliness recently as well. With the importance and sustainability. of online commerce increasing,

There are no industries or market segments that have more infringing commercial practices than other areas, GVH says. The more regulated a sector or area is, the fewer opportunities there may be for failure to comply, though. Where companies have large marketing

Although some parts of the digital world have been regulated, there is no EU-wide legislation for online markets and services. The European Commission has adopted a proposal for a Digital Services Act (DSA) which, together with a Digital Markets Act (DMA), will create a safer and more open digital space for all users and ensure a level playing field for businesses, the Commission says. (For more on this, see “Devil in the Details for Digital Markets and Digital Services Acts” on page 15.) Until the DSA and DMA are adopted, which, according to experts, is unlikely to take place before 2022 or 2023, countries will continue to have to deal with these cases by themselves.

PRESENTED CONTENT

2021: Year of Revival at Bán, S. Szabó, Rausch & Partners

The years 2020 and 2021 will long be remembered by all for well-known and sad reasons. My aim is that this year is recalled for entirely different reasons by our clients, partners, and colleagues; as the revival of our firm. The changes concern not only the name of the law firm and who sits at the helm of the office, but also the appearance and branding of our operation. As of June 2021, I will succeed Chrysta Bán and Péter S. Szabó as the managing partner. I will give my best to live up to their legacy as the founders who established the

office and lead it to become a highly reputable law office. I have been a partner for more than 20 years, and I am looking forward to the challenges that lie ahead with excitement. Our clients’ needs and expectations are constantly changing. We know that we must evolve and cope with such expectations and continue to provide excellent legal services to the complete satisfaction of our clients. To achieve this, we will adapt our internal procedures, change our image and introduce a new and updated branding. This will manifest itself in our new logo and revised homepage. Our traditional strong points, such as integrity and reliability, will continue to be the focal points of our work. Our approach is one of form and substance in accord that has a straightforward goal: taking care of the problems and issues of our clients with dedication and integrity. This is what we have striven to achieve for the last 25 years; we will continue to do so long into the future. JÁNOS RAUSCH, Managing partner

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Top-ranked law firms BELOW IS THE LIST OF LAW FIRMS WITH INTERNATIONAL AFFILIATIONS OPERATING IN HUNGARY THAT HAVE BEEN RECOMMENDED IN THE MOST AREAS OF LEGAL ACTIVITIES IN 2021 (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 2021 BAND 1

CHAMBERS EUROPE 2021 BAND 1

LEGAL 500 2021 TIER 1

IFLR 1000 2021 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

–

CMS

DLA PIPER HUNGARY

DENTONS

ANDRÉKÓ FERENCZI KINSTELLAR

HEGYMEGI-BARAKONYI AND PARTNER BAKER & MCKENZIE ATTORNEYS-AT-LAW

LAKATOS, KÖVES AND PARTNERS

OPPENHEIM

SIEGLER BIRD & BIRD ÜGYVÉDI IRODA

SZECSKAY ATTORNEYS AT LAW

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Special Report | 19

Top-ranked law firms CHAMBERS GLOBAL 2021 BAND 1

CHAMBERS EUROPE 2021 BAND 1

LEGAL 500 2021 TIER 1

IFLR 1000 2021 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

–

KAPOLYI LAW FIRM

–

VÁMOSI-NAGY ERNST & YOUNG LAW OFFICE

–

VJT & PARTNERS

–

ALLEN & OVERY KÁDÁR

NAGY & TRÓCSÁNYI

WOLF THEISS BUDAPEST

JALSOVSZKY

SBGK ATTORNEYS AT LAW

DANUBIA LEGAL

CHAMBERS GLOBAL 2021 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

BAND 4

Banking & Finance

Andrékó Ferenczi Kinstellar CMS DLA Piper Hungary

Allen & Overy Kádár Dentons Lakatos, Köves & Partners

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law Wolf Theiss Budapest

HP Legal | Hajdu & Partners Jalsovszky Noerr Schoenherr Hetényi Attorneys at Law Vámosi-Nagy Ernst & Young Law Office

Corporate/M&A

Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary

Allen & Overy Kádár Lakatos, Köves & Partners

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim Schoenherr Hetényi Attorneys at Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law Wolf Theiss Budapest

Forgó, Damjanovic & Partners Partos & Noblet / Hogan Lovells VJT & Partners

Dispute resolution

CMS Nagy és Trócsányi Oppenheim Szecskay Attorneys at Law

DLA Piper Hungary Lakatos, Köves & Partners

Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

CHAMBERS EUROPE 2021 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

Banking & Finance

Andrékó Ferenczi Kinstellar CMS DLA Piper Hungary

Allen & Overy Kádár Dentons Lakatos, Köves & Partners

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law

Competition / Antitrust

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim

Allen & Overy Kádár CMS Dentons Lakatos, Köves & Partners

Andrékó Ferenczi Kinstellar DLA Piper Hungary Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Corporate / M&A

CMS Dentons DLA Piper Hungary

Andrékó Ferenczi Kinstellar Lakatos, Köves & Partners

Allen & Overy Kádár Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law Wolf Theiss Budapest

Dispute resolution

CMS Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

DLA Piper Hungary Lakatos, Köves & Partners

Gárdos Mosonyi Tomori Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

Employment

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law

CMS DLA Piper Hungary Pál és Kozma Ügyvédi Iroda Szecskay Attorneys at Law VJT & Partners

CLV Partners Dentons Oppenheim Szabó, Kelemen & Partners Andersen Attorneys

Intellectual property

SBGK Attorneys at Law Szecskay Attorneys at Law

CMS Danubia Legal Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Life sciences

CMS Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law

Szecskay Attorneys at Law

CLV Partners KNP Law Nagy-Koppány & Lencs

Projects & Energy

Andrékó Ferenczi Kinstellar Wolf Theiss Budapest

CMS DLA Piper Hungary

Budapest Law Firm No. 5000 Dentons Oppenheim Szabó, Kelemen & Partners Andersen Attorneys

Real estate

CMS Dentons

DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves & Partners

Andrékó Ferenczi Kinstellar CERHA HEMPEL Dezső & Partners Oppenheim Szécsényi and Partners

Tax

DLA Piper Hungary Jalsovszky

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Vámosi-Nagy Ernst & Young Law Office

CMS Wolf Theiss Budapest

TMT

CMS Dentons Lakatos, Köves & Partners

DLA Piper Hungary VJT & Partners

Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law

IFLR 10 0 0 2021 LEGAL ACTIVITIES

TIER 1

TIER 2

TIER 3

Banking & Finance

Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Siegler Bird & Bird Ügyvédi Iroda

Allen & Overy Kádár Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners

CERHA HEMPEL Dezsö & Partners Gárdos Mosonyi Tomori Oppenheim Partos & Noblet / Hogan Lovells Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law Vámosi-Nagy Ernst & Young Law Office Wolf Theiss Budapest

M&A

CMS Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda

Andrékó Ferenczi Kinstellar Lakatos, Köves and Partners Szecskay Attorneys at Law

Allen & Overy Kádár Oppenheim Partos & Noblet / Hogan Lovells Wolf Theiss Budapest

Project development

Andrékó Ferenczi Kinstellar CMS Dentons Lakatos, Köves and Partners Wolf Theiss Budapest

DLA Piper Hungary Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Budapest Law Firm No. 5000 CERHA HEMPEL Dezsö & Partners Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Schoenherr Hetényi Attorneys at Law

Capital markets : Equity

Allen & Overy Kádár Siegler Bird & Bird Ügyvédi Iroda

Andrékó Ferenczi Kinstellar Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners

HBK Partners

Capital markets : Debt

Andrékó Ferenczi Kinstellar DLA Piper Hungary Allen & Overy Kádár

Dentons Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda

Gárdos Mosonyi Tomori Schoenherr Hetényi Attorneys at Law

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Special Report | 21

LEGAL 500 2021 LEGAL ACTIVITIES

Banking, finance & capital markets

Competition

Commercial, corporate & M&A

TIER 1

TIER 2

TIER 3

Allen & Overy Kádár Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Kapolyi Law Firm Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda

