Budapest Business Journal 2611 by Business Publishing Services Kft.

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BUSINESS JOURNAL BUDAPEST

VOL. 26. NUMBER 11

JUNE 1 – JUNE 14, 2018

SPECIAL REPORT Legal Market

NEWS

Investors Will Have to Wait for Economic Stimulus

The growth rate of the Hungarian economy may fluctuate in the future, the finance minister has said, as the Hungarian government is now focusing on cutting the deficit significantly and going on with debt reduction.  3

BUSINESS

Retail Projects Moving Ahead Futureal has started construction of the 53,000 sqm Etele Plaza next to the Kelenföld railway station. The shopping and entertainment center is scheduled to open in 2020. 6 SOCIALITE

Searching for a gem in Budapest Curious about the growth in city breaks in Budapest, David Holzer sets off in search of the Hungarian Museum of Trade and Tourism. He never finds it, but does discover much else.  38

Seeking to Comply

REP

ORT

Investors should not fear facing situations under Hungarian law that result in “extreme or weird solutions”, says the VP of the Hungarian Bar Association.  16

Budapest Business Journal Congratulates to on celebrating 10 Years in Hungary Bigger & Better

L EC I A

2 | 1 News BBJ

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Budapest Business Journal | June 1 – June 14, 2018

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Bridget Daley, Kester Eddy,

Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Rob Smyth, Zsófia Végh, Ágnes Vinkovits. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

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We bring you a mixed, yet rich package this issue, but perhaps the thought that struck me most deeply as we were putting the magazine together was the relentless nature of evolution. I don’t mean that in the Darwinian sense, although the principal of survival of the fittest is certainly apt here. The matter, as it so often does in business, comes down to evolution or extinction. The problem comes in knowing whether you are looking at a passing fad, or the advance wave of a step change. But then that’s why CEOs get paid the big bucks. Talking to several experts for the preparation of our Banking and Finance Special Report back in March, the point was made several times that while the tools that enable bankers to go about their business may have changed beyond all recognition in the last 30 years or so, the principle idea of what a bank is and does has remained unchanged for a much longer period. FinTech, though, might well change that. It seems to me that law, another venerable trade shrouded in tradition (I know far too many attorneys to risk mixing the words “lawyer” and “world’s oldest profession” in the same sentence), faces similar upheaval. The way it works has been revolutionized (it is hard to imagine a lawyer without a Blackberry now, but that is a relatively new adaption), but what will the development of LegalTech mean? We seem to have been discussing AI and digitalization in law for years already. One of our interviewees for this issue said he thought talk of its use today is overblown.

But he also said it is clearly coming. Others have talked of a time frame of no more than five years. Since I’m married to a lawyer, and have a strong sense of self-preservation, I’ll have to step back from the debate about whether a world without attorneys would represent a utopian or dystopian future and let you decide for yourself, but in answer to whether I think it likely, the reply is a resounding no. AI is a tool, not an answer. Law, like banking, is fundamentally a people business. Technology can help professionals by sifting through ludicrous amounts of data incredibly quickly. Machine learning can enable software to come to some conclusions about what that data reveals. Those save both time and money (in particular in relation to “due diligence” and “data rooms”, two phrases, along with “red flag” that come up several times in this issue). But the results still require interpretation, and for that, for now, we need human actors, not least because we are more likely to trust the advice coming from a person than a machine. Perhaps when we are more “augmented” beings, that will no longer be the case. Change is undoubtedly on the horizon. It may not necessarily favor the early adopters, but it would seem likely to favor those with the most resources in terms of time and personnel. And as is true in all fields of business, it will certainly favor those with the ability to see an opportunity and seize it. Robin Marshall Editor-in-chief

Photo: MTI/Komka Péter

Photo: fortepan.hu/Valter Torjay

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.

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THEN & NOW

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As the summer kicks in, the people move out. In the color photo, Balázs Farkas (left) and Péter Hoffmann (right) play a squash match in a glass court, especially set up in the central square of Eger (139 km northeast of Budapest) on May 27. The black and white picture shows a group of people preparing to play tennis in Tata (68 km southwest of the capital) in 1913.

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Budapest Business Journal | June 1 – June 14, 2018

News

///macroscope

Investors Will Have to Wait for Economic Stimulus

The growth rate of the Hungarian economy may fluctuate in the future, as the Hungarian government is now focusing on cutting the deficit significantly and going on with debt reduction. That announcement might come as something of a surprise, as the finance minister had earlier said that improving competitiveness is the number one task for the newly elected government. ZSÓFIA CZIFRA

Investors will have to wait for a large-scale fiscal stimulus package, Minister of Finance Mihály Varga said in a recent interview with news agency Bloomberg. According to the recently re-appointed minister, the current economic turmoil in countries such as Argentina, Italy and Turkey has led the Hungarian government to shift focus, and it is now concentrating on cutting the budget deficit and reducing state debt. The latter is one of the largest in the eastern bloc of the European Union: at the end of 2017, it stood at

73.6% of GDP,

making Hungary the country with the second largest debt in Eastern Europe. Croatia tops the list with a debt ratio of 78% of GDP, while Estonia has the lowest debt ratio with 9%. The re-defined plans of the new government is a turnaround from what Varga said earlier about bolstering economic growth. “I believe that in these turbulent times we need more fiscal room,” Varga told the news agency. “That means cutting the deficit and strengthening budget reserves.”

IMF Bailout

The Bloomberg article recalls that Hungary needed an IMF-led bailout in 2008, after the global financial crisis hit the country badly. PM Viktor Orbán stabilized public finances after he swept to power in 2010 for his second term, and when he was

Mihály Varga Minister of Finance (left) receives his appointment document from President János Áder at the Sándor Palace on May 18. MTI Photo: Zsolt Szigetváry re-elected for a record fourth term in office this April, markets and investors had good reason to believe that his administration would “turbo charge the economy with fiscal stimulus”, the news agency wrote. Such expectations seemed to be wellgrounded as Orbán said he expects an annual economic growth of at least 4% through 2020, a bold projection that went against domestic and international analysts, as most of them said such a high growth rate is not sustainable in the long run. The Hungarian economy may expand by 4.1% next year, and the country is currently enjoying an upturn which allows the cabinet to cut back on the deficit significantly, while the budget remains expansionary, Varga said. As he stressed, his ministry will insist on cutting the payroll tax rate

17.5%

in 2019, raising child benefits and continuing the housing subsidy program. There is, therefore, limited room for further stimulus, while the upheaval on global markets and the start of the monetary tightening in the United States also reduces the room for maneuver for the Hungarian government. The tightening cycle in the States has already hit emerging assets, including Hungary’s, Bloomberg notes. The forint fell to a two-year low against the euro on May 28 as political turmoil in Italy dented riskier assets across the continent. Hungary’s ten-year bonds are on track this month for their worst performance since 2012. The Hungarian government’s goal now, therefore, is to reduce risks. “This means significantly cutting the deficit and continuing with debt reduction,” the news agency cited Varga as saying. “That may also mean that our economic growth rate may fluctuate,” the finance minister concluded.

EU Warning

Varga’s words on delaying the introduction of measures to stimulate the economy came only a few days after the European Union warned the country about necessary structural adjustments.

On May 23, the EU said that Hungary needed a structural adjustment of 1% of GDP this year and 0.75% next year to correct a “significant deviation from an acceptable medium-term fiscal path. In reaction to that, Varga told government-friendly Magyar Idők that the Hungarian government thinks such worries are not grounded. Although the excess deficit procedure against Hungary, which had been on-going since the country’s EU accession in 2004, ended in 2013, and the European Union strictly monitors Hungary’s fiscal situation, there is no need to worry that the deficit exceeds or even emerges close to the 3% of GDP prescribed by the EU, the minister insisted. As he stressed then, there will not be any corrections in the budget; in order to maintain sustainable growth, the government continues to secure investment sources and scrutinizes the possibility of further tax reductions. Another factor to take into consideration when projecting future economic growth is the inflow of available European Union funds. On May 29, the European Commission officially proposed to ADVERTISEMENT

modernize its Cohesion Policy, which is the EU’s main investment policy. The proposal confirms earlier speculation about the EU cutting back significantly on available cohesion funds for Hungary and other countries in the region. Commissioner for Regional policy Corina Creţu admitted that the EC had adopted new priorities in drafting the modernized policy, and it wants to end the practice of distributing cohesion money on the basis of GDP per capita, shifting toward criteria including youth unemployment, education, the environment, migration and innovation. The draft policy paper proves right those saying that the EU would redirects fund from – among others – Czech Republic, Estonia, Hungary, Lithuania, Malta, and Poland, towards southern states such as Italy, Spain, and Greece. The draft needs to be approved by the European Parliament and the European Council; if both institutions give the green light, cohesion funds available to Hungary in the 2021-27 EU budget period will be cut

24%

from what had been made available in the current budgetary period. Based on 2018 prices, the currently available amount is EUR 23.6 billion, which would be reduced to EUR 17.9 bln.

Numbers to watch in the coming weeks The first estimates of April’s retail trade will be released by the Central Statistical Office (KSH) on June 5. On the same day, the second reading of first quarter GDP growth will be published. The day after that, KSH issues the first release of the April performance of the Hungarian industry, to be followed by the consumer price index for May on June 8.

4 | 1 News

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Budapest Business Journal | June 1 – June 14, 2018

15% Fewer Jobseekers in April There were 257,900 registered jobseekers in Hungary at the end of April, down 15.4% from the same month a year earlier, origo. hu reported. The National Employment Office (NFSZ) said that 27.9% of the total, or around 73,900 people, had been seeking work for more than one year. The ratio was down by 10.2 percentage points from a year earlier. About 9.6% of registered jobseekers, or 24,700 people, were unemployed school-leavers. Some 140,100 jobseekers, or 45.5% of the total, were eligible for some kind of unemployment or social support during the month. The rate of unemployed was lowest in Győr-MosonSopron county (in northwest Hungary).

9% of Employed Hungarians Work Part-time Almost 9% of employed Hungarians work part-time, some way under the European Union average of just over 14%, data compiled by Eurostat shows. The ratio of temporary employment contracts stands at almost 10% in Czech Republic, 26% in Poland and over 9% in Slovakia. Among employed Hungarians between the ages of 15 and 24, almost 18% have temporary contracts.

More Hungarians Work Abroad, Eurostat says Some 5.2% of active Hungarians, a total of 339,000 people, were working in another EU state in 2017, according to the block’s statistical office. Data released by Eurostat shows that the emigration of Hungarians has accelerated in the last ten years, though far more leave from some neighboring states. Eurostat’s survey compiled information about EU citizens of working age (20-64) residing in another member state. The European average was 3.8% in 2017, a sharp increase compared to 2.5% ten years

Legal Briefing Administrative Courts Support Democracy, Minister Says It is important to clarify the role of judges because if judges re-interpret the law in a way that is contrary to that intended by the legislator, it leads to judicial governance, which is profoundly anti-democratic, newly reappointed Minister of Justice László Trócsányi said an interview with Magyar Idők, magyaridok.hu reported. He added that judges are capable of influencing political struggles in the course of the administration of political cases. Trócsányi rejected criticisms of the violation of judicial independence. “Today we have an opportunity to set the goal of creating an independent Supreme Administrative Court – which was

ago. The least mobile are Germans, with only 1% of citizens of working age residing in another member state. The rate of Czech nationals stood at 1.8% in 2017, but the figure was 7.8% for Poles and 6% for Slovaks, while in the case of Romanians, this rate is very high at 19.7%. Romania also leads in terms of the growth rate of those working abroad, compared to ten years ago. The increase here was 12.3%, while for Hungarians, the growth has been much slower, starting at 1.5% in 2007, rising to 2.4% in 2012, and 5.2% in 2017. Eurostat notes that the free movement of workers is a fundamental principle of the Treaty on the Functioning of the European Union. EU citizens are entitled to look for a job in another EU country, work there without a work permit, live there and enjoy equal treatment with nationals in access to employment, working conditions and all other social and tax advantages. The outflow of skilled Hungarians to other EU member states in recent years is seen as one of the causes of growing labor shortages at home, gaps that have been filled not only by workers from other EU states, but increasingly by non-EU citizens.

Russo-Hungarian Trade Flow up by 11% Jan-Feb It is good news for Hungarian enterprises that, following a 30% increase last year, Russian-Hungarian bilateral trade flow increased again by more than 11% during the first two months of this year, reaching almost EUR 1 billion. The news was announced by Minister of Foreign Affairs and Trade Péter Szijjártó in a telephone statement on Friday after the St. Petersburg International Economic Forum, government’s news portal kormany. hu reported. “This also indicates that growth has begun following the significant reduction in trade caused by the European Union sanctions and the measures Russia has introduced in response, and more Hungarian enterprises are now realizing export opportunities,” Szijjártó stated.

abolished by the communist party state in 1949 – with which we can repay a historical debt.” Regarding the Strasbourg European Court of Human Rights, Trócsányi said “the court plays an important role in protecting human rights; it is a fact, however, that the member states often criticize the judgements of the Strasbourg court as in some instances it interferes in issues which concern the very essence of member state sovereignty.” The independence of judges and their high quality work and impartiality requires that judges receive further training in a centrally organized form, he added. GVH Could not Prove Paper Products Cartel, Drops Case The Hungarian Competition Authority GVH yesterday said it

The removal of the aluminum façade of wikimapia.org, the department store the Corvin Department Store on Blaha originally opened in 1926, having Lujza tér in the center of Budapest has been founded by the Hamburgfinally started and the original façade based company of M. J. Emden of the building is beginning to show, Söhne. The first escalator in the nepszava.hu reported. The structureí country was installed here in 1931. According to welovebudapest.com, will be reconstructed as part of a HUF 2 billion project to renew the the aluminum shell was installed over square, scheduled to be completed the classical building in 1967 as a by the end of 2019. According to “temporary” measure. Photo: MTI/Zsolt Szigetváry

News///in brief

Blaha Lujza tér Renewal Launched

Architectural highlights, hidden for years behind the Corvin department store’s aluminum shell, are seeing see the light of day again.

“The increase in exports is currently being driven by the pharmaceutical industry and cereal products,” he added.

more than 4%. GDP grew by 4.4% last year thanks to growth in market-based services, magyaridok.hu said.

Further Tax Cuts Expected in 2019

Széna tér to be Renewed by December 2020

Hungary’s new government will continue to reduce the payroll tax and increase tax preferences for families with two children, Gergely Gulyás, Minister of the Prime Minister’s Office, said on May 25, magyaridok.hu reported. The payroll tax will be reduced by a further two percentage points in 2019, and the tax preference for families with two children will be raised to HUF 40,000 a month, with further possible payroll tax cuts related to real wage growth. The purpose of the budget is to keep the deficit below 2% and growth at

Mayor of Budapest István Tarlós had previously announced that Széna tér in District II of Budapest would be renewed by the end of 2019, but the completion deadline has now slipped to December 2020, napi.hu reported. The reconstruction will start at the beginning of next year. The bus terminal opposite the Mammut shopping mall will be relocated but its new home has not yet been decided. The cost of the reconstruction is estimated to be HUF 2.5 billion. The Mayor’s Office did not provide an explanation for the delay.

terminated a procedure launched against eight companies suspected of colluding to set the prices of household paper products, ado.hu reported. The procedure, launched in spring 2015, affected Auchan Magyarország, DM-Drogerie Markt, Metro Kereskedelmi, Rossmann Magyarország, Essity Hungary, Spar Magyarország, Tesco-Global Áruházak and VajdaPapír. GVH said the evidence did not prove that the companies colluded to fix prices or shared other commercially sensitive information and therefore it decided to terminate the procedure. Gov’t to List Names of “Soros” Judges Opposition party Democratic Coalition (DK) claims the ruling party Fidesz is making a list of

the names of court employees and judges who have participated at sensitivity training related to migration, which was organized by the Hungarian Helsinki Committee, hvg.hu reported. DK’s MP said that the government wants to make a list of judges who are not loyal to the government. Fidesz responded to the comment by saying that Hungarian people want to live in a migrant-free country and therefore have the right to know how Soros is trying to manipulate the Hungarian courts to get more migrants into Europe. This is a threat to national security and to the Hungarian justice system, Fidesz said.

For more on Hungary’s legal market, see our Special Report, pages 15-37

1 News | 5

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Budapest Business Journal | June 1 – June 14, 2018

Hungary Ready to Jump on Global Blockchain Bandwagon Europe is starting to take blockchain-based solutions seriously, and Hungarian players seem to be ready to play a key role in the game. The largest international blockchain summit in the CEE region, Blockchaineum 2.0 gathered major stakeholders in Budapest to discuss the hottest issues on the global agenda. BBJ STAFF

“Many regulatory rules have been laid down recently on the European level, and it is in Hungary’s best interest to make use of them in order to become a regional center. It won’t happen, though, because of regulation but rather on purely market basis,” highlighted Tamás Czeglédi, who founded the event with the aim to put the country on the European blockchain map. The foundation of the Blockchain Competence Center in Budapest earlier this year was another sign of the local business community’s readiness to jump on the blockchain bandwagon ahead of regional competitors.

Tamás Czeglédi, founder of Blockchaineum. “Whereas all the European Union had been focusing on until around one year ago was regulation, the past few months saw a shift towards a more practical approach,” said Péter Benedek, CEO of BCC. By now, concrete projects have emerged and hundreds of millions of euros have been allocated to fund industrial use cases that could be deployed in business processes in various member states. Policy level dedication has further manifested itself in the establishment of a European blockchain platform aimed to provide a harmonized environment for related transactions across the European Union. “The newly established [Hungarian] Ministry for Innovation and Technology and an enhanced national digital wellbeing strategy can help local

blockchain players embrace innovative solutions and improve their fundraising potential,” added Benedek. An investor-friendly business environment is also crucial as the number of blockchain use cases beyond cryptocurrencies is already high.

Smart Contracts

“We get random corporate enquiries from different corners of the world saying they want a blockchain-related project, but only a few have a specific idea in mind,” noted Ádám Tarcsi, blockchain ambassador of EIT Digital. Smart contracts are among the first pilot areas. “Automated implementation and full traceability belong to the pros here, but such contracts will need to be coded, not drafted, and there are simply not enough IT experts yet with the right skills,” he added. Blockchain is further set to gain popularity in the field of record keeping such as title records or for securities in crowdfunding. “Or take supply chain management, where parties of often opposing interest can keep track of certain phases of the delivery process on the basis of various levels of access rights – all that thanks to blockchain technology, which allows for no deletion or modification, hence it can perfectly evidence the occurrence of an event,” noted Tarcsi. Peer-to-peer lending is considered another blockchain target area. Ray Youssef, CEO of Paxful gave the example of Nigeria, Africa’s biggest economy, where high inflation and foreign currency restrictions push people towards finding shelter in cryptocurrencies. “It is a global financial passport and a universal money translator that is the marketplace for global liquidity,” Youssef said. However, cryptocurrencies remain difficult to spend as most investors use it just to make huge short-term gains. A Hungarian project seeks to address that problem by setting up a special lending platform. “The idea is to link crypto with the existing financial scheme, so we intend to use it as a collateral to ensure shortterm liquidity,” explained Csaba Csabai, CEO of Inlock.io. By engaging a domestic FinTech bank, liquidity will be provided for those holding crypto currencies against a collateral. This way crypto assets will not need to be sold during the lending period, which would normally be subject to heavy taxes. “Volatility, scalability, tradability – they are all big problems for crypto now, and those market players who can offer a solution for these issues are bound to be winners,” Csabai predicts.

2nd district

90 sqm – 3 rooms + hall, Káplár street

84 sqm – 3 rooms, lUpény street

100 sqm – 3 rooms, GyerGyó street

This very bright, street and garden facing, top floor apartment benefits of separate rooms and balcony and it is situated within a building in good condition with elevator.

This completely renovated, sunny, street and garden facing, well divided apartment has separate rooms and balcony. It is situated within a condominium with nice, well kept garden.

In a Bauhaus style building, this completely renovated, quiet, garden facing apartment benefits of a living room with open kitchen, 2 separate bedrooms and balcony.

59.900.000 hUF

68.500.000 hUF

88.500.000 hUF

36.1.336.1706

2nd district

+36.1.336.1706

2nd district

+36.1.336.1706

2nd district

150 sqm – 4 rooms, széher street

1370 sqm – lot, nyéK

300 sqm – 6 rooms, tároGató street

In a very nice villa house, this spacious apartment in good condition has separate rooms, 2 bathrooms, terrace, air conditioning system and parking space in the courtyard.

This lot has 10% coverage possibility, electricity, gas and water on it. At the moment there is a detached house that needs renovation on it. It is located in a quiet and green street.

