Understand Your Rights. Solve Your Legal Problems
Looking at another nation in the Middle East, our next thought leader explains why mergers are moving the UAE’s M&A landscape forward and are set to boost FDI throughout 2017.
Dr. Habib Mohamed Abdullah, Managing Partner of Middle East Alliance Legal Consultancy (MELF), here talks to Lawyer Monthly about the prospects of further M&A operations in UAE, the obstacles between here and then, and the progress in legislation that is creating new opportunities in this innovating and business developing nation.
In the M&A landscape, what recent transactions have you and the firm been involved in?
MELF has been involved in multiple high value M&A transactions for major corporate entities in the UAE, and over the years has gained valuable experience in all aspects of M&A activities. MELF has the expertise to assist its clients in creating synergies by overcoming challenges unique to the UAE economic landscape.
How would you describe the current M&A landscape in the UAE? How is this to progress throughout 2017?
M&A activity has been affected by geopolitical tensions and the weakened oil prices. M&A activity in the UAE showed positive performance in the first half of 2016, and the outlook remains optimistic for the second half. Mergers are anticipated between National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), Mubadala Development Company and the International Petroleum Investment Company (Ipic), and Abu Dhabi has revealed plans to merge two oil production arms of the Abu Dhabi National Oil Company (ADNOC) and is working on merging its three science and technology centres. These mergers will also force others to look at mergers in 2017.
What are the overall obstacles to M&A progress today and what do you think can be improved to make UAE’s markets more appealing to FDI?
UAE is increasingly becoming an easier place to do business. However, several hurdles to M&A progress, both regulatory and cultural remain. There is foreign ownership restriction and foreigners may not own shares greater than a specified percentage in a company. There is also an unclear application of existing regulations and lack of depth in current regulations. The founding families of businesses tend to develop an emotional attachment to the business and are less willing to let their shares be acquired by others.
Similarly, how is the firm, as a thought leader, contributing towards the Abu Dhabi Economic Vision 2030, through services in the M&A sphere?
The Abu Dhabi Economic Vision 2030 represents a long-term roadmap for economic progress and for achieving tangible levels of economic diversification. M&A activity is essential for achieving the target of the Economic Vision 2030 as M&A activity enables businesses to gain more market share, to increase efficiency and to expand global reach. By facilitating M&A activity and highlighting inefficiencies in the M&A regime, MELF is contributing towards the Abu Dhabi Economic Vision 2030 of creating a diversified, sustainable and competitive economic base actively participating in the global economy.
What are currently the biggest obstacles to increased successful M&A deals in the UAE and how are you helping to turn that around?
There is little flexibility for market players collaborating with government authorities to prevent unfair takeovers where the market is not actually efficient. It would be fairer for target businesses to be valued on the basis of market price, rather than asset valuation to determine the merger ratio. However, considering the UAE economy is in a transitional period, the market often fails and makes it difficult for any proposed merger to be fairly assessed based on the fair values of the two companies.
What has been the most recent legislative development to affect the M&A sphere in the country? What impact has this had on your work?
The new Federal Commercial Companies Law of 2015 stipulates that any entity desirous of acquiring shares in a Public Joint Stock Company in the UAE, which offered its shares for public subscription, shall comply with the Securities and Commodities Authority’s (SCA) rules and procedures for acquisition, which require the shares to be assessed by a financial consultant and valued by a government appointed committee. This reflects a merger of finance and law and entails working in close collaboration with expert business appraisers and financial consultants to assist clients in resolving disputes and obtaining the sanction of government and judicial authorities for the highest valuation of their property rights.
‘As an ever-more technology dependent society, we should strive to make processes for obtaining IP smoother and faster and find more ways to support (suitably deserving, of course) fledgling companies in protecting their IP’ – this is the opinion of Ilya Kazi, one of the Senior Partners at Mathys & Squire LLP in the UK. Here Ilya provides an outlook on his thought leadership in the UK-European IP landscape, and touches on some of the changes he would like to see facilitate his clients.
What are the most common types of IP matters you work around in the UK?
My personal practice now mainly consists of conducting European Patent Office (EPO) Oppositions and Appeals and giving related strategic advice to help position clients with respect to their competitors’ IP, or to prepare for an exit, although last year a major litigation took up much of my time. I also supervise some large client patent prosecution portfolios of hundreds of patents, although my team mainly does the day to day hard work and I mainly finesse the overall direction or get stuck into difficult cases.
What particular challenges are encountered therein and how do you help resolve them alongside your clients, both domestic and international?
In the EPO and UKIPO, we are generally dealing with a reasonably competent tribunal, I have a good understanding with my clients as to what a realistic outcome might be (even though we may aim more ambitiously) and we tend to achieve or exceed expectations. However, occasionally we face a struggle, and consequent expense, caused by the failure of a tribunal (often examiners in certain overseas patent offices) to appreciate technology or a nuance of a case and this can be particularly frustrating for smaller clients for whom getting appropriate protection is both of significant importance and who have limited resources. The only resolution is merely to be very open with clients about what to expect, and to assist in determining, commercially, how far it is worth fighting or what alternatives to what might be academically the “right” answer we can live with.
