VBB on Belgian Business Law Van Bael & Bellis on Belgian Business Law should not be construed as legal advice on any specific facts or circumstances. The content is intended for general informational purposes only. Readers should consult attorneys at the firm concerning any specific legal questions or the relevance of the subjects discussed herein to particular factual circumstances. Highlights CAPITAL MARKETS Additional Protection for Investors in Crowdfunding Financing Platforms Page 3 CONSUMER LAW ‘Dual Quality’ Food Products: Euro- pean Commission Issues Notice Outlining Enforcement Guidance. Page 5 DATA PROTECTION Bill on New Belgian Data Protec- tion Authority Creates Framework for Application and Enforcement of GDPR in Belgium. Page 9 Topics covered in this issue CAPITAL MARKETS................................................................................................................ 3 CONSUMER LAW.................................................................................................................... 5 DATA PROTECTION................................................................................................................9 INFORMATION TECHNOLOGY ..................................................................................... 11 INSOLVENCY .......................................................................................................................... 13 INTELLECTUAL PROPERTY .......................................................................................... 15 LABOUR LAW ........................................................................................................................ 20 LITIGATION .............................................................................................................................. 21 INFORMATION TECHNOLOGY European Commission Proposal on Free Flow of Non-Personal Data in European Union. Page 11 INSOLVENCY Transfer of Employees as Part of Judicial Reorganisation: Labour Court of Appeal of Antwerp Submits Preliminary Question to Court of Jus- tice of European Union.. Page 13 INTELLECTUAL PROPERTY Distinction in Territorial Protection for Product Patents and Process Patents Is Not Discriminatory. Page 18 European Commission Issues Guide- lines and Principles on Tackling Ille- gal Content Online. Page 18 LITIGATION Advocate-General Delivers Opinion on Validity of Arbitration Clause in Intra-EU Bilateral Investment Treaty. Page 21 VBB on Belgian Business Law | Volume 2017, N O 9 September 2017 Renowned competition and trade boutique which continues to gain visibility in M&A and private equity transactions, with strong cross-border capabilities, earning praise for its commitment and manage- ment of global transactions. Chambers Europe 2017 “Van Bael & Bellis’ ‘responsive and knowledgeable team’ gives very good advice, both at EU and domestic level.” Legal 500 2017 [email protected]www.vbb.com
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VBB on Belgian Business Law
Van Bael & Bellis on Belgian Business Law should not be construed as legal advice on any specific facts or circumstances. The content is intended for general informational purposes only. Readers should consult attorneys at the firm concerning any specific legal questions or the relevance of the subjects discussed herein to particular factual circumstances.
Highlights
CAPITAL MARKETS Additional Protection for Investors in Crowdfunding Financing Platforms Page 3
DATA PROTECTION Bill on New Belgian Data Protec-tion Authority Creates Framework for Application and Enforcement of GDPR in Belgium. Page 9
Topics covered in this issue
CAPITAL MARKETS ................................................................................................................3 CONSUMER LAW ....................................................................................................................5 DATA PROTECTION ................................................................................................................9INFORMATION TECHNOLOGY .....................................................................................11INSOLVENCY .......................................................................................................................... 13 INTELLECTUAL PROPERTY .......................................................................................... 15 LABOUR LAW ........................................................................................................................20 LITIGATION .............................................................................................................................. 21
INFORMATION TECHNOLOGY European Commission Proposal on Free Flow of Non-Personal Data in European Union. Page 11
INSOLVENCY Transfer of Employees as Part of Judicial Reorganisation: Labour Court of Appeal of Antwerp Submits Preliminary Question to Court of Jus-tice of European Union.. Page 13
INTELLECTUAL PROPERTY Distinction in Territorial Protection for Product Patents and Process Patents Is Not Discriminatory. Page 18
European Commission Issues Guide-lines and Principles on Tackling Ille-gal Content Online. Page 18
LITIGATION Advocate-General Delivers Opinion on Validity of Arbitration Clause in Intra-EU Bilateral Investment Treaty. Page 21
VBB on Belgian Business Law | Volume 2017, NO 9
September 2017
Renowned competition and trade boutique which continues to gain visibility in M&A and private equity transactions, with strong cross-border capabilities, earning praise for its commitment and manage-ment of global transactions.
Van Bael & Bellis on Belgian Business Law should not be construed as legal advice on any specific facts or circumstances. The content is intended for general informational purposes only. Readers should consult attorneys at the firm concerning any specific legal questions or the relevance of the subjects discussed herein to particular factual circumstances.
CAPITAL MARKETS 3
Additional Protection for Investors in Crowdfunding Financing Platforms .............................................................................. 3
Entry into Force of New Prospectus Regulation ................ 3
Court of Justice of European Union Clarifies Scope of Consumer Sales and Guarantees Directive ..........................6
Court of Justice of European Union Rules on Display of Air Fares ........................................................................................................ 7
DATA PROTECTION 9
Bill on New Belgian Data Protection Authority Creates Framework for Application and Enforcement of GDPR in Belgium ...................................................................................................9
INFORMATION TECHNOLOGY 11
European Commission Proposal on Free Flow of Non-Personal Data in European Union ...............................................11
INSOLVENCY 13
Transfer of Employees as Part of Judicial Reorganisation: Labour Court of Appeal of Antwerp Submits Preliminary Question to Court of Justice of European Union .............13
New Royal Decree on Use of National Electronic Pledge Register .....................................................................................14
INTELLECTUAL PROPERY 15
“Port Charlotte” Whisky Does Not Infringe EU Protected Designation of Origin “Port” or “Porto” ....................................15
Advocate-General Finds Online Recording of Television Programmes To Be Incompatible with InfoSoc Directive .....................................................................................................16
Court of Justice of European Union Clarifies Conditions for Earlier Designs to Qualify as Novelty and Individuality Benchmarks ............................................................... 17
Distinction in Territorial Protection for Product Patents and Process Patents Is Not Discriminatory .........................18
European Commission Issues Guidelines and Principles on Tackling Illegal Content Online ............................................18
LABOUR LAW 20
Service Agreement vs. Employment Agreement: Labour Court of Appeals Rejects Request to Requalify Service Agreement ............................................................................ 20
Transfer of Employees as Part of Judicial Reorganisation: Labour Court of Appeal of Antwerp Submits Preliminary Question to Court of Justice of European Union .................................................................................... 20
LITIGATION 21
Advocate-General Delivers Opinion on Validity of Arbitration Clause in Intra-EU Bilateral Investment Treaty ...........................................................................................................21
Additional Protection for Investors in Crowdfunding Financ-ing Platforms
On 21 August 2017, amendments to the Law of 18 Decem-ber 2016 on crowdfunding entered into force (Wet van 18 december 2016 tot regeling van de erkenning en de afbak-ening van crowdfunding en houdende diverse bepalingen inzake financiën/Loi du 18 décembre 2016 organisant la reconnaissance et l’encadrement du crowdfunding et por-tant des dispositions diverses en matière de finances - the “Crowdfunding Law”). These amendments were brought about by the Law of 31 July 2017 introducing miscella-neous financial and fiscal provisions and measures con-cerning concession agreements (Wet van 31 juli 2017 hou-dende diverse financiële en fiscale bepalingen en houdende maatregelen inzake concessieovereenkomsten/Loi du 31 juillet 2017 portant des dispositions financières et fiscales diverses et portant des mesures en matière de contrats de concession - the “Amending Law”).
The amendments aim to grant additional protection to investors holding securities in crowdfunding financing platforms. Under Article 28, §1 of the Crowdfunding Law, financing platforms must not unilaterally amend the rights and obligations of investors acting through a crowdfund-ing financing platform. The Amending Law complements this provision and states that financing platforms are only allowed to (i) make amendments to the shareholders’ agreement of the issuer (ondernemer-emmittent/émet-teur-entrepreneur), or (ii) exercise their voting rights at a general meeting deciding on amendments to the arti-cles of association of the issuer that present a risk to the rights or economic position of the investors in the financ-ing platforms, if these actions are in line with the decisions approved by the investors and are subject to the required quorum and majority. Prior to making their investment, investors in financing platforms will be informed of the provisions of the shareholders’ agreement of the issuer that may have an impact on their rights or economic position.