CERHA HEMPEL Dezső & Partners Gárdos Mosonyi Tomori HBK Partneres Attorneys at Law Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Jalsovszky Noerr Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law Wolf Theiss Budapest

Deloitte Legal Göndöcz and Partners Law Firm Forgó, Damjanovic & Partners HP Legal | Hajdu & Partners Nagy & Trócsányi Oppenheim Partos & Noblet / Hogan Lovells Szabó, Kelemen & Partners Andersen Attorneys Vámosi-Nagy Ernst & Young Law Office

Bassola Law Firm CERHA HEMPEL Dezső & Partners DLA Piper Hungary Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Forgó, Damjanovic & Partners Partos & Noblet / Hogan Lovells Réti, Várszegi and Partners PwC Legal Siegler Bird & Bird Ügyvédi Iroda Szabó, Kelemen & Partners Andersen Attorneys VJT & Partners

Allen & Overy Kádár Forgó, Damjanovic & Partners Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law VJT & Partners Wolf Theiss Budapest

Deloitte Legal Göndöcz and Partners Law Firm Jalsovszky Kapolyi Law Firm Nagy & Trócsányi Partos & Noblet / Hogan Lovells Szabó, Kelemen & Partners Andersen Attorneys

Allen & Overy Kádár Andrékó Ferenczi Kinstellar CMS Dentons Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners Oppenheim Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Data privacy & data protection

CMS

Andrékó Ferenczi Kinstellar Dentons Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda Taylor Wessing Hungary VJT & Partners

Dispute resolution

CMS DLA Piper Hungary Lakatos, Köves and Partners Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

Dentons Forgó, Damjanovic & Partners LFB – László Fekete Bagaméry Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Szecskay Attorneys at Law VJT & Partners

Andrékó Ferenczi Kinstellar CLV Partners - Csabai & Partners Law Firm CMS DLA Piper Hungary Forgó, Damjanovic & Partners KCG Partners Law Firm Lakatos, Köves and Partners Oppenheim

Employment

Intellectual property

Projects & energy

Danubia Legal Oppenheim SBGK Attorneys at Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

Real estate & construction

CMS Dentons Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners

TMT

CMS DLA Piper Hungary Lakatos, Köves and Partners

Tax

CMS DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Jalsovszky Nagy & Trócsányi Vámosi-Nagy Ernst & Young Law Office

CERHA HEMPEL Dezső & Partners DLA Piper Hungary KPMG Legal Tóásó Law Firm Oppenheim Réti, Várszegi and Partners PwC Legal SBGK Attorneys at Law Schoenherr Hetényi Attorneys at Law Wolf Theiss Budapest Allen & Overy Kádár CERHA HEMPEL Dezső & Partners Gárdos Mosonyi Tomori Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lohn Law Firm Partos & Noblet / Hogan Lovells Réti, Várszegi and Partners PwC Legal Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Szabó, Kelemen & Partners Andersen Attorneys VJT & Partners bnt | attorneys-at-law Noerr Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Schoenherr Hetényi Attorneys at Law Siegler Bird & Bird Ügyvédi Iroda Szécsényi and Partners Szabó, Kelemen & Partners Andersen Attorneys Taylor Wessing Hungary Vámosi-Nagy Ernst & Young Law Office Wolf Theiss Budapest

CMS Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners

Dentons DLA Piper Hungary

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim Réti, Várszegi and Partners PwC Legal Schoenherr Hetényi Attorneys at Law

Forgó, Damjanovic & Partners HP Legal | Hajdu & Partners KCG Partners Law Firm Szabó, Kelemen & Partners Andersen Attorneys Szecskay Attorneys at Law

Andrékó Ferenczi Kinstellar DLA Piper Hungary Kapolyi Law Firm Noerr Oppenheim Partos & Noblet / Hogan Lovells Siegler Bird & Bird Ügyvédi Iroda

CERHA HEMPEL Dezső & Partners Deloitte Legal Göndöcz and Partners Law Firm Jalsovszky KCG Partners Law Firm Lohn Law Firm Schoenherr Hetényi Attorneys at Law Szécsényi and Partners Szabó, Kelemen & Partners Andersen Attorneys Szecskay Attorneys at Law Wolf Theiss Budapest

Andrékó Ferenczi Kinstellar Dentons Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda VJT & Partners Deloitte Legal Göndöcz and Partners Law Firm KCG Partners Law Firm Lakatos, Köves and Partners LFB – László Fekete Bagaméry Réti, Várszegi and Partners PwC Legal Szecskay Attorneys at Law Wolf Theiss Budapest

Allen & Overy Kádár Forgó, Damjanovic & Partners Partos & Noblet / Hogan Lovells Szecskay Attorneys at Law Wolf Theiss Budapest

Special Report

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

INSIDE VIEW

Here Comes the 3rd Metár Tender: What Investors Need to Know László Kenyeres

Partner

Associate

WOLF THEISS BUDAPEST

The Hungarian Energy and Public Utility Regulatory Authority (MEKH) has announced the third METÁR tender to encourage green investments in Hungary. Applications can be submitted between July 1-30 in two categories: (i) small, from 0.3 MW to 1 MW, and (ii) large, from 1 MW to 20 MW nominal capacity, lower than the 50 MW upper limit used in the second tender. Although it is open to various technologies, the legal environment continues to favor solar investments. NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Ádám Lukonits

It has been clear for a while that marketable green energy production might be within arm’s reach in Hungary. With the previous METÁR tender, bid prices continued to fall: they were between 0.04 and 0.05 EUR/kWh, compared to the 0.10 EUR/kWh feed-in tariff used in the late-KÁT system and the 0.06 EUR/kWh average bid price offered during the first METÁR round. Therefore, it is only a matter of time before the bid prices will meet the level of actual market prices. When this happens, there will theoretically be no need for the green premium (i.e., the support granted by the state to compensate the power generators for the difference between their bid prices and the actual market prices). This, added to the decreasing investment costs of PV projects, means Hungary is an attractive location for solar investments. However, investors should be aware of some significant pitfalls. The rules for tendering change frequently, sometimes from one round to another. In March 2021, NFM Decree No. 62/2016 (XII 28), which is the legal basis for all METÁR tenders, was amended. Firstly, it was declared that tenders will be grouped based on their nominal capacity, and the different categories will fall under different tendering rules; thus, the respective tenderers will compete only within their own category. Secondly, the definition of ultimate beneficial ownership (UBO) became stricter. Thirdly, MEKH is now entitled to determine some specifications of the project sites (e.g., the golden

crown value, land use nature, and the branch of cultivation). In addition, there were some minor changes regarding the evaluation committee and the disqualification of tenderers, among others. The third METÁR tender also brought some notable changes in comparison to the last round. As set forth above, the upper limit of the larger category was decreased to 20 MW. The maximum amount of electricity that can be subsidized for applicants falling under the same UBO shrank in the large category and is now 80 GWh/year instead of 175 GWh/year used in the last round. There is also a new aggregation rule: the nominal capacity of PV plants participating in the current tender shall be aggregated only if they share the same connection point within a 1 km radius; thus, applications submitted during the previous METÁR tenders do not count here. Also, the earlier 20% rate regarding the amount of security released from the performance bond if the applicants receive a final and binding building permit and a grid connection agreement can now be increased up to 50% if the investors prove sufficient project financing. In light of the above, up-to-date and continuous legal support is highly recommended for investors who wish to enter the Hungarian market. Because of the new UBO rules, tenderers will need more sophisticated company structures and joint venture agreements. MEKH’s right to determine the characteristics of the project site makes the project preparation phase more important, as the applicants will have to select the location before the authority announces the respective specifications. Thus, some refinement of land contracts (including step-out clauses if the site turns out to be unsuitable for the project) is also necessary. And for those who wish to implement their projects on a pure market basis, it is essential to know that some well-known constraints, such as the 31% income tax (Robin Hood tax) and the high balancing energy prices, are still in place.

