This article first reviews the implementation of the 2025 legislative plan before turning to the main features of the 2026 legislative plan and the policy objectives reflected in them.

Implementation Progress of the 2025 Legislative Work Plan

Among the 16 draft laws scheduled for submission to the NPCSC, only four remain pending and have been included in this year’s legislative plan. All other laws from the 2025 legislative plan have already been enacted or otherwise completed:

• Draft Amendment to the Road Traffic Safety Law (prepared by the Ministry of Public Security) 
• Draft Amendment to the Water Law (prepared by the Ministry of Water Resources): a consultation draft was published on 30 April 2026 
• Draft Amendment to the Law of the People’s Bank of China (prepared by the PBC): discussed and provisionally approved at the State Council executive meeting on 21 May 2026; the draft will be submitted to the NPCSC 
• Draft Finance Law (prepared jointly by the PBC, the Financial Regulatory Administration, the CSRC, and the State Administration of Foreign Exchange): a consultation draft was published on 20 March 2026 

Similarly, among the 30 administrative regulations scheduled for drafting or amendment, only seven have been carried forward into this year's legislative plan and most of which have already been approved as of the date of writing:

• Regulations on the Procedure for Drafting Administrative Regulations (amended, prepared by the Ministry of Justice): approved on 24 April 2026, published, to take effect on 1 July 2026 
• Implementation Regulations of the Administrative Reconsideration Law (amended, Ministry of Justice): approved on 17 April 2026, published, effective 1 July 2026 
• Regulations on Nature Reserves (amended, Ministry of Natural Resources and State Forestry and Grassland Administration): approved on 9 January 2026, published, effective 15 March 2026 
• Regulations on Securities Company Supervision (amended, CSRC) 
• Urban Water Supply Regulations (amended, Ministry of Housing and Urban-Rural Development): approved on 31 December 2025, published, effective 1 June 2026 
• Implementation Regulations of the Drug Administration Law (amended, State Administration for Market Regulation & National Medical Products Administration): approved on 31 December 2025, published, effective 15 May 2026 
• Regulations on Foundation Management (amended, Ministry of Civil Affairs) 

Additionally, several regulations listed as preparatory projects in the 2025 legislative plan have already been completed:

• Implementation Regulations of the Value-Added Tax Law: approved on 19 December 2025, published, effective 1 January 2026 
• Regulations on Administrative Law Enforcement Supervision: approved on 5 December 2025, published, effective 1 February 2026 
• International Maritime Regulations: approved on 12 September 2025 

It should also be noted that a small number of regulations not included in the 2025 legislative plan were enacted during the year. This is perhaps not entirely unexpected, as the plan is intended to guide legislative priorities rather than provide an exhaustive list of all legislative projects.These include:

• Decision on Amendments to the Regulations on the Exit and Entry Administration of Foreigners in China: introduced provisions on the K visa for young foreign science and technology talent entering China 
• Regulations on Chinese Employees of Foreign Diplomatic and Consular Missions in China 
• Regulations on the Management of Military Land 
• Decision on Amendments to the Regulations on the Registration and Administration of Social Organisations: mainly revised provisions on registration changes and deregistration of social organisations 

A closer look at these developments is also instructive. Those projects that have been carried forward into the following year generally involve particularly complex policy questions or areas where a more cautious legislative approach is required.

For example, the Draft Finance Law was the only legislative project in the 2025 plan involving the enactment of a new law, rather than the amendment of an existing statute.

Similarly, the Draft Amendment to the Road Traffic Safety Law shows the challenges posed by technological developments. The current law remains largely premised on the traditional concept of a "driver". Section 2 of Chapter II, for example, requires drivers to obtain driving licences, comply with road traffic rules and regulations, and be subject to the cumulative demerit point system. As autonomous and intelligent driving technologies continue to develop, legislators are faced with the more difficult question of how these concepts should be adapted and reflected in legislative terms.

Likewise, the proposed amendment to the Water Law goes beyond the revision of existing provisions and introduces two entirely new chapters on the management and protection of rivers and lakes, and on the construction and operation of water projects. Such structural changes inevitably require more extensive legislative consideration.

Conversely, the regulations enacted despite not having appeared in the 2025 legislative plan generally seem to have been driven by emerging practical needs. One example is the introduction of the K visa for young foreign science and technology talent. By facilitating the entry of holders of bachelor's degrees in STEM disciplines for scientific research, academic exchanges and business activities without requiring employer sponsorship, the new visa demonstrates that, notwithstanding the increasingly complex international environment, China remains committed to maintaining a high level of openness to overseas talent and promoting international scientific and technological cooperation.

We now turn to the 2026 legislative plan, focusing on what can be anticipated and any shifts in priorities compared with the 2025 plan.

What Are the Highlights of This Year’s Plan?

Overall, the 2026 legislative plan marks the first year of the 15th Five-Year Plan. Unlike the 2025 plan, which largely focused on implementing and consolidating reforms already underway, the 2026 plan is oriented towards the objectives of the new planning cycle. This shift is reflected not only in the legislative projects selected, but also in the way legislative priorities are framed.

First, while the 2025 plan emphasised high-quality development, the 2026 plan introduces the additional objective of safeguarding high-level security. Under the 15th Five-Year Plan, this concept encompasses food security, energy security, industrial and supply chain security, cybersecurity and data security, as well as broader public safety concerns such as food and drug safety, workplace safety, and disaster prevention and mitigation. 

A similar shift can be observed in the field of innovation and technology. The 2025 plan retained the traditional policy framework of "invigorating China through science and education" (科教兴国), whereas the 2026 plan places greater emphasis on "high-level technological self-reliance and self-strengthening" (高水平科技自立自强). In addition, the concept of developing "new quality productive forces" (新质生产力) appears as a priority area requiring legislative support. This closely mirrors the 15th Five-Year Plan, which identifies technological self-reliance and the development of new quality productive forces as key drivers of future growth.

The 15th Five-Year Plan continues the Digital China agenda, but the wording now emphasises a transition from digitalisation to digital-intelligent development (数智化), reflecting a stage of development in which artificial intelligence is integrated into industry, culture, governance and public services. Consistent with this shift, the 2026 legislative plan introduces new references to "accelerating comprehensive legislation for the healthy development of artificial intelligence" and "accelerating legislation on common AI-related elements", including data, computing power and algorithms.

Finally, a noteworthy change can be found in the concluding section on legislative implementation. The 2025 plan called for legislative projects to be completed "as soon as possible", whereas the 2026 plan emphasises completing them "with high quality and efficiency". 

As in last year's article, the table below summarises the correspondence between the principal legislative projects included in the 2026 plan and the broader economic and social development objectives of the 15th Five-Year Plan.

How Should We View This Year’s Plan?

As is often observed in official policy documents, this year's legislative plan presents both opportunities and challenges for foreign-invested enterprises operating in China.

On the one hand, foreign-invested enterprises should be aware of a number of legislative and regulatory developments that may affect their operations in China, particularly those relating to national security, industrial and supply chain security, and foreign-related extraterritorial measures. In particular, the Regulations of the State Council on the Security of Industrial Chains and Supply Chains (Decree No. 834) and the Regulations of the People’s Republic of China on Countering Foreign Improper Extraterritorial Application of Laws and Measures (Decree No. 835) have already entered into force. Broadly, these regulations are intended to strengthen China’s capacity to respond to foreign “long-arm” jurisdiction measures and to safeguard the security and resilience of key industrial sectors and supply chains.

From a compliance perspective, multinational enterprises, including those operating across multiple jurisdictions, should carefully review these regulatory requirements. Particular attention should be given to:

1. The potential inclusion of relevant sectors or supply chain segments within the “Key Areas List” under Decree No. 834. Although the list has not yet been published, sectors closely linked to national strategy, technological development and national security are likely to be included. Inclusion within the list may trigger enhanced monitoring, reporting, risk management, and, in certain emergency situations, mandatory operational coordination by the authorities. 
2. Obligations under Decree No. 835 to avoid implementing or assisting foreign measures deemed by the PRC to be improper extraterritorial applications of law, as well as associated countermeasures that may be directed at the enterprise, its affiliates, or relevant personnel.

On the other hand, the forthcoming Unified National Market Construction Regulations are expected to further reduce local protectionism and market fragmentation, facilitating the freer movement of goods, services and production factors across China.

This direction is consistent with the 15th Five-Year Plan itself which calls for greater efforts to attract foreign investment, continued improvement of the foreign investment environment, full implementation of national treatment for foreign-invested enterprises, and stronger support for foreign participation in advanced manufacturing, modern services, high technology and green industries. It also emphasises attracting regional headquarters and research and development centres, encouraging reinvestment by foreign-invested enterprises and expanding channels for foreign participation in China's capital markets.

The legislative plan provides a useful indication of the sectors and policy areas likely to receive particular regulatory attention and support in the years ahead. Technological innovation, new quality productive forces, green development and public welfare remain prominent priorities, and foreign investors may increasingly find opportunities in advanced manufacturing, modern services, high technology and environmentally 

1. ^In some cases, the titles of enacted regulations might differ from those set out in the legislative plan. For example, the planned Regulations on the Protection of Miyun Reservoir were ultimately promulgated as the Regulations on the Protection of the Water Source of Miyun Reservoir, while the planned Urban Water Supply Regulations were enacted as the Water Supply Regulations.

Yesterday, the European Commission published the final version of the Code of Conduct on the marking and labelling of AI-generated content, a strategic tool within the European regulatory framework for AI. The Code represents the operational response to the transparency obligations set out in Article 50 of the AI Act, which will come into force on 2 August 2026.

The AI Act, moreover, has identified transparency as one of the most urgent systemic risks to be addressed. When machine-generated content is indistinguishable from human-generated content — journalistic texts, deepfake videos, synthetic voices — it creates fertile ground for disinformation, the manipulation of public opinion and a loss of trust in the information ecosystem. Consider, for example, an apparently authentic video of a political leader circulated during an election campaign, a voice recording used to impersonate a company executive and authorise a bank transfer, or images of events that never took place circulating on social media during crisis situations. In all these cases, the ability to identify the artificial origin of the content plays an essential role in preserving user trust.

The Code of Conduct is the practical tool through which the Commission seeks to translate these regulatory principles into concrete actions.

What the Code provides for: obligations and target audience

The Code is voluntary in nature, but carries significant legal weight: companies that sign up to it will be able to rely on shared standards to more easily demonstrate compliance with the obligations set out in the AI Act in the areas covered by the Code itself. This mechanism makes it particularly attractive to industry.

There are two target groups.

Providers, i.e. those who develop (generative) AI systems. They are under an obligation to ensure that the content produced (audio, images, video, text) is marked in a machine-readable format and detectable as artificially generated or manipulated. The technical solutions adopted must be effective, interoperable, robust and reliable, in line with the state of the art and implementation costs.

Deployers, i.e. those who make generative AI systems available to end users. They are subject to disclosure obligations in two specific cases:

• Deepfakes: audio, image or video content depicting real people, objects, places or events in such a way as to appear authentic, but which is not. In practical terms, this category would include a video showing a person making statements they have never actually made.
• Texts of public interest: articles, press releases or publications generated by AI on matters of public relevance, unless they have undergone a process of human review with editorial responsibility. The most obvious example is an article generated by an AI system commenting on election results, health measures or government decisions. Conversely, a text that has undergone substantial human review and been published under the editorial responsibility of a journalist or editorial team could benefit from the exception provided for in the AI Act.

There is also a requirement to inform users when they interact with an interactive AI system, such as a chatbot or a virtual assistant.

The process: how the Code was developed

The Code is the result of a participatory process launched in September 2025 by the AI Office, involving a public consultation and a call for expressions of interest. The process involved two thematic working groups (one for providers and one for deployers), led by independent chairs and vice-chairs, and included a wide range of stakeholders: developers of detection technologies, trade associations, civil society organisations, academics and major online platforms.

Over seven months — from November 2025 to June 2026 — three interim drafts were produced and put out for consultation before the final version was finalised. In parallel, the Commission published interpretative guidelines to clarify the scope of regulatory obligations and cover aspects not addressed by the Code.

Practical implications: what changes for businesses and users

For technology companies, signing up to the Code means adopting technical standards for content labelling and traceability, such as digital watermarking, signed metadata and provenance standards such as C2PA, as well as implementing appropriate disclosure systems for end users.

For example, an image generated by an AI model could contain metadata that allows platforms and verification tools to automatically identify its artificial origin, even if the label visible to the user has been removed.

Companies that do not sign up will still have to comply with the obligations of the AI Act from 2 August 2026, but without the benefit of being able to refer to the shared standards identified by the Code.

For the public, the expected impact is significant: deepfakes and AI-generated texts on matters of public interest will have to be clearly identified, making it easier to recognise when one is dealing with synthetic content.

The question of technical feasibility remains open. Watermarks and metadata can be removed or altered, and the detection of synthetic content in distributed environments still poses a significant technological challenge. The Code itself acknowledges this limitation, requiring the adoption of ‘technically feasible’ solutions in light of the state of the art.

Outlook: a model for the rest of the world?

The European initiative comes at a time of intense global regulatory competition over artificial intelligence. Whilst the United States is proceeding with a more fragmented approach and China has adopted specific rules on synthetic content, the European Union aims to build a model based on transparency and the accountability of operators.

A scenario that is far from unlikely is one in which a global platform chooses to apply European labelling standards to all users, rather than developing different systems for each national market. This is a phenomenon already observed in the past with European data protection legislation.

The challenge will be to maintain a balance between transparency and innovation, ensuring that excessive compliance burdens do not put European businesses at a disadvantage compared to their global competitors. The Code of Conduct on represents a significant attempt to strike this balance, with August 2026 serving as the first real-world test.

This article provides a comparative overview of the legal frameworks, typical structures and key tax risks associated with ManPacks in France, Germany and Italy.

By Philippe de Saint-Bauzel (ADVANT Altana), Markus P. Linnartz (ADVANT Beiten) and Irene Aquili (ADVANT Nctm)

Read the full document

In brief, best practices in France regarding witness interviews

To conduct an internal investigation implies establishing a list of priority interviews and secondary interviews, sometimes even preliminary interviews. 

Before summoning the interviews, the first concern of the company should be to determine how to deal with the legal hold; then to ensure that confidentiality and the rights of the interviewees are duly protected. 

In that view, while it is generally advisable not to unduly restrict the circle of interviewees, the team must also avoid expanding it excessively, as this may result in spreading rumors. 

In France, it is considered good practice to provide interviewees, prior to the interview, with a written notice summarizing their rights, together with a confidentiality agreement relating to the investigation. These documents should be signed before the interview begins. 

Interviews may not be recorded without the interviewee’s prior consent. Where consent is obtained, the recording should be destroyed once the interview minutes have been drafted and signed by the relevant parties.

Interview minutes may constitute significant evidence, especially in the context of a labor law dispute such as dismissal cases. Under French law, the confidentiality of internal investigations does not preclude the disclosure of the investigation report to a court. However, interviews minutes may be anonymized to ensure the protection and safety of the interviewees against potential retaliation. The French supreme court – in French “Cour de cassation” - has held that anonymous testimony may be admissible in dismissal proceedings, provided it is corroborated by other evidence. 

The transcription of interviews must be handled with particular care. The minutes should be impartial and accurately reflect the substance of the exchanges. Where a verbatim transcript is prepared, it may be useful, especially if to be used in future litigations, to be reviewed and signed by the interviewee.

Legislative proposal to establish a statutory framework for internal investigations (Bill. No. 2208)

A reform bill was submitted to the French National Assembly on 9 December 2025. 

If enacted, the reform would guarantee a series of rights to interviewees. Thus, at the time of notification, the witness would be informed of: the right to end the interview at any time, the right to make statements, the right to be assisted by a lawyer of their choice during the interview and, where applicable, the right to be assisted by an interpreter. The notification would also specify the maximum duration of the interview.

The reform would also make it mandatory to prepare a formal interview report, which may be signed by the interviewee. 

We regularly assist clients in navigating the French legal framework governing internal investigations, which continues to evolve. We also have extensive experience of conducting internal investigations on behalf of our clients, both in purely domestic contexts and in cross-border matters.

Legal Obligations of Employees in Internal Investigations

In the context of internal investigations, employees are generally obliged to cooperate in interviews conducted by their employer and to provide truthful information about work-related matters, insofar as these relate to the core area of the employment relationship. The obligation to provide information extends to questions concerning the fulfillment of work duties, operational processes, and compliance with ancillary obligations under the employ-ment contract, but not to private matters. This includes self-incriminatory information.

Data Protection Requirements

Data protection law plays a key role. Witness interviews inevitably involve the processing of personal data, including potentially sensitive information. Investigations must therefore comply with the General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG), especially with regard to Article 13 of the GDPR, which regulates the duty to provide information when collecting personal data from the data subject.

Works Council Participation Rights

Another issue concerns the involvement of the works council. If standardized questionnaires are used that record personal circumstances, knowledge, or skills, the works council has the right of co-determination.  Individual, non-standardized questionnaires are excluded from this.

Conclusion

Witness interviews are a powerful but legally sensitive investigative tool. Their effectiveness depends not only on careful preparation and professional interviewing techniques, but also on a robust legal framework that balances corporate interests in compliance and enforce-ment with the individual rights of employees.

The key role of the external defence counsel in conducting witness interviews

Under the ICCP, an external defence counsel must be appointed by the company to lead the interviews. Said counsel is empowered to gather information about suspected criminal offences committed against the company or by its employees and managers, even where no criminal proceedings are pending.

Efficacy and confidentiality of interviews led by the appointed defence counsel

Obtaining witness statements through a formally appointed external defence counsel in accordance with the ICCP formalities offers several key advantages:

• Reliability of the information: if witnesses decide to respond, they are obliged to tell the truth - providing false statements constitutes a criminal offence;

• Confidentiality and legal privilege: witnesses are prohibited from disclosing, including to the Public Prosecutor, the specific questions asked and answers given to the defence counsel;

• High probative value: in the event of criminal proceedings, witness statements collected in this manner carry the same evidentiary weight as those obtained by the Public Prosecutor.

Allowed interactions with witnesses and required formalities

In practice, witness statements may be obtained under the ICCP through:

1. An undocumented witness interview (useful, for example, for assessing whether the interviewee can provide relevant information);

2. A written statement from the witness; or

3. A documented witness interview.

In all cases, interviewees must receive a formal ­invitation with adequate prior notice. Before starting the interview, the defence counsel must provide the requisite statutory warnings, including the right to remain silent and potential criminal liability for false statements. For written statements and documented interviews, minutes and recordings are required to preserve authenticity.

Ordinarily, witnesses have no right to legal assistance during the interview; however, exceptions apply where the witness is involved in criminal proceedings as a suspect or victim. Additional requirements may arise in specific circumstances, such as the involvement of an interpreter or the assistance of psychologists when minors are heard. There is no obligation to notify a works council or other employee representative body prior to conducting the interview.

Conclusion

Under Italian law, it is advisable that witness interviews are conducted by an external  defence counsel in compliance with all ICCP formalities. Only then will the statements be reliable, protected from disclosure to the Public Prosecutor, and afforded full evidentiary weight in criminal proceedings.

Francesca Cannata
Matteo Nicolì

Searches at law offices are not generally prohibited. The German Code of Criminal Procedure provides privilege protection of the communication between individual defendants and their defence counsel only. In-house counsel generally do not qualify as lawyer or defence counsel for their company. 

It is prohibited to seize documents of individual defendants and their defence counsel and of documents prepared for the purpose of defending a company if the company is in a position similar to an accused person; this requires sufficient suspicion against manager that increases the probability of sanctions against company (Federal Constitutional Court).

German law does not prohibit lawyers from conducting internal investigations, even if they have regularly consulted the company and are still doing so. In any case, however, it must be made clear to an interviewee that the lawyer conducting the interview does not represent the employee, but the company.

Collection of Information

Notwithstanding the prevailing lack of legal privilege regarding internal investigations, companies should carefully structure the collection of information. Data gathering should follow a documented investigation plan, combining forensic data analysis, document review, and employee interviews, while fully respecting GDPR, employment law, and works council rights.

Internal and external Circulation 

Internal dissemination of investigation results should be strictly limited. A common pitfall is over-distribution of findings within management or compliance functions. Information should follow a clear need-to-know principle, typically restricted to senior management, compliance officers, and supervisory bodies. Wider circulation increases the risks of leaks, reputational harm, inconsistent narratives, and loss of control in potential enforcement proceedings. 

Whether and to what extent findings should be disclosed to prosecutors or regulators is - except for statutory disclosure requirements -a strategic business decision requiring careful balancing of interests. While cooperation may expedite the conclusion of investigations and mitigate sanctions, premature or uncoordinated disclosure can significantly increase criminal, regulatory, and civil liability exposure. Structured disclosure strategies and consistent communication frameworks are essential.

One principle must guide the entire process: the strict confidentiality of the internal investigation, including the investigation report itself.

Circulation of information collected during an internal investigation within the company

The internal investigation report should be circulated only to a limited number of individuals within the company. Restricting distribution indeed minimizes the risk of rumors spreading within the company and, more importantly, prevents the potential external dissemination of sensitive information that could damage the company’s reputation. 

As a matter of principle, an internal investigation report should not be disclosed to authorities nor to the external auditors without prior authorization from the relevant internal decision-making body.

That said, a company may decide to disclose the report to judicial authorities in the context of judicial cooperation, especially with a view to negotiating a Convention Judiciaire d’Intérêt Public – a kind of French DPA - if applicable. 

Legal uncertainty surrounding French legal privilege in internal investigation

In the absence of a clear statutory framework, the applicability of French legal professional privilege to internal investigations remains a matter of debate.

Under French law, communications and documents exchanged between a lawyer and a client involved in criminal proceedings are, in principle, protected by legal privilege. Accordingly, an internal investigation launched after a company has been formally implicated in criminal proceedings would normally fall within the scope of that protection.

However, significant uncertainty remains when the company is not yet under investigation. Although the preliminary article of the French Code of Criminal Procedure extended legal professional privilege to legal advice provided by lawyers, the French supreme court (in French, “Cour de cassation”) has adopted a restrictive approach. The court has issued decisions that appear inconsistent, creating uncertainty as to the exact scope of privilege.

Soft law instruments further reflect this divergence. Guidelines issued by the Financial Public Prosecutor’s Office and the French Anticorruption Agency denies the application of legal professional privilege to internal investigations. By contrast, guidance from lawyers’ representative bodies, including the Conseil national des barreaux, supports the application of privilege to such investigations conducted by lawyers.

For this reason, Bill. No. 2208 submitted to the French National Assembly on 9 December 2025 but not enacted yet seeks to clarify the issue. The reform intends to extend legal professional privilege to internal investigations conducted by lawyers, characterizing them as legal advice relating to the rights of the defense.

Pending legislative clarification, we regularly accompany our clients on how to navigate the evolving and sometimes contradictory contours of French legal professional privilege in the context of internal investigations.

Formal requirements to benefit from legal privilege in the context of information gathering

In the context of defensive investigations, information may be gathered through witness interviews, forensic activities, and electronic data review. To preserve legal privilege, the Italian Code of Criminal Procedure ("ICCP") prescribes specific formalities for conducting interviews, including statutory warnings to interviewees and the drafting of formal minutes. Where forensic and electronic data collection is involved, GDPR compliance must also be ensured. Additionally, the formal appointment by defence counsel of technical (including, IT) consultants  is necessary to ensure that their activities fall within the scope of the privileged investigation and to safeguard data integrity.

Circulation of information within the company

Italian law establishes certain safeguards with respect to, among others, communications exchanged between the appointed defence counsel and his/her client, providing for a general prohibition on the seizure or compulsory acquisition by the authorities of the latter. 

To mitigate the risk that such communications may still be accessed, including inadvertently, e.g. in the course of searches or seizures, by the Authorities - 

although they could not ultimately be used against the involved entity at trial – the following could be considered: i) using secure channels for document exchange; ii) including clear disclaimers on communications/documents; iii) copying external counsels on all relevant communications.

Reporting lines and conflicts of interest

Investigation findings should ordinarily be reported to the person who appointed the defence counsel. However, where that individual may be involved in the facts under review, a potential conflict of interest arises. It is therefore advisable to direct findings to a dedicated investigation team identified from the outset, comprising relevant control functions such as Internal Audit and Compliance.

Information flows towards the Supervisory Body (Organismo di Vigilanza) under Decree 231/2001 should also be carefully calibrated to enable it to fulfil its supervisory duties while preserving legal privilege.

Selective disclosure

Selective disclosure of defensive investigation findings to the authorities is permitted but warrants careful evaluation. Since criminal prosecution is mandatory under Italian law, disclosing even a portion of the findings may trigger broader investigations extending beyond the original scope and exposing the entity to corporate liability under Decree 231/2001 and significant reputational consequences.

Conclusion

Effective preservation of legal privilege in Italian internal investigations depends on the formal appointment of external defence counsel, strict compliance with procedural formalities, careful management of reporting lines and conflicts of interest, and rigorous control over the circulation of privileged information.

Paolo Vespa
Jacopo Nicolaj

In Germany, there are no specific requirements for internal investigations, but certain measures taken in the course of such investigations are subject to restrictions under criminal, data protection, and labor law. Also, the newly introduced Whistleblower Protection Act (Hinweisgeberschutzgesetz, “HinSchG”) covers certain requirements for internal investigation situations.

Corporate law compliance obligations

The executive management of companies is obliged to immediately investigate and remedy any violations of the law brought to their attention and to take disciplinary action against the employees responsible (LG Munich I, 5 HK O 1387/10). Remedying a violation of the law includes taking appropriate measures to prevent similar violations in the future.

A violation of these corporate compliance obligations may give rise to claims for damages against the executive bodies and result in fines against managers and the company itself.

Whistleblower Protection Act

The HinSchG obliges companies with 50 employees or more to set up an internal reporting office for whistleblowers. This reporting office must operate independently in order to ensure that reports are handled objectively and confidentially.

The internal reporting office first checks whether a reported violation falls within the material scope of the law and whether the report can be classified as valid. If a valid report is received, internal investigations must be initiated.

There are information obligations towards the whistleblower. Among other things, the whistleblower must receive confirmation of receipt and information about any follow-up measures taken. The identity of the whistleblower and all persons affected by a report must be treated as strictly confidential, unless there are exceptional reasons to disclose it upon demand by an authority.

Data protection law

Whether the processing of personal data is permissible in the context of internal investigations is determined by the General Data Protection Regulation and the Federal Data Protection Act (“BDSG”). If there is no legal basis for the processing, not only is there a risk that evidence will be inadmissible, but also that the company will face fines of up to EUR 20 million or 4% of its annual turnover. Responsible persons may also be liable to criminal prosecution.

In most cases, the processing of personal data in practice is not based on consent. Such consent can be revoked at any time and carries the risk that courts may deem it inadmissible. As a rule, data processing can be based on Art. 6 (1) lit. f GDPR or § 26 (1) sentence 2 BDSG.

If a data protection officer has been appointed in the company, they must be involved in the planning and implementation of the investigation at an early stage. 

Labor law

The labor law framework for internal investigations can be summarized as follows:

Employees are generally obliged to cooperate in internal investigations and to provide truthful information. Refusal to cooperate or providing false information can result in consequences under labor law, including warnings or dismissal. 

At the same time, general right of privacy (Allgemeines Persönlichkeitsrecht, APR) limit internal investigation measures. In particular, employees' rights to their own image, spoken word, reputation, privacy, and informational self-determination are protected. Measures such as workplace inspections or email screening interfere with the APR and are only justified if, after careful consideration of the interests involved, the legitimate interests of the employer (e.g., to ensure order in the workplace, to protect company property, or to preserve trade secrets) outweigh the personal rights of the employee. The latter is usually the case, if there are suspicions of considerable wrongdoing and high potential damage for the company. In any case, employees cannot generally refuse their cooperation based upon the potential risk of self-incrimination (as they could in criminal proceedings).

Collective agreements or works council agreements can establish framework conditions for internal investigations. They often determine binding rules for dealing with suspicions, the involvement of the works council, and the protection of employee rights in the context of investigations. 

Under statutory law, the works council's right of co-determination under Section 87 of the Works Constitution Act (BetrVG) can apply, for example, with regard to using technical solutions to review emails (review platforms).

Given the lack of specific legal provisions, the legal framework of internal investigations has been progressively shaped both by French case-law and several institutional and professional tools: 

• Guides published by the French anti-corruption Agency and the Financial Prosecutor’s Office (in French, “Parquet National Financier”)

• Recommendations from the French National Council of Bars (in French, “Conseil National des Barreaux”)

• Specialized academic papers

• Standards issued by professional associations

• Specific appendix in the internal regulations of the Paris Bar aiming to regulate the activity of the investigator-attorney. 

In parallel, French case-law issued by labor division courts enshrined a set of guiding principles such as the impartiality requirement, the inculpatory and exculpatory conduct of the investigation, the right to defend itself, or the loyalty in evidence gathering. 

However, this basis remains incomplete and devoid of normative unity. Persistent discrepancies, especially regarding the scope of the adversarial principle or the regime of confidentiality applicable to investigations conducted by attorneys, create structural uncertainty for companies operating in an international environment. 

In this context, a draft bill was presented on 9 December 2025. 

Starting from the premise that the lack of unified legal framework creates legal insecurity for economic operators and people involved, this draft bill intends to enshrine fundamental principles governing the conduct of internal investigations and to professionalize the practices. 

It introduces a legal definition in the French labor code according to which the mechanism of international investigations is a formal process intended to verify alleged facts, conducted through the investigation of inculpatory and exculpatory evidence and by means of proportionate measures. 

The draft bill also addresses and regulates the case in which an internal investigation is conducted concomitantly with criminal proceedings by inserting a mechanism guaranteeing procedural rights to people interviewed in the French Code of Criminal Procedure, such as prior information, assistance by an attorney and the adversarial formalization of the interviews. 

Finally, it asserts that acts and documents from an investigation conducted by an attorney are covered by confidentiality, thus bringing a normative response to one of the most sensitive issues at stake. 

This initiative is part of a larger movement of consolidation of French anti-corruption policy, at a time when the French Court of Auditors (in French, “Cour des comptes”) has recently highlighted the fragmentation and the weaknesses of the national governance in this regard. Such legislative proposal marks a significant milestone towards the transition from scattered standards to a coherent, comprehensible and secure legal framework.

A critical preliminary distinction is between internal investigations as such and defensive investigations, carried out by formally appointed external defence counsel under the ICCP (Art. 327-bis and 391-bis). Investigations conducted by in-house functions are not legally privileged; privilege is preserved only when the matter is structured as a defensive investigation, following the procedural formalities set out in the ICCP.

Typical phases of an internal investigation

Defensive investigations typically follow a structured workflow: (1) issue spotting and preliminary scoping, (2) evidence preservation (e.g., legal hold), (3) document collection and review, (4) forensic analysis on corporate devices, (5) interviews, and (6) outcome assessment and remediation. The process should remain flexible, as the scope often needs refining as facts emerge.

Employment law and data protection

Where employees are involved, investigative steps must align with employment-law safeguards. Any disciplinary measures must respect the procedural guarantees under Art. 7 of the Workers’ Statute, including proper contestation and the employee’s right to be heard.

GDPR principles also contribute to shape investigative design. The lawful basis is commonly legitimate interest (Art. 6(1)(f) GDPR) and, where sensitive data are implicated, defence rights (Art. 9(2)(f) GDPR).

Operationally, before launching or forensic collections, investigators should verify the scope of existing IT/privacy policies and notices. A practical minimisation approach is also to apply timeframe and keyword filtering before substantive review, limiting exposure to irrelevant personal data. 

Italy’s Data Protection Authority has also issued deontological rules specifically addressing processing in connection with defensive investigations and the exercise of defence rights.

Criminal law implications and cooperation with Authorities

Absent a formal defence counsel appointment, investigative materials may be exposed to prosecutorial seizure, and investigators may be summoned as persons informed of the facts. Securing privilege requires, as anticipated, conducting a defensive investigation with strict procedural compliance and practical safeguards (secure channels, confidentiality markings, etc.).

A further strategic dimension concerns Decree 231/2001 on corporate criminal liability: a well-run defensive investigation can support remediation and strengthen the entity’s defence. However, sharing outputs with Prosecutors implies waiving protection over what is disclosed, so engagement strategy should be counsel-led and case-specific.

Conclusion

Internal investigations in Italy require careful legal structuring and cross-functional execution, balancing effective fact-finding with employment-law safeguards, privacy requirements, and criminal procedure formalities to preserve privilege and the full range of strategic options.

Ornella Belfiori
Gabriele Belardinelli

This obligation to repair upon consumer’s request does not only apply in cases where the product was defective at the time the risk passed to the consumer, but also, for example, where a consumer has damaged the product themselves. Thus, the right to repair exists independently outside the seller's contractual liability under statutory warranty provisions. 

Companies introducing such products from outside the EU, i.e. importers, should consider in their business case that they may be subject to repair obligations: the right to repair will apply to the product irrespective of its origin and therefore to the company commercialising the product in an EU-country s. The directive establishes a special liability system:

• Primarily, the manufacturer is obliged to fulfil the "right to repair" obligations.
• If the manufacturer is established outside the Union, its authorised representative must perform the obligation of the manufacturer.
• If the manufacturer has no authorised representative, the importer of the good concerned is responsible.
• In exceptional cases where there is no importer, the distributor of the goods concerned shall fulfil the manufacturer's obligation.

Each of these parties may subcontract repair services to fulfil their obligation to repair.

Any obligated party must make information about its repair services available to consumers free of charge (at least for the duration of the repair obligation) in a clear, easily accessible, and comprehensible manner. Repairers shall be found by consumers easily through a new online European Repair Platform, which is expected to become operational in 2027.

The obligation to repair applies to the products listed in the implementing regulations under the Ecodesign Directive 2009/125:

• Household washing machines and household dryers
• Household dishwashers
• Refrigerators
• Electronic displays
• Welding equipment
• Vacuum cleaners
• Servers and data storage products
• Mobile phones, cordless phones, and slate tablets
• Household tumble dryers
• Goods containing batteries for light vehicles

The Digital Omnibus — the legislative package through which Brussels is streamlining the EU’s digital rules — has been moving in the same direction for years: more sharing, more portability, fewer silos. A legitimate objective, but one with a side effect that many companies have not yet fully grasped: every data-sharing obligation creates an additional window through which know-how that has not been — or cannot be — patented may escape.

The package includes two main texts: one amending existing rules on data, cybersecurity, and privacy (the “digital acquis”), still under negotiation; and another concerning artificial intelligence, for which a provisional political agreement was reached on 7 May 2026. The dates of official publication remain subject to completion of the formal process.

What changes in practice

The most relevant amendments to the digital acquis for those handling sensitive information include:

– Public data and large operators. Public administrations may impose special conditions on Very Large Enterprises and DMA gatekeepers reusing public-sector data, in order to prevent privileged access to data from reinforcing already dominant positions.

– Data intermediaries. The mandatory regime under the Data Governance Act would become voluntary, with lighter separation requirements. More actors in the chain means more points of contact.

