Archive for category: EU Legislation

On 24 February 2026, the Council of the European Union approved the position of the European Parliament at first reading (reported on this blog) on the proposal for a directive amending, among other legislative measures, Directive (EU) 2024/1760 on corporate sustainability due diligence (CSDDD). The directive has thereby been formally adopted (the final text can be read here) and will be published shortly on the Official Journal of the European Union.

It will enter into force on the twentieth day following that of its publication in the Official Journal.

As a result of the amending directive, the deadline for the transposition of the CSDDD will be postponed to 26 July 2028. Member States will apply those measures from 26 July 2029, with the exception of the measures necessary to comply with Article 16 of the CSDDD – which requires Member States to ensure that companies publish an annual statement on their due diligence activities – and which will apply to financial years starting on or after 1 January 2030.

On 30 December 2025, Directive (EU) 2025/2647 amending Directive 2013/11/EU on alternative dispute resolution for consumer disputes and amending Directives (EU) 2015/2302, (EU) 2019/2161 and (EU) 2020/1828 following the discontinuation of the European Online Dispute Resolution Platform has been published on the Official Journal of the European Union.

Directive (EU) 2025/2647 introduces important changes to the EU framework on consumer alternative dispute resolution (ADR), with implications that go beyond consumer law and are of clear relevance for private international law. While maintaining the voluntary and out-of-court nature of ADR, Directive (EU) 2025/2647 strengthens its role in cross-border consumer disputes and extends its scope to situations involving traders established in third countries, using connecting factors closely aligned with the Rome I and the Brussels I bis Regulations.

First, Directive (EU) 2025/2647 amends Directive 2013/11/EU with the aim of increasing the effectiveness, accessibility and cross-border reach of ADR procedures within the internal market. It responds to the findings of several Commission reports and evaluations, which highlighted persistent obstacles to the uptake of ADR, including low awareness among consumers and traders, uneven coverage across Member States and specific difficulties affecting cross-border disputes, such as language barriers and uncertainty regarding the applicable law. These challenges are compounded in an increasingly digital marketplace, where consumer transactions frequently involve traders established outside the Union.

Against this background, Article 1 of Directive (EU) 2025/2647 significantly reshapes the scope of consumer ADR by clarifying that the Directive applies to procedures for the out-of-court resolution of domestic disputes, cross-border disputes and third-country trader disputes between a consumer resident in the Union and a trader, through the intervention of an ADR entity that proposes or imposes a solution or facilitates an amicable settlement.

The Directive thus covers disputes arising from sales or service contracts, including contracts for the supply of digital content or digital services, where the consumer pays or undertakes to pay a price, as well as disputes relating to contractual obligations stemming from the pre-contractual phase. Within this broadened framework, the extension of ADR procedures to disputes involving third-country traders that direct their activities towards one or more Member States stands out as a particularly significant development.

The notion of “directing activities” is expressly linked to Article 6(1)(b) of the Rome I Regulation and Article 17(1)(c) of the Brussels I bis Regulation, thereby relying on well-established private international law connecting factors. By distinguishing between domestic disputes, cross-border disputes and third-country trader disputes on the basis of the consumer’s residence and the trader’s place of establishment, the Directive reinforces legal coherence across EU instruments and situates ADR as a complementary mechanism alongside judicial jurisdiction, particularly in consumer contracts with an international dimension.

Therefore, Directive 2013/11/EU is amended also in its material scope. ADR procedures cover disputes relating not only to the performance of contractual obligations, but also to pre-contractual practices, including misleading advertising and failures to provide mandatory information. Moreover, disputes concerning digital content and digital services are explicitly included, reflecting the realities of contemporary consumer markets and the growing importance of e-commerce and digital platforms.

From a private international law perspective, particular attention is drawn to the provisions governing third-country trader disputes.

Article 5 of Directive 2013/11/EU is amended by providing that Member States may make access to ADR conditional on the parties’ agreement that the dispute be resolved on the basis of the law applicable in the Member State where the ADR entity is established and where the consumer resides. At the same time, the changed framework safeguards the consumer by ensuring that such an agreement does not deprive them of mandatory protections under the law of their habitual residence. These rules mirror familiar techniques of EU private international law, combining party autonomy with the protection of weaker parties.

Article 6 of Directive 2013/11/EU is amended requiring that natural persons in charge of ADR possess the necessary knowledge and skills in the field of alternative or judicial resolution of consumer disputes, as well as a general understanding of law and, when dealing with cross-border disputes, a general understanding of private international law.

In addition, Member States are required to provide assistance to consumers and traders in cross-border disputes, facilitating access to competent ADR entities and reducing procedural barriers.

Finally, Directive (EU) 2025/2647 amends several related consumer law instruments in order to align them with the revised ADR framework.

Directive (EU) 2015/2302 on package travel is updated to reinforce transparency obligations, requiring traders to inform consumers about available in-house complaint handling procedures and ADR mechanisms pursuant to Directive 2013/11/EU, as well as, where applicable, the ADR entity by which the trader is covered.

Directive (EU) 2019/2161 is amended to clarify the consumer’s right to submit a complaint to the competent centre of the European Consumer Centres Network, thereby strengthening institutional support for consumers, particularly in cross-border disputes.

Directive (EU) 2020/1828 on representative actions is adjusted by deleting point (44) in Annex I, ensuring consistency with the discontinuation of the European Online Dispute Resolution platform and with the updated consumer ADR system.

Directive (EU) 2025/2647 entered into force on 19 January 2026.

Member States shall adopt and publish the measures necessary to comply with Directive (EU) 2025/2647 by 20 March 2028.

The European Commission has established the Brussels Ia sub-group and launched a Call for Applications to select members of this group, which will support the revision of the cornerstone instrument of EU Private International Law.

Members of the sub group will contribute to the evaluation of the Brussels Ia Regulation, support the preparation of any eventual legislative proposal for the Brussels Ib Regulation, and exchange best practices with leading experts from across Europe.

In principle, the sub-group shall meet at least once per year physically on Commission premises and as needed virtually in order to discuss the application and future prospects of the Brussels Ia Regulation and related matters. DG JUST shall provide secretarial services. Members should be prepared to attend meetings systematically, to contribute actively to discussions in the sub-group, to be involved in preparatory work ahead of meetings, to examine and provide comments on documents under discussion, and to act, as appropriate, as ‘rapporteurs’ on ad hoc basis. As a general rule, working documents will be drafted in English and meetings will be also conducted in English.

The selection process of members  shall be carried out in such a manner as to ensure a high level of expertise and balance in terms of knowledge, geographical origin and gender.

🧑‍⚖️ Up to 20 members
⏳ Five-year renewable mandate
📅 Apply by 23 February 2026

More details can be found here, including the procedure to apply.

On 21 October 2025, the European Commission adopted its 2026 work programme, titled Europe’s Independence Moment.

It outlines how the EU plans to respond to current and emerging challenges, from security threats and geopolitical tensions to economic vulnerabilities and the accelerating climate crisis, building on the priorities set out in President von der Leyen’s Political Guidelines 2024-2029 and the 2025 State of the Union address.

The initiatives that the Commission plans to prioritise in 2026 are set out across three annexes.

Annex I outlines the new initiatives. Although the document does not list any new measures based on Article 81 TFEU, certain initiatives, particularly those grounded in Article 114 TFEU, may nonetheless have an indirect effect on matters of private international law.

Among these, more specifically among the “simplification initiatives” listed in the programme, the 28th Regime for Innovative Companies aims to create an optional EU framework for startups and cross-border business.

Beyond simplification, the Digital Fairness Act will enhance consumer protection in the digital environment, ensuring greater transparency and accountability in online markets.

As non-legislative, the Gender Equality Strategy 2026–2030 will set new priorities to promote equal opportunities across the EU, with private international law playing a key role in safeguarding EU citizens’ rights when status and relationships cross national borders.

Annex II covers the annual plan for evaluations and fitness checks, while pending legislative proposals are discussed in Annex III, which includes: the Proposal for a Directive amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements; the Proposal for a Regulation on combating late payment in commercial transactions; the Proposal for a Directive harmonizing certain aspects of insolvency law; the Proposal for a Regulation on jurisdiction, applicable law, recognition of decisions, and acceptance of authentic instruments in matters of parenthood, including the creation of a European Certificate of Parenthood; the Proposal for a Regulation on jurisdiction, applicable law, recognition, enforcement of measures, and cooperation in matters relating to the protection of adults; and the Proposal for a Regulation establishing the Justice programme for the period 2028-2034 and repealing Regulation (EU) 2021/693.

It also cover the Proposal as regards the enforcement of passenger rights within the EU, and the Proposal in the context of multimodal journeys; the Proposal on the establishment of a digital euro and related measures; the Proposal on substantiation and communication of environmental claims (the Green Claims Directive); and the Proposal on safety, resilience and sustainability of space activities in the Union.

Also interesting is Annex IV, on withdrawals. The list of proposals that the Commission plans to withdraw includes the Proposal for a Directive on European cross-border associations.

The European Commission has formally withdrawn two legislative proposals related to judicial cooperation in civil matters, namely the Proposal for a Regulation on the law applicable to the third-party effects of assignments of claims, as well as the Proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence (AI Liability Directive).

A notice of the withdrawals has been published in the Official Journal on 6 October 2025, following the Commission’s 2533rd meeting on 16 July 2025. Both proposals had previously been listed in Annex IV of the Commission 2025 Work Programme of 11 February 2025, already noted on this blog.

Reasons for the withdrawals are set out in Annex IV referred to above. As regards the proposal on the law applicable to the third-party effects of assignments of claims, the stated reason is the absence of a foreseeable agreement among the EU political institutions. For the AI Liability Directive, the stated reason is also the lack of a foreseeable agreement; the Commission further indicated that it will evaluate whether to present a revised proposal or to pursue an alternative approach.

On 18 June 2025 the European Commission opened an infringement procedure under Article 258 of the TFEU against Malta (INFR(2025)2100), alleging that Malta is failing to comply with its obligations under the Brussels I bis Regulation with respect to litigation in matters related to gambling.

Following the formal notice sent by the Commission, the Maltese Government has now two months to address the shortcomings raised by the Commission. Absent a satisfactory response, the Commission may decide to issue a reasoned opinion. If indeed such an opinion is issued, and Malta fails to comply with it, the Commission may then bring the matter before the Court of Justice.

The Alleged Infringement

As stated in its own press release, the Commission considers that Malta is breaching the Brussels I bis Regulation by requiring its courts to “systematically refuse”, on grounds of public policy, the recognition and enforcement of judgments given in other Member States against Maltese-licensed gaming companies. In the view of the Commission, Malta is also violating the Regulation by discouraging “foreign litigants from pursuing legal action in Maltese courts against these entities, despite EU rules designating such courts as the appropriate forum based on the defendant’s domicile”.

In the Commission’s view, this “undermines the principle of mutual trust in the administration of justice within the Union and violates the prohibition on reviewing judgments from other Member States on their substance, exceeds the limits of the public policy exception, and distorts the EU’s rules on jurisdiction”.