www.wolftheiss.com

A.I.: a Deceptive aid set to Send Shockwaves Through the Lawyer’s World Péter Lakatos, managing partner at Lakatos, Köves and Partners, outlines lawyers’ concerns in the Brave New World of artificial intelligence. Photo by Andrey_Popov / Shutterstock.com

22 | 3

KESTER EDDY

BBJ: What effects will the application of AI have on lawyers’ work? Péter Lakatos: From a helicopter view, the situation is that AI will definitely affect how we practice law. The problem is that, in principle, it sounds very good that there is a machine which helps your efficiency, helps you to do things that take a long time, like the due-diligence process. It will also help you to draft contracts, very big, heavy contracts where you have to go and check manually, to fix the grammar and details, so it’s helping a lot. Drafting complex documents is a very complex, time-consuming, highly intellectual process. So, the technology helps to search, and that’s what it’s mainly used for nowadays: it’s basically extending the search technology. In the traditional way, if you put a word search into the system, then the software just searches for that particular word. But in the AI world, if you start to teach the machine, the technology is able to conclude what you are looking for could also be somewhere else. An IT guy tried to explain it to me once, and what I understood

is that this is a very advanced, sophisticated pattern-recognition research tool. BBJ: So it’s not just a word search; it’s a more meaningful concept search? PL: Yes, which, in principle, would very much help our work and does help. The problem is that this technology is not [usable] off the shelf. It can handle only that part which it has been taught, but it requires a lot of energy and time to teach it to make it usable for your own purposes. It involves a combination of processes and, at the end of the day, a lot of work and a lot of investment. BBJ: It needs training, in fact, like a new employee? PL: We have to train the system for it to be useful for us, and this is one of the fundamental or conceptual issues that we have to deal with. Second, lawyers are.… It’s a social science if you like, and there is a certain thinking process around how you approach social issues and relationships. Law is just one set of rules on how to regulate society, but there are many other rules, and you have to combine them together properly. It is something that is always in adjustment, always sensitive to

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

BBJ: You mean it’s a kind of black and white? PL: IT is a technical, science-based philosophy. It’s kind of black and white. The lawyer-thinking process is totally different from an IT-thinking process. And to work together, it’s a real, real issue, because to train the system, you effectively involve more and more IT and IT people, [over whom] I don’t have real control about how they think. Having worked with a lot of them, I have much experience. But, in order to make this [AI assistance] happen, you have to allow them to enter your territory, but you cannot control how they do that. And this is also true from the other side: only those guys from the IT world who spend time with you understand you. But they are always looking for byte or no-byte solutions, and this is conceptually a conflict between how these two sets of mindsets can work together.

deliver the same service, it reduces the work we can deliver to clients. Because what we are doing is always an intellectual [service]. Whether I can sell on an hourly basis or a fixed fee, I’m selling an intellectual work product. Am I really interested in applying AI here, in my law firm, because that will reduce the potential number of hours that I can sell to clients and reduce my profits. BBJ: This sounds like the intellectual equivalent of the textile workers dealing with machine looms in the 18th century? PL: Absolutely, it’s like an industrial revolution issue. Yeah, we have to increase the business; that’s the only way. In the long run, definitely, the answer is we have to use AI. The long-term answer is clear, but how we get there is going to be very painful, very disruptive.

BBJ: What is the upshot of this contradiction? PL: Because we are a law firm, we are running the legal risk; we have to do the intellectual activity to advise the client, to solve problems. So far, we have been controlling our thinking process, our business, and our risk at the end of the day, and I’m signing it off. But in this new world, this will not be true. I will not control completely what and how we are working. And this is a fundamental conflict. I can see more and more people are realizing this. BBJ: But AI people would see this all as an investment, wouldn’t they? That over the long term, your costs will go down? PL: Unfortunately, this is also not true. Because the AI is not just helping us

Péter Lakatos

Will Less ‘Grunt Work’ Mean Less Training, Poorer Skill Sets? While the application of AI to legal searches means large savings in time pondering wordy texts, it also causes issues in terms of training young lawyers, argues Péter Lakatos. BBJ: If trainee lawyers are no longer in the data room checking texts, doing the “grunt work,” doesn’t this mean they are losing training experience? PL: Absolutely: the more time they spend in the data room, the more documents they have reviewed, and that’s a learning path. Because the trainee is forced to go through several hundred documents and needs to look at these with a purpose: it’s not just reading. The trainee is learning a lot; he or she can see a lot of things. But this is just finding the information; the second [element] is to evaluate [it].

BBJ: With a senior lawyer? PL: Before he or she reports to a senior lawyer, he or she needs to take a professional view, and that’s part of the learning curve. When the trainee finds something in a document in the data room, first they will need to evaluate it and take a position. But now, the machine will come on, and the machine says this or that. I can well imagine asking: but did you consider X? And the answer will come back: No, because the machine said Y. So, they are not learning. Lawyering, to a large extent, is the ability to make a judgment on a situation, but [with AI] they will not be doing that. It takes two, three, four years until someone gets the experience to read, process, and make a judgment. But in the AI world, how will they be able to get the learning? Big question. I don’t know.

INSIDE VIEW

When Will the Wave of Non-performing Loan Deals Hit? Dr. Edina Schweizer Partner, Head of CEE Banking&Finance, Head of Hungary Banking&Finance Noerr and Partners Law Firm

Everybody should watch The Big Short In the Academy Award-winning Hollywood movie “The Big Short,” the eccentric physi-cist and hedge fund manager Dr. Michael Burry (Christian Bale) is one of the first inves-tors to discover the negative outlook of U.S. banks’ mortgage portfolios. He is convinced that the ratio of nonperforming loans will skyrocket in 2007. He builds up significant short positions and bets against mortgage-backed securities. Very few understand, and even fewer share his stance. When the market eventually does col-lapse, he earns a 489% profit, closes his investment fund, and leaves his offices wearing the same worn-out Bermuda shorts and flip-flops he has been wearing in the office the entire time. The signs of an upcoming increase in non-performing loans were obvious, at least for Burry. But what about now? In the aftermath of COVID-19, banks face another credit downturn. How can lessons learned in the 2008 crisis be adapted and utilized now?

in 2020: approximately 6% of the European banks’ total loans. Hungarian banks reported that an astonishing 39% of commercial loans and 54% of retail loans by value were under mor-atorium at the end of 2020. The National Bank of Hungary estimates that 15-20% of the total value of bank loans bears an increased credit risk. The moratorium currently delays non-performance. Once the moratorium ends, banks may face a cliff-edge effect. In Hungary, the suspension is intended to end in August, followed by a gradual return to reality. This rather long moratorium and its further extension cover-up risks of structural, management, and other performance issues of borrowers known as zombie firms. On top of that, borrowers may get used to the pleasant conditions and develop a culture of non-payment that harms the overall stability of the lending ecosystem in the long run.

NPLs: Restructure or Sell?

