‘Saudi Arabia is trying to put itself on the map and establish itself as a place where international businesses want to make significant inward investments,’ says Clyde & Co’s Susie Abdel-Nabi, of the busiest Middle Eastern legal market today.

Abdel-Nabi, who is based in Dubai, leads the international firm’s dispute resolution group across the Middle East, where she has been based since 2002.

Clydes was an early mover in Saudi – gaining a presence in the market in 2009 through an association with local firm Abdulaziz Al-Bosaily Law Office, the only option at that time for international firms operating in the Kingdom.

New rules, introduced in 2023, mean affiliations are no longer enough to win work in the Kingdom. Instead, international firms must obtain foreign law licences to practise, either by setting up their own stand-alone offices in Saudi or by forming a joint venture with a local firm, in which the local firm must make up at least 25% of the partnership.

On top of this, the Regional Headquarters (RHQ) Programme means that since the start of 2024, eligible multinational corporates, including a handful of law firms, have been able to shift their Middle Eastern HQ to Saudi in order to secure an RHQ licence that enables them to bid for the most lucrative work from key government agencies, as well as to secure various other perks.

‘Saudi Arabia is trying to put itself on the map and establish itself as a place where international businesses want to make significant inward investments.’
Susie Abdel-Nabi, Clyde & Co

Both new regulations have triggered a wave of expansion in the Kingdom by international firms as they seek to win lucrative mandates from the sweeping social and economic reforms and investment set out in Saudi’s Vision 2030 strategy, which sets out ambitious plans to diversify the economy away from hydrocarbons.

So far, at least 15 firms have already secured foreign law licences, with a similar number thought to have applied but not yet completed the process. Some have ended long-term partnerships with local firms to set up alone, while others are establishing a presence in Saudi Arabia for the first time.

Several have also taken advantage of the RHQ, which is intended to support organisations’ growth plans in the country, as long as they meet various criteria, including hiring at least 15 employees, three of which are at C-Suite level and all of whom reside in Saudi Arabia, and performing certain mandatory operations such as formulating and monitoring regional strategy and having operations in at least two other Middle East countries.

While the biggest advantage to the RHQ licence is that, as of January this year the Saudi government has refused to contract directly with any foreign company without a licence, other benefits include tax relief, unrestricted visas and a ten-year exemption from Saudisation requirements, which obligate companies operating in Saudi Arabia to meet a specified quota of Saudi national employees.

With Saudi home to some of the wealthiest public bodies, institutions and sovereign wealth funds in the world, this would prohibit non-complying multinationals from accessing premium work and business streams directly from government agencies – although they could still work for other parties involved.

Firms securing RHQ licences so far include Clyde & Co, Latham & Watkins, Kirkland & Ellis, White & Case, and most recently Greenberg Traurig, which obtained its licence in February 2024.

In Abdel-Nabi’s view, the decision to take advantage of the RHQ licence was essential to the firm’s growth strategy in the Kingdom: ‘In order to work with the PIF (Public Investment Fund) and government-backed entities, it is mandated that you have your regional headquarters in Saudi Arabia. Securing our Regional Headquarters licence further cemented our dedication to our clients, specifically public bodies and government agencies that we have worked with for a very long time in the Kingdom.’

While the new regulations bring with them definite benefits, there are strict rules of compliance for international firms that may be harder for some firms to meet.

For Clifford Chance (CC), which does not have an RHQ licence but says it can still bid for projects work via its local association, these restrictions have not been an issue: ‘For a firm like ours, our offering in Saudi has scale and maturity and it is simpler for us to comply with the latest regulations,’ says CC regional managing partner Mohammed Al-Shukairy. ‘The bulk of our Saudi work is done in Saudi with the support of our global network to bring the best of both worlds to our clients.’

This sentiment is shared by Abdel-Nabi, who argues that Clydes’ long-term presence in the Kingdom makes it well-positioned to meet the conditions: ‘One of our strong points is going into challenging, emerging markets and establishing ourselves before others, and that’s given us a headstart. We have a full-service offering, and I think a lot of firms will try and play catch up.’

However, both Al-Shukairy and Abdel-Nabi think the restrictions may pose issues for firms without a longstanding history and presence in the jurisdiction. ‘I think problems may arise for law firms with a far smaller presence in Riyadh if they need to export a lot of the work outside the Kingdom, as that is an area of focus for the regulators,’ says Al-Shukairy. He further adds that many clients value firms engaging with and handling work on the ground in the Kingdom. ‘Saudi clients also want to see skin in the game with a strong presence on the ground and be true partners to our clients. This enhances one’s ability to organically build and strengthen these client relationships. That’s really our mantra at Clifford Chance in Saudi.’

Abdel-Nabi adds: ‘It will be interesting to see how new entrants into the Saudi market – who have traditionally had a fly-in, fly-out approach – are able to balance their work and comply with the regulations.’

With numerous new market entrants to Saudi, some question how they will all navigate an increasingly competitive legal landscape. The Saudi Ministry of Justice announced in October 2023 that it had granted 15 licences to foreign law firms, and this number increased further when Gibson, Dunn & Crutcher and Norton Rose Fulbright both received licences at the end of last year, while Quinn Emanuel Urquhart & Sullivan and Simmons & Simmons secured their presence in 2024.

‘The reality is, there are not enough people to meet the in-country native lawyer requirements in Saudi, so there has been a push for training to catch up.’
Sara Khoja, Clyde & Co

Lateral recruitment

This competition is creating a battle for talent as firms endeavour to comply not only with the quota for Saudi nationals set out in the foreign law licence stipulations but also with client demand for local expertise.

As Abdel-Nabi stresses: ‘Based on our experience, having been in the Kingdom for over 15 years, Abdulaziz Al-Bosaily, our managing partner, has been instrumental in our growth. He’s a Saudi national plugged into what’s happening in the market and has the experience and credibility clients want to see. If a client has a Saudi dispute, they want a Saudi partner and want to know their counsel know what they’re doing. If you’ve got a credible, established name, it opens doors and delivers positive results.’

As a result lateral partner recruitment is booming, with frequent changes between firms.

For example in 2023, Addleshaw Goddard bolstered its Riyadh presence with a flurry of hires, including Ibrahim Siddiki (formerly at Bracewell) and Homam Khoshaim and Amar N Meher from Latham & Watkins. The firm also hired Christian Both, formerly of AS&H Clifford Chance, who subsequently left in June this year to join local independent leader Khoshaim & Associates.

Kirkland’s newly established Saudi offering features seasoned Saudi lawyers Noor Al-Fawzan, previously of Latham & Watkins, and Manal Al-Musharaf, a former White & Case local partner, who offer M&A and capital markets expertise respectively.

Gibson Dunn, meanwhile, hired a team of seven local partners from White & Case and its former associated firm in 2023, including Megren Al-Shaalan, the managing partner of White & Case’s former associated Saudi law firm. This came as part of a wider regional play by the US powerhouse which has added 14 new partners and 19 new associates to its Gulf offices over the past 18 months.

Highlighting the extent of the war for local talent in the market, when Herbert Smith Freehills (HSF) became one of the first international firms to receive a foreign law licence, having previously practised in the Kingdom under an association with The Law Office of Mohammed Altammami (LOMAT), Norton Rose Fulbright formed its own association with LOMAT, acquiring all but one of its lawyers for the new partnership. This left HSF’s Riyadh office with just Saudi partner Joza Al-Rasheed, who continues to lead the office today.

In December 2023, Norton Rose Fulbright received its foreign law licence and dissolved its association with LOMAT but retained the lawyers, who are now part of Norton Rose Fulbright, with Altammami currently serving as head of Saudi Arabia.

Sara Khoja, head of the MEA employment group at Clydes, comments: ‘The reality is, there are not enough people to meet the in-country native lawyer requirements, so there has been a push for training to catch up. We’re seeing a lot of entrants into the market starting from day one with this policy and agenda. Some firms even have scholarship programmes, where they send candidates to the US or Europe to get qualified and gain experience before bringing them back to the Kingdom. There’s a lot of investment.’

Local firms are also having to navigate an ever-changing legal landscape. Addressing the increased presence of international firms in the Kingdom, Rima Mrad, a corporate and M&A partner at BSA Ahmad Bin Hezeem & Associates (BSA), a firm with offices in Saudi Arabia, the UAE, Iraq, Lebanon and Oman, says: ‘There’s a lot of competition in the legal field. The presence of Magic Circle and international law firms is pushing the expertise in the Saudi legal market to another level and is elevating the quality of legal services provided.’

BSA’s head of banking and finance Arsalan Tariq also notes that while new regulations attract new players, they also generate substantial work. ‘When laws are issued, there is a need to interpret them for companies and multinationals practising or intending to practise in the Kingdom. This means as of now there is a huge demand for lawyers in the jurisdiction. So, while more firms make it more competitive, the piece of the pie is also increasing because of the activity taking place.’

Some local firms have capitalised on the increased movement and investment in Saudi Arabia and the opportunities this brings. Khoshaim & Associates, which has offices in Riyadh and Jeddah, was associated with legacy Allen & Overy (A&O) from 2012 until they mutually parted ways in 2020. Khoshaim managing partner Zeyad Khoshaim emphasised that Vision 2030 and the need for independence to effectively and comprehensively advise multinationals investing in the Kingdom were key reasons for the decision to split from A&O in 2020 in press articles at the time.

‘When laws are issued, there is a need to interpret them for companies and multinationals practising or intending to practise in the Kingdom.’
Arsalan Tariq, BSA Ahmad Bin Hezeem & Associates

Boom times for tech and construction

As regulations increase and more multinationals enter the Kingdom, firms are taking on more diverse mandates. Mrad notes that BSA’s work has significantly broadened over the past four years, moving beyond litigation and corporate work for Saudi and international clients. Now, the firm caters to a wider range of clients, including many new investors and multinationals active in emergent sectors. ‘We are working a lot with companies who were historically active in the region but did not have a direct presence because of the previous restrictions. The newcomers include businesses active in various sectors, but mainly e-commerce and technology,’ says Mrad.

The Saudi state is targeting markets such as China and Silicon Valley for potential investment, with a particular focus on big technology companies and start-ups, with press reports suggesting they are being encouraged to set up in Saudi in return for investment. Alongside Silicon Valley, Shenzhen is considered crucial for the Kingdom to develop its emerging AI industry.

Mrad describes how technology start-ups have become a feature of the Saudi market and BSA’s work: ‘There are various new technology start-ups considering the region as a base. They are coming from the US and Europe and mainly looking to start developing their products in countries like KSA or UAE, benefiting from the various sandboxes and initiatives from the government. Such initiatives include facilities and different types of support for legal, practical and operational needs.’

The technology piece is especially important to Saudi due to the scale and complexity of the giga-projects currently under development. The need for skill and technology is essential for Saudi Arabia to achieve its Vision 2030. Clyde & Co’s Khoja comments: ‘A lot of these projects are government-led, and there is a need to have more private sector involvement for there to be a transition away from a state economy. This is why there’s such a focus on start-ups and trying to get people to set up companies.’

The infrastructure focus of Vision 2030 and desert city Neom means construction work is also keeping firms busy in the Kingdom. As Abdel-Nabi comments: ‘We have been active on mega projects from their inception, and clients continually return to us throughout the project lifecycle.’

‘Although equity capital markets have slightly softened compared to debt capital markets, there are still some very interesting opportunities, and we continue to act on a number of IPOs in the UAE.’
Mohammed Al-Shukairy, Clifford Chance

Where next?

With so many firms already active in Riyadh, many are already moving to expand elsewhere in the Kingdom. Clydes, for example, joined the likes of Dentons and Ashurst when it established a Jeddah office in May 2024.

BSA also considers Jeddah as an area with real opportunity. ‘We actively work outside of Riyadh for two major work streams: M&A involving companies present across Saudi, particularly in the energy sector, TMT, and litigation,’ says Mrad. ‘We have our internal arrangements to manage this from our Riyadh office, but in our long-term plans we have an interest to set up an office in Jeddah because of the active commercial scene and the fact we have various clients, particularly those involved in the pharmaceutical and education space, based in Jeddah.’

UAE

Saudi Arabia’s ambitious Vision 2030 strategy, combined with the ramifications of the RHQ programme, effectively pits the Kingdom against Dubai and the UAE. Partners stress though that while the Kingdom is winning many of the headlines right now, the UAE remains active.

‘Dubai has something of a halo effect on a global scale and has boomed over recent years,’ says Addleshaw Goddard’s Middle East head Robin Hickman. ‘Riyadh has its RHQ programme to ensure businesses are moving their operations to the Kingdom and this has helped the Kingdom achieve its ambitious plans, but Dubai still thrives. It’s in the best position it’s ever been in and is a real hub for the region.’

The region moved earlier than Saudi to introduce sweeping regulatory reform to facilitate the growth and appetite of multinationals operating in the jurisdiction, and in the past year the government has made significant amendments to a number of federal laws.

As Mrad comments: ‘The government is constantly hearing the challenges facing investors and addressing these. The legal amendments are issued to enhance and create more appetite for international investors and to provide more clarity on the stability for foreign investments in the jurisdiction.’

Law firms report growth across all practice areas in the UAE, with M&A and private equity particularly thriving. Al-Shukairy comments: ‘Our M&A and private equity focus not only reflects the presence of some very active financial investors in the UAE, particularly in Abu Dhabi, but also strategic players in the UAE who are looking to expand their business operations and get exposure to markets outside the Middle East.’

With asset managers and hedge funds setting up headquarters in the jurisdiction, the fund space remains a core area of activity for firms. In 2023, Addleshaws and White & Case were among the many firms making a play to further enhance their fund formation and management offering in the UAE, with the former hiring Philip Dowsett from Dechert and the latter Phillip Sacks, also from Dechert. Both individuals now head their respective practices.