In addition, the new provisions will not apply if the issuer is subject to a bankruptcy procedure, reached an amica-ble settlement in the framework of the Law of 31 January 2009 on the continuity of enterprises (Wet van 31 januari
2009 betreffende de continuïteit van de ondernemingen/Loi de 31 janvier 2009 relative à la continuité des entreprises), or is in judicial reorganisation.
Separately, the bidder who wants to benefit from the pro-spectus exemption (See, this Newsletter, Volume 2017, No. 1, p.1) will be required to provide all necessary documents to the FSMA, prior to the public offering and every twelve months in case of a continuous bid.
The Crowdfunding Law, as amended by the Amending Law, can be found here (in Dutch and in French).
Entry into Force of New Prospectus Regulation
On 20 July 2017, Regulation 2017/1129 on the prospectus to be published when securities are offered to the pub-lic or admitted to trading on a regulated market entered into force in part following its publication in the Official Journal of the European Union on 30 June 2017 (the “New Prospectus Regulation”).
The New Prospectus Regulation simplifies prospectus requirements for smaller companies to access capital and for issuers that are already known to capital markets. It also aims to enhance the level of information available to investors by introducing a retail investor-friendly summary of key information.
The provisions of the New Prospectus Regulation enter into force in a staggered fashion.
As noted, a limited number of provisions entered into force on 20 July 2017. These provisions relate to (i) the increase, from 10% to 20%, of the threshold below which admission to trading of securities over a 12-month period is exempt from prospectus requirements; and (ii) an exemption from prospectus requirements for the admission to trading of shares resulting from conversion or exchange of other securities or from the exercise of rights conferred by other securities. This exemption will apply provided that the new securities represent less than 20% of the secu-rities already admitted to trading on the same regulated market.
On 21 July 2018, a further important measure will enter into force. “Small” public offerings of securities, i.e., offer-ings for a total consideration of less than EUR 1 million over a 12-month period, will fall outside the scope of the harmonised prospectus regime governed by the New Pro-spectus Regulation. Member States will have the power to determine the rules applying to these “small” public offer-ings of securities on their territory, under specific condi-tions (e.g. no additional burden for issuer compared to public offering falling within the scope of the harmonised prospectus regime; and no exemption possible if the con-sideration exceeds EUR 8 million).
On 21 July 2019, the European Growth Prospectus will enter into force. Specific “small” issuers, i.e., (a) SME’s; (b) non-SME’s traded on an SME growth market, with an average market capitalisation of less than EUR 500 mil-lion; and (c) issuers of securities to the public for a total consideration of less than EUR 20 million not traded on a Multilateral Trading Facility and with an average num-ber of employees of up to 499, will be allowed to provide simplified information to the public. SME’s are defined as companies with an average market capitalisation of less than EUR 200 million or which satisfy at least two of the following criteria: (i) an average number of employees of less than 250; (ii) a total balance sheet not exceeding EUR 43 million; and (iii) an annual net turnover not exceeding EUR 50 million.
Furthermore and still on 21 July 2019, a new simplified disclosure regime for frequent secondary issuers will enter into force. This regime will allow issuers whose shares have been admitted to trading for at least the last 18 months, to publish a simplified prospectus, which will contain fewer strenuous disclosure obligations. In addi-tion, a universal registration document (“URD”) will be introduced for listed companies as a form of shelf regis-tration document that may benefit from a faster approval process under specific conditions.
Finally, the New Prospectus Regulation will also imple-ment, as from 21 July 2019, a new system for the classifica-tion of risk factors in accordance with their materiality and nature. For retail public offerings and subject to excep-tions, a retail investor-friendly summary of the prospectus of maximum seven pages will be required and the total number of risk factors will have to be limited to fifteen.
The European Commission (the “Commission”) has pub-lished guidance on how national authorities should apply EU consumer and food law in relation to ‘dual quality’ food products (Commission Notice C(2017) 6532 final of 26 Sep-tember 2017 “on the application of EU food and consumer protection law to issues of Dual Quality of products – The specific case of food” – the “Notice”; available here).
‘Dual quality’ or ‘differentiated’ products are those goods that are marketed throughout the EU’s Single Market under the same brand or trademark but with differences in content, composition or quality in individual EU Mem-ber States. The marketing of differentiated products has been the subject of political interest and was addressed by the President of the Commission, Jean-Claude Juncker, in his State of the Union address of 13 September 2017 (available here). The Commission initiative also follows on from specific consumer concerns regarding, for instance, soft drinks, coffee and prepared fish products. The Com-mission intends this to be a first step in a broader effort to ensure compliance with the legislation on unfair trading practices, and may extend this approach to areas other than food products.
Regulatory Landscape
Three pieces of legislation are central to the Commission’s approach: (i) the General Food Law Regulation (Regula-tion No 178/2002; available here); (ii) the Food Informa-tion to Consumers Regulation (Regulation No 1169/2011; available here); and (iii) the Unfair Commercial Practices Directive (Directive 2005/29/EC – the “UCPD”; available here). Enforcement is a responsibility of national con-sumer and food authorities, but has a strong cross-bor-der element. National authorities are supported by the Commission and may conduct coordinated cross-border investigations through the mutual assistance procedure contained in the Consumer Protection Cooperation Reg-ulation (Regulation No 2006/2004; available here). In par-ticular, the Commission encourages information-sharing and cooperation between national authorities in cases of
parallel investigations into the same business operator or commercial practice.
If a sector-specific regime does not apply, food products are caught by the general provisions of the UCPD. The Commission notes that the UCPD prohibits any commer-cial practice which contains false information or deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to the main char-acteristics of a product, leading the consumer to make a choice that he or she would not have made were it not for that information. In effect, the Commission is concerned by practices which may give consumers the impression of buying a product that differs significantly from a ‘reference product’ marketed elsewhere by the same manufacturer under the same brand.
Degree of Differentiation
The Commission requires food and drink operators to ensure ‘constant quality’ but not identical products. Allow-ance is made for tailoring products to local conditions (such as consumer preferences and dietary habits), objec-tive differences in sourcing and raw material availability, the staggered introduction of new or modified products, and the price elasticity of local demand.
Nonetheless, particular care should be taken in how such products are presented. If the presentation, marketing or branding of a product is likely to induce consumers to believe that the product is identical throughout the EU, then differences of content or formulation may be in breach of the UCPD. Marketing that stresses, even implic-itly, the originality, uniformity or historical continuity of a product is a key concern of the Commission, as are prac-tices that enable different versions of a product to be sold in different markets without making clear the material dif-ference. Finally, the Commission reiterates the importance of ensuring that consumers are fully informed of changes in formulation or composition, especially when this would potentially alter the consumer’s choice.
The Notice outlines progressive steps in assessing, on a case-by-case basis, whether differentiated branded food products may be in breach of the UCPD, namely:
• Does the product comply with sector-specific legislation?
• Is the product promoted under the same brand and packaging?
• Does the composition of the product differ signifi-cantly from the version(s) sold elsewhere in the Sin-gle Market?
• Is the consumer sufficiently informed about this difference?
• And if consumers were informed, would they buy the product all the same?
The key question, therefore, is whether a sufficiently-in-formed consumer would nevertheless buy the differenti-ated product. If the consumer would not, a breach of the UCPD may arise.
Other Actions
The Notice is published as part of the Commission’s wider efforts to enhance food quality compliance. The Commis-sion has financed its Joint Research Centre to develop a methodology for food comparative tests, and allocated funds to national authorities for studies and enforcement actions. Producers and brand associations have also agreed to develop a code of conduct which was discussed at the High Level Forum for a Better Functioning Food Sup-ply Chain on 3 October 2017.
Court of Justice of European Union Clarifies Scope of Con-sumer Sales and Guarantees Directive
On 7 September 2017, the Court of Justice of the European Union (the “ECJ”) held that a contract to carry out renova-tion works falls outside the ambit of Directive 1999/44/EC of 25 May 1999 on specific aspects of the sale of consumer goods and associated guarantees (the “Directive”), even
if the contract provides for the delivery and installation of specific goods (ECJ, 7 September 2017, Case C-247/16, Heike Schottelius v. Falk Seifert).