How do you feel the UK and international IP landscape has evolved to become what it is today in terms of legislation and goals still to come? What’s next on the IP agenda?
I think the greater harmonisation and streamlining over the couple of decades I have seen has all generally been a good thing. In terms of Brexit, I recently hosted a discussion with senior representatives of about 15 major household names brand owners, the UKIPO and representatives of INTA who between them had over a trillion of market cap, a million employees and hundreds of thousands of marks and patents between them, and nobody could see anything positive in Brexit. A simple short term goal that came out of that discussion is a desire that there will be at least an inexpensive simple transition from existing community IP rights to national rights.
You have worked on patents and IP in several sectors; which do you find to cause the most complications? Why do you think this is?
Two areas I work in a lot jump out; the first is software. Here one is often working at the borderline of what is patentable and the border shifts from time to time, and the practices of individual offices diverge from each other, and moreover the approach taken by individual examiners or even Boards of Appeal within a given office also varies. This makes it hard to give clients certainty about expected outcomes.
The second is medical devices. Often there is a great innovation but the devices are not drastically different from old devices used in a different way. The US allows methods to be protected but Europe does not.
The plus side in both is it is often very satisfying to get clients protection which was by no means guaranteed by adopting a little creativity.
Are there further developments you would like to see facilitate your work in IP and as a thought leader, how are you working towards developing said change?
I would love to see IP processes speed up and focus so that, at least for clients for whom timing is important, we can get to what is an objectively reasonable conclusion in a shorter timescale.
As to what I have done, I have given direct feedback in informal meetings with offices such as the UKIPO concerns and suggestions and to their great credit they are receptive to them but I confess I have not done much to tackle the wider issue.
I worry that as the economy is squeezed as a result of Brexit, this is not going to be top of the agenda.
The saying ‘health is wealth’ is ever prevalent and so we place our trust in our GPs to correctly diagnose us so our recovery can rapidly come around; nevertheless, this is not always the case and when a patient believes they are a victim of clinical negligence, they turn to the law. We speak to Luke Meleagros, an expert witness in surgery, who outlines the effects of misdiagnosis and how he provides insight to try settle a case involving negligence.
In cases of professional negligence, how long can it commonly take to complete an investigation?
In my experience knowing the time it takes between the solicitors requesting medical records and the time that they issue a claim, it can take anything up to 6 months and a year, because the claimant solicitors will have to review the medical records and interview the clients. They then usually instruct the expert to provide them with reports. It is likely in some cases, the solicitor will instruct counsel as well, before they issue legal proceedings they will hold a conference with councils, experts and claimants, and when that is completed, and the case is reviewed, they will then issue a length of claim. It is a lengthy process which takes several months.
I know that you deal with a range of cases in a way, but can you specify a common case you tend to deal with on a regular basis?
In general surgery, a common case I deal with in professional negligence are complications of laparoscopic cholecystectomy, delaying diagnosis of appendicitis, complications of appendicitis, delay of the diagnosis of bowel cancer, complications following surgery of bowel cancer and delaying the diagnosis of these complications.
Can you think of reasons to why there are delays with diagnosis?
There are many reasons why there is a delay with diagnosis; for bowel cancer, the patients’ symptoms may not be typical. The patient maybe falsely reassured when they visit their GP, who does not appreciate their symptoms are significant and attribute the symptoms to minor ailments, such as piles; piles are very common in the general population and the symptoms, such as bleeding, are similar to the symptoms of bowel cancer. Therefore, it is not uncommon for the GP to not refer the patient to the specialist early enough.
Another reason is because the patient is not referred to the appropriate investigation. The statistics in misdiagnosis say that it is possible to misdiagnose up to 2% of colonoscopies. Based on a negligence investigation the patient will then go away, and feel reassured that they have had their definite investigation i.e., a colonoscopy which was negative; they will then treat the patient for a different condition, such as Irritable Bowel Syndrome (IBS), which causes similar symptoms as bowel cancer. Thus, a year or two later, the patient returns to the doctor, and reports the same or worse symptoms and the investigation is repeated; this time the cancer would have grown and is usually picked up.
How often is your critical analysis the game-changer in a claim?
I would say the expert report is crucial to the entire process, but it is not usually the case that an expert provides such an earth-shattering report, that the defendant will immediately put their hands up and immediately accept it; the defendant will always come up with their own report to counterargue, so the aim is to read the settlement which limits the pay-out as much as possible. A game changer I think, is a joint expert discussion; in a situation whereby the claimant and defendant obtain expert reports and provide diametrically opposing opinions on most of the major issues, their solicitors require the experts to hold a conference in order to respond to the disputed area. The weakest argument made by one of the experts is made apparent. Any expert can provide a supporting report and an argument for their instructed solicitors, the problem experts will have will be defending the arguments during discussion.
I have been involved in cases where a conference is held with the other experts to discuss the issues; the conference is held within a month of the trial and based on the issues and discussions that arise, the claimant eventually discontinues the case as they realise that the argument that they have provided will not allow them to win in court.
What makes you the go-to expert witness in this field?