– Cloud switching. Simplified regimes for certain categories, but with explicit safeguards regarding trade secrets and risks of exposure to third-country jurisdictions.

– Smart contracts for data sharing. The essential requirements under Article 36 of the Data Act would be removed: fewer technical constraints, greater reliance on contractual governance.

The starting point: the Data Act

Already applicable since 12 September 2025, the Data Act grants users of connected devices the right to have their data shared with third parties. For manufacturers, this exposes a delicate perimeter: the data may contain operational logic, configuration parameters, performance information — everything that makes up know-how without ever having been labelled as such. Moreover, the Data Act disapplies the sui generis protection of databases in this context, shifting the burden of protection onto trade secrets.

Consider a practical example. A manufacturer of connected industrial equipment receives a request from a customer to share 18 months of operational logs with an independent maintenance provider that directly competes with its after-sales service. Those logs contain calibration parameters and control sequences developed over years of R&D and never patented. The Data Act does not allow for a blanket refusal, but it does permit the manufacturer to require proportionate technical measures before sharing the data (Article 4(6)): NDAs with anti-reverse-engineering clauses, sensitive data disclosed only in aggregated form, and contractual prohibitions on using the data to develop competing services (Article 6(2)(e)). If the third party refuses those measures, the manufacturer may block the sharing, but must provide written reasons and notify the competent authority. These two steps are not optional: they are the formal conditions for a lawful refusal.

The Regulation also provides for the possibility of refusing disclosure where sharing would make serious economic harm highly likely. The threshold is high, and the practical problem is that the harm must be demonstrated before the disclosure occurs, based on data that has not yet left the company. Those who have not documented the value of their trade secrets will find themselves without arguments when they are most needed.

The Digital Omnibus novelty: the jurisdictional factor

If approved in its proposed form, the amendment to the Data Act would introduce a new basis for refusing disclosure: the risk of unlawful acquisition by entities operating in third countries with insufficient safeguards — or with formally equivalent safeguards lacking effective enforcement.

This represents a concrete shift in perspective. Today, many leaks do not originate from cyberattacks or disloyal employees: they arise because data lawfully shared reaches a legitimate recipient operating in a jurisdiction where a local authority may require disclosure — and where obtaining an injunction is slow or impossible. The secret is lost because of a structural systemic issue, not because of malicious intent. The proposal seeks to turn this asymmetry into a legal lever: refusal is legitimate, but it must be justified in writing and notified to the competent authority.

Five things to do now

– Map data from a competitive standpoint. Not for GDPR purposes: which datasets, if analysed, reveal proprietary processes or logic? Which fall within the scope of the Data Act?

– Build a trade secret registry. A trade secret exists if it is not generally known, has economic value because it is secret, and is protected through reasonable measures. NDAs, access controls, audit logs, internal policies: everything documented and updated.

– Structure responses to data-sharing requests. What is needed is a process, not a case-by-case assessment. Clear criteria are required regarding when to refuse disclosure, how to justify the refusal, and how to notify it.

– Conduct a jurisdictional assessment of data flows. Who receives the data? Where do they operate? Where are their subcontractors located? What is the actual level of enforcement in those jurisdictions?

– Monitor the legislative process. The Digital Omnibus for the digital acquis will evolve. Those working with sensitive data need to know how, and when.

The direction of the Digital Omnibus will not change: more circulation, more portability. But companies that have built their competitive advantage on data and unpatented processes cannot wait for the legislation to stabilise. The trade secret that survives is the one already structured as such before someone asks for it to be shared.

• raising of merger control thresholds in France
• new mandatory notification thresholds and digital filing in Italy

Read the full document by Marie Hindré and Margaux Brunet (ADVANT Altana) and Francesco Mazzocchi (ADVANT Nctm)

Click here

1. TARIFF REDUCTION: SIGNIFICANT OPPORTUNITIES – BUT NOT AUTOMATIC

At the core of the agreement is the gradual reduction of tariffs, which to date have been substantial across many sectors. In the automotive industry, tariffs have reached up to 35%; in mechanical engineering, they have often ranged between 14% and 20%; and for chemical products, duties have in some cases been as high as 18%. Under the agreement, these tariffs will be progressively reduced, and in many instances eliminated altogether.

For businesses, this creates tangible competitive advantages in South American markets. However, these benefits are not available automatically. Companies must actively comply with the agreement’s requirements and provide the necessary documentation. It is at this point that the real need for action begins.

2. RULES OF ORIGIN: A PREREQUISITE FOR ANY CUSTOMS DUTY SAVINGS

For customs duties to be reduced or waived under the agreement, goods must comply with the so‑called rules of origin. The decisive factor is whether a product is considered to have preferential origin. These requirements are particularly relevant for exports, as it is the exporter who must demonstrate that the goods meet the applicable criteria in order for tariff preferences to be granted in the country of destination.

In practice, this means that a product must either have undergone sufficient value creation in the country of origin – i.e. a substantial part of its manufacture or processing must have taken place there – or meet specific production or processing requirements. These requirements are precisely defined in the agreement and vary depending on the product category.

In many cases, verifying compliance is complex. The entire supply chain must be taken into account, and origin rules can differ significantly between products. For companies with international supply chains in particular, this raises a key question: do their products meet the relevant origin requirements, or are adjustments to sourcing or production processes necessary?

3. LONG-TERM SUPPLIER DECLARATIONS (LTSDs): THE KEY PRACTICAL TOOL

A crucial aspect of the agreement – and one that is often underestimated in practice – is the long‑term supplier declaration (LTSD). In the context of customs and foreign trade, these are formal declarations in which a supplier confirms to its customer that the goods supplied meet specific rules of origin. LTSDs typically apply to deliveries over an extended period, provided the goods are expected to retain the same origin status.

They form the essential basis on which an exporter can issue a declaration of origin and, in turn, benefit from preferential customs treatment. The EU–Mercosur Agreement introduces changes that directly affect how these declarations must be handled.

What is changing:

• Mercosur countries may be included in LTSDs with effect from 1 May 2026
• The countries must be listed individually (e.g. Brazil, rather than “Mercosur”)
• Existing declarations cannot be reused automatically

In practice, difficulties often arise because many long‑term supplier declarations were issued years ago and have not been reviewed since. As a result, origin information frequently no longer complies with the rules currently in force. In addition, supply chains may have evolved over time without corresponding updates to the supporting documentation.

Incorrect or outdated LTSDs can have significant consequences. These include the loss of tariff preferences, retroactive customs duties, and potential liability towards customers. Issues may also arise in the course of customs inspections or audits.

What companies should do now:

• Thoroughly review and update existing LTSDs
• Ensure Mercosur countries are correctly and individually listed
• Reassess applicable rules of origin
• Clearly define internal responsibilities

4. CONTRACTS, DISPUTES, AND COMPLIANCE: ADJUSTMENTS REQUIRED AS TRADE INTENSIFIES

As trade with Mercosur countries increases, existing contractual arrangements should be reviewed and, where necessary, adapted. Many supply and framework agreements have historically been designed with a primary focus on European markets and often take limited account of the specific characteristics of trade with Brazil, Argentina, Paraguay and Uruguay.

In particular, contractual provisions relating to Incoterms, delivery timelines, transfer of risk and payment terms become more critical when dealing with longer distances and differing commercial practices. At the same time, higher trade volumes inevitably increase the risk of disputes, for example in relation to delivery delays, quality defects or payment defaults. Companies should therefore address potential conflict scenarios at an early stage and clearly determine how and where disputes will be resolved, whether through jurisdiction clauses, arbitration agreements or other dispute resolution mechanisms.

Alongside the economic opportunities, compliance and supply chain requirements are also becoming more demanding. Obligations relating to environmental and social standards, contractual assurances given to business partners, and expanded documentation requirements are no longer limited to large corporations; they are increasingly affecting small and medium-sized enterprises as well. The EU-Mercosur Agreement reinforces this development, making it necessary to systematically review and, where appropriate, adapt existing compliance and governance structures.

5. CONCLUSION: ACT NOW RATHER THAN FIXING ISSUES LATER

The entry into force of the EU-Mercosur Agreement marks the start of an ongoing adjustment process for small and medium‑sized enterprises. While the gradual elimination of tariffs offers considerable economic opportunities, the extent to which these benefits can actually be realized depends largely on effective and compliant implementation in practice.

Particular attention should be paid to the rules of origin and long‑term supplier declarations. Only companies that carefully review and update these instruments – and align their supply chains accordingly – will be able to make full use of the intended preferential treatment. Failing to do so may result not only in the loss of tariff savings, but also in legal risks arising from incorrect origin declarations, retroactive customs duties or administrative penalties.

At the same time, the agreement’s entry into force presents an opportunity to reassess existing legal and organizational structures and adapt them where necessary. If you would like to review whether your long‑term supplier declarations, proofs of origin or contractual arrangements comply with the new requirements, we would be pleased to assist you with legally sound implementation and classification. An early review ensures legal certainty and enables businesses to take consistent advantage of the agreement’s economic benefits from the outset.

Dr Philipp Sahm
Katharina Reichert
Kevin Einert

Click here to read the alert by Francesco Mazzocchi

Critical Note: The IAA is a proposal, not yet binding law. Final regulations may differ significantly from this proposal, as the legislative process is ongoing. It requires approval from the European Parliament and Council, with adoption expected in late 2026 or early 2027 at the earliest. 

For Chinese investors operating in the four emerging strategic sectors, the most significant challenge is the IAA's foreign direct investment (FDI) screening regime — a new industrial policy — focused framework that will operate separately from existing EU security-based screening mechanisms.

The European Commission's proposal for IAA stems from the need to address growing concerns about external market dominance, strategic dependencies on foreign supply chains for critical technologies, and the necessity to strengthen Europe's industrial base. By shifting towards a more active industrial policy, the EU aims to safeguard its manufacturing capacity, reduce reliance on external actors, and ensure competitiveness in a global landscape increasingly shaped by state-backed investments and strategic interventions.

Beyond "Made in EU" requirements for public procurement and streamlined permitting for industrial projects through digital one-stop-shops and designated acceleration zones, the IAA introduces a novel and strategically significant foreign direct investment screening regime — the focus of this analysis for Chinese investors.

The New FDI Screening Regime: A Distinct Industrial Policy Framework

1. A Separate System from Existing EU Security Screening

The IAA's FDI regime is fundamentally distinct from the existing EU FDI Screening Regulation (Regulation (EU) 2019/452). Where the current EU regime focuses exclusively on security and public order risks, the IAA introduces a new industrial policy-oriented screening mechanism designed to ensure that foreign investments deliver tangible economic benefits to the EU: technology transfer, job creation, value chain integration, and reduced strategic dependency.

This creates a dual-track screening system. Chinese investors will need to navigate both traditional security-based screening under EU Regulation 2019/452 and the new industrial policy conditions upon the adoption of the IAA — two parallel approval frameworks with potentially different timelines and approval criteria.

2. Scope and Triggers

The IAA's screening regime shall apply to investments exceeding €100 million from the date of its entry into force, targeting only the four emerging strategic sectors:

a. battery technologies and its value chain for battery energy storage systems;

b. pure electric vehicles, off-vehicle charging hybrid electric vehicles and fuel-cell electric vehicles, including components related to electrification and digitalisation; 

c. solar PV technologies; 

d. extraction, processing and recycling of critical raw materials.

All other sectors remain unaffected by this new screening regime.

Triggering the 40% Capacity Threshold: The regime only applies to investors from countries controlling more than 40% of global manufacturing capacity in the relevant sector, who is not covered by economic partnership and free trade agreements. China is currently the only country meeting this threshold across all four sectors.

Control Definition: Screening is triggered when a foreign investor acquires 30% or more of voting rights or ownership in a European target through acquisition or establishment. All investments by the same investor and affiliated parties are aggregated to determine threshold compliance.

3. Approval Process and Timeline

The FDI approval process unfolds as follows:

This extended process creates substantial execution risk, with potential delays in deal closing, financing complications, and regulatory uncertainty.

4. Value-Added Conditions: The Four-of-Six Test

Approval requires satisfying at least four of six specified conditions, with one mandatory prerequisite:

Mandatory Condition – EU Workforce: At least 50% of employees across all categories, including senior management, must be EU citizens or residents. This is non-negotiable for approval, regardless of other conditions met.

Optional Conditions (Choose 3 of 5):

1. Ownership Cap – Foreign investors shall not hold more than 49% of voting rights or ownership, preventing majority control in any Union target or over a Union asset.
2. Joint Venture Structure – For investment structured through a joint venture with EU partners, the foreign investors' shareholding shall be capped at 49% in any Union entity, ensuring European partners have effective participation in management, technology transfer, and capacity building.
3. Technology Transfer and IP Licensing – Foreign investors must license key intellectual property and know-how to Union entities. Pre-existing European IP remains fully owned by the EU target; jointly-developed IP is shall be owned jointly.
4. R&D Investment – Foreign investors shall commit at least 1% of gross annual revenue of the Union target to research and development within the EU.
5. EU Supply Chain Integration – Foreign investors shall publish a strategy prioritizing EU sourcing, with an aspiration to source at least 30% of manufacturing inputs from the EU.

5. Treatment of Subsidiary Investments: A Potential Regulatory Gap

The IAA proposal primarily targets direct investments by foreign investors. However, Article 18(4) of the proposal allows national Investment Authorities to apply some or all of the six conditions to investments made within the Union by a foreign investor's subsidiary, but only where this is deemed "essential" to prevent circumvention or where no less restrictive alternative measures are available.

This creates a regulatory asymmetry: direct investments face mandatory scrutiny, and the four-of-six test, while subsidiary investments face discretionary screening based on circumvention risk assessment. Investors should assume that sophisticated subsidiary structures designed to avoid the 30% trigger could face retroactive scrutiny and condition-imposition by national authorities seeking to prevent regulatory arbitrage.

6. Enforcement and Penalties

Non-compliance carries substantial consequences: administrative fines of at least 5% of average daily aggregate turnover for violations of notification requirements, false information, or breach of conditions. National authorities can modify or revoke approvals if conditions are materially breached.

7. Projected Timeline to Final Adoption and Entry into Force

The Industrial Accelerator Act (IAA) is currently progressing through the ordinary legislative procedure, which typically requiring 12 to 18 months from proposal to adoption. The public consultation will be closed on May 6, 2026. The negotiation process will proceed through several phases: first, parliamentary committees will elaborate their negotiating positions and amend the Commission proposal during the parliamentary first reading phase; second, the Council will adopt its position and negotiating mandate; third, trilogue negotiations will attempt to reconcile Parliament and Council positions, typically requiring multiple sessions that may extend across a three to six month period; and fourth, final adoption requires passage through both institutions' plenary bodies. Adoption is expected by early 2027 at the earliest, with the IAA entering into force shortly thereafter. 

Implementation will follow a staggered timeline: the FDI screening regime will take effect 12 months after entry into force, public procurement requirements will be phased in over 1 to 3 years, and Member States need to designate national industrial manufacturing acceleration areas within 12 months. This phased approach ensures sufficient time for businesses and administrations to adapt to the new framework.

8. Conclusion

The IAA represents a fundamental reconceptualization of European industrial policy. While the proposal is not yet law, it signals clearly where European regulation is heading.

The concept of IAA mirrors established Chinese industrial policies in striking ways. Both frameworks center on joint ventures and technology transfer as regulatory cornerstones. Both target strategic sectors to strengthen domestic industrial capacity and technological prowess. Both integrate investment screening and conditionality to govern foreign market access. Both establish thresholds — China through sector mandates, the EU through investment scale and market concentration metrics — that trigger regulatory requirements.

These parallel mechanisms pursue converging strategic objectives: maintaining equilibrium in capital flows, securing domestic benefits from foreign investment, and advancing technology transfer and indigenous industrial development. Yet the EU explicitly rejects replicating China's state-capitalist industrial policy model. Instead, the EU employs targeted public investment, regulatory coordination and demand-side instruments within a competitive market framework, fundamentally distinguishing its institutional architecture from China's state-directed approach.

Chinese investors, who may already have concrete plans to invest in Germany, should consider accelerating Greenfield projects before the IAA enters into force. This proactive approach could help mitigate the regulatory challenges posed by the new framework. Additionally, advisory services can play a critical role in guiding Chinese companies through the evolving EU regulatory landscape, ensuring compliance and strategic alignment with European industrial policy goals.

Chinese investors should prepare for a more restricted investment environment by restructuring acquisition strategies around joint venture models, building European partnerships, and recruiting local management teams. The window for accelerating deals under current rules may close in 2028.

Lelu Li

It is against this backdrop that Directive (EU) 2024/825, known as "Empowering Consumers for the Green Transition", was adopted, with the aim of strengthening consumer protection against unfair commercial practices of an environmental nature. Legislative Decree No. 30 of 20 February 2026, which came into force on 24 March 2026, transposed the provisions of the Directive into Italian law, setting 27 September 2026 as the deadline by which economic operators must comply with the new requirements.

This measure has a significant impact on the Consumer Code (Codice del Consumo), introducing into Article 18(1) the definitions of key terms — including "environmental claim", "generic environmental claim", "sustainability label" and "certification schemes" — which are essential for interpreting the new provisions, which expand the scope of misleading commercial practices, misleading omissions and practices deemed misleading in all cases.

Specifically, Legislative Decree No. 30/2026 has made the following amendments:

(i) Extension of Article 21(1) of the Consumer Code. The provision introduces an explicit reference not only to the traditional characteristics of products, but also to their environmental and social characteristics and aspects of circularity, such as durability, reparability and recyclability. It follows that any practice likely to mislead the consumer on these points is classified as misleading.

(ii) New categories under Article 21(2) of the Consumer Code. The categories of "environmental claims regarding future performance without an implementation plan" (letter b-ter) and "advertising of irrelevant benefits" (letter b-quater) are introduced. Environmental claims relating to future performance that are not supported by a defined and independently verifiable plan are therefore considered misleading, as is the promotion of characteristics common to all products in the same category that are unduly presented as distinctive from an ecological perspective.

(iii) Strengthening of the rules on misleading omissions (Article 22 of the Consumer Code). The new paragraph 5-terof Article 22 of the Consumer Code provides that, in product comparison services where environmental, social or circularity-related information is provided, the following are deemed essential — with the consequence that their omission constitutes an offence: the comparison method used, the products and suppliers involved, and the measures put in place for updating the information.

(iv) Expansion of the list of practices that are misleading in all cases (Article 23 of the Consumer Code). The most significant change concerns the expansion of Article 23 of the Consumer Code, which lists commercial practices considered misleading in all cases. These include, amongst other things, the use of sustainability labels not based on recognised certifications and generic environmental claims that cannot be substantiated.

Enforcement of the legislation is entrusted to the Italian Competition and Market Authority (AGCM), which has been granted specific sanctioning powers and has always been particularly active in combating so-called greenwashing.

Conclusions

Legislative Decree No. 30/2026 marks a turning point in the regulation of corporate environmental communications, introducing specific obligations for those who make such claims. With the compliance deadline set for 27 September 2026, companies are called upon to act promptly, reviewing their communication strategies in light of the new regulatory framework.

At an operational level, it is essential that companies conduct an audit of the environmental claims currently in use, ensuring that each is supported by verifiable evidence and, where necessary, by recognised certifications. It is also essential to establish a permanent interdisciplinary task force — involving the legal, marketing, compliance and sustainability functions — responsible for the prior approval of content and the continuous monitoring of communications.

1. EU Commission presents proposal for ‘EU Inc.’

As highlighted in the Draghi report, nearly 30% of Europe’s unicorns have relocated to the US since 2008. Why? Because for many startups, breaking into the US market is simpler than scaling across Europe itself. Such dynamics have prompted the need for decisive action at the European level.

When European Commission President Ursula von der Leyen introduced the concept of a new European company form — referred to as an ‘EU Inc.’ — at this year’s World Economic Forum in Davos, it was likely unfamiliar to many in the audience. The underlying idea, however — namely, the creation of a private company form operating under a uniform set of rules across all EU Member States—is not new. Earlier initiatives have faltered due to a lack of political support, but there are now reasons to believe that momentum may be building.

Last week, the European Commission presented its proposal for an EU Inc. In the following, we outline the key elements of the current initiative and consider how the proposed legal framework may take shape from both legal and tax perspectives.

2. Status Quo

Against the backdrop of corporate structures that have existed for decades, the concept of a European legal form — an EU Inc. — has emerged. While Europe constitutes one of the world’s largest internal markets in economic terms, it remains a regulatory patchwork. This presents particular challenges for innovative companies that depend on access to venture capital, pan-European mobility, scalability, a highly skilled workforce and long-term investment. To date, businesses operating — or seeking to operate — across borders have been required to invest significant time and resources in navigating divergent national regulatory regimes. In fact, these involve 27 national legal systems and more than 60 distinct corporate legal forms. Such complexity may delay the incorporation of a company by several weeks or even months, thereby hindering growth, increasing costs, and discouraging expansion.

The existing European legal form available to companies, the Societas Europaea (SE), introduced in 2001, does not adequately address these challenges. As a result, it has not become the standard vehicle for start-ups. It is widely regarded as overly complex. In addition, it requires a minimum capital of €120,000 and leaves key governance matters to be determined by national laws.

3. EU Inc. Legal form

After years of limited political traction, the idea of a European company form has regained momentum, driven in part by initiatives from European technology companies, investors and start-up associations.

The EU Inc. is envisaged as a uniform company form operating across Europe within a legal framework designed as a “28th regime”, existing alongside the national regimes of the 27 Member States. It is intended to be incorporated entirely digitally, with a minimum share capital of just €1, and could be established within as little as 48 hours. Start-up costs are expected to be capped at approximately €100.

The EU Inc. will be introduced in the form of an EU Regulation and will provide a single, harmonised set of corporate rules which businesses may elect to apply and be subject to, rather than navigating multiple national regimes.

The Draghi Report dated 9 September 2024 indeed highlighted the urgent need to focus on enhancing the EU’s competitiveness, including by facilitating the expansion of innovative enterprises within Europe. Announced in the Commission’s political guidelines for the 2024–2029 period and in President von der Leyen’s State of the Union address, the EU Inc. proposal aims to reduce fragmentation, strengthen the EU’s competitiveness, and address the needs of innovative businesses.

Companies would therefore be able to operate under uniform capital requirements, supported by a central EU register, standardised investment documentation and a harmonised employee share ownership scheme across Europe.

If realised, the EU Inc. would offer clear economic advantages for both entrepreneurs and investors. Scaling businesses would become more straightforward, and investment processes could be accelerated — for example, through potentially shorter and more streamlined due diligence procedures.

Among the key advantages of the proposed framework, the following merit particular attention.

Simplified and fully digital procedures: EU Inc. companies will be required to submit corporate information only once, via an EU-level interface connecting the national business registers. Business processes — including incorporation, financing operations, share transfers and liquidation — will be digital by default throughout the entire lifecycle of the company. Tax identification and VAT numbers will be obtained without the need to resubmit paper documentation.

Enhanced conditions for attracting investment and talent: The proposal will simplify the transfer of shares and eliminate mandatory intermediary involvement. EU Inc. companies will have the ability to create different classes of shares with varying economic or voting rights, and to establish EU-wide employee stock option plans, with stock options taxed solely at the time of sale.

Full access to the internal market with strong safeguards: EU Inc. companies will be free to choose the Member State in which to incorporate and will be treated on an equal footing with any other national company. National labour and social laws — including rules relating to codetermination — will continue to apply in full.

4. National Tax sovereignty remains in place

The intended simplicity and speed of incorporation should not be undermined by additional registration and onboarding requirements imposed by public authorities. In practice, obtaining a company registration number from the authorities, opening a business bank account and securing a tax registration number have proved particularly time-consuming. A meaningful reduction in administrative burdens would therefore be highly desirable.

However, as the proposed 28th regime is primarily focused on company law, no immediate simplifications in tax rights and obligations are expected. According to statements by the European Commission, certain areas of tax law may also be subject to future harmonisation, although the precise scope remains unclear. Any such measures would, in any event, likely require the unanimous consent of the Member States. Nevertheless, it would make sense to:

• remove tax barriers to cross-border business activities to ensure transparency and simplification; and
• establish uniform criteria for determining administrative headquarters to avoid the double taxation of companies.

Yet, the EU’s tax policy to date makes one point unmistakably clear: the harmonisation of cross-border taxation among Member States remains highly contentious.

Taxation lies at the heart of national sovereignty, as it constitutes the primary source of public revenue. Against this backdrop, the national tax regimes of the Member States will continue to apply within the framework of an EU Inc. Member States will retain full control over tax rates, assessment and enforcement. In practice, an EU Inc. would be treated in the same way as a German private limited liability company (GmbH) and, as a legal entity subject to unlimited tax liability, would be liable to corporate income tax and trade tax where it has its registered office or place of effective management in Germany, as well as to value added tax (VAT) to the extent that it supplies goods or services within Germany. 

Given the extensive harmonisation of VAT rules under the VAT Directive — Member States differ primarily in their rates, which range from approximately 16% to 25% — tax competition in the area of direct taxation will remain largely unaffected and may even intensify as a result of the EU Inc. As the EU Inc. is intended to simplify company formation and expansion (with incorporation possible within 48 hours, a minimum capital requirement of €1 and no need for notarial involvement), businesses will find it significantly easier to relocate their formal seat to any Member State. This is likely to increase competition between jurisdictions for corporate establishments.

As a result, the choice of seat may increasingly be driven by tax considerations, as other factors — such as legal form, administrative burden and costs — become less decisive. Member States will therefore need to offer more attractive tax frameworks to attract new businesses. In this respect, the EU Inc. would strengthen tax competition within the EU without harmonising substantive tax law. A greater alignment of the corporate tax base across Member States — similar to what has already been achieved in VAT — would enhance transparency in tax competition.

From a German policy perspective, the gradual reduction of the overall corporate tax burden to an internationally competitive level of no more than 25% by 2032 represents a key measure in maintaining the attractiveness of Germany as a business location.

In the Italian context, a reduction of the current corporate tax burden, presently around 28%, would likewise be desirable to achieve the same level of competitiveness.

As far as France is concerned, the new regime will have no impact in this regard, since France had already lowered its corporate tax rate to 25% as of 2022.

In any case, the Commission has proposed a Head Office Taxation (HOT) system, which would allow small and medium-sized enterprises (SMEs) to apply the tax rules of their country of origin. Furthermore, the “Business in Europe: Framework for Income Taxation” (BEFIT) initiative aims to establish a single legislative framework for corporate taxation within the EU.

5. Outlook

With its proposal for an EU Inc., the European Commission has sent a clear signal: the European Union intends to significantly simplify company formation and further strengthen the freedoms of establishment and movement of capital. The aim is to enable businesses to operate and raise capital across Europe as seamlessly as they do in jurisdictions such as the United States or China.

In Italy, the Chair of Confindustria Giovani¹, Maria Anghileri, also underscored the significance of the initiative. It constitutes, in fact, an opportunity to operate across multiple Member States through a single corporate structure. At the same time, the high degree of flexibility envisaged will require further scrutiny. While, on the one hand, such modularity allows the instrument to be tailored to diverse needs, on the other it risks undermining comparability among undertakings — an element that is crucial for attracting investment and operating effectively on a European scale. The success of the project will therefore depend on the ability to strike an appropriate balance between simplification, flexibility, and legal certainty. Such a balance will need to be pursued during negotiations at the European level in order to fully realise the value of a measure that has the potential to reshape the business ecosystem in the coming years. Further aspects requiring clarification include the impact of the initiative on directors’ liability and on the functioning of companies’ supervisory bodies. To date, the chambers of commerce — and Unioncamere in particular — have maintained a quite neutral stance with respect to the proposed initiative. 

However, for all its potential, the transition to a new European corporate framework will be complex. Key considerations — including legal structuring decisions, auditing layers, directors' liability, employment law implications and integration into existing organisational models — are areas in respect of which there exists, at least in Italy, a complex stratification of legislation, regulatory interventions and judicial as well as scholarly interpretation. These matters will require careful planning and thorough preparation.

Filippo Federici
Paolo Gallarati
Marie Hindré
Markus Linnartz
Dr Christian Osbahr
Fabien Pouchot

^{1 Confindustria Giovani is the youth organisation of Confindustria, the main association representing Italian manufacturing and services companies which represents one the most interested „target“ of this EU initiative.}

I. Overview and background: a long road to a common framework

On 26 March 2026, the European Parliament formally adopted the European Union’s first comprehensive anti-corruption directive — a landmark piece of criminal legislation that closes one of the most glaring gaps in the EU’s legal architecture (hereinafter, the “Directive”). The text was approved by 581 votes in favour, 21 against, and 42 abstentions, and had been provisionally agreed with the Council in December 2025 (1).

The context underscoring the urgency of this intervention is striking. According to a 2025 Eurobarometer, 69% of Europeans believe corruption to be widespread in their country, and 66% consider efforts against high-level corruption to be insufficient (1). Earlier EPRS studies estimated the total cost of corruption risk in EU public procurement alone at €29.6 billion between 2016 and 2021, with an additional €4.3 billion attributable to contracts involving EU funds. More broadly, Europol has reported that 71% of the most threatening criminal networks active in the EU use corruption to facilitate their activities or obstruct justice (2).

The path to the directive began on 3 May 2023, when the European Commission tabled an anti-corruption legislative package based on Article 83 TFEU — the provision empowering Parliament and the Council to establish minimum rules on criminal offences and sanctions in areas of particularly serious cross-border crime (1). The proposal followed calls by the European Parliament for EU-wide harmonisation of corruption offences and was shaped by the EU Security Union Strategy (2020–2025) and the EU Strategy to Tackle Organised Crime (2021–2025), which had tasked the Commission with assessing whether existing rules were adequate to address evolving criminal practices.

The pre-existing framework was acknowledged as fragmented. It consisted principally of Council Framework Decision 2003/568/JHA on private-sector corruption, a 1997 Convention on corruption involving EU officials, and the PIF Directive (2017/1371) (2). A 2023 external study mandated by the European Commission confirmed that “the lack of a coherent European framework including provisions for all corruption-related crimes identified by international standards” constituted “a source for legislative and operational challenges in tackling cross-border corruption cases” (3). The Commission’s own questionnaires to Member States revealed wide divergence: definitions differed substantially, certain UNCAC-mandated offences were absent from national legislation, and limitation periods varied significantly (3).

Following the Commission proposal, the LIBE Committee of the European Parliament adopted its report in January 2024 with near-unanimous support. The Council agreed its general approach in June 2024, and trilogue negotiations concluded with a provisional agreement in December 2025. The Parliament gave its final endorsement on 26 March 2026 (4).

II. Key provisions and criminal offences

The Directive (5) establishes a catalogue of corruption-related offences that Member States are required to criminalise if committed intentionally. These include (Articles 3 to 11):

1. Public-sector bribery (active and passive): promising, offering, or granting an undue advantage to a public official, or a public official soliciting or accepting such an advantage, to perform or abstain from an act in the exercise of their functions;

2. Private-sector bribery (active and passive): the same conduct involving directors or employees of private entities, acting in breach of their professional duties within the context of economic or commercial activities;

3. Misappropriation: the use by a public official of assets entrusted to their management for a purpose other than that intended, to their benefit or that of a third party, or to the detriment of the relevant public or private entity;

4. Trading in influence: promising or granting an advantage to any person to exercise improper influence on a public official, irrespective of whether the influence was actually exerted or produced the intended result;

5. Unlawful exercise of public functions: intentional serious violations of the law committed by a public official in the exercise of their functions;

6. Obstruction of justice: use of violence, threats, or inducements to interfere with testimony, evidence, or the official functions of judicial or law-enforcement officers in proceedings related to corruption offences;

7. Enrichment from corruption offences: acquisition, possession, or use of assets by a public official in the knowledge that those assets derive from corruption offences committed by another public official;

8. Concealment: intentional disguise or concealment of the nature, origin, or movement of assets derived from the above offences.

9. Incitement, aiding and abetting, and attempt are also covered.

The Directive (Article 2) defines key concepts including “public official” (covering EU and national officials, persons performing public service functions, and officials of international organisations), as well as “high-level official” — a category encompassing heads of government, ministers, members of parliament, constitutional and supreme court judges, prosecutors-general, and members of the European Commission and European Parliament.

Member States retain the right to adopt stricter standards, seeing as the Directive establishes only minimum rules.

Sanctions for natural persons (Article 12) are tiered according to the gravity of the offence: a minimum maximum penalty of five years’ imprisonment for public-sector bribery where the official’s act constitutes a breach of duty; at least four years for misappropriation, enrichment from corruption, and concealment; and at least three years for other offences, including private-sector bribery and trading in influence. Additional penalties may include fines, removal from public office, temporary disqualification from standing for election, exclusion from public procurement, and revocation of licences.

The Directive (Article 19) also harmonises limitation periods, requiring at least eight years from the commission of offences punishable by a maximum of at least four years’ imprisonment, and at least five years for less serious offences, with reduced minimum periods permissible only where interruption or suspension mechanisms exist.

Prevention obligations (Article 20 and following) require Member States to adopt national anti-corruption strategies, establish independent anti-corruption bodies, introduce asset disclosure mechanisms for public officials, regulate conflicts of interest and “revolving doors”, and conduct periodic risk assessments by sector. Whistleblower protection under Directive (EU) 2019/1937 is expressly extended to reports of corruption offences under this Directive (Article 25). Enhanced cooperation between national authorities and EU bodies — including OLAF, Eurojust, Europol, and the EPPO — is also mandated (Article 32).

III. Sanctions for legal persons: the turnover-based fine model and its broader context

One of the most significant innovations of the Directive lies in its approach to the liability and sanctioning of legal persons. Member States must ensure that companies can be held liable for corruption offences committed for their benefit by persons in a leading position, or where inadequate supervision by such persons enabled the commission of the offence (Article 13).

Sanctions must be effective, proportionate, and dissuasive. Beyond fines, they may include exclusion from public procurement, suspension from business activities, judicial winding-up, and publication of the judgment (Article 14).

The headline provision, however, concerns the calibration of pecuniary sanctions. For the most serious offences — public-sector bribery, private-sector bribery, and misappropriation (Articles 3 to 5) — the maximum fine must reach at least 5% of the legal person’s total worldwide annual turnover in the preceding financial year, or alternatively €40 million in absolute terms. For trading in influence, obstruction of justice, and enrichment from corruption (Articles 6, 8, 9), the threshold is set at 3% of global turnover or €24 million.

This turnover-based mechanism represents a structural break from the traditional Italian framework under Legislative Decree 8 June 2001, no. 231 (hereinafter, the “231 Decree”), which determines corporate sanctions through a “quotas” system: the judge fixes the number of units (quote) — between 100 and 1,000 — and the monetary value of each unit — between €258 and €1,549 — resulting in a maximum fine of approximately €1.55 million for corruption offences under Article 25 of the 231 Decree (6). While this system allows for a degree of judicial discretion calibrated to the gravity of the offence and the entity’s degree of responsibility, it was not designed to scale with the actual size or financial capacity of large multinationals.

