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Hot Practice: Zsolt Okanyi on CMS’s Dispute Resolution Practice in Hungary

Hot Practice: Zsolt Okanyi on CMS’s Dispute Resolution Practice in Hungary

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The hot practice for CMS in Hungary is Dispute Resolution, and Zsolt Okanyi, Partner and Head of Dispute Resolution both for Hungary and globally at CMS, explains that his team's current workload is primarily driven by the COVID-19 crisis.

"A number of arbitrations – some at the ICC, some local – that are primarily linked to infrastructure construction are keeping us busy," Okanyi says, pointing to "one involving the reconstruction of railways, and another one related to the construction of gas pipelines," as examples. Delays in construction were caused by the pandemic, giving rise to disputes over penalties.

Another type of work relates to internal investigations – the number of which has seen quite an increase according, Okanyi reports, noting that his team is currently dealing with more than five such projects.

Finally, Okanyi says, his team is dealing with a "huge Italian portfolio held by a large insurance company in Hungary that has generated over 100 cases."

"We've seen a correlation between crises and an increase in our disputes-related workload in 2009-2010 as well," Okanyi says, adding: "When economic distress appears, the number of transactions declines while disputes soar, most often resulting from a drop in the flexibility of parties involved." Manufacturers, for example, had to deal with production forecasts being thrown off by the pandemic, and Okanyi describes one CMS client – a car parts manufacturer – who was caught between having placed raw material orders while seeing his own orders from car manufacturers canceled.

And the slow-down in the courts has caused quite a pile-up of work as well, according to Okanyi. "Like in many countries, court hearings ceased in March, April, and May of last year. Later on, there were two solutions implemented – one where hearings would take place through submitting documents to the courts only, and a second, once courts reached the needed level of IT preparedness, where hearings were being held online." Both added to the workload. "The first solution meant that, as opposed to a two-hour hearing where I could put everything forward, a full day was spent on drafting the needed documentation. The second registered a lot of delays and waiting times to have everyone log in for the hearings – again, more time spent on this."

The cancellation of court hearings during the several months' lockdown last spring caused a considerable backlog as well, Okanyi reports, delaying both ongoing cases and new filings, leading to "an extremely high number of court hearings at the moment."

On the investigations side of things, Okanyi explains that, during such crises, people are "fearing for their existence and their way of life," which, unfortunately, means that some will more easily cross previously clear lines, and "end up bringing home the pencil from the company's cupboard."

Looking into the future, Okanyi says that he expects difficulties related to the Covid-19 crisis to "continue to trickle down until fall, when we hope for a return to normality in how disputes are handled." Still, he says, that "will not impact the origins I mentioned with both companies and individuals remaining existentially distressed, so I expect both the increase in disputes and number of internal investigations to continue."

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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