The European Central Bank has estimated that European banks’ non-performing loans could reach an unprecedented total of EUR 1.4 trillion. Bankers currently spend half their time monitoring the performance of existing borrowers. There are two ways to handle vulnerable loans: restructure or sell. Restructuring: We saw an increase in restructuring deals around Is this different? yearend 2020. If fiscal supporting The COVID-19 situation has different measures and liquidity are maintained, characteristics than the 2008 credit crisis. the economic prospects of more 1) Sector-specific: The COVID-19 situation borrowers might justify restructuring impacts different sectors in different in 2021. ways. Travel, leisure, accommodation, and Sale: Non-performing loan levels at the fashion industry have been hard hit. Hungarian banks were at a record low Other sectors like transportation, logistics, of 1.8% as of the end of 2020. This e-commerce, and digital entertainment means banks had already started have been boosted. Only borrowers in offloading non-performing loans. As the first business sectors are causing a result, the Hungarian banking arena headaches for the banks. seems to be prepared to absorb at 2) State support: States are offering least some of the non-performing fiscal support measures to shore up loan losses expected for 2021. liquidity and mitigate the economic Despite of the more intense impact. The level of government monitoring and restructuring intervention is unprecedented worldwide. measures, the banking sector will These measures can delay the effect. undoubtedly face a peak in the ratio 3) Uncertainty: There is a high of non-performing loans when degree of uncertainty about the longthe loan mora-torium expires. We term economic consequences of the will probably see some further pandemic and lockdowns. It’s difficult to deleveraging later this year or next, predict precisely which sub-sectors may whenever the suspension ends and bounce back and which will suffer longlending gets back to normal. lasting damage. The pandemic also But what is the new normal in lending? affected demand. Consumer behavior That is a topic for a separate article. and people’s preferences shifted.

Loan Moratorium – Hungarian borrowers maxed it out European banks placed a moratorium on EUR 871 billion worth of loans

www.noerr.com

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

your thinking and to the process. The IT world is totally different: in the IT world, it’s either byte or no byte.

Special Report | 23

24 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Law firms with international affiliations

7 Partners +5 Local Partners

✓

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

CMS Cameron McKenna Nabarro Olswang LLP London 1779

77 1989

✓

Data protection & cybersecurity, compliance & investigations, restructuring and insolvency, new technologies, state aid

✓

Capital markets, data protection and privacy, film and media law, fintech, project finance, restructuring and insolvency

DLA Piper UK LLP London 2006

–

Freshfields Bruckhaus Deringer London 1743

cms.law 1

name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

Cms CameRon mCkenna nabaRRo oLsWang LLp magyaRoRszági fiókteLepe

otheR

Life sCienCes

pubLiC pRoCuRement

inteLLeCtuaL pRopeRty

dispute ResoLution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

empLoyment

Competition

eneRgy

banking and finanCe

tax

ReaL estate

CommeRCiaL

LegaL speCiaLity aReas no. of paRtneRs of hungaRian offiCe on may 3, 2021

no. of tRainees in hungaRy on may 3, 2021

Company Website

no. of attoRneys With LiCense to pRaCtiCe in hungaRy on may 3, 2021

Rank

Ranked by no. of attorneys (with license to practice) in Hungary on May 3, 2021

top LoCaL exeCutive addRess phone emaiL

erika papp 1053 Budapest, Károlyi utca 12. (1) 483-4800 budapest@cms-cmno.com

dLa pipeR hungaRy www.dlapiper.com

✓

andrás posztl 90+ 1988

oppenheim Ügyvédi iRoda www.oppenheimlegal.com 3

✓

–

✓

1124 Budapest, Csörsz utca 49–51. (1) 510-1100 reception.budapest@ dlapiper.com

ulrike Rein 28 1989

1053 Budapest, Károlyi utca 12. (1) 486-2200 office@oppenheimlegal.com

Bond to be better.

Integrated Advisory Solutions Legal | Tax | Business Advisory

Lakatos, köves és táRsai Ügyvédi iRoda 39

✓

Clifford Chance LLP, Multilaw, Interlaw, Association of European Lawyers, Global Leaders Forum – –

✓

Infrastructure and project finance, joint ventures and private equity, capital markets, financial restructuring and insolvency, data protection

Dentons Europe LLP London 2013

✓

State aid, data protection, project financing, restructuring and insolvency

CERHA HEMPEL Rechtsanwälte GmbH Vienna 1921

Advertising law and consumer protection, capital markets, data protection, restructuring and insolvency

WSG – World Services Group, TerraLex, Legalink, EuroJuris, SCG – State Capital Group, DORDA Best Friends Network, Biolegis, Lexicom, LEGUS, INBLF – –

✓

–

PricewaterhouseCoopers Legal LLP London 2006

✓

Capital markets, project finance, employment, international space and air law, healthcare

Bredin Prat Paris 1966

37 1993

✓

Compliance, risk & sensitive investigations, infrastructure & projects, NPLs & distressed assets, restructuring & insolvency, white-collar crime, aviation

Kinstellar – 2008

11 2000

dentons

www.dentons.com 5

✓

–

✓

CeRha hempeL dezső és táRsai Ügyvédi iRoda 6

www.cerhahempel.com/hu/offices/ magyarorszag

✓

szeCskay attoRneys at LaW www.szecskay.com

Réti, váRszegi és táRsai Ügyvédi iRoda pwC LegaL

✓

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

✓

Restructuring & insolvency, data protection & GDPR, aviation, investment protection, regulatory, compliance and investigations, consumer protection

www.lakatoskoves.hu 4

otheR

Life sCienCes

pubLiC pRoCuRement

inteLLeCtuaL pRopeRty

dispute ResoLution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

empLoyment

Competition

eneRgy

banking and finanCe

tax

ReaL estate

CommeRCiaL

no. of paRtneRs of hungaRian offiCe on may 3, 2021

no. of tRainees in hungaRy on may 3, 2021

no. of attoRneys With LiCense to pRaCtiCe in hungaRy on may 3, 2021

Rank

Company Website

LegaL speCiaLity aReas

Special Report | 25 name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

✓

www.retivarszegipartners.hu

andRékó feRenCzi 10 kinsteLLaR Ügyvédi iRoda

✓

–

✓

www.kinstellar.com

szabó, keLemen és táRsai andeRsen Ügyvédi iRoda

1991

✓

7 1998

✓

–

✓

–

✓

–

1992

www.twobirds.com

1055 Budapest, Kossuth Lajos tér 16–17. (1) 472-3000 info@szecskay.com

zoltán várszegi 90 2000

1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 461-9888 hu_rvp.central@pwc.com

zoltán sárhegyi beatrix bártfai 1022 Budapest, Árvácska utca 6. (1) 209-0180 titkarsag@sarhegyi.hu

kristóf ferenczi

265 1996

✓

IT (Information technology), data protection

Wolf Theiss Rechtsanwälte GmbH Vienna 1959

13 2007

Data protection, sports

Bird & Bird LLP London 1846

siegLeR biRd & biRd Ügyvédi iRoda

1011 Budapest, Fő utca 14–18. (1) 457-8040 office@cerhahempel.hu

andrás szecskay A

Andersen Global San Francisco 2013

www.wolftheiss.com

1061 Budapest, Andrássy út 11. (1) 488-5200 budapest@dentons.com

tamás polauf Wilhelm stettner

–

WoLf theiss faLudi eRős Ügyvédi iRoda

1075 Budapest, Madách Imre út 14. (1) 429-1300 mail@lakatoskoves.hu, info@lakatoskoves.hu

istván Réczicza 200+ 2015(1)

Corporate restructuring and insolvency, gaming and betting, information technology, telecommunications and e-commerce

www.hu.andersenlegal.com

addRess phone emaiL

péter Lakatos

győRi és sáRhegyi Ügyvédi táRsuLás www.gyoriessarhegyi.hu

top LoCaL exeCutive

1054 Budapest, Széchenyi rakpart 3. (1) 428-4400 budapest@kinstellar.com László kelemen domonkos kiss tamás szabó péter vincze 1024 Budapest, Lövőház utca 39. (1) 288-8200 tamas.szabo@ hu.andersenlegal.com

zoltán faludi 1085 Budapest, Kálvin tér 12–13. (1) 484-8800 budapest@wolftheiss.com

david dederick 26

✓

30 2008

1027 Budapest, Kapás utca 6–12. (1) 301-8900 david.dederick@ twobirds.com

www.bbj.hu

www.bakermckenzie.com/en/ locations/emea/hungary

✓

name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

otheR

Life sCienCes

pubLiC pRoCuRement

inteLLeCtuaL pRopeRty

dispute ResoLution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

empLoyment

Competition

eneRgy

banking and finanCe

tax

ReaL estate

CommeRCiaL

hegymegi-baRakonyi és táRsa bakeR & mCkenzie Ügyvédi iRoda

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

Budapest Business Journal | June 4 – June 17, 2021

LegaL speCiaLity aReas no. of paRtneRs of hungaRian offiCe on may 3, 2021

Company Website

no. of tRainees in hungaRy on may 3, 2021

Special Report no. of attoRneys With LiCense to pRaCtiCe in hungaRy on may 3, 2021