It is important to appreciate that the solicitors do not have the expert scientific knowledge but are expected to draw conclusions on what happened; the expert has to provide a report that details and explains medical and scientific matters which can be quite complicated in layman’s language. More importantly, solicitors need to understand the issues involved so they can ask appropriate questions to explore the issue further and clarify matters for them. I have found that my value as an expert, the reason why I am instructed very frequently is because I can provide a summary of scientific and medical matters in language that can be understood by the solicitor. The other reason I think why I am a go-to expert is because I research this subject and refer to recent literature and quote relevant articles to support the arguments that I provide in my report.
With a particular focus on patent law, our next thought leader delves into the progress of IP legislation in Taiwan, over the last decade or so, touching on the most recent aspirations towards TTIP and the firm’s thought leadership in the sector.
Lawyer Monthly hears from Hsiu-Ru Chien, Partner at Lee and Li, who discusses some of the challenges Taiwan faces in the IP sphere, and how the latest legislative developments are changing litigation in the IP landscape.
Are there any issues patent legislation causes in the establishment of IP protection in the Taiwan?
On January 1st 2002, Taiwan joined the World Trade Organization (WTO) and is subject to the Agreement on Trade-Related Aspects of Intellectual Property Rights, which is one of the Annexes to the WTO Agreement.
On July 1st 2008, a specialized Intellectual Property Court (IP Court) was established, which governs civil cases related to patent infringement and administrative lawsuits related to patent validity. The civil tribunal in charge of patent enforcement actions shall review and make a decision on the patent validity issue if the defendant raises challenges therefor; however, the civil court's decision on the patent validity will only have binding effect between the concerned parties to the litigation. If the defendant wants to eventually invalidate the patent at dispute, he/she shall bring a cancellation action to the Intellectual Property Office (IPO).
On January 3rd 2014, the Legislative Yuan passed the amendment of the Patent Act, in which four new articles addressing "patent border protective measures" were added. As such, if a patentee suspects that imported items are infringing his/her patent right, he/she may, as with the Trademark Act and Copyright Act currently in effect in Taiwan, provide security bond to the Customs Administration for seizure of such items for the protection of his/her patent.
To gain ground on its aspiration for entry into the Trans-Pacific Partnership (TPP), the IPO submitted on May 10th 2016, to the Executive Yuan a TPP-related Patent Act amendment proposal (hereinafter referred to as ‘draft Amendment’), in accordance with the resolutions reached at the TPP/RCEP Special Working Group, and the Executive Yuan passed such amendment on August 4th 2016, which is now under review of the Legislative Yuan. In addition to expanding the "grace period" from six to 12 months, and introducing the ‘patent term adjustment’ mechanism to compensate for the patent office's delay in patent examination, the proposed amendment also provides the ‘patent linkage system’ – according to such, the owner of the new drug patent may file patent infringement litigation during the examination course of the generic drug application. If no such litigation is filed, the applicant for the generic approval may also institute a lawsuit to declare non-infringement (Article 60-1 of the draft Amendment).
Have there been any recent regulatory developments to affect your work with patents?
The Patent Act in Taiwan is amended frequently. For example, the Executive Yuan, Taiwan passed a draft amendment to the Patent Act on August 4th 2016. The main objective of this amendment is to coordinate Taiwan's legal system with TPP requirements.
This amendment to the Patent Act covers three key revisions:
Thus, we must pay close attention to the dynamics of revisionism and provide the right message and information to our clients at all times.
What are the most common patent cases you encounter in your work and how do you navigate them?
The most common patent cases I encounter are patent enforcement and dispute resolution matters. In the cases I have dealt with, I have employed innovative techniques and strategies in, for instance, proving infringement of method patents, explaining technical issues in court, applying expert opinions, etc., and we obtained favorable results in such experience.
How do you work daily to expand your exploration of patents law and push the boundaries of your work?
Our firm restructured our resources and formed practice groups, which span the five departments of the firm, i.e., banking and capital markets, corporate and investment, trademark and copyright, patent and technology, and litigation and ADR.
In the patent practice group, in addition to its work for our clients, the group is active in government, educational, and professional endeavors, both at home and abroad, such as promulgation of and amendment to patent-related laws and regulations, participation in international patent organizations and patent/trade secret seminars, and contribution to the firm's bi-monthly bulletin as well as other publications abroad.
Customs law, import and export formalities; if you import or export goods to or from the European Union, you will be forced to deal with them. Depending on origin, classification and value, import, anti-dumping and anti-subsidy duties, and import VAT will be among the charges payable upon declaration. If Customs & Excise take the view that a declaration was incorrect, additional duties and taxes may be retrospectively levied, often confronting businesses or even entire industry sectors with very substantial costs, which are usually neither budgeted nor recoverable. If confronted by reassessments from Customs & Excise, businesses will need specialized help, yet lawyers specialized in fending off customs claims are scarce.
Rotterdam based law firm Kneppelhout & Korthals is one of the very few to deal with all aspects of customs law, including issues where customs authorities have been attributed enforcement tasks such as in the areas of food and product safety, seizure of counterfeit products, export controls, sanctions and the environment. Jikke Biermasz and Marijn van Tuijl, Partners of Kneppelhout & Korthals here share their views on the past, the present and the future of customs law.
