The war in Ukraine and its consequences continue to provide firms with a wide range of instructions, mostly relating to sanctions, compliance and foreign trade. In the corporate law arena, law firms were kept particularly busy advising companies on their withdrawal from the Russian market.
As another important issue in the trade arena, firms reported an uptick in instructions pertaining to the Supply Chain Act that came into force in January 2023. The Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz) places enterprises that have their central administration, principal place of business, administrative headquarters, statutory seat or branch office in Germany under the obligation to respect human rights by implementing defined due diligence obligations.
More broadly, the effects of weaker global trade as well as higher interest rates and the consequent slowdown of Germany’s economy are being felt across a wide range of practice areas: In finance, teams have been increasingly active in restructuring and alternative financing work; restructuring and insolvency teams have received more pre-insolvency-related instructions; the German IPO market has been characterised by low volume and limited proceeds; and the transactional market has been rather cautious, particularly in the large-cap private equity sphere.
The exceptions to this are M&A and private equity transactions as well as related financing transactions in the energy and infrastructure sectors which are generally regarded as safe investments. These transactions are often tied to ESG criteria which continue to play an increasingly important role, not only in the transactional space but also with regards to bonds and other capital markets products, real estate investments and projects as well as construction projects, to name but a few.
Alongside the uptick in ESG-related work, firms active in the construction sector have reported an increase in contentious work; this is often due to construction delays following supply chain issues as well as contract breaches.
Data protection is another area that has become increasingly contentious with firms reporting tougher actions taken by data protection authorities against data protection breaches. At the same time, data protection authorities have been increasingly active investigating companies suspected of breaches and demanding corrective measures. A particular focus lies on emerging areas that were not clearly defined when GDPR was first introduced, such as biometrics and AI.
With AI becoming increasingly important and wide-spread, the European Parliament and the Council of the European Union are currently negotiating the EU AI Act. While a preliminary agreement was reached in December 2023, the details are still being debated. Once agreed, it will provide teams across a number of disciplines with a steady flow of mandates.
Similarly in the spotlight are crypto-assets which have been subject to the Markets in Crypto-Assets (MiCA) Regulation. This regulation, adopted in June 2023 with a delayed implementation date of December 2024, will be the main pillar of crypto-asset regulation in the EU. It covers crypto asset-related activities carried out in the EU and includes key areas such as transparency, disclosure, authorisation and supervision of transactions.