Banking and finance has also been a strong performer, across both acquisition finance and capital markets. ‘We’re seeing a lot of strong issuers taking advantage of capital markets,’ says Al-Shukairy. ‘Although equity capital markets have slightly softened compared to debt capital markets, there are still some very interesting opportunities, and we continue to act on a number of IPOs in the UAE.’

Meanwhile, real estate and hospitality disputes remain prominent in firms’ work in the UAE. Abdel-Nabi explains that hospitality disputes are cyclical, typically emerging when hotel owners seek new operators every few years, often leading to conflicts. ‘At the moment we have some really interesting cases brewing for some significant hotel sites,’ explains Abdel-Nabi.

Mrad adds that BSA is seeing a similar trend, with a growing focus on real estate and bankruptcy issues. Its bankruptcy practice is expanding due to the UAE’s updated laws, which are expected to drive more restructuring work. Insurance disputes have also increased, partly due to severe weather events causing supply chain, landlord-tenant, and various industrial issues.

Employment practices are also busy, reflecting the jurisdiction’s increasing sophistication and regulatory changes. Khoja notes that for many employers, there is a careful balance between the global integration of best practice and complying with the ever-changing local landscape: ‘You have multinationals who want best practices and consistency across all their global offices, whether that be contracts, policies or benefits. Very often, the advice they seek is how to achieve this whilst still complying with the rules and protecting the company from a legal perspective.’

There is also rising demand for lawyers with tech and digital expertise, with Abdel-Nabi pointing out ‘we’re seeing a lot of exciting and interesting activity around crypto and fintech’.

Addleshaws’ Hickman adds: ‘Dubai is a very smart and entrepreneurial city, and the opportunity to move into the digital space is not being missed either here or in the wider region. We’ve made big investments in fintech, finreg and data and are building out our partnership in this space.’

Qatar

If things are positive in the UAE and Saudi, Qatar has proven to be a difficult market for some law firms. In 2023, Simmons & Simmons became the latest international to withdraw from Doha, following in the footsteps of firms such as Squire Patton Boggs, HSF, CC, Latham, Hogan Lovells and Baker Botts in previous years.

Those remaining include White & Case, Dentons, Clydes, Eversheds, DLA Piper, Pinsent Masons and Addleshaw Goddard. Addleshaws’ Hickman expands: ‘There aren’t many international firms still on the ground in Qatar, as a lot of firms that opened in the jurisdiction subsequently left. It’s a small country with only a few million people, and whilst it’s an extremely wealthy state on a per capita basis, it’s not a big legal market by any means. It’s challenging for many firms to have strong offerings there.’

‘There’s a real opportunity for us to be the go-to firm in Qatar for complex work particularly given the lack of competition.’
Robin Hickman, Addleshaw Goddard

Squire Patton Boggs said that its Doha office closure was part of a strategy to ‘invest in growth elsewhere on the Arabian Peninsula’, while HSF stated it could ‘continue to provide the quality and breadth of service to clients in Qatar’ from other offices.

Khoja observes that while exits have been a trend in Qatar over the past decade and work streams fluctuate, the jurisdiction remains active. ‘We have seen a few international law firms exit the market, but at the same time, there’s a fair bit going on. Admittedly, after the World Cup in 2022, many were wondering what was coming next, but there’s still a big stimulus in the gas industry, and many energy companies are upping production and bringing new people in.’

Hickman adds that Addleshaws has a specific strategy for Qatar and is looking to capitalise on favourable opportunities in the country. ‘We’re not looking to be completely full service, and instead are looking to double down on corporate, finance and construction work. Those are the core areas we intend to build out, and we see that there’s a real opportunity for us to be the go-to firm in Qatar for complex work particularly given the lack of competition.’

Oman

In Oman, there is a big government push to increase tourism, as Tariq comments: ‘Oman is growing towards achieving its Vision 2040 and looking at pivoting away from the oil business, much like Saudi Arabia. The sectors they are looking for investment [in] are logistics, marine and tourism.’

Tariq describes substantial real estate activity, with the government aiming to develop a new Muscat Downtown that will feature a number of luxury properties and hotels, as well as high-rise buildings. ‘The laws in Oman have changed as they look to allow foreign investors to come and deliver in the jurisdiction. As a result, many Dubai developers are expected to turn their attention to Oman. Omani companies in the construction space may not have the experience delivering high-rise buildings; the largest structure in Oman today is only 13 floors and was constructed a long time ago.’

Elsewhere, BSA also has offices in Lebanon and Iraq which, according to Mrad, are specifically tailored to service the firm’s longstanding clients still active in the respective jurisdictions. ‘In Lebanon, most of our clients are international energy clients who started operations in the country, and some are quite active, especially after the new government assignments in this field. Other than that, it’s litigation, M&A involving entities with presence in Lebanon, and retainer services to some international airlines that act in the jurisdiction.’

Mrad continues: ‘In Erbil, our operations before the political turmoil were much more active than today. At that point in time, we handled a lot of real estate, energy, and infrastructure projects for various US and European oil companies. However, since then, our practice in Erbil has changed drastically. Private sector operations dropped tremendously, and at the same time our oil and gas clients limited their presence to a streamlined team essential to their work and largely moved to other places in the region. We service these teams, as well as regional clients if they happen to have work in the jurisdiction.’

Türkiye

Türkiye retains close connections and synergies with the Gulf and deal and capital flow has steadily increased over recent years. Turkish industrial players are active in the region, especially in the context of infrastructure and projects in Saudi Arabia and the UAE, and Turkish banks are very interested in funding and financing operations, both inland and in the marine space.

2023 was of course a disrupted year for Turkish businesses as the country grappled with the impact of the country’s devastating earthquakes last February, as well as uncertainty around the presidential and parliamentary elections in May. However, the new government has implemented a robust economic strategy to address past macroeconomic imbalances, particularly high inflation.

Despite the unstable market conditions, Türkiye’s pro-foreign investment regime has enabled M&A and PE activity to remain fairly steady. Chinese and Russian companies continue to have an appetite to invest in the country, and start-ups have done particularly well. Emerging sectors such as software development and gaming have witnessed a steady increase in M&A activity, requiring corporate and IP teams to work closely together, with digital banking and fintech also areas of promise. LB

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Profile: An Overview of the Firm

At the heart of Saudi Arabia’s evolving commercial landscape stands ELaw Boutique Law Firm, a premier boutique law firm renowned for its specialisation in commercial and corporate law. Our firm has consistently demonstrated exceptional proficiency in navigating the intricate legal intricacies associated with these sectors, empowering our clients to achieve their strategic objectives with minimal legal impediments. We pride ourselves on providing personalised, client-centred legal solutions that are both innovative and practical.

Foundation and core values

ELaw was founded with the vision of offering unparalleled legal service through a focus on excellence, integrity, and innovation. Our core values are deeply rooted in these principles, which guide our day-to-day operations and long-term goals. We believe that every client deserves a tailored approach that addresses their unique needs and circumstances. Our attorneys work closely with clients to ensure that every legal strategy is bespoke, multifaceted, and effective.

Expertise in commercial and corporate law

Our firm’s expertise in commercial and corporate law is unmatched. We understand the complexities of the corporate world and provide strategic advice that helps our clients navigate through mergers and acquisitions, joint ventures, corporate governance, and regulatory compliance. At ELaw, we believe that informed decision-making is the cornerstone of business success. Our attorneys excel at anticipating legal challenges and providing solutions that align with our clients’ business objectives.

Expansion into technology law

In recent years, we have expanded our expertise into the rapidly advancing field of technology law. This includes fintech, regtech, and other emerging technological sectors, where we aim to be at the forefront of legal innovation. The digital revolution calls for a new breed of legal experts, and ELaw is dedicated to meeting this demand. We assist tech companies in dealing with regulatory compliance, intellectual property rights, and data protection, among other key legal issues. Our proactive approach ensures that our clients remain compliant in an ever-changing regulatory environment.

Client-centred approach

What sets ELaw apart is our client-centred approach. We believe that the relationship between a law firm and its clients should be based on trust, communication, and mutual respect. Our attorneys take the time to understand the business models, goals, and challenges of our clients, enabling us to offer solutions that are both innovative and practical. Whether advising a startup or an established corporation, our focus is always on providing value and delivering results that exceed expectations.

Conclusion

ELaw Boutique Law Firm is more than just a legal service provider; we are a trusted partner committed to the success and sustainability of our clients’ businesses. Our comprehensive expertise in commercial, corporate, and technology law, combined with our client-centric approach, positions us as leaders in the legal field. As we continue to evolve and expand, our core mission remains the same: to empower our clients through exceptional legal counsel, fostering growth and innovation in an ever-changing world.

Thought Leadership: Legal Developments in Saudi Arabia

Saudi Arabia has been witnessing transformative legal developments over the past decade, reflecting its Vision 2030 agenda aimed at diversifying the economy and reducing dependency on oil. These changes encompass a wide range of legislative reforms, judicial advancements, and regulatory updates. As thought leaders in the legal domain, ELaw Boutique Law Firm is at the forefront of these shifts, helping clients navigate the evolving landscape with confidence and agility.

Technology law: paving the way for innovation
One of the most significant areas of development has been technology law. The Saudi government recognises the importance of creating a robust legal framework to support the burgeoning fintech and regtech industries. Recent regulations have focused on ensuring cyber security, protecting consumer data, and fostering a conducive environment for innovation. These measures are pivotal in creating a legal ecosystem that supports technological advancement while safeguarding consumer interests.

For instance, the introduction of the Saudi Central Bank (SAMA)’s Regulatory Sandbox exemplifies the Kingdom’s commitment to nurturing fintech innovations. This initiative allows companies to test new technologies in a controlled environment, balancing innovation with consumer protection. Through this sandbox, fintech entities can experiment with novel solutions under regulatory oversight, thereby accelerating the development of cutting-edge financial technologies.

Additionally, the Capital Market Authority (CMA) has implemented several regulations aimed at facilitating fintech growth, including equity crowdfunding regulations and others in financial transactions. These regulations not only provide a clear legal framework for fintech operations but also encourage transparency and accountability, essential for building investor trust and market integrity.

Corporate governance: enhancing transparency and compliance

Another critical development is the overhaul of corporate governance standards. News about the imminent release of guidelines stipulates stricter compliance and transparency measures for certain activities, aiming to enhance investor confidence and attract foreign investments in these sectors. These changes are particularly relevant for businesses looking to establish or expand their operations in Saudi Arabia. By adhering to these enhanced governance standards, companies can better manage risks, improve strategic decision-making, and strengthen their market position.

The rules will require greater disclosure of financial and operational information, along with a clear delineation of responsibilities among board members and executives. This move aims to align Saudi corporate governance practices with international standards, thereby making the Kingdom a more attractive destination for foreign investors. Effective governance practices not only mitigate risks but also contribute to sustainable business growth.

Judicial advancements: streamlining dispute resolution

Judicial reforms have also been instrumental in supporting Saudi Arabia’s Vision 2030. These reforms focus on improving the efficiency and transparency of the legal system, making it easier and faster to resolve commercial disputes. This is crucial for fostering a business-friendly environment where legal ambiguities do not hinder commercial activities. The establishment of specialised commercial courts and the digitisation of legal processes are notable strides towards achieving this goal.

Regulatory updates: adapting to global standards

Regulatory updates in various sectors have been geared towards adapting global best practices to the Saudi context. This includes aligning local laws with international standards in areas such as anti-money laundering (AML), combating the financing of terrorism (CFT), and intellectual property rights (IPR). These efforts not only enhance compliance but also ensure that Saudi businesses remain competitive on the global stage.

Conclusion

Saudi Arabia is well on its way to becoming a hub for technological innovation and commercial growth, thanks to these dynamic legal reforms. At ELaw Boutique Law Firm, we are committed to staying abreast of these changes, ensuring our clients are well-prepared to navigate the evolving legal landscape. Our expertise in commercial, corporate, and technology law positions us as the ideal partner for businesses aiming to thrive in this rapidly transforming market. By leveraging our deep understanding of Saudi Arabian legal frameworks, we help our clients achieve their strategic objectives with confidence and agility.

Q&A: Interview with Ethar Aldaej

How has ELaw adapted to the rapid legal changes in Saudi Arabia?

We have adopted a proactive approach to legal changes, continuously updating our knowledge base and adapting our strategies to align with the latest regulations. Our team frequently engages in professional development and collaborates with regulatory bodies to ensure we provide the most current and effective legal advice.

What sets your firm apart in the fields of commercial and corporate law?

Our firm’s unique blend of local knowledge and international perspective sets us apart. We offer tailored legal solutions that cater specifically to our clients’ needs, ensuring they can operate seamlessly within the local legal framework while pursuing their strategic goals.

Can you share some insights on the future of fintech and regtech in Saudi Arabia?

The future of fintech and regtech in Saudi Arabia is incredibly promising. With ongoing regulatory support and a growing interest from the private sector, these industries are poised for significant growth. Our firm is ideally positioned to guide clients through this dynamic landscape, helping them innovate while remaining compliant.

How does ELaw incorporate technology and innovation in its legal practice?

We leverage cutting-edge technology and innovative tools to enhance our legal services. From AI-driven research to digital client management systems, we integrate advanced solutions to increase efficiency, accuracy, and client satisfaction. Our commitment to technological advancement ensures we stay ahead in the ever-evolving legal landscape.

What are the main challenges that ELaw faces in the current legal environment?

The main challenges include staying ahead of rapid legal changes, managing the complexities of cross-border transactions, and ensuring data security in a digital age. We address these challenges through continual learning, strategic partnerships, and robust cyber security measures, enabling us to provide comprehensive and secure legal services.

How does ELaw support the professional development of its team?

We prioritise the growth and development of our team by offering regular training sessions, access to industry conferences, and opportunities for further education. Additionally, we foster a collaborative environment where knowledge sharing and continuous learning are encouraged, ensuring our team remains at the forefront of legal expertise.