The turnover-based model, by contrast, ensures that the sanction bears a direct and proportionate relationship to the economic weight of the offending entity — a principle that resonates with the regulatory logic already adopted in other European instruments. Most notably, Legislative Decree 30 December 2025, no. 211 — the Italian Decree implementing Directive (EU) 2024/1226 on criminal penalties for violations of EU restrictive measures — introduced a new Article 25-octies.2 into the 231 Decree, expressly providing for fines calculated as a percentage of the global annual turnover of the offending entity (7). Under that regime, fines range from 1% to 5% of global turnover for the most serious violations (or €3 million to €40 million where turnover cannot be determined), and from 0.5% to 1% for less serious ones (or €1 million to €8 million as an alternative).

The EU anti-corruption Directive now introduces a parallel and closely analogous structure. The alignment between the two instruments is deliberate: both reflect the EU legislator’s evolving preference for sanctions that penalise conduct in proportion to the economic capacity of the offender, thereby addressing the risk that fixed-sum fines may be absorbed as a ‘cost of doing business’ by large corporations. The same philosophy underpins the GDPR (fines up to 4% of global annual turnover), the Digital Markets Act, and various other EU sectoral regulations.

From an Italian implementation standpoint, the transposition of the Directive will require to amend Article 25 of the 231 Decree, which currently governs corporate liability for corruption-related offences. The existing quota-based system will need to be either replaced or supplemented by a turnover-referencing mechanism to achieve compliance with the Directive’s minimum standards. 

From a corporate compliance perspective, the said directives make it critical for companies to promptly recalibrate their trade compliance and anti-bribery and corruption (ABAC) frameworks. The shift to turnover-based corporate fines  substantially increases the (also, financial) exposure attached to corruption risks and makes “static” control systems harder to defend as effective. In practical terms, this calls for an immediate refresh of risk assessments (including sectoral and geographic corruption risks, public-touchpoints, and third-party channels), tighter third‑party due diligence and ongoing monitoring, strengthened controls over gifts/hospitality, sponsorships, facilitation-risk, and conflicts of interest (including revolving-door scenarios), and testing of reporting/escalation mechanisms (also in light of the Directive’s express linkage to the EU whistleblowing framework). 

For Italian entities subject to the 231 Decree, transposition will likely require a targeted update of the so-called Model 231 (compliance program). Companies that treat the Directive as a “legislative update” rather than a compliance redesign risk finding that their Model 231 is no longer viewed as adequately implemented or effective when scrutinized by prosecutors and courts.

The Directive now awaits formal adoption by the Council of the EU, after which it will enter into force 20 days following publication in the Official Journal of the European Union (1). Member States will have between 24 and 36 months from entry into force (depending on the obligations concerned) to transpose the Directive.

Bibliography

(1) europarl.europa.eu/news/en/press-room/20260323IPR38831/parliament-greenlights-eu-anti-corruption-rules

(2) EPRS_BRI(2024)762406_EN.pdf, P. 2

(3) EPRS_BRI(2024)762406_EN.pdf, P. 5

(4) https://www.europarl.europa.eu/legislative-train/theme-a-new-era-for-european-defence-and-security/file-directive-on-combating-corruption

(5) https://www.europarl.europa.eu/doceo/document/TA-10-2026-0094_EN.html

(6)  https://www.normattiva.it/uri-res/N2Ls?urn:nir:stato:decreto.legislativo:2001-06-08;231

(7) www.normattiva.it/uri-res/N2Ls=

The Problem

Generative AI systems are trained on vast quantities of content gathered from the internet without authorisation and without compensation for those who produced it. The result, according to the European Parliament, is that authors find themselves competing in the market with systems trained on their own content, without having been asked for consent or receiving any compensation. This dynamic raises significant issues both in terms of authors' individual rights and the economic sustainability of the European cultural sector as a whole.

Measures Requested of the Commission

Transparency. AI providers should provide a detailed list of the protected content used in training — an obligation based on the principle of sufficient disclosure: the disclosure must be sufficiently detailed to allow rights holders to verify whether and how their content has been used. This measure builds on the provisions of the AI Act for GPAI models, which requires the publication of summaries of training data, whilst going a step further towards a significantly higher level of detail.

No geographical loopholes. An AI system that uses protected content outside the EU should not be marketed in the European market. This principle reflects the extraterritorial approach already adopted by the AI Act, which applies to all systems placed on the European market regardless of where they were developed.

Traceable crawlers. Those who collect data from the web should be identifiable by website operators and should keep detailed records of their activities.

Digital watermarks. Rights holders would be able to mark their content; AI providers would be obliged to keep watermarks intact and to offer tools to detect them. This issue intersects with the provisions of the AI Act on the labelling of synthetic content and the automated detection of deepfakes.

Right of exclusion. The Parliament proposes that rights holders should be able to exclude their content from model training, using standardised formats managed by the EUIPO. This would constitute an operational strengthening of the opt-out mechanism already provided for in the Digital Single Market (DSM) Directive, which the AI Act refers to but does not regulate in detail.

Collective licences. The EUIPO could coordinate a sector-specific licensing system. For content already used without authorisation, fair and proportionate transitional remuneration is envisaged.

Labelling. The proposal suggests introducing an obligation to distinguish content "generated by AI" from that "produced by a human being", with a code of good practice to be drawn up by the Commission — in line with the transparency obligations already introduced by the AI Act for systems that generate synthetic content or interact directly with users.

A Fundamental Principle

Content protection should remain anchored to human authorship: content generated entirely by AI would not be protectable and would remain in the public domain.

Why It Matters Now

Read alongside the AI Act, the resolution contributes to shaping a regulatory mosaic still under construction. The AI Act laid the foundations — transparency obligations, risk management, model governance — but deferred the issue of content protection to subsequent developments. This resolution indicates the form those developments might take. For those working in the cultural or technology sectors, now may be the time to assess their practices in light of a regulatory framework which, between existing obligations and measures still being defined, appears set to evolve significantly in the years ahead.

On 17 February 2026, the European Commission opened formal proceedings against Shein, designated as a Very Large Online Platform (VLOP) under the Digital Services Act (DSA). The initiative falls within the framework of the supervisory powers conferred on the Commission to verify compliance with the obligations imposed on large digital platforms, in particular with regard to the circulation of illegal and counterfeit products within online marketplaces. Among the issues under examination is the possible presence on the platform of goods infringing intellectual property rights, including trade marks, designs and copyright. Shein was formally designated as a VLOP by the European Commission in October 2023.

2. DSA Obligations Concerning Illegal Products and IPR

The Digital Services Act introduces a system of responsibility and due diligence for online platforms, directly affecting the circulation of counterfeit products as well. The DSA replaces the previous intermediary liability regime established by the E-Commerce Directive (2000/31/EC), significantly strengthening the obligations placed on platforms.

The most relevant obligations include:

a) Notice-and-action mechanisms (Art. 16 DSA): platforms must establish systems enabling rights holders to easily report illegal content or products, including items that infringe intellectual property rights. The system must be easily accessible, equipped with a direct electronic channel, and capable of allowing sufficiently precise reports. The platform is required to communicate its decision to the reporting party, with an obligation to provide reasons in the event of a refusal.

b) Trader traceability (Art. 30 DSA): marketplaces must collect and verify information on professional sellers operating on the platform — including business name, VAT number and bank details — in accordance with the "Know Your Business Customer" (KYBC) principle, with a view to reducing the presence of operators selling counterfeit products. Sellers who have not provided the required information or whose verification has failed may not operate on the platform.

c) Enhanced obligations for VLOPs (Arts. 34–35 DSA): very large online platforms must: i) assess systemic risks, including the spread of illegal products, on an annual basis; ii) adopt mitigation measures, such as more effective control systems and enhanced moderation; iii) undergo independent audits of compliance with the measures adopted (Art. 37 DSA).

d) Transparency and data access: VLOPs must provide information on how their systems operate and on the measures taken to counter illegal content and products, as well as share data with the Commission and authorised researchers (Arts. 40–42 DSA).

3. The Focus of the Investigation: Counterfeit Products

With specific regard to Shein's activity as a third-party marketplace, the Commission's investigation concerns in particular the possible inadequacy of the measures adopted by the platform to: prevent third-party sellers from selling products that infringe registered trade marks or designs; promptly remove items reported as counterfeit through notice-and-action mechanisms; ensure the traceability and proper identification of third-party sellers pursuant to Art. 30 DSA.

In this context, the DSA serves as a complementary instrument to traditional IP rights enforcement, since it does not target the individual act of counterfeiting carried out by the third-party seller, but rather the governance of the platform that enabled the commercialisation of such goods.

4. Possible Consequences of the Investigation

Should the Commission find violations of the Digital Services Act, it could impose:

• corrective measures to strengthen the platform's control systems (modification of notice-and-action systems, enhanced seller verification, periodic reporting obligations);

• fines of up to 6% of the company's annual global turnover (Art. 74 DSA);

• periodic penalty payments of up to 5% of average daily turnover for each day of non-compliance;

• in cases of serious and repeated infringement, interim measures and, as a last resort, temporary suspension of access to the service in the EU (Art. 76 DSA).

   

5. Conclusions

The investigation into Shein provides a significant opportunity to reflect on the role that the Digital Services Act may play, indirectly, in the enforcement of intellectual property rights in the digital economy.

The DSA strengthens the procedural responsibility of online platforms, imposing more stringent due diligence obligations in the management of potentially counterfeit products. This represents a step forward compared to the previous regime, but it does not eliminate the structural difficulties of IP enforcement in the digital context: the fragmentation of supply chains, the speed with which dishonest sellers reconstitute themselves under new identities, and the complexity of verification at a global scale remain open challenges.

For rights holders, the mechanisms introduced by the DSA — in particular notice-and-action and trader traceability — offer additional protective tools, which complement rather than replace traditional IP remedies. The practical effectiveness of these tools will depend, however, on actual implementation by platforms and on the rigour with which the Commission exercises its supervisory powers.

The outcome of the investigation into Shein will provide valuable guidance on the practical scope of the DSA in this area, but it is premature to regard it as a consolidated model: this is one of the first enforcement cases against a VLOP, and regulatory practice is still taking shape.

In Germany, this will be part of the updated German Civil Code (Section 356a) and take effect on 19 June 2026.

To whom does the obligation apply?

The withdrawal button requirement covers almost all online sales to consumers. The obligation applies regardless of whether the consumer purchases goods, digital content or services (including financial services). Exceptions apply only in cases where there is no right of withdrawal. Smaller businesses are not granted any special exemptions.

What are the requirements for the withdrawal button?

The legal requirements for the withdrawal button (or, as the lawmaker puts it, the withdrawal function) are quite specific:

First, there must be a clearly visible button labeled "Withdraw from contract here" (or equivalent wording). (The German law does not require the word “here”, contrary to the underlying EU directive). The button must be easily accessible, and available throughout the entire withdrawal period.

In a next step, the consumer must provide essential information to identify the contract:

1. The consumer's name,
2. Details identifying the contract (or specific part) they want to withdraw from,
3. Details regarding confirmation of receipt.

Then, there must be a ‘confirmation button’ clearly labeled "Confirm withdrawal" or similar and equally clear.

Finally, businesses must immediately send the consumer a confirmation of receipt via e-mail (or other permanent record).

EU Withdrawal Button vs. German Cancellation Button (Kündigungsbutton)

Companies offering subscriptions or ongoing services online in Germany might think this sounds familiar. You're right – it's similar to the cancellation button that's been required in Germany since July 2022 (Section 312k German Civil Code). However, unlike the withdrawal button, the cancellation button is not a requirement under EU law but German-specific. Even if a cancellation button has already been implemented, the requirement to provide a withdrawal button still applies. The legal consequences are also different: Cancellation (for instance, via the cancellation button) terminates the contract for the future, whereas in the case of withdrawal, the services already provided must (in principle, at least) be reversed.

Practical Information

19 June 2026 is less than three months away. Companies should move quickly to implement the withdrawal button if they haven't already initiated the process. Beyond the technical requirements, you'll also need to update your withdrawal policy and possibly your privacy policy. Non-compliance will almost certainly trigger warnings from competitors or consumer protection associations. Experience with the cancellation button (and other consumer laws) shows that consumer protection associations send out warnings shortly after new policies take effect and sometimes even provide consumers with ready-made reporting forms. 

If you don't respond to such warnings within a few days, this can lead to interim injunctions or other legal action. Additionally, incorrect withdrawal policy information can prevent the withdrawal period from starting, meaning it won't expire until 12 months and 14 days have passed. Fines may also be imposed in some cases, though experience shows the risk of monetary fines is low in the beginning after a new regulation takes effect.

Beyond that, e-commerce law is constantly evolving. Businesses should monitor other regulatory developments: additional information requirements (such as durability guarantees) and legally required warranty labels. The Digital Fairness Act also promises to further strengthen consumer protection.

Daniel Trunk

welcome to the March issue of ADVANT Beiten's International Briefing.

To understand what drives business success in Europe and what general counsel expect from in-house teams, external advisers, and European policymakers, ADVANT recently launched a research project to create “ADVANT Special Report: Europe’s opportunity outlook”. We surveyed 800 GCs across France, Germany, Italy, and the US, supported by interviews with senior legal leaders. The findings reveal companies’ views on Europe’s key opportunities and challenges in today’s complex economic and geopolitical climate and offer candid insights into what works well in the European legal and regulatory framework, and where improvement is needed. The results are clear: Europe remains highly attractive for investment, with 87% of US GCs viewing it as a key market for growth. If you or your clients are looking to follow this trend and take advantage of the opportunities Europe offers, ADVANT stands ready as your one‑stop shop for all Europe‑related projects.

In this issue we will also highlight interesting developments in the European and German legal landscape, invite you to meet us at international events, and tell you about our recent deals.

You can find the newsletter by following this LINK

Kind regards,

Dr Barbara Mayer
Prof Dr Hans-Josef Vogel
Dr Christian von Wistinghausen
Moritz Kopp

When it comes to distributing products to Indian customers on the ground, German manufacturers - as always - face the choice: make or buy. While the FTA substantially enhances India’s appeal as a strategic manufacturing base - by lowering trade barriers and deepening opportunities for supply‑chain integration, thereby offering European manufacturers commercially compelling pathway to leverage the “Make in India” ecosystem - alternate lighter entry models like distributorship arrangements provide a prudent initial step. It enables manufacturers to commercially assess the Indian consumer market, understand demand dynamics, and calibrate their long‑term investment strategy before committing to on‑ground manufacturing operations. 

European manufacturers can handle distribution themselves, from their home country, to access the Indian market, build distribution networks, and assess commercial viability without the immediate complexity of setting up a full-fledged local entity. They can also establish subsidiaries, branch or liaison offices in India. While establishing a subsidiary, branch or liaison office offers greater operational control and closer supervision over market activities, it typically involves regulatory approvals, compliance with foreign investment and corporate governance requirements, and the need to build local management and operational infrastructure. 

For distributorship, European manufacturers can appoint local companies as distribution intermediaries who know the market. In this context, it is possible for the European manufacturer to agree with its contractual partner in India either that its own (e.g. German) law applies or that Indian law applies. If the contract so provides, the contractual relationships are in principle subject to the same legal rules that would apply if the products were distributed in Germany. Or better still: Section 92c of the German Commercial Code (HGB) grants manufacturers who appoint commercial agents or distributors outside the European Economic Area greater contractual freedom than usual. In such cases, it is possible to deviate from all mandatory provisions of Sections 84 et seq. HGB - at least in the case of individually negotiated contracts. For example, the statutory minimum notice periods do not necessarily apply, and the goodwill indemnity under Section 89b HGB may be excluded or modified. 

Alternatively, the parties may decide that Indian distribution law shall apply. In that case, however, European manufacturers are well advised to seek advice from Indian lawyers regarding local regulatory environment.

While the parties may designate either German or Indian law as the governing law for their distribution arrangement, they retain full autonomy to structure, negotiate, and document a sophisticated cross‑border commercial relationship for commercial flexibility. However, in the Indian context – where no dedicated statute regulates distribution relationships – the practical commercial landscape necessitates the incorporation of appropriate contractual and regulatory safeguards. These safeguards must ensure a durable and compliant business presence in India, operating within the framework of the Indian Contract Act, 1872, and aligned with the on‑ground regulatory realities of the Indian market.

India’s exchange control regime is generally business‑friendly, allowing cross‑border payments such as distributorship fees, commissions, and royalties through established regulatory channels. However, the agreement must still be drafted with care so that its commercial structure and incentive mechanisms do not raise concerns under any Indian law. A clear, balanced, and well‑structured arrangement will support the parties’ commercial objectives while remaining comfortably within India’s regulatory boundaries.

India does not curtail commercial freedom in distribution arrangements; rather, it channels that freedom through a structured compliance framework. For any end‑product to lawfully enter and circulate within the Indian market, European manufacturers must comply with certain mandatory obligations such as certification standards, quality‑control approvals, labelling rules, and sector‑specific registrations. These requirements do not restrict the parties’ commercial choices; they simply ensure that products meet India’s consumer‑protection and regulatory expectations. For European manufacturers, careful structuring at the outset will ensure that commercial flexibility is harmonized with India’s mandatory regulatory environment. Success in India therefore demands both commercial foresight and regulatory discipline.

It is also important to agree that any disputes shall be decided by an arbitral tribunal. By contrast, agreeing on German jurisdiction would have the disadvantage that enforcement of a German court judgment - while theoretically possible - would require a very time-consuming recognition procedure in India, which would, among other things, necessitate bringing a new action. Enforcement of a foreign arbitral award in India is easier, as India (like, for example, Germany) is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Under this Convention, all signatory states have undertaken to enforce foreign arbitral awards within their territory without a renewed, full review of the merits.

India is an attractive enforcement jurisdiction owing to its distinctly pro‑enforcement stance toward foreign arbitral awards. Indian courts refrain from revisiting the merits or reopening factual findings, and the limited grounds for refusal are narrowly interpreted, with the burden placed squarely on the party resisting enforcement. Once enforceability is established, the award is treated as a decree of an Indian court to be executed against the opposite party in India without a fresh trial. For European manufacturers engaging Indian counterparties, this means that a well-drafted arbitration clause is a powerful risk management tool supported by an arbitration/enforcement‑friendly regime.

Oliver Korte
Sonil Singhania (Singhania & Partners LLP )
Jivesh Chandrayan (Singhania & Partners LLP)

Reform of the German Arbitration Law

On 27 January 2026, the German Federal Ministry of Justice presented a revised draft bill to modernize Germany's arbitration framework. While the 2026 version introduces two material modifications compared to the 2024 draft – notably with respect to Sections 55 and 1031 of the German Code of Civil Procedure (ZPO) (Modernisation of German Arbitration Law: Key Changes in the January 2026 Draft | ADVANT Beiten) – it retains the broader reform agenda already set out in 2024.
The overall objective of the reform remains unchanged: to strengthen Germany's position as a competitive place for arbitration, to further harmonize domestic arbitration law with prevailing international standards, and to enhance procedural efficiency in practice. To that end, the draft continues to provide for a number of structural adjustments, including the facilitation of digital proceedings, expressly permitting electronic awards and video hearings, and clearer rules on the publication of arbitral awards (subject to party consent). It also establishes a narrowly tailored retrial mechanism beyond the ordinary set-aside period and clarifies key issues such as multi-party arbitrator appointments, enforcement of foreign interim measures, judicial review of jurisdictional decisions, and the admissibility of dissenting opinions. Collectively, these measures reflect the legislator's intention to modernize German arbitration law in light of international developments and technological process. 

Within this broader framework, the 2026 draft introduces targeted refinements. The revised version of Sec. 55 ZPO now permits reliance on the principle of lex fori and habitual residence of the party concerned, rather than requiring recourse to foreign nationality‑based capacity rules. This approach aligns procedural capacity with modern principles of private international law. 
A further improvement concerns the revised wording of Sec. 1031, Subsection 1 ZPO. Under the draft, arbitration agreements shall be concluded or documented in writing or by any other means of communication that allows the information to be stored. This amendment brings German Law more closely into line with international legal standards while preserving the flexibility required in contemporary commercial practice. 
Taken together, the reform – both in its unchanged core elements and its 2026 refinements – signals a clear policy direction: Germany aims not merely to update its arbitration law, but to position itself proactively within an increasingly competitive global arbitration landscape.

Court of Arbitration for Nazi-Looted Cultural Property: First Cases Underway

The newly established Court of Arbitration for Nazi-Looted Cultural Property began its work in December 2025. It serves as an alternative dispute resolution mechanism for addressing disagreements regarding the restitution of cultural property confiscated as a result of Nazi persecution. Claimants can trigger arbitration unilaterally if public institutions in Germany refuse to return items, utilizing a "standing offer" system. It handles cases of cultural property lost between 30 January 1933 and 8 May 1945 due to persecution on racial, political, religious, or ideological grounds. The court is administered by the German Lost Art Foundation (Deutsches Zentrum Kulturgutverluste) in Magdeburg, with the arbitration office located in Berlin. The panel consists of 36 arbitrators. Its framework was negotiated with the Jewish Claims Conference and the Central Council of Jews in Germany. This institution represents a major shift in Germany's approach to restitution, aimed at providing legal certainty for both claimants and public holders of art. Something which is obviously well appreciated, given that as of February 18, 2026, already two cases have been brought before this institution.

Germany's Commercial Courts

The recent introduction of Commercial Courts in Germany, as part of the broader reform efforts surrounding German arbitration law, cannot be viewed in isolation from developments in arbitration. For decades, arbitration has been the preferred mechanism for resolving complex cross-border commercial or M&A disputes, largely due to its flexibility, international enforceability, specialized decision-makers, and the possibility of conducting proceedings in English. These advantages have increasingly shaped the expectations of multinational companies regarding dispute resolution.
Against this backdrop, the establishment of Commercial Courts represents a deliberate legislative response. By incorporating features traditionally associated with arbitration – such as English-language proceedings, procedural flexibility, specialized senates, and virtual hearings – the German legislator has sought to enhance the competitiveness of its state court system. In doing so, Germany positions its Commercial Courts not as a replacement for arbitration, but as a complementary and, in some cases, competitive alternative within the broader dispute resolution landscape.
Proceedings before Commercial Courts may be conducted in English at the level of certain Higher Regional Courts – a notable innovation within the German judicial system. 
The courts operate through specialized senates, with subject-matter expertise varying by federal state. For instance, two senates at the Hanseatic Higher Regional Court hear commercial disputes with an amount in dispute of EUR 500,000.00 or more, covering areas such as corporate law, post-M&A, banking and insurance law, transport, and shipping. Proceedings may be conducted virtually and offer enhanced confidentiality as well as verbatim transcripts – features traditionally associated with arbitration.
It is therefore unsurprising that the new Commercial Courts have been well received and are widely regarded as a success. Initial experiences suggest that both the Commercial Court and the Commercial Chambers established at certain Regional Courts, such as the Regional Court of Frankfurt am Main, are committed to conducting proceedings efficiently and resolving disputes significantly faster than is typically the case before state courts. 

AI-bitration

The rapid advancement of artificial intelligence has also reached the field of arbitration, bringing significant new developments. AI is increasingly influencing arbitral proceedings by offering transformative tools that promise greater efficiency and enhanced analytical capabilities. While it remains widely accepted that decision-making must rest with human arbitrators, AI's expanding capacity for analysis, interpretation, and drafting raises complex legal, ethical, and practical questions. 
A central issue for arbitral tribunals is whether, and to what extent, arbitration rules permit the use of AI – particularly given that neither international treaties nor most national arbitration laws expressly regulate its deployment. In the absence of legal provisions, parties and tribunals frequently look to institutional guidance. However, such guidance remains in an early stage of development. Examples include the 2024 Guidelines of the Silicon Valley Arbitration & Mediation Center, the SCC's 2024 Guide, and the CIArb's 2025 Guideline. Most recently the American Arbitration Association published its AI Arbitrator focusing on documents-only construction disputes. However, a real arbitrator remains involved and decisive in this procedure.
These initiatives seek to promote the responsible and effective use of AI in arbitration. Yet the existing guidelines remain deliberately broad and preliminary, while technological innovation continues to evolve at remarkable speed. Looking ahead to 2026, the growing relevance of AI in dispute resolution is likely to prompt further institutional guidelines and frameworks. As practical experience accumulates, existing guidelines will be tested, adjusted, and developed further to ensure that arbitral proceedings remain both technologically advanced and firmly anchored in fundamental principles of due process and fairness.

New Arbitration Laws and Rules

Across Asia, 2026, marks a year of significant regulatory reforms. China has introduced comprehensive amendments to its Arbitration Law, effective 1 March 2026. The reform constitutes a strategic step toward modernizing the domestic arbitration framework and further aligning the regime for foreign-related arbitration with international practice. Notable innovations include the nationwide introduction of ad-hoc arbitration, improvements to the recognition and enforcement of foreign arbitral awards, and the incorporation of additional internationally recognized key concepts, including a clearer statutory recognition of the separability of arbitration agreements and enhanced tribunal authority to rule on its own jurisdiction (Kompetenz-Kompetenz) – widely regarded as meaningful progress.
Pursuing a comparable objective of strengthening procedural governance and aligning its framework with internationally recognized best practices, the Asian International Arbitration Centre (AIAC) has introduced the AIAC Suite of Rules 2026. Effective from 1 January 2026, the suite comprises six new or revised sets of rules and guidelines. Key changes include an expanded scope of application, a clarification of party obligations, adjustments to procedural requirements, mandatory disclosure of third-party funding, and revisions concerning arbitrator conduct and tribunal powers.
In Korea, the 2026 version of the KCAB Rules has entered into force. Among the most notable developments are the establishment of the KCAB International Arbitration Court, the introduction of differentiated procedural tracks designed to enhance efficiency, the expansion of virtual proceedings, and the formal recognition of remote hearings.
From a European perspective, the ongoing reform of French arbitration law also merits close attention. The reform, expected to be finalized by autumn 2026, envisaged the codification of a unified and modern Arbitration Code aimed at harmonizing the legal framework and further consolidating France's position as a leading place of arbitration.

Dr. Ralf Hafner
Oliver Korte
Dr. Tobias Pörnbacher

Ruling

Article 25 (1) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that a third party, as the assignee of a claim for damages arising from the non-performance of a contract containing a jurisdiction clause, may rely on that clause vis-à-vis the original contracting party, as the assigned debtor of that claim, under the same conditions as those under which the other original party to the contract could have relied on that clause against that debtor, for the purposes of an action for recovery of that claim and without the consent of that debtor, in a situation where, in accordance with the national law applicable to that contract, as interpreted by the national case-law, an assignment of a claim entails a transfer, to the assignee’s assets, not only of the right of claim, but also of the rights attached to that claim, including the right to rely on the application of an agreement conferring jurisdiction set out in that contract, unless the original parties to the contract have expressly agreed that that clause cannot be relied on against them in the event of assignment, to a third party, of a claim arising from that contract.

CJEU, decision of v. 23 October 2025 – C-682/23 – Prorogation de compétence

Facts

E.B. and E. PL., two companies incorporated under Polish law, entered into two contracts on 24 March and 24 July 2017. The first concerned the preparation of a plot of land for the construction of a new wood products factory in Poland. The second governed the performance of construction work for that factory. On 4 March 2017 E. PL. concluded a subcontracting agreement with E. S.A., a company incorporated under Romanian law. On 10 July 2017, the latter in turn concluded a subcontracting agreement with K.P., a company incorporated under Polish law ("Subcontracting Agreement"). The Subcontracting Agreement contains a jurisdiction
clause stating that "any disputes shall be settled by the court having jurisdiction over the registered office of the contracting party" ("Jurisdiction Clause"), without defining the term "contracting party" in more detail. All the agreements are governed by Polish law.

By an assignment of claim agreement dated 16 December 2021, concluded with the participation of E. PL., E. S.A. assigned a claim for damages to E.B. ("Claim"). This Claim was said to result from K.P.'s failure to fulfil its obligations under the subcontractor agreement.

On 21 December 2021, E.B. brought an action against K.P. before the Tribunalul Specializat Cluj (Romania) for payment of the Claim including default interest. To justify jurisdiction, E.B. invoked the jurisdiction clause in the Subcontracting Agreement. It assumed that the local (Romanian) court had jurisdiction due to the
registered office of E. S.A.

According to K.P., Art. 7 No. 2 of the Brussels Ia Regulation is applicable to tortious claims. As the damage occurred in Poland, the Polish courts should have jurisdiction. In K.P.’s view, E.B. could not invoke the jurisdiction clause as a third party for contractual claims.

In its judgment of 19 December 2022, the Tribunalul Specializat Cluj dismissed the action due to an assumed lack of jurisdiction. E.B. lodged an appeal against this judgment with the Curtea de Apel Cluj on 11 April 2023. E.B. is of the opinion that the assignee's consent to a jurisdiction clause, regardless of when it was given, would be sufficient to establish its validity vis-à-vis the debtor. The latter would already have consented to it when the contract was concluded. Renewed consent would therefore not be necessary. In such a case, the national court designated by the jurisdiction clause would no longer have to examine whether the assignee had assumed the rights and obligations of the assignor.

K.P. counters that a jurisdiction clause would have effect only between the original contracting parties. Due to its personal contractual nature, it could not be invoked against third parties. Furthermore, Art. 25 of the Brussels Ia Regulation would have to be interpreted narrowly. Therefore, the existence of a jurisdiction agreement would always have to be determined between the parties to the proceedings themselves. The referring court points out that, in the present case, E.B., as the assignee of the claim for damages, is relying on the jurisdiction clause and is thus exercising a right linked to the Subcontracting Agreement which it wishes to assert against K.P. as the debtor of the assigned claim. On the other hand, however, as the assignee of only this individual claim, E.B. would not have assumed all of E. S.A.'s rights and obligations under the contract.

Furthermore, under Polish law, on which E.B. relies, the assignment of a claim would not only lead to the transfer of the claim to the assignee's assets, but also to the transfer of the rights associated with it, including the right to invoke the application of a jurisdiction agreement contained in the contract. However, the assignment of the claim would not mean that the obligations which the assignor has entered into vis-àvis the debtor of the assigned claim would be transferred to the assignee.

In those circumstances, the Curtea de Apel Cluj (Court of Appeal, Cluj) decided to stay the proceedings and to refer the following questions to the European Court of Justice for a preliminary ruling:

(1) Can Article 25 of [the Brussels Ia Regulation] be interpreted as conferring on the assignee of a claim arising from a contract [for the performance of works] the right to enforce the jurisdiction clause in that contract against the original party to the contract, if the assignment contract has, in accordance with the national law applicable to the substance of the dispute, transferred the claim and its ancillary rights, but not the obligations arising from the contract?

(2) In a case such as the one described above, is the opposition of the party that agreed to the jurisdiction clause, against whom the action is brought, relevant for the purpose of determining which court has jurisdiction? In addition, is a new consensus required from that party, prior to or concomitant with bringing a legal action, in order for the third-party assignee to be entitled to rely on the jurisdiction clause?

Grounds

30 [The first sentence of Article 25 (1) of the Brussels Ia Regulation] does not specify whether a jurisdiction clause may be assigned, beyond the circle of the parties to a contract, to a third party, who is a party to a subsequent contract and successor, in whole or in part, to the rights and to the obligations of one of the parties to the initial contract (judgment of 25 April 2024, Maersk and Mapfre España, C-345/22 to C-347/22, EU:C:2024:349, paragraph 47 and the case-law cited) nor whether such a third party may rely on such a clause against one of those original parties. (…)

38 [The] objectives [of the Brussels Ia Regulation] could be jeopardised if the enforceability of a jurisdiction clause in the relationship between one of the original parties to the contract in which that clause appears and a third party to that contract depended on whether it is one of those original parties or that third party who first relies on it by bringing an action before the designated court, which would be the case if that third party could not rely on that clause vis-à-vis those original parties under the same conditions as those under which those original parties could, in accordance with the case-law referred to in paragraph 34 of the present judgment, rely on that clause against that third party.

39 It follows that, in a situation in which an original party to the contract containing a jurisdiction clause has not consented to that clause being relied on against it by a third party to that contract, that third party may nevertheless rely on that clause against that original party if that third party has succeeded to all the rights and obligations of the other original party to that contract. (…)

46 A dispute concerning the recovery of a claim for damages, on the basis of the liability of one of the original parties to the contract containing a jurisdiction clause, on account of an improper performance of that contract, does indeed arise from the legal relationship in connection with which that clause was agreed, with the result that that original party cannot be surprised to be sued before the court designated by that clause for the purposes of that recovery, even if that claim for compensation has been assigned to a third party to the contract. (…)

48 Consequently, it must be held that, in the event of assignment of a claim arising from a contract containing a jurisdiction clause, the assigned debtor, who is the original contractual partner of the assignor, must remain, in principle, bound by that clause.

49 The fact remains that, first, that original contractual partner must also not be placed in a less favourable situation as a result of that assignment of claim. In other words, that clause must be interpreted as preventing any situation in which that contractual partner could be sued before courts other than those before which the other original party to the contract could have brought proceedings under that clause. (…)

54 [Absent] of (…) an express agreement, in the event of assignment of a claim arising from a contract containing a jurisdiction clause, the assigned debtor, who is the original contractual partner of the assignor, must remain bound by that clause and cannot unilaterally oppose its application where the assignee of that claim brings proceedings, before the court designated under that clause, aimed at recovering that debt.

55 In the present case, E. S.A. and K.P., as the original parties to the subcontract in question, agreed, by means of the jurisdiction clause at issue, that the ‘court within whose jurisdiction the contracting party has its registered office’ would have jurisdiction to hear disputes arising from that contract, including as regards the claim for damages in question, arising from that contract. First, it is apparent from the order for reference that E.B., as the assignee of that claim, brought proceedings before the same court as that before which E. S.A could have brought proceedings under that clause if E. S.A. had not assigned that claim to E.B., with the result that K.P. does not appear to be placed in a less favourable situation as a result of that assignment. Second, it is not apparent from the file before the Court that those original parties agreed that, in the event of an assignment of a claim arising from the subcontract in question, that clause could not be relied on against them by the assignee. Therefore, subject to verification by the referring court, it appears that, in the context of the dispute in the main proceedings, E.B. is entitled to rely on that clause against K.P. in order to obtain recovery of the claim for damages in question.

56 In the light of all of the foregoing considerations, the answer to the questions referred is that Article 25 (1) of the Brussels Ia Regulation must be interpreted as meaning that a third party, as the assignee of a claim for damages arising from the non-performance of a contract containing a jurisdiction clause, may rely on that clause vis-à-vis the original contracting party, as the assigned debtor of that claim, under the same conditions as those under which the other original party to the contract could have relied on that clause against that debtor, for the purposes of an action for recovery of that claim and without the consent of that debtor, in a situation where, in accordance with the national law applicable to that contract, as interpreted by the national caselaw, an assignment of a claim entails a transfer, to the assignee’s assets, not only of the right of claim, but also of the rights attached to that claim, including the right to rely on the application of an agreement conferring jurisdiction set out in that contract, unless the original parties to the contract have expressly agreed that that clause cannot be relied on against them in the event of assignment, to a third party, of a claim arising from that contract.