The Commission’s press release only provides a short description of the relevant facts. The circumstances of the alleged infringement, however, can be retraced based on court and media reports that have been emerging over the last few years, in particular after May 2023, when an Austrian law firm and a German lawyer wrote to the European Commission, as reported in article in the Times of Malta, to inform that the Maltese government was “undermining European rule of law through a Bill tabled in parliament to amend Malta’s gaming regulations” with a view to preventing “Maltese courts from enforcing sentences handed down against Maltese gaming companies in foreign jurisdictions”.

An article by Paulo Pena, Harald Schumann, Maxence Peigné, published on EUobserver on 6 March 2025, further explains that

[t]he world’s biggest gambling companies are using a little-known Maltese law, that nullifies court verdicts elsewhere in the European Union, to protect themselves from potentially having to pay out millions in legal claims.

Under a law known as Bill 55, Maltese courts can “refuse recognition and, or enforcement” of any foreign judgment involving companies registered on the island — namely, the scores of betting companies based there thanks to an already favourable corporate climate. 

The law effectively shields owners of brands such as Pokerstars, Betsson and Unibet from judgements handed down abroad, of which there are an increasing number.  

Bill 55, as another article in the Times of Malta recalls, has sparked significant controversy, especially in Austria, Germany, Sweden, and the Netherlands, where courts “have ruled against Malta-based online gaming companies, demanding reimbursement for losses incurred by players” using what those courts consider “illegal” foreign betting platforms.

According to a report published on 18 June 2025 on the Time of Malta, the Maltese government maintains that the “law does not establish new or separate grounds for refusing the enforcement of judgments” beyond those set in the Brussels I bis Regulation. The Malta Gaming Authority, for its part, argued that the law “does not impose a blanket ban on enforcing European judgments against Maltese-licensed gaming companies, nor does it shield them from legal action in other EU courts”.

Cases Pending before the Court of Justice

Two requests for a preliminary ruling, currently pending at the Court of Justice, are concerned with private international law issues in connection with gambling.

The first request forms the object of the Wunner case and concerns the interpretation of Articles 1 and 4 of the Rome II Regulation on the law applicable to non-contractual obligations. The second request resulted in the Mr Green case, which revolves around Article 7(1) of Regulation No 655/2014 establishing a European Account Preservation Order (EAPO) procedure.

As reported by Marta Requejo on this blog, the Wunner case arises from proceedings pending in Austria between a company running an online casino via a website from its registered office in Malta, holding a valid Maltese gaming licence but no licence under the Austrian rules on gambling, and a natural person domiciled in Austria. The latter had played online games via the company’s website, paying the amount claimed but without gaining any winnings. He sought repayment of his losses from the managing directors of the company, claiming that, in the absence of an Austrian licence, the gambling contract is null and void. He bases his claim on liability for damages, on the ground that interference with the Austrian monopoly on games of chance entails an infringement of protective provisions.

In his opinion delivered on 12 June 2025, AG Emiliou proposed that the questions referred should be answered as follows.

To begin with, AG Emiliou suggests that Article 1(2)(d) of the Rome II Regulation, which excludes from the scope of the Regulation the non-contractual obligations “arising out of the law of companies” , should be interpreted as meaning that the exclusion  does not cover an alleged non-contractual obligation of a company director arising out of the infringement of a duty or prohibition imposed by the law independently of the director’s own appointment, such as the prohibition on anyone to offer games of chance in a given Member State without a licence granted by the authorities of that State

Secondly, according to AG Emiliou, Article 4(1) of the Rome II Regulation should be interpreted as meaning that, “where a consumer alleges to have sustained gambling losses as a result of participating, from the Member State in which he or she is habitually resident, in the online games of chance offered to him or her by a provider established in another Member State without a licence granted by the authorities of the first State, the ‘damage’ within the meaning of Article 4(1) of that regulation occurred in that first State, as the country from which the bets were placed”.

The questions submitted to the Court of Justice in the Mr Green case are closely related to the facts underlying the recente infringement procedure opened by the Commission. An Austrian applied in Austria for a European Account Preservation Order against a defendant seated in Malta. The former asserted, in particular. that, following final and enforceable judgments, the defendant had moved, and could further move, its assets to Malta, apparently relying on the Maltese legislation (Bill 55) prohibiting enforcement of foreign judgments against gaming operators which have a Maltese licence. The issue arose of whether this would justify the periculum in mora required to obtain an EAPO.

Issues similar to those raised by the case are discussed in the guest post written by Carlos Santalò Goris in November 2023 fo this blog: The 2023 Reform of the Maltese Gaming Act: A Valid Ground to Reject the Issuance of an EAPO?

Further Readings

The EAPIL blog has dealt with various issues raised by cross-border (Malta-related) litigation over gambling. See, in particular, Matthias Lehmann’s posts published respectively in January 2024 (Where Do Gamblers Lose their Money? Lessons from an Austrian-Maltese Conflict), and in April 2024 (How Can Gamblers Get Their Winnings? Not Under Article 6 of Rome I!).

Geert van Calster has also discussed some private international law issues in connection with gambling and the Maltese Bill 55 in his blog, here.

As reported on this blog, the European Commission published on 26 February 2025 a proposal for a directive amending Directives 2006/43, 2013/34, 2022/2464 and 2024/1760. The initiative, part of the Omnibus Simplification Package, seeks to adjust certain corporate sustainability reporting and due diligence obligations.

On 1 April 2025, the European Parliament invoked the urgent procedure under Article 170 of its Rules of Procedure to expedite its review of the proposal in the parts aimed at postponing the implementation of social and environmental reporting, as well as due diligence requirements.

The Parliament adopted on 3 April 2025 its position at first reading voting overwhelmingly — 531 in favour, 69 against, and 17 abstentions — to postpone the transposition deadline and the initial phase of due diligence obligations under Directive 2024/1760 (the Corporate Sustainability Due Diligence Directive – CSDDD) by one year for the largest companies.

Consequently, according to the proposal, Member States have until 26 July 2027 to transpose the directive into their national laws. This one-year extension under the proposal also extends to the first group of companies subject to the new rules: EU-based companies with more than 3,000 employees and a net turnover exceeding € 900 million, and non-EU companies generating more than € 900 million in turnover in the EU. These companies will only have to apply the rules from 2028. For the other companies within the scope of the CSDDD, instead, the rules will have to be applied starting from 2029.

This decision by the European Parliament follows the Council’s Committee of Permanent Representatives (Coreper), which, on 26 March 2025, endorsed the Council’s negotiating position on the Commission’s proposal without amendments.

The proposal now requires formal approval by the Council of the European Union.

The European Commission has published on 26 February 2026 a proposal for a directive amending Directives 2006/43, 2013/34, 2022/2464 and 2024/1760 concerning certain corporate sustainability reporting and due diligence requirements, as part of its Omnibus Simplification Package.

The explanatory memorandum highlights that business associations have raised concerns about the regulatory burden resulting, inter alia, from due diligence obligations under Directive 2024/1760 (the Corporate Sustainability Due Diligence Directive or CSDDD), especially for companies operating within large and complex value chains. Similar concerns, the memorandum notes, have been voiced by SMEs, as they could face unintended trickle-down effects.

Concerns have also been raised regarding potential increases in liability risks. Although the CSDDD includes proportionality mechanisms aimed at ensuring that companies in scope benefit from reputational and resilience advantages through sustainable value-chain management, the Commission has addressed these concerns. The proposal aims to clarify and simplify the existing framework, reducing compliance costs — both one-off and recurring — and making the directive more business-friendly in the short term.

Key Amendments

Article 4 of the proposed directive contemplates several amendments. These involve expanding the scope of maximum harmonization, making due diligence primarily focused on direct business partners as a general rule and removing the obligation to terminate business relationships as a last resort.

The definition of ‘stakeholder’ is narrowed and the due diligence stages requiring stakeholder engagement are further limited.

The proposal also increases the intervals at which companies must assess the adequacy and effectiveness of their due diligence measures.

Additionally, the Commission proposes to clarify the principles governing pecuniary penalties, remove the ‘minimum cap’ for fines, eliminate certain provisions of the civil liability clause and rules on representative actions, modify the provisions related to implementing climate transition plans, delete the review clause concerning financial services and accelerate the adoption of the first set of general implementing guidelines by the Commission.

Civil Liability

Article 4(12) of the proposal aims to amend Article 29 of the CSDDD in relation to civil liability by deleting paragraph (1), which currently states that a company can be held liable for damage to a natural or legal person if it intentionally or negligently fails to comply with the obligations in Articles 10 and 11 (i.e., obligations to prevent potential adverse impacts and address actual ones), leading to harm to the person’s legal interests protected under national law, where the right, prohibition or obligation in the Annex is designed to protect them.

The Commission Staff Working document accompanying the proposal underscores that the harmonized liability framework under Article 29(1) CSDDD was originally established in response to legal actions taken against companies under national laws for failing to mitigate human rights and environmental violations in their value chains. While the CSDDD introduced constraints on liability— such as the necessity of proving fault and excluding responsibility for harm solely caused by business partners — the proposed removal of this EU-wide framework seeks to defer the regulation of liability conditions, including causality and fault, to national laws.

This shift may lower liability risks for companies operating in Member States with more restrictive regimes than Article 29(1) but could simultaneously heighten risks in jurisdictions with more claimant-favorable provisions, such as strict liability without a fault requirement.

Furthermore, the proposed new legislation amends Article 29 by removing paragraph (3), point (d), which require that Member States ensure conditions for allowing trade unions, NGOs and national human rights institutions to bring actions on behalf of an alleged injured party, in accordance with national civil procedure rules.

The access to justice provision has been designed to ensure that victims, especially those in disadvantaged positions (e.g., distant, facing complex legal issues, lacking expertise), can effectively access justice. The aforementioned document accompanying the proposal highlights that removing this obligation may lessen companies’ exposure to collective claims, reducing litigation risks. However, it could also lead to a more fragmented legal landscape, with individual victims filing separate lawsuits rather than pursuing claims collectively.

The proposal further envisages the deletion of Article 29(7), under which Member States must ensure that the provisions of national law transposing this Article are of overriding mandatory application in cases where the law applicable to claims to that effect is not the national law of a Member State. However, the Commission Staff Working document notes that this deletion does not prevent Member States from independently deciding to impose mandatory application at the national level.

Finally, Article 4(12) contemplates modifying Article 29(2), (4) and (5). Paragraph (2) stipulates that when a company is held liable under national law for damage caused to a natural or legal person due to non-compliance with the due diligence requirements, Member States must ensure that these persons are entitled to full compensation. Safeguards are introduced to prevent over-compensation, such as prohibiting punitive, multiple or other excessive damages. Then, the revision of paragraph (4) establishes that companies involved in industry or multi-stakeholder initiatives, or that have used independent third-party verification or contractual clauses to support due diligence obligations, can still be held liable under national law. Lastly, the modification of paragraph (5) clarifies that the civil liability of a company for damages as referred to in this Article shall be without prejudice to the civil liability of its subsidiaries or of any direct and indirect business partners in the chain of activities of the company.

On 1 January 2025, Poland assumed the presidency of the Council of the European Union, marking the start of a new trio of presidencies that also involves Denmark and Cyprus.

The Polish presidency’s programme for the semester ending on 30 June deals with a broad range of topics, including judicial cooperation in civil matters.

