Category: Legal Developments

On 7 November 2024 the Constitutional Court of Belgium handed down a judgment following the appeal for the annulment of the Belgian law on whistleblowers and referred questions regarding the status of in-house counsel’s legal professional privilege to the Court of Justice of the European Union (CJEU).

This challenged law represents the transposition of the Whistleblower Directive in Belgium (Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law). The European Company Lawyers Association (ECLA) intervened as a third party in support of the Institut des juristes d’entreprise/Instituut voor bedrijfsjuristen (IJE/IBJ).

ECLA and IJE/IBJ considered that the confidentiality of the opinions of in-house lawyers, which existed for 25 years in Belgium, should be acknowledged by the lawmaker in Belgium when transposing the whistleblower directive. In that respect ECLA specifically welcomes the protection through the exemption from liability, including criminal liability, the European directive provides for whistleblower. However, ECLA considers that on this point Belgium has unfoundedly overridden the in-house lawyers’ obligation of confidentiality when transposing this directive, which requires the maintenance of the professional obligation of confidentiality also for in-house lawyers. Belgium’s position in this respect is detrimental to the effectiveness of compliance systems within companies.

In its judgment, the Constitutional Court decided to ask preliminary questions to the Court of Justice of the European Union (CJEU), as proposed by ECLA in its submission to the court. The CJEU will thus examine the question of whether the directive on whistleblowers, which the Belgian law on whistleblowers transposes, imposes or allows the exclusion of protection, in addition to professional secrecy of lawyers, other forms of confidentiality, such as that of in-house lawyers.

If the Court of Justice of the EU concludes that the Whistleblower Directive does not allow an exception for the benefit of our confidentiality and only protects the professional secrecy of lawyers, the Constitutional Court will ask the CJEU whether this is compatible in particular with the principle of non-discrimination.

ECLA welcomes the Constitutional Court’s decision, which highlights the importance of the confidentiality of in-house lawyers to European judges. It is the first time since the well-known Akzo Nobel decision, that such a significant case involving the question of confidentiality for company lawyers and in-house counsel is going to be reviewed by the CJEU.

The proceedings are expected to take place throughout the year 2025.

Our colleagues Marc Mosse and David Zygas from the law firm August Debouzy have supported ECLA’s submission.

We will keep you updated on any further developments.

Download the press release here

 

About ECLA

The European Company Lawyers Association (ECLA) was founded in 1983 and is the umbrella organization of 21 different national associations of in-house counsel working in companies and organizations. For more than 41 years, ECLA has been committed to the profession of company lawyers throughout Europe and accounts for approximately 70,000 professionals in its network and represents the more than 160,000 company lawyers across Europe.

On 18 July, the now-re-elected President of the European Commission, Ursula von der Leyen, unveiled comprehensive proposal and vision for her 2024-2029 tenure, titled Europe’s Choice. Part of this proposal includes a section to make Europe competitive and prosperous on an international stage, while retaining its sustainability initiatives and doing so amidst global market volatility. The proposal identifies several structural challenges, including unfair competition, high energy costs, labour shortages, and difficulties in accessing capital.

Her plan emphasises the importance of completing the Single Market, the greatest success story of the European Union, in critical sectors, including services, energy, defence, finance, and the digital realm. The goal is to provide SMEs with easier access to broader markets, fostering growth and innovation. The proposal also includes a revised competition policy to better support companies scaling up globally, prioritising innovation and resilience in merger assessments, to prevent market concentration and its negative impacts on consumers.

Read more at https://inhouse-legal.eu/public-policy-regulations/europes-choice-will-we-start-to-properly-compete/

The European Commission has been conducting thorough investigations into the state aid measures provided to Deutsche Lufthansa AG and Air France-KLM Group to ensure their compliance with EU State aid rules. Initially approved under the State aid COVID Temporary Framework, these measures have faced legal challenges leading to their annulment by the General Court. The Commission’s reassessment is aiming to address the Court’s concerns and ensure that the aid complies with EU regulations.

Read more at https://inhouse-legal.eu/antitrust-competition-law/european-commissions-in-depth-investigations-into-state-aid-for-european-airlines/

On June 26, 2024, the European Commission issued a Statement of Objections to Microsoft, indicating its preliminary view that the tech giant has violated EU antitrust laws by tying MS Teams, its communication, collaboration, and conferencing platform, to its popular productivity and corporate software suites, Office 365 and Microsoft 365. This move marks the latest development in the EU’s ongoing scrutiny of Microsoft’s market practices, particularly concerning its software bundling strategies, one which has ongoing for the better part of two decades.

The Commission notes that Microsoft’s bundling of Teams with its core SaaS (Software as a Service) productivity applications limits consumer choice and stifles competition. The integration of Teams within Microsoft’s widely used productivity suites ostensibly provides it an unfair distribution advantage over competitors, who provide individual software solutions. This practice, the Commission argues, restricts competition and innovation in the market for communication and collaboration tools, potentially violating Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of a dominant market position.