Comments

1. The Sixth Chamber of the ECJ has decided that the assignee of a claim (in this case a claim for damages) has the right under Article 25 (1) of the Brussels Ia Regulation to invoke the jurisdiction clause agreed to in the original contract against the debtor. This also applies if the debtor has not again explicitly agreed to the clause. The decision ultimately strengthens legal certainty by increasing the predictability of the jurisdiction clause and is therefore welcomed.

2. The present decision further extends the rights of the assignee. In earlier cases (ECJ, judgment of 27 February 2025, Società Italiana Lastre, C-537/23, EU:C:2025:120, paragraph 34 and the case law cited therein = IWRZ 2025, 145 Anm. Fervers), the ECJ already emphasized that agreements on jurisdiction must be interpreted narrowly due to the exceptional nature of Article 25 of the Brussels Ia Regulation. Until now, the ECJ had merely decided that a jurisdiction agreement remains effective if a third party has expressly assumed all rights and obligations (see, ECJ, judgments of 21 May 2015, CDC Hydrogen Peroxide, C-352/13, EU:C:2015:335, BeckEuRS 2015, 477022, paragraph 65, and of 18 November 2020, Delay-Fix, C-519/19, EU:C:2020:933, BeckEuRS 2019, 665356, paragraph 47 and the case law cited therein).

3. However, the ECJ's decision could mean more work for courts. National courts must now carefully examine whether the assignee has acquired all rights in the present case and how the assignment has been contractually structured. This can only be done on a case-by-case basis.

4. The decision strengthens the rights of the assignee. In practice, when assigning a claim, it should be clearly specified in the contract which rights (not only in relation to jurisdiction clauses) are attached to the claim, particularly in the interests of the debtor as the original contracting party.

5. It might also be conceivable to transfer the reasoning behind the decision to the assignment in connection with arbitration clauses. According to Article 1 (2) (d) of the Brussels Ia Regulation, arbitration clauses do not fall within the scope of the Regulation. However, in its reasoning, the ECJ refers to the legal nature and the assertion of ancillary contractual rights by the assignee. Since arbitration clauses are generally considered to be ancillary contractual rights, it is not unreasonable to transfer the principles of the decision. Accordingly, the assignee can also invoke an arbitration clause in accordance with the principles laid down in the decision.

6. While, according to the prevailing view in German jurisprudence and legal scholarship, an arbitration clause is transferred to the assignee (see FCJ, judgment of 2 October 1997 – III ZR 2/96, NJW 1998, 371; Wolf/Eslami, in BeckOK, 58 ed. 9/2022, Sec. 1031 m.n. 10), it would benefit a unified legal understanding within the European Union if the ECJ, irrespective of the application of the Brussels Ia Regulation, would also apply these general principles to arbitration clauses as well.

Oliver Korte
Dr Tobias Pörnbacher

_{The article originally appeared in IWRZ 2026, p. 47 ff.}

Across the European Union (“EU”), the enforcement of restrictive measures has long been characterized by fragmentation. While sanctions are adopted at Union level, their implementation and enforcement remain the responsibility of Member States — resulting in a patchwork of divergent penalties, investigative approaches and ‘levels’ of enforcement.

Indeed, in some jurisdictions, breaches are treated merely as administrative violations; in others, they are prosecuted as criminal offences, often entailing imprisonment and/or corporate liability. This lack of uniformity has raised persistent concerns in Brussels, primarily because it encourages forum shopping by economic operators attempting to seek jurisdictions with softer enforcement. In this context, many called for deeper harmonisation, advocating for shared investigative standards and stronger cross-border coordination to close enforcement gaps.

Read the full document

Free Trade Agreement

The EU and India have concluded negotiations on a major new free trade zone. This was announced by EU Commission President Ursula von der Leyen and India's Prime Minister Narendra Modi in New Delhi.

The dismantling of trade barriers and tariffs is intended to boost the exchange of goods and services between the EU and India. The aim is to promote growth and jobs and at the same time reduce undesirable dependencies on other countries. 

Against the backdrop of the aggressive tariff and trade policy of the USA and China's increasing striving for power, the agreement is also considered a geopolitically significant step.

Which tariffs will be reduced or abolished?

The agreement paves the way for the opening of the Indian market, which has so far been very closed to companies from the EU, which is already the country's largest trading partner. Tariffs on more than 90 percent of EU exports to India will be abolished or reduced. For 30 percent of goods traded with the EU, tariffs will fall to zero. For example, most tariffs on industrial goods such as machinery, electrical equipment, chemicals and pharmaceuticals will be completely abolished. In addition, customs procedures are to be simplified. The EU said it is expected that the agreement will lead to a doubling of EU exports to India by 2032.

The European car industry will benefit in particular. India's car tariffs will fall from 110 to ten percent over five years. This applies under an annual quota of 250,000 vehicles and should significantly benefit Volkswagen, BMW, Mercedes-Benz and Renault. Also, for Italy, the agreement represents a particularly significant opportunity; the Italian automotive sector, with its premium and specialised brands, will surely benefit from the reduction of tariffs opening new growth prospects in the world's third-largest automotive market.

At the heart of the agreement is the agri-food sector, characterised by high levels of tariff protection in India, with average duties exceeding 36% and peaks of up to 150%. The agreement provides for a significant reduction in duties on numerous European products that are key to France, Italian and German exports: tariffs on wines will fall from 150% to 75% upon entry into force and subsequently to 20%; duties on olive oil will drop from 45% to 0% over five years; for processed agricultural products, such as pasta, biscuits and confectionery, duties of up to 50% will be eliminated.

For Italy, with its excellence in the agri-food sector, the agreement opens particularly favourable prospects. The abovementioned sectors represent the heart of Made in Italy agri-food and the reduction of tariff barriers could translate into a significant increase in Italian exports to a market of over 1.4 billion consumers, with a rapidly expanding middle class. 

What are the exceptions?

Agricultural products and cars from India are not affected by the tariff reduction. Beef, rice, sugar, dairy products and poultry are exempt from the agreement. EU food safety rules remain unchanged. In contrast to the postponed Mercosur agreement – the other major FTA that the EU wants to conclude – no protest from farmers is to be expected.

Where should cooperation be strengthened?

India is seeking better access to the EU's duty-free import quotas for steel. A decision on this is expected by June 30. Not only goods, but also services are affected by the agreement. The EU is opening more than 140 service sectors to India, and India is opening up almost 100 to the EU. The agreement also establishes binding rules on labour rights, environmental protection and women's empowerment. Digital trade rules are designed to support the economy while ensuring privacy and security.

Following the agreement on the new FTA, the EU and India also want to cooperate more closely in the areas of security and defence. Both sides agreed on a corresponding partnership in New Delhi. The aim should be projects in the areas of maritime security, counter-terrorism and cyber defence, the EU Commission announced.

Market with almost two billion people

Commission President von der Leyen said that the EU and India were making history today "and deepening the partnership between the world's largest democracies". A free trade zone with two billion people would be created, from which both sides would benefit economically. In addition, it sends a signal to the world that rules-based cooperation continues to deliver excellent results.

The agreement will not be as comprehensive as that of the EU with the Mercosur states. Given the size of the Indian market, it is nevertheless one of the largest that has been agreed so far.

Special attention from regulators will be required regarding the equivalence of standards and quality used for manufacturing products to be imported into the EU under this agreement, comparable to those imposed on competing EU-made products. Equivalence of rules regarding the free movement of goods enforced in the EU will also be necessary to ensure that EU producers are not disadvantaged by unfair or detrimental competitive conditions. For the same purposes, FSR rules will contribute to balancing the rights and obligations of non-EU manufacturers competing with EU producers.

India is the most populous country in the world with more than 1.45 billion inhabitants, ahead of China. Around 450 million people live in the EU. Together, the two sides represent nearly a quarter of the world's GDP and population.

The German-Indian trade volume was around 31 billion euros in 2024. Goods worth 17 billion euros were exported from Germany to India, from where goods worth 14 billion were imported. In the past ten years, the trading volume has almost doubled. In India, around 2,000 German companies are represented with subsidiaries that employ a total of more than 500,000 people.

Italy–India trade relations have also shown steady momentum in recent years. In 2024, bilateral trade amounted to approximately €14 billion, with Italian exports to India exceeding €5 billion and imports from India accounting for the remainder. Preliminary figures and official statements for 2025 confirm a broadly stable trade volume, with both governments emphasising the strategic importance of further deepening economic ties. The Italian Government has repeatedly highlighted India as a key partner in the Indo-Pacific region and has publicly supported the EU–India FTA as a crucial instrument to expand trade flows, enhance market access for Italian companies and foster long-term industrial and investment cooperation, with an explicit objective of significantly increasing bilateral trade volumes over the coming years.

What are the reactions?

In New Delhi, EU Commission President von der Leyen spoke of a signal to the world that rules-based cooperation continues to deliver excellent results. "The EU and India are making history today," the Commission President stressed. Indian Prime Minister Modi said the agreement opens up great opportunities for India's 1.4 billion people and people. Business representatives also praised the agreement. For example, Volkswagen CEO Blume said that India, as the world's third-largest automotive market, offers great opportunities.

It is likely to take some time before the agreement comes into force. The reason is that the text of the contract still has to be legally reviewed. It will then also need the approval of the Member States and the European Parliament.

German industry hopes for a speedy announcement of the agreement. This would be a real game-changer, said the head of foreign trade at the German Chamber of Industry and Commerce, Volker Treier. He added that it was important that market access was not prevented again through the back door with bureaucratic rules. "In order for companies to be able to use the agreement, the documentation of the origin of the goods must not contain any new documentation obligations."

Italian industry has also welcomed the conclusion of the EU–India FTA as a major strategic breakthrough. Confindustria described the closure of negotiations as “an extremely positive signal”. Italian business organisations have long been strong advocates of the FTA, emphasising that ambitious commercial policy and clear, high-standard rules can enhance competitiveness and strengthen supply-chain resilience for Italian firms. 

As far as France is concerned, the sectors most likely to benefit are the wine industry, which is suffering from declining domestic consumption, as well as the technology, automotive, and defense markets, which will benefit from expanded access to a rapidly growing Indian market. Sensitive agricultural sectors have also been protected, as mentioned above, which was essential for France. The full effects are expected to materialize over several years, with tariff reductions being implemented gradually.

ADVANT provides legal and tax advice to SMEs and has been supporting cross-border investments and M&A projects for many years. In recent years, India has taken on an increasingly important role – for internationally positioned companies or those that want to become one. 

We look forward to continuing to support our clients on their way to India.

Markus Linnartz
Filippo Federici
Paolo Gallarati
Fabien Pouchot
Marie Hindré

Germany's current arbitration framework in Book 10 of the ZPO dates back to 1997 and was based on the UNCITRAL Model Law in its 1985 version. After more than 25 years, the legal landscape has shifted significantly, for example regarding digitalisation. This evolution prompts the Federal Government to adapt the law to modern needs, improve procedural efficiency and enhance Germany's attractiveness as an arbitration venue. The reform process has been shaped by developments including the 2006 revision of the UNCITRAL Model Law, reforms in other jurisdictions, updated institutional rules and the ongoing digitalisation of procedural law.

The reform introduces several central innovations. These include the establishment of specialized Commercial Courts with English-language proceedings for arbitration matters under Sec. 1062 (5), 1063a, and 1065 (3) ZPO-Draft, along with procedural facilitation through English-language submissions pursuant to Sec. 1063a and 1063b ZPO-Draft. The draft embraces digital practice by permitting electronic arbitral awards and video hearings under Sec. 1054 (2), (5), 1064 (1), 1047 (2), and (3) ZPO-Draft. Additionally, it introduces the publication of anonymised awards subject to party consent or non-objection under Sec. 1054b ZPO-Draft and creates a narrowly framed retrial mechanism that operates even after set-aside deadlines have expired under Sec. 1059a ZPO-Draft.

The legislation also provides clarifications addressing multi-party appointment of arbitrators under Sec. 1035 (4) ZPO-Draft, enforcement of foreign interim measures under Sec. 1025 (2) and 1041 (2) ZPO-Draft, judicial review of both positive and negative jurisdictional decisions under Sec. 1040 ZPO-Draft, and the admissibility of concurring or dissenting opinions under Sec. 1054a ZPO-Draft.

In substance, the reform remains deliberately modest. Compared with the June 2024 draft (Draft bill on the modernization of the German arbitration law of the Federal Government of Germany | ADVANT Beiten), the version of 27 January 2026 differs in only two aspects: Sec. 1031 ZPO and Sec. 55 ZPO. These two amendments form the core of the following analysis.

Tightening of the Form Requirement for an Arbitration Agreement, Sec. 1031 (1) ZPO-Draft

The original Sec. 1031 ZPO-Draft limited formal requirements for arbitration agreements to consumer contracts only, proceeding on the assumption that parties in commercial transactions do not require the protective function of form. The abolition of formal requirements was intended to reflect modern commercial realities, particularly complex supply chains and framework agreements where the parties involved and their respective obligations may evolve over time, making the inclusion of a formal arbitration clause at an early stage impractical.

This approach attracted substantial criticism during the consultation process and parliamentary hearing. Practitioners emphasised that complete freedom of form entails significant risks and legal uncertainty. Without clear formal requirements, evidentiary problems would likely arise, and disputes over (i) whether an arbitration agreement has been concluded and (ii) its precise content would become more frequent, particularly in complex contractual structures. Cultural and linguistic differences in international transactions were highlighted as further factors increasing the risk of misunderstandings.

A further concern related to the enforceability of arbitral awards under the 1958 New York Convention, which requires arbitration agreements to be signed by the parties or contained in written communications such as letters or telegrams. Critics warned that arbitral awards based on purely oral or implied arbitration agreements could face serious obstacles in international enforcement proceedings. Additionally, the draft's reliance on the distinction between consumers and entrepreneurs was regarded as impractical, as the definition of "consumer" is difficult to apply in practice and particularly opaque for foreign parties.

Reflecting this criticism, the revised Sec. 1031(1) ZPO-Draft abandons complete freedom of form. It now requires that arbitration agreements are concluded or at least documented in writing or by any other means of communication that allows the information to be stored and reproduced at a later stage. This approach seeks to preserve flexibility for modern commercial practice while restoring the evidentiary and legal certainty functions traditionally served by formal requirements. Although it remains unclear which means of communication are sufficient to fulfil the form requirement, this amendment of Sec. 1031(1) ZPO represents a welcome improvement over the previous draft.

The new legal capacity regarding foreign countries, Sec. 55 ZPO-Draft

The current version of Sec. 55 ZPO governs the procedural capacity of foreign parties and remains based on nationality. It provides that a foreign party who lacks legal capacity under the law of its home state is nevertheless deemed capable of conducting legal proceedings if it possesses such capacity under the law of the court seized. In contrast, the new Sec. 55 ZPO-Draft abandons the nationality-based approach and links procedural capacity to habitual residence. A party who does not already have the capacity to conduct proceedings in its own name pursuant to Sec. 51 and 52 ZPO is deemed capable if it has party capacity under the procedural law of the state of its habitual residence.

This amendment was necessary following the reform of Article 7(2) EGBGB, which no longer determines legal capacity by reference to nationality but instead by habitual residence. Since under Sec. 51 and 52 ZPO a party's legal capacity is decisive for its capacity to be a party to proceedings, the continued reliance of Sec. 55 ZPO on citizenship created a systematic inconsistency. While substantive legal capacity was already residence-based, procedural capacity for foreigners still depended on nationality.

The new Sec. 55 ZPO-Draft resolves this conflict by harmonising the connecting factors and aligning procedural capacity with modern private international law. It simplifies judicial practice by allowing German courts to rely on lex fori procedural concepts and habitual residence rather than having to determine and apply foreign nationality-based capacity rules. This synchronisation enhances legal certainty, particularly in cross-border disputes and international arbitration-related court proceedings.

Summary

Overall, the modernisation of German arbitration law remains evolutionary rather than revolutionary. While the reform introduces a range of procedural improvements aimed at efficiency, digitalisation and international accessibility, the comparison between the June 2024 and January 2026 drafts shows that only two adjustments were ultimately required. The recalibration of Sec. 1031 ZPO restores legal certainty through a flexible documentation requirement, while the new Sec. 55 ZPO harmonizes procedural capacity with contemporary conflict-of-laws principles. Together, these targeted changes demonstrate the legislator's willingness to modernize German arbitration law without sacrificing predictability or enforceability.

Dr Ralf Hafner
Dr Tobias Pörnbacher, LL.M.

For companies, this means significantly increased liability risks. In addition, there is an urgent need to overhaul compliance systems. The amendments will come into force immediately after their expected publication in the Federal Law Gazette.

1. Background

The amendments adopted in the German government's draft bill "on the adjustment of criminal offences and sanctions for violations of restrictive measures of the European Union" (21/2508) are intended to transpose the EU requirements of Directive (EU) 2024/1226 on the definition of criminal offences and sanctions for violations of restrictive measures of the European Union into national law. 

The aim of the EU Directive is to harmonise and standardise the enforcement of sanctions, which has varied significantly between Member States to date, by aligning the criminal law definitions and consequences for offenders who violate EU sanctions. Although the EU itself can issue binding sanctions regulations, the responsibility for criminal prosecution (criminal jurisdiction) of violations remains with the respective Member States. 

Although the German Foreign Trade and Payments Act (Aussenwirtschaftsgesetz, AWG) already went beyond the minimum requirements of the EU, the directive requires further additions to the criminal offences (e.g. circumvention, reporting obligations, reckless dual-use violations) as well as specific sanction frameworks for legal entities.

2. Key criminal law changes in the AWG

In order to implement the requirements of the directive, the Foreign Trade Act is being amended, primarily. This primarily affects the key criminal and administrative offence provisions of Sections 18 and 19 AWG as well as consequential amendments to Section 82 of the Foreign Trade Ordinance (Außenwirtschaftsverordnung, AWV). Further amendments concern the Customs Investigation Service Act (Zollfahndungsdienstgesetz) and the Residence Act (Aufenthaltsgesetz), which will not be discussed here.

2.1 Sanctions violations, particularly in the financial sector, become criminal offences

One of the most significant changes is the upgrading of numerous offences from administrative offences to criminal offences. Violations that could previously only be prosecuted as administrative offences are now subject to mandatory penalties if committed intentionally. This applies in particular to intentional violations of certain transaction bans, financial services and payment bans, circumvention activities and, beyond the requirements of the directive, investment bans. These include, among other things, the acts previously listed in Section 82 (9) Nos. 4, 6, 7 and 9 AWV, such as the purchase, trading or listing of Russian securities and money market instruments issued after 9 March 2022. Violations may in future be punished with prison sentences of between 3 months and 5 years.

Similarly, a violation of the so-called duty to report – the duty to report information, in particular about possible sanctions violations, to the competent authorities – is no longer punishable as an administrative offence, but as a criminal offence with a prison sentence of up to 1 year or a fine, provided that the information was obtained in the exercise of a professional duty and concerns funds or economic resources to be frozen. The legal profession is exempt from criminal liability if the information was entrusted to them in their professional capacity or disclosed to them. 

A particularly critical aspect is that the existing possibility of avoiding fines for a large number of negligent violations by means of voluntary disclosure pursuant to Section 22 (4) AWG will no longer apply in future due to the reclassification of administrative offences as criminal offences. This increases the pressure on companies to take action against preventive sanctions violations, as it will be much more difficult to limit the damage retrospectively.

2.2 Criminal circumvention of EU sanctions

A new separate criminal offence has been introduced in Section 18 (1) No. 3 AWG with regard to certain acts intended to circumvent EU sanctions. This makes any use of frozen funds and resources a criminal offence if it is done with the intention of concealment. In addition, the dissemination of false, misleading or incomplete information with the intention of concealing the sanctioned ownership or possession of funds or economic resources will in future be punishable by imprisonment of between three months and five years.

2.3 Tougher penalties for violations of goods-related sanctions 

The tightening of goods-related sanctions is particularly relevant in practice. Here, new risks arise in particular in the trade in goods that can be used for both civilian and military purposes (so-called dual-use goods). Until now, reckless behaviour was only punishable in the case of certain violations of arms embargoes involving goods listed on the EU Military Goods List. However, reckless violations of certain prohibitions relating to goods listed on the EU dual-use goods list were only punishable as administrative offences. In future, reckless conduct in the export of dual-use goods will also be prosecuted as a criminal offence for the first time and punished with imprisonment of up to three years or a fine. 

A particularly serious case with prison sentences of 6 months to 10 years is introduced in Section 18 (6a) AWG. This is the case for example, if, in the context of a goods trading transaction, incomplete or incorrect information is provided to public authorities about the end use, transport route, recipient, consignor, origin, buyer, seller, quantity, value or nature of the goods in order to conceal a violation of EU sanctions. The use of a third-country company to conceal such a violation is also punishable if the perpetrator exercises a controlling or decisive influence over that company.

2.4 Significant increase in corporate fines

The new law brings with it a significant tightening of the rules for legal entities and associations of persons. The upper limit of the penalty portion of a corporate fine under Section 30 of the Administrative Offences Act (OWiG) will be quadrupled from the current EUR 10 million to EUR 40 million for underlying sanctionable offences committed by managers. This also applies to breaches of supervisory duties under Section 130 of the Administrative Offences Act (OWiG). However, no use was made of the option provided for in the EU Directive to impose fines of up to 5% of global annual turnover.

2.5 Elimination of relief measures for the timely implementation of new sanctions 

The grounds for exemption from punishment in Section 18(11) AWG, according to which no punishment was previously imposed on anyone who committed the offence by the end of the second working day after publication of the legal act in the Official Journal of the European Union, has been deleted. In practice, this particularly affects the inclusion of new natural or legal persons on the EU sanctions list and the associated business prohibitions. For companies, this effectively means that they are forced to implement new sanctions requirements almost immediately. 

2.6 Trust administration for Russian subsidiaries

New are explicit regulations that allow for public-law trust administration for European subsidiaries of Russian parent companies in the event of a concrete threat to public security and Germany's foreign interests. At the request of the company, a share custodian can also be appointed by the court to exercise the administrative rights arising from the shareholder position. This is intended to strike a balance between preventing circumvention or violations of the EU sanctions packages against Russia on the one hand and preserving jobs and safeguarding creditor interests on the other.

3. Relevance of the new regulations? 

The reform of criminal sanctions law leads to a significant increase in liability risk for companies and their managers. The risk landscape in the area of sanctions is shifting significantly to the detriment of companies. Almost all intentional violations of EU sanctions regulations will be punishable by law, in some cases supplemented by reckless offences, and the upper limit for fines for companies will rise to up to EUR 40 million. This increases both the financial risks and the personal liability risk for executives and compliance officers, especially since typical organisational deficits (e.g. missing or insufficient sanctions list checks, incomplete documentation, inadequate training) can now quickly become relevant under criminal law. The elimination of the grace period forces companies to record changes in the EU sanctions situation on a daily basis and to implement them immediately in their operations; delays in IT systems, processes or internal communication can now directly result in criminal liability risks. 

4. What should be done?

Against this backdrop, companies should comprehensively review and refine their sanctions compliance systems. This includes, in particular, a risk-based approach with systematic risk analysis along the entire value chain, robust sanctions list screenings (customers, suppliers, business partners, beneficial owners), clear process responsibilities and complete documentation of checks and decisions. In the area of dual-use goods in particular, technical classification, end-use and end-user checks, and the monitoring of re-exports and transit trade relationships with third-country companies are essential in order to counter the new circumvention and recklessness provisions. 

Companies should also design reporting processes for frozen assets and other sanction-related information in such a way that deadlines are met and responsibilities are clearly assigned. Finally, in view of the stricter penalties, regular training of sales, export control, finance, procurement, logistics and management staff is essential in order to raise awareness of the increased personal and corporate responsibility under sanctions law.

How we can support you

ADVANT Beiten's tax and white-collar crime practice specialises in the prevention, support and resolution of tax and criminal law risks in the financial sector. As a highly specialised unit with many years of industry experience in the financial sector, we combine expertise in criminal law with in depth tax law and regulatory know-how.

We provide advice on tax and commercial criminal law, tax controversy, anti-financial crime financial sanctions, and all related compliance issues, as well as the conduct of internal investigations.

In addition to preventive advice, we provide comprehensive defence for companies and individuals in tax and white-collar crime cases and represent them before financial and specialist authorities (e.g. BaFin). All lawyers in the team are also qualified as Certified AML & Anti Fraud Officers.

Our team provides comprehensive support and advice on all aspects of criminal law law, including representation and defence in cases of sanctions violations. We also offer individual legal advice on embargo law issues, and assistance with the drafting, operational review and adaptation of your sanctions compliance programme (SCP).

Martin Seevers, LL.M. Tax (USA)
Guido Storck

The agreement marks a milestone in trade relations between Europe and South America, creating one of the largest free trade zones in the world with over 780 million consumers. Mercosur (Mercado Común del Sur – Common Market of the South), with Argentina, Brazil, Paraguay and Uruguay as members, represents the fifth largest economy outside the EU with a gross domestic product of 2.7 trillion euros (as at 2024).

Removing trade barriers instead of creating new trade barriers and tariffs is a welcome political signal for the economy and strengthens the EU's strategic position.

Opportunities for companies

The central element of the agreement is the gradual reduction of customs tariffs over the next few years. Many industries are to benefit from the agreement, such as mechanical engineering, the automotive industry, chemicals and pharmaceuticals. In addition to tariffs, non-tariff trade barriers are also to be eliminated, for example by harmonising technical standards and labelling regulations. However, the agreement will also cover the services sector, opening up previously protected sectors to competition and allowing EU companies to bid on public procurement in Mercosur countries on an equal basis with local companies. In addition, the posting of personnel will be facilitated. 

The European Commission forecasts that EU exports to Mercosur will increase by 39 percent (48.7 billion euros), with the largest gains in motor vehicles, machinery and equipment, and chemicals. Exports from Mercosur to the EU are expected to increase by 16.9 percent (8.9 billion euros). 

However, the economic opportunities go beyond a mere increase in trading volume. Since Mercosur has only a few free trade agreements, it offers a first-mover advantage to European companies. Furthermore, it is to be expected that the agreement also offers potential for strategic alliances and repositioning in global supply chains. Mercosur countries can become a more attractive destination for foreign direct investment through preferential access to the European market and the agreement could thus lead to greater integration of Mercosur countries into European value chains.

Legal Mechanics - Two Agreements

The EU-Mercosur agreement is divided into two legally distinct but interrelated treaties:

Interim Trade Agreement (ITA): 

ITA covers only trade-related provisions, including tariff dismantling, rules of origin, services, public procurement and intellectual property rights. It falls entirely within the exclusive competence of the EU under Article 207 of the Treaty on the Functioning of the European Union (TFEU). Approval is granted by a Council decision after obtaining the consent of the European Parliament in accordance with Article 218(6) TFEU. Ratification by the national parliaments of the EU member states is not required. 

A key mechanism of the ITA is the possibility of provisional application under Article 23.3 of the ITA. This allows the EU and individual Mercosur states to put the ITA into force as soon as the respective internal procedures (of the EU and the Mercosur signatories) have been completed. This will allow trade benefits to be realised even before the full ratification of the Comprehensive Partnership Agreement. 

EU-Mercosur Partnership Agreement: 

This more comprehensive agreement contains provisions on political dialogue and cooperation in addition to the trade pillar. It must first be ratified by all 27 EU member states according to their respective procedures. Once fully ratified, the ITA will be replaced by the Partnership Agreement and the ITA will cease to be in force.

ADVANT Spanish & LatAm Desk

At ADVANT, we guide our clients through complex legal landscapes across Europe. For the Mercosur countries, our Spanish & LatAm Desk is at your side. We support you in solving legal challenges and making the most of your economic opportunities.

Dr Philipp Sahm

They can be implemented in various situations, such as issues relating to harassment, discrimination, corruption or other various violations of legal provisions.

This newsletter gives an overview on how national courts have ruled on the subject given that at European level, no legislation governs the practice.

Please find the flyer here: Link

Street art, by its very nature ephemeral and located in public space, forces a balancing of competing interests: on the one hand, the author’s moral right to the integrity of the work; on the other, the prerogatives of the property owner, who may decide to remove, cover, or even destroy the work. Italian copyright law (Law No. 633/1941) protects the artist from the very moment of creation, yet unauthorized execution on another’s property may constitute an infringement of ownership rights and limit protection.

Part of the scholarship invokes the doctrine of accessione (Article 936 Civil Code), whereby the mural becomes an integral part of the building; others refer to commistione (Article 939 Civil Code) or to the dicatio ad patriam, namely the dedication of the work to collective use. In any event, the act of removal introduces an element of transformation: the work, conceived as site-specific, loses part of its original meaning once detached.

The debate is not confined to Italy. From a comparative perspective, Germany adopts an approach similar to the Italian one, generally recognizing the primacy of property rights – and treating unauthorized street art as damage to the property – while nonetheless preserving copyright protection where the requirements of originality are met. Consequently, if the property owner decides to remove the portion of the wall and sell it, such conduct may conflict with the author’s exclusive right of “distribution,” unless the artist has implicitly accepted the prospect of future alienation. Equally noteworthy is the French system, which, much like the Italian and German models, grants copyright protection to all works reflecting the artist’s personality, regardless of the medium. Original street art thus falls within the creations protected by the Intellectual Property Code, without prejudice to the fact that its unauthorized execution may amount to a criminal offence of degradation.

The Venetian case illustrates this tension well: the collective interest in preserving an artistic language born on the margins of legality clashes with the dominical prerogatives of the property owner, who may perceive removal as a form of protection or as an economic opportunity. Nor are precedents lacking.

In the absence of ad hoc legislation, the issue remains entrusted to evolving interpretations of long-standing civil law doctrines, conceived for very different contexts. The removal of The Migrant Child demonstrates how urgent a systematic reflection on street art has become: who may truly dispose of it? And how can cultural value, public interest, and individual rights be reconciled, regardless of the artist’s fame?

Filippo Federici

Ilaria Gioffrè

Through Draft Legislative Decree No. 317/2025, Italy introduces a new Chapter I-bis in the Criminal Code on “Crimes against the Common Foreign and Security Policy of the European Union” and extends corporate criminal liability under Legislative Decree 231/2001.

The contribution examines the key features of the reform — including new offences, liability extensions, and coordination mechanisms — and highlights the compliance implications for companies, emphasizing the need for robust risk assessment, due diligence, and an integrated trade compliance culture.

Read the full article by Ornella Belfiori.  

welcome to the October issue of ADVANT Beiten's International Briefing.

In September 2025 ADVANT Beiten celebrated the opening of its new office in London with Sebastian Diehl, LL.M. (Cambridge) joining as an Equity Partner. We are pleased to share an interview with Sebastian Diehl, in which he reflects on his professional journey and outlines his strategic vision for ADVANT Beiten’s presence in London.

In this issue we will also highlight interesting developments in the European and German legal landscape, invite you to meet us at international events, and tell you about our recent deals.

You can find the newsletter by following this link.

Kind regards,

Dr Barbara Mayer
Prof. Dr Hans-Josef Vogel
Dr Christian von Wistinghausen
Moritz Kopp

The final approval
On September 17, 2025, the Senate, with 77 votes in favor, 55 against and 2 abstentions, definitively approved the law on artificial intelligence (hereinafter, the “Law”).
Italy thus becomes the first EU country to integrate the rules set out in the AI Act with national legislation on artificial intelligence. The aim of the national legislator is to further strengthen the level of protection from risks connected with the use of artificial intelligence in certain areas and sectors.

The structure of the Law
The Law is composed of 28 articles divided into six titles.
Title I, programmatic in nature, establishes the principles to be respected and the purposes that artificial intelligence should pursue.
Title II lays down specific provisions regarding the use of artificial intelligence systems in certain sectors such as the healthcare sector, scientific research, the world of employment, intellectual professions, public administration and the administration of justice.
Title III sets out the procedures for drafting and updating the national strategy for artificial intelligence, which must foster public-private collaborations and promote research and training.
Title IV is dedicated to copyright protection and Title V to criminal protection.
Finally, Title VI contains the financial and final provisions.

The competent authorities
With the approval of the Law, the Agency for Digital Italy (AgID) and the National Cybersecurity Agency (ACN) have been officially designated as the national competent authorities in the field of artificial intelligence.
AgID, as the notifying authority, will define the procedures and exercise the functions and tasks relating to notification, assessment, accreditation and monitoring of the entities appointed to verify the compliance of high-risk artificial intelligence systems.
Meanwhile, ACN, as the supervisory authority, will be responsible for monitoring artificial intelligence systems, with inspection and sanctioning powers.
Both authorities will also contribute to the definition and updating of the national strategy for artificial intelligence in agreement with the Department for Digital Transformation.
In addition, within the Presidency of the Council, the following are established:

• the Steering Coordination Committee, with functions of coordinating steering action and promoting research, experimentation, development, adoption and application activities of artificial intelligence systems and models;
• the Coordination Committee among the authorities, with the task of ensuring coordination and cooperation between national competent authorities, other public administrations and independent authorities.

The main innovations sector by sector
Healthcare and research. Art. 8 of the Law authorizes the secondary use of personal data (including special categories) for research purposes, provided they are free of identifying elements and without prejudice to the obligation to inform the data subject. The use of artificial intelligence in healthcare will be allowed as support for prevention, diagnosis, care and treatment processes, on condition that the final decision remains with the doctor.

Employment. A ministerial observatory on artificial intelligence is established to monitor risks and opportunities of artificial intelligence in the employment context. Any automated assessment of workers’ performance without the possibility of contestation is prohibited, while employers are required to inform and train staff on the use of technological tools.

Intellectual professions. Art. 13 of the Law limits the use of artificial intelligence systems in intellectual professions to instrumental and support activities for professional work, with prevalence of the intellectual work being performed. In addition, professionals are required to inform the client about the artificial intelligence systems used, with clear, simple and exhaustive language.

Justice. Art. 15 of the Law prohibits the use of artificial intelligence systems for the adoption of judicial decisions in an automated way; however, they may be used for analysis and support in the drafting of documents, without prejudice to the responsibility of magistrates.

How the criminal code changes
Title V introduces certain amendments to the criminal code. In particular, the Law introduces a new type of offence and a new common aggravating circumstance.
The new offence, which is included in Art. 612-quater c.p., punishes the dissemination of falsified content, capable of misleading (so-called deep fakes), through artificial intelligence systems.
On the other hand, the Law establishes an articulated system of aggravating circumstances, the core of which is the introduction of a common aggravating circumstance in Art. 61, no. 11-decies c.p., which provides for an increased penalty where the use of an artificial intelligence system constitutes a treacherous means to facilitate the offence, hinder the defence or aggravate its consequences.