In this area, the Polish presidency will “aim at strengthening the legal protection of European Union citizens in cross-border situations”. It plan to do so by making “substantial progress on the draft Regulation on jurisdiction, applicable law, recognition and enforcement of measures and cooperation in matters relating to the protection of adults“, while continuing “work on the draft Council Regulation on jurisdiction, applicable law, recognition of decisions and acceptance of authentic instruments in matters of parenthood and on the creation of a European Certificate of Parenthood”.

To remove “barriers to the competitiveness of the EU economy, which at the same time hinder citizens from exercising fundamental freedoms, such as the free movement of capital and freedom of establishment, and put their legally protected interests at risk”, the Polish presidency intends to “further focus on the draft Directive harmonizing
certain aspects of insolvency law“. The presidency will also be “ready to continue work on a draft Directive on adapting non-contractual civil liability rules to artificial intelligence“, and support “cooperation of Member States in the digitalisation of justice, particularly in key areas arising from the European e-Justice Strategy 2024-2028”.

The programme includes a more general statement on the importance of “political guidance for future European
Union action in the field of justice”, and indicates that the Polish Presidency aims to “take an active role in this discussion, taking into account the positions of all stakeholders”. No indications are provided in the text as to the directions that future developments may take, or as regards any possible area of intervention.

On 16 April 2024, Directive (EU) 2024/1069 of the European Parliament and of the Council of 11 April 2024 on protecting persons who engage in public participation from manifestly unfounded claims or abusive court proceedings (‘Strategic lawsuits against public participation’) has been published in the Official Journal of the European Union.

Pursuant to Article 21, it will enter into force on 6 May 2024.

Member States have until 7 May 2026 to adopt such laws, regulations and administrative provisions as are necessary to comply with the Directive.

The Council of the European Union on 15 March 2024 reached a final deal on the proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence (see here and here for previous analysis on the proposal hosted on this blog).

The deal comes after a series of meetings following a provisional political agreement reached at Council level and the European Parliament’s negotiating position, both reported here.

After the approval by the Permanent Representative Committee, the Presidency of the Council has transmitted the final compromise text to the Chair of the European Parliament Committee on Legal Affairs (JURI). On 19 March 2024, the Legal Affairs Committee of the European Parliament adopted the text, agreed with the Council.

The draft agenda for the plenary sittings of the European Parliament schedules the vote on the corporate sustainability due diligence directive for 24 April 2024.

The key provisions of the directive, as it results from the latest changes, are summarized below.

Subject Matter

The directive deals with obligations for companies regarding human rights and environmental impacts, including those of subsidiaries and business partners, and the operations carried out by their business partners in companies’ chains of activities, as well as liability for violations and the requirement to adopt a transition plan for climate change mitigation.

While doing so, the text ensures that it does not lower the existing level of protection for human, employment, and social rights, environmental protection, or climate protection provided by Member States’ laws or applicable collective agreements.

Finally, the directive does not override obligations under other EU laws in areas such as human rights, employment, social rights, environmental protection, and climate change. If there is a conflict between the directive and another EU law pursuing similar objectives with more extensive obligations, the latter prevails.

Scope

The proposed directive applies to (a) companies formed in accordance with the law of a Member State, where they meet certain criteria; these include having over 1000 employees on average and a net worldwide turnover exceeding EUR 450 million in the last financial year; the directive also applies to to ultimate parent companies whose subsidiaries meet these thresholds and those engaged in franchising or licensing agreements within the EU, provided certain conditions regarding royalties and turnover are met; (b) companies governed by the law of a third country, whenever specific conditions are fulfilled; among other things, they must have generated a net turnover exceeding EUR 450 million in the Union in the preceding financial year or being the ultimate parent company of a group meeting this threshold; additionally, companies engaged in franchising or licensing agreements within the Union, with royalties exceeding EUR 22.5 million, fall within the scope if the directive if their net turnover in the Union exceeds EUR 80 million in the preceding financial year.

An exemption is provided for ultimate parent companies primarily engaged in holding shares in operational subsidiaries without making management decisions.

It is specified that the number of part-time employees must be calculated on a full-time equivalent basis for the purposes of determining company eligibility. Additionally, temporary agency workers and other non-standard workers meeting the criteria established by the Court of Justice must be included in the calculation as if they were directly employed by the company. Furthermore, if a company meets the eligibility conditions outlined before, the proposed directive applies only if these conditions persist for two consecutive financial years. However, the directive ceases to apply to a company if it no longer meets the eligibility criteria for each of the last two relevant financial years.

Definitions

The directive comes with several definitions, including the following.

The term ‘company’ is understood to refer to any entity falling under the following categories: (i) a legal entity established in one of the legal structures outlined in Annex I and Annex II of Directive 2013/34/EU; (ii) a legal entity established under the legislation of a third country in a structure similar to those listed in Annex I and II of Directive 2013/34/EU.

An ‘adverse human rights impact’ denotes a detrimental effect on individuals stemming from: (i) the violation of any of the human rights delineated in Annex I, Part I Section 1, as outlined in the international agreements referenced in Annex I, Part I Section 2; (ii) the infringement of a human right not specified in Annex I, Part I Section 1, but covered by the human rights agreements listed in Annex I, Part I Section 2, provided some criteria are met. An ‘adverse impact’ encompasses adverse environmental effects and adverse human rights impacts. The impact is understood to be ‘severe’ when it is significant due to its nature, such as causing harm to human life, health, or liberty, or due to its scale, scope, or irreversibility.

A ‘business partner’ refers to an entity: (i) engaged in a commercial agreement with the company concerning its operations, products, or services, or to which the company offers services (‘direct business partner’); (ii) involved in business activities related to the operations, products, or services of the company, even if not directly engaged in a commercial agreement (‘indirect business partner’).

The ‘chain of activities’ encompasses: (i) the activities of a company’s upstream business partners involved in producing goods or providing services, including design, extraction, sourcing, manufacturing, transportation, storage, and supply of raw materials, products, or components, as well as product or service development.; and (ii) the activities of a company’s downstream business partners related to product distribution, transportation, and storage, conducted for or on behalf of the company, excluding distribution, transportation, and storage subject to export control regulations under Regulation (EU) 2021/821 or export controls pertaining to weapons, ammunition, or war materials post-authorization of product export.

Level of Harmonisation

Member States may not introduce provisions within the scope of the directive that lay down human rights and environmental due diligence obligations diverging from those resulting in specified provisions of the directive. An example illustrating this concept is Article 7(1) of the directive stating that Member States are responsible for ensuring that companies adopt suitable measures to either prevent or, if immediate prevention is not feasible, effectively mitigate potential adverse impacts. This provision mandates the consideration of specific factors to assess the adequacy of these measures. Member States, instead, are free from introducing, in their national law, more stringent provisions. Drawing from the precedent set by this provision, Member States could provide for such an obligation, or factors to assess the adequacy of the preventive measures, more specific in terms of the objective or the field covered, in order to achieve a different level of protection of human, employment and social rights, the environment or the climate.

Due Diligence and Related Obligations

Member States must ensure that companies undertake risk-based human rights and environmental due diligence. This includes integrating due diligence into policies and risk management systems, identifying and prioritizing adverse impacts, preventing and mitigating impacts, providing remediation, engaging stakeholders, establishing notification mechanisms and complaints procedures, monitoring effectiveness, and publicly communicating on due diligence.

Companies are allowed to share resources and information within their groups and with other legal entities for due diligence purposes. Business partners are not required to disclose trade secrets to compliant companies but must disclose information necessary to identify potential adverse impacts. Companies must retain documentation demonstrating compliance for at least 5 years or until the conclusion of any ongoing proceedings.

Parent companies falling under the proposed directive can fulfil due diligence obligations on behalf of subsidiaries if this ensures effective compliance. Subsidiaries must cooperate with the parent company, integrate due diligence into their policies, continue appropriate measures, seek contractual assurances, and comply with transition plans for climate change mitigation.

Due diligence requirements must be integrated into the concerned companies’ policies and risk management systems.

Supervisory Authorities

Member States must designate one or more supervisory authorities to oversee compliance with national provisions. The competent supervisory authority for companies formed under Member States legislation is that of the State of registration. For third-country companies, the competent authority is that of the Member State where the company in question has a branch or, if not applicable, where it generated most of its net turnover in the EU.

Supervisory authorities must publish annual reports on their activities and have adequate powers and resources to carry out investigations and inspections related to compliance with the directive. Supervisory authorities may initiate investigations and inspections, order corrective actions, impose penalties, and adopt interim measures to address non-compliance. These powers can be exercised directly, cooperatively, or through judicial authorities, ensuring effective legal remedies for affected parties. Decisions by supervisory authorities do not affect a company’s civil liability under the directive.

Penalties

Member States must establish rules on penalties, including pecuniary penalties, for breaches of national provisions derived from the proposed directive, ensuring they are effective, proportionate, and dissuasive. When determining penalties, factors considered include the nature, gravity, and duration of the breach, impacts resulting from it, investments made, collaboration efforts, previous infringements, remedial actions, financial gains or losses, and other relevant circumstances.

Penalties must include pecuniary penalties and, if the company fails to comply, public statements about the infringement. Pecuniary penalties are based on the company’s net worldwide turnover, with a maximum limit set at not less than 5% of the company’s net worldwide turnover in the preceding financial year.

Member States ensure that decisions containing penalties are published, publicly available for at least 5 years, and shared with the European Network of Supervisory Authorities, without including personal data.

Civil Liability of Companies and a Right to Full Compensation

Companies can be held liable for damages caused to natural or legal persons if: (a) they intentionally or negligently failed to comply with the obligations under the proposed directive; (b) and, as a result, a damage to the person’s legal interests protected under national law was caused. A company cannot be held liable if the damage was caused only by its business partners in its chain of activities.

If held liable, natural or legal persons have the right to full compensation for damages under national law, ensuring no overcompensation.

Member States must ensure: (a) limitation periods for damages actions are reasonable, starting after the infringement ceases and the claimant becomes aware of it; (b) costs of proceedings are not prohibitively expensive for claimants; (c) claimants can seek injunctive measures and authorize certain organizations to bring actions; (d) courts can order disclosure of evidence by companies when necessary for a claim, ensuring proportionality and protection of confidential information.

Participation in industry or multi-stakeholder initiatives or third-party verification does not exempt companies from liability.

Civil liability of companies does not affect subsidiaries or business partners’ liability, and joint liability applies when damage is caused jointly.

These rules do not limit companies’ liability under other legal systems and are of overriding mandatory application if applicable law is not that of a Member State.

Entry into Force and Transposition

The proposed directive will come into force on the twentieth day after its publication in the Official Journal of the European Union.

Member States must enact regulations and administrative provisions to comply with the directive within two years of its entry into force.

The application of these provisions varies based on company size and origin: (a) for companies formed in accordance with Member State legislation with over 5000 employees and a net worldwide turnover exceeding EUR 1500 million, measures must be applied within three years; (b) as regards companies with over 3000 employees and a net worldwide turnover exceeding EUR 900 million, within a four-year timeframe; (c) for companies formed under third-country legislation with a net turnover over EUR 1500 million in the Union, within three years; (d) for third-country companies with a turnover over EUR 900 million, within a four-year timeframe. All other companies must comply within five years.