The ECJ delivered its judgment in a dispute between Mrs Schottelius and Mr Seifert, a contractor who had been engaged by Mrs Schottelius to renovate her swimming pool. After the completion of the renovation works, a num-ber of defects became apparent that were only identifiable after the pool was used. As Mr Seifert failed to respond to Mrs Schottelius’ request to repair the defects, the repair works were carried out by Mrs Schottelius’ husband. Mrs Schottelius subsequently brought an action against Mr Seifert before the Hannover Regional Court to obtain reim-bursement of the expenses incurred. The Court decided to stay the proceedings and seek advice from the ECJ on whether a general principle of EU consumer law could be derived from the second indent of Article 3(5) of the Directive according to which the Directive must be inter-preted as meaning that, in order for a consumer who has entered into a contract with a seller for consumer goods to be able to enforce his rights under a warranty, it is sufficient for the seller to have failed to take remedial action within a reasonable period of time, without it being necessary for the consumer to have set a time limit for rectifying the defects in question.
At the outset, the ECJ raised the logical question of whether the Directive applies to ‘contracts for work’, such as the contract between Mrs Schottelius and Mr Seifert for the renovation of a swimming pool. In this regard, the ECJ first reiterated that the Directive does not only apply to ‘contracts of sale’ in the narrow sense, but also to spe-cific categories of contracts involving the supply of ser-vices. However, according to the ECJ, for contracts involv-ing the supply of services to be considered ‘contracts of sale’ within the meaning of the Directive, the supply of ser-vices must be ancillary to the sale. Assessing the facts of the case, the ECJ pointed out that although Mr Seifert did sell various goods necessary to renovate the swimming pool such as, for example, a filtration system featuring a pump, it was clear that the sale of goods was ancillary to the provision of services, which was the principal subject of the renovation contract.
Furthermore, the ECJ analysed the applicability of Article 1(4) of the Directive, which provides that “[c]ontracts for the
supply of consumer goods to be manufactured or produced shall also be deemed contracts of sale for the purpose of this Directive”. The ECJ ruled that the contract at issue could not be qualified as a “contract for the supply of consumer goods to be manufactured or produced” within the meaning of this provision given that the goods which were required for the renovation of the swimming pool did not have to be manufactured or produced by Mr Seifert.
The ECJ therefore concluded that the contract at issue did not constitute a “contract of sale” within the meaning of the Directive and that the Directive did not apply. Accordingly, the ECJ held that it lacked jurisdiction to answer the ques-tion submitted for a preliminary ruling.
Court of Justice of European Union Rules on Display of Air Fares
On 6 July 2017, the Court of Justice of the European Union (the “ECJ”) held that the third sentence of Article 23(1) of Regulation 1008/2008 of 24 September 2008 on common rules for the operation of air services in the Community (the “Regulation”) should be interpreted as meaning that, when publishing air fares, air carriers must separately detail the amounts payable by their customers in respect of taxes, airport charges and other charges, surcharges or fees. As a consequence, air carriers are prohibited from including such items, even partially, in the air fare. Moreover, the ECJ ruled that Article 22(1) of the Regulation does not preclude national legislation transposing Directive 93/13 of 5 April 1993 on unfair terms in consumer contracts (the “Directive”) from finding that general terms and conditions which allow separate flat-rate handling fees to be imposed on custom-ers who fail to make use of their bookings or cancel them is invalid (ECJ, 6 July 2017, Case C-290/16, Air Berlin plc & Co. Luftverkehrs KG v. Bundesverband der Verbraucherzen-tralen und Verbraucherbände – Verbraucherzentrale Bun-desverband eV).
The ECJ delivered its judgment in response to a request for a preliminary ruling from the German Federal Court of Justice in a dispute pitting the Federation of German Con-sumer Organisations (the “Federation”) against Air Berlin plc & Co. (“Air Berlin”). After conducting an investigation, the Federation concluded that the charges and fees indi-cated on the website of Air Berlin were much lower than the amounts actually payable, and were consequently
likely to mislead customers. According to the Federation, such a display is contrary to Article 23 of the Regulation which provides that, in addition to the final price, the fol-lowing must also be specified: (i) the air fare or air rate; and (ii) where applicable, the taxes, airport charges and other charges, surcharges or fees, such as those related to security or fuel.
The Federation further argued that it runs counter to Arti-cle 307 of the German Civil Code (i.e., the German imple-menting provision of Article 6 of the Directive) to impose a EUR 25 handling fee on customers who cancel their flight booking or fail to make use of that booking. Article 307 of the German Civil Code and Article 6 of the Directive pro-vide that unfair terms used in a contract concluded with a consumer by a seller will not be binding on the consumer and that the contract will continue to bind the parties on those terms if it is capable of continuing in existence with-out the unfair terms.
The Federation’s arguments were upheld by both the Ber-lin Regional Court and the Berlin Higher Regional Court, prompting Air Berlin to bring an appeal before the Ger-man Federal Court of Justice. The Federal Court of Justice decided to stay the proceedings and seek clarifications from the ECJ on whether (i) Article 23 of the Regulation should be interpreted as meaning that air carriers must specify the actual amount of taxes and charges referred to in Article 23 and must not partially include those elements in the air fare; and whether (ii) Article 22 of the Regulation pursuant to which air carriers enjoy pricing freedom pre-cludes the application of national law on general terms and conditions according to which a separate handling fee cannot be imposed on customers who have not taken a flight or cancelled their booking.
With respect to the first question, the ECJ considered it “evident” for charges to be specified in addition to the final price. Article 23 of the Regulation states explicitly that fares, taxes and charges should be indicated “in addi-tion to” the final price. Furthermore, the ECJ recalled the provision’s overall objective of information and transpar-ency and noted that offering the choice to companies of including such charges in the final price would run coun-ter to these objectives. Finally, the ECJ emphasised that the inclusion of charges in the air fare would ultimately deprive the provision of its practical effects. For example,
full inclusion would result in a fare mirroring the final price, which in any event must be legally disclosed.
As regards the second question, the ECJ first specified that the Directive does not exclude contracts of carriage by air from its scope and is meant to apply to all economic sec-tors. Referring to its judgment in Vueling Airlines (See, this Newsletter, Volume 2014, No. 9, p.3), the ECJ recalled that air carriers’ pricing freedom, as established by Article 22 of the Regulation, does not prevent EU Member States from legislating in order to protect consumers against unfair practices. Consequently, according to the ECJ, preclud-ing the application of national implementing provisions of the Directive would amount to depriving consumers of the enjoyment of their rights derived from EU law in the air transport sector.
It follows from the judgment that airline companies active in the European Union (i) should specify taxes, charges and other charges, surcharges and fees when publishing air fares; and (ii) remain fully subject to general consumer protection legislation, including the Directive.
Bill on New Belgian Data Protection Authority Creates Framework for Application and Enforcement of GDPR in Belgium
On 23 August 2017, the government introduced a Bill on the creation of the Data Protection Authority (Wetsontwerp tot oprichting van de Gegevensbeschermingsautoriteit/Projet de loi portant création de l’Autorité de protection des données - the “Bill”). The Bill creates a framework for the application and enforcement of Regulation No 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (the “GDPR”) in Belgium.
Under the GDPR, national supervisory authorities will have a strengthened role and increased enforcement powers, including the authority to impose fines of up to EUR 20 million or 4% of a company’s worldwide turnover. Accord-ingly, the federal Parliament prepared a draft bill to reform the current Privacy Commission (Commissie voor de bes-cherming van de persoonlijke levenssfeer/Commission de la protection de la vie privée – the “Privacy Commission” or the “Authority”).
The Privacy Commission issued its opinion on the draft Bill on 3 May 2017 (See, this Newsletter, Volume 2017, No. 5, p. 14). While the draft was amended to take account of the Privacy Commission’s comments, it would appear that the Bill does not tackle all of the shortcomings and ambigui-ties pointed out by the Privacy Commission. For example, there is still a lack of sanctions in case of non-cooperation with the Authority.