Implementation of the Law
For the entry into force of the Law, it remains only to await promulgation by the President of the Republic and its publication in the Official Gazette, from which the 15 days of vacatio legis will begin.
In any case, once the Law has entered into force, it will be up to the Government to complete the framework through the adoption, within twelve months, of one or more legislative decrees. These will regulate aspects of particular importance, including:

• the definition of an organic framework concerning the use of data, algorithms and mathematical methods for the training of artificial intelligence systems;
• the attribution to the competent authorities of supervisory, inspection, sanctioning and other administrative powers provided for by the AI Act;
• the regulation of measures for updating the existing legislation on banking, financial, insurance and payment services;
• the definition of rules on civil liability for damages resulting from the use of artificial intelligence;
• the definition of criteria for imputing criminal liability of natural persons and administrative liability of entities, taking into account the actual level of control over systems.

The unresolved issues
Some critical issues highlighted during the parliamentary process remain in the text of the Law definitively approved by the Senate.
In particular, in its detailed opinion C(2024)7814, the Commission had “rejected” the first draft of the Law for three main reasons:

1. definitions cannot deviate from those used in the AI Act;
2. the healthcare, intellectual professions and judicial administration sectors risk being subject to excessive obligations;
3. AgID and ACN are government authorities and therefore do not ensure full independence.
   While the first issue had already been resolved by referring to the AI Act definitions, the other two areas of potential incompatibility with EU legislation do not appear to have been addressed.

The challenge is now
The final approval of the Law represents an important milestone for Italy, which takes the lead among other European countries with regard to artificial intelligence. But the real challenge begins now with the implementation of the legislation.
The success of the Law will in fact largely depend on the quality of the legislative decrees that the Government will have to adopt within the next year; a crucial test to translate the programmatic objectives into operational rules that can adequately balance the needs of operators, technological progress and the protection of fundamental rights and freedoms.

Giulio Uras and Francesco Fidel Camera

Regulation (EU) 2023/1115, known as “EUDR”, entered into force on 29 June 2023 and will apply from 30 December 2025 for most operators (30 June 2026 for micro and small undertakings). 

The legislation aims to minimize global deforestation and forest degradation, reduce greenhouse gas emissions, and protect biodiversity. In addition to environmental objectives, the EUDR integrates social considerations, requiring compliance with the legislation of the country of production, including land use rights, forest-related rules, human rights, and indigenous peoples’ laws.

It should be noted that this is a sectoral regulation compared to the “horizontal” framework provided for in the field of “due diligence” by Directive 2024/1760 on corporate sustainability due diligence (the so-called “CSDDD”); therefore, in case of conflict, the EUDR prevails over the CSDDD.

Recently, the European Commission published (in OJ C of 12 August 2025) a new guidance document (C/2025/4524), aimed at clarifying the provisions of the EUDR (hereinafter, the “Communication”). The Communication – which is not legally binding – provides operational indications on key aspects such as the differences between the obligations of various operators, due diligence, the submission of the due diligence statement (“DDS”), the role of certifications, and the timing of the EUDR’s entry into force.

The scope of the EUDR covers seven commodities considered at risk: cattle, cocoa, coffee, palm oil, soy, wood, and natural rubber, as well as numerous derived products listed in Annex I, including leather, chocolate, paper, furniture, and pneumatic tyres.

The EUDR applies in particular to operators and traders, distinguishing between SMEs and non-SMEs. In short, the operator is the one who first places a relevant product on the EU market or exports it, while the trader is the one who makes it available on the market after the initial placing.

Non-SME operators must implement a three-step structured due diligence process: collection of detailed product information (description, quantity, country of production, geolocation of plots of land, supplier and buyer data, proof of compliance); risk assessment of possible non-compliance, considering elements e.g. the assignment of risk to the relevant country of production, prevalence of deforestation or forest degradation in the country of production, the complexity of the relevant supply chain, and risk of mixing with products of unknown origin; and, if necessary, adoption of mitigation measures to reduce the risk to a negligible or zero level, such as requests for additional information or independent audits.

A positive conclusion of the due diligence process is possible only if the residual risk is zero or negligible. Otherwise, the product cannot be placed on the market or exported.

Operators must submit the DDS through the Information System provided for in Article 33 and keep the related documentation for at least five years.

They are also required to set up an internal due diligence system, with formalized procedures and controls, as well as a periodic review (at least annually).

It should be pointed out that the EUDR provides for a classification of countries of origin based on risk level: low, standard, or high. Generally speaking, for low-risk countries, operators may apply simplified due diligence, limited to collecting basic information and submitting the DDS, without in-depth assessment and mitigation. For high-risk countries, on the other hand, checks and inspections are more stringent and frequent.

Competent authorities carry out documentary and physical checks, including at customs. In case of non-compliance, corrective measures may be adopted, such as immediate withdrawal or recall of products, donation for charitable purposes, or disposal. Sanctions may amount to at least 4% of the annual turnover achieved in the EU, in addition to confiscation of products or revenues, temporary exclusion from public procurement and public funds, and, in the most serious cases or in case of repeat offences, temporary prohibition from placing or exporting relevant commodities and products.

The Communication acknowledges the usefulness of voluntary environmental certifications; however, these may supplement – but not replace – mandatory due diligence. In particular, certifications based on mass balance models or mixed product percentages do not in themselves guarantee compliance with the EUDR. Only products fully compliant with legality and zero-deforestation criteria in all their components may be placed on the EU market. The operator must therefore verify the certifications’ compliance with the EUDR.

To prepare for the 30 December 2025 deadline, companies should implement as soon as possible a series of actions: mapping their supply chains, identifying suppliers and risk areas; establishing a centralized database for information management; as well as adapting supply contracts with specific clauses on compliance with the EUDR.

It is also essential to train the staff involved, particularly in the purchasing, quality, and sustainability departments, and to implement a structured internal due diligence system. Finally, it is essential to maintain constant monitoring of regulatory developments and best practices, to ensure timely compliance and prevent legal and reputational risks.

Valentina Cavanna

Beyond broader trade issues, the Joint Statement specifically addresses tariffs, in line with a new protectionist US trade policy. 

Following months of what the EU expected to be a negotiation on an agreement on customs duties and related issues, the EU and the USA have published the Joint Statement, which is not a legally binding instrument, but a political document outlining the commitments of both parties on the new parameters of their trade relationships.

With specific respect to tariffs, the US will apply to the majority of EU products the higher between:

• the current US Most Favoured Nation (MFN) tariff rate; and 

• a tariff rate of 15%.

This entails that EU products already subject to MFN tariffs equal or higher than 15% will not be subject to the new tariffs announced by the US administration. This a better outcome than what the UK achieved

In addition, as from 1 September 2025, the US commits to apply only the MFN tariff to the following EU products: unavailable natural resources, aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors. The parties will consider other sectors and products for inclusion in the list of products for which only the MFN tariffs would apply.

For other products – those subject to US Section 232 of the of the Trade Expansion of 1962 (including cars, pharmaceuticals, semiconductors and lumber) – the total tariffs will be capped at 15% (after the EU eliminates its own tariffs on US industrial goods and provide preferential market access for a wide range of US seafood and agricultural goods); this may result in a reduction, for these products, of the overall tariffs currently in place.

As for steel and aluminium, the framework remains undefined. The parties agreed in principle to cooperate on protective measures against global overcapacity and to develop secure supply chains, possibly through Tariff Rate Quota (TRQ) solutions. However, previous attempts to resolve tariff issues related to aluminium and steel remained futile.

Some of these tariffs may be impacted by the recent decision of the U.S. Court of Appeals for the Federal Circuit; pending appeal to the U.S. Supreme Court, the Appeals Court has left the tariffs in place until October 14. Whether the U.S. Supreme Court sides with the Administration argument, that the imposition of broad tariffs is in keeping with the powers granted through the “International Emergency Economic Powers Act” or goes beyond that authority remains to be seen.

It should also be noted that the de-minimis rule for products sold into the U.S. at up to US$ 800 via parcels has been scrapped. This has led to a halt on shipping such products by the big European logistics companies. The repercussions on Chinese direct sales enterprises, such as Shein and Temu will be considerable and also be felt with European business in the direct sales area. To put the importance of this into context: the US Customs and Border Patrol estimates that in the last fiscal year, 1.36 billion packages were shipped to the U.S.

The Italian Government, while welcoming the Joint Statement, wishes o broaden the preferential treatments to sectors currently excluded, such as food and wine and to reach an agreement on steel and aluminium.

Apart from agriculture and wine, the Italian industry (in particular in the fashion and luxury, as well as the furniture and machinery sector) emphasize that for safeguarding the “Made in Italy” supply chains, broader exemptions or mitigating measures. are necessary. 

The German government expressed a cautious but overall positive view, stating that it is a successful effort to avert a damaging trade conflict that would have severely impacted the German export-oriented economy. Needless to say, German industry leaders have warned that even the reduced 15% tariffs on EU exports to the US will have a significant negative impact on Germany's export-driven industries, from automotive to chemical to steel products.

French politicians have roundly criticized the Joint Statement without however convincingly demonstrating that they would have achieved a better result than the EU Commission, supported by the Member States. The French President has called on the EU to mobilize all of its instruments, including anti-coercion, which is a negotiation tool but also provides for severe mechanisms to be used as a retaliatory measure, to reach a satisfactory deal.

French industry representatives have also urged the French Government and the European Commission to secure broader exemptions, namely for the wine and spirits or the luxury sectors, but overall deplore the content of the Joint Statement, which they find too unbalanced. It should however be noted that the EU did not give in on reducing non-tariff barriers. Although the wording of the Joint Statement is very vague and further development should be monitored, the agreement does not seem to provide for any modification of the EU legislative framework.

The Spanish prime minister recently said that he would support the trade agreement, "but I do so without any enthusiasm". The Spanish industries, notable those producing steel, called for clarity on critical details of the Joint Statement, especially concerning the continuing 50% U.S. tariffs on steel and aluminum, pending quota arrangements. They called for temporary aid for sectors most affected, including vehicles and steel

In conclusion, considering the non-binding nature of the Joint Statement and the need for further legal implementation, future developments should be closely monitored. In the meantime, EU companies exporting to the US – particularly French, German and Italian businesses, as three of the largest European exporters to the US – are advised to proactively review their cross-border commercial agreements, paying careful attention to clauses on pricing, allocation of duties, force majeure, hardship, and supply chain resilience, in order to mitigate risks, preserve margins, and prevent disputes. Such clauses could also be reviewed to include in their definition significant changes in international trade law.

Prof. Dr Rainer Bierwagen
Filippo Federici
Simone Gaggero
Morgane Gandaubert
Paolio Gallarati
Marie Hindré
Prof. Dr Hans-Josef Vogel

Anti-abuse rules against entities avoiding employer responsibilities through ambiguous and complex structures

Sometimes, companies try to evade legal responsibility as employers through complex employment structures. Interpretation II stipulates that when project owners subcontract/assign their business to entities without legal business qualifications, or when an entity without the corresponding qualifications conducts business activities externally through "affiliation" with a unit with legal business qualifications, the contractor/affiliated entity with legal business qualification will be legally recognized as the entity bearing the main responsibility as employer. This clarification aims to afford employees with a better protection of their rights in seeking payment of salaries and social insurance benefits because the responsibility for such claims will be borne by entities with legal status and (hopefully) sufficient financial means to honour such commitments.

In cases of so-called "group employment" or "affiliated company employment" (i.e. employment models where within a group of affiliated companies’ staff is transferred across different entities/units), it is often difficult to determine which particular entity is the “true” employer. Interpretation II provides that in determining the true employer, priority shall be given to the entity who signed the labour contract. If no written contract exists, the overall management behaviour and other comprehensive factors shall be considered. Specifically, one shall not only focus on formal aspects such as which entity pays salary and social security but also on actual factors such as which entity manages the staff, allocates work tasks, controls working hours, conducts performance evaluations, etc. and in such case the affiliated entities jointly are liable for salary payment and insurance benefits. This rule aims to better protect employees subject to business outsourcing models involving low-cost models and questionable third parties and is aimed to steer companies to simplify structures they may have set up to evade legal liability through untransparent structures.

Situations qualifying as “two consecutive fixed-term labour contracts” entitling employees to open-term labour contracts

PRC labour laws provide that in certain cases employees are entitled to ask for an open-term contract. Among others, employees are entitled to request an open-term contract after two consecutive fixed-term labour contracts with the same employer. 

Interpretation II provides that any of the following situations shall be considered as "consecutive conclusion of two fixed-term labour contracts":

• The parties agreed to extend the term of the first labour contract for at least one more year and such extension period has expired.

• The labour contract stipulates that the contract automatically renews upon the expiration of the first term for another fixed term and such second fixed term has expired.

• The employee “for reasons not attributable to himself” continues to work at his original workplace or job position after the first term of the contract expires and the employer merely changes the contracting entity of the (new) labour contract but continues to exercise labour management over the employee and the contract term expires. 

This addresses a scenario where the employee continues working in the same position/location after his contract has expired, even though the employer has changed the formal "party" (such as the company or organization) responsible for the contract, but the initial employer continues to manage the worker as before. In such cases, the court may treat this as a continuation of the same employment relationship and recognize it as meeting the conditions for signing two fixed-term contracts in a row, provided the continued performance at the same workplace/position with a new contract party did not stem from a voluntary decision of the employee himself. 

• After the expiration of the first contract, a new labour contract is signed by engaging in other actions that violate the principle of good faith to avoid obligations, and the contract term expires.

This refers to a situation where the employer signs a new labour contract under circumstances that violate good faith principles after the initial contract expires. Despite these circumstances, the contract is still recognized as having expired and requires legal consideration.

In essence, the last two bullet points focus on identifying situations where employers may try to circumvent labour laws by changing the structure of contracts or manipulating conditions, and the courts should still recognize the contracts as consecutive fixed-term contracts under those conditions.

Also, where, after the expiration of a given labour contract, the employee continues to work for his employer and the employer does not raise any objections against such continued performance for more than one month after the previous contract expired, the employee is entitled to a renewed labour contract under the terms of the expired contract. If at this point in time circumstances warranting the conclusion of an open-term labour contract exist, the renewed contract shall be entered into for an open-term if so requested by the employee. Should the employer rather choose to terminate the labour contract, this will subject the employer to bear liability for termination of a labour contract according to law (e.g. make severance payment if so required by law).

Consequences of failure to enter into written labour contracts

Under Chinese labour laws, not entering into a written labour contract with an employee carries serious legal and financial consequences for employers. An employer must sign a written labour contract within one month from the employee’s first day of work.

If the employer fails to sign a written contract within more than one month but less than one year, the employee is entitled to claim double his monthly wage for each full month worked without a written contract, starting from the second month. Interpretation II specifies that for a period of less than one month, the payment shall be calculated according to the employee’s actual working days in that month.  However, the employer is exempt from liability for double wage payment if it can prove any of the following circumstances:

• The labour contract could not be concluded in a timely manner due to force majeure.

• The failure to conclude the labour contract is attributable to the employee's own fault (e.g. refusal to provide necessary information).

• Other circumstances as stipulated in laws and regulations on this subject matter.

If the employer still fails to sign a written contract within one year from the employee’s  work start date, the employee is deemed to have entered into an open-term contract starting from the second year. In this regard, Interpretation II specifies that while the employee is entitled to sign an open-ended labour contract as of such second year, the employee is not entitled to claim double wages for the period as of such second year. The employee however remains entitled to claim double wages from the day following the expiration of one month from his work start date until the day before the expiration of one year from the work start date (so basically up to eleven months of a double wage claim).

Interpretation II further provides that where the term of a labour contract expires under any of the following circumstances and the court determines that the term of the labour contract automatically renewed/extended by operation of law, this situation shall not be regarded as a “failure to conclude a written labour contract”:

• The employer terminated the labour contract despite the terminated employee being under statutory protection against dismissal pursuant to Art. 42 Labour Contract Law (which lists situations such as medical treatment, occupational hazards/disease, maternity, other legally protected conditions). 

• The initial term of the labour contract expired but has been automatically extended 

in accordance with Art. 17 Labour Contract Law Implementing Regulations (extension until the agreed end of the service period after specific technical training under Art. 22 Labour Contract Law).

• The labour relationship is extended in accordance with Art. 19 Trade Union Law under the framework of a valid collective bargaining agreement. 

Clarifications for cases of breach of service period and non-compete agreements

Breach of Service Period: If the parties to a labour contract agreed on a minimum service period for the employee (e.g. following specialized training) and the employee breaches such obligation, PRC labour laws allow the employer to claim compensation for the resulting losses. Such labour contracts or training agreements often stipulate formulas for calculating such compensation. Interpretation II provides that courts shall not rigidly enforce such agreed formulas but comprehensively consider all actual losses of employers, such as the training expenses, housing subsidies, travel costs, the length of service that the employee has fulfilled and other special benefits granted to the employee. The compensation amount shall be proportionately adjusted based on factors such as the degree of fault of both parties regarding the employee's resignation. 

Validity of Non-compete Agreements: Under PRC labour laws non-compete obligations can only be imposed on employees having knowledge of and access to employers’ trade secrets and/or confidential information relating to intellectual property rights. Thus, in case of dispute, employers bear the burden of proof to demonstrate that the obliged employees did in fact have such knowledge/access during their employment period. If employers fail in such demonstration, the non-compete agreement is not binding on the employees. Additionally, when assessing the validity of non-compete agreements, court will put the substance scope, geographical area and duration of the non-compete restrictions into relation to the nature and scope of trade secrets and other protected information that the employee had access to. If a court finds that certain parts of the non-compete restrictions are incompatible with the trade secrets the employee had access to and thus the non-compete restrictions exceed the necessary scope for protecting the trade secrets, courts may determine such parts of the non-compete agreement invalid. Thus, employers are compelled to tailor the scope, geographical location and duration of non-compete restrictions based to the nature of the employee's position, job description and trade secrets he has access to because if excessive in nature/scope, the validity of the non-compete agreement can be challenged.

Procedural aspects regarding labour termination / labour disputes

A labour contract cannot continue to be performed: If an employer terminates a labour contract without being entitled to do so, PRC labour laws provide that employees can either claim for double severance payment or for reinstatement of the labour relationship if it is possible to continue to perform the labour relationship. Regarding the latter, Interpretation II provides that in the following cases, a labour contract cannot continue to be performed (thus making the reinstatement claim mute and compelling the employer to pay double severance):

• The labour contract expires during the labour dispute process and there are no legal requirements that mandate a renewal or extension of the labour contract.

• The employee has begun to enjoy the basic old-age insurance benefits according to law.

• The employer has undergone bankruptcy liquidation, had its business license revoked, been ordered to close down, been dissolved, or has decided to liquidate voluntarily.

• The employee has already been employed by another employer and the new labour relationship seriously affects the continued performance of the original labour relationship or the employee refuses to terminate the labour contract with the new employer. 

• Other circumstances exist make it objectively impossible to restore the labour relationship.

Salary calculation during the period until resumption of contract performance: If the employer is ordered to resume the performance of a labour contract with an employee, the employee's salary during the period from the termination date until the date of work resumption shall generally be calculated based on the normal labour wage standard of the employee (i.e. including base pay and fixed allowances but excluding performance-based salary/bonus, overtime pay and year-end bonuses). However, if the employee contributed to his dismissal and only the employer's dismissal procedure does not comply with the law, the court may, based on the degree of the employee's fault, proportionally reduce the wages that the employer should make up for.

Off-boarding occupational health examination: For employees engaged in operations with occupational disease hazards, conducting pre-departure occupational health examinations is a legal prerequisite for employers to dismiss such employees. If an employer terminates a labour contract without conducting a pre-departure occupational health examination for the employee as required, the employee has the right to request the continuation of the labour contract unless any of the following circumstances can be proven by the employer to exist:

• the pre-departure occupational health examination is completed before the conclusion of the first-instance court hearing, and the examination results show that the employee has no (suspected) occupational disease. 

• The employee refuses to undergo the pre-departure occupational health examination without a valid reason.

Defense of statute of limitation: In legal terms, "statute of limitation" refers to the maximum time within which a party can initiate legal action, such as a labour arbitration claim. If the time limit expires, the party may be barred from pursuing their case. In this regard, Interpretation II provides the following clarifications:

• No Raising the Defense During Arbitration: If a party did not raise the statute of limitations defense during the arbitration process (because of their own reasons), it cannot later use this defense during the litigation process (whether during the first or second instance of litigation). The court will not accept this defense in such cases.

• New Evidence: If the party has new evidence showing that the statute of limitations has indeed expired for the other party’s claim, the court will support this defense even during the litigation process.

• Failure to Raise the Defense in the Proper Time: If a party fails to raise the statute of limitations defense in arbitration or during the early stages of litigation, it cannot later seek a retrial or raise the statute of limitations defense during a retrial. The court will not entertain this defense in such cases.

This clarification encourages parties to raise relevant defenses (like the statute of limitation) in a timely manner during arbitration or earlier litigation stages. This rule prevents parties from using the statute of limitation defense as an afterthought if they failed to address it at the appropriate time.

Cases involving foreign nationals or entities

Foreigners asking for confirmation of their employment relationship: Interpretation II stipulates that foreigners employed in China by local employers are entitles to request courts to confirm the existence of their local employment relationship in the following cases:

• The foreigner obtained Chinese permanent residence status (aka Greencard).

• The foreigner obtained a Chinese work permit and resides legally in China.

• The foreigner has otherwise gone through the relevant legal procedures to work/reside in China.

Labor disputes involving foreign representative offices (FROs): According to Chinese law, FROs do not hold independent legal person status and are not entitled to directly hire Chinese nationals as employees. Rather, FROs must enter into labour dispatch agreements with qualified PRC human resources agencies to hire such Chinese staff through a three-party arrangement where the Chinese staff enters into the labour contract with the qualified agency and the agency in turn enters into a labour dispatch agreement with the FRO (or its foreign parent company). This arrangement has it made debatable how to involve the FRO/its foreign parent company in case of labour disputes involving dispatched staff. Interpretation II now confirms that legally established FROs may be parties to labour dispute cases and that in case any party to such cases applies for the participation of the foreign parent of the FRO to the lawsuit, the courts shall support such requests.

Opting out of mandatory social insurance is illegal 

According to PRC labour and social insurance laws, both employers and employees are obliged to participate in the mandatory basic social insurance in China. 

Any agreement between the parties to a labour contract, or any undertaking by the employee, waiving the employer’s obligation to pay social insurance contributions is invalid. 

If an employer fails to pay mandatory social insurance, the employee may terminate the labour contract for that reason and the employer must pay the statutory severance payment to the employee. 

If under any of these above circumstances the employer makes up the social insurance payments in accordance with the law, he is entitled to recover from the employee the employee portion of contributions.

Susanne Rademacher
Dr Jenna Wang-Metzner
Kelly Tang

Part 26A Restructuring Plan

Even after its exit from the European Union, the United Kingdom still strives to be an attractive location for insolvency and restructuring proceedings. In a number of high-profile cases, debtors have deliberately relocated their Centre of Main Interests (COMI) to the UK to take advantage of the comparatively debtor-friendly legal framework there. Of particular interest to debtors is a restructuring plan under Part 26A UK Companies Act 2006. This process allows for either all creditors or only certain classes of creditors to be included in the proceedings. The key advantage of this instrument, from the debtor’s perspective, is precisely that a large number of creditors can be excluded from participation in the process. The associated, significant, costs—typically running into the millions—for relocating the COMI, engaging specialised lawyers and advisors, and utilising the English courts are willingly borne by many companies in the hope of achieving more flexible debt relief.

The recent decision by the English Court of Appeal to tighten the fairness requirements for such restructuring plans (ruling dated July 1, 2025), was unlikely to significantly reduce the attractiveness of the Part 26A Restructuring Plan for debtors. However, the recent decision of 22 August 2025 from the Frankfurt am Main Regional Court changes the picture entirely: now, from the debtor’s perspective, a major obstacle has been put before them because such restructuring plans are not recognised in Germany. Although Germany is only one jurisdiction, this is of critical significance because, in principle, a cross-border restructuring plan can only be approved by an English court if there is a reasonable prospect of recognition in the other jurisdictions involved. So far, where English courts have considered the question of whether a Part 26A Restructuring Plan is capable of recognition in Germany, they have (until now) affirmed the possibility of such recognition.

Legal Assessment of Recognisability in Germany

The crucial question of how courts in Germany assess the recognisability of Part 26A Restructuring Plans has had many lawyers on tenterhooks. The opinion of the English courts on this matter is irrelevant for recognition in Germany: only German law is decisive.

The recognisability of a Part 26A Restructuring Plan under German law has been a matter of controversial debate. Possible legal bases for recognition include Section 343 of the German Insolvency Code (InsO), Section 328 of the German Code of Civil Procedure (ZPO), and Article 26(1) of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (EuGVÜ). However, there have been significant reservations about applying any of these provisions, which is why the prevailing view in legal literature has so far been to fundamentally reject recognition. However, until now, no decision by German courts had addressed this question. 

The Frankfurt Regional Court decision and its significance

On August 22, 2025, the Frankfurt am Main Regional Court ruled that a Part 26A Restructuring Plan cannot be recognised in Germany. In doing so, it adopted the arguments frequently presented in legal literature and confirmed a legal position that ADVANT Beiten had already represented on behalf of creditors before the Frankfurt am Main Regional Court.

The court rejected recognition under Sect. 343 InsO, as this provision applies exclusively to insolvency proceedings. Insolvency proceedings under the German Insolvency Code are characterized by the inclusion of all creditors. Since the Part 26A Restructuring Plan does not include all creditors, the required collective nature of the proceeding is lacking.

The Regional Court also followed its previous case law by the Higher Regional Court (OLG Frankfurt am Main) rejecting the recognition of the restructuring plan under the EuGVÜ (Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 1968), on the basis that it was replaced in 2002 by the Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (EuGVVO). Although the EuGVVO no longer applies to the United Kingdom since Brexit, the EuGVÜ as its predecessor does not become applicable again due to Brexit. 

Regarding Sect. 328 ZPO, the Frankfurt am Main Regional Court emphasised that mutual recognition of judgments must be ensured. Accordingly, the recognition of a Part 26A Restructuring Plan in Germany depends on whether comparable decisions by German courts would also be recognised in England. According to the Frankfurt am Main Regional Court, this is a question of fact rather than law, as it depends on the actual practice of recognition. In the case at hand, evidence for the claimed recognition in England could not be provided. Therefore, the court, based on the burden of proof, denied reciprocity and thus rejected recognition under Sect. 328 ZPO. As this is a regional court ruling, the decision is not yet final. It is possible – though in our view unlikely – that evidence of reciprocity could still be submitted later in the proceedings. From our perspective, it is doubtful whether reciprocity can be proven at all. It seems unlikely that a German restructuring decision regarding a claim governed by English law would be recognised in the United Kingdom. This is particularly supported by the so-called Rule of Gibbs, recently confirmed in UK case law. According to this principle, rooted in English common law, foreign insolvency or restructuring decisions have no effect on claims governed by English law.

Conclusion 

The decision of the Frankfurt am Main Regional Court is welcome news for creditors, because it upholds the protection that German insolvency law intends to grant them. Moreover, it ensures that the choice of governing law made at the time of contract conclusion remains effective throughout the entire duration of the legal relationship. A relocation of proceedings and a flight to non-European jurisdictions aimed at circumventing the interests of specific creditor groups is no longer easily possible. Companies considering such an “insolvency relocation” must now seriously consider the lack of recognition of their restructuring measures in Germany. From the creditors’ perspective, this means that affected creditors in Germany no longer must accept the consequences of English restructurings and can continue to assert their original rights. 

If the Frankfurt court’s case law prevails, English courts will also have to take notice. They would be unable to approve Part 26A Restructuring Plan involving Germany, as the lack of recognition would be established. Whether this will happen, and the decision will become final remains to be seen. However, a clear first signal against insolvency tourism abroad has been sent. Creditors affected by a foreign restructuring should examine whether it is also recognisable in Germany and whether their claims have indeed been extinguished.

If you are affected by a foreign restructuring, we are happy to offer a consultation.

Dr Nadejda Kysel
Dr Philipp Sahm
Jessica Schneeberger

The simplification efforts brought forward by the SIU represent an essential step forward, but must now be accompanied by concrete measures to make capital more accessible to both companies and savers.

“We need a push from Member States to support the creation of new financial instruments dedicated to domestic equity, backed by significant tax incentive schemes,” Plattner emphasized. “These kinds of solutions are already attracting strong interest and demand from savers. In Italy, for instance, only 16% of total managed savings are currently invested in this asset class – a percentage that must be increased. We can look again to PIRs, which proved to be a solid model, and work on updating and relaunching them. At the same time, it is crucial to act on the pension system, which remains a key area of focus. What’s needed is an integrated, collaborative approach between businesses, the financial sector, and the government to ensure this vital capital shift towards the productive economy.”

The full video is available on Milano Finanza.

Looking at the broader trends over the past year and into the first quarter of 2025, it is evident that the transition is no longer solely focused on renewable energy generation and emissions reduction. The current phase increasingly involves diversification of energy sources and the progressive modernization of grid infrastructure. This evolution reflects the growing demand for system flexibility, a direct consequence of the rise in non-programmable energy sources. At the same time, the integration of digital infrastructure into energy grids is becoming a crucial element, enhancing grid management and enabling a smarter, more resilient energy network.

Read Here

Authors: Piero Viganò, Ernesto Rossi, Giuliano Proietto, Stefano Biraghi

It outlines the prerequisites for holding companies accountable, the types of sanctions imposed, and the treatment of cross-border offences and corporate restructurings.

The guide also examines the role and impact of compliance programs and internal investigations in mitigating liability.

With practical insights into legal obligations and enforcement approaches, the guide aims to guide multinational companies in aligning their practices with national legal standards.

Read here the full document

Authors: 

• ADVANT Altana: Gildas Robert, Philippe Goossens, Laetitia Citroën
• ADVANT Beiten: Jochen Pörtge, Oliver Ofosu-Ayeh, Kristin Trittermann
• ADVANT Nctm: Raffaella Quintana, Luca Cavagnaro, Alice Baccin

The existence of the AFSL, AFSL Provisions and the IP Dispute Provisions obliges any parties engaged in foreign (= outside China) or domestic legal action involving Chinese parties to carefully assess the risks of any dispute resolution strategies. Not only China-based enterprises but also foreign enterprises are affected by these regulations and must hence balance these Chinese regulatory and compliance requirements with other responsibilities resulting from conflicting sanctions regimes of other jurisdictions such as Europe and the US and general international compliance requirements.

I. Countermeasures under AFSL Provisions in case of “foreign litigation”

The AFSL Provisions allow the Chinese government to take countermeasures against “promoting and implementing litigation by any foreign country, organisation or individual”, which the Chinese government deems will “endanger the sovereignty, security, and development interests of China”. It is thereby irrelevant where such litigation occurs inside or outside China and the “foreign” element is rather established by a foreign (invested) party promoting or implementing such litigation.

The potential countermeasures faced by the affected litigation subjects (including natural and legal persons) range from restrictions to enter/leave China, seizing of any kind of property in China; prohibition/limitation on transactions and cooperation with third parties; compulsory property enforcement and other measures. 

Whether the AFSL Provisions will be applied also to private commercial disputes or are more directed against cases of important strategical/political matters remains to be seen. However, given the far-reaching wording and the lack of excluding private party legal action against Chinese parties, one would be amiss to think this could not become a tool at the convenience of Chinese regulatory bodies to invoke countermeasures even in cases of private commercial disputes against Chinese parties if China deems such legal action could endanger the sovereignty, security, and development interests of China.

II. Particular Importance of IP Disputes - Link between the IP Dispute Provisions & AFSL Provisions

The IP Disputes Provisions are expressly linked to the ASFL and AFSL Provisions. The IP Disputes Provisions emphasise that “containment or suppression” against China and “discriminatory restrictive measures” against Chinese citizens and organisations taken “under the guise of IP disputes” fall within the scope of AFSL. 

While the AFSL uses the terminology of “containment, suppression and discriminatory restrictive measures”, it fails to define these terms. To date there is also no other public legislation known that would specify these terms. This ambiguity makes it very daunting to predict situations in which countermeasures could be taken against what China believes to be a foreign containment, suppression or discriminatory restrictive measures under the guise of international IP disputes in which Chinese enterprises are a party. 

While the IP Disputes Provisions only became effective on 1 May 2025, already on 15 January 2025 the PRC Supreme People’s Court issued a ruling in patent dispute filed by Huawei against Netgear, prohibiting Netgear and its affiliates from seeking anti-suit injunctions in the US and other foreign countries that would restrict Huawei from initiating or continuing patent infringement proceedings in China. 

Given that Chinese enterprises having become increasingly active in the international arena and are leaders in many high-tech sectors, it appears plausible to believe that in the future one will rather see more than less international IP disputes between foreign and Chines parties. 

Therefore, with these new IP Disputes Provisions, any such international IP disputes between foreign and Chinese parties should be subject to a risk assessment if they could create cause for potential countermeasures being invoked by China against the foreign litigants. In addition, foreign parties starting litigation against Chinese parties for IP disputes may also risk other legal consequences such as refusal to recognise and enforce foreign judgments and arbitral awards in China if they would be considered by China to fall under these new provisions.

III. AFSL Provisions in General  

The AFSL obliges China-based organizations and individuals to implement China’s countermeasures to (a) safeguard China’s interests against discriminatory restrictive measures imposed on organizations and individuals, and (b) against interference with China’s internal affairs by foreign countries, or individuals and organisations that have directly or indirectly participated in the formulation or implementation of discriminatory restrictive measures. 

The AFSL entitles Chinese individuals or organisations to initiate civil legal action to demand cessation of infringement and compensation for losses against any organisation or individual that “implements or assists in implementing discriminatory restrictive measures” taken by any foreign country against them. 

Further, the AFSL Provisions allow administrative measures to be taken against such organisations or individuals, including conducting interviews, orders to make corrections and other corresponding measures. 

In both such cases (civil & administrative cases), the related liabilities and administrative penalties apply to China-based and foreign organizations and individuals.

Legal consequences suffered in case of a failure to execute China’s countermeasures can entail the following: being ordered to make a correction, prohibition/limitation to partake in government procurement and in import/export of goods & services in general, prohibition/limitation to transfer/receive data and personal information across borders and prohibition/limitation to enter/exit China. 

Cooperations involving organizations or individuals against whom countermeasures have been taken are generally prohibited or limited unless an exemption is granted as per the AFSL Provisions. Such an exemption application must be submitted to the State Council department and documentary requirements, review timelines, and substantive evaluation criteria of the exemption mechanism remain subject to further clarification. 

Susanne Rademacher

Key Figures of 2024: A Year of Challenges and Actions

The report clearly highlights how complex and interconnected the landscape of data protection has become:

• 2,204 data breaches were reported across both public and private sectors—evidence of increasing exposure to risk and the need for a rigorous, proactive approach from all actors, especially in light of the Authority's increasingly strict sanctions in serious cases.
• 130 inspections were carried out, focusing on highly innovative areas: digital identity systems (SPID), facial recognition, video surveillance, and artificial intelligence applications. These audits underscore how the privacy challenge is increasingly intertwined with technological innovation and cybersecurity.
• 835 collegial decisions were adopted, including 468 corrective and punitive measures—a strong signal of the Authority’s growing attention to both repressive and preventive efforts concerning the most relevant violations. Sanction-related payments amounted to €24,430,856.45.
• Over 16,000 inquiries were handled by the Authority, reflecting a growing and tangible interest in data protection and the need for clear and authoritative communication to support citizens and businesses.