This two storey Bauhaus style detached house built on 1078 sqm of lot, has a big terrace, garage and separate entrance to the ground floor. It is located in a quiet and green area.

92.900.000 hUF

149.000.000 hUF

+36.70.376.4138

3rd district

+36.70.376.4138

3rd district

198.000.000 hUF

+36.70.376.4138

3rd district

49 sqm – 2 rooms, miKlós sqUare

66 sqm – 3 rooms, raKtár street

73 sqm – 3 rooms, sUlyoK street

This sunny, well divided, street facing apartment, that needs renovation, benefits of separate rooms and private gas heating. It is situated within a nice, well maintained condominium.

Beautiful view over the Buda Hills, this high floor, sunny apartment has separate rooms, bright kitchen and balcony. It is situated within a building with elevator.

This spacious, very well divided, quiet, park facing apartment in good condition has wardrobe room and balcony. It is situated within a well maintained building.

29.900.000 hUF

31.400.000 hUF

39.900.000 hUF

36.1.430.1403

3rd district

+36.1.430.1403

3rd district

+36.70.669.5350

3rd district

130 sqm – 4 rooms, szentendrei street

112 sqm – 3 rooms, dósa street

744 sqm – 12 rooms + hall, szőlő street

This very well divided, spacious, duplex apartment has separate rooms, 2 bathrooms, terrace, private garden and garage. It is situated within a nice villa house.

In a very nice villa house, this well divided, garden facing apartment has private gas heating and parking space in the courtyard of the building. It is located in a beautiful, green side street.

This three storey detached house in good condition built on 1070 sqm of lot, has 2 kitchens, bathrooms, terrace, garage and parking space in the courtyard.

44.900.000 hUF

54.900.000 hUF

260.000.000 hUF

+36.70.669.5350

6th district

+36.70.669.5350

6th district

+36.1.430.1403

7th district

52 sqm – 2 rooms, szinyei merse street

83 sqm – 3 rooms, rózsa street

167 sqm – 3 rooms, Benczúr street

In a new built building with elevator, sauna, fitness room and reception, this very bright, top floor apartment benefits of a nice view over the roofs. Close to the Kodály Circuit.

In a completely renovated building with elevator, this very sunny, top floor, duplex apartment has separate rooms, air conditioning system and a very nice, spacious terrace.

This very spacious and bright, street facing apartment has 2 bathrooms and private gas heating. It is situated within a very well maintained period building with nice common garden.

150.000 eUr

64.500.000 hUF

450.000 eUr

+36.1.351.0446

13th district

+36.1.351.0446

13th district

+36.1.351.0446

13th district

38 sqm – 2 rooms, heGedűs GyUla street

53 sqm – 3 rooms, st. istván circUit

83 sqm – 4 rooms, Katona JózseF street

Next to the Víg Theatre, within a very nice, renovated building with elevator, this sunny apartment in good condition benefits of a sleeping gallery and private gas heating.

Close the Nyugati Square, within a nice period building with elevator, this very bright, quiet, high floor apartment has private gas heating.

24.900.000 hUF

34.900.000 hUF

In a Bauhaus style building with elevator, this bright, street and garden facing, high floor apartment in very good condition benefits of a balcony.

+36.70.414.7759

54.900.000 hUF

+36.70.414.7759

GrUppo t.F.m. KFt. 1068 BUdapest, Király U. 102. each agency independently owned and operated. • these offers are valid, till the apartments are sold. • these information do not constitute a contractual element.

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Business

Retail Projects Moving Ahead

Futureal has started construction of the 53,000 sqm Etele Plaza next to the Kelenföld railway station and adjacent to the 65,000 sqm Budapest One business park office project, which is being built by the same company. The shopping and entertainment center is scheduled to open in 2020. GARY J. MORRELL

This will be the first major shopping center completion in several years as projects have been put on hold due to concerns over economic issues and consequently consumer demand and spending power. The three current pipeline projects are all by experienced regional retail developers. Etele Plaza will be located at a multimodal transport intersection that includes a Metro 4 stop, Kelenföld railway station and the M1 and M7 motorway links, and is ten minutes from the center of Budapest. According to Futureal, 165,000 people use the Kelenföld bus, rail and metro terminals on a daily basis. The complex is projected to attract around 40,000 daily customers from the capital, the suburbs and

1,000 jobs

towns outside Budapest that are accessible from the transport hub. The immediate catchment area of the new center consists of a population of around 235,000. Futureal says it aims is to create a business, service and leisure hub on the 22-hectare site along the lines of its Corvin Promenade urban regeneration project, that has delivered a 44,000 sqm shopping center and 10,000 sqm of street retail in addition to office and residential space. Although Budapest was the first cities in the region where Western-style shopping centers were developed, it has one of the lowest such provisions in Europe. However, market conditions are now regarded as appropriate for the delivery of new malls that would freshen up the market. Shopping center stock in Budapest has not changed in several years; JLL puts total modern shopping center stock in Budapest at around 770,000 sqm.

Shopping center density for Budapest is put at 443 sqm per 1,000 inhabitants.

Return to Aquincum

In the other announced project, the German retail developer and center operator ECE says it is finally planning to move ahead with the 50,000 sqm Aquincum Center on the site of a former textile factory in the Óbuda area of Budapest. According to ECE, the complex will deliver more than 170 retail units and construction is scheduled to commence this year with a proposed completion date for 2021. ECE says the center has more than 640,000 inhabitants within a 30 minute driving distance.

GSE Tops out Auchan Logistics Facility The French constructor and project manager GSE Own, Develop and Manage Goodman and Auchan agreed the project has celebrated the topping out ceremony of the in September last year after an open for tenders; construction 87,000 sqm Auchan Retail Hungary logistics facility competition commenced in October and the project is expected to be completed this summer. The for Goodman at its Üllő Airport Logistics Center. The Auchan logistics facility is described as the largest logistics complex to-date in Hungary and adds

around

to the total two million plus sqm of logistics stock in the Budapest area. Auchan Retail Hungary is increasing its commercial capacity in Hungary; the center will be owned and operated by Goodman. GSE now operates in Hungary, Poland and Romania in the region. As many as

“There is little competition in the catchment area, and the purchasing power for the planned project is very good. Because of its excellent quality, we secured the location long ago. In recent years, the macroeconomic figures and retail sales in Hungary have developed very positively, leading us to develop the project now with new and modern planning,” commented Christoph Augustin, managing director of ECE Hungary. According to Balázs Bús, Mayor of District III, the retail project will create as many as

ten different nationalities worked on the project according to GSE. The complex will handle Auchan Retail Hungary’s food and non-food logistics for existing and planned new stores, while also supporting the company’s online commerce in Hungary. “This integrated and centralized logistics hub enables us to provide excellent customer service at all our current and future stores in Hungary,” said Dominique Ducoux, CEO of Auchan Retail Hungary, on the development.

Goodman Group business model provides what it describes as an integrated “own and develop and manage” customer service. “Goodman’s own develop and manage business model has proven to be successful again in delivering a high-quality logistics facility for our customers that will provide for their needs now and into the future,” commented István Kerekes, country manager of Goodman Hungary. Goodman’s current portfolio in Hungary is located in Gyál (22 km southeast of Budapest) and Üllő (28 km southeast), both in the greater Budapest area. The Üllő

and rehabilitate the brownfield site next to Szentendrei út. Although there is no metro link in the area, there is the Hév suburban railway. However, one seemingly significant complication has materialized. Kristóf Szatmáry, the government commissioner for trade policy, says the development will not happen in its present form since it lacks the necessary construction permit. The day after the ECE announcement, Szatmáry said that the developer only holds a permit from 2013, which was overridden by newer regulations in force since the beginning of 2015. The latter, commonly known as the “plaza stop”, aim to ensure sustainable development according to guidelines based on EU laws, he added. The commissioner said this means, the entire process of obtaining a permit needs to begin again. Szatmáry stressed that had the company already begun work based on the 2013 permit, then it would be able to claim the latter’s validity; however, because this did not happen and the investor had not requested a new permit after 2015, the newer regulations invalidate any exemption from “plaza stop”. ECE and its partners have invested more than EUR 600 million into Hungary since the company began its activities in 1996. It now operates five shopping centers with a total leasable area of 210,000 sqm including Árkád Budapest, currently the largest shopping center in the capital at 68,000 sqm. ECE also operates centers in Pécs, Győr, Debrecen and Szeged. The other significant Budapest pipeline shopping center project is the 37,000 sqm Mundo by Poland’s Echo Investment in Pest that has also been on-hold for several years and is now reportedly scheduled for delivery in 2020/2021.

Airport Logistics Center, located next to the M4 highway and M0 ring road, is on the pan-European transport corridor to Ukraine, Romania and Serbia. With the completion of the Auchan warehouse, Üllő Airport Logistics Center will be close to full, as the French supermarket has as an option on a

further

11,500 sqm.

Rossmann and Oriflame are the other major tenants at the complex. With regard to further development, Goodman currently has options on two further development plots in greater Budapest according to Kerekes. Built-tosuit is currently the preferred development option in the country. However, more established logistics park operators are considering the speculative option as vacancy is close to 4%. Labor and construction costs are a potential obstacle to further market growth despite the rising demand and falling vacancy rates.

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Blastoff Startup Competition a Highlight of Budapest Brain Bar Ten startups are due to be competing for the grand prize of a EUR 150,000 investment today (Friday, June 1), as part of an annual event that this year features tech giants such as PayPal’s Peter Thiel and Jacquelline Fuller of Google. BENCE GAÁL

The ten best startup projects drawn from an initial starting field of nearly 100 entrants are looking to impress both the crowd and the professional jury in a competition organized by Blastoff and OXO Labs. The competitors have come up with ideas such as applications that help diabetics or promote virtual learning, and drones that help with inventory-keeping problems at large companies, in a competition sponsored by EURid and Szerencsejáték Zrt. The Blastoff Startup Competition takes place during the second day of the Brain Bar Festival, which was due to start yesterday (May 31), after this issue of the Budapest Business Journal went to press, and ends on June 2. Each of the ten teams will have three minutes to pitch their ideas in an event moderated by the American-born,

Budapest-based actor, singer and trainer Andrew Hefler. The jury will include experts such as OXO Group founder and former Finance Minister Péter Oszkó, the owner of Impact Works András Batiz, and Balázs Polyák, who acts as leading analytical advisor to Google. The projects will be judged based on their novelty value, the motivation and aptitude of the teams, and the thoroughness as well as the viability of the business strategies. This year is the fourth time that Blastoff provides an opportunity for Central and Eastern European entrepreneurs to present their ideas, providing a path to the practical realization of the best projects. The

take part in an accelerator program. Other prizes are provided by EURid, Impact Works, Google, and L!ber8Tech.

Europe’s Largest Future Fest Brain Bar is Europe’s largest so-called future festival, attracting important personalities from the fields of science, technology, business, culture, and politics annually. This year, the festival will be held on the campus of Corvinus University. Special guests of the event include PayPal

Business

founder Peter Thiel and Jacquelline Fuller, vice president of Google. Brain Bar will also feature Sophia, a humanoid robot from Hanson Robotics that has become something of an international sensation. It has appeared on TV programs such as “The Tonight Show” with Jimmy Fallon, appeared on the cover of ELLE magazine in Brazil, been appointed the UN’s first non-human “innovation champion” and even made Saudi Arabia’s first robot citizen. Apart from the Blastoff competition, Brain Bar will also include an opportunity for the younger generation to present their ideas on a platform provided by uSchool. In this program, the young innovators will be guided by more than 80 mentors from the startup, corporate, investment, and civic fields. The winner of uSchool’s event will have then be able to take to the stage as an extra team in the Blastoff Startup competition.

grand prize of

EUR 150,000

is provided by Power Angels, and the winner is also given an opportunity to

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German Business Club Opens Debrecen Section the German economy, the development of business relations between the two countries is thus an elementary interest of both countries, he said. “Debrecen is very close to our heart, this is why we decided to lead this section. BASF has already a long standing relationship with Debrecen, as the company is running its educational programs in the city since 2015, engaging more than 3,000 kids with natural sciences each year,” the BASF boss said.

Under the leadership of Thomas Narbeshuber, managing director of BASF Hungária Kft. and leader of BASF South East Europe, the German Business Club (Deutsche Wirtschaftsclub) has opened its Debrecen section. From left to right: Arne Gobert, László Papp and Thomas Narbeshuber.

BBJ

DWC, which describes itself as the second largest independent bilateral trade association in Hungary, comprises more than 200 companies with a German/ Hungarian background and has been present in Hungary for 25 years. The club is aimed at active C-level leaders of the relevant companies, and offers a chance to discuss current topics of business, politics, society and culture to its regular members and guests. At the launch on May 16, Fidesz-KDNP Mayor László Papp presented the developments of Debrecen’s New Phoenix Plan to the German community. He described what he called an “economic-industrial revolution” taking place in Debrecen,

the country’s second city in terms of population at almost

202,000 people.

According to the Financial Times’ fDI magazine, Debrecen has the best foreign direct investment attracting strategy in its category in Europe. Of the foreign investors, the largest number are German companies. The development of the Southern Economic Zone, the development of Debrecen International Airport (there are currently five Lufthansa flights per week between Debrecen and Munich and from December 2018 Wizz Air will launch a Debrecen-Dortmund route) and the establishment of the Debrecen International School will all, hopefully attract more German investors.

Changing Name

Dr. Arne Gobert, chairman of the Deutsche Wirtschaftsclub, said that the organization’s major goal is to facilitate a dialogue between German and Hungarian business leaders and decision makers, and therefore he has proposed changing the name to the GermanHungarian Business Club at its January 2019 general meeting. Narbeshuber emphasized that the role of German companies is a key factor for Hungary, as these companies provide 30% of Hungary’s GDP and ensure a livelihood for more than

600,000 Hungarians.

At the same time, it should be remembered that the economic weight of Hungary and the V4 countries are equally significant for

“I trust that this solid partnership will serve as a good basis for our future work with the section here, because only joint thinking and continuous dialogue between the decision makers can provide the opportunity to further develop the industry-friendly economic and regulatory environment, which is the utmost interest of the companies and the society also.” “I trust that this solid partnership will serve as a good basis for our future work with the section here, because only joint thinking and continuous dialogue between the decision makers can provide the opportunity to further develop the industry-friendly economic and regulatory environment, which is the utmost interest of the companies and the society also,” Narbeshuber added.

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Company ///news Cargill to Build HUF 5 bln Feed Plant in Pápa Cargill Takarmány Zrt., the local unit of U.S.-owned agricultural giant Cargill has laid the cornerstone of a more than HUF 5 billion feed plant at its base in Pápa (165 km west of Budapest), magyarmezogazdasag.hu reported. The plant will make feed mainly for pigs and poultry as the consumption of meat is increasing in Hungary, said Cargill chairman-CEO Szabolcs Makai. The company also trades in grain and oil seeds. Cargill has been operating since 1995 in Hungary and has five feed plants and storage facilities.

Duna House Q1 Profit up by 140% First-quarter after-tax profit of Duna House increased 140% year-on-year to HUF 637 million, lifted by the completion and partial handover of the Reviczky Liget residential development in Budapest as well as significant real estate and loan market growth in Hungary and Poland, portfolio.hu reported. The growth was due to the fact that 70% of the homes in Reviczky Liget project were delivered. Revenue increased by 145% to HUF 2.6 billion.

Revenue from the francise segment grew by 11%. Duna House confirmed its earnings guidance for net profit of HUF 2.7 bln-2.9 bln for the full year. Its MyCity development projects are progressing according to schedule.

Főtaxi Acquires Budapest Taxi Főtaxi group has announced that it has acquired the taxi branch of its peer Budapest Taxi, increasing its fleet from 1,500 to 2,000 vehicles, forbes.hu reported. The transaction reinforces Főtaxi’s position as a market leader. The taxi company’s legal predecessor was established more than 100 years ago, becoming the first taxi company in Hungary. Budapest Taxi will continue to operate as an independent brand but will use the same systems as Főtaxi. clients will not notice any difference in operation. In the next few months the systems and processes of the two companies will be integrated. The transaction price was not disclosed. Főtaxi had after-tax profit of almost HUF 0.4 billion on revenue of HUF 2.2 bln last year, public records show. Budapest Taxi had revenue of more than HUF 500 million; its fleet was about one third of the size of Főtaxi’s.

Business | 9

Ericsson Inaugurates Budapest headquarters Swedish telecommunications company Ericsson inaugurated its EUR 56 million headquarters and R&D center in Budapest on May 29. Known as “Ericsson House”, the complex was inaugurated by Ericsson President-CEO Börje Ekholm and Hungarian Prime Minister Viktor Orbán. Hungarian developer Wing built the 24,000 sqm center and will lease it to Ericsson Hungary for seven years. More than 1,700 of the company’s 2,000 employees work at the site on the banks of the Danube, and more than 1,400 of these are R&D-focused, noted Hungarian news agency MTI. Ericsson also signed a memorandum of understanding with the Budapest University of Technology and Economics (BME) to

extend a collaboration aimed at longterm close cooperation in education, research, and innovation. “Ericsson has a strong commitment to Hungary. The continuous growth of the local R&D organization builds on excellent results achieved by Hungarian researchers and engineers, such as the development of Ericsson Expert Analytics, our realtime analytics solution,” Ekholm said. Orbán noted that Hungarians, as well as Swedes, had been pioneers in the telecommunications industry in Europe, citing Tivadar Puskás, the Hungarian inventor of the telephone exchange. He added that Ericsson was the first foreign investor in Hungary’s telecommunications industry, entering the market in 1911.

From Left: Swedish Ambassador to Hungary Niclas Trouvé; Hungarian Prime Minister Viktor Orbán; Börje Ekholm, President and CEO of Ericsson Group; Noah Steinberg, chairman and CEO of WING Zrt.; and Gábor Éry, CEO of Ericsson Hungary. MTI Photo: Szilárd Koszticsák.

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Hungarian Rosé Triumphs in U.S. Competition Sauska’s 2017 wine from Villány emerged as the judges’ favorite dry rosé in this year’s The Rosé Competition in Fort Lauderdale, Florida. BENCE GAÁL

The annual rosé competition was held this year under the auspices of the American Fine Wine Competition at RoboVault in Ft. Lauderdale, Florida. The event featured

173 entries,

with 18 Double Gold Medals, 25 Gold Medals, and 92 Silver Medals handed out to the best wines. In a fierce competition, four rosés from all around the world reached the final in the category of “Best in Show – Dry”. The Hungarian entry, coming from the hills of Villány in Southern Hungary, triumphed over rosés from California, France, and New York, in what the organizers described as a major upset. ADVERTISEMENT

First Big U.S. Win

Proprietor Andrea Sauska was clearly delighted by winning an international prize, while expressing gratitude towards the organizers. “We can’t believe we have won this competition! First ever American big wine award of our life. Thanks to you, dear American Fine Wine Competition, this competition is international, the judging fair and blind, and chances are equal,” the organizers quoted her as saying. The winning blend was made from a unique combination of grapes, including Blaufrankisch (26%), Merlot (24%), Pinot Noir (19%), Cabarnet Sauvignon (16%), Syrah (9%), and Cabarnet Franc (6%). Founder and wine director of The Rosé Competition, Bob Ecker, described Sauska as “An excellent new player on the rosé scene.” For more on Hungary’s wine scene, see our regular wine column on page 39.

Unique Footwear Store Opens in Budapest BENCE GAÁL

Footshop, a specialist regional shoe store offering exclusive sneakers, has opened its first outlet in Budapest. According to a press release sent to the Budapest Business Journal, Slovakian Entrepreneur Peter Hajducek decided to expand his firm into the Hungarian market, offering designs from Kanye West’s and Pharrel Williams’ collections Footshop says it aims to bring a new flavor of urban culture with its shop at Kristóf tér. The core idea of the company was developed by Hajducek in 2011, as a part of his university thesis. Starting with only a single employee and merely 50 pairs of shoes, the company now has stores in Prague and Bratislava as well as Budapest. The breakthrough moment for Footshop came in 2015, when it joined the Adidas Consortium, which opened the door to selling limited edition Adidas shoes, thus attracting collectors. In order to promote the artistic development of the sneaker

and streetwear subculture in Budapest, Footshop says it is planning to maintain a permanent exhibition area in the store. For the opening, there were two exhibitions, one featuring a collaboration of Footshop and Dent Kicks Custom, the other being Rok’s Kicks on Canvas selection. Apart from the exhibitions, the Downtown store will also feature rare collections, including Kanye West’s Yeezy pieces, Pharrel Williams’ Human Race collections, and shoes from Sean Witherspoon. Footshop is also planning to release its own line of shoes this year. Aside from designer collections, the shop is also planning to offer classic well-known brands in order to satisfy clientele looking for more conventional streetwear brands, like Converse, Kangaroos, or Vans. During the Budapest Central European Fashion Week 2018, the brand will present a collection designed in collaboration with LAFORMELA.