Rank

26 | 3

top LoCaL exeCutive addRess phone emaiL

zoltán hegymegi-barakonyi

✓

Data protection, cyber law, consumer protection, corporate compliance, capital markets, financial regulatory, project finance, restructuring, insolvency

✓

Tax litigation, data privacy, legal and financial protection of private wealth

✓

Litigation, arbitration & ADR, data protection/ GDPR, healthcare, insurance & reinsurance, state aid, restructuring & insolvency

Noerr Partnerschaftsgesellschaft mbB Munich 1950

Public policy, privacy

Lexing Paris 1978

Baker & McKenzie LLP Chicago 1949

79 1987

1051 Budapest, Dorottya utca 6. (1) 302-3330 budapest.reception@ bakermckenzie.com

attila kövesdy

deLoitte LegaL göndöCz

13 és táRsai Ügyvédi iRoda www.deloittelegal.hu

✓

–

✓

–

noerr és táRsai iRoda www.noerr.com

✓

Deloitte Legal A A

153 2009

1068 Budapest, Dózsa György út 84/C (1) 428-6800 cehudeloitteinhungary@ deloittece.com

zoltán nádasdy 16 1990

1011 Budapest, Fő utca 14–18. (1) 224-0900 recepcio@noerr.com

miklós orbán

oRbán & peRLaki 14 Ügyvédi táRsuLás

✓

–

✓

–

✓

–

✓

www.opl.hu

30 2011

1036 Budapest, Perc utca 6. (1) 769-1163 office@opl.hu

Managing Disruption through Innovation Legal innovation has been a trending topic for years. In the past 15 months, the COVID-19 pandemic mandated a new client service approach: court proceedings were held and business acquired, all without any in person meetings. Like businesses, law firms’ work methods evolved to enable their continued operations. Though it was a global disturbance, the pandemic was not an isolated one. Even pre-pandemic, companies faced various disruptions and heightened market complexity, causing them to seek out legal advisors able to work faster, more accurately and with greater cost certainty. Law firms responded by discussing legal innovation, sparking clients’ interest. Although machine learning and artificial intelligence have not yet caused true disruption of legal services and the legal business, the potential for them to do so is growing. Law, a service industry, is necessarily client focused, so the approach to legal innovation starts with an understanding of the client’s business, a debunking of tech myths and then bringing innovative thinking and solutions where they truly add value. Innovation is most effective where clever solutions meet the client’s challenges and strategic goals, whether those are to achieve speed, accuracy, flexibility or efficiency gains. Recognizing our client-centric approach, IFLR named us the 2021 Law Firm of the Year in Hungary from a shortlist including many other prestigious law firms, based on our innovative approach to precedent setting cross-border M&A and corporate finance transactions. Our multidisciplinary teams manage risks that rarely sit neatly in one jurisdiction or area

of law by thinking laterally to identify new opportunities to deliver better client outcomes across markets, industries and practices. Innovation comes from broad thinking to leverage multiple tools. Using legal project management (LPM) to increase efficiency is an example. At Baker McKenzie, we invest more than any other law firm in LPM to optimize delivery of large projects, whether complex cross-border transactions or nontransactional mandates, by streamlining processes among project stakeholders. Innovation involves increased use of tech. Many legal apps are available, some of which we’re created, like: GIPM to manage IP rights; GMAP, that answers 90 detailed questions on merger control law in over 120 jurisdictions and is updated in real time; or the Healthcare MapApp, enabling real-time access to information on the laws and regulations impacting the healthcare and life sciences industry. Other commercially available apps can quickly review large amounts of information or even prepare initial drafts of certain types of documents. Speedy information access and processing is appealing to clients. Yet the human element of previous experience remains a key client criterion in outside counsel selection. Companies still expect their outside lawyers to help them navigate a deal based on past experience applied to new circumstances. Legal innovation also includes engaging with other changemakers inside and outside law to bring new thinking and

best practice to clients. We’ve partnered with the World Economic Forum’s Centre for the 4th Industrial Revolution and also have formed a legal tech start-up program. And our recently announced exclusive collaboration with SparkBeyond aims to reimagine the future of legal services and scales up our current use of artificial intelligence (AI) in a number of areas to benefit clients. The collaboration has a three part focus. One is on AI-powered legal services, with the aim of delivering machine learning enabled judgement. Another is to amplify social impact initiatives with machine learning-driven research and analysis, eventually using machine learning to scale our pro bono practice in a way that cannot be achieved through human resourcing alone. And incorporating datadriven insights and machine learning across our legal and commercial operations is a third focus, that is part of our own continuing digital transformation. SparkBeyond’s technology is specifically designed to support problem solving, aligning well with the role of our lawyers as problem solvers for clients. Rather than being a suite of ‘out of the box’ products, this technology platform is one on top of which we will build our capability to design applications tailored to meet our and our clients’ needs.

Ines Radmilovic Partner, Corporate/M&A Baker McKenzie

vámosi-nagy eRnst & young 14 Ügyvédi iRoda

✓

–

✓

–

✓

–

✓

–

✓

–

Lex Mundi / Yingke International Houston, USA / Kína 1989/2001

✓

Compliance, white collar crime, regulatory, data protection, insolvency and restructuring

Schönherr Rechtsanwälte GmbH Vienna 1950

15 2008

Data protection, project finance, private wealth

bpv LEGAL, bpv HÜGEL, bpv BRAUN PARTNERS, bpv GRIGORESCU & STEFANICA Vienna, Brussels, Prague, Bratislava, Bucharest 2007

8 2000

–

International Lawyers Network Westwood, USA 1988

✓

Data protection

AIPEX Munich 2010

✓

Immigration, data protection, regulatory compliance, administrative law

Eversheds Sutherland London, UK / Atlanta, USA 1988 (UK), 1924 (USA)

69 1987/1999

–

Capital markets

IR Global West Midlands, UK 2010

159 1998

✓

Data processing & privacy, compliance, pharma, insolvency and restructuring

bnt – –

12 2003

–

Projects, construction, wealth management, data protection

Ally Law London 1990

70 2014

✓

Pharmaceutical law, data protection and privacy, cyber security, white collar criminal, corporate compliance

