European update

European Update

This month we feature a number of brief articles on areas of European law which are currently on the move.  The Society’s Brussels Office produces each month the Brussels Agenda, a publication which aims to give brief updates on progress on different areas of EU law which are of most interest to practitioners – giving advance warning of future changes in the law, outlining European Court of Justice cases of particular importance and providing up to date information on current EU negotiations.  This month the Agenda features items on money laundering, criminal law, data protection, employment law and a number of other matters, some of which are set out below.  The Brussels Agenda can be received either by post or by e-mail and is also posted on the Society’s website.  If you would be interested in subscribing to the Brussels Agenda (which is free of charge), contact Sarah Fleming at the Society.

Money laundering  Green light for new money laundering Directive

On 13 November 2001, the European Parliament facilitated the final adoption of a new Directive on money laundering, by approving the compromise text, which had been agreed by the Conciliation Committee in October (http://www.europarl.eu.int/plenary/default_en.htm) [under “Joint texts approved by the Conciliation Committee”]. The new Directive will require lawyers engaged in financial or real estate transactions to identify clients and report suspicions of laundering of the proceeds of serious crime to the authorities. The Directive will also recognise legal professional privilege when lawyers are engaged in giving legal advice but this is subject to a number of exceptions. A lawyer will not be covered by privilege, if he/she is engaged in a criminal enterprise with a client or knows that a client is involved in money laundering. Member States will be able to decide whether to apply the prohibition against ‘tipping-off’ to the legal profession. The UK already has legislation which forbids ‘tipping-off’. The Council of Ministers formally adopted the Directive on 19 November 2001. EU Member States will be given a period of eighteen months to implement the Directive

Data protection 

Second time lucky for Parliament’s vote on ‘spamming’ legislation

MEP Marco Cappato was given a second chance to win the hearts of MEPs on the much-debated Commission proposal for a Directive to protect privacy in the context of electronic communications (http://europa.eu.int/eur-lex/en/com/pdf/2000/en_500PC0385.pdf). During their plenary session in September MEPs referred the proposal back to the Citizens’ Rights and Freedoms Committee. On 13 November, MEPs agreed that Member States should be given the choice, when implementing the Directive into their domestic legislation, as to whether unsolicited e-mails for marketing purposes will only be permitted with the prior consent of users (‘opt-in’) or whether users should merely be given the right to un-subscribe to a mailing list (‘opt-out’). MEPs were more definitive on the issue of direct marketing by fax, SMS (text messages) or automated calling systems, where they voted in favour of an ‘opt-in’ approach. On the controversial issue of traffic data retention, MEPs emphasised that Member States should only be allowed to restrict data protection provisions for national security and the investigation of crime, if this was appropriate, proportionate and limited in time. The Parliament opposes any form of blanket electronic surveillance. The Council will continue its deliberations on this draft Directive, which has been given even greater prominence in the aftermath of the 11 September attacks on the United States.

Employment law  European Parliament challenges Council on equal treatment Directive

During its second reading in October 2001, the European Parliament voted for amendments previously rejected by the Social Affairs Council in June 2001 over the proposed Directive for equal treatment amending Directive 76/207/EEC. The Commission’s proposal establishes a general framework on equal treatment in employment and occupation, covering discrimination on grounds of sex, race, age, religion or sexual orientation and also includes a definition of sexual harassment in the workplace. Amendments re-introduced by the European Parliament include a distinction between sexual harassment and harassment on the grounds of sex, the introduction of measures to tackle discrimination at the work place, the creation of confidential counselling services, the right to paternity leave and the establishment of bodies to ensure that equality legislation is complied with. The proposal is now expected to go to conciliation.

Criminal law  Raft of new proposals in the sphere of criminal law

Justice and Home Affairs Ministers met on 16 November in order to discuss ways of ensuring greater co-operation in the sphere of criminal law. There are a number of concrete proposals currently being discussed including measures to combat terrorism and a European arrest warrant.  In relation to the former, only six EU Member States currently define terrorism in their domestic legislation and each definition is different. One possible solution is to adopt the definition used by the United Nations: “intimidating the population or forcing governments or international bodies to do, or abstain from doing, something.” In terms of the arrest warrant, Ministers agreed a list of thirty crimes which would fall within its scope. There were however differences of opinion with regard to extradition to non-EU countries. Ministers hope to be able to reach agreement on these issues by the end of the year.