In what ways does ELaw contribute to the local community and legal education?

ELaw actively participates in community outreach programmes, pro bono work, and legal education initiatives. We conduct workshops, seminars, and mentorship programmes to support local legal education and awareness. By giving back to the community, we aim to contribute to the overall growth and development of the legal profession in Saudi Arabia.

Can you describe a recent successful case or project that ELaw worked on?

Recently, we assisted a major international corporation in navigating complex regulatory requirements to establish operations in Saudi Arabia. Our team provided comprehensive legal support, from initial consultation to final implementation, ensuring compliance with local laws and achieving the client’s strategic objectives. This successful project underscores our expertise in handling intricate legal matters and delivering exceptional client results.

What are ELaw’s goals for the next five years?

Over the next five years, we aim to expand our services, enhance our technological capabilities, and strengthen our international partnerships. By focusing on these goals, we plan to solidify our position as a leading legal firm in Saudi Arabia and continue to provide unparalleled service to our clients.

How does ELaw approach client relationships and customer service?

At ELaw, we prioritise building strong, lasting relationships with our clients. We achieve this by providing personalised service, understanding each client’s unique needs, and maintaining transparent communication throughout our engagement. Our client-centric approach ensures that we deliver not only legal solutions but also peace of mind and confidence in our services.

The post The Saudi Arabian legal market appeared first on Legal Business.

The advent of artificial intelligence (AI) has ushered in an era of unprecedented technological advancements, transforming various sectors by enhancing efficiency, accuracy, and decision-making capabilities. However, the proliferation of AI technologies also brings forth significant challenges, particularly concerning safety, fairness, transparency, and accountability. In response to these challenges, the European Union (EU) has proposed and the European Parliament has formally adapted the EU AI Act, a comprehensive regulatory framework aimed at fostering innovation while ensuring the safe and ethical deployment of AI systems. A central element of this framework is the requirement for conformity assessments, particularly for high-risk AI systems. This article explores the intricacies of conformity assessments as mandated by the EU AI Act, detailing their purpose, processes, and implications for AI developers and users.

Purpose of conformity assessments

Conformity assessments serve as a critical mechanism within the EU AI Act, designed to verify that AI systems adhere to the established legal and regulatory standards. The primary objectives of these assessments are multifaceted: they aim to ensure compliance with the EU AI Act, enhance the safety and reliability of AI systems, promote public trust, and ensure accountability among developers and deployers of AI technologies. By subjecting AI systems to rigorous scrutiny, conformity assessments help mitigate potential risks associated with AI, thereby safeguarding users’ rights and interests.

Regulatory context and requirements

The EU AI Act categorises AI systems into different risk levels, with high-risk AI systems being subject to the most stringent requirements. These systems, which include applications in critical infrastructure, healthcare, law enforcement, and employment, are assessed against a comprehensive set of criteria to ensure their safe and ethical operation.

Risk management system: One of the foundational requirements for high-risk AI systems is the implementation of a robust risk management system. This system must encompass the entire lifecycle of the AI product, from initial design and development to deployment and post-market monitoring. It involves identifying, analysing, and mitigating potential risks that the AI system might pose. Continuous monitoring and periodic updates to the risk management measures are also mandated to adapt to emerging threats and vulnerabilities.

Technical documentation: Comprehensive technical documentation is a cornerstone of the conformity assessment process. Developers are required to maintain detailed records that describe the design, specifications, algorithms, data sources, testing methods, and performance metrics of the AI system. This documentation must be sufficiently detailed to allow external auditors and regulators to understand and verify the AI system’s compliance with the EU AI Act.

Data governance: High-risk AI systems must adhere to strict data governance standards to ensure the quality, integrity, and relevance of the data used in their training, validation, and testing phases. This includes measures to prevent and mitigate biases in the data, which could lead to discriminatory outcomes. Ensuring data accuracy and completeness is essential for the reliable performance of AI systems.

Transparency and explainability: Transparency is a key principle underpinning the EU AI Act. AI systems must be designed to provide clear and understandable information about their capabilities, limitations, and decision-making processes. Users should be informed when they are interacting with an AI system, and mechanisms should be in place to explain the rationale behind the AI’s decisions. This fosters trust and enables users to make informed choices about the AI technologies they use.

Human oversight: The EU AI Act emphasises the importance of human oversight in the operation of AI systems. High-risk AI systems must be designed to allow human operators to intervene and override decisions when necessary. This ensures that critical decisions, particularly those affecting health, safety, and fundamental rights, are subject to human judgement and control.

Cyber security and resilience: Given the increasing threats to cyber security, the EU AI Act mandates that AI systems incorporate robust cyber security measures. These measures are designed to protect the AI system from attacks, data breaches, and other security vulnerabilities. Ensuring the resilience of AI systems is crucial to maintaining their functionality and reliability in adverse conditions.

Process of conformity assessments

The process of conducting conformity assessments under the EU AI Act involves several stages, each designed to ensure that AI systems meet the necessary standards and requirements.

Preparation: The preparation phase involves gathering and organising all necessary documentation and evidence to demonstrate the AI system’s compliance with the EU AI Act. This includes compiling technical documentation, risk assessments, testing results, and internal audit reports. Developers must ensure that all relevant information is readily available for review by auditors or notified bodies.

Assessment: The assessment phase involves a thorough review and evaluation of the AI system against the criteria specified in the EU AI Act. For some high-risk AI systems, this may be conducted internally by the organisation. However, for higher-risk systems, an independent external assessment by a notified body is required. These notified bodies are accredited organisations authorised to evaluate and certify AI systems’ compliance. The assessment process may include audits, inspections, and testing to verify that the AI system meets the required standards.

Certification: Upon successful completion of the assessment, the AI system may receive a certificate of conformity. This certification indicates that the system complies with the EU AI Act and meets all necessary requirements. Certification is essential for high-risk AI systems to be marketed and used within the EU. It provides assurance to users and regulators that the AI system has undergone rigorous evaluation and adheres to safety, fairness, and transparency standards.

Continuous compliance: Compliance with the EU AI Act is not a one-time requirement but an ongoing obligation. Developers must implement continuous monitoring and periodic reviews to ensure that the AI system remains compliant throughout its lifecycle. This includes updating risk management practices, maintaining technical documentation, and reporting any incidents, malfunctions, or significant changes to the AI system to relevant authorities.

Implications for AI developers and users

The conformity assessment requirements imposed by the EU AI Act have significant implications for AI developers and users. For developers, these requirements necessitate a proactive approach to compliance, involving substantial investment in risk management, data governance, transparency, and cyber security. Developers must establish robust internal processes to document, monitor, and review their AI systems continuously. The need for external assessments by notified bodies also introduces additional costs and administrative burdens. However, these measures are essential to ensure the safe and ethical deployment of AI technologies and to build public trust in AI systems.

For users, the conformity assessment framework provides assurance that high-risk AI systems have been rigorously evaluated and meet stringent standards. This fosters trust in AI technologies and enables users to make informed decisions about their adoption and use. The transparency and explainability requirements also empower users by providing them with clear information about the AI systems they interact with and the rationale behind their decisions.

Challenges and future directions

While the EU AI Act’s conformity assessment requirements represent a significant step towards ensuring the safe and ethical deployment of AI systems, they also pose several challenges. One of the primary challenges is the potential for increased regulatory burden and compliance costs for AI developers. Small and medium-sized enterprises (SMEs) may find it particularly challenging to meet the stringent requirements, which could hinder innovation and competitiveness.

Another challenge is the need for harmonisation and standardisation of conformity assessment processes across different member states. Ensuring consistency and uniformity in the application of the EU AI Act’s requirements is crucial to avoid fragmentation and ensure a level playing field for AI developers.

To address these challenges, the EU and relevant stakeholders must work collaboratively to develop clear guidelines, best practices, and support mechanisms for AI developers. This includes providing technical assistance, training, and resources to help developers navigate the conformity assessment process. Additionally, fostering international cooperation and alignment with global AI standards can enhance the effectiveness and efficiency of conformity assessments.

Conclusion

The EU AI Act’s conformity assessment requirements represent a comprehensive and rigorous approach to ensuring the safe, ethical, and transparent deployment of high-risk AI systems. By establishing clear standards and processes for risk management, data governance, transparency, and cyber security, the EU AI Act aims to mitigate potential risks and promote public trust in AI technologies. While the implementation of these requirements poses challenges for AI developers, particularly in terms of compliance costs and administrative burdens, they are essential for safeguarding users’ rights and interests.

As AI technologies continue to evolve and proliferate, the importance of robust conformity assessments cannot be overstated. By adhering to the EU AI Act’s requirements, developers can ensure that their AI systems operate safely, fairly, and transparently, thereby contributing to the responsible and sustainable development of AI. The ongoing collaboration between regulators, developers, and other stakeholders will be crucial in addressing the challenges and realising the full potential of AI technologies in a manner that aligns with societal values and ethical principles.

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Iran is a strategic country located in the Middle East, possessing abundant natural resources such as oil, gas, gold, and other mines and minerals. In addition, Iran enjoys the benefits of having access to the Caspian Sea in the north, and to the Persian Gulf and free waters of Oman in the south.

Moreover, Iran is one of the top ten countries in the world with the most officially registered UNESCO World Heritage sites, and is among the few four-season countries of the world which benefits from diverse landscapes and geographical distribution, and thus having the potential to become an attractive tourism destination. Iran, at the same time, possesses a favourable climate for producing a variety of agricultural products, such as saffron and pistachios.

The country is also quite large in terms of the total land area it covers, being the second-largest country in West Asia), with a population of over 80 million people. It is strategically placed at the heart of the Middle East, being direct neighbour to a considerable number of countries; namely Armenia, Azerbaijan, Turkmenistan, Afghanistan, Pakistan, Iraq, Turkey, Kuwait, Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, and Oman; noting that Iran has maritime borders with the last six countries, and Kazakhstan and Russia are also neighbours to Iran by way of the Caspian Sea.

Investment and business opportunities:

Possessing the aforementioned qualities, makes Iran an important country both for those who wish to trade with and invest in Iran, and for those who wish to engage in commerce and investment in its neighbouring countries. In fact, apart from Iran’s rich natural resources, tax incentives, and low-priced labour, its geopolitically significant location – with several free-trade zones at the heart of the West-East corridor, which connects Europe and the Middle East to Asia, or at the centre of the North-South corridor which connects Russia to the Persian Gulf and Arab countries – gives Iran a natural advantage as the focal point for storage, swap, and transit of various commodities, whether it be transiting energy through pipelines, transmitting power, or transshipment of cargo via sea or railway, etc. This is the main reason why in the past several years, some major long-term agreements have been concluded with Iran regarding energy, infrastructure, ports and free-trade zones (such as Chabahar port), etc, with the potential of many more being concluded in the future.

Legal service necessity

Taking into account Iran’s geographical placement as well as the opportunities and attractions that go with it, non-Iranian investors and traders, especially those active in the Middle East region, will invariably at some point require to directly or indirectly solicit legal advice with regard to Iran’s legal system – whether it be in relation to legal framework for investment protection, contract enforceability, starting a business, taxation issues, or other practical issues like dispute settlement procedures, provisional orders, or recognition and enforcement of awards issued by foreign courts or arbitral panels. Put differently, due to Iran’s geography and natural resources, advantages and attractions – being at the heart of the Middle East, centre of the North-South Corridor, and an essential part of the East-West Corridor, controlling power of the Hormuz Strait etc – it is more likely than not that international businesses active in the region will inevitably at some point require legal advice concerning Iranian laws and regulations. Understanding this reality and engagement in rendering timely, accurate, and cost-effective legal advice and services to international players in the region has been a cornerstone of Hatami & Associates’ business model. We have a proven track record of excellence and integrity in provision of effective legal advice, services and even feasibility studies from a legal point of view to a highly satisfied international client-base.

‘We remain proud of our consistent ability to steer our clients clear from obstacles in their pursuit of their business goals and our track record and history of highest client satisfaction testifies to our ability in this regard.’
Ali Hatami, Hatami and Associates

In this ever-growing region of high importance where East meets the West and when it comes to conducting business in the Middle East and beyond, we remain proud of our consistent ability to steer our clients clear from obstacles in their pursuit of their business goals and our track record and history of highest client satisfaction testifies to our ability in this regard. Our purpose and business model at Hatami & Associates is to ‘Guide and Protect’ our clients on all legal aspects of their business journey from A to Z. Where you see opportunity in this region, we pave the legal avenues for you to reach it.

Legal framework

Investment protection

According to Foreign Investment Promotion and Protection Act (FIPPA), foreign investment is possible in all sectors of the country’s economy without a preset ceiling amount for the invested capital. This is so for all foreign natural or legal persons, including dual Iranian nationals that plan to invest capital of foreign-origin.

The protections included in FIPPA are as follows:

• Guaranteeing and transferring foreign capital only by obtaining a foreign investment licence.
• Imposing no ceiling limit on the intended invested capital.
• Ensuring the possibility of exporting products and transferring the resulting currency abroad.
• Guaranteeing capital against expropriation and immediate compensation based on real value of investment before expropriation.
• Observance of national treatment principle regarding foreign investors.
• Possibility of resolving disputes between foreign investors and the government by referring to arbitration.

Foreign investment under FIPPA and its executive regulations can be made directly or indirectly. Indirect investment is made as contractual arrangements, including ‘build-operate-transfer’, ‘buy-back’, and ‘civil participation’. In other words, any type of investment in which a foreign investor does not want or is not eligible to have a share of joint venture capital and ownership is known as indirect investment.