Privacy and Artificial Intelligence: Assessments and Perspectives

In 2024, the Authority focused on the profound implications of adopting artificial intelligence in key sectors: from digital healthcare to age verification, digital identity management, and the risks linked to web scraping for algorithm training. The dialogue between technological evolution and legal regulation is becoming increasingly intense, leading the Authority to reaffirm the need for strict, up-to-date governance in response to emerging digital scenarios.

Audit activities and decisions also addressed the sensitive issues of automated decision-making and profiling, as well as the cybersecurity of public and private infrastructures. The report calls on all data controllers to maintain a high level of awareness and responsibility in terms of both technical and organizational security.

Culture of Compliance: Rights and Trust at the Core

The Authority’s assessment is clear: building a culture of compliance and data security is no longer a mere regulatory requirement. It is a safeguard for the fundamental rights of individuals and an essential foundation for digital trust in society and the marketplace.

A renewed call is made to all stakeholders—public and private—to invest in training, continuous process updates, and transparency, in order to strengthen a digital ecosystem that protects the dignity, freedom, and security of every individual.

The 2024 Annual Report of the Italian Data Protection Authority portrays a country where personal data protection is no longer just a technical issue, but a social, legal, and ethical matter. From managing data breaches to AI innovation, the challenge is ongoing and demands that all players rise to the occasion—working together to build a safer, more inclusive, and more transparent digital future.

Article by Marco Cappa

1. Data Security & Cross-Border Data Transfers

China’s data regulation regime remains a top concern.

Laws Involved:

• Personal Information Protection Law (PIPL)
• Data Security Law (DSL)
• Cybersecurity Law
• Cross-Border Data Transfer Assessment Measures

Issues for FIEs:

• Whether their operations involve "important data" or large volumes of personal data that must undergo security assessments before export.
• Mandatory localization of certain data.
• Uncertainty around Standard Contract Clauses vs. government-led security assessments.

To-Do’s for FIEs:

• Assess compliance with the PIPL, DSL and Cybersecurity Law.
• Ensure data localization for sensitive or important data, including personal information and key business data.
• Conduct cross-border data transfer assessments and consider Standard Contract Clauses or government reviews.
• Review data-related contracts for data processing and privacy policies aligned with Chinese regulations.

2. National Security Reviews & Anti-Espionage Law

National Security Review Mechanism has been expanding in scope, especially for:

• Investments in sensitive sectors like semiconductors, defence, biotech, energy, and AI.
• Acquisitions of Chinese companies by foreign firms.
• Anti-Espionage Law (revised 2023) now includes broader definitions (e.g., data theft), impacting due diligence, audits, and market intelligence work by FIEs.

To-Do’s for FIEs:

• Review investment in sensitive sectors (e.g., tech, AI, semiconductors, defence).
• Evaluate acquisition targets for national security review risks and submit for approval when necessary.
• Train staff on espionage laws, particularly those handling proprietary data or conducting market intelligence.
• Ensure compliance with China’s Anti-Espionage Law; check protocols for sensitive information handling.

3. Corporate Governance & Compliance Under the Revised Company Law 

The amended Company Law impacts both domestic and foreign-invested entities:

• Capital Contribution Rules: Paid-in capital must be contributed within 5 years, not the open-ended terms allowed before.
• Increased Director Duties: Enhanced obligations on directors and supervisors for corporate misconduct.
• Stronger Compliance Culture: Regulatory expectations for internal compliance systems are increasing, especially in listed companies and FIEs in regulated industries.

To-Do’s for FIEs:

• Update company articles of association to reflect the latest Company Law revision, particularly around capital contributions, director duties, and supervisor roles.
• Enhance internal compliance systems for ensuring corporate governance practices meet legal standards.
• Establish and monitor an effective system for director responsibilities and liabilities under the new laws.

4. ESG, Supply Chain Transparency, and Forced Labor Allegations

Driven partly by Western regulatory pressure (e.g., U.S. Uyghur Forced Labor Prevention Act, EU CSDDD), foreign companies are under pressure to audit and verify supply chains.

China has pushed back, citing sovereignty, but companies need:

• Detailed supply chain due diligence.
• Legal strategies for reconciling Chinese anti-sanctions laws and Western compliance expectations.
• Legal complexity arises when complying with foreign extraterritorial laws might contradict China's Anti-Foreign Sanctions Law.

To-Do’s for FIEs:

• Conduct supply chain audits for forced labour risks, including compliance with the U.S. Uyghur Forced Labor Prevention Act and similar EU regulations.
• Ensure internal systems can track ESG criteria like emissions, human rights, and anti-corruption.
• Assess risk of reputational harm from not meeting global or domestic ESG standards.
• Review supplier contracts and ensure supply chain transparency practices are in place.

5. Foreign Investment Negative List & Encouraged Industries Catalogue

• Although the Negative List has been gradually reduced, some strategic sectors remain restricted or sensitive.
• There’s growing incentive alignment through the Encouraged Industries Catalogue, which offers tax and land policy incentives for investments in western/central China and green technologies.
• Companies must evaluate corporate structure and local partnerships carefully.

To-Do’s for FIEs:

• Ensure compliance with the Foreign Investment Negative List and Encouraged Industries Catalogue.
• Assess potential investments and verify capital structure (e.g., joint ventures, VIEs, wholly foreign-owned enterprises).
• Explore tax incentives and investment opportunities in western/central China or in green tech sectors.

6. Intellectual Property (IP) Protection & Technology Transfer

Enforcement is improving, particularly in IP courts, but:

• Concerns remain about compulsory licensing, local joint venture pressures, and protection of trade secrets.
• Legal scrutiny over non-compete clauses and employee mobility is increasing.

To-Do’s for FIEs:

• Review IP portfolios to ensure it is adequately protected under Chinese IP laws, including trademark, patent, and copyright laws.
• Evaluate risks around tech transfer requirements, especially in joint ventures or local partnerships.
• Strengthen trade secret protection measures for R&D operations in China.
• Stay updated on IP litigation trends in China and enforcement practices in specialized IP courts.

7. Employment Law and Workforce Localization

• Labor disputes are rising, particularly regarding layoffs, contract terminations, and salary adjustments.
• FIEs are being pushed to localize leadership or reduce expat headcounts due to cost and availability reasons.
• Social insurance audits and back payments are becoming more frequent.

To-Do’s for FIEs:

• Review labour contracts and employee handbooks to comply with Chinese labour law, including termination conditions, non-compete clauses, and social insurance.
• Prepare for potential labour disputes by establishing internal dispute resolution procedures.
• Verify social insurance contributions and ensure compliance with local regulations.

8. Exit Barriers & Capital Controls

• Repatriation of profits, dividends, or liquidation proceeds can be delayed due to forex controls.
• Government increasingly monitors suspicious outbound payments under FDI and transfer pricing rules.
• Legal due diligence is critical for structuring exits (e.g., sale vs. asset transfer).

To-Do’s for FIEs:

• Where needed, develop an exit strategy for potential sale, liquidation, or other exit events.
• Review capital controls and profit repatriation procedures to ensure compliance with foreign exchange regulations.
• Consider structure of divestments to minimize regulatory hurdles (asset vs. stock sale, etc.).
• Assess the impact of outbound investment restrictions and foreign exchange controls on your business in general and on any exit plan.

9. Anti-Monopoly Law & Fair Competition Review

China's Anti-Monopoly Bureau (SAMR) is actively reviewing:

• M&A deals involving foreign parties.
• Platform economies and abuses of dominance.
• New focus on fair competition reviews during tendering or market access, especially where foreign companies are bidding against SOEs or domestic champions.

To-Do’s for FIEs:

• Review mergers and acquisitions for potential anti-monopoly issues, especially for deals involving foreign players.
• Conduct fair competition review when participating in government tenders or other market access procedures.
• Evaluate market dominance risks if operating in platform-based businesses or highly regulated sectors.

10. Anti-Money Laundering Law and Disclosure of Beneficial Owners

• With the recent tightening of China's Anti-Money Laundering Law (last revised in 2024), foreign-invested enterprises (FIEs) are also increasingly coming under the scrutiny of regulators.
• A key innovation concerns the obligation to disclose ultimate beneficial owners (UBOs) to financial institutions and potentially also to competent authorities when establishing a company, changing its structure, or conducting certain business transactions.
• The definition of beneficial owner is increasingly aligned with international standards (e.g., FATF), but with local interpretations and implementation requirements.

To-Do’s for FIEs:

• Identify and document the beneficial owners of your Chinese companies in accordance with the current requirements. This includes, for example, natural persons who directly or indirectly exercise control over the company or receive significant economic benefits.
• Review group structures and shareholdings, particularly in complex holding structures, trusts, or cross-border constellations, to meet transparency requirements.
• Ensure compliance with disclosure obligations to banks, authorities, or business registrations, particularly for account openings, corporate actions, or other compliance-relevant events.
• Update internal compliance policies to meet anti-money laundering requirements and train relevant employees on identity verification and reporting requirements.

Susanne Rademacher
Dr Jenna Wang-Metzner

The financing of the EU's tasks must be secured in the long term and requires comprehensive budget planning. The basis of this budget planning is the so-called "Multiannual Financial Framework“, and the next one must be adopted unanimously by the Member States for the years 2028 to 2034 on a proposal from the European Commission with the consent of the European Parliament. The Commission presented its draft on July 16, 2025, and it is quite ambitious. But what exactly is the "Multiannual Financial Framework"? Which changes does it make compared to the previous funding period? What happens next?

What is the "Multiannual Financial Framework"?

Based on Art. 312 of the Treaty on the Functioning of the European Union (TFEU), the "Multiannual Financial Framework" (MFF), which is the responsibility of the European Commission, covers the EU's budget planning for at least five – usually seven – years. It determines the financial scope of the annual EU budget by setting binding ceilings. The focus is always on promoting European cooperation, particularly in terms of growth and competitiveness. Long-term budget planning enables investment projects to be aligned over several years and thus designed more efficiently. Variable elements of the MFF allow a flexible response to crises and emergencies such as natural disasters. Moreover, it enables financial resources to be deployed quickly and precisely.

In addition to the MFF, the EU also has subsidiary budgets. The most prominent example of this is NextGenerationEU (NGEU). This is a temporary recovery program that was launched in 2020 to deal with the economic and social impact of the COVID-19 pandemic. With a volume of more than EUR 800 billion, NGEU aims to finance economic recovery in the EU and promote investment.

There are also other budgets outside the traditional financial framework, such as the European Peace Facility (EFF). The facility was set up for the period 2021-2027 with a volume of EUR 5.69 billion and serves to support countries affected by military conflicts.

What are the main innovations of the MFF 2028-2034?

A – Increasing the budget and new sources of revenue

The Commission wants to significantly increase the budget. The current MFF 2021-2027 has a total volume of around EUR 1,211 billion, which corresponds to around 1.11% of the gross national income (GNI) of the EU-27. In addition, there are funds from the "Next Generation EU" reconstruction program amounting to around EUR 800 billion.

The current EU budget, including NGEU funds, therefore amounts to around EUR 285 billion per year. In comparison, the German federal budget alone is already around EUR 450 billion, i. e. almost twice as much.

The European Commission considers the current budget volume for the future MFF 2028-2034 to be insufficient, particularly regarding the need to overcome global instabilities and to finance climate protection and biodiversity. The European Commission wants to invest EUR 2,000 billion to future-proof the EU. "The next Multiannual Financial Framework is the most ambitious we have ever proposed. It is more strategic, more flexible, more transparent", says European Commission President Ursula von der Leyen. But where will this funding come from?

To keep the Member States' national contributions stable, the European Commission is trying to tap into new own resources. At present, the fulfilment of EU tasks is largely financed by contributions from the Member States, and they would rather "transfer less to Brussels" than more. On the one hand, ecological levies are proposed, i. e. revenues from the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) are to be used permanently as own resources, with 30 % of ETS revenues flowing into the EU budget in addition to the proceeds from the CBAM. On the other hand, revenue is to be generated from the taxation of multinational corporations: With the planned taxation of corporate profits in the EU through the BEFIT (Business in Europe: Framework for Income Taxation) instrument as well as revenue from the OECD-driven Pillar One of the global minimum tax system.

B – Changes

The heart of the new MFF are the national and regional partnership plans, which shall form the basis for investments and reforms. The European Commission would like to invest EUR 865 billion just for this.

In addition, the European Commission intends to modernize the Common Agricultural Policy (CAP) and adapt it to new ecological and social requirements. A further EUR 300 billion has been earmarked as income support for farmers, which corresponds to double the amount of the agricultural reserve compared to the previous MFF.

In addition, programmes to reduce economic and territorial disparities between regions should be more efficient and customs and excise duties should be optimized.

Another important proposal is the establishment of a European Competitiveness Fund with almost EUR 410 billion. This fund bundles up to 14 previously separate programmes, including innovation, digitalization, climate protection, health and defence, into a single, thematically focused fund. The aim is to promote strategic investments in key technologies, drive forward industrial decarbonization and strengthen Europe's global competitiveness.

What criticism is there of the planned changes to the MFF 2028-2034?

The European Commission's draft has not met with a positive response everywhere. The European Parliament has already rejected the European Competitiveness Fund proposed by the European Commission as inadequate. Large funds are considered unsuitable for guaranteeing parliamentary control. It also criticizes the model of a national plan per member state ("single plan"), as is practiced with the Recovery and Resilience Facility. The European Parliament will not accept any restriction of its duty of oversight and democratic control over EU funds. Instead, it is calling for a differentiated structure with strong parliamentary control and the involvement of regional and local authorities.

Several member states also reject a significant increase in the EU budget. If this were to be accompanied by an increase in the expenditure ceiling above the current level of 1 % of GNI, which in turn is criticized by the European Parliament and the European Commission. "Frugal" states such as Germany have already spoken out against an increase in the EU budget. France has even announced its intention to cut payments to the EU budget in 2026.

Many member states are sceptical about new, mandatory own resources and additional financial burdens that go beyond management or structural reforms. Regardless of the Commission's proposals for new financing instruments, differences remain, for example regarding the integration of new thematic areas or centralized control.

How will defence be financed?

There is overwhelming consensus on increasing the defence budget. The financing of defence is based on the European Defence Fund (EDF). This is the central EU instrument for promoting research, development and joint procurement of modern defence technologies. For the current period 2021-2027, the fund has a budget of EUR 7.3 billion at its disposal. Given the current geopolitical situation, the European Commission has invested EUR 910 million in strengthening the innovative and interoperable defence industry in Europe this year. The European Commission's proposal provides for a special mechanism with a financial impact of almost EUR 400 billion to deal with serious crises. EUR 131 billion is to be invested from the Competitiveness Fund in the areas of defence and space. A further EUR 100 billion is earmarked for Ukraine's recovery and resilience. 

In addition to the EDF, the European Commission is planning a comprehensive rearmament as part of its "ReArm Europe" initiative. To this end, it plans to borrow EUR 150 billion through capital market bonds. This should enable rapid and targeted investments without placing an undue burden on national budgets. Over the next four years, around EUR 800 billion will be mobilized, a large part of which is to be covered by an increase in national defence spending by the member states of 1.5 % of GDP.

Further considerations concern the establishment of a so-called "rearmament bank", which is supported by EU member states as well as foreign partners such as the USA and the UK, to simplify and bundle financing for defence technologies. This bank would issue triple-A bonds backed by the shareholder states and thus mobilize additional funds without increasing the debt levels of the member states.

What happens next?

The proposal for the 2028-2034 MFF submitted by the European Commission on 16 July 2025 will be discussed over the next two years. The new MFF must be adopted unanimously in the Council and by simple majority in the European Parliament.

How the European Commission will manage the balancing act between future-orientated policy with new tasks and expenditure desired by the European Parliament and the savings wishes of the Member States cannot be predicted. So far, negotiations have been characterised by the paradox that every Member State wants to get more out than it pays in. Furthermore, in the EU as elsewhere, regrettably, different points are being linked together: For example, the approval of EU sanctions with commitments in favour of individual EU Member States, as in the recent case of Slovakia's delayed approval of the 18th sanctions package against Russia. In the next two years, there will certainly be tough disputes over the proposal. Besides, the MFF 2028-2034 will certainly look different from what was proposed.

Gábor Báthory
Prof. Dr. Rainer Bierwagen
Christian Hipp
Dr. Dietmar O. Reich

Sources

Proposal of the European Commission

https://commission.europa.eu/strategy-and-policy/eu-budget/long-term-eu-budget/eu-budget-2028-2034_en

Parliament's priorities for the Multiannual Financial Framework from 2028 onwards | News | European Parliament

Budget proposal "simply not enough", say MEPs | News | European Parliament

Example comments from Baden-Württemberg

https://stm.baden-wuerttemberg.de/de/service/presse/pressemitteilung/pid/vorschlag-der-eu-kommission-fuer-mehrjaehrigen-finanzrahmen 

China is increasingly projecting its sovereignty into the global space, actively protecting its strategic interests and strengthening its enforcement capacity beyond its borders.

It does so through the massive use of extraterritoriality clauses embedded in its most "sensitive" laws (privacy, counter-espionage, dual use, cybersecurity, national security, unfair competition). These clauses allow China to extend the application of its domestic laws to subjects, behaviors, or legal situations outside its national territory, with cascading effects within its legal system or involving Chinese strategic interests. […]

[…] “This is a forward-looking application,” notes Laura Formichella, of counsel at ADVANT Nctm, “but we must not underestimate the scope of these clauses, whose legal reach goes well beyond physical territory. Extraterritoriality can be based on various factors, such as the nationality of individuals or companies, the location of the conduct, or the effects of such conduct within the State's territory. And China is showing its full ability to enforce its laws beyond its borders.”

Read the full article in the July 23, 2025 edition of Il Sole 24 Ore.

What the Sezioni Unite decided

Why this matters

1. Precedent for strategic litigation – The ruling is Italy’s first high-level endorsement of climate tort claims against a fossil-fuel producer, echoing landmark cases like Urgenda(NL) and Milieudefensie v. Shell (NL), but within a civil-law jurisdiction.
2. Expands the net of liability – By recognising claims against shareholders, the Court broadens potential defendants to include investors with controlling stakes, strengthening the hand of activists and minority shareholders alike.
3. Aligns with EU sustainability agenda – The reasoning dovetails with the forthcoming Corporate Sustainability Due Diligence Directive (CS3D) and the revised EU Emissions Trading Scheme, adding judicial pressure to legislative and market forces.
4. Heightens directors’ duties – Executives now face clearer litigation exposure if corporate transition plans fall short of the best available climate science, raising the bar for disclosure and risk management.

Action points for boards, banks, and investors

• Stress-test transition plans against a 1.5 °C pathway; ensure emission-reduction targets are credible, time-bound and science-aligned.
• Map group-wide exposure — include subsidiaries and joint ventures — and embed climate clauses in intragroup governance documents.
• Document stewardship by significant shareholders (not only state entities) to demonstrate active oversight of portfolio companies’ climate performance.
• Update litigation risk registers to reflect potential tort claims under ECHR-based arguments, not just statutory environmental breaches.
• Banks and investors to assess direct and indirect liability from financing hard-to-abate and carbon-intensive sectors and to include related risk in PD, LGD and EV/NPV considerations.

Looking ahead

The case now returns to the Rome Civil Court for a merits trial that could impose operational emissions caps on ENI or mandate shareholder-driven policy shifts. Regardless of the outcome, the Supreme Court has already reshaped Italy’s climate-litigation landscape: corporations can no longer rely on jurisdictional or political-question defences to sidestep ambitious climate suits. Expect a surge in filings targeting high-emitters (including companies active in hard-to-abate and carbon-intensive sectors), shareholders and potentially lenders, heightened investor engagement, and closer integration between EU regulatory reforms and domestic judicial enforcement.

Article by Riccardo Sallustio

With decision No. 118 rendered on 21 July 2025, the Constitutional Court intervened in the matter related to the regime of protections applicable in cases of dismissal by a “small” employer, declaring unconstitutional Article 9, paragraph 1, of Legislative Decree No. 23 of 2015, insofar as it provides a rigid and non-modifiable cap for the compensation due to employees in the event of unlawful dismissal, equal to six months' salary.

According to the Court, imposing a rigid cap on the indemnity without allowing the Tribunale any room for further evaluation of the specifics of the case undermines the effectiveness of the protection afforded to employees and does not serve as a deterrent against unlawful terminations.

The ruling does not challenge the legitimacy of a system that, for smaller companies, provides a differentiated regime based on reduced indemnity. That choice by the legislator is not questioned per se; rather, it is the rigidity of the upper limit that is deemed incompatible with constitutional principles, as it prevents any real assessment of the damage based on the peculiarities of the case.

As a result of the unconstitutionality of Article 9(1), limited to the words "and may not in any case exceed the limit of six months' salary", the indemnity in the case of smaller companies may now be adjusted by a judge between 3 and 18 months’ salary—i.e., half of the range provided for companies that exceed the numerical threshold.

The decision also notes that the number of employees is no longer a reliable indicator of a company’s real economic strength in the current economic scenario. As a result, the Court invites the legislator, in the event of a review of the applicable laws, to consider the introduction of additional parameters to calibrate the size of compensation in a manner more consistent with the actual characteristics of the employer.

The Constitutional Court had already raised concerns on the matter with decision No. 183 in 2022 and emphasized the existing misalignment between the rules applicable to smaller employers and constitutional principles. At that time, however, the Court decided not to intervene with a ruling and instead called for a reform of the matter, which has not been implemented.

Article edited by the Employment department of ADVANT Nctm. For more information click here

From Property Rights to Instruments of Power

Intellectual property rights – particularly patents – are traditionally understood as tools for protecting technical innovations. However, their role extends beyond exploitation through licensing or litigation. Rather, IP rights can be leveraged strategically to block competitors from market access, strengthen one's own strategic position, or even control critical infrastructures.

IP rights can thus become a strategic instrument through the consistent use of the existing legal framework, for example, by withdrawing licenses from certain players or by selectively sharing know-how. The accumulation of extensive IP rights portfolios in security-relevant technologies – such as satellite communication, drone technology, sensor systems, cryptography or artificial intelligence – can also serve as a strategic deterrent.

Those holding exclusive rights in key markets can not only block third parties from entering the market, but also activate regulatory leverage – for instance in the context of export controls, security reviews or investment screening procedures.

In this context, IP rights can be used strategically in a number of ways:

• Strategic Acquisition and Monopolization: Companies may seek to acquire or assert control over critical IP rights in key areas as a means of excluding competitors, shaping supply chains or restricting access to essential technologies.
• Enforcement of Sanctions and Export Controls: IP licenses or the transfer of IP-protected technologies can be leveraged to pursue strategic goals or undermine the capabilities of competitors or adversarial players. This applies in particular to dual-use technologies that can be used for both civilian and military purposes.
• Active IP Protection and Enforcement: Safeguarding relevant technologies from unauthorized acquisition or reverse engineering requires a robust and proactive approach. This includes not only preventive measures and internal security protocols but also the consistent extrajudicial and judicial enforcement of IP rights so as to prevent the outflow of expertise and ensure long-term competitiveness.
• Defense against Unwanted Technology Transfer ("IP leakage"):
  IP assets and sensitive technologies must be protected from strategically motivated access attempts by potentially adversarial partners or entities.

Leveraging the Legal Framework

For companies in the defense and aerospace sector, but also for companies that develop dual-use technologies, it is essential to develop a proactive IP strategy that addresses the aforementioned risks and at the same time optimally protects and uses their own IP assets. The existing legal framework offers numerous ways to achieve this objective:

1. Robust IP Protection: One essential measure is the implementation of a comprehensive IP strategy, including the protection of trade secrets and technical know-how. This also entails the consistent implementation of strict internal processes to protect confidential information.
2. Due Diligence for M&A Transactions and Cooperations: In M&A transactions or R&D partnerships, a thorough IP due diligence process is essential – not only to uncover potential infringement risks but also to assess dependencies on critical technologies or third-party rights.
3. Strategic Licensing and Technology Transfer Agreements: By drafting contracts appropriately and implementing technology transfer controls, companies can manage access to their IP rights while ensuring compliance with export control laws. This can include the inclusion of "clawback" clauses that allow for the withdrawal of licenses in the event of certain geopolitical developments.
4. Active enforcement of IP rights: In the event of IP infringements, swift and consistent legal enforcement is crucial. This can include legal proceedings, arbitration or recourse to customs authorities to prevent the sale and import of infringing products.
5. Geopolitical Risk Management in Contract Drafting: Contracts with international partners should explicitly include clauses that address the impact of sanctions, export restrictions or other geopolitical events on IP usage rights.

Conclusion

The strategic deployment of IP rights described above illustrate the great importance of IP rights in a geopolitical context. For companies operating in the defense, aerospace dual-use sectors, a sound understanding of these relationships and the resulting dynamics is essential. IP rights are no longer just a competitive factor but an integral part of risk mitigation and national security.

French Article available here 

Drafting comprehensive transfer pricing documentation is now considered the ‘minimum standard’ for ensuring tax compliance, managing tax risk and promoting tax transparency purposes in multinational groups. However, transfer pricing audits are increasingly scrutinizing the consistency between a company’s transfer pricing policies and the documentation provided.

As a result, it has become crucial for multinational groups to proactively assess and validate their transfer pricing arrangements through stress testing, ensuring robust compliance and minimizing potential audit risks.

Download now to learn more!

Article available here 

Comments from Paolo Lazzarino, Partner at ADVANT Nctm (Italy):

“The new Code of Practice released by the European Commission on July 10, 2025, marks a significant step toward transparency in artificial intelligence. One of its core elements is the requirement for developers of generative AI models to disclose what data was used to train them. This isn’t just a formality—it allows users, journalists, and other developers to understand the foundations behind AI-generated content. Think of it as a nutrition label for AI: knowing what a model was ‘fed’ helps to assess the reliability of what it produces.

“This focus on transparency is aimed to build public trust and increase corporate accountability. If we know whether the data comes from a certain media or archives, we can better evaluate the model’s potential biases and limitations. While the Code is voluntary, companies that adopt it show a commitment to responsible AI, anticipating the binding requirements that will come into force under the EU AI Act in the coming years.”

Comments from Paolo Gallarati, Partner at ADVANT Nctm (Italy):

“This will also contribute to raise awareness on the fair processing of personal data in AI training models, with a view to preserving the right balance between the legitimate interest of AI developers and data subjects’ consent: in fact, big data and machine learning can pierce the veil of anonymous data enabling the identification of individuals with technical means whose affordability was unimaginable just a few years ago.”

Comments fromGiulio Uras, Counsel at ADVANT Nctm (Italy):

“From a compliance standpoint, the EU’s newly released code of practice for general-purpose AI systems reveals not only the technical direction of AI Act enforcement, but also the political and economic balancing act the Union is currently engaged in.

“While framed as a voluntary tool, the code is clearly intended to become the de facto compliance path for major AI providers. For legal and compliance professionals working within the AI Act’s risk-based framework, the immediate challenge is operational: how to ensure conformity and due diligence in an environment where upstream transparency — particularly in relation to model documentation and training data — remains discretionary and, in many cases, asymmetrical.

“Beyond the legal mechanics, however, the broader picture is harder to ignore. The EU’s attempt to ‘simplify’ compliance via soft law mechanisms is, in reality, a defensive maneuver. With geopolitical uncertainty increasing — and transatlantic tensions, industrial policy shifts, and global AI races accelerating — Europe’s regulatory approach risks becoming both overly cautious and structurally rigid. The code’s voluntary nature may ease the short-term burden on industry, but it also delays legal certainty and fosters fragmented compliance strategies across jurisdictions and actors.

“Moreover, the EU’s efforts to accommodate industry concerns, while politically expedient, arguably dilute the AI Act’s foundational promise of trustworthy and safe AI. In practice, this risks creating a compliance framework that is neither robustly enforceable nor truly innovation-friendly — particularly for EU-based firms that do not have the scale or leverage of the major GPAI developers.”

"The swift and efficient recovery of outstanding debts over which no legal controversy exists is of paramount importance for economic operators in the European Union, as late payments constitute a major reason for insolvency threatening the survival of businesses, particularly small and medium-sized enterprises, and resulting in numerous job losses[1]."

This observation, made nearly twenty years ago, prompted the European legislator to provide creditors of the Member States with instruments to facilitate the recovery within the European Union of uncontested pecuniary claims that are due and payable.

From this concern emerged Regulation (EC) No 1896/2006 of 12 December 2006 creating a European order for payment procedure (the "EPO Regulation"), which entered into force on 12 December 2008, establishing a simplified, uniform, and swift procedure enabling creditors to recover their claims throughout the EU[2], while ensuring reduced processing times and lower costs associated with cross-border procedures.

Like the European Account Preservation Order (EAPO)[3], the European Order for Payment (EPO) aims to establish a harmonized procedural framework for cross-border debt recovery.

The purpose of the EPO Regulation[4] is twofold, as it aims to:

• On the one hand, simplify, speed up, and reduce the costs of litigation in cross-border cases concerning uncontested pecuniary claims by establishing a European order for payment procedure; and

• On the other hand, permit the free circulation of European orders for payment throughout all Member States by laying down minimum standards, compliance with which renders unnecessary any intermediate proceedings in the Member State of enforcement prior to recognition and enforcement.

The purpose of this article is to present the legal framework and regime of the EPO, which, after almost 20 years, remains a relatively unknown and underused cross-border debt recovery instrument, available to European creditors.

Scope and Application

The EPO applies in civil and commercial matters in cross-border cases, whatever the nature of the court or tribunal.

However, the Regulation excludes certain areas such as revenue, customs, or administrative matters, liability of the State for acts and omissions in the exercise of State authority, matrimonial property regimes, bankruptcy, social security, or claims arising from non-contractual obligations, unless they have been the subject of an agreement between the parties or an admission of debt or they relate to liquidated debts arising from the joint ownership of property[5].

The Regulation applies only in the context of a "cross-border case", defined as one in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seised of the EPO application[6].

The EPO is designed as an additional and optional means for the creditor, who remains free to use any other procedure to obtain an equivalent measure under national law[7].

Jurisdiction

Jurisdiction to issue an EPO is determined by Article 6 of the Regulation, which establishes the principle that jurisdiction is determined in accordance with the relevant rules of Community law, in particular Regulation (EU) No 1215/2012 (Brussels I bis Regulation).

By way of exception, if the defendant is a consumer, jurisdiction lies solely with the courts of the Member State where the defendant is domiciled[8].

In parallel, it is up to each State to determine which court has jurisdiction within its territory.

Claims Eligible for an EPO

To be eligible for an EPO, a claim must be both:

• Pecuniary, liquidated, and due at the date on which the application for the order is lodged: in other words, the Regulation does not apply to obligations to act or refrain from acting; and

• Uncontested by the debtor.

It should be noted, however, that the Regulation does not set a ceiling on the amount of the claim that may be the subject of an EPO, which may therefore be substantial.

Procedure

The application for an EPO is lodged by the creditor with the competent court by means of a unilateral and non-adversarial application (ex parte), using a standard form (set out in the Annex to the Regulation)[9].

Content of the Application

The application must contain a number of elements to precisely identify the claim and enable the defendant, if necessary, to oppose it. The following must therefore be specified[10]:

a) The names and addresses of the parties, and where applicable their representatives, as well as the court to which the application is made;

b) The amount of the claim, including the principal and, where applicable, interest, contractual penalties, and costs;

c) If interest on the claim is claimed, the interest rate and the period of time for which that interest is claimed, unless statutory interest is automatically added to the principal under the law of the Member State of origin;

d) The cause of the action, including a description of the circumstances invoked as the basis of the claim and, where applicable, the interest demanded;

e) A description of the evidence supporting the claim. However, the Regulation does not require the provision of the evidence of the claim itself, but only a description of that evidence.

f) The grounds for jurisdiction; and

g) The cross-border nature of the dispute.

Examination of the Application

To issue an EPO, the court examines the application "as soon as possible."[11]

The court verifies, on the basis of the information provided by the creditor in the application, that all the conditions laid down in the Regulation are met : i.e., cross-border dispute; pecuniary, liquidated, and due claim, civil or commercial; jurisdiction of the court seised, correctly completed form, etc[12].

If the aforementioned conditions are not all met, but the application is not manifestly unfounded or inadmissible either, the court may give the applicant the opportunity to rectify or complete the application, within a time limit set by the court[13].

The court may also make a proposal to amend the application if the requirements are met for only part of the claim[14]. In this case:

• If the claimant accepts the court's proposal, the EPO is issued and the procedure continues, but only for that part of the claim accepted by the claimant [15].

• On the other hand, if the claimant fails to send his reply within the time limit specified by the court or refuses the court’s proposal, the court shall reject the application for a EPO in its entirety[16].

If the conditions are met, the court issues the EPO "as soon as possible and normally within 30 days of the lodging of the application[17]" (excluding the time necessary to complete, rectify, or amend the application).

The court will, however, be required to reject the application in four cases[18]:

• If the application does not meet the required conditions.

• If the application is clearly unfounded.

• If the applicant has not responded to a request for additional information or rectification within the time limit set by the court.

• If the applicant has not responded to the court’s proposal for modification within the time limit set by the court or has rejected it.

No right of appeal lies against the decision rejecting the application[19].

However, the creditor will have the possibility to submit a new EPO application or to opt for any other procedure provided for by the law of a Member State[20].

Service of the EPO

To safeguard the rights of the defendant, the EPO must be served or notified in accordance with the national law of the Member State where service or notification is to be done.

The EPO is transmitted directly and as soon as possible between the entities of origin and the entities required, in one of the modes provided for by the Service Regulation[21], i.e., by means of a decentralized, secure, and reliable computer system.

Once in the required territory, the Regulation defines the possible methods of notification of the EPO, depending on whether it is accompanied, or not, by proof of receipt by the defendant.

Regarding the methods of service or notification with proof of receipt by the defendant[22], their use ensures that the defendant has knowledge of the document, or has refused it.

Regarding the methods of service or notification without proof of receipt by the defendant[23], to compensate for the lack of guarantee of actual receipt of the document by its addressee, the European legislator has provided an additional condition: their use is only possible if the defendant's address is certain.

In either case, service or notification may also be made to a representative of the defendant[24].

Opposition to the EPO

If the defendant disputes the debt claimed by the applicant, the defendant may lodge a statement of opposition to the EPO with the court that issued it[25], as long as the order is not yet enforceable, i.e., within a period of 30 days from its service or notification[26].

The debtor is not required to specify the reasons for the opposition; the debtor only needs to indicate that the claim is disputed[27].

The opposition is lodged using the means of communication accepted by the Member State of origin of the EPO (e.g., paper or electronic means)[28]. In France, for example, the opposition is lodged with the registry of the French court that issued the EPO, either by declaration against receipt or by registered letter[29].

The opposition has the effect of continuing the procedure before the competent courts of the Member State of origin of the EPO, in accordance with the rules of ordinary civil procedure[30].