The Bill proposes to change the name of the Privacy Commission to Data Protection Authority (Gegevensbes-chermingsautoriteit/Autorité pour la protection des don-nées – the DPA) in order to reflect better the scope of the authority’s supervision. In addition, while the current Privacy Commission focuses on its advisory role, the new DPA will enjoy increased enforcement powers, includ-ing strengthened investigative powers, and the ability to impose significant administrative fines.
In addition, the Bill also provides for a structural change to the Authority’s composition. The DPA will be composed of six internal bodies:
• the executive committee (directiecomité/comité de direction) ;
• the general secretariat (algemeen secretariaat/secrétariat général), which can be contacted, inter alia, to consult on the result of a data protection impact assessment as required under Article 36 of the GDPR ;
• the “first line service” (eerstelijnsdienst/service de première ligne) acting as a contact point for external stakeholders, dealing with complaints and requests, and examining their admissibility;
• the knowledge centre (kenniscentrum/centre de con-naissances) issuing advice and recommendations on compliance with the GDPR;
• the inspection service (inspectiedienst/service d’in-spection) which is bestowed with (i) investigative powers; (ii) powers to take corrective action and issue authorisations; and (iii) advisory powers;
• a dispute chamber (geschillenkamer/chambre con-tentieuse): a legal and administrative body holding the prosecution and sanctioning powers. The dis-pute chamber also oversees the inspection service’s investigative powers and its powers to take correc-tive action.
The Bill also sets out procedural rules for complaints and decision-making. In this respect, the DPA is granted an array of potential measures for enforcement, including the power to suspend a sentence, issue a warning or an injunction (such as the deletion of data), as well as impose fines or the publication of the decision.
Decisions of the dispute chamber can be appealed to the Market Chamber of the Brussels Court of Appeal (Mark-tenhof/Cour des marchés).
Furthermore, as the GDPR does away with much of the prior authorisation requirements, the new DPA no longer hosts sectoral committees granting prior authorisations. Authorisations previously granted by the sectoral commit-tees of the Privacy Commission will nonetheless remain valid, without prejudice to the potential control powers of the new supervisory authority.
European Commission Proposal on Free Flow of Non-Per-sonal Data in European Union
On 13 September 2017, the European Commission (the “Commission”) published a Proposal for a Regulation (the “Regulation”) on a framework for the free flow of non-per-sonal data in the EU (the “Proposal”). The Proposal is an important element of the Commission’s Digital Single Market Strategy. With the Proposal, the Commission seeks to remove restrictions on the free movement of data for reasons other than the protection of personal data within the EU and unjustified restrictions on the location of data for storage or processing purposes.
Why was it necessary to introduce such a Proposal?
The Commission’s Communication “Building a European Data Economy” stated that in order to “realise the full potential of the European data economy, any Member State action affecting data storage or processing should be guided by a principle of free movement of data within the EU as a corollary of their obligations under the free movement of services and the free establishment provi-sions of the Treaty and relevant secondary legislation.”
The Proposal seeks to address limitations on the mobility of non-personal data across borders in the single market. The principal such limitations are as follows:
1. Member States’ legislative and administrative restric-tions are the biggest obstacle to data mobility in the EU. Many Member States have put in place “data localisation restrictions.” These are rules that oblige citizens and businesses to process and store specific categories of data within the territory of the coun-try. Whilst Europe’s digital economy is split along national lines, Europe is held back from its broader digital growth.
2. In addition, obstacles are created by market dynam-ics leading to localisation because of risk-averse behaviour in the face of legal uncertainty. There is no explicit prohibition in EU law against localisation of non-personal data. This gives rise to a large degree of legal uncertainty when it comes to cross-border data
storage and processing. The complexity of applicable legislation exacerbates legal uncertainty.
3. Another problem that causes obstacles to move-ment of data across borders within the EU is a lack of trust, originating from concerns over data security and protection of sensitive data. Fear of the risk of a security breach is the most common concern, which directly constrains the uptake of cloud services. This in turn leads to efficiency losses for businesses and society as a whole. In addition, a lack of trust can be observed in relation to access to data for regulatory and supervisory purposes when this data is stored outside national borders.
4. Vendor lock-in actions by cloud service providers constitute a form of data localisation restrictions imposed by private parties, hampering more specif-ically data mobility across IT-systems. This problem becomes apparent when users of data storage or pro-cessing services try to switch cloud service providers.
The general policy objective of the initiative is to achieve a more competitive and integrated internal market for data storage and other processing services by addressing the following areas:
1. Improving the mobility of non-personal data across border in the single market. Data mobility refers to the degree in which data can be (re)located to different IT-systems, regardless of the physical location of such systems or the owner of such IT-systems, including the data holder or data storage and processing ser-vice provider.
2. Ensuring that the powers of competent authorities to request and receive access to data for regulatory control purposes, such as for inspection and audit, remain unaffected.
3. Making it easier for professional users of data storage or other processing services to switch service provid-ers and to port data, while not creating an excessive burden on service providers or distorting the market.
Under the Proposal, the storage or other processing of electronic data must be provided as a service to users residing or having an establishment in the Union and must be carried out by a natural or legal person residing or having an establishment in the Union for its own needs in order to fall within its scope. In addition, within the ambit of the Proposal, “data” means data other than personal data.
Key Rules in the Proposal
Article 1 defines the scope of the Proposal as follows: “This Regulation seeks to ensure the free movement of data other than personal data within the Union by laying down rules relating to data localisation requirements, the availability of data to competent authorities and data porting for pro-fessional users.”
Area 1- Data Localisation Requirements
In Article 4, there is a prohibition on the localisation of data. A “data localisation requirement” is defined in Arti-cle 2 as any obligation, prohibition, condition, limit or other requirement provided for in the laws, regulations or administrative provisions of the Member States, which imposes the location of data storage or other process-ing in the territory of a specific Member State or hinders storage or other processing of data in any other Member State. The location of data for storage or other processing within the Union should not be restricted to the territory of a specific Member State, and storage or other process-ing in any other Member State should not be prohibited or restricted, unless this is justified on grounds of public security. Member States must also notify to the Commis-sion any draft act which introduces a new data localisation requirement. Member States will have to repeal any data localisation that is not in conformity with the Regulation.
Area 2- Availability of data to competent authorities
The Proposal contains provisions whereby data is made more readily available for competent authorities. For example, Article 5 states that competent authorities may request and receive access to data for the performance of their official duties, and where a competent author-ity has exhausted all applicable means to obtain access to the data, it may seek the assistance of a competent
authority in another Member State. Access to premises of a natural or legal person, including to any data storage or processing equipment, should be secured in accordance with Union or Member State procedural law.
Area 3- Data porting for professional users
The Commission will encourage and facilitate the devel-opment of self-regulatory codes of conduct at Union level, in order to define guidelines on best practices in facilitating the switching of providers and to ensure that they provide professional users with sufficiently detailed, clear and transparent information before a contract for data storage and processing is concluded.
Application of rules in the Proposal and Review Mechanism
Each Member State will designate a single point of con-tact that will liaise with its counterparts in other Member States and the Commission regarding the application of the Regulation.
The Commission is expected to carry out a review no later than 5 years after the entry into force of the Regulation.
The Proposal has been earmarked as a priority by the European Council of Ministers and should become a Reg-ulation by June 2018.
Transfer of Employees as Part of Judicial Reorganisation: Labour Court of Appeal of Antwerp Submits Preliminary Question to Court of Justice of European Union
On 14 August 2017, the Labour Court of Appeal (Arbeidshof / Cour du Travail) of Antwerp, division Hasselt (the “Court of Appeal”) referred a question concerning the transfer of employees following judicial reorganisation of a Belgian company to the Court of Justice of the European Union (the “ECJ”) for a preliminary ruling.
The case was brought before the Court of Appeal by an employee (the “Plaintiff”) who had not been transferred to the acquirer (the “Acquirer”) of her employer (the “Com-pany”) following a judicial reorganisation procedure of the Company with a transfer under judicial authority in accordance with the Law of 31 January 2009 on the conti-nuity of enterprises (Wet van 31 januari 2009 betreffende de continuïteit van de ondernemingen / Loi de 31 janvier 2009 relative à la continuité des entreprises - the “LCE”).