What are the current developments?
The outlook of the international trade landscape is set to change profoundly in the next few years. CETA negotiations have reached, and TTIP negotiations may reach, their conclusion shortly. The presently unknown consequences of Brexit are also a cause for concern. Against this background the new Union Customs Code just entered into force. Although there are no fundamental changes, a number of issues will require businesses to carefully review certain consequences, for example with regard to the abandoned ‘first sale for export’ principle, the new provisions on Binding Tariff Information applications, and on AEO licenses. Furthermore IT will play an ever more important role in communications with Customs & Excise. Modernization of the supply chain and communication with customs bring along new challenges and complex legal issues too.
Can you mention some highlights of the past year?
In the past year we (again) saw much activity concerning anti-dumping and anti-subsidy measures on solar modules and cells of Chinese origin. While the regulations on this topic were already adopted in 2013, in recent months we have seen a significant number of substantial customs claims concerning alleged circumvention via Taiwan and Malaysia and evasion of the MIP Undertaking by Chinese exporters. The solar panel file is far from closed. It appears that the European Commission, OLAF and the national authorities should be able to detect shifts in the flows of goods from China to other countries, but in reality these issues are raised by Customs & Excise several months or even years after the events took place, sometimes with hefty financial impact for customs agents and other logistic service providers who did not adequately protect their business against the risks connected to imports of solar modules.
Importers and their customs agents also have many questions on the extension of the duties on Chinese panels via Taiwan and Malaysia since 2016. Panels consigned from these countries have been registered since the end of May 2015. Some companies are exempt, but there are questions about the requirements that have to be met. The scale of the solar panel case is unprecedented and as most import declarations are made in the Netherlands, we are in the centre of the storm.
On fasteners: as a result of the WTO-ruling of 26th February 2016, the Commission repealed the anti-dumping duty imposed on certain iron or steel fasteners from China since 2009 and extended to imports of fasteners consigned from Malaysia. Apparently, the Commission is of the opinion that the infringements of the WTO Antidumping Agreement is found by the Dispute Settlement Body are of such severe nature, that it is not possible to nail shut the measure again, like the Commission still did in 2012 when China also successfully filed a complaint. Therefore, the Commission decided to withdraw the regulation in full, however without retroactive effect. We anticipate that many businesses will want to take steps to claim reimbursement of the duties they paid. At some point the European Court of Justice will be asked preliminary questions about the validity of the fasteners measures in view of the rules laid down in the Basic regulations anti-dumping duties. If the ECJ would rule that the measures have been invalid from the beginning that means there is retrospective effect. A word of caution though: claimants must prevent expiry of the statutory period of limitation by filing formal request for repayment or reimbursement immediately; this cannot wait.
We are furthermore seeing an ever-increasing awareness of export controls and sanctions legislation. US companies have been mostly very professional in dealing with these issues for years. It now seems that Europe is finally catching up, which is for the better, as the legal consequences of export violation are severe; it is a crime, penalties can be levied, arrests are possible, and there are personal consequences for people that intentionally violate rules (get fired, imprisonment etc.). Apart from that there is of course a huge risk of commercial and reputational damage. Companies can lose contracts or be publicly named and shamed.
How do you add value to your clients’ businesses?
We believe that a successful approach to customs matters requires active knowledge of all other aspects concerning the international trade of goods. Our approach is unique in the Netherlands. Our customs practice is embedded in a broad-based trade, regulatory, transport and insurance practice. Our clients will be assured of top notch legal assistance, be it in a customs case, when food safety authorities seize goods, or when any mishaps occur in the logistics chain.
Do you have a mantra or motto you live by when it comes to helping your clients?
Lawyers still have certain legal privileges, but essentially they are service providers. After 35 years of providing legal services, creating added value for our clients is still our key driver. As a full service firm Kneppelhout & Korthals is committed to take client service to a new level. An independent agency monitors our customer satisfaction level on a continuous basis. Currently, we score an average of 8.8 out of 10.
What top 3 qualities make a thought leader?
What’s most important to you and the firm?
Every law firm’s existence entirely depends on being and staying of relevance and of value to its clients. As a full service firm we distinguish ourselves from other firms by offering services and specialisms which bigger firms do not, or no longer, offer.
You’d have to go quite a long way to find someone who likes passwords. Typically, they’re an inconvenience at best. The only time most people even think about passwords is when they are forced to hit the ‘Forgotten password?’ button, at which point they already know they’ll never get the next 10 minutes of their life back.
Here Chris Hill, Commercial Technology Partner at Kemp Little, provides an outlook on the risks involved in online security, and the potential solutions the future holds for anti-hacking & security measures and the rise of biometric technologies therein.
As well as being a user experience nightmare for bank customers, the wish to avoid this ‘forgotten password’ scenario leads customers to compromise their own security through poor password hygiene: some write down passwords so they don’t have to remember them, others use the same password across all their online services. Needless to say, both these approaches present security risks all of their own.