Read more at https://inhouse-legal.eu/antitrust-competition-law/another-eu-antitrust-action-against-microsoft-a-new-chapter-in-a-longstanding-saga/

On 7 March 2024, the Court of Justice of the European Union (CJEU) handed out two judgments on data processing with cases C-479/22 P and C-604/22. The cases clarified what constitutes personal data processing under the General Data Protection Regulation (GDPR), particularly in contexts involving the dissemination of information by public authorities and the management of consent in digital advertising. The second judgment also touched on the responsibilities of entities involved in such processing, defining under what circumstances an entity might be considered a controller or joint controller of personal data.

Read more at https://inhouse-legal.eu/digitalisation-gdpr/cjeu-clarifies-edge-cases-of-gdpr/

On 19 March 2024, the European Commission published a Recommendation on how to increasingly combat counterfeiting and enhance the enforcement of intellectual property rights. The Commission estimates that industries that “make intensive use of IP” contribute 47% of total EU GDP and nearly 40% of total employment within the Union. It further emphasises the intrinsic value that IP holds, pointing to a 2021 firm-level analysis report by EUIPO, which found that companies with IP rights pay on average 19% higher wages and that IP rights convey increased revenue regardless of company size, pointing out that European SMEs that rely on IP rights “appear to generate 68% higher revenues per employee.”

The value of IP-protected products has enabled a vast illegal market flourish, ranging from counterfeit goods to both digital and product piracy. The OECD/EUIPO joint 2022 report on Dangerous Fakes highlights the dangers that products that do not follow rigorous safety standards or processes can impose. Though there are some industries where public acknowledgement of the risk is higher, such as adverse health risks when consuming counterfeit pharmaceutical products, cosmetics, or alcohol, there are other areas, such as electrical and electronic equipment or even children’s toys where, due to a lack of adequate safety standards, the risks the products pose can be significant to the average consumer.

Read more at https://inhouse-legal.eu/public-policy-regulations/european-commission-publishes-recommendations-to-combat-online-and-offline-counterfeiting/

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (IF) represents a significant overhaul of international tax rules, aimed at addressing the tax challenges arising from the digitalisation of the economy. The global tax solution seeks to ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate. Over 130 countries were signatories to the initial deal in 2021. The final deal included several concessions, including by Ireland to cap the minimum tax threshold at 15%, instead of the initial wording that would have allowed tax rates under these rules to exceed it.

The framework is based on two separate pillars. Pillar One focuses on the reallocation of taxing rights over MNEs to the countries where their goods or services are consumed, regardless of the MNEs’ physical presence there. The Pillar’s scope covers MNEs with global turnover exceeding €20 billion and profitability above 10%. This pillar introduces a new nexus rule not tied to physical presence and allocates taxing rights through a formula that considers the revenue generated in each market jurisdiction.

Read more at https://inhouse-legal.eu/public-policy-regulations/oecd-two-pillar-global-tax-framework-at-risk/

Shareholder activism in the oil and gas industry has gained traction in recent years, with activist shareholders pushing multinational conglomerates towards sustainable practices to decrease the negative and harmful impact that fossil fuel production has. Thus far, the companies have been ambiguous in their promises to decarbonise and have not made any significant transitions towards the marketing slogans that they have put forth.

Still, the efforts by activist groups seem to be having an impact beyond what executives in these companies would tolerate, exemplified by ExxonMobil recently filing a lawsuit against Follow This, an Amsterdam-based investor activist group, and Arjuna Capital, a registered investment adviser. The suit claims that the activist proposal violates SEC rules for investor petitions, which disallow resubmitting proposals that do not gain investor support over time.

The goal of the lawsuit is to block a motion that the activist group, as an ExxonMobil shareholder, had put forward at the company’s annual investor meeting, to increase the pace for reducing greenhouse gas emissions. This was the first time that the company had turned to courts to block a shareholder motion. Even though filing the lawsuit that ExxonMobil filed succeeded in practical terms, forcing activist investors to shelve the call to motion, ExxonMobil has decided to continue with the lawsuit.

Read more at https://inhouse-legal.eu/public-policy-regulations/exxonmobil-sues-investor-activists-for-micromanaging/

The Corporate Sustainability Due Diligence Directive is part of the broader ambitions by the European Union, as set out in the European Green Deal and the European Climate Law. The due diligence process aims to cover the six steps defined by the OECD Due Diligence Guidance for Responsible Business Conduct, which include: integrating due diligence into policies and management systems; identifying and assessing adverse human rights and environmental impacts; preventing, ceasing or minimising actual and potential adverse human rights, and environmental impacts; assessing the effectiveness of measures; communicating; and providing remediation.

Read more at https://inhouse-legal.eu/corporate-ma/what-will-happen-to-the-corporate-sustainability-due-diligence-directive/