However, if the applicant does not wish to risk incurring costs in the context of an ordinary procedure, the applicant may request, in the context of the initial EPO application, that in the event of opposition, the procedure is not automatically continued[31].

Review of the EPO

Once the 30-day period has expired without any opposition being lodged, the EPO becomes, in principle, final.

The European legislator has nevertheless provided for three exceptional cases in which the defendant, who has not been able to oppose the EPO within the prescribed period, may request a review before the competent court of the Member State of origin[32]:

• First case: if the EPO was notified without proof of its receipt by the defendant and within a period too short to enable the defendant to arrange for his defence, without any fault on his part[33].

• Second case: if the defendant was prevented from objecting to the claim by reason of force majeure or due to extraordinary circumstances, again without any fault on the defendant's part[34].

• Third case: if it is clear that the payment order was wrongly issued, having regard to the requirements set out in the Regulation or due to other exceptional circumstances[35].

In the event that the court rejects the defendant's request for review, the European order for payment remains valid and can therefore be enforced.

On the other hand, if the court considers that the review is justified, the European order for payment is null and void[36].

Enforcement

Unless the defendant opposes, the court that issued the EPO declares it enforceable "without delay[37]" after verifying the date on which the EPO was served or notified.

The court then sends the enforceable EPO to the applicant.

An EPO that has become enforceable in the Member State of origin is recognized and enforced in all other Member States without the need for a declaration of enforceability and without any possibility of opposing its recognition. In other words, the enforcement of the EPO in another Member State does not require an exequatur[38].

Under no circumstances may the EPO be reviewed as to its substance in the Member State of enforcement[39].

As a last resort, the defendant may request a refusal of enforcement of the EPO from the competent court in the Member State of enforcement in two situations:

• First situation: If the EPO is irreconcilable with an earlier decision or order previously issued in any Member State or third country, provided that the following three conditions are met: 

  1. The earlier decision or order was issued in a dispute concerning the same cause of action between the same parties, and

  2. The earlier decision or order fulfills the conditions necessary for its recognition in the Member State of enforcement, and

  3. The irreconcilability could not have been raised as an objection in the court proceedings in the Member State of origin.

• Second situation: if the defendant has already paid the claimant the amount awarded in the EPO.

Finally, the Regulation provides for the possibility of suspending or limiting the EPO in the event that the defendant has applied for a review in accordance with Article 20[40]. In this case, the defendant may request the competent court in the Member State to either:

• limit the enforcement procedure to protective measures, or

• make enforcement subject to the provision of security as determined by the court, or

• in exceptional circumstances, stay the enforcement proceedings.

An EPO which has become enforceable shall be enforced under the same conditions as an enforceable decision issued in the Member State of enforcement[41].

***

_{[1] EPO Regulation – Recital 6.}

_{[2] Except for Denmark and – prior to Brexit – the United Kingdom.}

_{[3] See B.Dors, Revisiting Cross-Border Debt Recovery Tools (Part 1): The European Account Preservation Order (EAPO): https://www.advant-altana.com/en/news/revisiting-cross-border-debt-recovery-tools-part-1-the-european-account-preservation-order}

_{[4] EPO Regulation – Article 1.}

_{[5] EPO Regulation – Article 2.}

_{[6] EPO Regulation – Article 3.}

_{[7] EPO Regulation – Recital 10.}

_{[8] EPO Regulation – Article 6 (2).}

_{[9] EPO Regulation – Article 7.}

_{[10] EPO Regulation – Article 7 (2).}

_{[11] EPO Regulation – Article 8.}

_{[12] EPO Regulation – Article 8.}

_{[13] EPO Regulation – Article 9.}

_{[14] EPO Regulation – Article 10(1).}

_{[15] EPO Regulation – Article 10(2).}

_{[16] EPO Regulation – Article 10(3).}

_{[17] EPO Regulation – Article 12(1).}

_{[18] EPO Regulation – Article 11.}

_{[19] EPO Regulation – Article 11 (2).}

_{[20] EPO Regulation – Article 11 (3).}

_{[21] Regulation (EU) 2020/1784 of the European Parliament and of the Council of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (recast)}

_{[22] EPO Regulation – Article 13.}

_{[23] EPO Regulation – Article 14.}

_{[24] EPO Regulation – Article 15.}

_{[25] EPO Regulation – Article 16 (1).}

_{[26] EPO Regulation – Article 16 (2).}

_{[27] EPO Regulation – Article 16 (3).}

_{[28] EPO Regulation – Article 16 (4).}

_{[29] French Code of Civil Procedure – Article 1424-8.}

_{[30] EPO Regulation – Article 17.}

_{[31] EPO Regulation – Article 17.}

_{[32] EPO Regulation – Article 20.}

_{[33] EPO Regulation – Article 20 (1.a).}

_{[34] EPO Regulation – Article 20 (1.b).}

_{[35] EPO Regulation – Article 20(2).}

_{[36]EPO Regulation – Article 20(3).}

_{[37]EPO Regulation – Article 18.}

_{[38]EPO Regulation – Article 19.}

_{[39]EPO Regulation – Article 22.}

_{[40] EPO Regulation – Article 23.}

_{[41]EPO Regulation – Article 21.}

This move is part of a strategic plan to strengthen the Labour department, which started a few months ago with the arrival of lawyer Patrizio Bernardo and his team. 

The new group will be based in Rome, ensuring better coverage of the area and an increasingly structured service that is closer to local clients.

ADVANT Nctm welcomes Enrico Boursier Niutta, Partner, and a team composed of Carlo Boursier Niutta (Of Counsel), an authoritative figure in the field, and Patrizio Maria Raimondi (Of Counsel), Antonio Armentano (Counsel), Paolo Angeli, Antonio La Bella and Mattia Grupposo (Advisors), Rosalina Panetta (Senior Associate) and Giulia Clementi (Associate), as well as two staff members.

As a result of the addition of Studio Boursier Niutta & Partners, ADVANT Nctm's Labour Department strengthens its position among the leading players in the sector, achieving a size and level of expertise among the most significant in the market, with 37 professionals. 

Enrico Boursier Niutta has significant experience in assisting domestic and international clients in the field of labour and trade union law and provides advice and assistance to companies in all areas of labour law, with particular focus on the following matters: corporate restructuring, incentive plans for executives, MBOs and fringe benefits, individual and collective dismissals, transfers of businesses, industrial relations and agency agreements.

Paolo Montironi, Senior Partner at ADVANT Nctm, comments: “We are thrilled to have reached this important deal with Enrico, Carlo, and their team. ADVANT Nctm keeps proving itself as an attractive place for boutique firms and well-known professionals, thanks to the quality of its organisation and a modern and transparent partnership model that values their skills while keeping their identity, offering at the same time the perfect space for growing business projects and professional relationships, as demonstrated by the recent additions of Studio Berlingieri (shipping, 2023) and Studio Zitiello (regulatory, 2024)”.

The total number of ADVANT Nctm partners now rises to 84.

Her arrival represents a further step in ADVANT Nctm’s growth in the area of corporate criminal law, also following the recent hiring of Luigi Orsi and Alice Baccin, which completes the structure of the current team, integrating synergistically with the firm’s existing expertise in compliance, thanks to the work of lawyers Paolo Gallarati, Raffaele Caldarone and Luca Cavagnaro. At the same time, a department specialising in White Collar Crime, Investigations & Compliance will be established, which will be coordinated by Raffaella.

This move strengthens the firm’s ability to provide clients with a fully integrated and strategic service in connection with the full spectrum of compliance activities and support in managing criminal risks related to their activities.

With extensive professional experience in corporate criminal law, Raffaella Quintana is top-ranked in leading international directories and deals with white-collar crime issues of all varieties, with a particular focus on cases concerning crimes against the Public Administration, tax crimes, corporate and bankruptcy related criminal offences, as well as environmental and health & safety criminal matters, privileged internal investigations and quasi-criminal corporate liability pursuant to Legislative Decree 231/2001. 

Raffaella Quintana joins the ADVANT Nctm’s Rome office with a team that includes Francesco Lalli and Federico Lucariello (Managing Associates), Ornella Belfiori and Francesca Cannata (Senior Associates) and three Trainees (Matteo Nicolì, Paolo Vespa and Jacopo Nicolaj). 

“We are delighted to welcome Raffaella and her team, and we are confident that this collaboration will enable the firm to strengthen and expand its offering, providing clients with increasingly comprehensive and solid legal assistance focused on complex transactions”, commented Paolo Montironi, Senior Partner at ADVANT Nctm. “In an increasingly complex regulatory environment, strengthening our criminal law practice will indeed enable us to better protect our clients, increase our competitiveness and offer high-level multidisciplinary solutions.” 

welcome to the June issue of ADVANT Beiten's International Briefing.

Germany remains one of the world’s most attractive destinations for foreign direct investments. This reputation is well-deserved, as the country offers a stable legal environment, a highly skilled workforce, and a dynamic industrial landscape, all of which create a robust foundation for successful business ventures. In ADVANT Beiten's newly released guide "Investing in Germany" our experts provide a comprehensive overview of the legal framework for foreign investments in Germany - practical, understandable and with extensive experience in the field of foreign direct investments.

This year our Beijing office proudly celebrates its 30^th anniversary. We are delighted to share with you an insightful interview with our Beijing team of Susanne Rademacher, Dr Jenna Wang-Metzner, and Lelu Li, highlighting their dedication and three decades expertise in the field of the inbound and outbound investments in China.

In this issue we will also highlight interesting developments in the European and German legal landscape, invite you to meet us at international events, and tell you about our recent deals.

You can find the newsletter by clicking here.

Kind regards,

Dr Barbara Mayer
Prof. Dr Hans-Josef Vogel
Dr Christian von Wistinghausen
Moritz Kopp

These appointments are part of the firm's internal growth strategy, aimed at enhancing its talents and building solid career paths. They represent a further step in strengthening ADVANT Nctm's competitiveness and professionalism.

Giuseppe Buono has extensive experience in banking and finance law and capital markets, with a particular focus on leveraged finance, real estate finance, project and corporate finance, as well as debt capital markets. He regularly assists banks, funds, and companies in both domestic and cross-border financing operations, overseeing their structuring and documentation. He has also managed numerous basket bond transactions in the Italian market.

Andrea Iovieno is an expert in corporate and capital markets law, with a focus on both equity and debt capital markets. He advises issuers, banks, and financial intermediaries on IPOs, capital increases, extraordinary transactions, and the issuance of debt instruments. He also provides legal assistance in public M&A transactions, as well as in matters concerning corporate governance and regulatory compliance.

Filippo Ughi has solid experience in corporate finance, M&A, private equity, and corporate law. He advises Italian and international industrial companies and investment funds in M&A, private equity, and corporate finance transactions, also offering ongoing corporate consultancy, from bylaws and governance to the operation of corporate bodies.

The recent launch of the International Organization for Mediation (IOMed) in Hong Kong has led to greater media attention on mediation for disputes involving China. At the same time, mediation has received significant attention by the legislators, judiciary and government agencies in China as a viable way to resolve also civil and commercial disputes.

China's judiciary has experienced unprecedented growth in caseloads, reflecting heightened public trust in legal institutions and expanded access to justice. From 2019 to 2024, courts witnessed a 67% increase in accepted cases—from 28.7 million to 48 million—signaling both progress and systemic pressure. This surge intersects with the statutory six-month adjudication deadline for domestic cases, creating the current operational challenges in the judicial system that litigants have to face. One of the ways in which the Chinese government is trying to resolve this impasse is by promoting mediation.

Mediation is essentially assisted settlement negotiations. More specifically, it is a voluntary and confidential non-litigation dispute resolution mechanism, in which two or more parties to a dispute attempt to reach an settlement with the assistance of a neutral and impartial third party, known as the mediator. The mediator does not have the authority to impose a binding decision on the parties but facilitates communication, promotes understanding, normally by focusing on the parties’ interests rather than on the legal details, and helps the parties identify mutually acceptable solutions.

Mediation is recognized under international legal frameworks, such as the UNCITRAL Model Law on International Commercial Mediation and the Singapore Convention on Mediation, as a flexible, party-centered method of dispute resolution. In China, it is used in both domestic and international disputes across commercial, civil, and other legal contexts.

1. China Mediation History

From a historical perspective, and without delving into imperial past, contemporary China has a long tradition of commercial mediation. 

• In 1987, the China Council for the Promotion of International Trade (CCPIT) Mediation Center was established, marking the beginning of specialized foreign-related mediation. 

• After China joined the WTO in the 21st century, institutions like the Shanghai Economic and Trade Commercial Mediation Center (SCMC) emerged, shifting commercial mediation from being mainly handled by business associations to a more diversified model, including centers like the “Belt and Road” International Commercial Mediation Center.

• Following the signing of the Singapore Mediation Convention in 2019, the judicial confirmation system enhanced the enforceability of mediation agreements, aligning cross-border mediation mechanisms with international standards. 

• In 2020, the Supreme People's Court launched a "one-stop" platform for international commercial dispute resolution. With the integration of online litigation-mediation connections, commercial mediation case volumes grew by over 30%.

   

2. The Current Legal Framework

2.1 Supportive Legislation 

The PRC foundational legal framework for mediation can be summarized as set out below.

The last piece of legislation is particularly significant, as it enables parties involved in institutional mediations in the PRC to apply for judicial confirmation of their settlement agreement. Judicial confirmation allows the court to formally endorse the agreement, thereby granting it the same legal force and enforceability as a court judgment. Naturally, this mechanism has its limitations: courts may decline confirmation if the settlement contains provisions that are overly complex or difficult to enforce. Nonetheless, it offers a valuable tool for reducing time and costs in cases where one party fails to comply with the terms of the agreement.

In addition, China is one of the signatories of of the Singapore Convention on Mediation which provides that certain international commercia settlement agreements resulting from mediation may be directly enforceable in member countries.

2.2 Recent Policies

China has recently introduced a range of policies to support and promote the development of mediation. For instance, the 2024 Legislative Work Plan of the State Council lists the Regulations on Commercial Mediation as a key legislative project. Central policy documents, such as the Decision on Further Deepening Reform Comprehensively to Promote Chinese-Style Modernization, call for the improvement of international commercial arbitration and mediation systems.

The Supreme People’s Court and the Ministry of Justice have also issued opinions on further strengthening institutional mediation under the new circumstances. These aim to expand the scope and coverage of mediation, enhance the coordination and integration between mediation and litigation procedures, promote innovation and efficiency in mediation mechanisms, and advance the legalization of mediation.

Institutions such as the CCPIT Mediation Center the Shanghai Commercial Mediation Center and the more recent Shanghai International Commercial Mediation Center have also received strong support and development. 

On 21 November 2024, the local legislature of Zhuhai, Guangdong Province (the Standing Committee of the Zhuhai Municipal People’s Congress) adopted the “Commercial Mediation Regulation of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin” which came into effect on 1 January 2025.

3. Characteristics and Function of Mediation 

Mediation conducted within a legal framework—particularly in the commercial context—offers distinct advantages that make it an increasingly attractive method of dispute resolution.

First, mediation is voluntary. Unlike litigation, no resolution is imposed; a settlement is reached only if both parties agree, preserving autonomy and fostering cooperative solutions.

Second, mediation is confidential. Proceedings are not open to the public, documents remain confidential, and mediators are bound by duties of confidentiality. It is important to note, however, that while the information and documents exchanged in mediation are confidential, they are not privileged—meaning that parties may still rely on them in any subsequent litigation.

Third, mediation is both cost-effective and flexible. It typically allows for faster resolution than litigation, conserving time and resources—an essential feature in commercial disputes that often require prompt outcomes. While litigation may involve complex procedures and unpredictable outcomes, commercial mediation offers a streamlined process, usually concluding within 30 days.

Mediation is particularly well-suited to cases where both parties are acting in good faith—when each genuinely believes they are in the right, or when both wish to resolve the dispute amicably and preserve an ongoing business relationship. It is also especially valuable in disputes involving complex issues, where a negotiated solution may be more appropriate than a rigid legal judgment, and where the amount at stake may not justify the high costs of protracted litigation.

Most significantly, mediation agreements that receive judicial confirmation carry the same legal force as court judgments. This ensures not only the authority but also the enforceability of the settlement, providing parties with both certainty and finality.

In sum, when supported by a robust legal framework, commercial mediation stands as a powerful alternative to litigation—offering efficiency, confidentiality, and enforceability, particularly in cases where mutual understanding, complexity, or cost considerations make traditional proceedings less appropriate.

By Hermes Pazzaglini and Yijun MU

The Standing Committee of the National People’s Congress (NPCSC) of the People’s Republic of China recently released its 2025 Legislative Work Plan. 

I. What Is the Legislative Work Plan? 

The PRC is a country in a state of journeying, aiming at an ultimate ideal which is identified with communism through a series of intermediate steps. From a legal point of view, the underlying mindset implies on one hand the CPC leadership as a constitutional principle, on the other hand a legislation work that by meeting annual objectives and systematically implementing successive five-year plans.

In this step-by-step journey mindset, the last intermediate, the CPC regards that the goal of “solving the problem of extreme poverty and creating a moderately prosperous society” has been achived in 2021. The current goal will be to achieve “basic socialist modernization” by 2035, i.e., in the space of two five-year plans.

The broader vision extends to the middle of the century, with the goal of “transforming China into a modern socialist country that is prosperous, democratic, culturally advanced, harmonious, and beautiful—ultimately contributing to the realization of national rejuvenation”, which in more immediately practical terms will probably mean:

• increasing per capita GDP, avoiding significant income imbalance
• broadening society’s participation in decision-making processes and creating a more rule-based, predictable environment
• promoting education, technology, talents, sports and fine arts
• promoting personal development, social equity fair income, and accessible public services
• ensuring environmental protection and sustainability
• raising the PRC’s profile in the international community.

II. What Are the Highlights of This Year’s Plan?

The 2025 legislative plan carries particular significance. As the final year of the 14th Five-Year Plan (2021–2025), it not only marks the conclusion of existing initiatives but also sets the stage for the next phase of national development. This year's legislative work shows not just the direction of 2025 but also hints at the country’s longer-term priorities.

In fact, based on the mid-term evaluation of the 14th Five-Year Plan and the 2035 long-range goals, initial directions for the 15th Five-Year Plan (2026-2030) are already taking shape. These include a continued emphasis on innovation-driven growth, green and low-carbon development, and the digital transformation of industries. Broader strategies aim to boost domestic consumption, unlock investment potential, and strengthen research in core technologies for strategic sectors. China is also expected to deepen support for enterprise innovation, enhance talent attraction, and further improve the overall business environment.

In line with these strategic objectives, the 2025 legislative plan has been structured to reflect and support national priorities. It is divided into six sections, with the second section—Drafting and Reviewing Legislation—serving as the core component. The laws listed in this section are closely tied to the major goals of the 14th Five-Year Plan. I summarize them as follows:

III. How Should We View This Year’s Plan?

First, the key focus remains economic development and high-quality growth. That is also the legislative priority.

After the Deng Xiaoping’s reforms, China’s rapid growth came from structural acceleration—more labour, more factories, and better use of resources. Labour participation rose, industrial technology spread, and capital moved from agriculture to manufacturing. In recent years, China has entered a phase of structural slowdown. Labor participation is falling. Returns on capital are declining. Innovation in manufacturing is hitting limits. Service industries and traditional sectors face increasing pressure to upgrade. As quantity reaches a ceiling, quality must take over.

China’s most pressing economic challenge probably lies in structural overcapacity—an excess of production capacity relative to domestic demand. This imbalance, I believe, underscores that selling to China is harder than buying from China. Should foreign enterprises nevertheless seek to enter this market, the critical question becomes: What unique value can they offer?

Examining China’s legislative priorities provides clarity. While certain themes—such as democratic governance, national unity, and security frameworks—lie beyond the immediate concerns of foreign investors, others align directly with evolving societal aspirations, with increase emphasis on quality of life, cultural enrichment, and environmental stewardship. In particular:

1. Healthcare and lifestyle: Demand persists for advanced medical technologies, precision diagnostic tools, and nutrient-rich functional foods tailored to wellness-conscious consumers.
2. Sustainability and outdoor living: China now promotes the idea that “green mountains and clear waters are mountains of gold and silver.” This shift favors European manufacturers of premium bicycles, electric off-road vehicles, and durable outdoor equipment. Urban development patterns reflect this ethos: vacant parcels are increasingly repurposed as green corridors, riverfront trails, and communal parks rather than residential complexes.
3. Cultural enrichment: Opportunities abound in touring theatrical productions, arts education partnerships, and cross-cultural performances. Shanghai Culture Square, adjacent to our offices, exemplifies this trend through its 2025 lineup featuring European productions like Molière, l'opéra urbain and Mozart.

To stand out in the Chinese market, a product must offer a clearly articulated advantage over domestic alternatives. Competing on price alone is difficult. Instead, emphasis should be placed on what sets your product apart—whether in quality, distinctiveness, or overall appeal.

IV. Conclusion 

In recent years, China has continued to move gradually forward with its policy of reform and opening-up, taking steps to enhance its legal and regulatory environment in ways that facilitate greater international engagement. While the country is steadily expanding its cooperation with foreign partners and easing access for international business and travel, it continues to maintain a distinction between purely domestic matters and those with a foreign or cross-border dimension. In Particular:

• The 2020 Foreign Investment Law abolished the legal distinction between foreign-invested companies and purely domestic companies.

• From 2021 to 2022, China amended many laws to deepen reform and opening-up. Examples include the Hainan Free Trade Port Law and the Customs Law. 

• In 2024 and 2025, foreign-related legislation is gaining momentum. The 2024 legislative plan emphasized improving foreign-related legal frameworks. New laws and amendments focused on customs, quarantine, anti-money laundering, and foreign-related provisions.

• In 2025, China has submitted to the NPC Standing Committee amendments to the Foreign Trade Law. It has also issued regulations on foreign-related intellectual property disputes, mediation guidelines, and new rules for using the national emblem abroad. Further revisions are expected to laws on immigration, customs, technology imports and exports, labour cooperation, and international shipping. Legislation on outbound investment is underway. China is also engaging in treaty review and international legal reform to promote peace and global development. 

• Additionally, China is implementing visa-free and visa facilitation policies: it has signed comprehensive visa exemption agreements with 26 countries, unilaterally offers 30-day visa-free entry to citizens of 43 countries including France, Germany, and Italy, and from 17 December 2024, China will introduce a new transit visa exemption policy for citizens of 54 countries. This policy extends the transit stay period to 240 hours (10 days) and adds 21 new ports for visa-free transit entry and exit.

Overall, China's ongoing legal reforms demonstrate a constructive openness toward international cooperation, particularly in areas such as trade, investment, intellectual property, and people-to-people exchanges. 

Hermes Pazzaglini
Ma Leyan

You can download the entire file by clicking ‘Download associate files’.

While the German export model has occasionally come under pressure, German exports to India were able to increase by EUR 5 billion in the last five years. Overall, German companies exported USD 18.3 billion worth of goods to India in 2024 - 2.6 percent more than in the previous year and a new record. The total value of German imports from India was USD 15.1 billion in 2024. India's growing role as a procurement market for electronics is striking. German imports amounted to approximately USD 1.1 billion (plus 62 percent). According to the German Federal Statistical Office, the bilateral trade in goods between the Federal Republic of Germany and India reached an overall new all-time high in 2024. 

India is pursuing ambitious economic goals. The vision of expanding its own economy to a volume of 30 trillion US dollars is ambitious, but by no means utopian. A growing domestic market, favourable demographic developments and a progressive economic liberalisation make the country an attractive target for investments. Already today, India is the world's fifth-largest economy and a key player in world trade and in global supply chains. With the exception of the coronavirus crisis year 2020, the country has recorded stable economic growth for many years.

Diljinder Singh and Markus Linnartz had the opportunity to attend the conference of the International Bar Association (IBA) in Mumbai from 3 April to 4 April 2025. Under the title "Mergers and Acquisitions in India: A Key Engine to the USD 30 Trillion Goal" more than 230 lawyers and business representatives from more than 20 countries met together - an impressive sign for the growing international importance of the Indian market.

As the M&A activities in India in the financial year 2024-25 amount to almost USD 100 billion due to private equity and structural reforms, the role of M&A as an expansion tool for India's growth trajectory was highlighted at the conference. The IBA Conference was fully booked and offered a variety of exciting insights and perspectives. The increasing importance of financial investors positioning themselves as strategic buyers in India was discussed. The impact of geopolitical developments on international transactions were also intensively discussed. At the same time, it was clear how much technological innovations were now shaping M&A processes and how corporate governance standards for listed companies in the Indian market were evolving.

A panel discussion on private equity and financial investors was of particular practical relevance. The development of transaction structures and strategies as well as current trends were debated. This showed that the Indian market continues to struggle with uncertainties despite progressive legal frameworks such as the Insolvency and Bankruptcy Code (IBC) - among other things, with regard to deadlines, access to information and evaluation criteria. This makes it even more important for activities to be professionally supported by consultants who know the market, the business and the right contacts.

A particularly interesting aspect for international investors was the discussion about the so-called "clean slate" principle. It is intended to ensure that buyers are not liable for the insolvent company's inherited liabilities in the event of a takeover. However, there is still uncertainty, especially when it comes to tax liabilities: is it really guaranteed that any tax debts will be completely waived? This is a crucial point for investors - for, unanswered questions about tax treatment can have a significant impact on the risk assessment and transaction structure in the case of takeovers.

Conclusion and Outlook

Participation in the conference was extremely enriching, instructive and impressively demonstrated: India is not only one of the most exciting growth markets worldwide, but also an increasingly regulated and professional environment for international M&A transactions.  It is still important to always consider economic opportunities in conjunction with the legal and tax framework.

We look forward to contributing our expertise to the India panel at the IHK-Außenwirtschaftstag NRW in June 2025 and to supporting the economy in NRW on its way to India and its organisation.

ADVANT Beiten provides legal and tax advice to medium-sized companies and has been supporting cross-border investments and M&A projects for many years. In recent years, India has played an increasingly important role here - for internationally operating companies or those who would like to become one.

Autor: Markus P. Linnartz
Beteiligter Experte: Diljinder Singh Walia

Despite this, hydrogen remains a key technology in the eyes of the new coalition government. With the special infrastructure fund^[2] on the one hand and the prospect of an expanded framework for state aid on the other, there is indeed new impetus that gives hope.

Reason enough to take a look at the political agenda and the corresponding levers in the regulatory framework. 

What does the coalition agreement say?

The future of the hydrogen economy is negotiated centrally in the coalition agreement in no less than twenty lines (p. 34), which are a tough sell:

Pragmatism instead of dogmatism

The development of the hydrogen economy should be faster and more flexible. In addition, "all colours" of hydrogen are to be used - in other words, a technology-neutral approach is to be pursued. The previous focus on green hydrogen in particular will thus be abandoned. Moreover, the focus of the future certification system (probably for both green and low-carbon hydrogen) is on making it unbureaucratic.

Broad infrastructure expansion

With additional routes and taking into account hydrogen storage facilities, the hydrogen core network is to be supplemented by a distribution network infrastructure to ensure a connection to the industrial centres in the south and east. In addition, European and German harbours are to be integrated into and connected to the necessary infrastructure for the import of hydrogen.

Stabilise funding instruments

National and European funding programmes are still needed to develop infrastructures and domestic production capacities. The coalition agreement explicitly mentions H2Global, IPCEI projects and specific programmes for SMEs.

Further ideas for additional incentives for the demand for hydrogen can already be found on p. 6 of the coalition agreement. There, climate-neutral lead markets are outlined via the quota regime (e.g. for green steel) or levers under public procurement law.

What does the European Clean Industrial Deal make possible?

If the Commission has its way, Germany (and the other Member States) will in future have an extended framework under state aid law for the promotion of investments in hydrogen ramp-up.

The draft Clean Industrial Deal^[3] presented by the Commission in February also explicitly provides for a new aid framework (Clean Industrial State Aid Framework - CISAF^[4]). This is intended to complement the existing guidelines for state aid for environmental, climate protection and energy. As the name already suggests, the focus is on industrial policy requirements. In addition, the present draft explicitly recognises the challenge of the cumulation of different state aid vehicles and attempts to resolve this.

In addition, further impetus for the hydrogen industry is expected from Brussels. For instance, the delegated act on low-carbon hydrogen is to be adopted in 2025 to create clarity for investors. This will be accompanied by a study to assess the effectiveness of the current regulatory framework and to identify potential obstacles to the expansion of renewable hydrogen.

In the second quarter of 2025, a hydrogen mechanism is to be introduced via the European Hydrogen Bank (EHB) which will bring together buyers and suppliers and provide financing and risk mitigation instruments. A third bidding round of the EHB with a budget of up to EUR 1 billion is planned for the third quarter of 2025.

Seize opportunities - minimise risks

With the change of government acting as a catalyst, the legal framework for the hydrogen economy, including the funding landscape, is likely to change again over the next few months.

In addition to new funding vehicles, however, adjustments to existing privileges cannot be ruled out.

For instance, in its recently published discussion paper on the further development of the general grid fee system, the Federal Network Agency casts doubt on the appropriateness of the existing 20-year grid fee privilege for electrolysers.^[5]

Hence, flexible regulations are needed in the contractual design of projects that safeguard economic interests even against the backdrop of a constantly changing legal situation. 

In addition, funding law challenges must be overcome when cumulating privileges. This is because national regulations can also fall under cumulation bans beyond the subsidies approved under state aid law, e.g. as part of the IPCEI waves or the EHB tender processes. Finally, there is also a risk of reclaims if funding recipients violate public procurement law requirements when using the funding. In procurement processes, the framework set by the respective funding provider and the applicable public procurement law should therefore be observed without exception to avoid unpleasant surprises - e.g. in the context of a later audit of the utilisation of funds.

Conclusion

With the special infrastructure fund on the one hand and the short-term expansion of state aid instruments on the other, the chances of a successful market ramp-up in Germany are better than they have been for a long time.

In addition, Katherina Reiche is a proven expert at the head of the BMWE who credibly stands in favour of consolidating the legal framework. The speed at which the requirements for new projects and those already being realised are likely to remain high.

Authors: Sebastian Berg and Max Stanko

Experts involved: Julian Gruß and Johannes Voß-Lünemann

^[1] Cf. BDEW, Strombezugskriterien Delegierter Rechtsakt für RFNBO-konformen Wasserstoff, with clear criticism of the current design of the additionality and temporal correlation criteria, available at: Strombezugskriterien Delegierter Rechtsakt für RFNBO-konformen Wasserstoff | BDEW

^[2]In this respect, the DVGW is calling for a further 50 billion from the special infrastructure fund to finally boost the market ramp-up, DVGW e.V.: 2025-04-23 - Sondervermoegen.

^[3]See also: EU-Kommission stellt den Action Plan for Affordable Energy als Teil des Clean Industrial Deals vor | ADVANT Beiten

^[4] See draft version under 45b532ce-53fb-4907-975c-79edaa31a166_en.

^[5] BNetzA, Bundesnetzagentur - Presse - Bundesnetzagentur veröffentlicht Diskussionspapier zur Bildung der Stromnetzentgelte.

The need for innovative technologies for defence, cyber security and reconnaissance is increasing. At the same time, start-ups that provide new impetus for Europe's security architecture with artificial intelligence, robotics and drone technologies are playing an increasingly important role However, one thing remains crucial for this trend to be sustainable: Without sufficient funding from venture capitalists on the one hand and the awarding of public contracts to start-ups on the other, many of these ideas will remain stuck in the early development phase.

Current developments and market trends

For a long time, defence start-ups in Europe were considered a niche phenomenon. But this is changing rapidly. According to a report by the NATO Innovation Fund and Dealroom, around USD 5.2 billion was invested in European defence start-ups in 2024 - an increase of 24 per cent compared to the previous year. Germany has surpassed the United Kingdom as the largest target market for investment in this sector. Munich in particular has established itself as the European centre for defence tech, with almost USD 1 billion in investments in 2024 alone.

Paradigm shift 2025: safety precautions are the new ESG

Since the Munich Security Conference 2025 at the latest, it has been clear that Europe must increasingly stand on its own two feet in terms of security policy. With Donald Trump's return to the White House and the clear strategic reorientation of the USA away from European security guarantees, the era of the American defence umbrella is in fact history. The consequence: Europe must secure its own defence capabilities - technologically, militarily and financially.

This geopolitical upheaval has also changed investment logic.

Just a few years ago, investments in military technologies were often rejected across the board with reference to ESG criteria. The idea that "defence" per se was incompatible with ethical and sustainable investing shaped the investment criteria of many VC funds. Today, this view is considered outdated, as a new understanding now prevails: There is no sustainability without security.

The defence of democratic societies, the protection of critical infrastructure and resilience to hybrid threats have become the central pillars of a new ESG approach - one that does not exclude geopolitical reality but rather integrates it.

This can be seen not least in practice: More and more family offices, sovereign wealth funds and topic-specific VC funds are opening up to investments in security-related start-ups. The NATO Innovation Fund (with a volume of EUR 1 billion), the Estonian DeepTech Defence financing model and new funds such as Helantic are examples of this development.

Helantic - a new defence fund based in Switzerland - plans to invest EUR 100 million specifically in defence and dual-use start-ups. The focus is not only on end products such as drones or robotic systems but also on components such as batteries, sensors or software architectures. What is crucial, according to the founders, is that a specific civil-commercial market is developed and that the founding team has commercial excellence and a sense of responsibility in terms of security policy.

A look at current fund structures in Europe shows a growing diversity of approaches that complement each other: Although Helantic is based in Switzerland, the investment focus is clearly on Germany and Europe. Around half of the planned fund volume of EUR 100 million is to be channelled into German start-ups. The high density of qualified engineers, the excellent research infrastructure and the large number of successful spin-offs from German universities are decisive for this focus. The allocation of funds reflects this strategic focus: 50 per cent of the fund volume is earmarked for Germany, 30 per cent for Central and Eastern Europe and 20 per cent for promising global markets.

Estonia is also increasingly positioning itself as a driving force for defence-related innovations: With a newly created state defence fund totalling EUR 100 million, the Baltic country is investing specifically in military and dual-use technologies. Managed by the investment company SmartCap, the fund supports both start-ups and specialised venture capital funds. The aim is to strengthen the domestic industry, create new jobs and expand Europe's technological sovereignty.

In Germany - especially in Munich, which became a hotspot for defence tech investments in 2024 - almost USD 1 billion has gone into defence-related start-ups. The trend is clear: Investing in security today means investing in stability - and in the future of Europe. 

Successful examples from practice

Taking a look at the start-up landscape reveals that success stories do exist. The Munich-based company Helsing develops AI solutions for analysing sensor data for military systems and closed a financing round of EUR 450 million in 2024. For instance, the German robotics start-up ARX Robotics, which develops modular unmanned vehicles, recently received funding from the NATO Innovation Fund.

Outlook and recommendations

To realise its full potential, the start-up scene needs:

• More specialised venture capitalists with a deep understanding of dual-use technologies,
• More efficient regulatory processes and better interfaces between companies, investors and ministries, in particular the possibility of awarding major contracts to young start-ups instead of only to established companies, and
• A broader social understanding that defence and innovation are not mutually exclusive.