Annex I

The lists contained in the Annex specify the adverse environmental and human rights impacts relevant for the directive, to cover (the violation of) rights and prohibitions included in international human rights instruments (Part I Section 1), human rights and fundamental freedoms instruments (Part I Section 2), and prohibitions and obligations included in environmental instruments (Part II).

The readers of the blog are aware of the proposal for a Directive on the protection of persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as strategic lawsuits against public participation (SLAPPs).

After the political agreement reached at Council level and the European Parliament’s negotiating position, the negotiators of the Parliament and of the Council reached on 30 November 2023 a provisional political agreement on the text to be adopted. The agreement is expected to be formally approved by the Council and the European Parliament at a later stage.

The text of the deal, made accessible here, features various innovations, including the following.

Minimum Requirements

The text resulting from the political agreement now makes clear that the Directive lays down minimum rules, thus enabling the Member States to adopt or maintain provisions that are more favourable to persons engaging in public participation, including national provisions that establish more effective procedural safeguards. The implementation of the Directive should not serve to justify any regression in relation to the level of protection that already exists in each Member State.

Public Participation

Public participation is more broadly defined.

It should mean any statement, activity or preparatory, supporting or assisting action directly linked thereto, by a natural or legal person expressed or carried out in the exercise of fundamental rights.

Future public interest is included, referring to the fact that a matter might not yet be of public interest, but could become so, once the public becomes aware of it, for example by means of a publication.

Such activities should directly concern a specific act of public participation or be based on a contractual link between the actual target of SLAPP and the person providing the preparatory, supporting or assisting activity. Bringing claims not against a journalist or a human rights defender but against the internet platform on which they publish their work or against the company that prints a text or a shop that sells the text can be an effective way of silencing public participation, as without such services opinions cannot be published and thus cannot influence public debate.

Matter of Public Interest

The notion of a matter of public interest is clarified in more detail.

It should include matters relevant to the enjoyment of fundamental rights.

Activities of a natural or legal person who is a public figure should also be considered as matters of public interest since the public may legitimately take an interest in them.

In addition, matters under consideration by a legislative, executive or judicial body or any other official proceedings can be examples of matters of public interest.

Finally, the Directive text provides under Recital 19b for many cases where a matter of public interest is at stake.

Abusive Court Proceedings

The description of when court proceedings can be considered abusive is reworked and better described.

They typically involve litigation tactics deployed by the claimant and used in bad faith including but not limited to the choice of jurisdiction, relying on one or more fully or partially unfounded claims, making excessive claims, the use of delaying strategies or discontinuing cases at a later stage of the proceedings, initiating multiple proceedings on similar matters, incurring disproportionate costs for the defendant in the proceedings. The past conduct of the claimant and, in particular, any history of legal intimidation should also be considered when determining whether the court proceedings are abusive in nature. Those litigation tactics, which are often combined with various forms of intimidation, harassment or threats before or during the proceedings, are used by the claimant for purposes other than gaining access to justice or genuinely exercising a right and aim to achieve a chilling effect on public participation in the matter at stake.

Claims made in abusive court proceedings can be either fully or partially unfounded. This means that a claim does not necessarily have to be completely unfounded for the proceedings to be considered abusive. For example, even a minor violation of personality rights that could give rise to a modest claim for compensation under the applicable law can still be abusive, if a manifestly excessive amount or remedy is claimed. On the other hand, if the claimant in court proceedings pursues claims that are founded, such proceedings should not be regarded as abusive for the purposes of the Directive.

Scope

Few express indications have been added.

The Directive shall apply to matters of a civil or commercial nature with cross-border implications entertained in civil proceedings, including interim and precautionary measures and counteractions, entertained in civil proceedings, whatever the nature of the court or tribunal.

Then, it shall not apply to criminal matters or arbitration and shall be without prejudice to criminal procedural law.

Matters with Cross-border Implications

The cross-border implications element has been revised.

According to the text, a matter is considered to have cross-border implications unless both parties are domiciled in the same Member State as the court seised and all other elements relevant to the situation are located only in that Member State. Domicile shall be determined in accordance with the Brussels I bis Regulation.

Common Rules on Procedural Safeguards

Article 5a, devoted to the accelerated treatment of applications for safeguards, has been added.

Member States shall ensure that applications for security and early dismissal of manifestly unfounded claims are treated in an accelerated manner in accordance with national law, taking into account the circumstances of the case, the right to an effective remedy and the right to a fair trial.

Member States shall ensure that applications for remedies against abusive court proceedings may also be treated in an accelerated manner, where possible, in accordance with national law, taking into account the circumstances of the case, the right to an effective remedy and the right to a fair trial.

Early Dismissal of Manifestly Unfounded Claims

In relation to the early dismissal, Member States shall ensure that courts and tribunals may dismiss, after appropriate examination, claims against public participation as manifestly unfounded at the earliest possible stage, in accordance with national law. In addition, Member States shall ensure that an application for early dismissal is treated in an accelerated manner in accordance with national law, taking into account the circumstances of the case and the right to an effective remedy and the right to a fair trial.

The burden of proof and substantiation of claims, under Article 12, have been specified. The burden of proving that the claim is well founded rests on the claimant who brought the action. Member States shall ensure that where a defendant has applied for early dismissal, it shall be for the claimant to substantiate the claim in order to enable the court to assess whether it is not manifestly unfounded.

Finally, Member States shall ensure that a decision granting early dismissal is subject to an appeal.

Remedies Against Abusive Court Proceedings

The award of costs, under Article 14, is clarified. Member States shall ensure that a claimant who has brought abusive court proceedings against public participation can be ordered to bear all types of costs of the proceedings, available under national law including the full costs of legal representation incurred by the defendant, unless such costs are excessive. Where national law does not guarantee the award in full of the costs of legal representation beyond statutory fee tables, Member States shall ensure that such costs are fully covered, unless they are excessive, by other means available under national law.

Article 15, specifically devoted to compensation of damages, has been deleted. It provided a natural or legal person who has suffered harm as a result of a SLAPP case to be capable of claim and to obtain full compensation for that harm. The text resulting from the political agreement loses this (express) provision.

Article 16, dedicated to penalties, has been amended including other equally effective appropriate measures. Member States shall ensure that courts or tribunals seised of SLAPPs cases may impose effective, proportionate and dissuasive penalties or other equally effective appropriate measures, including the payment of compensation for damages or the publication of the court decision, where provided for in national law, on the party who brought those proceedings.

Protection against Third-country Judgments

This chapter has been affected by significant changes relevant from a private international law perspective.

In relation to grounds for refusal of recognition and enforcement of a third-country judgment, the reference to public policy, which was used in the original text version proposed by the Commission, has been deleted. According to the current text version, Member States shall ensure that the recognition and enforcement of a third-country judgment in court proceedings against public participation by a natural or legal person domiciled in a Member State is refused if those proceedings are considered manifestly unfounded or abusive according to the law of the Member State in which recognition or enforcement is sought.

Article 18, on jurisdiction for actions related to third-country proceedings, provides as follows. Member States shall ensure that, where abusive court proceedings against public participation have been brought by a claimant domiciled outside the Union in a court or tribunal of a third country against a natural or legal person domiciled in a Member State, that person may seek, in the courts or tribunals of the place where he is domiciled, compensation for the damages and the costs incurred in connection with the proceedings before the court or tribunal of the third country.

A paragraph 2 has been added, providing that Member States may limit the exercise of the jurisdiction while proceedings are still pending in the third country.

Relations with other Private International Law Instruments

In final provisions, under Article 19, the Directive shall not affect the application of bilateral and multilateral conventions and agreements between a third State and the Union or a Member State concluded before the date of entry into force of the Directive. Recital 33a refers, as example, to the 2007 Lugano Convention, in line with Article 351 of the TFEU.

Under Recital 33b it is specified that any future review of the rules under the Brussels I bis and the Rome II Regulations should assess also the SLAPP-specific aspects of the rules on jurisdiction and applicable law.

The readers of this blog are aware of the pending proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence. The topic was dealt with in a post that can be found here, and in another post here, with reference to the recommendations by GEDIP, the European Group of Private International Law.

The proposed directive aims to foster sustainable and responsible corporate behaviour throughout global value chains. In-scope companies will be required to identify and, where necessary, prevent, end or mitigate adverse impacts of their activities on human rights.

The next steps for the directive proposal will be the trilogue discussions between the European Parliament, the Council of the European Union and the Commission.

The Views of the European Parliament

On 1 June 2023, the European Parliament, at 1st reading/single position, adopted amendments to the proposal. It could be summarized as follows.

Scope of application

Parliament addressed the threshold criteria to fall within the scope of the directive. The new rules will apply to EU-based companies, regardless of their sector, including financial services, with more than 250 employees and a worldwide turnover over EUR 40 million, as well as to parent companies with over 500 employees and a worldwide turnover of more than EUR 150 million. Non-EU companies with a turnover higher than EUR 150 million, if at least EUR 40 million was generated in the EU will also be included; the same for non-EU parent companies with a turnover exceeding EUR 150 million, from which at least EUR 40 was generated in the EU.

Definitions

Parliament moves in broadening the definition of ‘value chain’, to include the sale, distribution, transport, and waste management of products.

Companies’ Obligations

Parliament, in Article 8b (new), specified that the directive should lay down rules on companies’ obligations regarding actual and potential negative impacts on human rights and the environment that they have caused, contributed to or are directly involved in, with regard to their own activities, and those of their subsidiaries.
Companies would be required to identify and, where appropriate, prevent, bring to an end or mitigate the negative impact of their activities on human rights and the environment, such as child labour, slavery, labour exploitation, pollution, environmental degradation and loss of biodiversity. They should also monitor and assess the impact of their business partners, not only suppliers, but also sales, distribution, transport, storage, waste management and other areas.

Integration of Due Diligence

Companies covered by the Directive should: integrate due diligence into their corporate policies, identify and, where necessary, prioritise, prevent, mitigate, remedy, eliminate and minimise potential and actual adverse impacts on human rights, the environment and good governance; establish or participate in a mechanism for the notification and out-of-court handling of complaints; monitor and verify the effectiveness of actions taken in accordance with the requirements set out in the Directive; communicate publicly on their due diligence and consult relevant stakeholders throughout this process.
Member States should ensure that parent undertakings can take action to help ensure that their subsidiaries falling within the scope of the Directive comply with their obligations.
Companies should apply a due diligence policy that is proportionate and commensurate to the degree of severity and the likelihood of the adverse impact and commensurate to the size, resources and capacities of the company, taking into account the circumstances of the specific case, including the nature of the adverse impact, characteristics of the economic sector, the nature of the company’s specific activities, products, services, the specific business relationship.
In conflict-affected and high-risk regions, companies should uphold their obligations under international humanitarian law and demonstrate heightened, conflict-sensitive due diligence in their operations and business relationships.