The Company and the Acquirer had relied on Article 61, §3 of the LCE, which provides that the acquirer of wholeor part of the company subject to a procedure of judi-cial reorganisation may select the employees that will be transferred together with the assets and activities, provided that such a choice (i) is based on technical, economical or organisational reasons; and (ii) does not constitute a prohibited difference of treatment between employees. In the case at hand, approximately two thirds of the employees of the Company were transferred to the Acquirer, to the exclusion of the Plaintiff whose employ-ment contract was terminated by the Company.
The Plaintiff claimed that Article 61, §3 of the LCE violated Directive 2001/23/EC of 12 March 2001 on the approxi-mation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of trans-fers of undertakings, businesses or parts of undertak-ings or businesses (the “Directive”). Pursuant to Article 3 of the Directive, “the transferor’s rights and obligations arising from a contract of employment or from an employ-ment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee”.
On the basis of this provision, the Plaintiff argued that all rights and obligations resulting from the employment contracts entered into by the Company, including her own employment contract with the Company, should have been transferred to the Acquirer, notwithstanding the transfer agreement between the Company and the Acquirer pursuant to which only two thirds of the employ-ees were to be transferred.
By contrast, the Acquirer argued that Article 61, §3 of the LCE is compatible with the Directive, and in particular Arti-cle 5, which provides that “unless Member States provide otherwise, Articles 3 and 4 shall not apply to any transfer of an undertaking, business or part of an undertaking or busi-ness where the transferor is the subject of bankruptcy pro-ceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of a competent public authority (which may be an insolvency practitioner authorised by a competent public authority).” According to the Acquirer, the Belgian judicial reorganisa-tion procedure with transfer under judicial authority must be considered as an “analogous insolvency procedure” that “aims at the liquidation of the assets of the transferor” and this exception regime under Article 5 of the Directive should therefore apply to the situation at hand.
In a judgment of 23 May 2016, the Labour Tribunal (Arbeids-rechtbank/Tribunal du Travail) of Antwerp, division Hasselt (the “Tribunal”), ruling in first instance, declared the Plain-tiff’s claims unfounded. The Plaintiff lodged an appeal against the judgment of the Tribunal.
In its judgment of 14 August 2017, the Court of Appeal considered that, on the basis of the language used in the Directive, it was not clear whether the Belgian judi-cial reorganisation procedure with transfer under judicial authority fell within the scope of the exception provided for under Article 5 of the Directive. Therefore, the Court of Appeal decided to suspend the proceedings and to request the ECJ to rule on whether or not Article 61, §3 of the LCE complies with the Directive.
In a recent judgment in the “Smallsteps” case (ECJ, 22 June 2017, Case C-126/16, Federatie Nederlandse Vakverenig-ing and Others v. Smallsteps BV), the EJC was asked to examine the compatibility of the Dutch “pre-pack” pro-cedure with Articles 3 and 5 of the Directive. The “pre-pack” procedure is a procedure under Dutch law whereby a transfer of the assets of a company in financial difficul-ties is prepared prior to the declaration of insolvency, with the consent of a prospective insolvency administrator, appointed by the competent court. The transfer of the assets is then put into effect by that administrator imme-diately after the declaration of insolvency. In a “pre-pack” procedure, the court also appoints a prospective super-visory judge. The ECJ concluded that such a procedure did not fall within the exception laid down in Article 5 of the Directive because it is not aimed at the liquidation of the assets of a business and payment of the debts, but rather at the continuation of the business.
New Royal Decree on Use of National Electronic Pledge Register
On 26 September 2017, the Royal Decree of 14 September 2017 implementing the provisions of Title XVII of Book III of the Civil Code concerning the use of the national pledge register was published in the Belgian Official Journal (Kon-inklijk Besluit van 14 september 2017 tot uitvoering van de artikelen van Titel XVII van Boek III van het Burgerlijk Wet-boek, die het gebruik van het nationaal pandregister betref-fen/Arrêté royal du 14 septembre 2017 portant exécution des articles du titre XVII du livre III du Code civil, concernant l’uti-lisation du registre national des gages - the “Royal Decree”).
The Royal Decree provides for the entry into force of the Law of 11 July 2013 amending the Civil Code with regard to securities over movable property and the abolition of specific provisions in this respect (Wet van 11 juli 2013 tot wijziging van het Burgerlijk Wetboek wat de zakelijke zeker-heden op roerende goederen betreft en tot opheffing van diverse bepalingen ter zake/Loi du 11 juillet 2013 modifiant le Code Civil en ce qui concerne les sûretés réelles mobilières et abrogeant diverses dispositions en cette matière - the “Law”). The Law was originally designed to enter into force in January 2014, but failed to do so as the electronic pledge register was not yet operational. Most recently, on 30 December 2016, the entry into force of the Law was again postponed to 1 January 2018 for the same reason (See, this Newsletter, Volume 2017, No. 1, p. 16).
The introduction of the electronic pledge register was one of the most important innovations of the Law nota-bly because it allowed for a more flexible and practical method of perfection of the pledge, without disposses-sion of the collateral provider.
The Royal Decree governs the use of the national elec-tronic pledge register. This concerns the formalities nec-essary to register a pledge or a retention of title, the associated costs and the procedure relating to the con-sultation of the electronic pledge register.
The Royal Decree can be found here (Dutch and French) and will enter into force on 1 January 2018, which is also the date of entry into force of the Law.
“Port Charlotte” Whisky Does Not Infringe EU Protected Designation of Origin “Port” or “Porto”
On 14 September 2017, the Court of Justice of the Euro-pean Union (“ECJ”) handed down a judgment in case C-56/16 P with regard to the Protected Designations of Origin (“PDO”) “Porto” and “Port” in relation to the use of the trademark “Port Charlotte” for a whisky.
The appeal stemmed from a dispute relating to the reg-istration by Bruichladdich Distillery Co. Ltd (the “Appli-cant”) of the word sign “Port Charlotte” for whisky. After registration of the challenged trade mark, the Instituto dos Vinhos do Douro e do PortoIP (“IVDP”) filed an invalidity application with the European Union Intellectual Property Office (“EUIPO”) pursuant to Regulation 207/2009 on the Community trade mark based on the protection under Portuguese law of the appellations of origin “Porto” and “Port” of which it is the proprietor.
The Cancellation Division had rejected IVDP’s invalidity claims and the Board of Appeal had dismissed IVDP’s appeal mainly on the grounds that the protection of des-ignations of origin for wines is governed exclusively by Regulation No 1234/2007 establishing a common organ-isation of agricultural markets and on specific provisions for certain agricultural products (the “Regulation”) and, therefore, falls within the exclusive competence of the EU and not Member State law.
IVDP appealed to the General Court of the European Union (the “General Court”). In its judgment of 18 Novem-ber 2015 (T-659/14), the General Court upheld IVDP’s claim that the protection conferred on PDOs, provided that they qualify as “earlier rights” within the meaning of Article 53(1)(c) of Regulation 207/2009 on the Community trade mark, may be supplemented by national law grant-ing additional protection and rejected the other pleas. On that basis, the General Court annulled the decision of the Board of Appeal.
The EUIPO then sought to have the judgment of the Gen-eral Court set aside arguing that the rules applicable to PDOs fall within the exclusive competence of the Euro-
pean Union and that the exhaustive nature of the system of protection of PDOs in the European Union precludes the granting by a national provision of any additional pro-tection under national law which supplements or sup-plants that provided for under the Regulation.
By a cross-appeal, IVDP sought to have the judgment of the General Court set aside in part. To that end, it argued that the General Court erred in law in finding (i) that the Regulation governs, in a uniform and exclusive manner, both the authorisation of and limits to, and even the pro-hibition of, commercial use of protected designations of origin and protected geographical indications under EU law; (ii) that the challenged trade mark neither used nor evoked the protected designation of origin “Porto” or “Port” and so it was not necessary to verify whether that designation of origin had a reputation; and (iii) that the use of the challenged trade mark “Port Charlotte” did not involve “misuse, imitation or evocation” of the protected designation of origin “Porto” or “Port”.