Conference Bleue Brussels 1996

✓

nagy & tRóCsányi Ügyvédi iRoda 15

✓

top LoCaL exeCutive addRess phone emaiL

iván sefer

Ernst & Young Law GmbH Stuttgart, Germany 2002

www.eylaw.hu

www.nt.hu

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

otheR

Life sCienCes

pubLiC pRoCuRement

inteLLeCtuaL pRopeRty

dispute ResoLution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

empLoyment

Competition

eneRgy

banking and finanCe

tax

ReaL estate

CommeRCiaL

no. of paRtneRs of hungaRian offiCe on may 3, 2021

no. of tRainees in hungaRy on may 3, 2021

no. of attoRneys With LiCense to pRaCtiCe in hungaRy on may 3, 2021

Rank

Company Website

LegaL speCiaLity aReas

Special Report | 27 name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

90 2010

1132 Budapest, Váci út 20. (1) 451-8100 law@hu.ey.com

péter berethalmi 600/66 1991

1126 Budapest, Ugocsa utca 4/B (1) 487-8700 budapest_office@nt.hu

kinga hetényi

sChönheRR hetényi

15 attoRneys at LaW www.schoenherr.eu/hungary/office/

✓

–

✓

1133 Budapest, Váci út 76. (1) 870-0700 office.hungary@ schoenherr.eu

bpv Jádi németh Ügyvédi iRoda www.bpv-jadi.com

JaLsovszky

www.jalsovszky.com

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

andrea Jádi németh

pál Jalsovszky 91 2005

sbgk Ügyvédi iRoda 15

✓

–

✓

–

✓

–

✓

sándoR szegedi szent-ivány komáRomi eveRsheds sutheRLand Ügyvédi iRoda

16 www.eversheds-sutherland.hu

1969

✓

bnt Ügyvédi iRoda www.bnt.eu

✓

–

✓

–

✓

–

✓

–

✓

1143 Budapest, Stefánia út 101–103. (1) 413-3400 info.hu@bnt.eu

eszter kamocsay-berta

www.kcgpartners.com

✓

–

✓

–

✓

–

knp LaW nagy-koppany & LenCs LaW offiCe www.knplaw.com 18

1051 Budapest, József nádor tér 5–6. (1) 267-3975 info@kapolyi.com éva Ratatics, Rainer tom

kCg paRtneRs Ügyvédi táRsuLás 18

1026 Budapest, Pasaréti út 59. (1) 394-3121 office@ eversheds-sutherland.hu

József kapolyi

www.kapolyi.com

1062 Budapest, Andrássy út 113. (1) 461-1000 mailbox@sbgk.hu

ágnes szent-ivány

kapoLyi LaW fiRm 17

1124 Budapest, Csörsz utca 41. (1) 889-2800 office@jalsovszky.com

katalin szamosi

www.sbgk.hu 16

1051 Budapest, Szent István tér 11. (1) 429-4000 budapest@bpv-jadi.com

✓

1054 Budapest, Széchenyi rakpart 8. (1) 301-3130 reception@kcgpartners.com

kornelia nagy-koppany László Lencs 28 2007

1011 Budapest, Hunyadi János út 20. (1) 302-9050 knplaw@knplaw.com

www.bbj.hu

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

otheR

Life sCienCes

pubLiC pRoCuRement

inteLLeCtuaL pRopeRty

dispute ResoLution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

empLoyment

Competition

eneRgy

banking and finanCe

tax

ReaL estate

CommeRCiaL

name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

Budapest Business Journal | June 4 – June 17, 2021

LegaL speCiaLity aReas no. of paRtneRs of hungaRian offiCe on may 3, 2021

Company Website

no. of tRainees in hungaRy on may 3, 2021

Special Report no. of attoRneys With LiCense to pRaCtiCe in hungaRy on may 3, 2021

Rank

28 | 3

top LoCaL exeCutive addRess phone emaiL

Lohn Ügyvédi iRoda www.lohn.hu 18

paRtos & nobLet in Co-opeRation With hogan 18 LoveLLs inteRnationaL LLp

✓

–

✓

World Link for Law Zurich 1989

✓

Capital markets, data protection, compliance

Hogan Lovells International LLP London, Washington Legacy Lovells: 1899 Legacy Hogan & Hartson: 1904

–

Compliance, data protection, IT, greenfield investments, corporate acquisition

Rödl & Partner GbR Wirtschaftsprüfer, Steuerberater, Rechtsanwälte Nuremberg 1977

109 1992

–

Bankruptcy, telecommunication, sports

Norton Rose Fulbright LLP London 1794

More than 50 1989

–

IBLC (International Business Law Consortium) Salzburg 1998

85 1997

1051 Budapest, József nádor tér 5–6. (1) 266-3522 office@bansszabo.hu

–

Insurance law, transportation law

ADVOC London 1990

94 1992

1056 Budapest, Váci utca 81. (1) 327-7560 postmaster@gmtlegal.hu

–

PONTES: The CEE lawyers – 2005

7 2005

1011 Budapest, Szilágyi Dezső tér 1. (1) 799-8330 admin@hunlaw.hu

–

RSM Legal Group London 2018

16 2006

1139 Budapest, Lomb utca 32. (1) 576 1234 info@rsmlegal.hu

–

Energy law, real estate transaction & investment advisory, VAT advisory and tax representation services, compliance, public law

CEE Attorneys Prague 2015

13 1992

✓

Aviation law, data protection, compliance, consumer protection

LUTHER Rechtsanwaltsgesellschaft mbH Cologne 1992

20 2014

–

Conybeare Solicitors, Gowling WLG, Berwin Leighton Paisner London 1997/2016/2001

✓

www.hoganlovells.com

sáRközy RödL & paRtneR Ügyvédi iRoda, RödL & paRtneR Ügyvédi táRsuLás

18 www.roedl.de

✓

–

balázs Lohn

Hotels&leisure, solar projects, industrial property, zoning, data protection, sports and arbitration

80 2008

László partos Jnr. 51 2006

✓

–

✓

–

bán, s. szabó, RausCh & paRtneRs Ügyvédi iRoda www.bansszabo.hu

✓

–

✓

–

✓

1051 Budapest, Vörösmarty tér 7–8. (1) 505-4480 office@hoganlovellls.co.hu

sándor sárközy stefan sieferer

bpss Ügyvédi iRoda www.bpss.hu

1053 Budapest, Károlyi utca 12. (1) 999-1233 info@lohn.hu

1062 Budapest, Andrássy út 121. (1) 814-9880 budapest@roedl.com

gergely stanka 1013 Budapest, Pauler utca 11. (1) 354-4300 office@bpss.hu

János Rausch

erika tomori

gáRdos mosonyi tomoRi 19 Ügyvédi iRoda

✓

–

✓

–

✓

–

www.gmtlegal.hu

pontes budapest Ügyvédi iRoda www.ponteslegal.eu 20

✓

–

✓

–

✓

–

✓

–

Csaba polgár

Rsm LegaL | szűCs & paRtneRs attoRneys-at-LaW

bálint szűcs

www.rsmlegal.hu

desseWffy & dávid vaLamint táRsaik Cee attoRneys Ügyvédi iRoda

21 www.ceeattorneys.com

fest és táRsa 21 Ügyvédi iRoda

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

www.festandpartner.hu

hp LegaL | haJdu & paRtneRs 21 | LaW fiRm www.hplegal.eu

✓

–

✓

–

✓

–

✓

–

✓

–

alice dessewffy 1125 Budapest, Lóránt út 1/B (1) 413-3340 budapest@ ceeattorneys.com

attila fest 1054 Budapest, Báthory utca 8. 1/6 (1) 791-7060 office@festandpartner.hu László hajdu 1/18/14 2008