Prevention of Potential Negative Impacts

Companies would be required to take the following steps, as appropriate: consider establishing contractual arrangements with partners with whom the company has a business relationship, obliging them to comply with the company’s code of conduct and, where appropriate, a prevention action plan; take necessary modifications, improvements to, withdrawals of or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, projects, services and skills; adapt business models and strategies, including purchasing practices, including those which contribute to living wages and incomes for their suppliers, in order to prevent potential adverse impacts, and develop and use purchase policies that do not encourage potential adverse impacts on human rights or the environment; take appropriate measures to ensure that the composition, design and commercialisation of a product or service is in line with Union law and does not lead to adverse impacts, be it individual or collective. In this regard, particular attention shall be paid to potential adverse impact on children.

Mitigating Actual Negative Impacts

Where a company has caused or contributed to an actual adverse impact, it should take steps to remedy or contribute to the remedy of that adverse impact and any harm it has caused to people or the environment. Remedial measures, introduced by Parliament, would aim to restore the affected individuals, groups, communities and/or the environment to a situation equivalent to, or as close as possible to, that which existed prior to the adverse impact.

Exchanges with Stakeholders

The new rules would also require companies to engage in dialogue with those affected by their actions, including human rights and environmental defenders. Companies would also be required to regularly monitor the effectiveness of their due diligence policies. To facilitate investor access, information on a company’s due diligence policy should also be available on the European Single Access Point (ESAP).
Employees and their representatives should be informed by their company of its due diligence policy and its implementation.

Guidelines

To provide support to companies or to Member State authorities, the Commission, in consultation with Member States, the European cross-industry and sectoral social partners and other relevant stakeholders, should issue clear and easily understandable guidelines, including general and sector- specific guidance, in order to facilitate compliance in a practical manner. Each Member State should designate one or more national helpdesks for corporate sustainability due diligence.

Combating Climate Change

Companies should implement a transition plan to limit global warming to 1.5°C. Companies, with more than 1 000 employees on average according to Parliament, should have an effective policy in place to ensure that part of any variable remuneration for directors is linked to the company’s transition plan.

Sanctions

Non-compliant companies will be liable for damages and can be sanctioned by national supervisory authorities. According to Parliament, sanctions include measures such as “naming and shaming”, taking a company’s goods off the market, or fines of at least 5% of the previous net worldwide turnover. Non-EU companies that fail to comply with the rules will be banned from public procurement in the EU.

Single Market Clause

Parliament introduced the single market clause. According to the latter, the Commission and the Member States shall coordinate during the transposition of this Directive and thereafter in view of a full level of harmonisation between Member States, in order to ensure a level playing field for companies and to prevent the fragmentation of the Single Market.

Justice Costs, Injunctions and Third-party Intervention

Parliament require Member States in ensuring that: the limitation period for bringing actions for damages is at least ten years and measures are in place to ensure that costs of the proceedings are not prohibitively expensive for claimants to seek justice; claimants are able to seek injunctive measures, including summary proceedings (these shall be in the form of a definitive or provisional measure to cease an action which may be in breach of this Directive, or to comply with a measure under this Directive); measures are in place to ensure that mandated trade unions, civil society organisations, or other relevant actors acting in the public interest can bring actions before a court on behalf of a victim or a group of victims of adverse impacts, and that these entities have the rights and obligations of a claimant party in the proceedings, without prejudice to existing national law.

The Council’s General Approach of November 2022

Previously, on 30 November 2022, the Council of the European Union had adopted its negotiating position, or general approach. It included the following provisions.

Companies Concerned

In relation to companies concerned (see Article 2), the rules of the due diligence directive would still apply to large EU companies and to non-EU companies active in the EU. For EU companies, the criteria that determine whether a company falls within the scope of the directive are based on the number of employees and the company’s net worldwide turnover, whereas in the case of non-EU companies the criterion is related to the net turnover generated in the EU; if a non-EU company fulfils the criterion regarding net turnover generated in the EU, it will fall under the scope of the due diligence directive, irrespective of whether it has a branch or a subsidiary in the EU.
The Council’s text has introduced a phase-in approach regarding the application of the rules laid down in the directive. The rules would first apply to very large companies that have more than 1000 employees and €300 million net worldwide turnover or, for non-EU companies, € 300 million net turnover generated in the EU, 3 years from the entry into force of the directive.

Definitions

The European Council’s draft limits the scope of the due diligence obligations identified by the Commission in the full life-cycle “value chain” approach towards a more narrowed “chain of activities”: the latter covers a company’s upstream and in a limited manner also downstream business partners as it leaves out the phase of the use of the company’s products or the provision of services and excludes the use of a company’s products by its consumers (see Article 3(g)); then, it leaves it up to the Member States to decide whether regulated financial undertakings (including fund managers) shall be included in the scope of the directive.
The Council’s text also strengthens the risk-based approach and the rules on the prioritisation of the adverse impacts to ensure that carrying out due diligence obligations is feasible for companies (see Article 3, points (e) and (f)).

Combating Climate Change

The text of the provision on combating climate change (see Article 15) has been aligned as much as possible with the soon-to-be-adopted Corporate Sustainability Reporting Directive (CSRD), including a specific reference to that directive, in order to avoid problems with its legal interpretation, while avoiding broadening the obligations of companies under this Article.
Due to the strong concerns of Member States regarding the provision proposed by the Commission linking the variable remuneration of directors to their contribution to the company’s business strategy and long-term interest and sustainability, this provision has been deleted (Article 15(3)). The form and structure of directors’ remuneration are matters primarily falling within the competence of the company and its relevant bodies or shareholders. Delegations called for not interfering with different corporate governance systems within the Union, which reflect different Member States’ views about the roles of companies and their bodies in determining the remuneration of directors.

Civil Liability

The Council’s text provides more clarity to the conditions of civil liability (see Article 22) with a provision that ensures full compensation for damages resulting from a company’s failure to comply with the due diligence obligations, avoiding unreasonable interference with the Member States’ tort law systems.
The four conditions that have to be met in order for a company to be held liable – a damage caused to a natural or legal person, a breach of the duty, the causal link between the damage and the breach of the duty and a fault (intention or negligence) – were clarified in the text and the element of fault was included.
Furthermore, the right of victims of human rights or environmental adverse impacts to full compensation were expressly provided for in the compromise text. On the other hand, the right to full compensation should not lead to overcompensation, for example by means of punitive damages.
Further, clarifications of the joint and several liability of a company and a subsidiary or a business partner and the overriding mandatory application of civil liability rules were made.
All of these clarifications and precisions allowed to delete the safeguard for companies that sought contractual assurances from their indirect business partners after a strong criticism of this provision due to its heavy reliance on contractual assurances.

Directors’ Duties

Due to the strong concerns expressed by Member States that considered Article 25 to be an inappropriate interference with national provisions regarding directors’ duty of care, and potentially undermining directors’ duty to act in the best interest of the company, the Council’s proposal deletes the director’s duties introduced by the Commission.

Annex I

The Annex I to the proposed directive has undergone significant changes with the main objective of making the obligations as clear and easily understandable for companies as possible, while ensuring a legally sound base. The logic of the Annex I is to list specific rights and prohibitions, the abuse or violation of which constitutes an adverse human rights impact (see Article 3, point (c)) or adverse environmental impacts (see Article 3, point (b)). To better understand how these rights and prohibitions should be interpreted, the Annex I contains references to international instruments that serve as points of reference.
To ensure the legitimacy of referring to international instruments that are legally binding only on the States, and following the overall logic of the Annex I, the Annex I covers only those international instruments that were ratified by all Member States. Overall, the Annex I of the compromise text only refers to such obligations and prohibitions that can be observed by companies, not just by States.
As regards the human rights part of the Annex I, it covers only legally binding international instruments that are recognised as a minimum list of instruments in the international framework. Concerning the environmental part of the Annex I, a limited number of additional specific obligations and prohibitions under international environmental instruments have been added, the violation of which results in an adverse environmental impact.
Moreover, the definitions of adverse environmental and human rights impacts have been clarified. Furthermore, the so-called ‘catch-all clause’ included in the Commission’s proposal has been kept in order to safeguard the indivisibility of human rights, but it has been clarified thoroughly to ensure maximum predictability for companies.

The readers of the blog are aware of the European Commission proposal for a Regulation on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters, and the associated proposal for a Directive amending several existing directives with a view to improving digitalisation and ensuring secure, reliable and time-efficient communication between courts and competent authorities.

Presented in December 2021, the two proposals aim to ensure access to justice in the EU including in the events of force majeure, such as pandemics, and adapt judicial cooperation between Member States for such situations.

On 28 June 2023, Parliament and Council negotiators reached an agreement on the use of digital technology in the judicial cooperation among Member States. Negotiators of the Legal Affairs Committee (JURI) and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) agreed with Council negotiators on its future shape. The agreement, once formally approved by the Council, will be confirmed by a vote in the European Parliament.

The Parliament press note, which provides few details, highlights two aspects: one relating to electronic documents and videoconferencing, the other regarding inclusive digitalisation.

In relation to electronic documents and videoconferencing, the proposed legislation enables the use of digital technology for exchange of information, documents, payments of fees and videoconferencing. Communication between citizens, companies and national authorities would be ensured by an IT system, created and maintained by the European Commission and financed through the Digital Europe Programme with an access point in each Member State. The European e-Justice portal will provide information to individuals and companies on their rights and the European electronic access point will enable their direct communication with authorities.

Inclusive digitalisation refers to efforts to ensure that digitalisation does not lead to exclusion and is implemented in a way to ensure right to a fair trial for everyone. Equivalent access for people with disabilities is also stressed.

The Council press note specifies that the new rules, once adopted, will improve cross-border judicial procedures by:
-allowing parties and other relevant persons in civil, commercial and criminal hearings to participate by means of videoconferencing or other distance communication technology;
-establishing a European electronic access point through which natural and legal persons can file claims, send and receive relevant information, and communicate with the competent authorities;
-accepting electronic communication and documents from natural and legal persons;
-recognising documents with electronic signatures or seals;
-promoting the payment of fees through electronic means.

Negotiators further agreed on the need for additional training for justice professionals when it comes to the use of digital tools such as videoconferencing and the IT system and encouraged Member States to share their best practices on the use of digital tools.

On 31 May 2023, the Commission adopted an implementing decision whereby the European citizens’ initiative (ECI) entitled Effective implementation of the concept of judicial precedent in EU countries shall be registered. The English version can be downloaded here.

The decision has been taken pursuant to Regulation (EU) 2019/788 on the European citizens’ initiative. The Regulation establishes the procedures and conditions required for an initiative inviting the Commission, within the framework of its powers, to submit any appropriate proposal on matters where citizens of the Union consider that a legal act of the Union is required for the purpose of implementing the Treaties.

The initiative comes from a small group of persons (according to Article 5 of the Regulation, an initiative must be prepared by at least seven natural persons), whose affiliation is not disclosed on the webpage. The e-mail address of the substitute to the representative of the organisers points to the University of Bucarest.

The objectives of the initiative as expressed by the organisers are the introduction of ‘a mechanism at national level which guarantees mutual recognition of final judicial decisions adopted by courts’ in other Member States and ‘the option of invoking national judicial precedents decided by the courts of the country in question’, with a view to ‘consolidat[ing] a uniform judicial practice among the Member States’.