For its part, the ECJ first held that the system of protection provided for by the Regulation is uniform and exclusive as well as exhaustive in nature, meaning that the Regulation prevents the application of a national system of protection for designations of origin and geographical indications.
Second, the ECJ rejected IVDP’s second ground of appeal on the basis that the incorporation in a trade mark of a name protected under the Regulation does not exploit the reputation of that designation of origin inasmuch as that incorporation does not lead the relevant public to associate the challenged trade mark with the designa-tion of origin.
Third, the ECJ also held, in relation to IVDP’s third ground of appeal, that the average consumer will understand the sign “Port Charlotte” as designating a harbour named after a person called Charlotte, without associating it with a port wine covered by the designation of origin “Porto” or “Port’”.
Interestingly, the judgment of the ECJ deviates from the opinion of Advocate General Campos Sanchez-Bordona.
The AG had argued that IVDP’s second and third grounds of appeal should be upheld under the assumption that even in the absence of any likelihood of confusion with the PDO Porto/Port, the trade mark “Port Charlotte” may evoke, in the mind of a reasonably well informed and rea-sonably observant European consumer, the wines pro-tected by that PDO, therefore affecting the reputation or prestige of that PDO.
Advocate-General Finds Online Recording of Television Pro-grammes To Be Incompatible with InfoSoc Directive
On 7 September 2017, Advocate General Szpunar (the “AG”) issued his opinion in case C-265/16, VCAST Lim-ited v R.T.I. SpA., involving VCAST Limited (“VCAST”), a UK company offering cloud-based recording services allow-ing the recording of free-to-air television programmes, and R.T.I. SpA (“RTI”), an Italian broadcaster whose pro-grammes had been included in VCAST’s offer.
The dispute arose after VCAST had sought a declara-tion validating its activities against RTI before the Turin Court of First Instance (the “Court”). VCAST argued that, since the recording is made by the user himself but not by VCAST, which merely provides the recording tools, its activities can benefit from the private copying exception contained in Article 5, §2, b) of Directive 2001/29/EC of 22 May 2001 on the harmonisation of specific aspects of copyright and related rights in the information society (the “InfoSoc Directive”). RTI lodged a counterclaim aiming to have VCAST’s activities prohibited. The Court decided to stay the proceedings and referred a request for a prelim-inary ruling to the Court of Justice of the European Union (the “ECJ”) with regard to the interpretation of Article 5, §2, b) of the InfoSoc Directive and the private copying excep-tion which that provision contains. In essence, the Court asked whether a national provision prohibiting the offer-ing of cloud-computing services that enable the remote recording of private copies of copyright protected works without consent of the right holder, is compatible with Article 5, §2, b).
In his opinion, the AG first explained that Article 5, §2, b) of the InfoSoc Directive must not be interpreted too restric-tively, and that the mere fact that the copying required the intervention of a service provider does not prevent the reproduction from falling within the scope of the private copying exception, as long as the user takes the initiative
of the reproduction and defines its subject and terms. The AG further stated that the receipt by VCAST of compen-sation for providing its services did not alter this finding. The AG added that the requirement that the reproduc-tion is made for ends that are “neither directly nor indi-rectly commercial” only pertained to the use of this repro-duction by the user benefitting from the private copying exception. Similarly, the AG considered that the ability of the user to share its content with an infinite number of users through the cloud was irrelevant.
Nonetheless, the AG considered that, according to the ECJ case law, the application of the private copying exception is predicated on the lawful access of the user to the work concerned. The AG was of the opinion that this condition is not satisfied by VCAST’s services since these services are not limited to the Italian territory. VCAST’s services there-fore enable users located outside of Italy to have access to television programmes exclusively broadcast in that territory, such as RTI’s programmes. As a consequence, the AG took the view that VCAST’s activities constitute a “communication to the public” within the meaning of Arti-cle 3(1) of the InfoSoc Directive, as they enable the broad-casting of programmes to a new public, not initially taken into account by the right holders. The AG referred inter alia to the judgment of the ECJ in “ITV Broadcasting e.a.” in which it held that the making available of a protected work through terrestrial broadcast and over the Internet were two separate communications to the public. Hence, they both must be authorised individually (See, this News-letter, Volume 2013, No. 3, p. 11).
Finally, the AG applied the test embedded in Article 5, §5 of the InfoSoc Directive, pursuant to which any exception to the reproduction right must be applied in special cases that do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder. The AG found that VCAST’s services do not pass that test. Indeed, the main rationale of the private copying exception is that it is impossible, or at least very difficult, for copyright holders to control the use of their protected works by persons who lawfully access them. In the case of VCAST’s services, taking place publicly as part of the company’s economic activity, this justification does not apply as these can be easily moni-tored by copyright holders. Hence, nothing would theo-retically prevent right holders from summoning VCAST to require their consent.
The AG also highlighted the specific situation of VCAST, whose services are exclusively designed to make avail-able copies of protected works whose copyright hold-ers are known in advance. This circumstance differs from that of operators making recording equipment or media available to users, or providing reproduction services which can also be used for other purposes. As regards the requirement that there should be no conflict with a normal exploitation of the work, the AG recalled that the normal exploitation of RTI’s television programmes con-sisted of one-time broadcasts. Therefore, it held that mak-ing these television programmes accessible at any time and for multiple viewings constitutes an additional ser-vice conflicting with the normal exploitation of the work. Further, the AG found that VCAST, through its impact on audience and broadcasting, was a direct competitor of RTI on the advertising market, which inevitably also conflicted with the normal exploitation of the work.
As a consequence, the AG concluded that VCAST’s ser-vices could not benefit from the private copying exception.
Court of Justice of European Union Clarifies Conditions for Earlier Designs to Qualify as Novelty and Individuality Benchmarks
On 21 September 2017, the Court of Justice of the Euro-pean Union (the “ECJ”) upheld, in joined cases C-361/15 P and C-405/15, Easy Sanitary Solutions and European Union Intellectual Property Office v. Group Nivelles, the judgment of the General Court of the European Union (the “Gen-eral Court”) annulling the decision of the Third Board of Appeal (“Board of Appeal”) of the European Union Intel-lectual Property Office (“EUIPO”) which had reformed the decision of EUIPO’s Invalidity Division’s invalidating Easy Sanitary Solutions BV’s (“ESS”) community design for a shower drain on account of lack of novelty and individual character within the meaning of Articles 5 and 6 of Reg-ulation No 6/2002 of 12 December 2001 on community designs (the “CD Regulation”).
The dispute arose after Group Nivelles NV (“Group Niv-elles”), a company active in the bathroom furniture and shower design sectors, had challenged the validity of a community design owned by ESS on a shower drain con-sisting of a cover plate (the only visible feature), a collec-tor and a siphon. Group Nivelles claimed, using extracts
of product catalogues, that ESS’ community design was invalid given the existence of an earlier identical plate design. After a series of varying decisions invalidating and then validating the challenged community design, the matter was brought before the ECJ.
The applicants before the ECJ, EUIPO and ESS, first sought to demonstrate that the General Court had erred in its assessment of the elements qualifying as evidence of an earlier design and of the burden of proof. They contended that Group Nivelles had not provided specific information or reproductions of the earlier design which it referred to. This led the General Court to request EUIPO to combine various extracts of the catalogues provided by ESS and Group Nivelles, which related to multiple earlier designs, to construct the earlier design to be taken as a bench-mark. The ECJ disagreed with this approach. It held that the earlier design used to assess the novelty of a subse-quent design must be specific, individualised, defined and identified. It added that it is for the applicant to provide evidence of such earlier design(s). On that basis, the ECJ held that the General Court had erred in law in requiring EUIPO to combine various elements of an earlier design only partially documented by the applicant for a decla-ration of invalidity. However, the ECJ added that such an error of law did not invalidate the judgment as its opera-tive part remained well founded.