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Business | 11

Future driven

S TA R T U P S P O T L I G H T

innovation

sponsored by

Webshop Owners can now say Goodbye to all That Logistical Hassle Webshippy streamlines shipments for online orders so that webshop owners can focus on growth instead of logistics. BÁLINT SZŐNYI

As your online business grows, logisticsbound issues gradually start eating up ever more of your time and money. That old truth became all too clear to András Perényi and his partner, Zoltán Vorobcsuk when they launched their own webshop, just to hit the wall of shipment-induced problems sooner than expected. “We wanted to outsource all such tasks to spare our resources, but we realized that even companies specializing in fulfilment services weren’t doing a much better job than ourselves,” recalls Perényi who therefore decided to build a startup himself and thus meet an existing market demand. Key had always been to automate processes step by step. The word quickly spread, so it wasn’t long before the service had been validated by a number of businesses. By now, around

100

customers,

including fashion label Nanushka and local cosmetics giant Helia-D, make use of Webshippy’s solutions that range from storing, packing, invoicing, and label generating to shipping. “No matter how established your brand is, managing orders remains very complicated, so you either want to outsource it, or you need to develop your own internal system. But that, again, costs a lot,” says Perényi. Webshippy attracts interest because it secures lucrative volume-based deals with its delivery service partners and the entire discount can be enjoyed by its customers. This way even the smallest webshops can start shipping to the region or even overseas thanks to competitive delivery rates.

Migrating Costs

By outsourcing logistics, companies no longer need their own warehouse, which means logistics-bound costs migrate from fixed costs to the variables column. Spared resources can therefore be used to boost growth. The whole concept sounds easy as one-two-three. By one click of a button, your online store is synchronized with Webshippy, and from that moment on owners can track the route of their products in real-time. Storage is in Webshippy’s warehouse, and every further step from packing to hand-over for delivery takes place on the spot. As the CEO explains, it is all about automation, on which a whole development team works. “Take a product that needs to be delivered abroad. Our system automatically determines whether a customs declaration is needed, and if so, it is filled out and printed to be enclosed with the shipment.” Automation also means less staff are needed to handle packaging in the warehouse and it cuts down training time. Hardware-based innovation is also under way, mostly in the field of taking products into inventory. The purpose is to grow the customer base dynamically. And apparently there is no lack of interested parties, many of whom run a web operation only as a side business. Perényi gives one typical example of the phenomenon. “There is this Hungarian banker living in Switzerland who sells some odd stuff online, but we have never met in person, and he hasn’t even seen his own stock stored at our venue. He doesn’t need to, Webshippy handles it all for him.”

Startups and Multinationals Combine as Innovation Flourishes Despite high expectations for startup companies to uproot how we think about the ICT industry, it appears that the culture has integrated into the market while innovation is becoming a crucial factor that every layer of a company must implement. CHRISTIAN KESZTHELYI

Being one of the cornerstones of all strategies created by Hungarian ICT giant T-Systems Hungary, the culture of innovation has to be integrated not only into the planning, but also into the everyday life of the management, and indeed colleagues at all levels, T-Systems tells the Budapest Business Journal. “Multinational companies working in a highly-affected industry like information technology learned well that offering state-of-the-art technology can only be genuine if they not only develop, own and sell new technology, but they also literally live by it,” Klementina Krégl, head of innovation at T-Systems Hungary, says. Just a few years ago when the startup culture was first growing, the era was often regarded as disruptive, with expectations that startups would shake the world of the global companies. However, over time it has become clear that the future does not solely belong to such companies alone; they often need to be allied with big companies and bind the constructive force and the global network together. “Take a huge, slow ship, an often-used image of a large global company, and think of it as an aircraft carrier, housing many pursuit planes that can take off in an instant, covering large distances and discovering all the new possibilities. Technologies brought in-house can boost the original startups as well as strengthen the mother ship that secures and nurtures the whole joint effort,” T-Systems writes in a statement sent to the BBJ. According to the company, what appears to be “science fiction” today can easily become reality tomorrow, and in the blink of the eye it can make the technology of yesterday obsolete. “This requires that we know the current pains and hidden fears of our customers and provide solutions right now. In order to be able to deliver the answers today, we have to be one – or even more – step ahead when developing, researching and piloting solutions and services,” says Krégl.

What’s Cooking?

András Perényi (left) and Zoltán Vorobcsuk.

On the lines of this logic, T-Systems recently launched its innovation lab called Kitchen Budapest (or KiBu), which incorporates functions including research and development (design, prototyping, testing), education (next generation programs) and collaboration of different startups.

Artificial intelligence, for example, is not sci-fi anymore; slowly but steadily it is becoming reality, and T-Systems says it sees great potential in it. The same applies for solutions based on virtual reality and Big Data, and networks like 5G and Narrowbrand-Internet of Things (NB-IoT). “The NB-IoT network is a great example of how large companies can work together with innovation centers and with the startup scene. NB-IoT is sufficient for the low bandwidth requirement of many IoT uses in industrial, public and consumer domains; its unique advantages are low cost, low energy and deep indoor penetration,” the statement by T-Systems Hungary says.

The company is close to launching a partner program based on Magyar Telekom’s existing NB-IoT network covering Budapest. With KiBu and the partner program, T-Systems intends to invite its partners — including external partners — to test the new network, which means they will also be able to test and develop their own technologies. “You would never have thought that machine vision and deep learning enables us to halve the time needed to assemble machines and tools,” Krégl says. “Another digitalization direction based on big data is the Real Time Location System (RTLS) that is able to collect and analyze real-time information and that can utilize data without a human interface. Digital technology saves us time and resources, but it can also save lives: one of the mentoring projects of the Kitchen Budapest team last year was a program that, by using drones and mobile applications, significantly enhances the precision of life-saving missions during disasters,” she adds.

12 | 2

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WHO’S NEWS

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

in the past. The Hungarian national has moved from Dublin, Ireland, where for several years he worked at marketleading hotels such as the Westin Dublin and the iconic The Shelbourne Dublin, A Renaissance Hotel. Kis-Király has also gained experience at the 2 Michelin-starred restaurant the Belmond Le Manoir aux Quat’Saisons by Raymond Blanc. The press release says he has also excelled in various areas of team management, such as recruitment, training and development, and building up and mentoring teams for pre-opening restaurants.

Fornetti COO Picked to Head Franchise Association New Directors at RitzCarlton, Budapest The Ritz-Carlton, Budapest has welcomed two new colleagues in leading positions: Meda Vasiliu as director of sales and marketing, and Ernő Kis-Király as director of food and beverages, according to a press release sent to the Budapest Business Journal. Vasiliu will lead all sales and marketing-related functions and will be responsible for further promoting the Budapest-based luxury hotel to both local guests and international travelers. The Romanian-born sales and marketing professional brings with her two decades of experience in the hospitality sector. She started her career working at travel agencies, but most recently she held the position of director

of sales and marketing at the prestigious JW Marriott Bucharest Grand Hotel. Besides her passion for sales and marketing, Vasiliu is an enthusiastic mentor and a certified Sales and Service Foundation trainer at Marriott International. She has played an instrumental role in supporting charity initiatives and kids with special needs, through organizations such as the Rotary Club, United Way and SOS Children’s Villages. Kis-Király will be responsible for strengthening the hotel’s food and beverages services along with leading the related teams, perfecting performance and operations, and further providing memorable dining experiences. The hospitality professional brings vast experience in conference and banqueting, in-room dining and private dining, and has led multiple high-end restaurants

Gyula Vidács, chief operating officer and managing director of bakery company Fornetti, has been picked to head the Hungarian Franchise Association, Fornetti announced. Vidács said he aims to strengthen the role of the association among its international peers, as well as representing the interests of its members, according to a report by business news site napi.hu. “I am delighted that we can take on a more active role in the Hungarian Franchise Association, where we can share our experiences in network development and foreign expansion, thus helping the members of the association,” Vidács was cited as saying. Fornetti, established in 1997, is one of Central and Eastern Europe’s biggest makers and sellers of frozen bakery products. The company employs more than 850 people at its two bakeries in Hungary and almost 500 more abroad.

Fornetti has been a member of the Zurichbased Aryzta group since 2015. The Hungarian Franchise Association was established in May 1991, according to the organization’s website, which adds that the Hungarian franchise community consists of approximately 250 companies. The number of franchisees is approximately 20,000 in Hungary, employing some 100,000 people in the sector including suppliers. The association notes that 70% of local franchise systems are based on Hungarian ideas and owned by Hungarian companies, while the remaining 30% are international licenses coordinated by either the subsidiary of an international company or Hungarian firms owned by Hungarian master licensees. Some 20% of all franchise companies in Hungary are members of the Hungarian Franchise Association. The association is a member of the European Franchise Federation and the World Franchise Council.

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Business | 13

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AmCham and HIPA go Digital ‘MythBusting’ AmCham Hungary first vice president Péter Csucska opened a conference on digitalization in Budapest on May 3 by asking everyone in the audience to think about their first kiss. NATHAN JOHNSON

“At the time, you don’t know how to do it,” Csucska said, “but it’s something that everyone is talking about. I think Panel discussion featuring, from left: Péter Sere (KPMG); Mihály Szabó (ABB); Zoltán Czibók (DXC this is similar to what we face in terms of Technology); Dóra Petrányi (CMS Hungary); and Róbert Keszte, (Continental Automotive). innovation and new technologies. In all the excitement and confusion, how can we tell a buzzword from the real thing, Sere from KPMG welcomed four panelists or a snake-oil salesman from a genuine boost productivity worldwide (by up to discussion, after which participants could to the stage: Zoltán Czibók (DXC merchant?” 200%), but also use up to 30% less energy. attend one of five 90-minute breakout Technology), Róbert Keszte (Continental In an effort to generate more “Even the shift to renewable sources sessions, which were held simultaneously. Automotive), Dóra Petrányi (CMS) and excitement and clear up some of the of energy will require a great deal more Mihály Szabó (ABB). confusion surrounding new technologies, The ‘Day After Tomorrow’ data in order to use them most efficiently,” The morning’s first keynote speaker With interactive input from audience AmCham Hungary and the Hungarian Alexeeva added. was Bernd Gill, head of digital service members it was quickly established Investment Promotion Agency partnered The concluding keynote speaker innovation at DXC Technology, Central that technology means different things to organize “Digital Mythbusting: was Jens Brüning, head of the Deep North Europe. Addressing the question to different people, and that a precise Buzzwords and the Reality”, a half-day Machine Learning Competence definition of “digitalization” is quite event that took place at Boscolo Budapest, “How do you get your business ready for Center at Continental Automotive, who the day after tomorrow?”, Gill stressed the difficult to pin down. The discussion and drawing around 150 participants. stressed the urgent need to develop importance for companies in understanding autonomous driving technology to radically audience feedback also revealed multiple Sponsoring the event were digital how a new product will work on the outlooks on Hungary’s current position technology company ABB, law firm CMS decrease the number of road crash fatalities market prior to its full development and in the technological playing field and its Hungary, Continental Automotive, DXC worldwide, which currently stands at 1.3 Technology and consultancy firm KPMG. introduction. He also urged startups not to million people each year — or, 3,287 per day. possible roles in the future. be afraid of failure, “so long as you learn Asked to assess the current state of “tech The other principle aim of the “Sensing is essential for automated from your failures and make the changes readiness” in their workplace on a scale of conference was to help clarify Hungary’s driving technology,” Brüning explained. necessary to overcome them”. one-to-ten, audience member responses position in the context of the “digital “And we hope to be able to introduce In what was to be something of a mantra ‘Stage-5’ — that is, full automation — by came to an average of 5.3. transformation” and to help lay the repeated throughout the day, Gill’s simple “This is a classic example of people groundwork for strategies that could 2025. But safety absolutely comes first. strategic advice for new tech companies is believing that the glass is either half-full help to shift the Hungarian economy Every pilot technology we develop is to “think big, start small and move fast.” or half-empty,” Petrányi commented. “But to a new dimension. HIPA, for its part, put through a minimum of two million Up next was Zoya Alexeeva, solutions I would also stress that there is no industry aims to draw company’s attention to kilometers of road testing prior to its portfolio manager at Digital ABB. Arguing that hasn’t already started down the road the new incentive scheme supporting introduction on the market.” that innovation is simply part of being to digitalization.” R&D projects and the so-called human, Alexeeva detailed several of Asked to conclude by identifying the most technology intensive investments, Hungary’s Role In the projected benefits of technological important needs for Hungarian companies, which focuses on innovation, R&D The ‘Digital Revolution’ innovation and advance. the panelists suggested, among others: activities and the level of technology, In order to discuss a variety of Citing modularity, robotization and understanding problems and identifying as HIPA vice president Tünde Kis perspectives on Hungary’s current AI, and digital retro-fitting among key solutions, assessing the best ways to handle explained in her opening remarks. and future position as a technology innovation trends for the future, she new ideas, and — no less importantly — The conference featured three keynote innovator, discussion moderator Péter claimed that digital operations will not only listening to the next generation. speakers and a five-person panel

Bernd Gill, DXC Technology Central North Europe.

DXC Technology breakout discussion.

Zoya Alexeeva, Digital ABB.

Jens Brüning, Continental Automotive.

14 | 2

Business

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Budapest Business Journal | June 1 – June 14, 2018

Gender-balanced PE Investing Targeting Region profitable companies with revenues of EUR 2 million-12 mln in traditional private equity sectors. Diversity criteria means that a company’s leadership (shareholders, board members or top management) has

A newly launched private equity fund is looking for gender diverse companies in the CEE to invest in; Hungary is also on its radar.

at least

25%

female representation. The fund evaluates every company on its own merits. The investment process is the same as in any other private equity transaction and on top of that, the team also evaluates diversity in decision making.

“When working for private equity funds, I rarely saw any investment in companies where women were in a leadership role: it didn’t raise the interest of the investors.”

ZSÓFIA VÉGH

Whether because of the general momentum surrounding women or the business case for tapping into a new, potentially profitable resource, so-called gender lens investing has been gaining traction in the Western world for some time. Now, it is arriving in this region as well. One tangible sign of that is Espira, a newly established private equity firm focused on growth capital investments in SMEs in Central Europe. The firm’s strategy is to invest solely in companies that are managed by a balanced team of men and women.

“It is not just a headline, there is substance in this recipe as these companies are proven to deliver better results and thus should generate higher returns for investors.” “When working for private equity funds, I rarely saw any investment in companies where women were in a leadership role: it didn’t raise the interest of the investors,” Emília Mamajová, co-founder of Espira Investments, told the Budapest Business Journal. “But in the United States, an increasing number of venture funds have been founded by women or started to focus on investing in enterprises with gender diverse management teams; this is where I got intrigued by the topic. And it

Female Financial Self-care While the concept of financial selfcare is rather widespread across Europe, in Hungary it is not even in the early stages of development. This probably has to do with the country’s past and its socialist regime, Mónika Kiss, independent capital market analyst told the BBJ. The first gender-type initiatives are starting to crop up just now, she added. On the one hand, the government’s 40+ program, which enables women to

“The fund is targeting returns typical in private equity but we also hope to have a social impact by empowering and inspiring women entrepreneurs and managers and promoting role models.”

Primary Focus

Emília Mamajová, co-founder of Espira Investments is not just a headline, there is substance in this recipe as these companies are proven to deliver better results and thus should generate higher returns for investors.”

Gender diversity makes business sense

Several international research studies, including one by McKinsey, show that gender diverse companies outperform their peers in many metrics: for example, the return on equity or the earnings before interest and tax (EBIT) margin. At companies with high diversity, the risk of a “negative event”, such as insolvency or bankruptcy, is also lower. Women in business tend to be less indebted, have

retire at an earlier age, encourages them to focus on savings and financial self-care. Pension may not be sufficient to cover their needs by the time they retire, which also prompts many to shift their attention to this problem. To help women better understand financial self-care and investments Kiss, together with Anyapara.hu, a blog aimed at mothers, is launching a new service. “Women only buy investments they understand, research shows. We want to teach

better payment discipline and prove to be more active in solving default situations. To make sure that the results of international research are also valid for Central Europe, the ESPIRA team did some research on local SMEs. Rather than profitability, they looked at revenue growth and risk profile, and the results showed that gender diverse companies performed better than companies with zero diversity in the management. The research also showed that there is a sizeable potential market in Czech Republic, Slovakia and likely in Hungary and other Central European countries. This convinced ESPIRA’s founders to go ahead with the gender lens investment strategy. ESPIRA Fund is targeting

them how to develop their financial skills in an easy-to-understand way and make good investment decisions.” So rather than offering products, or recommending pension schemes, they aim to improve the ability women use at with easy at home when deciding about the household budget. The first articles will appear on the blog in a few weeks’. Videos, external partners and meetings will also be available for women wishing to learn those skills.

ESPIRA’s primary focus is on companies with diverse teams of men and women, but not all of investments have to meet this criterion at the beginning. There is always a chance to add diversity when the company grows – ESPIRA won’t discriminate companies just because they don’t have diversity on day one, Mamajová said. In terms of sectors, the fund has a slight preference for consumer goods, services, education and healthcare as well as the manufacturing sector. It invests in companies with a proven business model and more mature companies than start-ups. The fund has not made any investment yet – the team of five is working on its first transaction. It plans to invest EUR 1 mln-3 mln per company. Since ESPIRA provides primarily growth capital, it is looking for companies with significant growth potential. ESPIRA held its first closing of

EUR 30 mln fund

with the European Investment Fund being its largest investor. Beyond that, the list of investors includes family offices and individuals. The strategy is to invest in up to ten companies in the horizon of next five years. “Our target market is Central Europe with a main focus on the Czech Republic and Slovakia where we have the strongest track record and network. Currently, we don’t do active deal sourcing in Hungary, but we are happy to hear about any opportunities that could be relevant for us,” Mamajová said. “Once we have a proof of concept from the first ESPIRA fund, we plan to target actively the whole Central Europe with the second fund,” she added.

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Budapest Business Journal | June 1 – June 14, 2018

Special Report Legal Market

Is Hungary’s legal market ready to embrace the changes AI and digitization will bring?

‘Compliance is the General Intention’



New Legislation on GDPR Will Help



Legal Market Talk

 20-21

AI set to Disrupt the Hungarian Legal Sector

 24-25

16 | 3

Special Report

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Budapest Business Journal | June 1 – June 14, 2018

‘Compliance is the General Intention’

rejected

out of 100 submitted claims because they do not satisfy the newly established requirements.” Another new law, also introduced in January, opens bar registration to in-house counsels. “This is mainly good because all legal practitioners can belong to the same organization – the bar association – for registration purposes, for disciplinary purposes, for educational purposes and so forth. The bar is very busy in preparing and improving its internal regulations,” Szecskay said.

The vice president of the Hungarian Bar Association (MÜK), Dr. András Szecskay, seeks to assure investors and businesses that Hungary’s legal system is well founded and that compliance with EU law remains the general intention in an exclusive interview with the Budapest Business Journal.

Straightforward

NATHAN JOHNSON

As a high-ranking member of national bar association, Szecskay is well positioned to comment on the current dynamics of law and the legal profession in Hungary as Prime Minister Viktor Orbán’s Fideszled government settles in for a record third consecutive term. “Compared to the U.S. or U.K. common law traditions, the evolution and development of Hungarian law is quite different,” Szecskay told the BBJ. “In general, Hungarian law is built on a continental legal foundation, deriving originally from Roman law tradition, and in that respect is very similar to the legal systems in Germany, Switzerland and Austria. In the 20th century, Hungarian lawmakers copied and borrowed some legal solutions from lawmakers in those countries. Beyond that, I think that the biggest difficulty of Hungarian law for foreigners is the language.” More recently, the greatest changes taking place in Hungary’s legal system are the result of having joined the European Union in 2004. To suggest, however, that

a Formula 1 race car. I was told recently that the courts have immediately

the Orbán-led government and the EU have not always seen eye to eye over the past eight years qualifies as serious understatement. Even without the oftensimmering tension between the parties involved, achieving compliance with EU legislation is no easy task. “While Hungary has some historical and traditional differences, foreign investors should not be afraid of facing situations under Hungarian law that would result in extreme or weird solutions,” Szecskay explained. “It is the intent of Hungary to comply as closely as possible with corresponding EU regulations. This may not be what the government and Prime Minister always communicate to the public for political considerations, but compliance is the general intention nonetheless.”

GDPR Burden

The need for compliance also holds true for the EU’s new General Data Protection Regulation (GDPR) legislation, which entered into effect on May 25.