Justice and home affairs 

Hearing on Draft Convention of the Hague Conference

Once in force, the Convention of the Hague Conference on Private International Law, proposed in 1999 will regulate both the direct jurisdiction of the courts in civil and commercial matters and the recognition and enforcement of foreign judgments in approximately 55 countries. As a follow-up to the current draft the Commission organised a hearing in Brussels covering the latest status of the Convention on 24 October 2001. A number of participants from industry, consumer interest groups, academic institutions and the regulated professions attended. Many felt that it was vital for the USA to be a signatory for the Convention to be truly global. Some also believed that it was too ambitious to have such a broad Convention. However, lawyers who attended generally welcomed the increased predictability and reliability that would emerge once the Convention comes into force. It was also felt that various intellectual property rights should be dealt with individually rather than collectively. At the end of the hearing, the Commission stated that it would take stock of the points raised and that negotiations would now continue between the contracting states on the present substance of the Convention.

Member States provide assessment on Tampere objectives

Following objectives laid down in the October 1999 Tampere summit, where it was agreed that an area of freedom, security and justice should be created within the Community, EU Member States have reported on their progress to date. In respect of asylum and immigration, the general consensus is that not enough action is being taken in this field. Some Member States would like the Directives on reception conditions, asylum procedures and family re-unification to be adopted immediately whereas others have shown resistance. Criminal law has also proved to be contentious as some Member States have expressed a preference for harmonisation whereas others favour applying the mutual recognition principle. Views on civil law are less divergent as most Member States agree that there should be a simplification of cross-border civil procedures. The Commission has also recently provided its assessment on the Justice and Home Affairs scoreboard  (http://europa.eu.int/comm/dgs/justice_home/index_en.htm) generally applauding the efforts made by the Member States to realise the Tampere goals. The Commission will now present the scoreboard to the December 2001 Council in Laeken where the Tampere agenda will be reviewed.

company law and financial services

Experts report to Parliament on company law issues

The seven-member group of Company Law Experts, appointed by the European Commission to advise on a new proposal for a Directive on take-over bids, attended a meeting of the Parliament’s Legal Affairs Committee on 5 November 2001. In a report to the Committee on their work, the experts admitted that the most difficult question for the group, with regard to the take-over bids Directive, concerns the creation of a level playing field for shareholder rights throughout the EU. The group is expected to make recommendations to the Commission on a revised take-over bids Directive by the end of the year. Another aspect of the group’s mandate is to examine broader company law issues and it was reported that these could include the need for EU rules for co-operatives and mutual societies, transfer of corporate seat and the ability of shareholders to exercise voting rights across borders. The experts will deliver a report to the Commission with recommendations on the broader regulatory aspects of company law by June 2002.

Market abuse and prospectuses Directives put under the microscope

On 15 October 2001, a hearing was held at the European Parliament to receive views from experts in the field of financial services on the planned Directives on prospectuses and market abuse.  The main idea behind the proposal for a Directive on prospectuses is to create a ‘single passport’ for issuers, so that once a prospectus is approved in one Member State, it can be accepted without any further conditions or procedures throughout the EU (http://europa.eu.int/comm/internal_market/en/finances/mobil/com280en.pdf). The proposal on market abuse establishes a framework and harmonises Member States’ legislation on insider dealing and market manipulation (http://europa.eu.int/eur-lex/en/com/pdf/2001/en_501PC0281.pdf). The main points for debate on the Commission’s market abuse proposal were: (1) Criminal vs Administrative sanctions and (2) a Code of Conduct. The debate on the prospectuses Directive revealed several areas of concern for the experts and chief among them was registration with a home competent authority.  The overwhelming view  was that issuers should be free to choose the competent authority with which they file their prospectus, provided there is a reasonable connection with the Member State of the competent authority. Both Directives are expected to be put to the Parliament’s plenary sessions in February/ March 2002.