Enforcing contracts

Regarding the efficiency of dispute resolution and quality of judicial process as two key factors in assessment of contract enforcement, and their relation with the cost and time of dispute resolution, it can be claimed that Iran has a competitive advantage in comparison with the other countries in the region. The reason is that Iran has taken some effective actions in recent years which both directly and indirectly ease the process of contract enforcement. For instance, constructing the online platform of filing and service of the judicial documents has reduced the time and indirect cost of filing the lawsuits and servicing related documents or decisions. In addition, forming a special commercial court, with highly professional judges, dealing only with business litigations is another eminent step in court structure and proceeding quality which directly impacts on contract enforcement.

Moreover, when direct costs such as court costs, average attorney fees, and enforcement costs are considered, it becomes evident that the process is a low-cost one.

Practical issues

1. Association and openness to foreign dispute settlement procedures.
2. Recognition and enforcement of a non-Iranian arbitral award.
3. Dealing with international arbitrations under Iranian legal system.
4. Conditions for enforcement of awards which are issued by non-Iranian courts.
5. Categories of costs for settling a dispute in Iran.
6. Iranian courts familiarity with the specification, specialities and requirements of commercial disputes involving non-Iranian factors.
7. Implications of the Iranian legal system for cross-border criminal cases.
8. Iranian legal system’ effectiveness for settling or adjudicating the disputes with foreign elements.

Hatami and Associates International Law Firm

Founded in 1997 by Dr Ali Hatami, Hatami and Associates International Law Firm is a leading global business law firm, that has formed a solid reputation due to its expertise and experience. From its inception to date, the firm has consistently focused its practice on corporate law and international trade and foreign investment, and has brought a diversified range of talented lawyers – complementing each other’s expertise – under the leadership of Dr. Hatami, with an eye to provide unique solutions in addressing, advancing and defending its clients’ interests and needs. Throughout the years, we have worked with distinguished local and international clients from various sectors, and have very efficaciously managed to build an impressive client base from various countries and provided the same with competent advice on Iranian laws and regulations as well as on international matters. The value of the projects and disputes for which the firm has provided its services, amounts to more than $500bn. The firm’s extensive experience in dealing with various clients of all nationalities has enabled us to effectively communicate, understand, and address the clients’ distinct needs with an eye to ensure the delivery of the best possible outcome. Also of particular note is the firm’s success in building a solid network of collaboration with various North American and European law firms and financial consultants in order to best serve our clients’ multifaceted interests internationally.

‘The value of the projects and disputes for which the firm has provided its services, amounts to more than $500bn.’
Ali Hatami, Hatami and Associates

The firm has, since its establishment, advised and advocated its clients in many diverse disputes, with an aggregated value amounting to more than $500bn. Such services include A-Z dispute settlement phases; ie, drafting pre-action legal opinion, clients’ briefings, advocating the clients before the dispute settlement body in every step, including enforcement of the awards. Having in-depth knowledge and experience in international trade and investment law and usages, the achievements of the firm in disputes, especially those involving foreign factors, have been exceptional. The firm has participated in establishing several case laws in the courts of Iran. For instance, in a recent dispute over certain amount of euros, after winning the lawsuit in favour of the Turkish client, a complex legal issue arose about the applicable currency exchange rate. The Iranian loser party did not have euros, so we had to sell its assets and convert the rials to euros. According to the rules of the Central Bank of Iran (CBI), the exchange rates are only legal if announced by the CBI. Yet, such CBI rates, although much lower than the free market rates, are not accessible for enforcement of the awards. The courts tended to apply the CBI rates. It was our team who argued for, insisted on and reasoned in favour of the applicability of the free-market exchange rates. Not only was the court convinced, but also a benchmark was established in the case law.

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Lebanon finds itself trapped in a profound political, economic, financial, and social crisis, the effects of which have echoed across its public services and societal fabric for half a decade. This multifaceted crisis has created a stark escalation in poverty levels, marking a troubling descent in the standard of living for almost half the population. Concurrently, the efficacy of public sector institutions has faded, with service provision faltering under the strain of fiscal constraints and administrative inefficiencies.

Inflation and workforce exodus

At the heart of this turmoil lies a relentless inflationary spiral, driving up prices and eroding the purchasing power of ordinary citizens. However, in the first quarter of 2024, inflation showed signs of slowing down while the exodus of skilled workers from the public sector, lured by more promising prospects in the private sector or abroad, continues.

Armed conflict and damages

The situation is further aggravated by ongoing conflicts, notably the war along Lebanon’s Southern border in conjunction with the war in Gaza. This ongoing conflict has taken a heavy toll on the country’s physical infrastructure, destroying houses, roads, and agricultural lands with extensive forest fires and the destruction of thousands of acres of farmland, and soil damage due to the use of white phosphorus bombs. Moreover, since 8 October 2024, over 90,000 people have been displaced from southern Lebanon, further exacerbating the humanitarian crisis, and highlighting the severe impact of the regional instability on civilian lives.

Syrian refugee crisis

Lebanon hosts more than two million Syrian refugees who have fled their homes in search of safety due to the civil war, marking the highest per capita globally. This influx has placed a severe strain on Lebanon’s resources and infrastructure. Syrian refugees often work without permits, do not pay taxes, and do not pay for electricity. Even before the Syrian refugee crisis began in 2011, Lebanon faced a shortage in electricity production relative to consumption. Over the past five years, the number of refugees has increased significantly, leading to a surge in electricity consumption. This has exacerbated the strain on Lebanon’s already struggling power grid, leading to more frequent and prolonged power outages. Additionally, a large number of refugees are involved in criminal activities, and more than half lack residency status, exacerbating social tensions and straining the country’s infrastructure. The burden is particularly evident in public services. There is an overload on healthcare services, schools are operating in two shifts to accommodate the influx of refugee children, and roads and other infrastructure are under significant pressure.

Furthermore, the security services are weakened due to inadequate wages and resources, making them less effective in dealing with ordinary crime. The proportion of Syrian detainees compared to the overall prison population is higher than that of Lebanese detainees. Despite efforts by Lebanese authorities, the international response, particularly from Europe and the United States, has been inadequate, ignoring the calls for facilitating the refugees’ return to safe zones
in Syria.

‘Lebanon faces an uphill battle to salvage its economic vitality and restore normalcy for its population amid these challenges.’

IMF Negotiations

Since May 2020, Lebanon has been in negotiations with the International Monetary Fund (IMF) for a rescue package that would help stop the deterioration of its macroeconomic outlook. An initial Staff Level Agreement (SLA) was signed between Lebanon and the IMF in April 2022 for a four-year extended fund facility that envisioned restructuring the financial sector, undertaking fiscal reforms, and strengthening governance. However, progress in implementing the actions mandated by the 2022 agreement has been extremely slow. In such a scenario of limited progress, the IMF has warned that continued inaction and weak willingness for reform could lead to a ‘never-ending crisis’.

World Bank initiatives

The World Bank has initiated several projects to support Lebanon’s recovery. One major initiative is the US$34m Fiscal Management Project in February 2024, aimed at restoring core fiscal management functions to support revenue mobilisation and ensure the accountable use of public resources. This project focuses on stabilising revenue administration, enhancing tax compliance, and upgrading ICT systems for tax and customs functions. It also seeks to restore fiscal controls, improve budget preparation and fiscal reporting, and strengthen oversight and accountability mechanisms.

Currency stability

Despite the challenging environment, the Lebanese pound (LP) maintained a stability against the US dollar on the parallel FX market due to:

1. high dollarisation as Lebanon’s economy heavily relies on the US dollar for transactions and savings;
2. convergence between official and parallel exchange rates: Since mid-February 2024, there has been a relative convergence between the official exchange rate and the parallel market rate for the Lebanese pound against the US dollar;
3. growth in BDL’s liquid FX buffers: The Banque du Liban (BDL), Lebanon’s central bank, has experienced continuous growth in its liquid foreign exchange (FX) reserves; and
4. due to quasi-balanced public and external accounts: Lebanon’s public finances (government revenues and expenditures) and external accounts (foreign trade and financial transactions) were somewhat balanced or stable.

Conclusion

Lebanon faces an uphill battle to salvage its economic vitality and restore normalcy for its population amid these challenges. Continued efforts towards fiscal reforms, international support, and effective governance will be crucial for its recovery.

Law Offices of Naoum Farah as a law firm deeply invested in Lebanon’s future, we are committed to supporting legal reforms that promote transparency, accountability, and sustainable development. We believe that through strategic legal interventions and robust policy frameworks, Lebanon can overcome its current challenges and build a more stable and prosperous future.

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What is the current state of Irish legislation on ESG?

Environmental, social and governance considerations have always been important to our clients but in recent years conversations about ESG matters have risen to the top of many organisations’ agendas, especially following the pandemic.

At Arthur Cox, we have seen demand for ESG-related advice increase over recent years and we expect that trend to continue as ESG considerations are pondered by governments, regulators, companies, investors and wider society.

The Irish legislative landscape on ESG matters is made up of domestic and EU measures (all of which exist in the context of global initiatives and discussions).

ESG touches upon multiple policy areas, such as climate action, biodiversity, energy, water, financial services, commercial enterprise, and transport. This means that legislation on ESG covers a broad range of topics and has an impact on multiple stakeholders.

When we talk about ESG, many of the legislative measures over the past decade have focused on the E of ESG, ie environmental goals (particularly those related to climate), but it is important to remember that there have also been significant legislative and policy initiatives connected to the S and the G.

Irish domestic initiatives over recent years are many and varied. They include the publication of Ireland’s first statutory National Adaptation Framework in 2018, the passing of the Climate Action and Low Carbon Development (Amendment) Act in 2021, committing Ireland to specific greenhouse gas emission reduction targets by 2030 and 2050, the Circular Economy and Miscellaneous Provisions Act in 2022 (supporting Ireland’s transition to a circular economy) and the Work Life Balance and Miscellaneous Provisions Act in 2023 (setting new ‘S’ rules for Irish workers).

At an EU level, measures such as the European Commission’s 2018 Action Plan on Financing Sustainable Growth, 2019 Green Deal and 2021 Sustainable Finance Strategy have led to a proliferation of European legislative measures, some of which are directly effective in Ireland with others being transposed into Irish law.

Are there any recent or upcoming changes to Irish ESG legislation that our readers should be aware of?

There are a number of measures that Irish businesses should be aware of and the key one to mention is the Corporate Sustainability Reporting Directive (CSRD).

Irish legislation transposing the Corporate Sustainability Reporting Directive (CSRD) is expected to be published ahead of the 6 July 2024 deadline. Companies within scope of the first phase will be preparing to report in 2025 on FY 2024.

We recognise that ESG considerations are impacting all of our clients across sectors not just through law and regulation but through other potential ESG-related exposures.

What legal obligations do Irish companies have in terms of ESG reporting?

Many of the legal obligations concerning ESG in Ireland stem from EU legislation. The focus of EU ESG measures in recent years has been on disclosure and reporting (as opposed to mandating specific actions).

The measures include those set out in:

• the Non-Financial Reporting Directive (2014/95/EU)
• the Corporate Sustainability Reporting Directive (EU) 2022/2464
• the Sustainable Finance Disclosures Regulation (EU) 2019/2088
• the Taxonomy Regulation (EU) 2020/852
• the Capital Requirements Regulation (EU) No 575/2013
• the Low Carbon Benchmarks Regulation (EU) 2019/2089
• the Climate Law Regulation (EU) 2021/1119
• the Gender Balance on Corporate Boards Directive (EU) 2022/2381

How does Irish law enforce ESG disclosure by companies?

Enforcement covering matters that are now labelled ESG is not new. Up to now, Irish law has overseen ESG disclosures under general rules of company law, eg, through examining company reports for material misstatements. Given the new and upcoming ESG-specific disclosure requirements, we expect enforcement to become increasingly robust with companies’ sustainability information being scrutinised by various stakeholders including regulators, lenders, insurance companies, shareholders and the general public.

The reach of ESG regulation is very broad and the regulatory sanctions will vary depending on the particular regulator engaged by the event that triggers an investigation. The regulatory and reputational implications of investigations are likely to be particularly significant if greenwashing allegations emerge.

It is important to remember that enforcement action by regulators is not the only means by which company disclosure will be scrutinised and challenged and we expect a rise in actions through litigation.

What are the penalties for non-compliance with ESG regulations in Ireland?

Regulatory sanctions will depend on the nature of the specific regime engaged. They can include directions, cautions, reprimands, fines, suspensions or revocations of authorisations.

Given the number of different sources of ESG regulations in Ireland, it may be most helpful to give an illustrative example. Taking the CSRD as that example, the CSRD will require companies to report sustainability information in compliance with new reporting standards. Failure to comply with these standards can result in substantial fines, eg, financial penalties of up to €50,000 and administrative fines of up to 2% of a company’s annual average revenue if it exceeds €400m.

Outside formal, financial penalties, it is also important for companies to consider the reputational risks associated with getting ESG disclosures wrong.

How does Irish ESG legislation address social issues such as employment rights and diversity?

Irish ESG legislation has been increasingly attentive to social issues, including employment rights and diversity, which underscores a broader commitment to equality, diversity and inclusion issues.

The introduction of the Gender Pay Gap Information Act in 2021 marked a significant step towards transparency in the workplace, requiring organisations with more than 250 employees to report gender pay gap metrics. From 2024, companies with 150 employees or more will be required to submit gender pay gap reports, and from 2025 this will be extended to companies with 50 employees or more.

How does Irish legislation ensure the environmental aspect of ESG, specifically in terms of sustainability and climate change?

Irish legislation has taken significant steps to ensure the environmental aspect of ESG, particularly focusing on sustainability and climate change.

The Climate Action and Low Carbon Development (Amendment) Act, signed into law in 2021, commits Ireland to a legally binding path to net-zero emissions by 2050 and a 51% reduction in emissions by 2030 from a 2018 baseline.