Hungarian Bar Association (MÜK) commissioners and a disciplinary The association is a “public body and high commissioner. According to national organization of attorneys “Act XI of 1998 on Lawyers with an independent administrative and the Statutes of the apparatus and budget,” according to its website. The officers of the MÜK’s Hungarian Bar Association”, the MÜK presidency is tasked with 25-member presidency include a convening the plenary meeting, the president (currently Dr. László Réti), association’s supreme decisionvice presidents, a secretary general making body whenever necessary, and other secretaries, presidents of but no less than once a year. standing committees, disciplinary

“Every day you hear about GDPR. The legislation is a major burden on companies,” said Szecskay. “I’m sure it will take some time for the Data Protection Office [DPO] to deal with the new situation, but I’m also sure that they will be cautious enough not to impose the maximum fines on companies straight away. While enforcement will be more and more rigorous over time, the DPO will probably further distinguish between the different sizes of companies and their resources, degrees of reluctance to comply, as well as sufficient levels of diligence and effort to comply within a given time frame. But it’s a tough, very complex set of regulations. I’m not personally involved in this, but for those who are involved on a daily basis, including some of my partners, they are very busy.” As for homegrown legislation, recent changes to Hungary’s new Code of Civil Procedure, effective from January 1 of this year, are having an immediate, if mixed, impact. “The Code has changed dramatically and imposes new requirements for the average practitioner,” Szecskay explained. “I understand that there was a clear intention in the preparation of the new law to accelerate the procedure and make things more efficient. I don’t know exactly how efficient and how accelerated things will be, but for the everyday practitioner there are so many changes. I’m not speaking here about big law firms where you can find lots of people who are familiar with and involved with such complexities on a daily basis, but about average practitioners who are not familiar with such things – for example, those in more rural areas who are mostly practicing on their own. An average driver cannot drive

In terms of what to expect legislationwise during the government’s third term, Szecskay feels “pretty comfortable” with Hungary’s Minister of Justice, László Trócsányi, who has called for the completion of efforts to set up a Supreme Public Administration Court – a body that its critics believe will lack impartiality. “The Minister of Justice is straightforward, very knowledgeable, fully familiar with EU legislation and regulations, and a highly respected person, and I’m pleased that he chose to accept a second term,” Szecskay told the BBJ. “However, as we’ve often seen in the past, there have been initiatives [in Parliament] to amend existing legislation that are improvised. The Ministry of Justice is not the problem. What causes problems are politics and self-interest.” Regarding the setup of the Public Administration Court, Szecskay believes it “makes sense” in terms of concentrating similar types of cases. “There should be, in theory, a professional team of judges who are deeply knowledgeable and experienced in the relevant field,” Szecskay explained. “The real concern is the selection of the judges. If people don’t feel comfortable with the selection of the judges, it’s because the court might, emotionally or otherwise, align itself closer to the government, as opposed to being completely independent.” Regarding Hungary’s current investment climate, Szecskay sounds a positive note. “The Hungarian market is still very competitive. Regardless of the financial and economic results of the country, which change from year to year, Hungary is still a favored destination for investors, and I think the country can still very well attract foreign investment – the automotive and communications industries being two clear examples. There may be sectors which are less favored by the government – retail, banking and the like – but in general it’s still an attractive environment and that keeps most of the international firms here,” Szecskay concluded.

BIO BOX: As well as being vice president of the Hungarian Bar Association (MÜK), Dr. András Szecskay is a practicing attorney at law and the managing partner of Szecskay Attorneys at Law (est. 1992). The Budapest-based firm describes itself as providing “clientfocused and innovative solutions to a diverse multinational and local client base consisting of typically large and medium-sized businesses representing a full spectrum of industry, trade and services.”

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Budapest Business Journal | June 1 – June 14, 2018

PRESENTED CONTENT

Special Report | 17

30 Years of Adapting to Changing Markets The legal market in Hungary has seen countless changes since the arrival of the free markets. International law firms have come and gone. But throughout it all has remained Gabriella Ormai, who became part of what was then McKenna back in 1989. Now she is handing over control of what today is simply known as CMS to Erika Papp. ROBIN MARSHALL

Given how long Ormai has run the Budapest office, why the change-over now? Why not last year, or next? “That’s a good question. I think we just felt that this is the right time. It was always something we were planning,” says Ormai. “We have talked about it for a while,” Papp agrees. “I am continuing as co-head of the commercial team, and part of the Partner Group. We have already introduced the practice of involving the partner group in the decision making process in a lot of things, and Erika is continuing with this, so I am still in the picture. Erika will continue to head the Budapest banking and finance team as managing partner.” It is not as if Papp is a newcomer to the CMS family; she joined the firm, officially called CMS Hungary McKenna Nabarro Olswang LLP Hungary, back in 1996. The hand over was made official on May 1. “It is the end of the financial year in London and Budapest,” notes Papp. “Everything happens on this date in our world,” Ormai adds. Aside from the not insignificant job of running a highly successful legal firm (CMS is the largest legal practice in Hungary, based on number of lawyers, and on April 20 was named “Hungary Law Firm of the

choosing law can fairly be described as impatient. Five years of university study are followed by three years of practice to sit the bar exam. Add the international masters LL.M. degree and that can be another year of study.

Immediate Feedback

“They love their gadgets, they love new technologies, they need immediate feedback, they want a better work/life balance, flexible work hours and they love training to help them develop. But all in all I do not think they are so very different,” says Papp. One definite advantage of the newer generation is their affinity with technology. A CMS paralegal, for example, was part of a team that has just won a global legal hackathon in New York. New technologies and apps will be central to how law firms develop in the future, Papp says. In that regard, the backing from London is a huge advantage over

Gabriella Ormai, left, and her successor as managing partner Erika Papp, right.

“The changes have been huge. There were no international lines when we started; sending a fax to London was a nightmare. Now hardly anyone uses a fax.”

when we started; sending a fax to London was a nightmare. Now hardly anyone uses a fax.” But why did CMS stay, survive and thrive when so many others did not. Ormai believes in large part it is down to having the right people. “We try to have a good atmosphere. If people are going to work hard and you have a bad atmosphere it becomes very difficult. And we always made a point of selecting people who we thought would be a good fit.” The new managing partner thinks foresight has also played a major role. “Gabi built up the commercial team to compliment the transactional team. That was not luck; that was planning ahead.” She also pinpoints one other factor. “CMS offers the local offices some autonomy. That gives us more freedom to shape our business and adapt to local conditions, which in turn makes it easier to survive.” Ormai agrees that when the recession hit – the worst time she has experienced in the business – the fact that CMS was a full service firm was crucial to surviving. “In 2008 there was still a pipeline, but that had gone

“I was reminded that when I was being interviewed for joining the firm in 1989, my first question was ‘How long will McKenna stay in Hungary?’ The big international law firms only started to enter the market at that stage. I have no memory of asking that, but if I did, I am quite proud of my courage in doing so!” Ormai recalls with a laugh. “The changes have been huge. There were no international lines

We got through, reorganizing staff, reallocating work. And no one left. We even managed to keep our property team together, which proved to be a very good thing; it is very difficult to get good property lawyers now.” Securing the best talents today means working with millennials and their supposed “immediate gratification” mentality. Ormai points out that no one

Year” at the annual Chambers Europe awards), one of Papp’s first major tasks will be overseeing the

30th anniversary

celebrations. “We are already planning a year ahead for what is a big anniversary,” she says.

Another Time

In terms of the way law is practiced today in Hungary, 30 years – before email, or laptops, or tablets or smartphones – feels like it was a lifetime ago. It was also a time of some market movement in Budapest.

2009.

“It is not enough to give positive solutions to legal problems, you also have to explain, in the language of business, how it might affect their operations. If you are going to have any authority, you have to know how business works, have to know the jargon they use, how they think.” smaller, national firms when it comes to developing FinTech or LegalTech. Already the time taken to draw up a security agreement or undertake a due diligence is greatly reduced thanks to automation. But the structure of the Budapest office is also changing. “We have a new Chief Operating Officer who will be doing the business management stuff. We have a great business development team and HR professionals to look after staffing issues. We are transforming to be more like a business than a traditional law firm,” Papp says. Part of that involves creating agile teams that can keep pace in a rapidly changing market, such as responding to AutoTech, or offering packages especially tailored to startups that even go so far as helping them find investors. New business opportunities are opening up all the time, but client expectations are also changing. Nowadays they don’t want detailed explanations, but so-called “red flags” (potential problems) flagged and solutions offered. Ormai holds up her smartphone, showing its screen. “And nothing should be bigger than this.” Papp adds: “It is not enough to give positive solutions to legal problems, you also have to explain, in the language of business, how it might affect their operations. If you are going to have any authority, you have to know how business works, have to know the jargon they use, how they think.”

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Special Report

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Budapest Business Journal | June 1 – June 14, 2018

New Legislation on Personal Data Storage Will Help – But Only if you Know What to Do Whether it is a newsletter a business wants to send out to its customers or an industrial camera system that videos employees, the new General Data Protection Regulation brings a whole new dimension to companies’ personal data management procedures. The European regulation imposes a major challenge for all businesses. Lawyers’ assistance is needed now more than ever. ÁGNES VINKOVITS

This spring was a memorable one for businesses across the continent. Regardless of the sector a business is active in, it is very likely that it stores some personal data of its clients and/or employees. From now on, all have to comply with the European Union’s General Data Protection Regulation (GDPR) that came into effect on

May

and overwrites Hungary’s national regulations, which had in any case been considered with near unanimity to be incoherent and inflexible by the local lawyer profession. As such, the new unified system is expected to increase Hungary’s competitiveness, but only if companies fully understand the new requirements. Hungary’s previous regulations mostly focused on subscription, meaning that clients (or any type of persons whose personal data was stored) had to actively accept the usage of their data. However, while this concept could work a decade ago, the world is undoubtedly different today. More and more new fields have appeared where getting the client’s subscription is not realistic for all purposes of data usage or where the withdrawal of the subscription would be problematic. In order to cut the Gordian knot, personal data management has been regulated by different sectorial laws. However, these often failed to cover all services of a given company. A telecommunication supplier, for example, which by now does not only

offer traditional telecommunication services but also sells telephones, operated under the Electronic Communications Act. Nonetheless, it only regulates electronic services.

A Clearer World

Given that such under-regulation often results in confusion all round, GDPR will bring a much clearer world as it creates a uniformed and flexible system of data management. However, it definitely also requires a new approach from companies. As a novelty for Hungarian businesses, the regulation introduces the concept of legitimate interest, which – contrary to the previous black-and-white situations of subscriptions given or not given – means that from now on businesses have to consider and decide themselves for what purpose they keep personal data, as different purposes have different regulations. Depending on the purpose, companies have to consider whether their legitimate interest or the rights of those whose data is kept come with a heavier weight in the given situation. For instance, if a company runs its own camera system in its warehouse, this activity has thus far been unregulated in the Hungarian legal system and so the supervising authority usually handled such cases as if the videos were made by professional property security suppliers. The problem is that while security companies are not allowed to keep videos longer than a couple of days, a company that does monthly stock-taking definitely needs the videos of the entire month and not only of a few days. In such cases from now on, the company’s legitimate interest can somewhat overwrite the employees’ rights. Also, while clients’ data up to now could only be kept for the purpose of providing a service but for sending out a newsletter the clients’ deliberate subscription was needed, the businesses’ legitimate interest might simplify the process and make the subscription unnecessary.

No matter the sector or the given issue, GDPR forces companies to have a deep understanding of the regulation and to make complex decision themselves. As such, helping the implementation of the new system imposes a challenge for the legal profession too. “GDPR has kept many of our lawyers busy over the recent months,” Péter Lakatos from Lakatos, Köves and Partners law firm tells the Budapest Business Journal. “This

“GDPR has kept many of our lawyers busy over the recent months. This is clearly a major field of legislation which, together with the local implementing legislation which is still awaited, is going to have an effect on the way many businesses (both our clients and us as a law firm) conduct their business.” is clearly a major field of legislation which, together with the local implementing legislation which is still awaited, is going to have an effect on the way many businesses (both our clients and us as a law firm) conduct their business.” Lakatos sees that this will be a long-term process with advice continuing to be needed.

Harmony Required

Although the need to harmonize the Hungarian legislation to the European has now become inevitable, it is also true that making the regulations more up-todate had been on the government’s agenda

even before the continent-wide regulation appeared. A new bill was tabled and open for social consultation last September. The proposal was widely criticized by lawyers; numerous professional suggestions for amendments appeared, and the document still has not been finalized. “We hope that most of those suggestions will be built into the new proposal,” András Posztl, country managing partner at Horáth and Partners DLA Piper tells the BBJ, noting that, due to legal hierarchy, the EU regulation came into force on May 25 anyway, despite its conflicts with the national regulation. Yet its implementation will give a lot of headache to the courts and also to the National Authority for Data Protection and Freedom of Information, the supervising authority which “lacks the satisfactory resources anyway” for monitoring the entire economy if it complies to GDPR. “As the law has not been harmonized with the EU regulation in time, it would be desirable and gratifying if the Hungarian law makers’ procrastination would be based on the wise foresight of ‘not kicking the door down on entering the house’ and so would create a more liberal, tolerant, realistic and differentiated national regulation,” Péter Kesseő-Balogh from Ecovis Global tells the BBJ. “This would facilitate the life of thousands of SMEs and so would also improve Hungary’s international competitiveness,” he points out. Kesseő-Balogh expects the strategic guidelines to be clarified by the end

and a bill to be created by the end of this year. “It will be a priority,” Erika Papp, new managing partner at CMS agrees, and expects major legislative progresses regarding GDPR as soon as by this summer. Meanwhile, there have been some soft statements about a grace period to follow May 25, particularly for SMEs, although nothing has been confirmed on paper.

NEW CIVIL PROCEDURE CODE DR.KOVÁCS ORSOLYA / PARTNER

- from the perspective of an attorney at law

The new Hungarian Civil Procedure Code came into effect on the 1st of January 2018. The new code aimed to encourage responsible litigation by parties, and active procedural conduct of litigation by the judiciary, to ensure concentrated processes. It introduced several new legal institutions such as the divided process structure, process caesura and substantive litigation which resulted in conceptual changes in the system and which caused concern to most legal representatives. Aside from professional debates, there were also several Facebook groups where the members of those groups predicted disaster, and some well-known attorneys declared they would not accept any engagement until it is seen whether the new code is able to establish an efficient procedural order. The concerns arose because the new code requires a high level of professionalism from legal representatives and their clients as it introduces strict deadlines and formalities, as well as obligatory fines (up to HUF 1,000,000) for legal representatives who fail to comply with the requirements of the new code or orders of the court. Those fears seemed to be somewhat justified with news reported in February and March this year about the high number of claims filed under the new code that have been rejected by the courts. The figures, however, later showed that the number of rejected claims has not been significant and that the causes of the rejections are rather formal. As discussion on the new code continues in conferences, it seems that because the courts are tending to follow a very formal interpretation of the new requirements, a diligent legal representative should be more than cautious. Since the major concept of the new code is concentrated litigation, the legislature introduced institutions which can promote the real domination of this principle. The biggest challeng from this principle for attorneys at law is time management. Concentrated litigation is served by the general principle that the court and the parties shall ensure that all facts and evidence are made available within a timeframe that allows a judgment to be delivered after one hearing. This requires legal representatives to file a fully-comprehensive presentation of statements of claim based on relevant facts, and a comprehensively reacting counter-statement, within a relatively short time (45 days), in addition to the exact definition of the facts to be evidenced. By introducing limited limit on the number of submissions parties can make, and new deadlines for submitting those submissions, the new code prevents flooding the courts with written documents and distracting the courts from astutely considering the merits of the claims. However attorneys at law dispute whether such deadlines are long enough (the maximum deadline is 45 days, with some exceptions) to submit the limited numbers of fully comprehensive, and therefore lengthy, submissions. This strict deadline system, together with the electronic communication system, anyway means high risks for the proceeding attorneys at law. Failures (failing to meet deadlines, failing at the first hearing, failing to dispute facts or legal arguments, failing to refer to facts or present evidence) could result in the court closing the so called first procedural entry section (the divided structure has been introduced by the new code) which would prevent the legal representative from reinstating such failed attempts (disregarding the few, strict exceptions). It means that the divided structure of the procedure where the parties must give their statements first (procedural entry section), and then secondly produce evidence for their statements (substantive section) requires more intensive preparation by the parties, and it also means that the parties must be able to answer all questions asked in the hearings; an answer by the legal representative requesting time to contact his/her client will not be an acceptable answer anymore. This could result in all legal representatives taking their clients to the hearings, which however cannot help if the subject of the litigation is about historical facts which a newly appointed MD has no information about. Another essential change relates to expert evidence. The previous practice excluded the facts presented by a private expert from the circle of evidence and treated them as the parties’ private presentation. In contrast, the new code provides that private expert evidence, with the guaranties of the appropriate process regulations, as primary evidence, with the reservation that a forensic expert must possess adequate qualifications, skill and entitlements, and that the expert must give comprehensive responses to questions and reflections not only for the commissioning party, but also the other side. The opposing party also has the right to commission a private expert, in this case any discrepancies between the experts must be resolved. Taking into evidence an expert brought on the judiciary’s commissioning can take place only secondarily, if there is no private expert involved, or if the presented expert report is ambiguous. In sum, it can be concluded that – because of the new strict and professional litigation mode as the basic model of civil procedural law, there is a much bigger chance of failing the procedural rules (and loosing the case). Claimants will be interested in filing their statement of claim only if all legal grounds have been crystallised, the facts are coherently collected, all evidence is available and the motions for evidence are prepared: the attitude to file a statement of claim already tomorrow is no longer a feasible attitude. On the other side, defendants are pushed to present all their arguments within 45 days (which can be extended by another 45 days upon request), as a short challenge with a formal objection is not enough anymore. Lengthy procedures seem to a thing of the past, which also means that the responsibility of legal representatives has grown. To avoid responsibility, lengthy preparatory works and submissions reflecting to all possible scenarios of the case at the very beginning of the procedures are to be calculated which would generate further costs and sometimes unnecessary works. The general expectation is that the demand for highly qualified professionals having a thorough understanding of the new system and a considerable routing in litigation planning and winner tactics where the old routines will not work will grow.

20 | 3

Special Report

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Budapest Business Journal | June 1 – June 14, 2018

Demand for Digital and Versatile Solutions to Drive Segmentation of Legal Market Hungary’s leading law firms seem to be happy enough. The economic upswing is keeping them busy with an increasing number of cases, while some legislative changes topped with the challenges of the workforce market and the digitalization ensures that the upcoming period will not be boring either. ÁGNES VINKOVITS

Dynamic growth in both the number and the volume of work has been reported by most of the country’s largest law firms the Budapest Business Journal interviewed, all of whom have at least 30 lawyers.

the so-called GDPR, which came into effect on May 25, has also created demand for legal work, as well as a growing number of investments in solar power station projects. Yet, there are some changes regarding the clientele. “As we see, the increased demand is often boosted not by the public but by the private sector,” András Posztl, country managing partner at Horváth and Partners DLA Piper tells the BBJ. Many of these new clients are among the country’s richest people, who wish to place their accumulated capital through acquisitions, he adds. At the same time, medium- and large-sized companies show increasing demand for legal services, while small businesses are somewhat boosted by the EU’s JEREMIE funds.

Another result of economy-related legal services taking a bigger slice of the cake is that it is a general trend that law firms have to be increasingly versatile. “I experience a growing need for lawyers to act not simply like a lawyer,

“A lot of exciting legislative processes are about to come,” CMS’s managing partner Erika Papp says. Her company, for example, is taking part in the creation of a new bankruptcy law. “Due to our international background, we can really be inspired by good examples abroad and could suggest conceptual changes in, for example, the insolvency regulation,” she says.

“Generally, businesses appreciate the stability that the continuation of the Fidesz-KDNP government presents.”