ESS also claimed that the earlier design referred to by Group Nivelles could not be used as a novelty and individ-uality benchmark for ESS’ design since it was meant to be used in a different product than the subsequent design, i.e., a drainage device for liquid waste. The ECJ rejected this argument and confirmed that the General Court was right in holding that a community design lacked novelty if an identical earlier design existed, even if earlier and subsequent designs were intended for use or incorpora-tion in different products.
Finally, by its third ground of appeal, EUIPO asserted that the General Court erred in law when it held that, in the context of the assessment of the individual character of the challenged design, the nature of the products asso-ciated with or incorporating the designs being compared have an influence on the likelihood of the ‘informed user’ being aware of the earlier design, and that it is only if this condition of knowledge is fulfilled that the earlier design
is capable of preventing the recognition of the individual character of the subsequent design. The ECJ first recalled that an ‘informed user’ refers to a particularly observant user who, due to his personal experience or his extensive knowledge of the sector concerned, is taken as a refer-ence to determine if a design has individual character, i.e., if it stands out by making on the observant user an overall different impression than any earlier design. The ECJ then followed EUIPO’s argument, underlining that contrary to the General Court’s findings, the concept of ‘informed user’, as referred to in Article 7 of the Regulation, could not be interpreted as meaning a user having imperative knowledge of the earlier design that could prevent rec-ognition of the individual character of the subsequent design.
Still, the ECJ found the ground of appeal to be ineffective, as these findings were part of a broader analysis that led to a conclusion which was not challenged by the appli-cants (i.e. that the sector concerned is relevant for assess-ing the individual character of the design).
The ECJ therefore sided with the General Court in annul-ling the decision of the Board of Appeal, thereby uphold-ing the invalidity of ESS’ design.
Distinction in Territorial Protection for Product Patents and Process Patents Is Not Discriminatory
On 28 September 2017, the Belgian Constitutional Court (Grondwettelijk Hof/Cour Constitutionnelle) held that Article XI.29, § 1, b) of the Code of Economic Law (Wetboek vanEconomisch Recht/Code de droit économique¬ – the CEL) does not violate the principle of equality and non-discrim-ination, nor the right to property.
Article XI.29, § 1, b) CEL provides that a patent holder has the right to prevent any third party from using the patent which is the subject-matter of the patent or from offering the process for use on the Belgian territory when the third party knows, or it is obvious in the circumstances, that the use of the process is prohibited without the consent of the proprietor of the patent.
Requested to interpret Article XI.29, § 1, b) CEL, the Ghent Commercial Court (Rechtbank van koophandel/Tribunal de commerce) held that the geographic limitation “on the
Belgian territory” applied to the use of the process and not to the offer as such. Hence, offering the process on the Belgian territory for use abroad is not captured by this provision.
In its judgment, the Constitutional Court confirmed the interpretation of Article XI.29, § 1, b) CEL given by the Com-mercial Court. It further held that the distinction between the scope of the territorial protection granted to product patents (the relevant provision, Article XI.29 § 1, a) CEL does not provide for any geographic limitation) and that afforded to process patents in line with the Ghent Com-mercial Court’s interpretation, does not violate the princi-ple of equality and non-discrimination enshrined in Arti-cles 10 and 11 of the Constitution, nor the right to property laid down in Article 16 of the Constitution read in conjunc-tion with Article 1 of the First Protocol to the European Convention on Human Rights.
European Commission Issues Guidelines and Principles on Tackling Illegal Content Online
On 28 September 2017, the European Commission pub-lished guidelines and principles addressed to online mar-ket platforms to tackle illegal content online (the “Com-munication”). The proposed measures constitute a first element of the anti-terrorism package announced by President Juncker, but also covers intellectual property rights, counterfeit measures and consumer protection rules.
The Communication points out the societal responsibility of online platforms in terms of protecting users and soci-ety at large, and preventing criminals from exploiting their services. Quite surprisingly, the Communication chose not to define the concept of online market platforms. How-ever, the meaning of this concept can be found in an ear-lier Commission Communication relating to online plat-forms and the Digital Single Market dated 25 May 2016, according to which online platforms “cover a wide-ranging set of activities including online advertising platforms, mar-ketplaces, search engines, social media and creative content outlets, application distribution platforms, communications services, payment systems, and platforms for the collabora-tive economy”. It thus seems that the new Communication is designed to offer guidelines to a broad array of players active on the Internet.
The Communication addresses three themes: (i) detect-ing and notifying illegal content; (ii) removing illegal con-tent; and (iii) preventing the re-appearance of illegal con-tent. When discussing the detection of illegal content, the Commission identifies different channels for report-ing illegal content, including court orders and administra-tive decisions; notices from competent authorities such as law enforcement bodies, trusted flaggers, intellectual property owners and users; and the online platforms’ own detection work. When it comes to removing illegal con-tent, the Commission believes this should occur as fast as possible but should not stand in the way of prosecuting underlying infringements. Finally, in the fight against the re-emergence of illegal content, the Commission specif-ically examines measures against repeat infringers and automatic re-upload filters.
Lastly, the Communication points out the importance of transparency on the online platforms’ content policy and on notice-and-action procedures, and guards against over-removal and abuse of the system.
Service Agreement vs. Employment Agreement: Labour Court of Appeals Rejects Request to Requalify Service Agreement
In a judgment of 7 June 2017 (Brussels, 7 June 2017, A.R. 2015/AB/407, www.socialeye.be), the Brussels Labour Court of Appeals (“Labour Court of Appeals”) rejected an action which had sought to requalify a service agreement as an employment agreement.
By way of background, a press photographer had con-cluded a service agreement with a media company in 2000. The photographer’s services included the daily sup-ply of photo reports as well as news coverage one week-end out of three. During the entire duration of the pro-fessional collaboration, the photographer sent monthly invoices to the media company and was also subject to VAT. Moreover, he was registered with the Crossroads Bank for Enterprises (Kruispuntbank van Ondernemingen/Banque-Carrefour des Entreprises). After ten years, the media company terminated the professional collabora-tion in accordance with the terms of the service agree-ment which provided for a notice period of one month.
Following this termination, the photographer challenged the classification of his contract as a service agreement and argued that he had always worked in an employ-ment relationship with the media company. Therefore, according to the photographer, the agreement should be requalified as an employment agreement and he would be entitled to arrears of employee benefits, such as end-of-year premiums, holiday pay, indemnity in lieu of notice and the like.
In its judgment, the Labour Court of Appeals referred to the four criteria laid down in the Law of 27 December 2006 containing several provisions (the “Law of 27 December 2006”) (Wet van 27 december 2006 houdende diverse bep-alingen/Loi du 27 décembre 2006 portant des dispositions diverses) for the purpose of assessing whether the actual performance of the agreement at issue is incompatible with its formal qualification (i.e., (i) intention of the par-ties, as expressed in the agreement; (ii) free organisation of working time by service provider; (iii) free organisa-
tion of work by service provider; and (iv) no hierarchical relationship).
At the outset, the Labour Court of Appeals observed that the photographer had failed to prove that the qualification of service agreement is incompatible with the content of the agreement and with the way in which the agree-ment had been performed in practice. The Labour Court of Appeals thus rejected the first criterion for requalifying the agreement, but went on to verify the other three cri-teria provided for by the Law of 27 December 2006. The Labour Court of Appeals thus examined whether the pho-tographer was free to organise his work and working time and whether there was the possibility of a hierarchical control by the media company over the photographer. The Labour Court of Appeals held that, whilst the photogra-pher was required to be present at specific moments and under special circumstances, those facts did not point to a hierarchical relationship.
Transfer of Employees as Part of Judicial Reorganisation: Labour Court of Appeal of Antwerp Submits Preliminary Question to Court of Justice of European Union
Please refer to this Newsletter, in section “Insolvency”.
Advocate-General Delivers Opinion on Validity of Arbitra-tion Clause in Intra-EU Bilateral Investment Treaty
On 19 September 2017, Advocate-General Wathelet (“AG Wathelet”) delivered an opinion (the “Opinion”) on the compatibility with EU law of an arbitration clause con-tained in an intra-EU bilateral investment treaty (a “BIT”).