It’s common examples of bad security practice like these which lead some commentators to question whether passwords are even fit for purpose anymore. They can be brute-forced by determined hackers, but more commonly they are simply stolen en masse from online services. Household brands from the online world, such as Dropbox and Yahoo, have both been in the headlines recently, having been the victims of massive data breaches. In both cases, millions of sets of user credentials were stolen and subsequently made available for purchase on the dark web.
The relative ease and frequency with which user details are compromised today, combined with both the difficulty of remembering passwords for a myriad of services and the clunky user experience they routinely bring with them, has led some organisations to consider other means of authentication, contributing to the rise of biometrics as a complementary or alternative solution to enhance security standards.
Why biometrics?
The term biometrics describes the use of unique physical features, such as a fingerprint or retina as a method of authenticating a user’s identity. These systems don’t require the user to remember anything, and in the event that it is stolen, biometric data is harder to use than passwords. Generally speaking, for these reasons biometrics are perceived to be more secure than passwords, and as such we are seeing biometric authentication entering the mainstream.
Perhaps the most obvious example of this is the fingerprint scanner on the iPhone, and it’s a mark of acceptance of this technology that a number of mobile banking apps now make use of this handset feature even for highly sensitive applications.
Elsewhere in financial services, MasterCard allows users to verify their identities using a selfie, and both Barclays and HSBC plan to increase their use of voice recognition so as to speed up the security clearing process for telephone banking. As well as being more convenient for customers, this also reduces the time taken to deal with telephone queries, and therefore reduces call centre costs for the bank. In banks’ never-ending quest to improve the customer experience and reduce their cost base around customer interactions, together with the growing prevalence of biometric sensors in popular consumer hardware, it is reasonable to expect other financial institutions to follow suit with this and other forms of biometric identification.
The ‘spoofability’ of particular biometrics in banking
Although biometrics boast a number of advantages over passwords, the technology does have its downsides. In the same way that passwords can be stolen, so too can biometric data. For example, when the Office of Personnel Management was hacked in the United States, criminals stole the fingerprints of some 5.6 million US government employees. And unlike a password, you can’t change your fingerprint: those fingerprints and identities are forever compromised.
In common with other types of authentication such as passwords, biometrics compare an input (for example a user’s fingerprint or a scan of their retina) with a base document or record held on file to check whether the two match. There are several ways that such “static” biometrics can be spoofed. An imprint of the fingerprint could be stolen, and presented at the point of authentication in place of the real thing. Alternatively, if a hacker can change the base document, then the authentication system could be made to think that another person’s fingerprint is that of the authorised user.
This is where “dynamic” forms of biometrics, such as voice recognition or personal typing patterns – the modern equivalent of handwriting analysis - may well be a safer option. Whereas a fingerprint can be spoofed just by presenting it in isolation at the right time, it is far harder both to mimic a person’s voice quality and to do so in a way that is responsive to the context at the time of the security check (a recording of the same phrase over and over again is unlikely to pass muster). Similarly, it would be very difficult to accurately imitate the way another person types, and to do so accurately at a speed that would not be suspect. But even these forms of “dynamic” authentication are not impregnable: if the “yes” signal emanating from a successful comparison can itself be spoofed, then the battle is lost no matter what input is used.
Biometrics and the GDPR
The fingerprint theft example above throws into sharp focus the need to protect this source data appropriately, which is why biometric data is expressly included in the GDPR as a “special category” of personal data. The provisions around processing sensitive data in the GDPR are broadly similar to those contained in the Data Protection Directive, although it should be noted that under Article 9(4) of the GDPR, member states have the right to impose further conditions or limitations on sensitive data such as biometric, health or genetic data. It is therefore reasonable to expect that national differences on rules around the processing of such data will remain, and banks will need to pay close attention to any UK amendments in this area.
At a time when financial fraud in the first half of 2016 reached a value of almost £400 million, there can be little doubt that increasing the standard of security offered by banks has to be a major focus. With personal information exposed in data breaches increasingly being exploited as the basis for fraud, assuring the identity of customers has never been more central to the fight to reduce losses. The advent of the GDPR will place even greater emphasis on the need to process and store customer data securely: failure to do so could result in significant maximum fines, not to mention severe reputational damage and remediation costs.
Where next?
For all the advances in technology and market penetration in recent years, biometrics is still very much in its infancy. The inherent sensitivity of the data means that, in a financial services context, banks may well choose to protect biometric data by banks in much the same way as credit card data (think PCI DSS).
But even then, it is only a matter of time before there are further breaches. Security is a never-ending cat and mouse game between cybercriminals and their targets: as soon as a bank introduces a new security measure, there will be criminals attempting to crack that system. Banks and other financial institutions will remain major targets for hackers due to the value of the potential payload. At the moment the relatively infrequent use of biometrics means that fraudsters will logically be encouraged to move on to one of many softer targets still in the market; but as the technology becomes more prevalent, there will be fewer soft targets to attack, leaving biometric data as a likely focal point for their attentions.