András Posztl

but also like a legal and economic consultant,” Zoltán Sárhegyi, the head of Győri és Sárhegyi Ügyvédi Társulás says. In ideal cases, clients do not come to lawyers for help to collect their debts, but they ask for professional advice at a “I experience a growing very early stage of their businesses to see how it can fit the given environment, he need for lawyers to explains. act not simply like But even in a booming economy, a law firm’s success does not come for free. a lawyer, but also like “Given the confidential nature of the legal a legal and economic services and how saturated the sector is, new markets of significant size can be consultant.” gained only through notable investments in HR, marketing, organization and logistics,” ECOVIS’ Kesseő-Balogh points out. Law firms report an increasing Péter Kesseő-Balogh amount of casework from foreign “If choosing between stability and investors too. According to Péter Lakatos, political pedigree, investors usually prefer stability,” Posztl says, referring to the head of Lakatos, Köves and Partners “Due to the European Union’s (LKT), the new investors coming into the Hungary’s recent parliamentary election general economic boom, which affects that resulted in a two-thirds majority for country have often been CEE regional Hungary too, and to the country’s stable the governing parties, giving Fideszcompanies from the likes of Poland, governance, and the predictable and low KDNP a four-year mandate for a record Czech Republic and Romania. tax environment, we do very well,” Péter third time in a row. Kesseő-Balogh, founding office manager of “Generally, businesses appreciate the ECOVIS tells the BBJ. stability that the continuation of the In this positive environment, the firm Fidesz-KDNP government presents,” could even conquer new markets and LKT’s Lakatos agrees. As the April election started new departments in personal resulted in no fundamental change, LKT tax services, mediation and confidential is seeing “business as usual” and does not New Investors property management. Kesseő-Balogh, anticipate major changes. “In addition to – and to some extent added, however, that he would welcome replacing – international investors from taxes on labor showing a decreasing the more traditional markets (e.g. Western tendency too. Europe and United States) we have seen With legal cases evidently attached notable growth in the number of clients to the country’s general economic from Asia, notably Japan, Korea and China trends, law firms experience an increase and also from markets such as Australia, first and foremost in property cases, Excitement Ahead South America and Africa,” Lakatos adds. green and brown field investments, Still, when taking a slightly longer-term manufacturing and FMCG. The European He also sees intra-regional M&A as a view, there may be more open questions. growing area. Union’s regulation on personal data,

ECOVIS’ Kesseő-Balogh also expects a less intense but nonetheless interesting period to come regarding legislative work. “Fundamental, systemic changes are not likely to come,” he says while also noting that a new administrative court is expected to be established. Kesseő-Balogh’s expectation are based on the words of Hungary’s newly reappointed Minister of Justice. László Trócsányi is an open admirer of the concept of administrative jurisdiction and has recently stated that he wants to see it introduced here, having previously been thwarted by the Constitutional Court, which argued such a change required a two-thirds

Péter Lakatos majority in Parliament. The government lacked the numbers in the last term, but has them now. “We can find arguments both pro and con and the final quality will depend on the details,” DLA Piper’s Posztl says, adding that lawyers’ community has a trust that no measures would be taken to derogate

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Special Report | 21

PRESENTED CONTENT

juridical independence. The two-digit wage increase Hungary sees nowadays evidently affects lawyers too. “When the city is full of hiring posters saying that a public bus driver can make HUF 400,000 a month, it is not an option not to keep up with the trend or not to appreciate our colleagues’ work enough,” says Posztl. He adds, however, that the extent of the increases is a more complex issue. While big offices with a global background can be more generous, smaller offices, who still constitute the major part of the Hungarian legal profession, often see wage rises as a challenge. It is a fact that slowly but certainly strengthens market segmentation. In any case, offering nice money is often not enough of a motivation

Zoltán Sárhegyi anymore, especially for younger professionals. To attract them, a very long-term potential career also has to be drawn up, topped with extra inducements such as flexible working hours and really useful training, an international work environment, trips abroad and interesting, complex cases.

Although these technologies raise competitiveness by speeding up the work and saving money for the firms on the longer-term, in the

“We can find arguments both pro and con [the new administrative court] and the final quality will depend on the details.” beginning they definitely represent an investment. As such, it is also likely to sooner or later lead to the segmentation of the market. Smaller offices often lack the necessary digital competencies, too. This counts as a rapidly growing disadvantage as even the new Codes of Procedure bring digital technologies into the front. Legal proceedings, for example, can be initiated only electronically since January 1 of this year. Official replies to proceedings are also given via email, meaning that if a lawyer does not have the daily habit to check their mailbox and so overlooks a letter that is officially considered to have been delivered, important and tight deadlines can be easily missed. A good understanding of legal aspects of digital business is inevitable anyway, in order to be able give good advice “given that almost all businesses now are to a greater or lesser extent dependent on their management of data – most obviously currently in the context of GDPR but also much more widely,” Lakatos points out. Digitalization, however, appears in the legal sector in other aspects too. “It is full of new challenges and exciting

Hungary might have a new government, and the cabinet might already be talking about its legislative priorities (like reviewing the constitution), but from a commercial perspective it seems unlikely at this stage that there will be much to surprise the business world, says Iván Sefer, head of the EY Law office in Budapest. ROBIN MARSHALL

“I don’t think anyone in business here was surprised by the election results, and everything we have heard feeds into the narrative so far. From a commercial perspective, I think it is business as usual,” says Sefer. Where change might come, Sefer believes it is more likely to be at the EU-level, with the implementation of community law into the local environment, such as General Data Protection Regulation, which it has been impossible to ignore for the past six months, or the ramifications of Electronic

“There has been a fundamental shift as to what clients want. Now it must be very short, very to the point, very easy to understand. What is the risk? And try and put a number on that.” Identification, Authentication and Trust Services and the Payment Services Directive 2, which will significantly affect the banking market. Sefer says he has great sympathy for the legislators who must harmonize national law with these legislative instruments. “These things are insanely complex at the EU level, and it is not always straightforward to localize and implement them. They come from different places and vastly differing economic and social environments. Lawmakers in Brussels don’t think like lawmakers in Budapest: why would they? Anything that comes out of Brussels is a compromise between 28 member states to start with, and that makes it very, very difficult to implement and adapt to local specifics and harmonize with other local laws and legislative priorities.”

Good Atmosphere

“A good office atmosphere is a must,” Papp says. in addition, Mothers’ Day, Fathers’ Day and several other family and team building events are organized at CMS, she says, in order to keep workforce happy and motivated. While attracting and retaining workforce definitely costs money, most offices do not seem to suffer under the extra costs as they could increase their prices by an average of about 5%. At the same time, more and more software is available to substitute the human workforce. Legal due diligence and litigation support are legal tasks that nowadays can be handled by AI technologies with outstanding efficiency. Also, some everyday things such as simple contracts can also be created by automated systems.

Bringing One Stop Solutions to the Hungarian Legal Market

partner says. “What is the risk? And try and put a number on that.” Expectations for what can be charged are also shifting. Clients, typically, want more for less, and some firms have responded by driving prices down. “What was formerly big ticket work is not necessarily a high paying mandate anymore.” Some of the changes are also being driven by technology and automation within the legal profession, although that has been somewhat overplayed, Sefer believes. “I don’t think it is as yet as developed as people say. But you don’t have to be a revolutionary to see it is coming. There is no doubt the future will belong to those who can successfully embrace its possibilities and implement them.” In that regard, Sefer and his colleagues are helped by the technical background and forward-thinking approach offered by one of the Big Four consultancy services. And in a world where clients increasingly expect lawyers to understand how business works, EY Law can offer its close cooperation with EY’s multiple service lines. Recently he found himself working with his accountant colleagues at EY to ensure the best legal solution to a problem also provided the best accountancy solution, resulting in a optimized “package” result for the client. “I would have never got involved in that if I was still at a multinational law firm. I believe I am working on exactly the same level of exciting, complex cases as I was back then, but I get to do so much more here.” He is quick to praise the quality of lawyers working in Budapest’s multinational or boutique law firms, but he also believes the one stop shop model EY can offer is ultimately better suited to thriving in a constantly shifting and evolving market.

Short, and to the Point

Erika Papp opportunities,” Papp says referring to some new fields like the Internet of Things (IoT), self-driving cars or FinTech, which still require further regulation and so legal assistance.

While that may create pressure for local lawmakers, client demands are doing much the same for local lawyers. “There has been a fundamental shift in what clients want,” Sefer says. Not so long ago, the call was for very complete memorandums, explaining the problems and possible solutions in great depth and detail. “Now it must be very short, very to the point, very easy to understand,” the

Iván Sefer

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INSIDE VIEW

Stock Markets and Cryptocurrencies Dr. György Boros-Gyömbér Lawyer

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SÁRHEGYI AND PARTNERS LAW FIRM

With current market capitalization of around USD 377 billion, Bitcoin and other cryptocurrencies cannot be ignored anymore. While institutional investors seem to have caught on to the new trends, regulatory bodies continue to struggle to adopt an appropriate regulatory framework. Although several measures have been taken already, a proper legislative solution is still missing. 1. Classic stock exchanges vs. crypto markets Traditional stock exchanges are characterized by strict regulation, the need for intermediaries and high transactional fees. These features are not self-serving; most are necessary (or thought to be necessary) for the reliability and security of these markets. In contrast, cryptocurrency markets are currently not subject to sector-specific rules and are much cheaper to trade on. These traits make crypto markets more desirable, but these are its main disadvantages as well; just think about the bankruptcy of Mt. Gox or the frauds concerning ICOs. To fight these risks, authorities in the European Union as well as the United States have adopted regulation in some form. 2. Regulation in the EU In the European Union, agencies of the EU and several member states have proposed some kind of crypto-related regulation already, mainly for financial instruments related to cryptocurrencies. In a statement issued last year, the European Securities and Markets Authority (ESMA) said that in the case of ICOs, the process by which the financial instruments are created or traded is likely to involve some Markets in Financial Instruments Directive (MiFID)-regulated activities. Thus, a company engaged in such activities needs to comply with organizational and transparency requirements as well as conduct of business rules laid down in MiFID. In the same vein, the U.K.’s Financial Conduct Authority stated that crypto futures,

CFDs and options can be subject to MiFID regulation and the authorization of FCA too. For CFDs, product intervention measures has been agreed upon by ESMA as well, stating that cryptocurrencies pose major risks for investors. Another drastic step has been taken by the European Parliament recently. Based on an upgrade to the Anti-money laundering Directive adopted by the EP, virtual currency exchange platforms and custodian wallet providers have to apply customer due diligence controls as well. This could mean that investors can say goodbye to the anonymity, which is one of the main advantages of crypto exchanges. 3. Regulation in the United States In America, both the federal government and individual states had already dealt with cryptocurrencies in some form. On the federal level, a uniform regulation has not yet been proposed. However, the Securities and Exchange Commission (SEC) has already made several statements regarding the matter. In one recent statement, the SEC laid down that a platform trading securities and operating as an exchange must register as a national securities exchange or operate under an exemption. In another statement, the SEC stressed that those who offer and sell securities in the United States are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology. In the absence of federal regulation, the individual states had been left to introduce regulation. One example is the controversial BitLicense introduced by New York State, which has received some criticism. Under this regulation, anyone engaging in crypto-related business activities, like buying and selling virtual currency or storing them, must obtain a BitLicense. Most states have not passed any specific regulation thus far, however. To help them, the Uniform Law Commission has proposed a model regulation named the Uniform Regulation of Virtual Currency Businesses Act, which can serve as a guideline for the future. 4. Summary By now it has become clear that some kind of regulation needs to be applied to crypto markets. Nevertheless, in the absence of a globally harmonized regulation, none of the regulatory responses can fully achieve their goals. Crypto exchanges are global and can operate almost anywhere in the world, which makes regulation especially difficult for national governments. That said, a slight movement toward a more regulated market can be observed.

How not to be a Misfit: Hungary’s National Law in the Light of EU Directives While harmonizing national laws with European Union directives is usually more of a continuous work than a one-off challenge, there are always some urgent things to do.

ÁGNES VINKOVITS

The European Commission releases its infringements packages monthly, showing which member states it is pursuing legal actions against for failing to comply with their legislative obligations under EU law. In its May publication, the Commission mentions Hungary three times, which is usually enough to hit a few Hungarian headlines about the country running the risk of infringement procedures and so ultimately to be fined. However, as András Posztl country manager at Horváth & DLA Piper points out to the Budapest Business Journal, even such reports “should be interpreted in a wider context”. He refers to the fact that while Hungary appears three times in the report, as many times as Germany does, Italy, for example, is mentioned in nine cases. In one of the cases in which Hungary is called to account, which is related to nuclear waste,

19 other

countries such as Germany and the United Kingdom are also mentioned. In another case about air quality, Hungary appears in an equally illustrious company of seven other countries. The third case the report mentions requests Hungary to end the discriminatory taxation of spirit drinks.

Little Details

www.sarhegyi.hu

The most spectacular case of not complying with EU directives in the recent past has definitely been the European law on personal data, the so-called GDPR, which came into force EU-wide on May 25 and where Hungary

has thus far failed to harmonize its national laws (for more about GDPR, read our article on page 19), creating some confusion in businesses in Hungary. Beneficial owner information is a case no less interesting. The EU directive on the prevention of the use of the financial system for money laundering

In one of the cases in which Hungary is called to account, which is related to nuclear waste, 19 other countries such as Germany and the United Kingdom are also mentioned. or financing terrorist came into force back in 2015 and obligates some service providers such as credit institutions, financial service providers, lawyers, and those performing audit, bookkeeping or tax consultancy activities not only to have record of the beneficial owner, as before, but also to immediately forward such data to a central register. The member states have to ensure that the central register where this information is stored is located in a state-controlled center, in full compliance with EU law. Hungary, along with many other member states, has so far failed to introduce this database. Lawyers – together with other service providers affected by the EU directive – are eager to know when the data forwarding obligation will come into force, how public the database will be, and which state authority will take care of it.

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Budapest Business Journal | June 1 – June 14, 2018

Amidst Hungary’s recent referral to the European Court of Justice for its levels of particulate matter surpassing legal thresholds, lawyers from the Clean Air Action Group (CAAG), the Environmental Management and Law Association (EMLA) and ClientEarth are calling on the Hungarian authorities to revise speed up efforts at ensuring cleaner air. BRIDGET DALEY

“According to Hungarian and EU law, Hungarians have the right to clean air and governments are obliged to comply with this law,” Agnieszka WarsoBuchanan, a ClientEarth lawyer, said in a press release sent to the Budapest Business Journal. ClientEarth is a British-registered charity, with branches around the world. The CAAG and EMLA are both Hungarian public benefit organizations which specialize in the legal protection of the environment and provide legal advice on environmental issues. “By far the biggest source of air pollution is residential burning,” András Lukács, president of the CAAG, told the BBJ via email. To solve this problem, the most important tasks are raising public awareness, strengthening the authorities so that they can control and sanction illegal burning, prohibition of the sale of lignite for households, prohibition of garden and agricultural waste burning, and financial support should be provided for those in need so that nobody would freeze in their home.” He further notes that “the second main source of air pollution is transport”, and emphasizes the necessary revision of the air quality plan, explaining that it has not been reviewed by the government

since

2016. Far From Unique

Hungary’s referral to the European Court of Justice over air pollution is far from a one-off case, however. The European Commission reports that, in addition to

Hungary, the United Kingdom, France, Germany, Italy and Romania will all be subject to court appearances concerning illegal environmental practices; the former three for continuously failing to stay within the legal limits of nitrogen dioxide in the air, while Italy, Romania and Hungary all violated legal caveats for levels of particulate matter (PM10). The Hungarian government rebutted the commission’s accusation, saying it has spent

more than HUF

160 billion

on a particulate matter reduction program launched in 2011, MTI reported. The government also cited Hungary’s weather and geographic location as an influencing factor of PM10 levels. Lukács commends the government’s reduction program, saying CAAG considers it to be quite good, but notes that its “implementation is extremely slow”. The ClientEarth-funded collaborative project seeks to invoke government environmental responsibility, while maintaining personal involvement in the content of the new air quality plan. “Firstly, CAAG would like to convince the government to review the most important air quality plans and to establish compliance with European law. If the authorities fail to do it, CAAG will be ready to appeal to the court and to use all legal and professional arguments. In order to reach effective measures against the pollution, CAAG will consider [going to] international fora as well,” Lukács explains. Human activity and inaction may have led to the need for such strict environmental regulation, but ClientEarth says: “Strong laws are the best tools we have to protect the environment.”

András Lukács, president of the CAAG

INSIDE VIEW

PropTech Already at the Doorstep of Real Estate Business János Tóth Partner

WOLF THEISS BUDAPEST

BlabDroids are tiny cute robots asking strange questions such as: “What would you do if there were no laws?” Terrible question for a lawyer, but interesting to hear the many different answers – and yes, some people would immediately create laws. The sci-fi author Isaac Asimov also created laws: of Robotics. Robots and other intelligent applications are hot topics in almost all industries at the moment. As a result, lawyers also see an increasing demand in advice in these new areas which are substantively reshaping conventional industries, in particular with regard to data protection and security, intellectual property, consumer protection and regulatory laws. And as the real estate sector faces disruptive businesses, “PropTech”, an abbreviation for Property technology, is the latest buzzword jolting the whole sector. PropTechs can refer to any application that offers new services for the real estate sector based on a business model that integrates information and communication technology. These services cover many areas, including planning and visualizing, construction, financing, transactions, leasing, usage, and property management. In our robust region, we are experiencing incredible growth in the PropTech sector already, which is transforming booming real estate markets. Current product offerings already include home matching tools, crowdfunding, shared economy, smart utilities, building information modeling (BIM), smart homes and even smart contracts. Many influential fora for the real estate sector have been debating extensively on the bright prospects for the PropTech segment, involving executives of real-estate services companies, developers and construction firms, as well as several high-tech startups. Somewhat less

discussion has been around the potential legal risks related to PropTech solutions, though, including data privacy and consumer protection regulations, as well as the allocation of legal responsibility. One of the major challenges for all market players will be to apply existing regulations to these innovative solutions and to allocate legal responsibilities as different people build software, implement it, and operate the systems. It is especially important to adhere to data protection and data security regulations to prevent both damage to a company’s reputation and significant fines under the new EU General Data Protection Regulation (GDPR). A legal assessment would reduce any risk that courts would prevent new business models. PropTechs owe their early success to the legal safeguarding of their business model as well as their innovativeness. It is vital for all stakeholders that these services stand on legally solid ground to prevent the operation and use from infringing upon the IP rights of others. Conversely, solution providers have an obvious incentive to protect their own services from infringement by third parties. Some questions already exist, however, that the current regulatory framework will be forced to address: Is a virtual tour sufficient to purchase a property and still guarantee that any warranty claims are recognized? Will renters in future be able to demand a virtual inspection of statements and receipts for utilities expenses? Will it be possible to sublet a parking space by the hour? How will utility regulations allow retail landlords to invoice the electricity which visitors consumed when charging their electric cars? How can BIM best be integrated into building contracts? Can visualization give full representation of potential sources of noise and vibration? Not all PropTech applications succeed, but those that do massively disrupt longestablished businesses such as the hotel and tourism sector or the real estate agents-sector. Some react with legal arguments, others try – where possible to integrate those new technologies into their own business models. Some other technologies are in the early stage of development. Blockchain technology, mainly known for cryptocurrencies, is currently being tested for use in the land registers in Sweden, Georgia and Ukraine. Blockchain is considered a secure technology that can ensure a secure process for real estate transactions and mortgage deeds in the future. It will be interesting to see how swiftly politics reacts and whether other countries will follow this path.

www.wolftheiss.com

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Environmental Law Groups Demand Action on Hungary’s Air Quality

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INSIDE VIEW

New measures to support the establishment and expansion of R&D centers Marcell Tatai-Szabó Financial Advisor State Aid Specialist

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Noerr & Partners Law Office

The Hungarian government introduced a new R&D cash incentive under its VIP cash grant system for large enterprises in 2017 in order to promote the establishment of R&D centers and the expansion of already existing facilities. The growing number of public announcements by the Ministry of Foreign Affairs and Trade indicates the success of the new scheme. The subsidized R&D projects originate from various sectors such as automotive, electronics and information technology services and aim at the development of new generation electric motors, deep machine learning for advanced driver assistance systems, cloud optimized data analysis, software development for smart metering, etc. Besides the cash incentive, companies running R&D projects can also enjoy various tax incentives: double deduction of R&D costs, exemption from social security contributions due to negative corporate tax base or exemption from social security contributions for researchers. The key to obtaining either cash or tax incentives is the project’s R&D classification. In line with the needs of industrial R&D centers running tens or even hundreds of research projects, the government introduced a new and simplified R&D classification procedure in 2018. The so-called group classification allows companies to request the classification of a series of projects in a single procedure instead of separate classifications for each project. Many executives ask: ‘How do I know, whether my company really carries out R&D activities?’ In this respect, the European Union’s State aid law also applies the globally used Frascati Manual, which defines three main categories of R&D: fundamental research; industrial research; and experimental development. Generally, the industrial R&D carried out by enterprises falls into the last two categories. In order to ensure the

eligibility for incentives, the Hungarian Intellectual Property Office (HIPO) issues a resolution or an expert opinion certifying that the project is classified as R&D. Moreover, and contrary to socalled regional aid (typically provided for investments in regions that are underdeveloped compared to the average level of the European Union), R&D aid is provided to foster research activity, regardless of its geographical location. Consequently, the cash incentive is also available in Budapest where many R&D centers of large multinational firms are located. Based on the favorable legislative framework and the success of many other companies, executives may consider starting new R&D projects or establishing R&D centers in Hungary, since up to 25% of the project costs can be subsidized in the form of a VIP cash grant. One of the main advantages of the incentive measure is that companies can include all of the R&D projects that they are conducting in a maximum three-year period. Moreover, all operational costs incurred in relation to R&D activities are eligible for the grant, such as personnel costs of researchers, rental fees, depreciation of equipment or material costs. Therefore, an existing R&D center may include the personnel costs of its current researchers to the extent they are employed on the subsidized R&D project(s); the rental costs of the office to the extent used for the project is also eligible. The abovementioned project costs should reach minimum EUR 3 million and the company should create a minimum of 25 new R&D jobs (which may also include employees working indirectly on the R&D project, e.g. admin staff) during the project period, which should be of a maximum of three years in duration. Another favorable condition of the cash grant is that the applicant has to commit the retention of the already existing and new R&D jobs only for two years after the project period. Due to the relatively low job creation threshold and short maintenance period of the VIP cash grant, executives of new R&D center may plan in advance the future cash grant applications in line with the center’s expansion. Recent experience shows that companies must thoroughly plan their R&D strategy in order to maximize the benefits available through cash and tax incentives and must be wellprepared for the incentive applications and classification procedures.