This act is a cornerstone in Ireland’s framework to meet its international and EU climate commitments, aiming to transform the economy towards a greener future.

What is Arthur Cox’s approach to ESG issues in its legal practice?

At Arthur Cox, we recognise that ESG considerations are impacting all of our clients across sectors not just through regulation but through impacts on their business proposition.

Our ESG group works with our clients to identify and integrate ESG priorities at all levels of their businesses. We advise clients on areas such as energy transition, climate action, sustainable finance and green bonds, ESG disclosures and sustainability reporting, sustainable real estate investment and development and green leases.

What sets us apart from other firms is the breadth and cutting-edge nature of our ESG practice. Our ESG group is at the forefront of the market, providing clients with advice across the entire ESG space.

We have assembled a cross-disciplinary team of experts who bring a wealth of knowledge and experience across sectors to work with our clients to meet their ESG-related goals and obligations.

Our approach is collaborative and client-focused. We work closely with clients to understand their unique goals and challenges, providing tailored solutions that reflect the latest legal updates and industry insights.

What measures has your firm taken to improve its own ESG performance?

Sustainability for us involves a commitment to robust governance, policies, and practices. That commitment includes a relentless focus on diversity and inclusion, respect for human rights, responsible procurement and environmental sustainability. The integration of each of these elements is a key part of the decision making for our business.

Our ESG strategies are overseen by our Sustainable Business Committee, which manages our Sustainable Business Programme. At the core of this programme is the annual publication of our Sustainable Business Impact Report. Launched in 2021, this report is a comprehensive overview of our initiatives and accomplishments across four essential dimensions: community, workplace, marketplace, and environment. By aligning with the UN Sustainable Development Goals, we aim to show our commitment to global sustainability standards.

We aim to play an active role in contributing to positive change while minimising our environmental impact through a programme of monitoring and continuous improvement.

What are the biggest ESG challenges your firm currently faces, and how are you addressing them?

As a firm, we have set ambitious targets in relation to reducing our Scope 1, 2 and 3 emissions. Over the past 12 months, we have continued to work with our people and external stakeholders to assist us in the delivery of the key measures required to achieve our carbon reduction goals.

Our work in this area is continuing and we are very aware that we need to continue to work with our people to reduce our carbon footprint as an organisation. To address this, we are working hard to explore alternatives so that we can provide more sustainable options through an updated travel policy, online meetings, events and other operations.

How does the firm assist clients in integrating ESG factors into their business strategies?

We assist clients in navigating reporting obligations and advise boards on strategic planning, risk management and internal controls to support disclosure in relation to their business operations and value chains.

Our ESG group advises on disclosure and sustainability reporting obligations in relation to climate, diversity and other aspects of ESG in compliance with local and international legislation and voluntary frameworks, including the CSRD, the Taxonomy Regulation and Task Force on Climate-related Financial Disclosures.

We also advise companies on all aspects of their governance arrangements. Board governance and oversight is essential in developing and delivering effective ESG strategy, managing risks including activism and litigation, supporting robust disclosure and maintaining stakeholder engagement.

We provide regular ‘horizon scanning’ insights to legal teams and company boards regarding ESG-related developments and advise boards on topical issues including board diversity, executive remuneration, directors’ duties and the implications of new legislation such as the proposed Corporate Sustainability Due Diligence Directive (CSDDD).

Can you share some examples of how Arthur Cox has helped clients navigate complex ESG issues?

Our ESG team offers advice on a multitude of complex ESG issues, such as:

Environmental: Under the environmental pillar we advise on energy system transition, energy efficiency and demand side response, resource management and the circular economy, carbon sequestration and emissions reduction, sustainable finance, climate-related plans, disclosures and activism and environmental due diligence.

Social: On the social side, we have extensive experience advising on the social impacts of organisations on internal and external stakeholders. We advise on equality and discrimination matters, environment, health and safety issues, community investment and capacity building as well as human rights and the rule of law.

Governance: Good governance is a core aspect of ESG, and our team regularly advises clients on all aspects of their governance arrangements, including areas such as strategic oversight, risk management, shareholder engagement and reporting and transparency.

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The European Union has taken a significant step towards promoting sustainable and responsible business practices with the adoption of the Corporate Sustainability Due Diligence Directive (CSDDD). Approved on 24 April 2024, this directive mandates large companies operating within the EU to integrate human rights and environmental due diligence into their operations and value chains. This article delves into the key aspects of the CSDDD, its implications for businesses, and the expected outcomes for various stakeholders.

Background and legislative journey

The journey to the adoption of the CSDDD began with growing calls from civil society, businesses, and EU citizens for a unified approach to corporate sustainability. Prior to the directive, several national regulations existed, such as France’s Duty of Vigilance Law and Germany’s Supply Chain Due Diligence Act, which highlighted the need for a harmonised EU-wide framework.

On 23 February 2022, the European Commission proposed the directive, which underwent extensive negotiations and revisions. The European Parliament adopted the final text on 24 April 2024, after reaching a compromise with the Council in December 2023. The directive will be published in the Official Journal of the European Union and enter into force 20 days later, giving member states two years to transpose it into national law.

Scope and applicability

The CSDDD applies to large EU companies with more than 1,000 employees and a net turnover exceeding €450m worldwide. It also affects non-EU companies with significant operations in the EU, specifically those generating more than €450m in turnover from their EU activities. Although small and medium-sized enterprises (SMEs) are not directly covered, they may still be impacted as part of the supply chains of larger companies.

Core requirements of the CSDDD

The directive establishes a corporate duty of due diligence that encompasses several key obligations:

1. Risk-based due diligence: Companies must develop and implement a due diligence policy that integrates human rights and environmental considerations. This policy should include procedures for identifying, assessing, and addressing actual and potential adverse impacts across the company’s operations, subsidiaries, and value chains.
2. Stakeholder consultation: Meaningful engagement with stakeholders, including employees, affected communities, and civil society organisations, is required throughout the due diligence process. Companies must ensure that vulnerable stakeholders are given particular attention and barriers to engagement are addressed.
3. Prevention and mitigation: Companies are required to take appropriate measures to prevent or mitigate identified adverse impacts. These measures should be proportionate to the severity and likelihood of the impact and may include contractual clauses, training, financial support for SMEs, and, as a last resort, terminating business relationships if necessary.
4. Remediation: If a company causes or contributes to an adverse impact, it must provide remediation to restore affected persons, communities, or the environment to a state as close as possible to the pre-impact situation. Remediation can involve compensation, rehabilitation, and other forms of support.
5. Monitoring and reporting: Companies must refresh their due diligence assessments annually and publish an annual statement detailing their due diligence processes, findings, and actions taken. This promotes transparency and accountability, allowing stakeholders to make informed decisions.

Enforcement and compliance

The enforcement of the CSDDD will be carried out by national authorities designated by EU member states. These authorities will have the power to impose sanctions, including fines and other penalties, for non-compliance. Additionally, the directive establishes civil liability provisions, ensuring that victims of adverse impacts can seek compensation through legal channels.

At the EU level, the European Commission will set up a European Network of Supervisory Authorities to ensure a coordinated approach to enforcement across member states. This network will facilitate the sharing of best practices and support the uniform application of the directive.

Implications for businesses

The CSDDD represents a paradigm shift in how businesses operate within the EU, with significant implications for corporate governance, risk management, and stakeholder engagement. Key implications include:

1. Increased legal certainty and uniformity: The directive provides a harmonised legal framework across the EU, reducing the fragmentation of national due diligence regulations and creating a level playing field for businesses. This uniformity is expected to enhance legal certainty and reduce compliance costs for companies operating in multiple EU countries.
2. Enhanced reputation and trust: By demonstrating a commitment to human rights and environmental sustainability, companies can build greater trust with customers, investors, and employees. This can lead to increased customer loyalty, better access to finance, and a more motivated workforce.
3. Risk management and competitiveness: Implementing robust due diligence processes can help companies identify and mitigate risks early, reducing the likelihood of legal disputes and reputational damage. This proactive approach can also enhance business resilience and competitiveness in a rapidly evolving market.
4. Global influence: The CSDDD sets a high standard for corporate due diligence that could influence international norms and practices. As EU companies implement these requirements, their global business partners may also be encouraged or required to adopt similar standards, promoting sustainability beyond the EU’s borders.

Benefits for stakeholders

The directive aims to deliver wide-ranging benefits for various stakeholders:

1. For citizens:

• Better protection of human rights, including labour rights.
• Healthier environment for present and future generations, including climate change mitigation.
• Increased transparency and informed consumer choices.
• Improved access to justice for victims of corporate misconduct

2. For developing countries:

• Enhanced protection of human rights and the environment.
• Sustainable investment and capacity building.
• Adoption of international standards and improved living conditions

3. For companies:

• Harmonised legal framework providing legal certainty and level playing field.
• Increased trust from customers and employees.
• Better risk management and competitiveness.
• Attraction of sustainability-oriented investors and talent.

Challenges and criticisms

While the CSDDD is a landmark piece of legislation, it is not without challenges and criticisms. Some businesses have expressed concerns about the potential costs and administrative burden of compliance, particularly for complex global value chains. Additionally, there are concerns about the enforceability of the directive and the potential for inconsistent application across member states.

Moreover, the exclusion of SMEs from the directive’s direct scope has raised questions about the overall effectiveness of the regulation, given the significant role SMEs play in global supply chains. However, the directive includes provisions to support and protect SMEs indirectly affected by due diligence requirements.

Conclusion

The EU Directive on Corporate Sustainability Due Diligence represents a major advancement in promoting sustainable and responsible business practices. By mandating comprehensive due diligence for large companies, the directive seeks to address adverse human rights and environmental impacts, fostering a more sustainable and equitable global economy.

As the directive is transposed into national laws and companies begin to implement its requirements, the true impact of the CSDDD will become clearer. While challenges remain, the directive’s emphasis on transparency, stakeholder engagement, and remediation offers a robust framework for driving positive change in corporate behaviour.

In the long term, the CSDDD has the potential to set new global standards for corporate sustainability, influencing practices beyond the EU and contributing to a more sustainable future for all. Businesses, policymakers, and civil society must work collaboratively to ensure the successful implementation and enforcement of this groundbreaking directive, realising its full potential to benefit people and the planet.

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Jiun Ean Ban, chief executive of Maxwell Chambers in Singapore, recently sat down with Legal 500 senior research editor Allan Cohen to share the story of his journey to his current position, as well as the latest developments from Maxwell Chambers, the influence of technology in disputes, and his sideline in fantasy novels and educational board games

The genesis of Maxwell Chambers

When the Singaporean government came up with the idea of creating an international alternative dispute resolution (ADR) facility in 2002, Ban, a qualified lawyer, was a public servant specialising in policy work within the Ministry of Law. Maxwell Chambers started to take shape in 2007, and Ban started to become involved with the ADR project, eventually leading the development of the Chambers.

Maxwell Chambers was set up by the government with a grant and is wholly owned by the Ministry of Law. To this day, the government of Singapore remains the sole shareholder, ‘but of course, everything here is run commercially,’ says Ban. ‘The government supports us and provides the funding so that we can build this ADR ecosystem in Singapore, but does not get involved in the day to day running of the centre.’ The aim of the Chambers is, and has been since the very beginning, to establish Singapore as a base for international dispute work.’

In 2010, the Chambers officially opened its doors and Ban became its chief executive. He held this position until 2015 and, after the centre had been running well for several years, moved on to pursue other projects. ‘At this stage, I did not expect to ever come back to Maxwell,’ Ban says.

The Chambers continued to grow physically, tripling its initial size in 2019 when it expanded to the adjacent building, the former Traffic Police headquarters in colonial times. More institutions and practitioners joined the centre at this point as tenants.

Apart from the hearing room facilities, Maxwell Chambers was conceived to be an integrated ADR centre for institutions and practitioners from all over the world. To achieve this, it hosts institutions from many other countries or regions, such as the International Court of Arbitration (ICC) headquartered in Paris, the Permanent Court of Arbitration (PCA) headquartered in The Hague, the American Arbitration Association (AAA) headquartered in New York City, and the World Intellectual Property Organization (WIPO) headquartered in Geneva, for instance. It is also the base for various ADR bodies which have a physical presence within Maxwell Chambers so that they can connect more easily and travel back and forth from Europe and APAC with convenience.

The rise of virtual hearings and hybrid models

In late 2021, ‘I was approached by the Ministry of Law to consider coming back to Maxwell,’ Ban remembers. ‘We were in the midst of the Covid crisis, and back, then, no one knew how long it would last.’ As with so many things around us, the pandemic also forever changed the realm of dispute resolution and the way hearings were to be conducted. This left the centre faced with a fundamental question: How could a physical ADR facility still have a place in the new normal? ‘I was part of the original team that contributed to the creation of Maxwell Chambers, so I was asked to also be part of the team that would navigate the centre through this challenging new era.’

Nearly three years later, Ban sees that ‘in-person hearings have largely returned. Many are what I would call hybrid, but people still generally want to meet face-to-face. Therefore, the original purpose of Maxwell Chambers remains relevant, which I am very pleased about.’ However, the process initiated during the Covid period is still ongoing, and Ban continues his efforts in broadening the Chambers’ activities and transforming it in order to meet the needs of an ever-evolving environment.

Today, sudden changes have had consequences on the general business environment. ‘The Russia-Ukraine war obviously affects everyone globally,’ Ban comments. Additionally, the ‘tensions between countries in our own region also have implications on business. We do our best, like many, to navigate these geopolitical challenges.’ However, the global pandemic was indeed the beginning of a profound evolution for Maxwell Chambers. ‘The closure of borders affected Singapore very significantly,’ Ban explains, ‘more so than it did for bigger countries. Singapore being a city-state, has a smaller domestic market and is very reliant on cross-border work.’