Further, the holding of biometric data, with the regulatory and reputational risks it poses, will undoubtedly pose an administrative and compliance burden for any organisation – even banks who are used to protecting sensitive data. So, it may well be that new business models arise in the secure holding of biometric records, such that banks could outsource the protection of the data to specialist third parties, who would hold the records on their behalf and serve up tokenised, non-sensitive versions of them for authentication purposes. In time, as the use of mainstream biometrics starts to spread outside financial services to other sectors which have less experience of safeguarding sensitive data, the existence of such expertise can only be a good thing.
Lobbying for a more favourable and FDI enabling business environment, this thought leader believes that often South Africa is perceived as an onerous location for operations, and intends to change that view.
Talking to Lawyer Monthly about the various challenges the South African M&A landscape encounters daily is Bartlett Hewu of Hewu Attorneys. Here he touches on the need for further foreign direct investment into South African markets, and discusses the top considerations that any business looking to invest here should make.
In the M&A landscape, what recent transactions have you and the firm been involved with?
We are currently finalising an acquisition in the food and beverages sector, and are also busy with the establishment and funding of a Multi-Disciplinary Health Care Centre.
Were there any new challenges involved? What have you learnt on the back of these fresh deals?
Yes, there were challenges. Well, no two transactions are the same; they all have their unique and peculiar nuances, in particular around food safety standards. For the other transaction, a challenge was encountered on the regulatory matrix we had to navigate in the health care sector. We have learnt a lot from these two transactions.
How would you describe the current South African M&A landscape, and how do you think this might proceed throughout 2017?
We have some challenges; economic growth is estimated to be just less than 1%, putting a lot of strain on M&A activity, and we hope for an improvement in 2017.
What would you say are the top three considerations to make in advising on risk management surrounding mergers and acquisitions? What are the significant variables in South Africa?
It is important to take cognisance of political considerations, anti-trust & competition issues, as well as the employment & labour issues. Whilst it is pivotal to appoint a competent team to conduct the legal, final and commercial due diligence to ascertain the true nature and value of the business before any acquisition, in SA we have labour laws that make it obligatory for the employees to follow the business after a merger or acquisition thereof.
In dealing with cross-border transactions, what are the common challenges you encounter and how do you push for the most commercially rewarding deals for your clients?
With the professional network that one has managed to build over the years it becomes easy to address any issues that arise in cross-border transactions for the benefit of our clients. For instance, in some jurisdictions it is peremptory that any foreign owned businesses should have a local partner. In this regard, you need people you can trust on the ground, who can provide you with credible and reliable data regarding the business, the regulatory environment and other issues.
How do you believe your previous experience at various firms has contributed towards your thought leadership in the South African M&A arena?
I was given the space to grow as a young professional and I was left to my own devices to run with multiple domestic and cross-border commercial transactions in the leading commercial firms in Johannesburg, working in the tax and commercial departments. That tremendous exposure is the best thing that could ever happen to me, and I think it contributed a great deal towards my thought leadership, preparing me for the role that I play today in the M&A arena in the MEA region.
As a thought leader, do you believe South African markets legislation could be changed for the better? Please explain.
Yes. As a developing economy we need the injection of foreign direct investments into the country, but the impediment is that in some quarters there is a general perception (and in some instances a semblance of truth) that the regulatory environment for doing business in South Africa is onerous.
Added to that, I have had instances where offshore clients were not happy with the exchange control regulations and decided to disinvest and establish their business in other parts of the continent via Mauritius. I think we could do a great deal with the relaxation of some of the requirements for doing business in South Africa, and could eventually set up a one-stop centre.
As a thought leader, how are you currently working towards implementing or developing said change?
There are various stakeholders that we have approached, such as the business associations and international bodies, and we continue to lobby for our government to continue creating that enabling environment for foreign direct investment.
Do you have a mantra or motto you live by when it comes to helping your clients?
‘Service Excellence’.
What top 3 qualities make a thought leader?
Avid reader, great listener and integrity.
What do you want to achieve in 2017?
Increase our human capital to establish a forensic investigation unit and a real estate department.
Next up on our special M&A focus is Frank Wu, Co-Chair of the Greater China Practice Group at Haynes and Boone, LLP. Frank talks about the current M&A landscape in China, where it’s heading towards, and what kinds of challenges are involved in agreements and transactions within the East Asian nation.
In the M&A landscape, what recent transactions have you and the firm been involved in?
We are seeing an increase in outbound investments coming from China. Many of these investments are driven by Private Equity firms. We recently represented a consortium of four major Chinese PE funds in its acquisition of Ambrx, Inc. (a biotechnology company based in San Diego). In addition, we have represented WuXi PharmaTech (a major biotech company) in several high profile acquisitions in the US. We are likely to see more of these transactions as Chinese PE funds and major Chinese companies focus on making investments in key biotechnology assets.
Were there any new challenges involved? What have you learnt on the back of these fresh deals?
In addition to the typical M&A issues, Chinese acquirers are also subject to governmental approvals and regulations specific to China. We work to balance the business goals and the legal needs of our clients in the potentially complex arena of cross-border acquisitions.
How would you describe the current M&A landscape in China, specifically regarding corporate deals and its relationship with the US?