The dispute concerned the Dutch insurance company Achmea (“Achmea”) which had established a subsidiary in Slovakia in order to market private sickness insurance products in that country. Following a change of legislation in the insurance sector in Slovakia in 2008, Achmea initi-ated arbitral proceedings against that State on the basis of a BIT entered into in 1991 between the former Czecho-slovakia and the Netherlands (the “Czechoslovakia-Neth-erlands BIT”). Essentially, Achmea alleged that Slovakia’s legislative amendments were in breach of specific provi-sions of the BIT.
In 2012, the arbitral tribunal sided with Achmea and issued an award ordering Slovakia to pay Achmea damages of approximately EUR 22 million.
Since the place of arbitration was in Germany, Slovakia brought an action before the German Courts seeking the annulment of the award. In these proceedings, Slovakia argued that:
• The arbitration clause contained in the Czechoslo-vakia-Netherlands BIT infringed the prohibition of discrimination on grounds of nationality contained in Article 18 of the Treaty on the Functioning of the European Union (“TFEU”). More specifically, Slovakia contended that the arbitration clause was discrimi-natory since it only offered Dutch investors the pos-sibility to use arbitration to solve their dispute with Slovakia while investors of the Member States which had not concluded any BIT with Slovakia were denied similar treatment.
• The award handed down against Slovakia was con-trary to public policy since the arbitral tribunal estab-lished in accordance with the Czechoslovakia-Neth-
erlands BIT – being unable to request the Court of Justice of the European Union (“ECJ”) to give a pre-liminary ruling on the interpretation of EU law – failed to take account of fundamental principles of EU law (such as rules on the free movement of capital or the rights of defence). This argument was based on the fact that, pursuant to Article 267 of the TFEU, only courts and tribunals of Member States are entitled to request the ECJ to give a preliminary ruling on a mat-ter pending before them. However, according to Slo-vakia, the arbitral tribunal established pursuant to the Czechoslovakia-Netherlands BIT was not a “court or tribunal of a Member State” and it was therefore not capable of requesting a preliminary ruling from the ECJ.
• The arbitration clause contained in the BIT infringed Article 344 TFEU which prohibits EU Member States from submitting a dispute concerning the interpreta-tion or application of EU law to any other forum than those provided for in the EU treaties.
Faced with these arguments, the German court stayed the proceedings and referred the matter to the ECJ for a pre-liminary ruling. Prior to the judgment of the ECJ (which will be delivered in the coming months), AG Wathelet handed down his Opinion.
With respect to first question: discrimination based on nationality
With respect to the first question, AG Wathelet took the view that the arbitration clause at issue in this case did not constitute discrimination on grounds of nationality. Relying on an interpretation of Article 18 TFEU and on the judgment of the ECJ of 5 July 2005 in D., AG Wathe-let found that the TFEU did not contain a most favoured nation clause and that there was “no discrimination where a Member State does not afford the nationals of another Member State the treatment which it affords, by convention, to the nationals of a third Member State” (para. 71).
With respect to second question: arbitral tribunals as judi-cial bodies
With respect to the second question, AG Wathelet main-tained that arbitral tribunals established in accord-ance with the Czechoslovakia-Netherlands BIT must be regarded as courts or tribunals of one of the Member States and are therefore entitled to refer questions to the ECJ for a preliminary ruling on a matter pending before them. This finding is surprising since the ECJ has already held that arbitral tribunals established pursuant to commercial contracts between private companies are not entitled to ask a preliminary ruling to the ECJ.
To reach his conclusion, AG Wathelet relied on the case-law of the ECJ according to which “in order for a judicial body to be a ‘court or tribunal’ for the purposes of Article 267 TFEU, it is necessary to take a number of factors into account, such as ‘whether the body is established by law, whether it is permanent, whether its jurisdiction is com-pulsory, whether its procedure is inter partes, whether it applies rules of law and whether it is independent” (para. 86). According to AG Wathelet, an arbitral tribunal estab-lished in accordance with the Czechoslovakia-Nether-lands BIT satisfies all these criteria.
First, with respect to the “established by law” criterion, AG Wathelet found that the arbitral tribunal “derives its juris-diction not only from an international treaty but also from the Netherlands and Czechoslovakian statutes ratifying the BIT by virtue of which the BIT became part of the legal orders of those Member States” (para. 96). Therefore, according to AG Wathelet, the tribunal was established by law.
Second, with respect to the permanence of the arbitral tribunal, AG Wathelet recalled that “the ‘permanence’ crite-rion does not relate to the composition of the arbitral tribunal as such but to the institutionalisation of arbitration as dis-pute settlement method” (para. 101). More specifically, AG Wathelet found that, in the case at hand, specific aspects of the institutionalisation of arbitration could actually be identified, notably the fact that (i) the Czechoslova-kia-Netherlands BIT conferred the power to appoint arbi-trators on the Stockholm Chamber of Commerce (which is a permanent arbitral institution); (ii) the UNCITRAL rules are applicable to the arbitral proceedings; and (iii) the pro-ceedings took place under the auspices of the Permanent
Court of Arbitration in the Hague (paras 107 and 108).
Third, with respect to the compulsory nature of the juris-diction of the arbitral tribunal, AG Wathelet recalled that, in investment arbitration, investors remain in principle free either to bring their disputes before the courts of the Member State concerned or before the arbitral tri-bunal established in accordance with the BIT at stake. Relying on a precedent by the ECJ in Ascendi Beiras Lito-ral e Alta (a case in which the recourse to arbitration was also optional but did not preclude the arbitral tribunal from being considered as “compulsory” and thereby fall-ing within the concept of “court or tribunal of a Member State” within the meaning of Article 267 TFEU), AG Wathe-let found that, in the case at hand, the option which was left to the investors to bring their disputes either before the courts of the Member State concerned or before an arbitral tribunal did not affect the compulsory nature of the jurisdiction of the arbitral tribunal.
Fourth, with respect to the proceedings conducted before the arbitral tribunal, AG Wathelet had no difficulties in establishing, on the basis of the UNCITRAL arbitration rules, that the procedure was indeed inter partes and inde-pendent and that it complied with the rule of law.
With respect to third question: Conformity with Article 344 TFEU
In his Opinion, AG Wathelet divided his analysis of whether an arbitration clause contained in an intra-EU BIT infringes Article 344 TFEU which prohibits EU Member States from submitting a dispute concerning the interpretation or application of EU law to any other forum than those pro-vided for in the EU treaties into three distinct questions:
1. Does a dispute between an investor and a Member State fall under Article 344 TFEU?
2. If the answer to that question is negative, then has an intra-EU BIT the effect of undermining the allocation of powers determined by the EU treaties?
3. If the answer to the first sub-question is positive, then does the subject matter of investor-State dispute con-stitute a dispute on the interpretation or application of the EU treaties?
With respect to the first sub-question and relying on an interesting analogy based on the ECJ’s Opinion 2/13 on the accession of the European Union to the European Con-vention on Human Rights, AG Wathelet clearly answered that a dispute between an investor and a State did not come within the scope of Article 344 TFEU.
With the answer to sub-question 1 in mind, AG Wathelet then considered the second sub-question on whether an arbitration clause contained in an intra-EU BIT had the effect of undermining the allocation of powers fixed by the Treaties and the autonomy of the EU legal system. Sur-prisingly, AG Wathelet also answered that question neg-atively. According to AG Wathelet, the autonomy of the EU legal system is maintained since the awards made by the arbitral tribunals cannot avoid review by the national courts in the context of an action to set aside the arbi-tral award or in the context of an objection to a request for recognition and enforcement of the award (para. 239).
For the sake of completeness, and even though he had found that the first sub-question had to be answered negatively, AG Wathelet nevertheless finally examined the third sub-question of whether the subject matter of an investor-State dispute could constitute a dispute on the interpretation or application of the EU treaties. In this respect, AG Wathelet found that “the scope of the BIT is wider than that of the EU and FEU Treaties and that the guarantees of the protection of investments introduced by the BIT are different from those afforded in EU law, without being incompatible with EU law. For that reason, a dispute between a Netherlands investor and the Slovak Republic falling under the BIT is not a dispute concerning the interpre-tation or application of the EU and FEU Treaties” (para. 228).