This episode prompted the Chambers to react promptly by developing international connections and build up its online presence, and offering new digital solutions. In particular, hybrid ways of operating grew in importance, improving flexibility and reducing cost for the Chambers’ customers.

‘Individuals that have less involvement in a hearing – for instance, a junior associate brought in to supervise a brief or a witness who has a minor testimony to provide –, used to fly in as well. They do so less frequently now.’, Ban explains. Instead, the people who attend in person are now often only the key individuals – the tribunal members, and ‘key witnesses whose demeanour have to be watched, for instance – the others dial in remotely.

‘This hybrid way of running has almost become the default set-up for international cases,’ which creates the need for new tech capabilities. ‘This now sounds surreal, but not so long ago, video conferencing was still a very bespoke kind of request. Accommodating this in many cases simultaneously was one our first challenges,’ Ban remembers.

Exploring new frontiers

‘Traditionally,’ Ban continues, ‘the dispute resolution industry has always lagged behind other industries, in terms of the adoption of technology. Lawyers, by definition, are risk averse.’ This means that Maxwell Chambers constantly has to find a balance between pushing innovations that will improve the industry in the long term, and what lawyers are ready to experiment.

For an organisation of the size of Maxwell Chambers, radical tech upskilling does not come at a small expense, and involves various security considerations. Indeed, developing Maxwell’s capabilities does not guarantee that the parties dialling in remotely have the appropriate connectivity, lighting, speed or sufficient video or audio quality at their end. There is also no way to ensure that the parties are going to be compromised or coached by anyone else in the room or location, or they are not reading from prepared notes. ‘We had to find solutions for these new considerations and challenges,’ Ban explains. In parallel, other international ADR centres have now also implemented similar technologies adapted to this growing demand. ‘In cross-border hearings, we are seeing parties increasingly require stakeholders to dial in from another centre or reputable facility, and not just their own homes. This has spurred us to build stronger partnerships with other like-minded hearing facilities around the world.’

Developing these relationships with peer organisations is an ongoing process. Currently, these agreements remain informal and are based on mutual trust, but Maxwell Chambers is working towards formalising the agreements and creating specific protocols and standards in order to establish the appropriate levels of security and audio-visual equipment quality.

The second aspect of the Chambers’ evolution was being able to accommodate the increasing use of digital documents. ‘The pandemic accelerated the move by lawyers, arbitrators and other parties away from huge bundles of paper, which brought about many advantages,’ Ban recalls. Not only did this solve the physical challenge of having to store, print and shred shelves of binders, it also facilitated term-searching within the documents, preventing lawyers from having to flip through numerous documents, thus improving and simplifying the entire process of a hearing. This was also an important step towards operating sustainably. ‘A very positive development for ADR centres around the world,’ Ban comments.

Other adjustments were also made contributing to the transformation of Maxwell Chambers as the new normal brought new ways of doing business. ‘We needed to understand how the overall preferences of the parties had changed too,’ Ban explains. ‘This includes how they travelled, and where, and what their expectations were when they stayed in a host city for a long hearing.’ An important adjustment that was made in that sense, was that because ‘people now carry substantially more electronic devices than they did only a few years back, which could create bandwidth issues,’ Ban continues. ‘We can have as many as fifty people in a room for large hearings. When you manage a facility like Maxwell, you have to anticipate what can happen when more than a hundred devices try to connect to the network at once. And this would be for just one of our hearing rooms.’ But Ban does not like to think of them only as problems where there are challenges. Instead, he looks for opportunities within these challenges. ‘Understanding these new digital habits and making the right investments in time set us apart from other centres.’

Two areas that businesses nowadays are taking an increasingly great interest in are AI – the advantages and risks it brings – and sustainability. ‘We try to offer insights, expert opinions, and even training on these key topics for the benefit of the lawyers in this industry, but we also keep innovating ourselves.’ Indeed, earlier this year, Maxwell launched its own online database of female ADR practitioners and arbitrators from Asia. ‘This was to address feedback that it was difficult to find the female ADR practitioners working and residing in Asia,’ Ban explains.

Another area of active interest for Maxwell is drone video cameras. When they launched this service in February this year, the Chambers’ idea was that tribunals might need specific high-resolution photos and videos of the location of a dispute that might not be necessarily easily accessible. Examples include an offshore oil rig, a mine in the mountains, or a factory in a location where civil unrest is ongoing. ‘Using drones to provide context and evidence can save the tribunal a difficult field trip,’ Ban explains. The service requires having a drone operator at or near the dispute location, who can listen to the court’s instructions, but all recordings can effectively be shown in the courtroom in real time. ‘The tribunal can order an overflight of the whole location, a zoom on a specific area, or to locate and show the safety measures that your company claims to have put in place, for instance. This makes evidence presentations very different than with prerecorded videos and really helps bring the context to life.’

Maxwell Chambers working on developing their own in-house drone service capable of operating in Singapore, at least. But for the moment, the service is being outsourced. The reason is that ‘when we had this idea, we wanted to quickly spin it up. It is working well, though. The drone companies we work with have the capability of doing this anywhere in the world.’ Ban says.

Drones go in the air, but also underwater, they can film pipelines and undersea cables. They can also fit in tiny nooks and crannies, inaccessible to the human eye, and help create 3D digital images based on the recordings. ‘We want to remain the interface that the law firms deal with when they need drone services so that they do not have to understand the technicalities of it, bother to get drone licenses, proceed to rehearsal flights, worry about the weather conditions on the day of the hearing, and so on, and so forth,’ Ban explains.

‘This service gets people very intrigued,’ Ban continues. ‘Of course, the cost of the service is determined by where it is required and how extensive it needs to be, but we have received many inquiries from lawyers operating in the oil and gas, and the construction industries. Drones are already used in the inspection of high-rise buildings and roofings.’ This procedure has not fully percolated into the space of dispute resolution yet, but ‘it opens up some new possibilities that do not exist currently,’ Ban concludes.

In parallel, Ban is also studying opportunities to take advantage of blockchain technology. ‘Blockchain is still quite nascent, but like many, we are thinking of ways to possibly use it in meaningful ways other than just cryptocurrencies,’ Ban says. ‘Artificial intelligence is yet another area we are exploring,’ he continues. Generative AI is starting to look interesting for law firms – as well as for other organisations –, when it comes to drafting documents or carrying on legal research. ‘We have not found a compelling enough way to use blockchain in the space of ADR yet, but we are keeping a close eye on this space. The Metaverse is one of the directions that we are exploring, but again, stakeholders and clients have made it clear that they still want to meet in person, and if needed, they are happy to use the existing video-conferencing platforms,’ Ban develops. One way, however, could be to couple this idea with the 3D imagery created with the drones’ photographs. ‘We could equip the members of the tribunal with virtual reality headsets for them to explore rooms and locations digitally or, in the case of patent disputes, look at objects as if they were holding them in their hands or in front of them. This could be interesting when the issue is with heavy and bulky material, such as excavators, cranes, or aircraft engines, all objects that we cannot bring into a hearing room. These are all in development.’

Pondering these possibilities, an important element to factor is cost. ‘In our uncertain economic environment, it is normal that clients watch their expenses more closely. Some mechanisms are more cost-effective, like mediation, and there are some who feel that the arbitration industry needs to take a good hard look at itself, to decide whether it’s getting too expensive for parties. That said, Maxwell Chambers is very keen to provide them with the best and most effective offer possible.’

Another component that an organisation needs to consider during its evolution is sustainability. In this field, ‘Maxwell also tries to make meaningful changes,’ Ban explains. ‘Nobody wants to leave a messed-up planet for our children. It is an ongoing conversation we are having with all parties. Changing our expectations and behaviours, as lawyers, is important.’

Beyond the hearing room: creative pursuits and philosophies

On the topic of making a positive impact, Ban tries to contribute to the cause in his free time. ‘In the interim time between my two stints at Maxwell Chambers, I tried my hand at a few interesting things I had been wanted to do,’ Ban recalls. ‘I helped with the setting up of an art centre at a theatre for underprivileged youths, wrote three novels, and created educational board games, which have been used in Singapore schools. It was a chance to do things I always wanted but never had time for.’

‘Of all these things I did,’ he continues, ‘the only one that still keeps me busy is the writing of fiction. The first three novels I wrote were fantasy books for young adults. But I have now just finished a science fiction book for adults, and I am already working on the next one.’ These stories Ban tells are not only here to entertain the reader, though. ‘I always try to convey a message, in my books. I have a strong interest in sustainability and education, and this generation’s concerns. I really do not like preachy books; I do not want to scold the reader – or anyone else for the matter. Rather, I want my books to be fun. I try to show interesting or new points of view, and I believe that we can all work to improve society,’ he confides.

These hobbies beg the question of whether there is enough free time. ‘It took me over a year to write my first book while doing it full time, and another year to create my first board game,’ Ban remembers. ‘When I returned to a day job, it took me even longer – three years – to write my fourth book. I might try full-time writing in the future, but I am not done with my work at Maxwell Chambers yet, he continues. ‘Rather than time, the most difficult is to find the right headspace. It is difficult to immerse yourself in the creative space when you have spent your day thinking about work and other commitments. I am not alone in this case. Most creators are faced with the same issue. I try to find pockets of time, on weekends, when I try to set aside a whole afternoon for writing only, with as few distractions as possible. I would sit down and write, even if I do not have breakthrough ideas at that very moment. Sometimes, even writing unimpressive stuff is better than nothing at all, because you still maintain some momentum.’

Ban also shares his ultimate writing tip. ‘I get some of the best ideas while in the shower,’ he says. ‘We all shower using muscle memory. This frees the brain and helps you think. When I noticed that I had some of my best ideas in those moments, I placed some old, empty CD cases within reach. Now, I jot my ideas on them with permanent markers if I get inspiration in the middle of a shower. I realise that this is a bizarre solution, but it really works for me!’

‘Too many people assume that someone else is going to figure things out for them, from how to use new technology to writing books,’ Ban says. ‘And because of that, many people are just waiting around for a solution to be given to them. But – if we stick to the tech example – a lot of technology is already here; it just might be used in an adjacent industry or for a different purpose than the one you need. I believe that if one puts their mind to it, they will realise there are so many things they could tweak to turn them into solutions for problems that seem insurmountable. This applies to the ADR industry as well. At Maxwell, we never tried to reinvent the wheel or pretended that we came up with revolutionary ideas. We just get a bit creative and test things out. Along the way, we have also realised that the cost of adopting these technologies or other solutions is lower than what lawyers anticipate – we know this because we have surveyed them. The drone service happened to be about ten times cheaper than what lawyers from the industry, on average, had anticipated. What I am trying to say,’ he continues, ‘is that your mindset is more important than it seems – for whatever you do. This is a philosophy we are applying at Maxwell.’

‘Singapore is a small country,’ Ban concludes. ‘Nobody would invite us to the table if we did not earn our place at it. Therefore, we have learned to improve and get positive results on most things quickly, to improve things for all our clients and partners. With time, this has become a habit, and this is exactly how the country works.’

allan.cohen@legalease.co.uk

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Against a backdrop of global stressors from conflict to trade friction and drivers for change such as global warming and the emergence of AI, Latin America presents a complex socio-political mosaic, currently, impacting both investor confidence and legal service provision.

From Argentina to Venezuela, the region has rarely seen so many elections or so much change. Here Legal 500 Latin America editor Tim Girven and Brazil editor Daniela Costa take a look at the politics framing the region’s legal markets.

Argentina: back on the map?

‘Milei is a game changer,’ says Santiago Carregal, chair of Argentina’s largest law firm, Marval O’Farrell Mairal, of the eruption onto the political landscape of radical populist Javier Milei, who won the country’s November 2023 elections with some 56% of the vote – ‘a clear mandate to change and shake things up’.

He inherited a country living with 30% annual inflation, a poverty rate above 50% and a fiscal deficit equivalent to 15 points of the country’s GDP, all driven by excessive public spending and aggravated by a drought that reduced 2023-export earnings by US$30bn.

Milei’s stabilisation plan has four pillars: a zero deficit policy to eliminate inflation; abandoning the peso in favour of the US dollar; far-reaching deregulation; and a relative price realignment of the economy. To this end he issued a presidential decree and sent an omnibus Bill to Congress, both pieces of legislation including reforms across multiple areas (most notably labour and tax) and the privatisation of state-owned companies. After only a few months in office he has liberalised prices and drastically reduced public spending, achieving a month of zero deficit in January; the first in two decades. Nevertheless, the economic situation is critical: while inflation is going down, it remains at disruptive levels, with real wages at record lows, poverty levels at record highs and economic growth remaining stubbornly absent.

‘The legal market in Argentina enjoyed a far better 2023 than expected.’
Hugo Bruzone, Bruchou & Funes de Rioja

Predictably, such radical steps have provoked a furious backlash, both in the street – in the form of huge demonstrations in Buenos Aires and other cities; and from provincial governors angered by the reduction of central government funding. Milei’s mantra: ‘No hay plata’ (‘there’s no money’) is still popular, but the question is: for how long? And while the market and investment community are supportive of the administration’s direction and purpose (the former head of Marval’s capital markets’ practice, Roberto Silva, has joined the administration as president of the Argentine National Securities Commission, for example), after the experience of the Macri administration (2015-19), many are adopting a ‘wait and see’ attitude until inflation is reduced and social unrest subsides.

If Argentines have the patience and Milei has the political savvy to build the congressional alliances and consensus required for his reform package, a new dawn may beckon for the resource-rich country that has remained mired in cycles of debt default and chronic inflation for almost 25 years.

Despite the political upheaval, ‘the legal market enjoyed a far better 2023 than expected’, comments Hugo Bruzone, managing partner of the full-service Bruchou & Funes de Rioja. Despite capital controls and foreign exchange restrictions, the M&A market was active, if not buoyant, ‘typically with foreign investors selling to local investors’, and there was some capital markets activity. Elsewhere international trade, tax, and hydrocarbon and mining activity all picked up.