M&A and cross border strategies are being more frequently utilized to accelerate growth by Chinese companies. China is in the midst of a transition where the focus is now on more quality growth as the country moves from a manufacturing-intensive, export-led model of growth, to a concentration on high value deals especially in the areas of consumption and innovation. This is a not an easy transition and a significant task for the world’s second largest economy, however, progress is being made and the development of these new growth sectors is among the top policy priorities of the government. As a firm, we are seeing more and more outbound investments coming from China to address this transition in the Chinese economy.
As Co-Chair of the Greater China Practice Group, how do you push for the most commercially rewarding deals in your M&A work?
At Haynes and Boone, we have been fortunate to have worked on some high profile Chinese transactions. Yet not all cross-border transactions can make it all the way through from promising initial negotiations to closure. It is navigating through these stages where experience with US-China M&A is important in explaining to our clients the cultural differences that need to be bridged in order to consummate a transaction for both parties. We make sure our clients understand the legal issues at hand, to help them make informed choices throughout the transaction process, resulting in transactions that are both successful and rewarding.
With many years of M&A legal experience in numerous sectors, from energy to biotechnology, which would you say has been the overall strongest sector and why do you think this is?
Whereas energy and natural resources used to comprise the majority of transactions, Chinese investment in virtually all non-resources sectors increased last year. Chinese buyers are targeting a more diverse and mature mix of assets.
Our current key focus at Haynes and Boone for the Greater China Practice Group is intellectual property and technology. With a very strong IP Section in the US, we see Chinese companies making strategic investments in technology, which is one of the sectors showing one of the largest increases from Chinese investment last year.
Here to provide an outlook on the ins and outs of family law matters in the Middle Eastern nation of Qatar is Ghada M. Darwish, Founder and Managing Partner at Ghada M. Darwish Law Firm. Ghada tells us all about divorce cases, the variables regarding child custody and on top of talking us through the challenges surrounding family businesses in Qatar, talks us through the firm’s thought leadership in the region.
What are the most prominent and common issues that arise pertaining to families in Qatar?
The most prominent issues that arise with regard to family law in Qatar are divorce and child custody, both governed by the ‘Family Law of Qatar’, Law No. 22 of 2006.
What challenges accompany these issues in terms of legal disputes and how do you navigate them?
Challenges accompany these issues because the provisions apply depending on who is seeking divorce. While divorce may be initiated by the husband through a written or oral declaration, or through some form of intelligible gesture, divorce may be initiated by the wife only through judicial recourse and subject to the grounds provided by law. In cases of divorce by judicial decree, reconciliation must first be attempted by the judge. Further, a divorced wife may be entitled to compensation if the divorce is made without any fault on the part of the wife. In the case of provision on redemptive divorce, which is a method of divorce primarily by mutual consent and also where the wife relinquishes her rights and offers consideration, the court has discretionary power to decide in favour of the wife even when the husband does not agree with such divorce.
Marital or premarital counselling is available to Qatari and non-Qatari couples through the Family Consulting Center.
Challenges in child custody arise when the mother is a non-Muslim, as stricter requisites apply in such cases. The Law allows non-Muslim mothers who do not renounce their religion to retain custody of their child, subject to the child’s religious faith. However, the non-Muslim mother may only retain custody until the child reaches the age of seven. Nevertheless, the law places the interests of the child as paramount.
How comprehensive is Qatar family law for the public, especially in terms of marriage and divorce? Could it be made more transparent?
Qatar family law is comprehensive and transparent to the general public. A purely non-Muslim family may only be bound by Family Law if they decide to file an action in court invoking its application. Additionally, for non-Muslims, their personal/national laws and international conventions will also be applicable for family issues, as long as those are in consonance with the Laws in Qatar and are in conformity with public morality.
Is there particular Qatar family-based legislation you would like to see changed in order to facilitate your work?
Mandatory counselling before a final judicial decree would greatly aid in the lessening of divorce. Further, mandatory premarital counselling would also help couples attain a better understanding of the rights and obligations that accompany marriage.
What would you say makes you the go to law firm for family cases?
As a law firm with a legal team from different legal backgrounds, we are able to provide clients with quality legal services. Thus, we are able to better understand and commiserate with the differing needs of the client when it comes to family matters. It is advisable to approach law firms for family disputes, as there may be unseen legal aspects regarding different issues.
As your firm is mostly commercial and business based, what legal complexities may have to be considered in terms of family businesses, and for those that want to set up shop in Qatar?
Our Firm is a full-fledged legal firm with a professional approach in offering legal assistance in all areas.
Complexities may arise due to the very nature of a family business itself – as it is run and held together by members of the same family and the dynamics may differ greatly than that of a listed company. Governance of the business may become strained at times of family conflict, as the line between personal relationships and business relationship would be very thin. Lack of management know-how and enjoyment of benefits by some members may ruin the integrity of the business. In order to avoid conflicting decisions, the communication on strategies should be systematic and professional; there should be a unified vision. If the business is to flourish over generations, there should be a transformation into a corporate structure. Assets could be brought together; there can be a written constitution, proper supervision and distribution of responsibilities. Usually, family businesses face problems because of generational changes, threat of families getting fragmented, and due to the need of sustainable business.