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Artificial Intelligence set to Disrupt the Hungarian Legal Sector The coming age of big data and artificial intelligence (AI) means big changes are expected in the legal industry worldwide. But most developments so far have been in the large and lucrative markets of the English-speaking world. Hungary, say the experts, has been something of a laggard in adopting AI. But not for much longer. KESTER EDDY

Many have yet to notice, but the Hungarian legal industry has been taking its first steps towards embracing artificial intelligence in recent months. And the implications are immense, even if the final outcomes may take some years to reach full effect, says Bálint Halász, partner with the Bird & Bird legal practice in Budapest. As perhaps the most striking example of the expected changes, he points to the “due diligence process” – scrutinizing all the legal and contractual obligations of a target company – in a company merger or takeover. “In an M&A transaction, the biggest part is due diligence. You get a bunch of lawyers, usually junior lawyers, you put them into a room, and they go through thousands of pages [of company documents] and make notes on particular issues. If there is a noncompete clause, or one any kind of clause that could trigger an issue, they make a note,” he says. The end result is the lawyers’ report on what the potential problems are, and proposals for how to deal with them. Not only does the process require significant human resources, there remains “quite a big chance” of an oversight, leading to later, possibly costly, disputes.

Demise of the Data Room

In practice, over the last decade digitization has already largely resulted in the demise of the classical “data room”, but the process still requires a small army of lawyers, and a lot of time, in a bid to identify and eliminate risk. But new software packages utilizing artificial intelligence promise a radical shake up. “There are new tools based on AI which can ‘learn’ different sectors and the languages of the law to spot the issues. They do

the same [due-diligence] work, but in a fraction of the time, and then report what they’ve found,” Halász told the Budapest Business Journal.

Bálint Halász Naturally, lawyers are still needed to review the software results and check the full text for any oversights, certainly in these pioneering days of usage in Hungary. But the application of machine-driven analysis certainly helps accelerate the process, he says. The positive implications, at least for the client, are obvious. If, or more likely when, AI is successfully applied to the due diligence, transactions will require fewer lawyers, significantly reducing costs. But for the law firms it involves up-front investment and risks. Although some large law firms have jointly created their own programs with software developers, the vast majority are buying from independent vendors, says Ádám Simon, an associate with Bird & Bird in Budapest.

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Budapest Business Journal | June 1 – June 14, 2018

Furthermore, the new software comes “as a clean slate” he says, meaning the algorithms “have to be taught” to

Ádám Simon understand the pertinent language and context of Hungarian law in Hungarian. This means local legal firms not only have to pay for the software, they must find and cooperate with IT specialists capable of making it work in the local environment – another cost of indeterminate size that must be realized before any operational savings can be made. Partly as a result, “Currently AI only exists in the realm of international law firms in the Hungarian legal market, but almost all the big names are doing projects with AI,” says Simon. Even Bird and Bird, a practice with a history of involvement in innovation, is only making its first tentative steps into the AI world, having adopted the Luminance software platform, a system developed in Cambridge, United Kingdom. “We are using it as tool for document review; it’s currently only under testing, …. we are just trying to find out how we can incorporate it in daily life,” Simon said, adding “These tools are still not working that well in English; it’s really hard to develop a machinelearning software that can understand Hungarian.” Indeed, one of the special problems is the system’s ability to discern and recognize the fine differences in Hungarian diacritics, an issue that

typically arises when reading poorly scanned legal documents.

Conservative Approach

Across the industry, other factors impeding progress include a conservative approach to doing business – many lawyers would typically prefer to hire a personal assistant than invest in even basic software – and the relative low prices within the Hungarian legal sector, says Halász. “If the human resources part of the market is really expensive, it is worthwhile investing in this kind of technology. In Hungary, lawyers are relatively cheap, so here the legal market is not performing well in the digital transformation [compared to] other sectors,” he says. But the new technology, when working successfully, will support more thorough work in the many smaller domestic deals where buyers today – due to the low value of many acquisition targets – typically only pay for so-called “red flag” duediligence, i.e. limited analysis of the target companies, Halász argues. Indeed, ultimately the changes may be demand driven, says Simon. With speed, and cost, of the essence, the quality of machine-assisted due diligence does not even need to match

“We are using it as tool for document review; itʼs currently only under testing, … we are just trying to find out how we can incorporate it in daily life. These tools are still not working that well in English; it’s really hard to develop a machinelearning software that can understand Hungarian.” that of humans. “Even a poorer quality is better than nothing!” he says. “Our foreign counterparts report that there is a very big push, from the client side. There is demand, and even if the technology is not yet there, it will come soon. It won’t be a time scale in decades, I think we are looking at five years,” Simon argues.

INSIDE VIEW

GDPR Considerations in M&A Transactions Kinga Hetényi

Roland Szebényi

Managing Partner

Associate

SCHOENHERR HETÉNYI ATTORNEYS AT LAW

The General Data Protection Regulation (GDPR) came into force on May 25 and introduced unified EU rules on personal data protection. As nearly all companies store or process information about their business partners, customers, potential customers and employees the GDPR will have an impact also on M&A transactions, especially in light of the extraordinarily high fines that may be imposed on noncomplying companies. From an M&A perspective, the scale of GDPR’s impact will depend on the characteristics of the business of the relevant target company. Companies focusing on B2C business will more likely be in the possession of significant quantities of personal data, because their business largely depends on the company’s access to its customers. On the one hand, the more complex and detailed information a target company has about its customers, the better the chances that it can use them for its business. On the other hand, however, the more such information is collected and processed, the greater the risk of either non-compliance, or that a so-called data protection incident – for example data leakage – occurs.

Due Diligence

Since the adoption of the GDPR, the non-compliance of a target company has started to purport a high risk for the potential buyer considering the potential amount of the fine. Therefore, nowadays, the level of the target company’s GDPR compliance needs to be much more carefully investigated. This entails a thorough review of the legal basis of the use of personal data, the existence of adequate internal privacy policies and the communication of various aspects of the data processing. The potential buyer will also need to identify the internal processes, action plans and possible GDPR related past or contingent breaches of the target company. Understanding the exact nature and puzzles of the target company’s business is also crucial, in order to identify the scope and type of the data that the target company stores or processes. Thus, the due diligence request list should include specific requests for information and documents in relation to the GDPR compliance of the target company.

In addition to the above, IT due diligence will likely play a more important role given that IT systems have an essential role in data protection, as the level of IT defense is already a key factor. From a compliance point of view, a secure and well-designed IT system will represent a remarkable value at a target company. However, from a business point of view, the integration of a more complex system of the acquired business with the acquirer’s business could cause additional costs and more technical difficulties.

Transaction documents

First of all, the buyer is advised to negotiate more sophisticated representations and warranties (“R&W”) that should explicitly cover, for example, that the target company collects only personal data for which the company has an appropriate legal basis, which are absolutely required for the given purpose, and the data subjects are well informed. Another possible R&W could be that the data is stored only as long as absolutely required, and the data subjects are given the possibility to request correction or deletion of their data, and that such requests are actually and swiftly complied with. Further, R&W could also be negotiated to the effect that there are no and have not been any GDPR related investigations that could adversely affect the company. If the due diligence review reveals that the target company does not comply with GDPR, it may affect for example the purchase price, as the buyer will need to invest into bringing the company into compliance after the closing of the transaction. In the case of identified possible breaches, adequate indemnities should also be included in the transaction documents. As Hungary has not yet adopted the laws which are necessary to actually operate the GDPR system, it is still unclear whether additional local tasks or other burdens will be imposed on companies. Whereas it will not be feasible for the buyer to cover this risk in the sale and purchase contract of a currently pending acquisition, the buyer should still take it into consideration in its own business calculations when acquiring a Hungarian company.

www.schoenherr.eu

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

Teaching the Software

Special Report | 25

26 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

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 2018 (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 2018 BAND 1

CHAMBERS EUROPE 2018 BAND 1

LEGAL 500 2018 TIER 1

IFLR 1000 2018 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

–

CMS

HORVÁTH & PARTNERS DLA PIPER

DENTONS

ANDRÉKÓ KINSTELLAR

HEGYMEGI-BARAKONYI ÉS TÁRSA BAKER & MCKENZIE

LAKATOS KÖVES AND PARTNERS

BIRD & BIRD

OPPENHEIM

SZECSKAY ATTORNEYS AT LAW

ALLEN & OVERY

Special Report | 27

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Top-ranked law firms CHAMBERS GLOBAL 2018 BAND 1

CHAMBERS EUROPE 2018 BAND 1

LEGAL 500 2018 TIER 1

IFLR 1000 2018 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

–

FALUDI WOLF THEISS

NAGY & TRÓCSÁNYI

JALSOVSZKY

SBGK ATTORNEYS AT LAW

FORGÓ, DAMJANOVIC & PARTNERS

KAPOLYI LAW FIRM

VJT & PARTNERS

CHAMBERS GLOBAL 2018 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

BAND 4

BANKING & FINANCE

Andrékó Kinstellar CMS Horváth & Partners DLA Piper

Allen & Overy Dentons Lakatos Köves & Partners

Faludi Wolf Theiss

Hegymegi-Barakonyi és Társa Baker & McKenzie HP Legal | Hajdu & Partner Law Office Szecskay Attorneys at Law

CMS Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie

Allen & Overy Andrékó Kinstellar Horváth & Partners DLA Piper Lakatos Köves & Partners

Faludi Wolf Theiss Oppenheim

Forgó, Damjanovic & Partners Schoenherr Hetényi Attorneys at Law Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law VJT & Partners

Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Nagy és Trócsányi

Lakatos Köves & Partners

CORPORATE/M&A

DISPUTE RESOLUTION

CMS Oppenheim Szecskay Attorneys at Law

Special Report

28 | 3

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

CHAMBERS EUROPE 2018 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

Banking & Finance

Andrékó Kinstellar CMS Horváth & Partners DLA Piper

Allen & Overy Dentons Lakatos Köves & Partners

Faludi Wolf Theiss Gárdos, Füredi, Mosonyi, Tomori

Capital markets

Allen & Overy

Andrékó Kinstellar Gárdos, Füredi, Mosonyi, Tomori Horváth & Partners DLA Piper Lakatos Köves & Partners

CMS Dentons Kapolyi Law Firm

Competition / Antitrust

Hegymegi-Barakonyi és Társa Baker & McKenzie Oppenheim

Allen & Overy CMS Dentons Lakatos Köves & Partners

Andrékó Kinstellar CHSH Dezső & Partners Horváth & Partners DLA Piper Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Corporate / M&A

CMS Dentons Horváth & Partners DLA Piper

Andrékó Kinstellar Hegymegi-Barakonyi és Társa Baker & McKenzie

Allen & Overy Faludi Wolf Theiss Lakatos Köves & Partners Oppenheim Szabó Kelemen & Partners Attorneys

Dispute resolution

CMS Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper

Gárdos, Füredi, Mosonyi, Tomori Lakatos Köves & Partners

Employment

CMS Hegymegi-Barakonyi és Társa Baker & McKenzie

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

CLV Partners Dentons Forgó, Damjanovic & Partners Oppenheim Szabó Kelemen & Partners

Intellectual property

SBGK Attorneys at Law Szecskay Attorneys at Law

CMS Danubia Patent and Law Office LLC Hegymegi-Barakonyi és Társa Baker & McKenzie Sár & Partners

Bird & Bird Oppenheim

Life sciences

Hegymegi-Barakonyi és Társa Baker & McKenzie Szecskay Attorneys at Law

CLV Partners CMS Dentons KNP LAW Nagy Koppány Varga and Partners

Projects and energy

Andrékó Kinstellar Faludi Wolf Theiss

Budapest Law Firm No. 5000 CMS Oppenheim

Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Lakatos Köves & Partners

Real estate

CMS Dentons Lakatos Köves & Partners

Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper

Andrékó Kinstellar CHSH Dezső & Partners Jalsovszky Szécsényi and Partners

Restructuring / Insolvency

CMS Horváth & Partners DLA Piper

Andrékó Kinstellar Dentons Lakatos Köves & Partners

Faludi Wolf Theiss Hegymegi-Barakonyi és Társa Baker & McKenzie

Tax

Horváth & Partners DLA Piper Jalsovszky

CMS Hegymegi-Barakonyi és Társa Baker & McKenzie

Faludi Wolf Theiss Nagy & Trócsányi Vámosi-Nagy Ernst & Young Law Office

TMT

CMS Dentons Lakatos Köves & Partners

Allen & Overy Horváth & Partners DLA Piper VJT & Partners

Hegymegi-Barakonyi és Társa Baker & McKenzie

IFLR 10 0 0 2018 TIER 1

TIER 2

TIER 3

Banking and Finance

Andrékó Kinstellar Bird & Bird CMS Dentons

Allen & Overy Horváth & Partners DLA Piper Lakatos Köves and Partners

Faludi Wolf Theiss Gárdos Füredi Mosonyi Tomori Hegymegi-Barakonyi és Társa Baker & McKenzie HP Legal | Hajdu & Partners Nagy & Trócsányi Oppenheim Partos & Noblet / Hogan Lovells Szecskay Attorneys at Law Vámosi-Nagy Ernst & Young Law Office

M&A

Bird & Bird CMS Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper

Allen & Overy Andrékó Kinstellar Faludi Wolf Theiss Lakatos Köves and Partners Szecskay Attorneys at Law

Jeantet-d'Ornano Nagy & Trócsányi Oppenheim

Project development

Andrékó Kinstellar CMS Dentons Faludi Wolf Theiss

Bird & Bird Budapest Law Firm No. 5000 Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Lakatos Köves and Partners Oppenheim

bpv Jádi Németh HP Legal | Hajdu & Partners Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Capital markets

Allen & Overy Bird & Bird

Andrékó Kinstellar Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Lakatos Köves and Partners

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Special Report | 29

LEGAL 50 0 2018 LEGAL ACTIVITIES

TIER 1

TIER 2

TIER 3

Banking & Finance

Andrékó Kinstellar Bird & Bird CMS Dentons Horváth & Partners DLA Piper Lakatos, Köves and Partners

Allen & Overy CHSH Dezső & Partners Faludi Wolf Theiss Hegymegi-Barakonyi és Társa Baker & McKenzie Szecskay Attorneys at Law

Deloitte Legal Erdős and Partners Law Firm Erős Ügyvédi Iroda/Squire Patton Boggs Forgó, Damjanovic & Partners Nagy & Trócsányi Oppenheim Partos & Noblet / Hogan Lovells Schoenherr Hetényi Attorneys at Law Szabó Kelemen & Partners Attorneys

Capital markets

Allen & Overy Andrékó Kinstellar Horváth & Partners DLA Piper Kapolyi Law Firm

Bird & Bird CMS Dentons Gárdos, Füredi, Mosonyi, Tomori Lakatos, Köves and Partners

Forgó, Damjanovic & Partners Hegymegi-Barakonyi és Társa Baker & McKenzie Partos & Noblet / Hogan Lovells Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Competition

Allen & Overy Andrékó Kinstellar CMS Hegymegi-Barakonyi és Társa Baker & McKenzie Lakatos, Köves and Partners Oppenheim

CHSH Dezső & Partners Dentons Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Bird & Bird Erős Ügyvédi Iroda/Squire Patton Boggs Faludi Wolf Theiss Forgó, Damjanovic & Partners Horváth & Partners DLA Piper Jalsovszky Klart Szabó Legal Partos & Noblet / Hogan Lovells Szabó Kelemen & Partners Attorneys

Commercial, Corporate & M&A

Bird & Bird CMS Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Lakatos, Köves and Partners

Andrékó Kinstellar Erős Ügyvédi Iroda/Squire Patton Boggs Faludi Wolf Theiss Forgó, Damjanovic & Partners Oppenheim Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law VJT & Partners

Allen & Overy Deloitte Legal Erdős and Partners Law Firm Jalsovszky Kapolyi Law Firm Nagy & Trócsányi Partos & Noblet / Hogan Lovells Schoenherr Hetényi Attorneys at Law

Dispute resolution

CMS Dentons Lakatos, Köves and Partners Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

Bird & Bird Erős Ügyvédi Iroda/Squire Patton Boggs Faludi Wolf Theiss Forgó, Damjanovic & Partners Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper VJT & Partners

Allen & Overy CHSH Dezső & Partners Lohn Law Firm Partos & Noblet / Hogan Lovells Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Szabó Kelemen & Partners Attorneys

Employment

CMS Forgó, Damjanovic & Partners Hegymegi-Barakonyi és Társa Baker & McKenzie VJT & Partners

Andrékó Kinstellar CLV Partners - Csabai & Partners Law Firm Dentons Faludi Wolf Theiss Horváth & Partners DLA Piper KCG Partners Law Firm Szecskay Attorneys at Law

Bird & Bird bpv Jádi Németh Attorneys at Law Erős Ügyvédi Iroda/Squire Patton Boggs Kinga Zempléni Law Firm Lakatos, Köves and Partners Noerr Oppenheim Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Schoenherr Hetényi Attorneys at Law Szabó Kelemen & Partners Attorneys TaylorWessing Hungary

Intellectual property

Oppenheim SBGK Attorneys at Law Szecskay Attorneys at Law

Bird & Bird CMS Danubia Patent and Law Office LLC Hegymegi-Barakonyi és Társa Baker & McKenzie Lakatos, Köves and Partners Sár & Partners

Dentons Forgó, Damjanovic & Partners Horváth & Partners DLA Piper

Projects and energy

Andrékó Kinstellar Bird & Bird CMS Faludi Wolf Theiss Horváth & Partners DLA Piper Lakatos, Köves and Partners

CHSH Dezső & Partners Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Oppenheim

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

CMS Dentons Lakatos, Köves and Partners

Bird & Bird Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Oppenheim

Andrékó Kinstellar CHSH Dezső & Partners KCG Partners Law Firm Kapolyi Law Firm Noerr Partos & Noblet / Hogan Lovells Schoenherr Hetényi Attorneys at Law Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law

Technology, Media, Telecommunications

CMS

Bird & Bird Dentons Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Lakatos, Köves and Partners VJT & Partners

Allen & Overy Andrékó Kinstellar bpv Jádi Németh Attorneys at Law Faludi Wolf Theiss Forgó, Damjanovic & Partners Partos & Noblet / Hogan Lovells Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Sár & Partners Szecskay Attorneys at Law

Tax

CMS Hegymegi-Barakonyi és Társa Baker & McKenzie Horváth & Partners DLA Piper Jalsovszky Nagy & Trócsányi

bpv Jádi Németh Attorneys at Law Deloitte Legal Erdős and Partners Law Firm Faludi Wolf Theiss KCG Partners Law Firm Lakatos, Köves and Partners Réti, Várszegi & Partners PwC Legal Szecskay Attorneys at Law Vámosi-Nagy Ernst & Young Law Office

Real estate & construction

30 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Transparency Boosts Competition, Reduces Corruption An ambitious set of measures is meant to restore public trust in the institution of public procurement, Dr. Csaba Rigó, president of the Public Procurement Authority of Hungary says in an exclusive interview with the Budapest Business Journal. BÁLINT SZŐNYI

BBJ: The term “public procurement” has had a negative connotation in Hungary for a long time now. What is reflected by your latest statistics? Csaba Rigó: Our purpose is to keep the public informed of all relevant data continuously, and we are happy to report about ever improving trends. As evidenced by the European Commission, the public information rate related to public procurement is 100% in Hungary, which means every detail about such procedures is fully disclosed. That rate, in turn, is well below 50% in the United Kingdom or the Netherlands. We are fully committed to provide transparency as it intensifies competition and reduces the risk for corruption. An encouraging sign is that while the average number of bidders per tender was 4.5 in 2014, that number soared to eight by 2017. BBJ: Competition is very much hampered if there is only one bidder involved. Criticism from the European Parliament’s Committee for Budgetary Control has cited that particular factor as a problematic issue in Hungary. CR: We are aware of such criticism. However, the true rate of one bidder procedures is way below the figure of around 30% mentioned by the committee in question. The total rate stood at 16.6% in 2017, and if you consider that back in 2010 it was more than 31%, a massive improvement is clear to detect. A similarly dropping trend is apparent in terms of those procedures above the EU thresholds, which represent high-value tenders. BBJ: Another key indicator with regard to transparency is the number of procedures where only a predetermined pool of bidders are allowed to participate. What is the situation there? CR: There are two major types of procedures, namely above European Union thresholds and below those

Dr. Csaba Rigó, president of the Public Procurement Authority thresholds. The former represent just some 22.3% of all procedures, but in terms of value they account for some 84.34% of total public procurements. I want to emphasize this because in the case of such procedures the ratio of negotiated procedures without prior publication, that is where bidders are predetermined, is less than 10%, which is a significant drop of 45% compared to the year before. I find this achievement even more impressive as 2017 produced record high volumes. The total value of the public procurement market exceeded HUF 3.6 trillion, which equivals approximately 10% of Hungary’s estimated GDP, based on 2016 data. This means that we managed to push down the ratio of tenders with a restricted bidder pool in spite of the record high volumes up for grabs. BBJ: The rule of law can be maintained only if those infringing the rules can’t get away with malpractice. With OLAF investigations about fraudulent use of European Union funds in the news, what do you do to enforce the law? CR: Since November 2015, the authority has been controlling not only the transparency of procedures but also the legal performance of contracts. Last year the number of such fulfilment checks exceeded 100, resulting in fines totaling HUF 500 million. The Public Procurement Arbitration Board, which is a professionally independent body operating within the authority, focuses on imposing heftier fines in line with the gravity of the violation. On the other hand, in 684 cases that were actually submitted to the arbitration board, an additional HUF 800 mln was imposed in sanctions. Interestingly, not only bidders

face fines: some 35% of performancerelated penalties had to be paid by the contracting authorities.