The mechanism would apply provided that: ‘(a) the Court of Justice of the European Union (CJEU) has had occasion to interpret the applicable provisions of EU law’ and that ‘(b) the case in question concerns similar or identical legal questions’. The organisers ask for the mechanism to be ‘actually available to litigants, allowing them to request the recognition of another decision relevant to their case at any stage of the proceedings.’ Furthermore, they consider that ‘a certain degree of flexibility should be ensured in light of the ‘rebus sic stantibus’ clause, making it possible to change the case-law if certain fundamental circumstances have changed.’ In addition, Member States should be ‘obliged to impose  effective, dissuasive and proportionate penalties in cases where the mechanism is not complied with’.

The text of the initiative is available here. Judging from its last paragraph, it has wide ambitions in terms of material scope: ‘Firstly, the initiative is based on Articles 81 and 82(1) TFEU as regards the recognition of judgments with cross-border implications. Secondly, the proposal is based on Article 352 TFEU and potentially Article 114 TFEU, so as to cover all situations which lead to inconsistent application and interpretation of EU [law] that could impede the attainment of EU’s objectives and the proper functioning of its internal market.’

In the absence of further explanations, I am not sure (but curious) about how the future mechanism would relate to already existing EU legal texts on the recognition and enforcement of foreign judgments in civil and commercial matters.

I fail to see third parties to a decision being granted, as per EU law, a right to requests its recognition in the usual sense of the word; but perhaps there is a new notion of recognition in the making – one providing for ‘precedential’ effect. Or, maybe, what makes the difference between the initiative’s desired mechanism in comparison to the status quo is the prong on ensuring litigants an option to rely ‘on national judicial precedents decided by the courts of the State concerned’, if ‘the State concerned’ is means a Member State other than the one where the court seized sits.

Again, I am not sure this is the correct understanding of the initiative, which at some point states that The mechanism ‘should apply not only to recognising final judicial decisions adopted in other Member States, but also to recognising final judicial decisions adopted in the country in question’ (italics added).

In any event, the future mechanism would only apply subject to three cumulative criteria being met: (i) the final judicial decision at stake applied provisions of Union law; (ii) the CJEU has already interpreted the same relevant provisions of Union law and (iii) the case concerned is governed by similar or identical points of law. First and second conditions do not look like too difficult to identify in a given case; the same can definitely not be claimed for the third one.

As a rule, all statements of support of a citizen’s initiative* shall be collected within a period not exceeding 12 months from a date chosen by the group of organisers (the ‘collection period’). According to Article 8 (1) of Regulation 2019/788, that date must be not later than six months from the registration of the initiative in accordance with Article 6. So far, I have found no indication on how to express support to this particular initiative. Pursuant to Article 11(7) of Regulation 2019/788, the recourse to individual online collection systems will no longer be possible for initiatives registered after the end of 2022; organisers will thus have to use the central online collection system, for which the Commission is responsible. It maybe that further clarification as regards the exact scope of the initiative’s proposed mechanism is to be found there (not to be taken for granted, though: assuming it is technically possible, there is a thin line between simply explaining an initiative and actually amending it).

*In order to ensure that a European citizen’s initiative is representative, a minimum number of signatories coming from each of those Member States is required. This translate into conditions set under Article 3 of the Regulation. Statistics on European Citizen Initiatives presented, registered, and valid, can be found in a recent report of the European Parliament.

On 31 May 2023, the European Commission has proposed new rules aimed to ensure that the protection of adults is maintained in cross-border cases, and that their right to individual autonomy, including the freedom to make their own choices as regards their person and future arrangements is respected when they move within the EU.

The proposals, based on Article 81(2) TFEU, cover adults who, by reason of an impairment or insufficiency of their personal faculties, are not in a position to protect their own interests (e.g., due to an age-related disease).

Specifically, In the context of a growing cross-border mobility of people in the EU, this gives rise to numerous challenges. For instance, individuals concerned or their representatives may need to manage assets or real estate in another country, seek medical care abroad, or relocate to a different EU-country. In such cross-border situations, they often face complex and sometimes conflicting laws of Member States, leading to legal uncertainty and lengthy proceedings.

The proposed Regulation, which is meant to apply 18 months after its adoption, introduces a streamlined set of rules that will apply within the EU, in particular to establish which court has jurisdiction, which law is applicable, under what conditions a foreign measure or foreign powers of representation should be given effect and how authorities can cooperate. It also proposes a set of practical tools, including the introduction of a European Certificate of Representation, which will make it easier for representatives to prove their powers in another Member State.

The proposal for a Council Decision provides for a uniform legal framework for protecting adults involving non-EU countries. It obliges all Member States to become or remain parties to the 2000 Protection of Adults Convention in the interest of the Union. Once the Decision is adopted, the Member States that are not yet party to the Convention will have 2 years to join it. Actually, some Member States have already launched their own ratification process, with the latest to announce (or re-announce) such a move being Italy, just a few days ago.

The approach underlying the package – in short, ensuring that the Hague Adults Convention enters into force for all Member States, and adopting a Regulation aimed to strengthen the operation of the Convention in the relations between Member States – reflects the suggestions that were put forward, inter alia, by the European Law Institute and the European Association of Private International Law, notably through a position paper issued in April last year.

Further analysis of the two proposals will be provided through this blog in the coming weeks.

As reported on this blog by Marco Pasqua, the European Commission adopted on 18 October 2022 its 2023 Work Programme, listing the legislative proposals, including in the area of private international law, that the Commission itself regarded as a priority.

On 15 December 2022, the Presidents of the European Parliament, the Council and the Commission signed a Joint Declaration on EU legislative priorities for 2023 and 2024. The document, as indicated in the official press release, “sets out a shared European vision for a stronger and more resilient Europe in the face of Russia’s unprovoked, brutal aggression against Ukraine and its wide-ranging impact – all the while tackling other serious challenges such as the climate crisis and economic headwinds”.

The joint declaration is accompanied by a working document, which lists 164 “key legislative proposals”, that the three institutions agreed to prioritise.

Some of these proposals either primarily relate to private international law or include provisions that have, or may have, significant private international law implications.

These include the proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence; the proposal for a Directive harmonising certain aspects of insolvency law; the proposal for a Directive on Corporate Sustainability Due Diligence; the proposal for a Directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (SLAPPs); the proposal for a Regulation on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters; and the proposal for a Regulation on the law applicable to the third-party effects of assignments of claims.

The recently adopted proposal for a Regulation aimed at harmonising at EU level the rules of private international law relating to parenthood (which Marta Requejo presented here) is not among those listed in the document.

There is also no reference to the expected developments regarding the international protection of adults.

The author of this post is Francesca Maoli, who is a Researcher at the University of Genova.

The Brussels II ter Regulation on matrimonial matters, matters of parental responsibility and child abduction has become fully applicable on 1 August 2022, meaning that legal proceedings instituted on or after that date, as well as authentic instruments and agreements registered on that date or afterwards, must, in all EU Member States (excluding Denmark), be dealt with in accordance with the Recast Regulation, rather than its predecessor, the Brussels II bis Regulation

Amending Brussels II bis: Improve the Tradition or Face Innovation?

The process that eventually resulted in the adoption of the Recast Brussels II Regulation was launched on the assumption that, overall, the old Brussels II bis Regulation had functioned reasonably well. The 2014 European Commission’s Report on the operation of the latter Regulation stressed that the system was in need of improvement, rather than radical change.

The existing rules have undergone several changes. Some amount to simple refinements and fixings. Others are more meaningful.

The most prominent innovation brought about by the Brussels II ter Regulation is, arguably, the abolition of exequatur for all decisions on parental responsibility. The two-track system envisaged in Brussels II bis, however, remains in place. While the general discipline is now contained in Article 30 and following of the Brussels II ter regulation, ‘override’ return orders and access orders (which the old regime already regarded as ‘privileged’ decisions) keep on benefiting from a special regime. Recognition and enforcement of the latter orders can be refused if they are irreconcilable with a later decision relating to parental responsibility concerning the same child, provided that such a later decision was given (i) in the Member State where recognition is invoked, or (ii) in another Member State or in the non-Member State of the habitual residence of the child, provided that the conditions necessary for its recognition in the Member State are met.

This post does not purport to analyse the new rules in details (a wealth of literature has been produced on the topic: see here for some references). It merely intends to ‘zoom in’ a selection of issues of special practical importance.

Private Divorces

The European Commission set itself the object of retaining the status quo as concerns matrimonial matters (this was, actually, the preferred policy according to the 2016 Recast Proposal). The Recast Regulation has nevertheless introduced, also in this area, some significant innovations.

One such innovation is about ‘private divorces’, i.e., divorces that fundamentally occur out of court, based on an agreement between the spouses.

The Brussels II ter Regulation comes with a definition of authentic instruments and agreements, respectively in Article 2(2) and (3). Authentic instruments and agreements in matrimonial matters, if they are given binding legal effects in the Member State of origin, benefit from recognition ‘without any special procedure being required’ (Article 65(1)), unless one of the grounds for refusal of recognition provided by Article 68(1) apply. The same is true of authentic instruments and agreements in matters of parental responsibility (Article 65(2)).

In practice, as clarified in Recital 70, authentic instruments and agreements are to be treated as equivalent to decisions. For this, they must have been formally drawn up or concluded in a Member State that would have had jurisdiction according to the regulation (Article 64). Where this is not the case, they may still circulate across Member States under domestic PIL provisions, or otherwise.

The EU decided to adopt rules on private divorces in light of developments that have arisen, recently, in domestic legislations. When the Brussels II bis Regulation was adopted, the laws of the Member States did not contemplate out-of-court divorces. This is why the Regulation itself failed to include provisions in this regard. This state of affairs has proved problematic. A case is currently pending before the ECJ (C‑646/20, Senatsverwaltung für Inneres und Sport), concerning a dissolution of marriage by joint declaration of the spouses before an Italian civil registrar, whose duty is to assess whether the conditions for an out-of-court divorce are met (Article 12 of the Italian Decree Law No 132/2014 requires, inter alia, that the spouses do not have minor children). While noting that ‘Regulation No 2019/1111 is inapplicable to the present case ratione temporis’, being therefore ‘not possible to draw any conclusions from it for the purposes of interpreting Regulation No 2201/2003’, AG Collins suggested in its Opinion that Articles 2 and 21(1) of the Brussels II bis Regulation be given a broad interpretation, thereby concluding that Italian private divorces should be treated as ‘divorce judgments’ for the purpose of the Brussels II bis Regulation (just like they will do under the Recast Regulation).

The Best Interests of the Child and the Child’s Participation in Parental Responsibility Proceedings

The most significant changes brought about by the Brussels II ter Regulation concern children. One key goal of the Regulation is to enhance the protection of their fundamental rights, as enshrined in the UN Convention on the Rights of the Child (UNCRC), the European Convention on Human Rights (ECHR) and the Charter oof Fundamental Rights of the European Union. Specifically, Article 24 of the Charter creates a link between children’s rights – as protected by universal and regional systems – and the EU legal order.

The Regulation fosters the principle of the best interests of the child, which underlies both the general ground of jurisdiction of the habitual residence of the child (Recital 20) and the rules on the recognition and enforcement of judgments (Recital 55).