1013 Budapest, Pauler utca 11. (1) 799-8230 office@hplegal.eu

act bán & kaRika Ügyvédi

22 táRsuLás www.actlegal-bk.com

foRgó, damJanoviC és

22 táRsai Ügyvédi iRoda www.fdlaw.hu

✓

–

✓

–

✓

–

✓

–

Data protection and GDPR, compliance

act legal Germany 2017

The Harmonie Group Minneapolis, USA 1993

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

otheR

Life sCienCes

pubLiC pRoCuRement

inteLLeCtuaL pRopeRty

dispute ResoLution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

empLoyment

Competition

eneRgy

banking and finanCe

tax

ReaL estate

CommeRCiaL

no. of paRtneRs of hungaRian offiCe on may 3, 2021

no. of tRainees in hungaRy on may 3, 2021

no. of attoRneys With LiCense to pRaCtiCe in hungaRy on may 3, 2021

Rank

Company Website

LegaL speCiaLity aReas

Special Report | 29 name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

top LoCaL exeCutive addRess phone emaiL

gergely bán márton karika 15 2010

1117 Budapest, Alíz utca 1. building A (1) 501-5360 budapest@actlegal-bk.com zoltán forgó gábor damjanovic

77 2000

✓

–

✓

English law banking and finance, international capital markets, regulatory

Allen & Overy LLP London 1930

Data protection

Ius Laboris Brussels 2001

–

EPLAW Brussels 2001

–

TELFA (Trans European Law Firms Alliance) Brussels 1990

26 2002

–

IR Global West Midlands, UK 2010

1,169 2004

–

Lawyers Cooperation Leusden, the Netherlands 2013

1123 Budapest, Alkotás utca 17–19. (1) 214-0080 office@fdlaw.hu miklós kádár

aLLen & oveRy kádáR

23 Ügyvédi iRoda www.allenovery.com

–

✓

–

✓

–

✓

42 1993

1075 Budapest, Madách Imre út 13–14. (1) 483-2200 marketing_budapest@ allenovery.com marianna Csabai

CLv paRtneRs

www.clvpartners.com

✓

–

✓

–

✓

–

✓

61 2003

Judit Lantos eszter szakács

danubia LegaL www.danubia.hu

✓

–

✓

–

✓

–

✓

1126 Budapest, Tartsay Vilmos utca 3. (1) 488-7008 info@clvpartners.com

1998

1051 Budapest, Bajcsy-Zsilinszky út 16. (1) 411-8875 office@danubialegal.hu

bihaRy, baLassa Ügyvédi iRoda

www.biharybalassa.hu

✓

–

✓

–

✓

–

✓

–

tibor bihary

mihaLiCs Ügyvédi iRoda

krisztián mihalics

www.mihalics.hu

✓

–

✓

–

✓

–

nyiRi Ügyvédi iRoda 5

kLaRt LegaL 26 Ügyvédi táRsuLás

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

www.klartlegal.hu

peteRka & paRtneRs iRoda

26 www.peterkapartners.com/ en/local/budapest/

saLLó Ügyvédi iRoda– paRtneR studio LegaLe de 26 Capoa

–

✓

–

✓

–

✓

–

✓

–

Data protection, family law, law of succession

✓

www.squarra.hu

notes: (1) Dentons (formely Salans) has been present in Hungary since 2006.

✓

–

✓

–

✓

–

✓

–

IBA (International Bar Association) A A

18 2013

2014

1011 Budapest, Corvin tér 10. (1) 796-3600 info@klartlegal.eu andrás Csehó

Data protection

9 2013

–

Studio Legale de Capoa e Associati Bologna, Italy 1986

8 2000

–

IT law and e-commerce, bankruptcy and insolvence law, debt management, construction law, gambling law

Warwick Legal International Network / Asean Legal Alliance Canterbury, UK / Singapore 2001/ A

✓

1126 Budapest, Kiss János altábornagy utca 11. (1) 397-7447 info@nyirilaw.hu Levente antal szabó

Peterka & Partners advokátní kancelář s.r.o. Prague 2000

www.decapoa.com/it/contact.php

sQuaRRa & paRtneRs 26 Ügyvédi iRoda

1013 Budapest, Krisztina tér 3. (30) 902-9876 info@mihalics.hu

Csaba nyiri

www.nyirilaw.hu 25

1121 Budapest, Zugligeti út 3. (1) 391-4491 office@biharybalassa.hu

1051 Budapest, Vörösmarty tér 4. (1) 235-1090 reception@ peterkapartners.hu krisztina salló 1055 Budapest, Honvéd utca 38. 4/7. (1) 331-0311 sallo.decapoa@gmail.com thomas a. squarra

51 / 10 1997

1016 Budapest, Avar utca 8. (1) 474-2080 info@squarra.hu

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Socialite On a recent unseasonably cold and rainy Sunday, my Hungarian partner and I took refuge in the Pre-Raphaelite exhibition at the Hungarian National Gallery. It was our first visit to an art gallery in more than a year. DAVID HOLZER

Despite the weather, plenty of other Budapest art-lovers had the same idea as us. We had to queue to get in. The exhibition consists of around 40 paintings and more than 50 graphic pieces from the Tate Britain collection, along with Dante Gabriel Rossetti’s “The Day Dream,” loaned by the Victoria and Albert Museum. It is the most comprehensive exhibition of PreRaphaelite art in Hungary ever. For my partner, who loves the PreRaphaelites and London’s museums, the exhibition was a treat. The artistic school got their name because they opposed the British Royal Academy’s promotion of Renaissance painter Raphael, then associated with profound conservatism. They were also in opposition to the triviality of the popular painting genre at the time. Instead, they were inspired by nature and serious subjects such as love and death treated realistically. Perhaps surprisingly, considering the perception of them as painters of sumptuous, idealized nature, they also painted contemporary social problems. The Pre-Raphaelite Brotherhood, as it was originally known, was rooted in the various romantic movements that grew up in the early part of the 19th century, partly in reaction to the ferocious pace of change triggered by the Industrial Revolution. Their concern

Photo by Gabriella Kiss

Warming up With the Pre-Raphaelites at the Hungarian National Gallery

with painting nature also reflected how the environment and social fabric of the British countryside was being destroyed by factories and mass migration to work in city factories. From around 1860 onwards, driven by the fervor of leaders Dante Gabriel Rossetti, William Holman Hunt, and John Everett Millais, the Pre-Raphaelites became increasingly influential.

The Ethos

Rossetti formulated four principles that summed up the ethos of the movement: to have genuine ideas to express; to study nature attentively so as to know how to express it; to sympathize with what is direct and serious in previous art; and, above all, to produce thoroughly good pictures and statues. As well as being painters and sculptors, several members of the movement were writers and poets. The exhibition at the National Gallery includes examples of their poetry, such as Rossetti’s “The Day Dream (For a Picture).” The poem is related to the artist’s painting “The Day Dream,” one of the most famous Pre-Raphaelite paintings. Painted in 1880, when the artists connected to the movement were doing more portraits, this depicts Rossetti’s muse Jane Morris who embodied the Pre-Raphaelite ideal of beauty. Morris, a highly skilled embroiderer and the wife of William Morris, was a somewhat unconventional and powerful woman. “The Day Dream” is one of my partner’s favorites, and it’s easy to see why. Mysterious and intriguing, it’s painted with a sensuality that suggests Rossetti’s

deep feelings for his muse. Morris is clutching a small honeysuckle which, for the Victorians, was a symbol of love. The painting shows Morris in full. Reading around, I discovered that it was unusual for Rossetti to depict his subjects full-length. I was delighted to find that Rossetti felt obliged to confess to Morris that he had copied another woman’s legs. While this undercuts the romance of the painting for me somewhat, it didn’t stop my partner from buying a fridge magnet of it. Although the name Pre-Raphaelite was used to describe a certain kind of British art for a few decades afterward, the core of the movement broke up in 1850 when Millais exhibited “Christ in the House of his Parents,” which caused outrage by showing the sacred family as ordinary. In 1853, Millais became a member of the Royal Academy, sworn enemy of the Pre-Raphaelites, and the group officially dissolved. In the late 1850s, Rossetti met William Morris and Edward BurneJones. Together they began to promote an even more rigorous form of PreRaphaelitism that venerated life before the industrial revolution.

Arts & Crafts

William Morris, whose work is well represented in the exhibition at the National Gallery, went on to create and lead the Arts & Crafts Movement, which was revolutionary in its time. This took the principles of the Pre-Raphaelites beyond fine art and into everyday life, producing furniture, wallpaper, textiles, and stained glass. The company he formed lasted until 1940.