“As evidenced by the European Commission, the public information rate related to public procurement is 100% in Hungary […]. That rate, in turn, is well below 50% in the United Kingdom or the Netherlands. We are fully committed to provide transparency as it intensifies competition and reduces the risk for corruption. An encouraging sign is that while the average number of bidders per tender was 4.5 in 2014, that number soared to eight by 2017.” BBJ: More SMEs seem to appear among the bidders, which is a pleasant phenomenon. Do you have any mechanisms in place to further encourage them to be more active? CR: Competition will grow if we manage to arouse the interest of as many potential bidders as possible. Cuttingedge solutions can help tremendously

in this effort. Therefore, last spring a new mobile app called Daily Public Procurement (Napi Közbeszerzés) was launched to give a hand to all stakeholders to maximize efficiency. Slick functions allow users to set up filters so that they get push notifications about the fields of their interest. This includes publication of calls and decisions in review procedures. Searching has also become a lot smoother. The app enjoys unconditional popularity shown by more than 5,000 downloads. In parallel, the Public Procurement Bulletin is updated on a daily basis too, this way all updated info is available by the end of each day. All calls for tender are forwarded to the Tenders of Electronic Daily, the official journal of the European Union, within two working days. BBJ: Talking of state-of-the art tech, a recent change that must further enhance transparency and traceability is the introduction of the fully electronic public procurement procedure, which became effective as of April 15. What are your expectations in this regard? CR: This is another huge leap forward since now every administrative step must be enacted, and can be followed, electronically. No more paperwork, no more rush to drop huge stacks of documents at the last second in some office. Filing bids becomes seamless, communication will be easy-to-follow, and most of all, procedural steps will be simpler to prove. It perfectly fits our overall concept to achieve an elevated level of transparency which nurtures competition and leads to a more efficient use of taxpayers’ money.

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Special Report | 31

Legal Education: All you Need is a Chair and a Book Young people in Hungary today considering a law career face a legal landscape that is changing rapidly and radically, experts tell the Budapest Business Journal. NATHAN JOHNSON

“The pace of change in Hungarian law has been breathtaking in the past years,” says Dr. Péter Kende, a practicing attorney and partner at Kende, Molnár-Bíró, Katona Attorneys-At-Law (KMBK), as well as a senior lecturer in European and Public International Law at both the Eötvös Loránd University Law School and the Central European University (CEU). “All the codices have been changed, and most acts of Parliament predating 2010, including the Hungarian Constitution, have been replaced. While these codices are not of bad quality, given that all pieces of the puzzle have changed simultaneously with the digitization of procedures, it will take some time for jurisprudence to smooth the rough edges. “Improvement, ” Kende adds, “consists primarily in consolidation, stability and previsibility. These are lacking now.” But not for lack of lawyers. “There has been, and still is, a surplus of lawyers emerging from the Hungarian education system,” says Dr. András Szecskay, vice president of the Hungarian Bar Association (MÜK) and managing partner of Szecskay Attorneys at Law. “I met very recently with the former general secretary of the Turkish Bar Association, and he complained that there is an overproduction of lawyers in Turkey. With a population of 80 million, the country has some 110,000 lawyers. Hungary’s per capita ratio, however, is even higher:

14,000 lawyers

in a country of ten million.” While the newly enacted “Act on the Legal Profession”, which enables in-house counsels to join the bar association, has increased the number of registered lawyers by about 5,000-6,000 the legislation has not, according to Szecskay, resulted in an automatic increase in competition because they are not freelance professionals. “At the lower end, however,” Szecskay adds, “there’s still an overproduction of freshly graduated law students from the universities.”

Multiple Faculties of Law

There are now multiple faculties of law at universities in Budapest, and others in secondry cities like Debrecen, Pécs, Szeged, Kecskemét, Győr and

Stephen Stec Miskolc. While the purse-strings might be tightening for other university departments, what accounts for the present flourishing of legal education in Hungary? “One reason, perhaps, is that a legal education is the cheapest to run,” says Szecskay. “I might be exaggerating a bit, but all the university needs to provide, aside from the professors, are a chair and a book. There’s no need for technical facilities or expensive equipment.” On the other hand, Szecskay suggests, another reason is that a legal education in Hungary grants a great deal of career flexibility to graduates. “He or she can become a judge, a state prosecutor, a practicing lawyer, or do in-house counsel, become a journalist, or go into politics; basically anything,” he says. Such a perspective from Hungary stands a stark contrast with trends in legal education in the United States, according to Stephen Stec, an adjunct professor of law with the CEU’s Department of Environmental Sciences and Policy. “After the 2008 financial crisis, there was a huge drop-off in applications for law schools,” Stec explains. “Part of the dropoff had to do with the fact that people were much more careful about what they were going to do in terms of a career, and they didn’t want to spend three years or more studying law if they weren’t sure they were going to make a lot of money. In my opinion, 2008 would have been a good time to go back to school, if you could afford it, because that way you could wait out the recession and re-enter an economy that is recovering. Instead, a lot of people were very nervous about committing themselves to something like law school.” As in Hungary, however, there were other factors involved. “With the internet and the explosion of social networking, people suddenly had

Péter Kende a lot of information at their fingertips,” Stec continues. “Lawyers have traditionally made a lot of their money in possessing arcane knowledge. Now, a lot of this knowledge becomes less arcane. This resulted in a dip, certainly,

“I met very recently with the former general secretary of the Turkish Bar Association, and he complained that there is an overproduction of lawyers in Turkey. With a population of 80 million, the country has some 110,000 lawyers. Hungary’s per capita ratio, however, is even higher: 14,000 lawyers in a country of ten million.” but I think we’re coming out of that now as people have come to realize that just because you might have some knowledge doesn’t mean you know what to do with it. People still make stupid decisions. If you’re well-trained as a lawyer, you’ll hopefully know what to do with that knowledge.”

Quantity versus quality

With no shortage of law graduates in Hungary, competition for good positions will be stronger; the demand for ambitious, top-quality performers nonetheless remains. “Our firm is constantly looking for talented and qualified trainees, as well as capable students to volunteer a couple

of hours a week,” Szecskay says. “Many other international firms and big business law firms are also facing difficulties in finding the right people. In the past two or three weeks, we interviewed about ten candidates, and we found only two that were satisfactory. I have many good friends teaching at law faculties in Hungary, and can’t tell you where the problem lies. Maybe the good graduates are leaving Hungary to continue their studies or find employment abroad.” KMBK’s Kende, while noting that Hungary’s law schools are “churning out graduates in sufficient numbers” concedes that the “quality of graduates is becoming very uneven”. He also sees the domestic practice as becoming more concentrated. “Hungarian firms are trying to become – or at least appear to be – more ‘Central European’,” he says. “The fact that many foreign firms are pulling out of the Hungarian market should create an opening for smaller and mid-sized Hungarian firms.” As Hungary passes through an undoubtedly interesting period of legal transformation, it remains to be seen how the country will respond to trends in legal education occurring elsewhere over the long-term, and how future changes will affect the attitudes of prospective law students. “In terms of differences in attitudes I’ve noticed in students over the years, I do think that law is now less mysterious than it used to be,” says Stec. “Even if the roles of lawyers in society have shifted a bit, the field still attracts those who love the law, people who are lawyers at heart or are merely fascinated with the subject. At the same time, the number of people who view entering the legal profession as a way to get rich quick is dwindling – at least in the U.S. – which is probably a good thing for the profession.”

Special Report

32 | 3

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Law firms with international affiliations no. of offiCes WoRldWide hungaRian offiCe yeaR established

CMS Cameron McKenna Nabarro Olswang LLP London 1779

74 1989

erika papp 1053 Budapest, Károlyi utca 12. (1) 483-4800 (1) 483-4801 budapest@cms-cmno.com

✓

Data protection, state aid, compliance, film industry, consumer protection, financial regulatory, private equity, project finance, restructuring and insolvency

DLA Piper UK LLP London 2006

More than 90 1988

andrás posztl 1124 Budapest, Csörsz utca 49–51. (1) 510-1100 (1) 510-1101 budapest@dlapiper.com

✓

–

Freshfields Bruckhaus Deringer LLP London 1743

27 2007

ulrike Rein 1053 Budapest, Károlyi utca 12. (1) 486-2200 (1) 486-2201 office@oppenheimlegal.com

✓

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

Dentons Europe LLP London 2013

More than 160 2015(1)

istván Réczicza 1061 Budapest, Andrássy út 11. (1) 488-5200 (1) 488-5299 budapest@dentons.com

✓

Data protection, GDPR, investment protection, consumer protection, finance regulatory and and anti-corruption compliance, internal audit, insolvency, state aid

Association of European Lawyers, Clifford Chance LLP, Multilaw Liverpool, London 1988/1987/1990

400 1991

péter lakatos 1075 Budapest, Madách Imre út 14. (1) 429-1300 (1) 429-1390 mail@lakatoskoves.hu

✓

Mining law, trust, workout

Ecovis International Berlin 2004

220 1991

Péter Kesseő-Balogh 1036 Budapest, Bécsi út 52. (1) 439-1166 (1) 439-1155 hungary@ecovis.hu

✓

International capital market, project finance, international air and space law, private equity, venture capital transactions

37 1993

Zoltán Sárhegyi beatrix bártfai Tibor Győri 1022 Budapest, Árvácska utca 6. (1) 209-0180 – titkarsag@sarhegyi.hu

cms.law 1

✓

hoRváth & paRtneRs dla pipeR

www.dlapiper.com/hu-HU/hungary/ 42

✓

oppenheim Ügyvédi iRoda www.oppenheimlegal.com

✓

–

✓

dentons 4

www.dentons.com

✓

–

✓

lakatos, kÖves és táRsai Ügyvédi iRoda www.lakatoskoves.hu 5

eCovis hungaRy legal balogh, b. szabó, Jean, zalaváRi és táRsai Ügyvédi iRoda www.ecovis.hu

✓

GYŐRI ÉS SÁRHEGYI ÜGYVÉDI táRsulás www.gyoriessarhegyi.hu 7

✓

E COVIS HUNGARY

name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

✓

Data protection & cybersecurity, compliance & investigations, restructuring and insolvency, tech industries, state aid

Cms CameRon mCkenna nabaRRo olsWang llp magyaRoRszági fióktelepe

otheR

top loCal exeCutive addRess phone fax email

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 1, 2018

Company Website

no. of tRainees in hungaRy on may 1, 2018

no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2018

Rank

Ranked by no. of attorneys (with license to practice) in Hungary on May 1, 2018

Bredit Prat Paris 1966

the lawyer • the tax adviser • the auditor • the accountant

Ecovis Hungary Legal Balogh, B. Szabó, Jean, Zalavári és Társai Ügyvédi Iroda

www.retivarszegipartners.hu/en

andRékó kinstellaR Ügyvédi iRoda www.kinstellar.com

✓

–

✓

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 1, 2018

no. of tRainees in hungaRy on may 1, 2018 19

✓

PricewaterhouseCoopers Legal LLP London 1999

100 (approx.) 2000

Zoltán Várszegi 1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 461-9888 (1) 461-9898 rvp.central@hu.pwclegal.com

10 2000

Csilla andrékó 1054 Budapest, Széchenyi rakpart 3. (1) 428-4400 (1) 428-4444 budapest@kinstellar.com

András Szecskay 1055 Budapest, Kossuth Lajos tér 16–17. (1) 472-3000 (1) 472-3001 info@szecskay.com

✓

Compliance, risk and sensitive investigations, infastructure and projects, NPLs and distressed assets, restructuring and insolvency, whitecollar crime

Kinstellar – 2008

✓

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

www.szecskay.com

top loCal exeCutive addRess phone fax email

Data protection and technology, state aid, trust, economic criminal law

szeCskay Ügyvédi iRoda

no. of offiCes WoRldWide hungaRian offiCe yeaR established

Réti, váRszegi és táRsai Ügyvédi iRoda pWC legal

no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2018

Rank 7

Company Website

legal speCiality aReas

Special Report | 33 name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

EuroJuris, Legalink, Legus, TerraLex, World Service Group, Dorda Brugger JordisBest Friends, Biolegis, INBLF, State Capital Group

1992

Ÿ –

CHSH DEZSŐ ÉS TÁRSAI Ügyvédi iRoda 10

www.chsh.com/hu/offices/budapest.html

oRbán & peRlaki attoRneys at laW www.opl.hu

szabó, kelemen és táRsai Ügyvédi iRoda www.sz-k-t.hu

✓

–

✓

–

✓

–

✓

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

CHSH Cerha Hempel Spiegelfeld Hlawati Rechtsanwälte GmbH Vienna 1921

9 2004

Attila Dezső tamás polauf 1011 Budapest, Fő utca 14–18. (1) 457-8040 (1) 457-8041 office@chsh.hu

✓

Outsourcing, law, tobacco industry regulations

Paralaw London 1997

3 2011

miklós orbán 1036 Budapest, Perc utca 6. (70) 342-9544 (1) 244-8378 office@opl.hu

–

Corporate restructuring and insolvency, energy, gaming and betting, information rechnology, telecommunications and e-commerce, mediation

Ally Law Minneapolis, USA 1990

65 1996

tamás szabó 1024 Budapest, Lövőház utca 39. (1) 288-8200 (1) 288-8299 tamas.szabo@sz-k-t.hu

✓

Compliance, data protection, consumer protection

Baker & McKenzie LLP Chicago 1949

77 1987

Zoltán Hegymegi-Barakonyi 1051 Budapest, Dorottya utca 6. (1) 302-3330 (1) 302-3331 budapestinfo@ bakermckenzie.com

–

Wolf Theiss Rechtsanwälte GmbH Vienna 1957

13 2007

zoltán faludi 1085 Budapest, Kálvin tér 12–13. (1) 484-8800 (1) 484-8825 budapest@wolftheiss.com

–

Lex Mundi / Yingke Houston, USA / China 1989 / 2001

600 / 66 1991

Péter Berethalmi 1126 Budapest, Ugocsa utca 4/B (1) 487-8700 (1) 487-8701 budapest_office@nt.hu

hegymegi-baRakonyi és táRsa bakeR & mCkenzie Ügyvédi iRoda 12

www.bakermckenzie.com

✓

faludi Wolf theiss Ügyvédi iRoda 13

www.wolftheiss.com

nagy & tRóCsányi Ügyvédi iRoda www.nt.hu

✓

www.bbj.hu

no. of offiCes WoRldWide hungaRian offiCe yeaR established 28 2008

Peter Knight david dederick 1054 Budapest, Szabadság tér 14. (1) 799-2000, (1) 301-8900 (1) 799-2088, (1) 301-8901 budapest@twobirds.com

14 2008

Kinga Hetényi 1133 Budapest, Váci út 76. (1) 870-0700 (1) 870-0701 office.hungary@schoenherr.eu

141 2009

Gábor Erdős 1068 Budapest, Dózsa György út 84/C (1) 428-6800 (1) 428-6801 deloitteinhungary@ deloittece.com

Noerr LLP Munich 1950

16 1990

Zoltán Nádasdy Jörg Menzer 1011 Budapest, Fő utca 14–18. (1) 224-0900 (1) 224-0495 recepcio@noerr.com

✓

Capital markets, data protection, privacy law, state aid law

Ernst & Young Law GmbH Stuttgart, Germany 2010

80 2002

iván sefer 1132 Budapest, Váci út 20. (1) 451-8100 (1) 451-8199 law@hu.ey.com

✓

Immigration, data protection, regulatory compliance, administrative law

Eversheds Sutherland London, Atlanta 1988 (UK), 1924 (US)

66 1987/1999

Ágnes Szent-Ivány 1026 Budapest, Pasaréti út 59. (1) 394-3121 (1) 392-4949 office@ eversheds-sutherland.hu

katalin szamosi 1062 Budapest, Andrássy út 113. (1) 461-1000 (1) 461-1099 mailbox@sbgk.hu

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

top loCal exeCutive addRess phone fax email

biRd & biRd budapest 14

www.twobirds.com

✓

Data protection, sports

Bird & Bird LLP London 1846

✓

Compliance, white-collar crime, insolvency and restructuring, capital markets, data protection, IT, pharma

Schönherr Rechtsanwälte GmbH Vienna 1950

✓

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

✓

State aid and financial advisory services, data privacy, GDPR, automotive sector advisory

sChÖnheRR hetényi Ügyvédi iRoda 15

www.schoenherr.eu

deloitte legal ERDŐS ÉS TÁRSAI Ügyvédi iRoda

✓

–

✓

–

✓

–

www.deloittelegal.hu

noeRR & táRsai iRoda www.noerr.com

✓

–

✓

–

name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

Budapest Business Journal | June 1 – June 14, 2018

legal speCiality aReas no. of paRtneRs of hungaRian offiCe on may 1, 2018

Company Website

no. of tRainees in hungaRy on may 1, 2018

Special Report no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2018

Rank

34 | 3

Deloitte Legal

Ÿ Ÿ

vámosi-nagy eRnst & young Ügyvédi iRoda www.eylaw.hu

✓

sándoR szegedi szent-ivány komáRomi eveRsheds sutheRland 17

www.eversheds-sutherland.hu

✓

sbgk Ügyvédi iRoda www.sbgk.hu

✓

–

✓

–

✓

–

✓

–

✓

Data protection

AIPEX Munich

1969

At your service The local lawyers with the global connections Today’s business world is increasingly complex, with rapidly changing laws and regulations. Eversheds Sutherland is a full service international legal brand that will help you to meet the challenges of the change and give you the answers that allow you to prosper.