While the overall regime of jurisdiction in parental responsibility matters is left substantially unaltered, some significant revision occurred concerning choice of court. Article 10 of the Brussels II ter Regulation provides the formal and substantial condition that an agreement of the parties must fulfil to be effective: those conditions reflect, in general, a concern for the best interests of the child. Among the other requisites, a ‘substantial connection’ must exist between the child and the State of the chosen forum. The new provision expands the cases in which the aforementioned connection is deemed to exists, thus creating more possibilities to exercise party autonomy. In addition, the choice of court results now disconnected from the existence of a proceeding concerning the dissolution of marriage (even if Recital 23 still mentions this circumstance). Finally, ‘persons who become parties to the proceedings after the court was seised may express their agreement after the court was seised’, with the specification that such acceptance of jurisdiction during the proceedings may also be implicit (Article 10(2)).

Child participation is another key issue. Recital 2 states that the Regulation ‘clarifies the child’s right to be provided with an opportunity to express his or her views in proceedings to which he or she is subject’, thus recognizing the already existing obligations stemming from international and EU law. The hearing of the child finds a comprehensive discipline in Article 21, which sets out a general obligation to hear the child in all proceedings on parental responsibility, in line with Article 12 UNCRC. The same obligation is stated in Article 26 in the context of child abduction proceedings.

All in all, a decision relating to a child may not be enforced if the child concerned was not given the opportunity to express their views in accordance with Article 21 (unless specific circumstances occur, as specified by Article 39(2)). As to ‘privileged decisions’, namely, overriding orders and orders concerning the rights of access, the violation of Article 21 prevents the issuance of the certificate aimed at facilitating recognition and enforcement (Article 47(3)(b)).

In spite of the foregoing, the opportunity for the child to be heard is still subject to ‘the national law and procedure’. Therefore, it remains unclear to what extent national practices of the Member States will be affected by the new provisions. The importance of the described innovations should, however, not be underestimated. The Regulation has built a solid link between EU proceedings on parental responsibility, on the one hand, and the obligations arising from international texts in this area. Against this background, in order for the child to be given a ‘genuine and effective opportunity to be heard’ (Articles 21 and 26), other aspects should be considered, such as the right of the child to receive adequate information, as suggested, inter alia, by the Guidelines of the Council of Europe on Child-Friendly Justice and the recent work of the Committee of experts on the rights and the best interests of the child in parental separation and in care proceedings (CJ/ENF-ISE).

The focus on the child’s best interests is further witnessed by Article 56 of the Recast Regulation. This provides that the enforcement of a decision may be suspended if it ‘would expose the child to a grave risk of physical or psychological harm due to temporary impediments which have arisen after the decision was given, or by virtue of any other significant change of circumstances’. According to Recital 69, this may take the form of a manifest and strong objection of the child voiced after the adoption of the decision (Recital 69).

International Child Abduction

Chapter III of Brussels II ter is about international child abduction. The new instrument confirms the intention to enhance the operation of the 1980 Hague Convention with respect to intra-EU abductions. The overriding mechanism or trumping order, which consents the court of the Member State of habitual residence of the child before the abduction to the return of the child despite a contrary decision issued in the State of refuge, is still operating. However, the recourse to the overriding mechanism is permitted only when the decision of non-return has been issued pursuant Article 13(1)(b) (grave risk of harm) and 13(2) (objection of the child) of the 1980 Hague Convention. Moreover, the court of the child’s habitual residence can issue such a decision only in the context of a proceedings on the merits of parental responsibility, thus reaching a stable assessment on the future of the child. Therefore, the risk of multiple transfers is mitigated.

On other aspects, the discipline is more detailed. Some innovations, inspired to the will to give substantial content to the child’s best interests, are to be welcomed.

The whole Article 24 of the Regulation is dedicated to the celerity of return proceedings: a term of six week after the lodgment of the application is prescribed at each instance, unless ‘exceptional circumstances’ make it impossible to respect this time limit. As concerns appeal proceedings, the term starts to run at the moment in which ‘the required procedural steps have been taken and the court is in a position to examine the appeal’. Similar obligations are placed upon Central Authorities, which shall act expeditiously in processing return applications. The same purpose inspires the possibility to declare return orders provisionally enforceable, notwithstanding any appeal (Article 27(5)). The enforcement proceedings themselves must be fast (Article 28).

The Regulation also provides that the requested court may invite the parties to consider mediation or other ADRs, unless it would result contrary to the best interests of the child, not appropriate in the particular case or would unduly delay the proceedings (Article 25). The explicit mention of this possibility follows the specific attention that the family law scholars and practitioners are devoting to mediation, the potentialities of which are undoubtful. For this reason, the recast could have devoted even more structured discipline to mediation, currently mentioned only in the Chapter dedicated to international child abduction.

The best interests of the child also play a crucial role when it comes to provisional measures aimed at ensuring a contact between the child and the person seeking the return of the child (Article 27(2)). The requested court, while deciding on the return, may also adopt provisional, including protective, measures that are  recognized and enforced in all other Member States until the court with jurisdiction as to the substance intervenes (as results from Articles 27(5), 35(2) and 36(1)(c), as well as Recitals 30, 44-46 and 59).

Autonomy, Flexibility and Protection of the Rights of the Child: The Role of Cooperation

Overall, the approach of the EU lawmaker with the Brussels II ter Regulation has resulted in the will to balance the enhancement of party autonomy, the need to grant judicial and non-judicial authority a certain degree of flexibility and the protection of the fundamental rights of the child.

As already mentioned, the latter has inspired some detailed obligations concerning, inter alia, the hearing of the child and a specific attention towards the discipline of international child abduction proceedings. While party autonomy has been empowered also in the context of parental responsibility, through the new discipline on choice of court agreements and implicit acceptance of jurisdiction, those rules have been surrounded by safeguards aimed at protecting the child’s best interests. The same reasoning applies to authentic instruments and agreements circulating according to Article 65(2) of the regulation, which are subject to the grounds for refusal of recognition or enforcement provided by Article 68(2) and (3). Specific reference is made to the possibility for the child to express his or her own views, which may result compressed in the context of out-of-court proceedings or private arrangements.

At the same time, the objective of protect children and their best interests has sustained the introduction of a certain degree of flexibility to national authorities: for instance, the possibility to issue cross-border protective orders pending an international child abduction proceedings, or to suspend the enforcement of a decision when the physical or the psychological wellbeing of the child is at risk.

In this context – and with a view to those objectives – the new provisions of the regulation dedicated to cooperation are of particular interests. Direct cooperation and communication between courts and between Central Authorities are now subject to a more detailed discipline and, therefore, encouraged. Chapter V is entirely dedicated to the role and obligations of Central Authorities, when cooperating between themselves and with courts. Other provisions are to be found in other parts of the regulation. Article 86 concerns direct judicial communication and provides that courts from different Member States should cooperate and communicate directly in all cases that are appropriate (for instance, when a court takes provisional or protective measures, it shall inform the court of another Member State having jurisdiction). The dialogue between judicial authorities can effectively contribute to the good administration of cross-border situations, as well as support swifter procedures, with positive repercussions on children. Of course, it could provide specialized training for judges, who need to be acquainted with this possibility and perhaps acquire new skills.

Those and other provisions contribute to a more fragmented discipline compared to the Brussels II bis regulation. On the other hand, if well applied, they may contribute to a better enhancement of the child’s best interests in the EU judicial space. As always, the application of the tool in practice will show its fruits.

This post was contributed by Dr. Vincent Richard, who practices with Wurth Kinsch Olinger in Luxembourg.

The end of the summer is the right time to draw readers’ attention to the recent entry into force in all EU Member States except Denmark of the Evidence Regulation recast on 1 July 2022 (Regulation 2020/1783).

The Evidence Regulation facilitates the cross-border taking of evidence by allowing a court or authority to request a court located in another Member State to take evidence there. The Regulation also allows courts to take evidence directly from another Member State after having asked permission from the central authority of that Member State.

The main goal of the recast is to bring the Evidence Regulation into the digital era by imposing that all communications and exchanges of documents should be carried out through a decentralised IT system such as e-CODEX and by encouraging the taking of evidence through videoconferencing. Additionally, the recast facilitates the direct taking of evidence and it introduces interesting changes to the notion of “court” under the Regulation.

Electronic Transmission of Requests through e-CODEX

The main objective of the recast is to impose an electronic transmission of requests and documents among courts using the Evidence Regulation. To that end, Article 7 (former Article 6 of Regulation 1206/2001) was entirely modified to provide for a fully dematerialised procedure and to allow electronic signatures, governed by Regulation no 910/2014 on electronic identification.

Communication between courts relies on the e-CODEX system, which is a decentralised and interoperable system for cross-border communication, allowing secure communication between preapproved and identifiable users such as judges and clerks. The e-CODEX system has already been used to connect the commercial registers of the Member States and in several pilot projects. The solution has been tested by a limited number of States in the application of the European Payment Order, Small Claims and European Account Preservation Order Regulation. The Regulation on the taking of evidence and the Regulation on the service of documents are the first texts on judicial cooperation in civil matters to require Member States to deploy access points to the e-CODEX system, but the Commission wishes to generalize the method, both in civil and criminal matters. On this issue, the reader may consult a recent blog post by Marta Requejo on the entry into force of the e-CODEX Regulation.

Because of the technical difficulties that this transformation entails, the relevant article (Article 7) did not enter into force in July 2022 with the rest of the Regulation but it will enter into force in 2025, three years after the adoption of the implementing regulation defining technical specifications (Commission implementing regulation (EU) 2022/422 of 14 March 2022).

Taking of Evidence through Videoconferencing

Where the taking of evidence requires the hearing of a person who is not in the territory of the requesting court, the Regulation encourages Member States to use videoconferencing whenever possible (Articles 12 and 20). This technology can be used to hear a party, a witness, an expert or even a child in the context of the application of Regulation 2019/1111. The recast encourages the use of videoconferencing, whether the taking of evidence is carried out by the requested court or directly by the requesting court.

The Notion of “Court” under the Regulation

Article 2 of the recast provides two definitions. One on the “decentralised IT system” and one on the notion of “court”. The latter definition is worth mentioning because it aimed to close the debate as to whether notaries can use the Evidence Regulation. (On the broader issue of notaries in EU PIL, see the post by Martina Mantovani on this blog, here)

Under the recast, the notion of court encompasses not only courts per se but also “other authorities in Member States as communicated to the Commission under Article 31(3), that exercise judicial functions, that act pursuant to a delegation of power by a judicial authority or that act under the control of a judicial authority, and which are competent under national law to take evidence for the purposes of judicial proceedings in civil or commercial matters”.

Hence, Member States are free to delegate the taking of evidence to notaries or court clerks and other Member States must respect this choice as long as it was communicated to the Commission. Recital 5 specifies that this definition includes authorities that qualify as courts under other Union legal acts, such as Brussels I bis, Brussels II ter and the Succession Regulation.

