Cevdet Caner Achieves Groundbreaking Success for Austrian Financial Market

European Court of Justice: Austrian Takeover Commission lacks separation of powers and violates European law

• Structure and procedure of Austrian Takeover Commission violate European law
• Austrian Takeover Commission violates European law by serving as "investigator," "prosecutor," and "judge" in a single institution
• Republic of Austria asked to swiftly and comprehensively reform Austrian Takeover Act
• Decisions of the Takeover Commission made against Caner therefore have no binding effect and, along with assessed administrative fines, are rendered null and void
• Third success in court fully vindicates Cevdet Caner

Berlin, September 9, 2021 - Today's decision of the European Court of Justice ("ECJ") hands a groundbreaking success to Caner, an investor focused on the real estate and financial markets. According to this decision, the Austrian Takeover Commission ("ATC"), as it is currently structured, as well as the procedure for appealing decisions of the ATC violate European law. In the view of Cevdet Caner, as the petitioner in the proceeding, the decision fully confirms his legal position, and he has asked the Austrian legislature to swiftly reform the Austrian Takeover Act in the interests of Austria as a marketplace and financial market.

To quote Caner: "After this case has run through all court instances, I welcome this decision by the highest court of the European Union. This decision is a significant success not only for me as a petitioner, but, above all and crucially, for Austria as a marketplace and financial market, which must guarantee Austrian and international investors an investment environment characterized by constitutionality, separation of powers, transparency, and predictability. The Austrian legislature must now follow the wake-up call from the ECJ and resolutely implement a comprehensive reform of Austrian takeover law to guarantee non-discriminatory, fair, and legally reliable investment conditions in Austria for all market participants."

Caner is among the major players on the European real estate and financial market. He is involved in numerous large projects in Europe, both as an investor and real estate and financial advisor. In particular, he has for a long time provided strategic support for the establishment and development of Adler Real Estate AG and Adler Group SA. His family holds substantial investments in the real estate market.

In March 2016 the ATC had accused Caner and his co-defendants of having "acted in concert" in connection with conwert Immobilien Invest SE ("conwert"). According to the view and decisions of the ATC, Caner allegedly participated in a scheme under which shareholders of conwert acquired a controlling interest in conwert on September 29, 2015 without submitting a mandatory offer as required by law. Not only could the findings of the ATC, which were based solely on hearsay rather than substantiated sources and evidence, not support its decision on the conwert transaction, but they also provided the basis for factually false claims that were made in the course of a criminal proceeding against Caner and five co-defendants, in the course of which none of the findings or unjustified speculations of the ATC could be confirmed, and which concluded, correctly, with a full acquittal in September of last year.

Caner and other parties to the proceeding appealed the conclusions of the ATC to the Federal Administrative Court of Austria, arguing, among other things, that the ATC's decision violated European law. In their view, the ATC cannot act as "investigator," "prosecutor," and "judge" without there being any possibility under current law to have findings of the ATC reviewed by an independent court. This legal argument prompted the Federal Administrative Court of Austria to submit issues of European law relevant to the proceeding to the ECJ.

Today's decision of the ECJ establishes that the ATC, as currently structured, as well as the avenues available for appealing decisions of the ATC, are not in conformity with European law, in particular Art. 47 of the European Charter of Fundamental Rights. According to the ECJ, the ATC could not serve as "investigator," "prosecutor," and "judge" in a single institution. Either the ATC must be structured like an independent court or if not, market participants must be afforded opportunity to have decisions of the ATC fully reviewed by an independent court.

Most likely, the decision of the ECJ will require not only a comprehensive reform of the Austrian Takeover Act, but an entirely new structure of Austrian takeover law in conformity with European law, which has already been referred to as "Lex Caner" within academic discussion and literature (Univ.-Prof. Dr. Sebastian Mock LL.M./Mag. Elisabeth Fuhrmann LL.M., both Wirtschaftsuniversität Wien, in ZIP 32/2021, p. 1633 ff.)

The decision of the ECJ not only renders null and void the administrative fine that were assessed against Caner. The decision by the highest court of the European Union also completely nullifies the binding effect of findings made by the ATC in other proceedings, such as civil proceedings and administrative proceedings.

For Caner, the decision of the ECJ is another major litigation success in his fight against the constitutional deficits of which he has complained. Thus, less than one year ago, an excessively long, 10-year criminal proceeding against Caner and five co-defendants ended with a full acquittal for all defendants with respect to all charges that had been brought by the Prosecutor's Office of Vienna. Even before his acquittal, Caner had won a judgment against the Republic of Austria in the European Court of Human Rights, which found that the excessive length of the criminal proceeding violated his human rights. Consequently, this decision by the ECJ brought to an end for Caner 11 years of reputational damage and stigmatization based on unjustified charges. After none of the charges brought against him proved justified or valid, Caner therefore has been fully vindicated.

In Caner's view, however, the decision by the ECJ not only fully vindicates himself, but also confirms that his call for stronger constitutional protections in Austria has merit. To quote Caner: "As an economy located in the heart of Europe that purports to serve as an example of constitutionality, it must be, and will be, a matter of course for the Republic of Austria to fundamentally reform the structure of Austrian takeover law and to completely discard the structure currently in place. This is another aspect with respect to which Austria as a marketplace and financial market must not fall behind its European neighbors, but rather must be guided by their structures in the interests of Austrian and international investors. Therefore, there is no question that the ATC must be dissolved and its functions fully transferred to the Austrian Financial Market Authority (FMA). In and of itself, this will not be sufficient, but it will be a first, critical step towards creating a non-arbitrary takeover law characterized by a separation of powers in conformity with European law. A resolute optimization of our constitutional principles will make Austria even more attractive as a marketplace, providing more legal certainty and predictability."

If you have any questions, please contact:

IRLE MOSER Rechtsanwälte PartG
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