If you need legal assistance in Hungary, contact us:

T: +36 1 394 3121 | office@eversheds-sutherland.hu | eversheds-sutherland.hu H-1026 Budapest, Pasaréti út 59.

www.bbj.hu

✓

–

✓

–

✓

–

Allen & Overy LLP London 1930

44 1993

Zoltán Lengyel 1075 Budapest, Madách Imre út 13–14. (1) 483-2200 (1) 268-1515 budapest@allenovery.com

✓

Pharmaceutical law, data protection and privacy, cyber security

Conference Bleue Brussels 1996

✓

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

bnt attorneys in CEE – –

10 2003

Norbert Varga Rainer tom 1143 Budapest, Stefánia út 101–103. (1) 413-3400 (1) 413-3413 info.hu@bnt.eu

Insurance law

ADVOC London 1990

94 1992

istván gárdos 1056 Budapest, Váci utca 81. (1) 327-7560 (1) 327-7561 postmaster@gmtlegal.hu

–

International Lawyers Network Westwood, USA 1988

91 2005

Pál Jalsovszky 1124 Budapest, Csörsz utca 41. (1) 889-2800 (1) 886-7899 office@jalsovszky.com

✓

Data protection, tax litigation, joint venture litigation, solutions to complex issues, innovative technological sololutions in legal services

KPMG Legal/Law – –

75 2016

bálint tóásó 1134 Budapest, Váci út 31. (1) 887-7100 (1) 887-7101 info@kpmg.hu

✓

Capital markets, data protection, compliance

Hogan Lovells International LLP London, Washington 1899/1904

51 2006

lászló partos Jnr. 1051 Budapest, Vörösmarty tér 7–8. (1) 505-4480 (1) 505-4485 office@hoganlovellls.co.hu

Telecommunication law

Norton Rose Fulbright LLP London 1794

More than 50 1989

eszter dávid 1013 Budapest, Pauler utca 11. (1) 354-4300 (1) 354-4399 office@bpss.hu

–

IBLC (International Business Law Consortium) Salzburg 1998

92 1997

Chrysta Bán péter s. szabó 1051 Budapest, József nádor tér 5–6. (1) 266-3522 (1) 266-3523 office@bansszabo.hu

–

Mackrell International Woking, UK 1987

170 1990

andrás moldován 1051 Budapest, Dorottya utca 1. (1) 328-6010 (1) 328-6011 info@moldovan.hu

Compliance, data protection, IT

bpv LEGAL – 2006

7 2000

Andrea Jádi Németh 1051 Budapest, Vörösmarty tér 4. (1) 429-4000 (1) 429-4001 budapest@bpv-jadi.com

knp laW nagy koppany vaRga and paRtneRs 18

www.knplaw.com

✓

–

✓

bnt ügyvédi iroda www.bnt.eu

gáRdos mosonyi tomoRi Ügyvédi iRoda www.gmtlegal.hu

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

otheR

top loCal exeCutive addRess phone fax email

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 offiCes WoRldWide hungaRian offiCe yeaR established

Special Report | 35 name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

www.allenovery.com

legal speCiality aReas no. of paRtneRs of hungaRian offiCe on may 1, 2018

allen & oveRy

no. of tRainees in hungaRy on may 1, 2018

Company Website

no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2018

Rank

Budapest Business Journal | June 1 – June 14, 2018

21 2006

Kornélia Nagy-Koppány István Varga 1051 Budapest, Vigadó utca 2. (1) 302-9050 (1) 302-9060 knplaw@knplaw.com

Jalsovszky

www.jalsovszky.com 19

✓

–

✓

–

✓

–

✓

–

kpmg legal tóásó Ügyvédi iRoda www.kpmg.hu

paRtos & noblet in Co-opeRation With hogan lovells inteRnational llp

✓

–

✓

–

✓

www.hoganlovells.com

bpss Ügyvédi iRoda / buRai-kováCs, peRlaki, stanka, szikla és táRsai Ügyvédi iRoda www.bpss.hu

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

✓

–

✓

–

✓

–

✓

–

✓

–

moldován és táRsai Ügyvédi iRoda 21

www.moldovan.hu

bpv Jádi németh

Ügyvédi iRoda www.bpv-jadi.com

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

–

✓

–

✓

no. of offiCes WoRldWide hungaRian offiCe yeaR established

Squire Patton Boggs (US) LLP Washington 1890

47 1991

Ákos Erős 1051 Budapest, Széchenyi István tér 7–8. (1) 428-7111 (1) 428-7000 budapest@squirepb.com

28 1998

József Kapolyi 1051 Budapest, József nádor tér 5–6. (1) 267-3975 (1) 267-3949 info@kapolyi.com

108 1992

Sándor Sárközy stefan sieferer 1062 Budapest, Andrássy út 121. (1) 814-9880 (1) 814-9898 budapest@roedl.hu

11/118 1992

Alice Dessewffy 1126 Budapest, Nagy Jenő utca 12. (1) 413-3340 (1) 413-3341 office@dessewffy.com

18 2014

attila fest 1054 Budapest, Báthory utca 8. (1) 791-7060 (1) 791-7065 office@festandpartner.hu

–

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

1/18/14 2008

lászló hajdu 1013 Budapest, Pauler utca 11. (1) 799-8230 (1) 799-8231 office@hplegal.eu

–

PONTES – 2005

7 2005

Csaba Polgár 1011 Budapest, Szilágyi Dezső tér 1. (1) 799-0140 (1) 799-0141 admin@hunlaw.hu

levente antal szabó 1011 Budapest, Corvin tér 10. (1) 796-3600 (1) 796-3636 info@klartlegal.eu

ildikó komor hennel 1051 Budapest, Bajcsy-Zsilinszky út 16. (1) 457-0550 (1) 214-8419 office@sarandpartners.hu

125 2003

marianna Csabai 1126 Budapest, Tartsay Vilmos utca 3. (1) 488-7008 (1) 488-7009 info@clvpartners.com

Compliance, data protection, consumer protection, bankruptcy, project financing, joint ventures and private equity, capital markets

–

Capital market

European Law Firm Eindhoven, the Netherlands 1989

–

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

Rödl & Partner GbR Wirtschaftsprüfer, Steuerberater, Rechtsanwälte Nuremberg 1977

–

Mining law, renewable energy law, state subsidies, higher education law, clusters, data protection law

CEE Attorneys, MSI Global Alliance Prague, London 1990

Aviation law

LUTHER Rechtsanwaltsgesellschaft mbH Cologne 1992

www.squirepattonboggs.com 22

name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

ERŐS ÜGYVÉDI IRODA/SQUIRE patton boggs (us) llp

top loCal exeCutive addRess phone fax email

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 1, 2018

Company Website

no. of tRainees in hungaRy on may 1, 2018

Special Report no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2018

Rank

36 | 3

✓

kapolyi Ügyvédi iRoda 22

www.kapolyi.com

sáRkÖzy RÖdl & paRtneR Ügyvédi iRoda, RÖdl & paRtneR Ügyvédi táRsulás www.roedl.de

desseWffy és dávid valamint táRsaik Ügyvédi iRoda táRsulásként ddsb Ügyvédi táRsulás a CCe Attorneys nemzetkÖzi hálózatában www.dessewffy.com

–

✓

–

✓

–

✓

–

✓

fest és táRsa Ügyvédi iRoda www.festandpartner.hu

hp legal | haJdu & paRtneRs www.hplegal.eu

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

pontes budapest Ügyvédi iRoda www.ponteslegal.eu

klaRt legal Ügyvédi táRsulás www.klartlegal.hu

–

✓

–

✓

–

✓

–

✓

–

✓

Data protection

✓

Data protection, internet and software law, e-commerce

sáR & paRtneRs attoRneys at laW 24

www.sarandpartners.hu

Clv paRtneRs, Csabai és táRsai Ügyvédi iRoda www.clvpartners.com

✓

–

✓

–

✓

–

✓

–

✓

–

IBA (International Bar Association)

Ÿ Ÿ

IBA, LES, INTA, ECTA, EPLAW, MARQUES, AIPPI, PTMG

Ÿ Ÿ

Ius Laboris Global HR Lawyers Brussels 2001

2014

1998

www.fdlaw.hu

✓

–

✓

–

✓

–

Industrial developments, employee stock ownership plans, IT - data protection, regulatory complaince

kCg paRtneRs Ügyvédi táRsulás www.kcgpartners.com

✓

–

✓

–

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 1, 2018 4

The Harmonie Group Minneapolis, USA 1993

IBA (International Bar Association) –

no. of offiCes WoRldWide hungaRian offiCe yeaR established

foRgó, damJanoviC és táRsai Ügyvédi iRoda

no. of tRainees in hungaRy on may 1, 2018

no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2018

Rank 25

Company Website

legal speCiality aReas

Special Report | 37 name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

top loCal exeCutive addRess phone fax email

77 2000

Zoltán Forgó gábor damjanovic 1123 Budapest, Alkotás utca 17–19. (1) 214-0080 (1) 214-0078 office@fdlaw.hu

– 2014

Eszter Kamocsay-Berta 1054 Budapest, Széchenyi rakpart 8. (1) 301-3130 (1) 269-0016 reception@kcgpartners.com

80 2008

Balázs Lohn 1053 Budapest, Károlyi utca 12. (1) 999-1233 (70) 902-1288 info@lohn.hu

9 2010

Gergely Bán márton karika 1117 Budapest, Alíz utca 1. building B (1) 501-5360 (1) 501-5361 budapest@actlegal-bk.com

26 2002

Ágnes Balassa Tibor Bihary 1026 Budapest, Pasaréti út 83. (1) 391-4491 (1) 200-8047 office@biharybalassa.hu

200 2002

arne gobert 1053 Budapest, Kossuth Lajos utca 14–16. (1) 270-9900 (1) 270-9990 office@gfplegal.com

33 1995

braner torsten 1051 Budapest, Dorottya utca 1. (1) 327-0407 (1) 327-0410 budapest@taylorwessing.com

ádám kollár veronika till 1051 Budapest, Vörösmarty tér 4. (1) 235-1090 (1) 235-1099 office@peterkapartners.hu

lohn Ügyvédi iRoda www.lohn.hu

✓

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

World Link for Law Zurich 2008

act legal | bán & kaRika www.actlegal-bk.com 26

✓

–

✓

–

Data protection, compliance

act legal Germany 2017

GDPR

TELFA (Trans European Law Firms Alliance) Brussels 1989

Data protection

Antea Barcelona 2008

–

TaylorWessing e|n|w|c Natlacen Walderdorff Cancola Rechtsanwälte GmbH Vienna 1986

–

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

9 2013

–

Studio Legale de Capoa Bologna, Italy 1986

8 2000

–

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

krisztina salló 1055 Budapest, Honvéd utca 38. 4/7. (1) 331-0311 (1) 769-0114 sallo.decapoa@gmail.com

Warwick Legal International Network Canterbury, UK 2001

55 1997

Thomas A. Squarra 1016 Budapest, Avar utca 8. (1) 474-2080 (1) 474-2081 info@squarra.hu

Construction law

International Advisory Experts Durham, UK 2015

900 2015

Loránd Barkassy-Grünfeld 1126 Budapest, Tartsay Vilmos utca 14. (1) 210-0768 (1) 210-0768 office@barkassygrunfeld.com

–

bihaRy, balassa Ügyvédi iRoda www.biharybalassa.hu

gobeRt és táRsa Ügyvédi iRoda

bRaneR és táRsai Ügyvédi iRoda koopeRáCióban a tayloRWessing e|n|W|C natlaCen WaldeRdoRff CanCola ReChtsanWÄlte gmbh-val

www.gobertpartners.com

www.taylorwessing.com

peteRka & paRtneRs iRoda www.peterkapartners.com

salló Ügyvédi iRoda– paRtneR studio legale de Capoa

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

www.decapoa.com/it/contact.php

sQuaRRa & paRtneRs Ügyvédi iRoda www.squarra.hu

✓

–

✓

–

✓

–

✓

–

baRkassy gRÜnfeld Ügyvédi iRoda 29

www.barkassygrunfeld.com

Ÿ= would not disclose, NR = not ranked, NA = not applicable

–

✓

–

✓

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This list was compiled from responses to questionnaires received by May 31, 2018 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14. or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu.

NOTES: (1) Dentons (formerly Salans) has been in Budapest since 2006.

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Socialite

Getting Lost Searching for a gem in Budapest

Short city break tourism to Budapest has been steadily building since 2004, when Hungary joined the EU. It started with stag parties, which you still see of course, but grew to include people who were genuinely interested in seeing the sights of Budapest. DAVID HOLZER

Today, the Hungarian government has what seems like a hugely ambitious aim to increase the contribution of tourism to the country’s GDP from 10%

16%

by 2030. Much of this growth will, I guess, be built on the steady rise in popularity of short breaks to Budapest. But why have short city breaks become so popular? Experts suggest that there are three main reasons. Because more of us are living in cities, the argument goes that we feel more comfortable in them than in, say, beach resorts. The rise of Ryanair (founded in 1985) and easyJet (1995) and the rest made air travel to cities more affordable. Technology has made it easier than ever before for us to book a hotel or an apartment and find out everything we ought to know before we travel – we’re hyper-informed. The problem with being hyper-informed is that we think we know all about a city before we get there. But do we? I’ve only been exploring Budapest for three years and I haven’t even scratched the surface of the surface. Having a thoroughly worked out itinerary to enable us to “do” a city can also mean that we miss its special magic.

Let’s get Lost!

Curious about the history of tourism in Budapest, I took the number nine bus out to Óbuda in search of the Hungarian Museum of Trade and Tourism. I’m a great fan of quirky museums and this one sounded right up my street. Here’s how it’s described by Lonely Planet: “This excellent little museum traces Budapest’s

Why not ditch the guide book, at least for a while, and just wander around exploring the city at your leisure? catering and hospitality trade through the ages, including the dramatic changes postWWII… A gem.” The only problem was that, despite good old Google maps, the Hungarian Museum of Trade and Tourism turned out not to be up any street I could find. Back in Deák Ferenc tér, I decided simply to drift through the city. To the casual observer, I may have looked aimless, but the words of the great

19th century

French poet and lover of cities Charles Baudelaire were, in fact, my guide. Baudelaire wrote: “The life of our city is rich in poetic and marvelous subjects. We are enveloped and steeped as though in an atmosphere of the marvelous; but we do not notice it.” As I wandered through the city, I found the excellent Wave Music record shop on Révay köz, just off Bajcsy-Zsilinsky út, and browsed while I listened to the owner discuss jazz colossus John Coltrane with a distinguished American gent with a silvery beard. Waiting to cross the street, I was cheerfully accosted by the worst living statue I’ve ever seen in my life. If the point of being a living statue is to stand absolutely still in an especially difficult posture, this guy failed miserably. He was dressed in a half-hearted approximation of a Roman Centurion’s costume sprayed bronze, grinning and waving his arms around. In one hand he

held a bottle of pink Hungarian fizz. I later saw him passed out under a bench up at Deák Ferenc tér.

The problem with being hyper-informed is that we think we know all about a city before we get there. But do we? I’ve only been exploring Budapest for three years and I haven’t even scratched the surface of the surface. Strolling up to the square, I watched as a very short lady beggar was collected in a wheelchair by what I guess must have been her daughter. In one sense the normality of the scene would fuel the argument of anyone who believes beggars are con artists. But I found the scene rather charming in its bizarre almost-normality.

Rich and Marvelous City

It seems to me that only by mooching through a city do you open yourself up to the possibility of discovering its “rich and marvelous” subjects, as Baudelaire wrote. I’d also humbly suggest that, while consulting some sort of a guide to a city is necessary, there’s such a thing as being too cool. At the very least, I find out where

the supposedly hippest part is in any city I visit. Even though, at my ripe old age, all hip districts tend to, if not look exactly the same, offer precisely the same things – usually tattoo shops, barbers and retro clothes outlets. As far as I know, the hippest district in Budapest is still the Eighth. I just found out that the outer part of the area is known as the Harlem of Budapest. I wonder why? Is it a place of pilgrimage for jazz-lovers? Or is it just incredibly dangerous? I shall find out and report back. Meanwhile, if you’re looking to see sides of Budapest far from the touristic beaten track, I suggest you do as I did, and get lost. Start by taking a bus to a district that, on the face of it, has absolutely nothing to recommend it. And, I hope you’ll find that once your eyes are opened to the city, they stay open. As my train pulled out of Nyugati train station – designed by Gustav Eiffel, of Parisian tower fame, if you didn’t know – I noticed to my right a large wooden cage peeking above the trees, filled with parrots or parakeets. A little further on, I saw what looked like a fake mountain. What’s that all about?

Find out about the Museum of Trade and Tourism at www.mkvm.hu. Wave Music record shop is at Révay Köz 1. For the rest, explore at will!

www.bbj.hu

Budapest Business Journal | June 1 – June 14, 2018

Socialite | 39

Collaborative Egytőről Doubles up as it Turns Two The second vintage of Egytőről – a cooperation between several wine bars, winemakers, wine distributor Bortársaság and wine website wineflow.hu – has seen a pair of wines released with a white joining the red this year. ROBERT SMYTH

“We learnt a lot about winemaking; it’s one thing to work in wine, but another thing to make it,” said Gábor Petrányi, from the Palack and 0.75 wine bars. Others to get their hands dirty are Doblo Wine & Bar, Andante Borpatika, Tasting Table Budapest and Cuvée Borszaküzlet és Borbár from Szombathely. Representatives from each wine bar and the other partners worked together with the wineries – Sebestyén from Szekszárd and Pálffy from Köveskál in the Káli Basin – cooperating at all the key grape growing and winemaking stages to produce a pair of wines from local varieties that are made for enjoying in a wine bar setting. Incidentally, the Egytőről name was thought up by Boglárka Kovács, selected from a large number of suggestions, and emphasizes the cooperation and coming together of like minds. Bortársaság’s Erika Szabados said the decision to also bring out a white wine was based on customer feedback that suggested that Egytőről would be better as a pair. Egytőről debuted with a single red wine last year – a light and fruity Kékfrankos from the 2016 vintage led by winemaker Csaba Sebestyén, who runs the family winery in Szekszárd together with his sister Csilla. His services were retained for the second year of Egytőről and this time he has made 1,900 bottles of Kadarka from the 2017 vintage, which comes from four Szekszárd vineyards: Iván-völgy, Bence-völgy, Szentgál (a cooler spot) and Alsónána. It is made from 70% young vines and 30% old vines, with 80% of the wine made in the tank with the balance going into a mix of used and new oak barrels.

Vibrant and Light

It is a very pale ruby color, almost like a deep rosé, and really aromatic with raspberry, raspberry jelly and rose hip. It has vibrant acidity and is very light. This is a varietally pure Kadarka but due to its lightness, it needs to be explained, especially to foreign customers who don’t know the grape. Fortunately, a wine bar is a great place in which to do that and as this

is the kind of light red that can be enjoyed by itself it is ideal for such a setting. The wine costs HUF 4,950 a bottle or HUF 950 for 1.5 deciliter in one of the wine bars. Next year, Csaba Sebestyén is handing on the red wine baton to Eger’s Böjt Pincészet, while the white wine will be made by Tokaj’s Gizella, which has already

“We learnt a lot about winemaking; it’s one thing to work in wine, but another thing to make it.” worked with the DropShop wine bar team to deliver the excellent 47 Csepp wines, initially a blend of Furmint and Hárslevelű, but a single varietal of the latter in 2015. One of the points of Egytőről is that the wines are made from Carpathian Basin grape varieties. While I usually want to drink the local varieties wherever I may go, a Bikavér – with local grape Kékfrankos at the forefront with some international grape help to flesh out the blend – might make a nice addition to the Egytőről fold. Böjt is also highly adept at making great value Bikavér. The white Egytőről is an Olaszrizling from the 2017 vintage made by the Pálffy family winery, with the grapes coming from Fekete hegy. It is fresh and clean with good fruit and the grape variety’s typical apple and pear notes, plus a bit of tangerine, and a bit of a more complex briny finish.

Spontaneously Fermented

It was spontaneously fermented with 80% aged in the tank and 20% in new

500-liter Stockinger barrels to give the wine roundness. The amount of oak is just right and it really helps make this wine, giving it good weight without impinging on the juicy and limey palate. This one goes for HUF 850 for a 1.5 deciliter glass at the aforementioned wine bars. Some 2,400 bottles were made. Eger’s St. Andrea winery, run by the father and son winemaking team of György Lőrincz Senior and Junior, has its own swish sky bar in Budapest and it has just released a number of new wines (the Igazán Egri Bikavér Grand Superior 2014 was reviewed in the previous issue). While Szekszárd may be the Hungarian epicenter of the Kadarka grape (also known as Gamza in Bulgaria), it is being firmly and successfully re-established in Eger where it once thrived. St. Andrea’s Egri Kadarka Superior 2016 came from several

harvests from the Magyalos vineyard. This contrasted with the more concentrated version from the prized pure limestone site of Nagy Eged from the same vintage, in which the grapes got a fair amount of botrytis or ‘noble rot’ to shrivel the grapes and further ramp up the intensity. I preferred the first for its remarkable and pure varietal character. Egyetlen Egri Cuvée Grand Superior 2016 is the third vintage of the wine made solely by György Lőrincz Jr. and is a blend of 50% Chardonnay, 40% Sauvignon Blanc (both from Nagy Eged), with 10% of Hárslevelű from the Boldogságos vineyard. It shows the younger Lőrincz has learned from his father how to handle oak in a restrained manner that brings elegance, a certain spiciness and a mouth-filling creaminess without shutting off the wine’s ripe stone fruit.

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