Horacio E Beccar Varela, managing partner of Estudio Beccar Varela, foresees ‘at least three more months of considerable political conflict ahead’ – others though more pessimistically argue that 2024 will be a write-off in its entirety. For now though the country is back on the map and under the magnifying glass as it attempts one of the most radical economic realignments in the region’s history.

Bolivia: dollar blues and ‘white gold’

Eighteen months out from Bolivia’s planned October 2025 presidential elections it is an internal governing-party dispute that is both electrifying the political stage and damaging the country’s economy. The confrontation between current president Luis Arce and former president Evo Morales as to who will stand as the official Movimiento al Socialismo (MAS) candidate, has opened a profound rift in the formerly monolithic party that has governed Bolivia since 2006.

Though both presidents and vice presidents can only serve two terms by law – a quota Morales has already completed – all indications suggest he remains committed to standing again, leading to suggestions that Arce may be forced from the party. For his part, Arce is determined to stand his ground and remain the MAS candidate.

The scenario is particularly significant given the country’s precarious economic situation. The economic boom of the 2000s and 2010s, driven by gas exports (primarily to Argentina and Brazil) is just a memory, with both production and sales falling significantly for the last eight years. In the face of declining revenues, consecutive administrations have turned to the country’s international reserves to cover public expenditure, bankroll projects and maintain heavily subsidised petrol and diesel importation. The resulting drop in reserves – from around $15bn to barely $2.5bn – over the course of the last decade has seen the country’s credit rating downgraded by the key international credit-rating agencies, driving inflation and increasing costs for importers.

‘We had a remarkable 2023 and saw billing grow 20% but while I’m enthusiastic about that for the firm, it also pains me since it is work derived from the crisis.’
Carlos Pinto, PPO

Foreseeing the impact of these falling reserves, the Arce administration has sought to develop a number of mining projects, many of which involve lithium (Bolivia has the world’s largest proven reserves of this ‘white gold’), to replace dwindling gas export revenues.

However, with any revenues unlikely to come on stream until a year after the election, should the Boliviano – which has been pegged to the dollar for 15 years – not remain steady, the odds of Arce retaining the presidency look increasingly small.

Commenting on the market, Carlos Pinto of PPO, notes: ‘We had a remarkable 2023 and saw billing grow 20% but while I’m enthusiastic about that for the firm, it also pains me since it is work derived from the crisis. The restructuring, tax and labour practices have all been very busy, financings and refinancings have been steady, and we’ve also had plenty of M&A transactions – unfortunately, again, arising from distressed scenarios as the crisis opens opportunities for the acquisition of assets at reduced prices.’

In a bid to move with Arce’s plans, the firm is considering opening an office in San Luis Potosí to further serve its growing mining clientele, including those in the lithium sector.

Chile: exhaustion vs hope

Chile has endured a torrid five years since the eruption of the ‘estallido social’ protests in 2019. Although that social uprising gave way to the pandemic, it also obliged Garbiel Boric’s Frente Amplio administration to oversee not one but two attempts to rewrite the country’s constitution – both subsequently rejected by the electorate at large.

It is not an overstatement to say that the country is scarred – not just as a result of the devastating forest fires that left 132 dead and thousands homeless earlier this year, or indeed, the death of former president Sebastián Piñera in February, but primarily as a result of the years of renewed socio-political polarisation.

‘To move forward, Chile needs broad agreement in both the political sphere and as regards the economic model.’
Jorge Carey, Carey Abogados

Economic recuperation will not be easy, however. The country, long accustomed to the lowest interest rates in the region, endured high interest rates in 2022-23. On the upside, the Central Bank’s efforts to redress the problem have opened the way to limited growth in 2024 – forecast at 1.8% by the World Bank in the wake of zero growth in 2023.

Jorge Carey – chair of leading full-service firm, Carey Abogados – comments: ‘To move forward, the country needs broad agreement in both the political sphere and as regards the economic model. Only in that way can Chile return to the path of development and turn its back once-and-for-all on the so called “lost decade” of 2014-24, which was characterised by declining indicators and economic stagnation.’

For the country’s legal market – undoubtedly the region’s deepest (excluding Brazil) and arguably its most sophisticated – with political interruptions (barring municipal elections in October) likely to take more of a backseat, there are hopes of further recuperation in the M&A market. With investors in the sector more attuned to longer-term stability issues, infrastructure M&A has seen a significant uptick, while mining transactions have exceeded expectations, with copper performing steadily (despite weakening global demand factors) and lithium continuing to outstrip forecasts.

Indeed, investor-state relations have gradually improved since the administration’s launch of a lithium strategy in April 2023, with Codelco and SQM establishing a private-public association to exploit reserves in Atacama until 2060. Elsewhere, the agribusiness sector has also performed well and, in the wake of the impressive performance of the Santiago Stock Exchange during 2023 and into 2024, it is hoped there will be an increased taste for public M&A deals.

If the transactional outlook is cautiously positive, it is tempered slightly by the more limited manner in which clients are seeking private practice advice, especially as regards due diligence requirements, where in-house teams are playing a far greater role, becoming less reliant on external counsel.

This decline is, in turn, offset by additional specialist requirements – most notably compliance (including cyber security and data protection) – which have steadily been gaining importance, particularly with respect to deals involving international operations buying into the Chilean market.

Colombia: the jury’s out…

‘Back in 1904, a Colombian president was elected under the phrase of “Less politics and more administration” (‘Menos política y más administracion’) – it seems that after 120 years we are still in the same place.’ So comments Carlos Umaña, a senior partner at the country’s leading law firm, Brigard Urrutia, with regard to the current political administration of Gustavo Petro.

Inaugurated in August 2022, Petro became the first left-wing president in Colombia’s recent history, assuming power in a scenario characterised by anger at corruption in the political classes, ongoing economic recession, increasing political polarisation and the social impact of both the Covid-19 pandemic and rising (violent) crime levels.

Sadly, his administration has all too quickly become bogged down in its own political scandals (not least those surrounding his son), and more significantly successive failures to pass new healthcare, pensions and labour legislation. While the government does have a tepid tax reform to its credit, the administration has increasingly lost the support of much of Congress, with Petro making his Cabinet more left wing, further reducing his chances of passing new legislation and losing public support.

‘The general opinion is that Colombia remains an attractive destination for investment.’
Martín Acero, PPU

Relations with the Supreme Court have become particularly sensitive: on the one hand, the institution has vacillated for months over Petro’s choice to replace outgoing attorney general Francisco Barbosa (when the process usually takes just a few weeks), leading to complaints of ‘lawfare’ against the administration. On the other, Petro has called on supporters to defend his administration in the streets. February this year saw a demonstration and march on the Supreme Court, not only raising accusations that the administration is seeking to pressure the judiciary, but also stirring memories of an infamous 1985 attack on the Supreme Court by M-19 (the group of which Petro was a member), which resulted in a military siege and the death of more than 100 civilians, including 11 court justices.

In this complex scenario, economic activity levels are mixed. Certain industries – most notably tourism and renewable energy – look set to benefit from the pro-environmental position adopted by the government. Nevertheless it remains difficult to see how these will offset the negative impact of the administration’s policy regarding two key sectors; hydrocarbons, long a key hard-currency earning export for the country; and road infrastructure, which has also acted as a key economic driver and additionally gone some way in recent years to resolving some of the logistic and governance issues presented by the country’s complex topography.

PPU Colombia managing partner Martín Acero notes: ‘At the end of 2023 and the beginning of 2024, there has been a reactivation in the interest of investors to continue with their projects.’ Indeed, he suggests ‘this combination of factors makes Colombia a buyer-friendly market in terms of M&A. Although there is still some caution, the general opinion is that the country remains an attractive destination for investment. As such, it is likely that transactional activity will continue over the next two years and that a moderate upward trend will eventually be seen, especially in key industries, including logistics, renewable energy and retail.’

On the contentious front, Acero highlights that ‘the private sector is very attentive to ensure that its acquired rights are respected in the face of decisions made by the national government’, with the market seeing a corresponding growth in arbitration activity, along with an upturn in claims before administrative courts.

Ecuador: a phoenix in the making?

In January this year Ecuador endured a wave of criminal violence that culminated in the armed storming of a television studio while the station was live on air. The shock attack catapulted the (apparently) peaceful nation into global notoriety.

In reality, a crisis had been developing steadily since 2017, when a combination of the departure of former president Rafael Correa (2007-17), whose authoritarian style had stifled social discontent; the austerity measures of his successor, LenÍn Moreno; and Ecuador becoming increasingly significant as a cocaine trafficking route; resulted in a steady growth of organised criminality and violence. Demonstrations in 2019 ultimately saw Moreno’s successor, Guillermo Lasso forced out of office and the calling of early presidential elections in late 2023. Some 11 days before the polls, however, the assassination of candidate Fernando Villavicencio upset all polling expectations and ushered in a period of criminal, gang-related violence that would culminate – at least in a mediatic sense, with the takeover of the TV station.

‘There has been a notable increase in Ecuador’s judicial effectiveness index, fostering greater confidence in the current legal framework and judicial authorities.’
Javier Robalino, Robalino

The October elections defied all expectations, with political novice Daniel Noboa (the heir to a banana trading fortune), defeating former frontrunner, lawyer and Correa-ally, Luisa González.

Forced to pivot towards a security focus, Noboa – whose current term runs through to May 2025, has demonstrated a degree of political savvy that defies his youth, moving to establish a state of emergency, and subsequently an internal war that has allowed him to deploy military resources against narcotrafficking and violence. As a result his political support has surged to more than 80%.

He has also managed to pass a number of relevant reforms to assist with the country’s finances, and given clear and coherent pro-business signals.

Overall, the early signs suggest a remarkable political turnaround for the country: violence has dropped precipitously giving way to a cautious wave of optimism and a growing belief in the possibility that the country can turn a socio-political and economic corner and return to growth.

While it remains early to talk of recovery (Noboa will have to win a second election in some 15 months time to obtain a full mandate), signals are promising.

As FBPH Abogados’ partner, Mario Flor, notes ‘the legal services market is already showing signs of recovery compared to 2023, when numerous projects were deferred or suspended due to the political crisis that culminated with the change of government. One senses greater optimism this year, with a dynamism that suggests firms are already beginning to feel this reactivation.’

The market has seen the return of both banking and finance and M&A transactions, along with increased activity in the energy and natural resources sector –particularly mining and public infrastructure – with the ESG segment also trending, especially in terms of debt swaps. Indeed, FBPH, a mid-sized but growing firm of 26 fee-earners has recently hired a new real estate practice head – Mauricio Bustamante – as well as making internal promotions to the partnership.

While the country’s twin challenges of insecurity and a significant fiscal deficit remain, there are a number of additional indicators that suggest a phoenix-like recovery – unimaginable even months ago – may indeed be possible.

As Robalino managing partner, Javier Robalino notes, Noboa’s actions have seen the country’s risk index drop below 1,500 points ‘instilling further confidence in international market actors watching Ecuador’, especially given the anticipation of a new financing agreement with the IMF; ‘moreover, there has been a notable increase in the country’s judicial effectiveness index, fostering greater confidence in the current legal framework and judicial authorities’. While there remains much to be done, ‘these developments signal positive signs of political and economic advancement for the country’.

Mexico: green-lit for growth?

A quiet optimism stalks the Mexican legal market. The end of Andres Manuel López Obrador’s damaging MORENA-alliance administration is in sight. While his successor will likely be his hand-picked replacement, Claudia Sheinbaum, there is a strong sense that a combination of practical economic necessity and her different political weight and profile will combine to provide a less ideological administration more attuned to Mexico’s needs.

One key indicator will be the make-up of Congress: if MORENA ’s outright dominance is broken, the next president will be obliged to negotiate policy in a manner absent during the current administration, prioritising pragmatism over ideology.

Indeed there is a sense that market players are comfortable with both leading candidates (MORENA ’s Sheinbaum and the PAN’s Xóchitl Gálvez), because if Mexico is to capitalise on the opportunity presented by the ‘near-shoring’ phenomena, it will have to facilitate increased power generation, which will require a return to private-sector investment in the energy sector. The scale of investment required after a six-year presidential period in which both the energy and infrastructure sectors have been starved of private funds, means there is the possibility that the return of such investment can drive the growth of the Mexican economy as a whole.

In Mexico, however, domestic issues are only ever half the equation. Tied to the US by virtue of the USMCA (formerly: NAFTA) agreement, and constituting the United States’ primary commercial partner, the country has benefited from the US/China trade war and the resulting desire of businesses to restructure and strengthen their supply chains for the key US market.

Leading firm Galicia Abogados’ experience of market conditions included a steady growth of corporate M&A and financing transactions, particularly in the second half of 2023, accompanied by an uptick in litigation, and both labour and tax consultancy.

The firm’s performance was further underpinned by its strength in regulatory matters across the competition, international trade, life sciences, environmental and compliance areas. Notably, in the face of the expected return of energy mandates, the firm has also retained its depth in that sector (where it fields a five-partner team), as well as in projects and infrastructure, another segment that has seen very limited activity during the López Obrador administration.

The firm added two new partners in January 2024, promoting M&A and mining specialist, Florent Patoret, and hiring contentious tax specialist Paola Yaber. It has also hired Xavier Careaga – formerly the GC of Meta Latin America – as a counsel for TMT and AI. With more than 20 legal initiatives related to AI and cyber security currently pending, the firm foresees a cascade of regulatory and litigious work in the sector in a Mexican market with little experience in the subject.

The broader economic optimism is also – arguably – driving market developments: March 2024 saw three partners from the former Ibarra del Paso Gallego, two from Creel Abogados, and one from Norton Rose Fulbright’s Mexico City office establish a new firm – the now 20-strong Assembla Law. The same month also saw a ten-strong group – including four partners and two counsel – leave Gonzalez Calvillo to join Sainz Abogados; the former has since announced its merger into Spain’s Pérez-Llorca.