Direct Taking of Evidence

Article 19 to 21 of the recast further encourages requesting courts to use direct taking of evidence after asking permission from the central authority where the evidence is located. If that central body does not answer within 30 days of acknowledgement of receipt of the request, article 19(5) provides that the requesting court may send a reminder. Interestingly, if the requesting court does not receive a reply within 15 days of the acknowledgement of receipt of the reminder, the request for the direct taking of evidence shall be considered accepted. The Regulation, therefore, provides that the silence of the central body is equivalent to implicit acceptance of the taking of evidence on its territory. Exceptionally, the central body may, however, still refuse the taking of evidence after the deadline until the moment of the actual direct taking of evidence.

Conclusion

The Evidence Regulation has never been used much but it remains a useful tool at the disposal of judges and counsels who need to gather evidence abroad in cross-border disputes. The introduction of the e-CODEX system and the use of videoconferencing should speed up the process of obtaining evidence abroad.

Moreover, the recast foreshadows the method that will be followed in judicial cooperation in the coming years and it will be interesting to observe the implementation of e-CODEX in all Member States.

Annexes A and B to the insolvency Regulation list, respectively, the national insolvency proceedings and national insolvency practitioners (as notified by Member States) to which that Regulation applies. They have been replaced by Regulation (EU) 2021/2260 of 15 December 2021.

The new Annexes are operative as of 9 January 2022

The reasons for the amendment are explained given in Recital 2 of the Regulation:

In October 2020, the Netherlands notified the Commission of recent changes in its national insolvency law which introduced a new preventive insolvency scheme, as well as new types of insolvency practitioners. That notification was followed in December 2020 by notifications from Italy, Lithuania, Cyprus and Poland relating to recent changes in their national law which introduced new types of insolvency proceedings or insolvency practitioners. Following the submission by the Commission of its proposal for an amending Regulation, further notifications were received from Germany, Hungary and Austria relating to recent changes in their national law which introduced new types of insolvency proceedings or insolvency practitioners. Subsequently, Italy clarified the date of entry into force of its new provisions on insolvency and restructuring which it had notified to the Commission in December 2020, and notified an amendment to a previous notification. Those new types of insolvency proceedings and insolvency practitioners comply with.

Neither Ireland nor Denmark are taking part in the adoption of the Regulation. Accordingly, they are not bound by it or subject to its application.

The Council of the European Union will aim at establishing a general approach on the regulation on assignments of claims on 7 June 2021 in Luxembourg.

The text which should be adopted is an amended version of the 2018 proposal of the European Commission for a Regulation on the law applicable to the third-party effects of assignments of claims, which was adopted by the European Parliament  in 2019 with 24 amendments.

The main features of the new text are as follows.

Law of the Habitual Residence of the Assignor

One of the most debated issues was whether the principle should be that third party effects of assignment of claims should be governed by the law of the habitual residence of the assignor or the law of the assigned claim. The Commission had proposed to retain the former, with certain exceptions.

In line with the Commission proposal, the law of the assignor’s habitual residence received more support than the assigned-claim law as it would lead to more predictability for third parties. The law of the assignor’s habitual residence was deemed suitable for bulk assignments subject to different laws and future claims and consistent with Regulation (EU) 2015/848 (Insolvency Regulation).

Law of the Assigned Claim

The list of exceptions, however, has slightly increased. The law of the assigned claim would apply to a longer list of claims in financial markets, but also to credit claims. This last exception will not doubt be criticised. Recital 27(b) clarifies its scope, which seems extensive:

The third-party effects of assignments of claims arising out of agreements whereby credit is granted in the form of a loan should be governed by the law of the assigned claim. This should include credit claims as defined in point (o) of Article 2(1) of Directive 2002/47, often used as financial collateral within the Eurosystem. In order to facilitate the cross-border assignment of claims arising out of syndicated loans and lending-based crowdfunding on secondary financial markets, the third-party effects of the assignment of claims arising out of syndicated loans and lending-based crowdfunding should also be subject to the law of the assigned claim.

Scope

It was also thought that the scope of the instrument should be further clarified and restricted. In particular, three matters are excluded from the scope of the future regulation:

– the transfer of financial instruments, including securities and derivatives;
– the transfer of crypto-assets; and
– the assignment of claims where the claims are not in intangible form but incorporated in a certificate or represented by a book entry.

Directive (EU) 2020/1828 of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC was published on 4 December 2020 (OJ L 409/1).

It consists of 79 recitals, 26 provisions (some of them actually looking as recitals, and vice-versa), and two Annexes, the second being a correlation table of provisions – to my mind, a good lawmaking practice. It will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union; transposition shall be ready by 25 December 2022; the national measures will apply from 25 June 2023.

The Key Features of the Directive in a Nutshell

The Directive is based  on Article 114 TFEU (see nevertheless Recital 76, arguing that the intervention of the EU is necessary due to the relevance of the cross-border element).

Having regard to its overarching objective, the Directive joins the group of measures aiming simultaneously at the protection of the consumer, the promotion of fairer competition and the creation of a level playing field for traders operating in the internal market (in other words, this piece of legislation has not been conceived only for the sake of consumers; therefore, it is here submitted that it should not be interpreted only with them in mind).

The Directive  takes up the failures of precedent legal acts in relation to the enforcement of consumer law, particularly Directive 2009/22/EC on injunctions for the protection of consumers’ interests. As in other fields of EU law, it clearly endorses private enforcement.

According to the Directive, a consumer is any natural person who acts for purposes outside that person’s trade, business, craft or profession, independently of how she is referred to (data subject, traveler, retail investor, etc) in the legal act allegedly infringed.

The Directive covers infringements of the provisions of Union law referred to in its Annex I, to the extent that they protect the interests of consumers, and provided the natural person involved acts as such.

For those willing to get the whole picture as to the scope of the Directive it is worth noticing that it does not substitute the enforcement mechanism contained in the EU legal acts listed in Annex I (by the way: keep in mind that Annex is subject to be amended each time that a new Union act relevant to the protection of the collective interests of consumers is adopted). In addition, Member States are able to retain or introduce national legislation that corresponds to provisions of this Directive in relation to disputes that fall outside the scope of Annex I. My understanding is that this possibility relates only to subject matters, and not to the subjective scope of the Directive.

The impact of the Directive on national systems will depend on the Member State concerned. National procedural mechanisms for the protection of collective or individual consumer interests – where they exist – do not need to be replaced. It is for the Member States to decide whether the procedural mechanisms for representative actions required by the Directive are part of an existing procedural mechanism for collective injunctive measures or redress measures, or a distinct procedural mechanism.

What matters is that at least one national procedural mechanism for representative actions complies with the Directive in every Member State, and, as a consequence, at least one effective and efficient procedural mechanism for representative actions, for injunctive measures and for redress measures, is available to consumers in all Member States.

In terms of contents, the Directive does not address every aspect of the proceedings. Already whether these should be judicial or administrative, or both, is to be decided by the Member States considering the area of law or the economic sector at stake.

The provisions eventually adopted focus on legal standing (and its mutual recognition), remedies (injunctive relief, redress measures), funding, settlements, allocation of costs, information about representative actions, effects of final decisions, limitation periods, disclosure of evidence, and penalties.

It is for the Member States to lay down the rules complementing those of the Directive under the principle procedural autonomy, subject to the requirements of effectiveness and non-discrimination.

Aspects of the Directive of Interest for PIL

The Directive does not intend to affect the application of rules of private international law regarding jurisdiction, the recognition and enforcement of judgments or applicable law, nor establish such rules (in other words, the well-known shortcomings of the existing PIL instruments are not remedied).

This intention has not prevented the lawmaker from shaping two cross-border categories: ‘cross-border infringements’, and ‘cross-border representative actions’.

The former covers ‘in particular’ the case of consumers affected by an infringement who live in Member States other than the Member State in which the infringing trader is established; what else is included is unclear. The latter designates the situation of a qualified entity bringing a representative action in a Member State other than that in which it is designated; conversely, if a qualified entity brings a representative action in the Member State in which it is designated, that representative action will qualify as a domestic representative action, even if it is brought against a trader domiciled in another Member State and even if consumers from several Member States are represented within that representative action. I would argue here that those categories have no meaning beyond the Directive itself; in other words, they should be accorded no significance in terms of application of PIL instruments.

Recital 22, according to which ‘It should be noted that Regulation (EU) No 1215/2012 does not cover the competence of administrative authorities or the recognition or enforcement of decisions by such authorities’, deserves a similar assessment. In my view, whether a representative action filed by an administrative authority falls under the scope of the Brussels I Regulation or not still depends on the autonomous characterization of the dispute as ‘civil and commercial’.

In addition to the clarification regarding PIL instruments, the following issues of interest for cross-border disputes are addressed in the Directive (not necessarily in the operational part).

Useful information for the courts – When bringing a representative action, a qualified entity should provide sufficient information on the consumers concerned by the representative action to the court or the administrative authority, thus allowing the court or administrative authority to determine whether it has jurisdiction and to determine the applicable law.

Useful information for the consumers – Member States should be able to set up national electronic databases that are publicly accessible through websites providing information on the qualified entities designated for the purpose of bringing domestic representative actions and cross-border representative actions, as well as general information on ongoing and concluded representative actions.

Legal standing criteria – For the purposes of cross-border representative actions, qualified entities should be subject to the same criteria for designation across the Union. Examples are listed – non exhaustively – under recital 25. Moreover, qualified entities that have been designated on an ad hoc basis are not allowed to bring cross-border representative actions.

Mutual recognition – Member States should ensure that cross-border representative actions can be brought before their courts or administrative authorities by qualified entities that have been designated for the purpose of such representative actions in another Member State. The identity of qualified entities enabled to sue abroad will be communicated to the Commission, who will compile a list and make it publicly available. Inclusion on the list serves as proof of the legal standing of the qualified entity bringing the representative action.

Opt-in – In order to ensure the sound administration of justice and to avoid irreconcilable judgments, where the consumers affected by an infringement do not habitually reside in the Member State of the court or administrative authority before which the representative action is brought, an opt-out mechanism is excluded regarding representative actions for redress measures. In other words, consumers have to explicitly express their wish to be represented in that representative action in order to be bound by the outcome of the representative action.

Cooperation and the exchange of information between qualified entities from different Member States is encouraged, in order to increase the use of representative actions with cross-border implications.

The Presidency of the Council of the European Union and the European Parliament reached on 30 June 2020 a provisional agreement on the modernisation of Regulation 1206/2001 on the taking of evidence abroad, and Regulation 1393/2007 on the service of judicial and extra-judicial documents (see here and here for contributions appeared on this blog regarding the reform).

The provisional agreement now needs to be submitted for endorsement by Member States’ representatives.

The purpose of the amendments under discussion is, generally, to improve the efficiency and speed of cross-border judicial proceedings by taking advantage of digitalisation and the use of modern technology, and by these means advance access to justice and fair trial for the parties.

Changes include the mandatory use of an electronic decentralised IT system, composed of interconnected national IT systems, for the transmission of documents and requests between Member States. The new regulations will also task the Commission with the creation, maintenance and future development of a reference software which Member States can choose to apply as their back end system, instead of a nationally-developed IT system.

As to the service of documents, the envisaged new rules provide that documents can be served electronically and directly on an addressee with a known address in another Member State, when his or her express consent is given in advance. The service can be performed through qualified electronic registered delivery services or, under additional conditions, by e-mail.

The new rules also aim to promote the use of videoconferencing or other distance communication technology in the taking of evidence.