By that time, the Pre-Raphaelites themselves had become rather unfashionable. Their radicalism had been well and truly surpassed by the various flavors of modern, avant-garde art. One of their few champions was the ever-contrary Surrealist Salvador Dali, who admired the paintings of women such as the subject of “The Day Dream” as “the gelatinous meat of the most guilty of sentimental dreams.” During the 1960s, when there was a revival of interest in celebrating nature and rejecting the supposed gains of modern, industrial society, the Pre-Raphaelites and the Arts and Crafts movement began to be taken seriously again. Since then, interest in these groups has risen steadily, particularly internationally.

Apart from the simple pleasure of walking around a splendid art gallery again, it seemed especially fitting on a cold, rainy day that we were able to bask in the glow from such richly colored, idealistic works of art. Apart from the simple pleasure of walking around a splendid art gallery again, it seemed especially fitting on a cold, rainy day that we were able to bask in the glow from such richly colored, idealistic works of art. The elegantly produced information boards that accompanied the work were particularly detailed and included a useful chronology that compared what was happening in Britain and Hungary at the time, in English and Hungarian. Happily for my partner, who loves a good souvenir or two, the selection of gifts to commemorate the exhibition was of a high standard, with various items coming from the Victoria & Albert.

“Desired Beauty. Pre-Raphaelite Masterpieces from the Tate Collection” runs until August 22. The museum suggests you allow 1.5-3 hours to wander around. Tickets cost HUF 3,600, concessions HUF 1,800. The Hungarian National Gallery is at Szent György tér 2, in the Buda Castle District, and is housed in part of the Royal Palace. This exhibition is in Building “C.”

www.bbj.hu

Budapest Business Journal | June 4 – June 17, 2021

Socialite | 31

Much of the attention on winemaking around Lake Balaton centers on the northern side of Central Europe’s largest lake with its cocktail of volcanic and other soils. Still, the southern side has a thriving wine culture all of its own, with distinctive, sun-kissed wines to match. ROBERT SMYTH

The soils switch to loess and clay on the southern side, with some pockets of limestone and sandstone (the Pannonian Sea once covered this area), yielding concentrated, ripe, round, and deliciously fruity wines, both white and red. Balatonboglár is the official name of a wine region that spans 3,200 hectares on the south of the lake. The immediate area on the edge of and around Balatonboglár town, vinously speaking, is the land of three brothers Légli: Ottó, Géza, and Attila. The former runs his eponymously named winery; the middle sibling is in charge of the Kislaki winery in the settlement of the same name, on the edge of Balatonboglár; the latter doesn’t make wine at all, but rather amphora, which winemakers across Hungary use. He also offers charming accommodation with the vessels delightfully scattered around the property. Ottó Légli (leglibirtok.hu) has long crafted round and fruity wines that expertly capture the essence of their sunny surroundings. His spontaneously fermented and barrelaged Riesling, from the Gesztenyés vineyard in Szőlősgyörök, is a standard-bearer for the region and Hungarian white wine in general. The most difficult challenge for him as a winemaker, it seems, is to craft something with bubbles. “I grew up as a sparkling wine drinker but making it presents so many challenges. My aim has been to make

Photo by Or Szűcs.

Exploring Wine on the Southern Shore of the Lake

a Balaton pezsgő [a traditional method sparkling wine],” he tells the Budapest Business Journal. His Villa Boclar Pezsgő 2015 is a blend of Furmint (once dominant in the region pre-phylloxera) and Riesling and was aged for 36 months on fine lees. It is complex, delightfully mature, and superbly balanced. Ottó also makes an impressive orange wine called Arancia from the Olaszrizling grape.

Traditional Method

Géza Légli (kislaki.com) has also started making traditional method sparkling wine, from Chardonnay in his case, and the Brut 2019 is a good start. He has an excellent single-vineyard, spontaneously fermented Chardonnay from the Matács vineyard, and a big, floral, and fruity Olaszrizling from the Kötcse vineyard. The wine that sent my palate spinning was the Jánoshegy Riesling 2020, though. It is terrific value at HUF 2,700 from the winery. Both Léglis own large sections of vineyards on Jánoshegy, which they are converting to organic. That’s not all that Géza has been converting, however. He has beautifully restored old press houses on Jánoshegy that can be rented and offer spectacular views across the vineyards and out over the lake. The brothers also both make accomplished Pinot Noir. High up the hill in Balatonlelle, the Konyári Pincészet has been wowing wine lovers over the last 20 years. We always knew the winery would be in excellent hands following the death of founder János Konyári in 2017, as he had been making the wine in tandem with his skilled son Dani for years. Dani has inherited his father’s expert use of oak, which subtly adds layers on to the wonderful base material. Dani Konyári has often stated that Bordeaux varieties make the best red

wines in the region, and true to his word, he’s decided to replace a chunk of his Kékfrankos vines, although he is keeping some for rosé. János also oversaw winemaking at the larger Ikon winery, where his younger daughter, Bori Konyári, is now the chief winemaker. She works in tandem with her husband, Emil Kvák, who deals with the vineyards. Ikon is known for its outstanding value single varietal bottlings, with the Rajnai rizling (Riesling) particularly esteemed.

“I grew up as a sparkling wine drinker, but making it presents so many challenges. My aim has been to make a Balaton pezsgő.” The couple have their own small winery, Késa Birtok, which was a revelation on my recent visit, with outstanding Riesling and Furmint offerings among the whites. Some of the rare Bordeaux grape Petit Verdot adds delicious spice to the Pegasus 2017, in which it accompanies Merlot, Cabernet Sauvignon, and Cabernet Franc. Ikon has also concentrated highend reds, such as its Cabernet Franc Evangelista 2017. This has a bit of a coconutty character from the American oak in which part of it is aged, the rest being aged in Hungarian oak. Villány has somewhat claimed the Cabernet Franc grape under its Villányi Franc moniker, but the fact is that it makes superb wines up and down the country, not least in the Balatonboglár region.

Standout Wine

In fact, I didn’t have a bad one during my stay in the region. It was the standout wine at the Pócz Winery, for example. It benefits from a touch of oak to bring a little woody complexity, but not too much; Balatonboglár’s great gift is its full, ripe fruitiness, which can be hidden behind overbearing oak. The Garamvári Winery, a large operation based in Balatonlelle, is efficiently run by Péter Baranyai. He has brought winemaking experience from stints in Marlborough in New Zealand and Napa Valley in California. He, too, excels with Cabernet Franc, in this case from the Sinai vineyard. It also interesting to sample the fragrant, floral, and muscat-like Irsai Olivér here and then contrast it with the more restrained yet similar Cserszegi fűszeres, which has more of a refreshing burst on the finish. The grapes for the top-notch traditional method sparkling wines are grown in the Balatonboglár region and then vinified at Garamvári’s sparkling wine cellar in Budafok. Miklós Németh, who makes wine for his family winery Kékajtó Borászat és Szőlőbirtok on Kőröshegy. The winery is named for the blue door of the cellar situated close to the bridge that passes over the valley. It has been an organic producer from the outset. “It rains less here than in the rest of Boglár,” he told the BBJ. That means a lower risk of fungal diseases like downy mildew, with treatments from naturally occurring chemicals like copper and sulfur and the likes of orange oil, perfectly adequate. His Olaszrizling 2018 had a pleasant, nutty quality. At the opposite western end of the region, in Kéthely, the Kristinus winey has been transformed in recent years and has transitioned to become a biodynamic producer, with top results.

, T R A T S H S E R F

S N O I T U L O S T S E B , T E E L NEW F

ng i s a e L al n o i t a Oper g nt n e i c m n e a g n na a m Fleet fi & ns o i t u l o Fleet s tal n e r m r e t t r Sho budgethu

budgethu

budgetflotta.hu/en budgetflotta@budget.hu +36 1 700 4864 Fuel consumption: 1,6-1,4 l/100 km, CO2 emissions: 41-38 g/km, current consumption: 18,0-15,7 kWh/100 km.

An old companion for the long run