Peru becalmed?

In a certain sense, Peru finds itself becalmed. The country’s emergence from the pandemic coincided with the disastrous and short-lived presidency of Pedro Castillo, who secured a narrow run-off win against three-time candidate Keiko Fujimori in June 2021, only to be removed from office and arrested on charges of ‘rebellion and conspiracy’ in December 2022. With former vice-president Dina Boluarte becoming the country’s first female president in his place, she endured a torrid first year in office with the country ending 2023 with negative economic growth.

The damage was largely done during the Castillo administration, with both foreign and local investors leaving the country to seek investments in more stable economies. 2024 has, nevertheless, begun on a more positive note following the president’s appointment of a number of new ministers to key posts (most notably, economist José Arista at the Ministry of Economy and Finance; and RÓmulo Mucho at the Ministry of Energy and Mines), a step which has been interpreted as signalling a willingness to seek to restore investor-confidence moving forward.

While Boluarte’s popularity continues to languish at around 10%, according to Miranda & Amado’s Juan Luis Avendaño she’s likely to stay in power until the end of her mandate in 2026, bringing some stability to the nation – ‘which is what Peru needs most right now following a number of years of abrupt change’.

2023’s poor economic indicators notwithstanding, the country registered some 140 M&A deals over the course of the year – primarily in the mining, energy and agribusiness sectors – and there is optimism that deal flow will increase slightly, given that the country’s inflation rate remains manageable; indeed, the World Bank has predicted growth of 2.5%.

Market strictures have been such that firms have largely remained cautious, with standout developments being Estudio Hernandez’s absorption of a dispute resolution team from Baker McKenzie member firm, Estudio Echecopar, in May 2023; and the more recent strategic swoop by Payet Rey Cauvi Abogados (PRC) for a seven-strong mining team (including three partners) formally with CMS Grau in October that year.

While the latter, with its long history in the sector, has already begun to rebuild its capabilities, the move was an undoubted coup for PRC, positioning it as a key player in this sector, along with national powerhouse Estudio Rodrigo and Estudio Hernández.

More generally, the lack of investment during Castillo’s administration and the subsequent political turmoil has impacted the local legal community more-or-less across the board. While firms with a broad offering, particularly leading players such as Estudio Rodrigo, Miranda & Amado, PRC, Garrigues and Rebaza, Alcázar & De las Casas and – increasingly – Estudio Hernández have proved able to offset the decline in transactional mandates with counter-cyclical work, less diversified firms have struggled, leading to price-dumping and even redundancies.

Uruguay: between a rock and a hard place

The coalition government led by president Luis Lacalle of the centre-right Partido Nacional (PN), has proved admirably durable as the country navigated its emergence from the pandemic. The administration has passed a number of modest, pro-business reforms, while dealing with a series of events that have hit the country’s gross domestic product – from the severe drought Uruguay’s predominantly agro-industrial economy endured in 2023, to the impact of the Argentine crisis, which saw hundreds of thousands of Uruguayans crossing the Rio Plata to spend their disposable income due to the huge difference in the costs of goods and services. Such was the scale of this flow that it negatively impacted the country’s GDP.

‘The Mercosur agreement does not even secure Uruguayan companies access to Argentina and Brazil’s internal markets.’
Nicolás Piaggio, Guyer & Regules

The administration’s success partly reflects a political maturity that has seen the country’s democratic framework respected regardless of the government in office: the judiciary is independent, the rule of law respected, and foreign investment is promoted and protected. Significantly, the country has enjoyed investment-grade status for over a decade. Inflation too, is under control – although at the expense of a significant appreciation of the Uruguayan peso vis-à-vis the US dollar, compromising the competitiveness of companies in the export sector.

Uruguay’s location between neighbouring Brazil and Argentina has long-defined the country’s economic policy options, a reality embodied by its membership of the Mercosur trade bloc. Of late, however, frustration with the agreement – which as Guyer & Regules’ Nicolás Piaggio notes ‘does not even secure Uruguayan companies access to Argentina and Brazil’s internal markets’, has grown, with the current administration seeking to establish trade agreements with the US, the EU and even China, only to be held back by its neighbours. Arguably, the Milei administration – with its radical agenda – could provide an opportunity to break out of this deadlock, although Brazilian opposition remains strong and a considerable brake on any modification of the Mercosur agreement.

The country will hold a general election in October 2024, with Lacalle’s term ending in March 2025. With his alliance and the opposing Frente Amplio more-or-less neck-and-neck in the polls, it is uncertain which party will be taking the country forward. What is more certain is that with an ageing population (one of the region’s oldest) and a relatively generous array of social benefits that are an increasing weight on the national purse, there are difficult policy decisions ahead.

Despite its small size, the Uruguayan legal market has remained very stable. It has long been dominated by a leading duopoly consisting of Ferrere and Guyer & Regules, with the arrival of Dentons (in conjunction with local firm Jiménez de Aréchaga, Viana & Brause) perhaps the only major development in the
last few years.

Venezuela: surviving ground zero

In October 2023, the Biden administration approved the Barbados Accord, temporarily lifting US sanctions on Venezuela’s hydrocarbons’ sector as a response to an electoral agreement between the Maduro administration and the country’s opposition coalition in the run up to the country’s July 2024 presidential elections.

This easing of restrictions potentially added some US$500m in export revenues to Venezuela’s depleted coffers, opening the way to moderate growth in the economy and the likelihood of increased M&A activity in the sector.

However, with political tension mounting, there is likely to be a rethinking of this policy when it comes up for review and renewal in October this year, impacting the already tenuous business environment again.

Despite the difficulties, the legal market’s most agile players continue to find and generate work. In the case of Palacios Torres y Korody (PTCK), name partner Juan Korody highlights the key role played by the firm’s corporate M&A and tax practices. On the M&A front, the firm enjoyed an integral role in the year-long negotiation of the sale of a prominent baseball franchise; while the team also secured significant tax relief for TotalEnergies in a dispute with the municipality of Anzoátegui in the country’s Monagas state. Outperforming its own financial goals and revenue forecast despite the national economic downturn impacting the service industry allowed the firm to launch a labour practice in 2023, thereby broadening its multi-service offering and consolidating its market position in otherwise difficult circumstances. LB

For more on Brazil, see ‘‘So big it never stops’ – why Brazil’s legal market is still booming despite political instability and economic uncertainty’.

The post The Latin American mosaic appeared first on Legal Business.

They say that Brazil comes to a halt on three occasions: Carnival, the World Cup and elections. It is no surprise therefore that the combined weight of these events in 2022 made for an unusual start to the year that followed.

A fraught election in October 2022 saw Workers’ Party leader Luiz Inácio Lula da Silva return to the presidency 13 years after he left office, ousting former president Jair Bolsonaro. Decided by the narrowest margin in decades, Lula’s inauguration was marred by an attempted insurrection when a sea of yellow and green-clad bolsonaristas stormed federal government buildings in Brasília.

Not only was President Lula inheriting a deeply polarised Brazil, he was also tasked with confronting a delicate economic situation at home and abroad.

‘2023 was a very challenging year. It started with the Americanas issue. Together with a bad economic climate and high interest rates, it caused the credit market to shrink,’ says Miriam Signor, project development and finance head at Lefosse.

A multibillion-dollar accounting scandal involving one of the country’s most established retailers, Americanas – and its subsequent implosion – alarmed many across corporate Brazil, raising deep concerns about systemic risks to the economy. Fearing that the fallout would envelop other domestic corporate borrowers, the local financial markets – already tested by rising borrowing costs and global instability – contracted, weakening prospects for Brazilian companies that were already struggling.

‘2023 was a difficult year for transactions,’ confirms Mattos Filho’s new managing partner, Pedro Whitaker de Souza Dias, who took over the leadership role from Roberto Quiroga in April 2024. ‘But the Brazilian market is so big that it never stops. Companies always end up having to adapt, even in times of crisis and uncertainty, and somehow find solutions. So even in a year with reduced M&A and capital markets activity, there were still opportunities, and our transactional areas continued to be routinely engaged by clients.’

Moving with the markets

On the equity capital markets side, after an IPO peak in 2021, Brazil has failed to attract a single market debut since Vittia Fertilizantes e Biologicos’ IPO in September that year. Confidence has been dented further by residual scepticism of Lula, who served 19 months of a sentence for corruption and money laundering before returning to politics after his sentence was annulled.

‘2023 was a very challenging year. It started with the Americanas issue. Together with a bad economic climate and high interest rates, it caused the credit market to shrink.’
Miriam Signor, Lefosse

‘Whenever there’s a change of government, the economy stagnates. People wait to see what kind of policy and which sectors are going to be prioritised,’ comments Signor.

While M&A transactional activity also fell, some sectors experienced a notable uptick: ‘Agribusiness, banking, transport, and technology were some of the sectors that saw most activity over the past year in Brazil,’ comments Luanna Perdiz de Jesus, a partner at Brasília-headquartered Perdiz de Jesus Advogados.

Some notable domestic deals still took place, including the R$12bn (£1.88bn) merger between BRMalls and Aliansce Sonae (BMA Advogados advised Aliansce Sonae, while Spinelli Advogados acted for BRMalls), but acquisitions by foreign buyers outstripped those by local purchasers, who cut back their M&A activity given the mismatch between valuations and high financing costs.

The infrastructure and energy sectors, long a safe bet for investors given the potential for stable, long-term returns, continued to drive much of the deal flow in the country, particularly those involving renewable assets.

‘The incumbent government has a clear focus on the environment and energy transition, which is aligned with international policies and sends out a very positive message to foreign investors,’ says Signor.

A radical change in Brazil’s environmental policy looks set to define the current administration. After suffering significant budget and staffing cuts under Bolsonaro, Brazil’s environmental agency IBAMA is experiencing something of a revival, pushing climate change, ESG and environmental compliance to the top of the domestic agenda.

Meanwhile, after benefiting from a particularly fruitful harvest in 2023, the agribusiness sector is responsible for a growing slice of the M&A pie: ‘Agribusiness has always taken up a very large share of GDP but traditionally a very small share of deals, but that is slowly changing,’ says Whitaker de Souza Dias.

Machado Meyer chief executive Tito Andrade agrees, adding that non-transactional practices, including tax, dispute resolution and crisis management, have also shown ‘capacity for growth’. Recently enacted tax reform is intended to tidy up Brazil’s tax system and overhaul its consumption tax system in the hopes of fostering growth.

Elsewhere, a backlog of around 78 million lawsuits is challenging the country’s legal system and the firms that work in it. Brazil’s courts are implementing various AI tools with the aim of reducing this mountain of pending cases.

‘Nowadays we have courts that use this technology to analyse pleadings and even suggest a decision. This certainly impacts the lawyer’s work when drafting a petition and developing a line of argument,’ says Perdiz de Jesus, who adds that ‘companies are increasingly looking to use artificial intelligence in their own legal departments’.

Courts and in-house teams are not the only ones turning to new technology and processes. Brazilian law firms are facing challenges that, in the words of Andrade, ‘require adaptability, innovation and a strategic approach. This implies not only adopting new tools and systems, but also rethinking processes and strategies to remain competitive and efficient in the market, and training professionals who are capable of navigating this new world.’

Talent spotting

While activity levels over the last few years may have been slightly sluggish, Brazilian law firms have demonstrated real dynamism in a post-pandemic world. Splashy lateral moves are expected to persist, as full-service firms look to strengthen practice areas that are likely to be key drivers of business.

Lefosse has arguably been the hungriest, recently recruiting notable industry experts, and at times whole teams, for its compliance, restructuring, life sciences, and competition teams. Indeed, Signor joined Lefosse in April 2022 from competitor Stocche Forbes Advogados.

‘Nowadays we have courts that use technology to analyse pleadings and even suggest a decision. This certainly impacts the lawyer’s work when drafting a petition and developing a line of argument.’
Luanna Perdiz de Jesus, Perdiz de Jesus Advogados

Talent is not solely concentrated in heavyweights like Lefosse though.

Brazil’s legal market is becoming more and more pluralised, with smaller players increasingly spinning off from well-established firms to create new outfits. Noteworthy recent examples include HRSA Sociedade de Advogados, which was established in 2022 by a team of former Huck, Otranto, Camargo Advogados’ lawyers and Gandelman & Costa Dias Advogados, which was founded by Marcelo Gandelman and Rafael da Costa Dias (formerly at Souto Correa Advogados) in May 2023. Boutique player Xavier Gagliardi Inglez Verona Schaffer, was founded the same month by a quintet of highly regarded litigators: Celso Xavier, Marcelo Inglez de Souza, Rafael Gagliardi, Daniel Kaufman Schaffer and Carlo Verona, all of whom came from Demarest Advogados.

This trend echoes the story of Mattos Filho, which over three decades has grown to become one of the largest and most successful full-service law firms in Latin America.

‘Today the Brazilian legal market is bigger and more sophisticated,’ says Whitaker de Souza Dias. He argues that the firm’s ‘diversification in terms of practices, professionals and clients’ shields it from competition, as well as wider market shocks.

Looking ahead

Looking to the future, while dealmakers are still cautious, a brighter picture is forming on Faria Lima, Brazil’s Wall Street. Defying the odds, Brazil’s GDP grew by around 3% in 2023, triple what analysts were predicting when the new government took office. Inflation has slowed down, interest rates have gradually fallen, and the Brazilian real is steadily recovering after years of volatility. Perhaps unsurprisingly, lawyers are reluctant to comment directly on the political tumult of the past 15 months but Lula’s internationalism signals the reemergence of a respectable Brazil on the world stage, something which is ultimately good for business. LB

For more on Latin America, see ‘The Latin American mosaic’.

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