As a thought leader in this field, how do you go the extra step when it comes to helping families in these matters?
Our firm goes the extra step by ensuring that top quality legal services are provided, keeping in mind the best interests of our client and guarantee the finest legal and moral support for families. We have a vision to arrange awareness campaigns for women, especially educated house wives in the region with the intention to bring them to the elite group.
Carrying on with our special competition & antitrust focus, Lawyer Monthly here looks at the markets in South Africa, what the latest legislative developments on competition law have been in the region, how the M&A landscape is faring, and talks to Pieter Steyn, Director of Werksmans and Chairman of LEX Africa, who details his and the firm’s thought leadership in this regional arena, and gives an outlook for 2017.
Who are the types of client you commonly deal with and what kind of complexities do they bring to you and the firm?
I mainly deal with local and foreign corporate clients on matters relating to merger control, cartels, leniency/immunity, compliance, distribution structures and dominance/unilateral conduct issues.
How does South African competition law compare to that of its neighbouring countries?
Other African countries are increasingly implementing modern competition laws but South Africa was one of the first to do so in 1999. Many new African competition regimes have been influenced by South African law, but there are differences and "South African specific" aspects. One of the key objectives of South Africa's competition law was to address the socio-economic imbalances and inequities caused by apartheid. For example, our public interest test for mergers includes an assessment of the effect of the merger on employment and the competitiveness of small and black owned firms. The role of "public interest" in merger control, as well as other competition cases, continues to stimulate debate worldwide as well as in other African countries.
How do you think South African regional M&A markets and businesses are faring in 2016, and how are things changing into 2017?
Unlike many other African countries, South Africa is currently beset by low growth rates. There is also regulatory uncertainty in key sectors like mining, a need for structural reforms and continuing (and well publicised) political issues which affect business confidence. Although there is still foreign direct investment, M&A activity is down. The outlook for 2017 is not clear at the moment – much depends on Government action and the results of the ruling party's internal elections in December 2017 will be a vital indicator.
What upcoming or newly established legislative developments should South African and foreign businesses be aware of before they plan mergers?
Significant recent amendments to South Africa's broad based black economic empowerment (BBBEE) laws and regulations need to be considered. A new criminal offence of "fronting" (or, in colloquial terms, phoney BBBEE) has been introduced and a BBBEE Commission (modelled along similar lines to the South African Competition Commission) has been established. The methodology for measuring BBBEE has been tightened. In the mining sector, much uncertainty reigns as to the contents of a new BBBEE charter for the sector.
The recent SABMiller/ABI case (which followed on the Walmart/Massmart case) shows that the public interest test for mergers remains an important consideration especially as the South African Commission has now published guidelines on its approach to public interest in its merger investigations.
Has antitrust & competition litigation increased in South Africa in recent years? To what do you attribute this?
Competition law enforcement is increasingly active both in South Africa and other African countries. There have been several recent dawn raids by the South African Commission as well as in Botswana, Malawi and Zambia. In South Africa "hard core" cartel conduct has been criminalised with effect from 1st May 2016. African competition regulators are increasingly cooperating through organisations like the International Competition Network (ICN) and the African Competition Network. The South African Commission has recently signed bilateral cooperation agreements with the Kenyan, Russian, Mauritian and European authorities. This increased level of enforcement (and resulting litigation) flows from an increasing recognition by African Governments of the importance of an effective competition law as well as better resourced and experienced regulators.
Since you joined the firm, as a thought leader, how have you helped push the boundaries of the firm’s competition team?
Our competition team has grown significantly since 1999 to become one of the largest and most experienced in South Africa. I have been active in the IBA and in developing our African practice through LEX Africa.
What do you believe contributes most towards your thought leadership in this legal segment, and in the South African region?
Competition law is a uniquely global practice area - while divergences between jurisdictions remain, there is increasing convergence and much commonality on the basic principles. Cases and developments outside Africa may influence local law and practice and emerging competition jurisdictions may take advantage of and learn from the lessons and best practices developed in older more established jurisdictions. My active involvement in the IBA Antitrust Committee as an officer over the last 15 years, and now as co-chair (as well as my involvement in LEX Africa), has allowed me to expand my knowledge of global trends and developments, to be involved in conferences and submissions to regulators throughout the world and also to make contacts in the global antitrust community.
Is there anything else you would like to add?
The term "Africa" is often spoken of as if it is a single unit when it is in fact 54 different countries with a huge diversity of cultures, languages, religions, business, political and legal systems. The continent offers many business opportunities, but it is vital to understand the risks, and the increasing spread of competition law enforcement is one of several factors that need careful consideration.
Do you have a mantra or motto you live by when it comes to helping your clients?
My mantras are "The Devil is in the Detail" and "Let's Find a Solution."
What has been your biggest achievement in the past 12 months?
Being appointed co-chair of the IBA Antitrust Committee and chairing the IBA working groups, which made submissions to the South African Competition Commission on its penalty and public interest guidelines, and to the COMESA Competition Commission on its draft guidelines on dominance.
What’s most important to you?
My clients always come first.