Only if it succeeds in combining key elements - specialised capital, regulatory clarity and social understanding - will Europe be able to compete for security-relevant technologies in the long term. Venture capital plays a crucial role here. However, it is just as important for politicians to take a positive and pragmatic attitude towards the numerous defence start-ups. They should become an integral part of a new procurement strategy for European armies so that the latter can benefit from the fast innovation cycles of start-ups.

The initial positive trends in this field described above must now be transformed by all stakeholders into a sustainable development stage. To achieve this, it is essential to substantially increase the acceptance of both defence tech and venture capital across society as a whole. Only with the help of start-ups will we be able to at least partially close the innovation gap between Europe and the USA and Asia and at the same time improve the European security situation.

Danielle Golinski, LL.M.
Dr. Mario Weichel

As the third largest economy worldwide after the US and China, and as the largest economy within the European Union, Germany is a major destination for foreign direct investment. Germany is consistently ranked as one of the most attractive destinations based on its stable legal environment, its skilled workforce and the innovation skills of its numerous industrial mid-cap companies. 

The German government and the European Union have made it a priority to secure and develop the industrial basis for critical technologies in Europe and we can already see a trend for increased foreign direct investment into Germany in greenfield projects aimed at making supply chains more resilient to trade barriers and geopolitical risk. We expect this trend to continue, as international players strengthen their footprint in the 450 mio + European Union consumer market. ADVANT Beiten will offer you an excellent gateway to Germany and to the European Union internal market.

We hope this series will provide you and your company the information you need to take your first steps towards market entry or the development of your business in Germany!

You can download the entire series by clicking ‘Download associate files’.

© BEITEN BURKHARDT Rechtsanwaltsgesellschaft mbH, 2024/2025

To order a PRINTED COPY, please send an e-mail to events@advant-beiten.com with the subject line "Printed copy: Investing in Germany" and the desired language (English or Chinese).

By order issued by the President of the United States on April 2, the U.S. government adopted new tariffs which provide for additional ad valorem duties on imports of products from all foreign countries.

The new protectionist policies adopted by the U.S. government – which took effect at midnight on April 2 – also apply to imports from the European Union.

Below are the main provisions introduced by the new measures:

• in the automotive sector, a 25 percent tariff is introduced on imports of cars, trucks and related components from all foreign countries (for components, the measures will take effect by May 3);

• imports of all goods from foreign countries into the U.S. customs territory are subject to an additional ad valorem rate of duty of 10 percent, effective April 5;

• for many countries, the rate is expected to rise from April 9. In particular, the European Union (and, consequently, Italy) will be subject to a rate of duty of 20 percent; for China, the rate goes up to 34 percent;

• certain products are currently excluded from the new tariffs. These include pharmaceuticals, lumber and semi-conductors, several precious metals (including gold, silver, platinum and copper), energy products (including oil) and critical minerals, as well as all goods subject to specific measures.

The new provisions complete an initial set of measures previously issued on February 10, whereby the U.S. government had imposed a rate of duty of 25 percent on steel and aluminum imports.

2. THE IMPACT OF CUSTOMS TARIFFS ON COMMERCIAL AGREEMENTS

Besides the clear economic and commercial impact, the introduction of additional duties may have a direct effect on all commercial agreements - whether existing or yet to be signed - involving the supply of goods to the United States.

In particular, for agreements already in place, fulfilling contractual obligations in light of the increase in tariffs may prove to be significantly more burdensome than expected – or reasonably foreseeable – at the time of signing.
First and foremost, it is advisable to conduct a preliminary review of the individual contractual clauses, checking for the presence of:

• provisions on governing law and jurisdiction, to determine whether the agreement is subject to Italian law (and, consequently, to the possible remedies provided by the Italian Civil Code);

• any delivery terms (so-called “Incoterms”) to verify the allocation between the parties for customs duties related to import/export;

• any clauses on renegotiation and/or early termination upon occurrence of certain circumstances (e.g. force majeure clauses or hardship clauses).

2.1 Remedies under the Italian Civil Code

For commercial agreements subject to Italian law – lacking specific contractual remedies agreed upon by the parties – the Italian Civil Code provides for certain legal instruments that may mitigate the impact of the new tariffs on the original contractual terms. In particular:

• supervening impossibility of performance due to causes not attributable to the debtor (pursuant to Articles 1218, 1256 and 1463 et seq. of the Italian Civil Code);

• supervening hardship (pursuant to Article 1467 et seq. of the Italian Civil Code);

• provisions on supplementary equity (pursuant to Article 1374 of the Italian Civil Code) and obligations to interpret and perform the contract in good faith (pursuant to Articles 1366, 1375 of the Italian Civil Code).

Supervening impossibility of performance refers to any situation preventing performance that cannot be foreseen and cannot be overcome with the effort that may be legitimately required of the debtor. According to the general principle laid down in Article 1218 of the Italian Civil Code, if the non-performing party proves that the default was a consequence of the impossibility of performance for “reasons not attributable to such party”, the latter may be held not liable.

In cases of definitive supervening impossibility, the contractual obligation is extinguished, resulting in the automatic termination of the agreement (either in full or partially, if the impossibility affects only part of the performance). If the impossibility is only temporary, the performance of the obligation may be legitimately suspended.

That said, while each commercial agreement should be assessed on a case-by-case basis, the new tariffs (at least in general terms) do not seem to constitute a genuine case of supervening impossibility. However, a temporary impossibility may be invoked in specific circumstances, resulting in a suspension of the contractual obligation.

It is arguably more feasible to rely on the instrument of supervening hardship. This remedy allows the termination of agreements whose balance is altered by supervening events – extraordinary and unpredictable when the agreement was entered into – which do not fall within the normal contractual risk and which make the performance of any of the obligations underlying the contract excessively burdensome or objectively debased in value and/or usefulness.

In such a case, the counterparty that is interested in maintaining the contractual commitment in place may offer to rebalance the relevant agreement within the limits of normal risk, thus avoiding termination.

In any event, it is worth noting that both remedies – aside from the option to take the contract back to fairness – often face a practical obstacle: in the context of commerce, contract termination may not be a suitable remedy, as it would completely erase the business relationship. In this regard, during the Covid-19 pandemic (an exceptional event par excellence), the Italian Supreme Court expressed support for the existence of an obligation to renegotiate the contract rather than seeking termination (see Corte di Cassazione, Ufficio del Massimario, relazione tematica no. 56/2020).

An alternative might be to invoke the application of general principles of supplementary equity and good faith in contractual performance, with respect to which scholars has already acknowledged the possibility of claiming a general duty to renegotiate the contract upon the occurrence of supervening circumstances.

2.2 Contract remedies

As discussed, the provisions of the Italian Civil Code mainly offer remedies that lead to contract termination, which often do not align with the commercial need to preserve existing business relationships.

To encourage the use of conservative remedies, one solution may lie in the prior arrangement of specific contractual renegotiation clauses.

In this regard, commercial contracts often include certain clauses that are commonly used in both domestic and international commercial practice, that contractually regulate the effects of supervening events that may impact the contractual balance.

The most common contractual provisions in business practice include:

• force majeure clauses;

• hardship clauses;

• material adverse change (MAC) clauses.

Force majeure clauses regulate cases in which the contractual obligation becomes impossible due to the occurrence of an event specified in the relevant agreement. The application of the force majeure clause results in the suspension of the affected party’s obligations and may, subsequently, lead to the termination of the contract or grant the parties the right to terminate it.

The applicability of such clauses in relation to the introduction of tariffs must be assessed in light of their precise wording, even though – as previously noted – the new customs duties generally do not result in an actual impossibility of performance. A detailed review of the specific events covered by the clause is therefore necessary.

On the other hand, hardship clauses place an obligation to renegotiate contractual terms upon the occurrence of certain circumstances that make it excessively onerous for either party to perform the contract.

This remedy seems to offer a more viable solution in the context of the newly introduced tariffs. First, hardship clauses do not strictly refer to impossibility of performance (similarly to the Italian remedy of supervening hardship). Second, the preservative nature of the remedy may represent a more suitable solution for commercial purposes.

Finally, MAC clauses entitle one party to terminate the contract upon the occurrence of a specified “material” event (unless a so-called “right to cure” is provided, allowing the other party to remedy the consequences of the supervening event. However, it is still appropriate to undertake a case-by-case assessment to determine the actual applicability of the clause.

3. CONCLUSIONS

The introduction of the new customs tariffs by the United States raises several questions regarding the future of trade relations between the United States and Italy.

Pending the developments of the policies undertaken by the U.S. government, it is advisable to consider the inclusion – in commercial agreements under negotiation – of adequate provisions aimed at mitigating the risks arising from the high degree of uncertainty in the international context, with an eye to any potential mitigants that may be adopted by the European Union – such as providing specific clauses that clearly allocate the burden of newly imposed customs duties and/or provide for price revision mechanisms.

As for commercial agreements already signed, the performance of which may be impacted by the tariffs, it will be necessary to assess on a case-by-case basis the potential triggering of legal and contractual remedies.

Paolo Gallarati

Filippo Federici

Simone Gaggero

These tariffs affect all sectors, but one of the most affected in Europe is the automobile sector, particularly in Germany: cars will now be taxed at 25%. The most affected sector in France are aeronautics, with 7.9 billion euros of exports in 2023, pharmaceuticals with 4.1 billion euros in 2023 and alcohol (especially wine) with 3,9 billion.

In addition, differentiated and higher tariff rates will apply on goods from the French overseas territories: Guadeloupe, Mayotte, Guyane and Martinique will be subject to a 10% tax in addition to the 20% levied on the rest of France, while Réunion will be subject to a total tax of 37%. Tariffs of 50% will be imposed on products from Saint-Pierre-et-Miquelon and 10% on those from French Polynesia, as these islands have not been considered part of the EU by Trump.

Commission President Ursula von der Leyen said she was ready to negotiate but was also ready for confrontation if necessary to assert the EU's interests and values. She said that the Commission is working on countermeasures. Several European heads of state are also working on measures to be adopted.

ADVANT has a team of international trade and national security attorneys, and government relations professionals ready to help European companies. Our dedicated team has decades of experience supporting clients across a range of industries – ranging from steel, chemical, rubber, mining, and agricultural products.

Prof. Dr Rainer Bierwagen
Christian Hipp
Dr Dietmar Reich
Gábor Báthory

Despite its potential to streamline cross-border enforcement and to foster a more integrated European judicial system, the EAPO remains relatively unknown and underutilized more than a decade after its adoption. 

This article delves into the legal framework and procedural intricacies of this underrated tool, which could prove more useful to international litigators.

Background 

The EAPO was designed by the EU legislator to address the challenges posed by the fragmented nature of national procedures for obtaining protective measures, such as account preservation orders. 

Indeed, prior to its introduction, creditors faced significant hurdles in securing claims across borders, as national procedures varied widely in terms of conditions and efficiency. 

These efforts culminated in the adoption of Regulation 655/2014 on May 15, 2014 (the “EAPO Regulation”)[1], effective since January 2017, which established a uniform procedure for the seizure of bank accounts in cross-border cases in the various member states of the European Union, except for Denmark.

Scope and Application

The EAPO applies to pecuniary claims in civil and commercial matters in cross-border cases, whatever the nature of the court or tribunal concerned. 

The Regulation defines a "cross-border case" as one where the bank account to be preserved is maintained in a Member State different from that of the court handling the application or the creditor's domicile[2].

However, the Regulation excludes certain areas such as rights in property arising out of a matrimonial relationship, wills and successions, insolvency proceedings, social security or arbitration[3].

It should be noted that the EAPO is designed to be an additional and optional means for the creditor, who remains free to make use of any other procedure for obtaining an equivalent measure under national law. 

Jurisdiction

Jurisdiction to issue the EAPO is determined by Article 6 of the regulation, which distinguishes various situations: 

• If the creditor has not yet obtained a judgment, court settlement or authentic instrument, jurisdiction lies with the courts of the Member State which have jurisdiction to rule on the substance of the matter[4]. 

• If the creditor has already obtained a judgment or court settlement, jurisdiction to issue an EAPO for the claim specified in the judgment or court settlement shall lie with the courts of the Member State in which the judgment was issued or the court settlement was approved or concluded[5]. 

• For authentic instruments, jurisdiction lies with the courts designated by the law of the Member State where the instrument was drawn up[6].

• If the debtor is a consumer, special protection is provided, as jurisdiction lies exclusively with the courts of the Member State where the consumer is domiciled[7].

Conditions for issuing the EAPO

The EAPO procedure begins with the creditor lodging an ex parte application with the competent court. 

The conditions for issuing the EAPO vary, depending on whether the creditor has already obtained a judgment, court settlement or authentic instrument.

In any case, the creditor must submit sufficient evidence to satisfy the court that there is an urgent need for an EAPO, because there is a real risk that, without such a measure, the subsequent enforcement of the creditor’s claim against the debtor will be impeded or made substantially more difficult[8].

If the creditor has not yet obtained a judgment, he must also submit sufficient evidence to satisfy the court that he is likely to succeed on the substance of his claim against the debtor[9].

The application must include detailed information about the creditor, debtor, and the bank account(s) to be preserved, as well as evidence supporting the claim and the need for the preservation order[10]. 

The court assesses the application based on the evidence provided and may request additional information, if necessary[11].

Where the creditor has applied for an EAPO before initiating proceedings on the substance of the matter, he must initiate such proceedings and provide proof of such initiation to the court within 30 days of the date on which he lodged the application or within 14 days of the date of the issue of the Order, whichever date is the later[12].

Ex Parte Procedure

To ensure the element of surprise, which is crucial for the effectiveness of the EAPO, the debtor is not notified of the application or heard prior to the issuance of the order[13]. 

This ex parte nature of the procedure is balanced by safeguards to prevent abuse (see below), including the requirement for the creditor to provide security to compensate the debtor for any potential damage. The court has discretion in determining the amount and form of security, which may be waived in exceptional circumstances[14].

Procedure for the obtaining of account information

The EAPO Regulation allows the creditor, in certain circumstances, to obtain the information necessary to identify the debtor's bank accounts.

Where the creditor has obtained in a Member State an enforceable judgment, and has reasons to believe that the debtor holds one or more accounts with a bank in a specific Member State, but knows neither the name and/or address of the bank nor the IBAN, BIC or another bank number allowing the bank to be identified, he may request the court with which the application for the EAPO is lodged to order that the information authority of the Member State of enforcement obtain the information necessary to allow the debtor’s account(s) to be identified[15]. 

For creditors who have a title which is not enforceable yet, the conditions are stricter. They must indeed demonstrate (i) that the amount to be preserved is substantial and (ii) that there is an urgent need for the account information because there is a risk that, without such information, the subsequent enforcement of the creditor’s claim against the debtor is likely to be jeopardized and that this could consequently lead to a substantial deterioration of the creditor’s financial situation. 

This distinction ensures that the procedure is not misused for speculative purposes.

Implementation and Enforcement

Once issued, the EAPO is recognized and enforceable in all Member States without the need for a declaration of enforceability[16]. It shall be enforced in accordance with the procedures applicable to the enforcement of equivalent national orders in the Member State of enforcement[17].

The bank must implement the order promptly, either by blocking the preserved amount or transferring it to a dedicated account[18]. The bank is also required to declare the extent to which funds have been preserved[19]. Any liability of the bank for failure to comply with its obligations under this Regulation shall be governed by the law of the Member State of enforcement[20].

Once issued, the EAPO needs to be served on the debtor, using one of the various methods of service or notification set forth at Article 28 of the Regulation, within a short timeframe (within three working days following the day of receipt of the declaration made by the bank or by the entity responsible for enforcement indicating that the amounts have been subject to an attachment).

The EAPO has the same rank (if any) as an equivalent national order in the Member State of enforcement[21].

Remedies and Safeguards

The EAPO Regulation includes several safeguards to protect the rights of the debtor, who can challenge both the order itself and/or the enforcement of the order.

The debtor can challenge the order on various grounds, set forth in Article 33 et seq., such as: non-compliance with the conditions or requirements set out in the Regulation, failure to serve the order within the prescribed timeframe, preserved amounts exceeding the amount of the order not released in due course, claim paid in full or in part, judgment on the substance dismissing the claim, etc. 

The enforcement of the EAPO may also be challenged, in accordance with the grounds set forth in Article 34 (e.g., if the account preserved is excluded from the scope of the Regulation, or is enforcement of the judgment which the creditor was seeking to secure by means of the EAPO has been refused in the Member State of enforcement or suspended in the Member State of origin).

Additionally, the debtor can request the release of preserved funds by providing security or an alternative assurance[22].

The Regulation also provides for the liability of the creditor for any damage caused by the EAPO due to fault, with a presumption of fault in certain cases[23].

Where the application is directed against the order per se, it is addressed to the competent court of the Member State of origin[24]. On the other hand, where the appeal is directed against the enforcement of the order, it is addressed to the competent court (or the competent enforcement authority, if any) of the Member State of enforcement[25].

Although underestimated, the EAPO represents an important step towards the harmonization of cross-border debt recovery between Member States. As the EU evolves, time will tell whether this tool will ultimately live up to the high expectations placed upon it and actually play a central role in promoting a more integrated and expedient legal environment for European creditors and debtors alike.

[1] Regulation (EU) n°655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters.

[2] EAPO Regulation - Article 3.

[3] EAPO Regulation - Article 2.

[4] EAPO Regulation - Article 6(1)

[5] EAPO Regulation - Article 6(3)

[6] EAPO Regulation - Article 6(4)

[7] EAPO Regulation - Article 6(2)

[8] EAPO Regulation – Article 7(1)

[9] EAPO Regulation – Article 7(2).

[10] EAPO Regulation - Article 8.

[11] EAPO Regulation - Article 9.

[12] EAPO Regulation - Article 10.

[13] EAPO Regulation - Article 11.

[14] EAPO Regulation - Article 12.

[15] EAPO Regulation - Article 14.

[16] EAPO Regulation - Article 22.

[17] EAPO Regulation - Article 23.

[18] EAPO Regulation - Article 24.

[19] EAPO Regulation - Article 25.

[20] EAPO Regulation - Article 26.

[21] EAPO Regulation - Article 32.

[22] EAPO Regulation - Article 38.

[23] EAPO Regulation - Article 13.

[24] EAPO Regulation - Article 33.

[25] EAPO Regulation - Article 34.

This is a blank check for the future government to borrow a theoretically unlimited amount for defence and security. This is also a significant increase compared to the (currently not yet exhausted) "special fund" from 2022, which was limited to 100 billion euros. It remains to be seen how high the new federal government will actually set defence spending, but considerable increases are to be expected.

The specific services to be procured have not yet been determined. It is planned to draw up a priority list for urgently needed armaments in the near future, from which initial details will emerge. 

How will it be possible for foreign companies to participate with their services in this massively increasing defence budget? The usual answer to this question would be: by participating in procurement procedures that are published in advance in the Official Journal of the EU. However, this answer does not apply without restriction in the defence sector anyway, as special procedural rules apply in some cases. These special rules have already been significantly extended for the "special fund" from 2022; the potential coalition partners from CDU/CSU and SPD are also planning to present a new law to speed up and simplify procurement within the first six months of forming a government.

In view of the still unclear situation as to which services are to be procured in which order and the expected simplification of procurement processes, it will therefore be crucial for foreign companies in particular to position themselves proactively with their products. With our experience in the defence and security sector, we can provide you with the following practical tips:

1. Understand the structures in the defence procurement sector
   
   The procurement of defence equipment in Germany is organized on a decentralized basis. In addition to the political level, the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw), which handles the actual procurements, plays a decisive role. However, the role of the Bundeswehr Planning Office, which is usually involved in the run-up to procurement measures, in the upcoming decisions on the services to be procured has not yet been clarified and should be carefully observed.
   
    
2. Position your services at an early stage
   
   Particularly in view of the lack of clarity about which services should be procured and in what order, there are currently clear opportunities to position your own products. However, swift, proactive action is required here - once the priorities have been established, it will be very difficult to bring a product that does not fall under these priorities into the discussion.
   
    
3. Make your company known
   
   In general, it is essential that your company, your expertise and your product portfolio are known in the right places. This is the only way to have a chance of being involved in specific procurement measures. Relying on open competition is a risky strategy in view of the expected simplification of procedures.
   
    
4. Look for partners
   
   Establish contacts with established (especially national) companies in the defence industry in order to benefit from their experience and networks and go to market together.
   
    
5. Get professional support
   
   Whether in the run-up to or within a procurement measure - the public client in the defence sector is a "special" customer. Different stakeholders must be taken into account, who regularly have heterogeneous interests. If you are not familiar with the particularities of the German defence sector, you could easily end up with nothing - regardless of the quality of your products.
    

If you need support with your market access in the German defence sector, we can assist you. We have been advising public clients for more than 20 years, especially in the defence sector. As a result, we have first-hand knowledge of the existing structures and the key players in defence procurement. We are happy to share our expertise with you - from the initial contact to support in a specific procurement process.

Michael Brückner

The acquired portfolio consists of three ready-to-build solar projects. The first project is located in Saarland, the second is an innovative Agri-PV project in Mecklenburg-Western Pomerania and finally another Agri-PV initiative in Lower Saxony. These projects are expected to be completed between mid and late 2025.

The ADVANT Beiten team, led by Dr. Christof Aha, regularly advises Trinasolar.

Trinasolar ISBU is the project development arm of Trinasolar and specializes in the development, engineering, procurement, construction, operation and maintenance as well as asset management of solar and battery storage projects worldwide.

Emeren Group is a global developer and operator of solar projects. The shares of Emeren Group Ltd. are listed on the NYSE.

Trinasolar France and Emerem Group have already worked together successfully in the past. With this strategic transaction, Trinasolar strengthens its commitment to expanding renewable energy solutions and promoting sustainable developments across Europe.

Advisor Trinasolar:
ADVANT Beiten: Dr Christof Aha (lead), Mark Thönißen, Felix Busold (all Corporate/M&A), Leopold Linden (Real Estate, all Frankfurt), Katrin Lüdtke (Public Law, Munich).
Inhouse Trinasolar: Esther Muñoz Contreras (Rome)

Advisor Emerem Group:
BNK: Dr. Florian Brahms, Désirée Oberpichler (both Hamburg)
Inhouse Emerem Group: Manuel Ales, Teresa Cera Mora (both Madrid)

Press contact
Frauke Reuther
Communications Manager
ADVANT Beiten
+49 (69) 75 60 95 - 570
frauke.reuther@advant-beiten.com

The Italian economic structure relies mainly on services and industry sector. Indeed, twothirds of Italy’s GDP is contributed by the services sector (including wholesales, retails and transports sub sectors), while approximately 29% of national income is derived from manufacturing and construction industry, mainly run by small and medium-sized familyowned enterprises. The strongest industrial sectors are machinery and clothing / textiles. Agriculture contributes to the remaining share of total GDP. Attracting foreign investments has been an important factor in the economic and social development of the country, in addition to being one of the priorities of the Italian government.

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Case Background

The dispute arose from an asymmetrical jurisdiction clause in an international contract related to a project undertaken by two individuals. The contract specified that disputes would be resolved by the court of Brescia, Italy. However, it also granted SIL the right to initiate legal proceedings in any other competent court, whether in Italy or abroad.

This type of clause is characterized by granting one party discretionary choice of jurisdiction, while binding the other party to a fixed forum. In this instance, SIL retained the ability to select the jurisdiction, whereas Agora was restricted to the court of Brescia.

Following alleged defects in project execution, both SIL and Agora were sued for liability and damages before the Regional Court of Rennes, France. Subsequently, Agora initiated proceedings in France against SIL based on a guarantee. SIL contested the French court’s jurisdiction, but both the Regional Court of Rennes and the Cour d'Appel ruled in favour of French jurisdiction.

Legal Issue

The Cour de Cassation referred the matter to the ECJ, questioning whether the asymmetrical jurisdiction clause aligned with the Brussels I Regulation and consumer protection principles. Specifically, the ECJ was asked to assess whether such a clause placed the weaker party at an unlawful disadvantage and whether it was legally enforceable. This necessitated an interpretation of Article 25 (1) of the Brussels I Regulation, particularly regarding the validity of jurisdiction clauses.

Key Aspects of the Judgment

The ECJ determined that an asymmetrical jurisdiction clause is not inherently invalid. Such clauses may be upheld if they comply with the Brussels I Regulation and do not impose an unfair disadvantage on the weaker party.

The court emphasized that the validity of such clauses must be assessed on a case-by-case basis. In this instance, the ECJ found no undue disadvantage for Agora, ruling that the clause remained effective as it did not contravene the Brussels I Regulation. Since the contract was purely commercial and concluded between two businesses, the consumer protection provisions of the regulation were deemed inapplicable.

The ECJ reaffirmed that jurisdiction clauses contribute to contractual freedom and legal certainty, both of which are protected under the Brussels I Regulation. Given that both parties had freely negotiated and agreed to the terms, the fact that Agora lacked the same jurisdictional flexibility as SIL did not constitute an impermissible disadvantage.

Conclusion

The ECJ's ruling in the SIL v. Agora case has significant implications for the enforceability of asymmetrical jurisdiction clauses in international commercial contracts. The judgment reinforces legal certainty in cross-border agreements and clarifies that such clauses are not inherently invalid but must be scrutinized on an individual basis to ensure compliance with the Brussels I Regulation and applicable legal principles. Ultimately, the ruling affirms that commercial parties’ contractual autonomy influences the validity of jurisdiction clauses.

Dr Ralf Hafner
Dr Tobias Pörnbacher

Understanding the Dual Investment Strategy

Let's examine both components of this historic financial commitment: 

The EUR 500 billion Infrastructure Special Fund

This fund, dedicated to rebuilding Germany's deteriorating infrastructure, will be deployed over ten years and represents more than one-tenth of Germany's GDP. SPD leader Lars Klingbeil emphasized that "Germany is running on wear and tear" and requires massive investment to modernize its roads, bridges, railways, and digital networks.

The Defence Spending Reform is equally significant. The constitutional debt brake (Schuldenbremse) will be modified: It will exempt defence spending above 1% of GDP from debt restrictions, allow theoretically unlimited credit-financed defence expenditures, and enable Germany to meet and potentially exceed NATO's 2% of GDP target for defence spending. CDU leader Friedrich Merz has called for a "whatever it takes" approach to defence, signalling a political commitment to substantial military modernization in response to evolving security threats in Europe.

Business Opportunities in Defence

The defence spending reform creates extensive opportunities for international defence contractors and related businesses:

1. Military Equipment and Systems Modernization

With the potential for substantially increased defence procurement budgets, companies in these areas stand to benefit:

• Land systems: Manufacturers of armoured vehicles, artillery systems, and ground equipment will see increased demand as Germany upgrades aging systems.
• Naval capabilities: Companies specializing in submarine technology, naval vessels, and maritime systems will find opportunities as Germany strengthens its naval forces.
• Aerospace and air defence: Producers of fighter aircraft, air defence systems, and military drones will benefit from Germany's focus on aerial capabilities
• Command, control, and communications: Providers of advanced C4ISR systems (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) will see growing markets.

2. Defence Technology and Innovation

Investment will flow to cutting-edge defence technologies beyond traditional defence equipment:

• AI and autonomous systems: Companies developing artificial intelligence for defence applications, including autonomous vehicles and decision-support systems.
• Cybersecurity and electronic warfare: Firms specialising in protecting military networks and developing electronic warfare capabilities will be essential as warfare becomes increasingly digital.
• Space-based defence capabilities: With growing recognition of space as a military domain, companies providing satellite technology and space-based intelligence systems will find new opportunities.

3. Defence Supply Chain and Services

The broader defence ecosystem will also benefit:

• Logistics and supply chain management: Companies that can optimize military logistics and supply chains.
• Training and simulation: Providers of advanced training solutions using virtual reality and augmented reality for military personnel.
• Maintenance, repair, and overhaul (MRO): Firms specialising in the maintenance of complex military systems throughout their lifecycle.

Business Opportunities in Infrastructure

The EUR 500 billion infrastructure fund will create enormous opportunities across multiple sectors:

1. Transportation Infrastructure

Germany's aging transportation networks require comprehensive modernization:

• Bridge construction and rehabilitation: There are thousands of bridges in need of repair or replacement. Companies with expertise in accelerated bridge construction will be in high demand.
• Road development and maintenance: Firms specializing in highway construction, smart road systems, and sustainable pavement technologies.
• Railway modernization: Companies with expertise in high-speed rail, signalling systems, and railway electrification as Germany pushes to improve its rail network.

2. Energy Infrastructure

Germany's infrastructure plans make the energy transition a priority:

• Renewable energy systems: Developers and manufacturers of wind, solar, and other renewable energy technologies.
• Energy storage solutions: Companies offering grid-scale batteries and other energy storage technologies to complement renewable energy.
• Smart grid technology: Providers of intelligent energy distribution and management systems.
• Hydrogen infrastructure: Firms specializing in hydrogen production, storage, and distribution as Germany invests in this emerging energy carrier.

3. Digital Infrastructure

Germany's digital transformation is a critical component of infrastructure modernization:

• Broadband and 5G deployment: Telecommunications equipment providers and network deployment specialists.
• Data centres and cloud infrastructure: Companies building and operating the physical foundation of digital services.
• Smart city technologies: Providers of integrated urban management systems that connect transportation, energy, and public services.

4. Environmental and Climate-Resilient Infrastructure

Germany will prioritise infrastructure that supports climate goals:

• Flood protection and water management: Companies specialising in flood defence systems and sustainable urban drainage.
• Climate-adaptive infrastructure: Firms designing infrastructure that can withstand extreme weather events.
• Carbon-reducing building materials: Providers of innovative, low-carbon materials for infrastructure projects.

The Common Challenge: German Bureaucracy

Despite the massive financial commitment across both defence and infrastructure, foreign companies must understand that Germany's administrative processes remain a significant challenge. The same bureaucratic hurdles affect both sectors:

Administrative Realities in Germany

• Planning and approval processes for major infrastructure projects can take up to 5-18 years.
• Defence procurement processes are notoriously complex and slow-moving.
• Multiple levels of government involvement create coordination challenges.
• Environmental, historical, and social impact assessments add layers of complexity.

These administrative challenges mean that despite the availability of funds, actual project implementation may lag significantly. It is likely though that this will be changed by the Union and the SPD as well. However, companies should have experienced experts at their sides when dealing with the German administration.

Strategies for Success in both Markets

To maximize opportunities in both defence and infrastructure, it is recommended to:

1. Form strategic partnerships: Consider joint ventures or partnerships with established German companies that understand the administrative landscape and have existing relationships.
2. Invest in regulatory expertise: Build teams that understand Germany's complex regulatory environment, including defence procurement rules and infrastructure approval processes.
3. Offer integrated solutions: Companies, that can demonstrate how their offerings address both technical requirements and administrative efficiency, will have advantages.
4. Emphasize sustainability and security: Projects that demonstrate alignment with Germany's dual commitment to environmental sustainability and enhanced security will receive priority.
5. Be patient but persistent: Adjust business expectations for the reality of German administrative timelines while continuously engaging with stakeholders.

Sectoral Convergence: Where Defence Meets Infrastructure

An interesting aspect of Germany's dual investment approach is the growing convergence between defence and infrastructure priorities. Companies positioned at this intersection will find particularly valuable opportunities:

Areas of Convergence

• Critical infrastructure protection: Solutions that secure energy grids, transportation systems, and communications networks against physical and cyber threats.
• Dual-use technologies: Technologies with both civilian and military applications, such as advanced materials, autonomous systems, and certain types of sensors.
• Resilient supply chains: Systems and services that ensure continuity of critical materials and components for both defence and infrastructure.
• Energy security: Solutions that enhance Germany's energy independence, a concern for both economic and defence reasons.

A Dual Opportunity for International Business

Germany's historic investment in both defence and infrastructure represents a rare dual opportunity for international companies. The scale of investment is unprecedented, creating markets that will evolve over the next decade and beyond. Success will require a nuanced understanding of Germany's unique administrative environment, patience with its bureaucratic processes, and the ability to demonstrate value beyond mere technical capabilities. Those companies that position themselves as partners in Germany's transformation – helping not just to rebuild roads or modernize military capabilities, but to improve the systems by which these goals are achieved – will find themselves at the forefront of this historic opportunity. Foreign companies willing to make this investment in understanding and adapting to the German context will find substantial rewards in the next decade as Germany reinvents both its physical infrastructure and its security posture in response to evolving global challenges.

Do you have any questions? Do not hesitate to contact us.

Dennis Hillemann
Johannes Voß-Lünemann

The new reality - defence technology as a growth market

The global political situation has escalated dramatically in recent years. With the ongoing war in Ukraine, increasing tensions in various regions of the world and general uncertainty, we are experiencing a historic turning point. The much-cited "turning point" has long since become a reality - and with it, considerable sums are flowing into defence.

This opens up completely new perspectives: Companies that previously only manufactured civilian products are now seriously considering whether and how they can make their technologies and expertise usable for the defence sector. For medium-sized companies with technological expertise in particular, the question arises: What funding opportunities are there for entering the defence technology sector?

Here is an up-to-date overview of the most important programmes and instruments that will be available at the beginning of 2025:

European Funding Opportunities

European Defence Fund (EDF) - the flagship of EU funding

The European Defence Fund (EDF) will provide around 1.065 billion euros for defence research and development in 2025. Particularly interesting for newcomers: 4% of the budget is reserved for "disruptive" technologies and a further 6% for innovative projects focussing on SMEs.

The current 2025 work programme comprises 33 topics in nine tenders - from ground combat and cyber defence to environmentally friendly technologies. The focus is on projects such as cyber defence, marine and underwater capabilities and sensor systems.

Funding conditions in brief:

• Applications must generally be submitted by consortia of at least three independent organisations from three EU Member States
• Two partners from two countries are sufficient for disruptive technology projects
• Only companies/organisations based in the EU or Norway are eligible for funding
• Depending on the project type, the funding rate is up to 100% (especially for pure research)
• There are bonus points for the participation of SMEs

Important for your planning: The tenders have been running since mid-February 2025 and the deadline for submitting project applications is 16 October 2025.

Defence Equity Facility – capital for innovative startups

Another exciting opportunity is the Defence Equity Facility (DEF) which was launched at the beginning of 2024. This venture capital fund has a volume of 175 million euros and seeks to mobilise private venture capital for defence technology innovations with dual-use potential.

The DEF does not invest directly in companies, but in specialised private funds which in turn invest in security and defence companies. It is planned to initiate investments of up to 500 million euros in defence-related startups and SMEs by 2027.

The DEF could facilitate access to urgently needed growth capital, especially for innovative startups that develop new technologies such as AI, sensor technology or cyber security.

German Funding Opportunities

Dual-use potential in civil innovation programmes

An approach that is often neglected or ignored is to apply the classic innovation funding programmes such as ZIM (Central Innovation Programme for SMEs) or KMU-innovativ. Although these programmes are primarily civilian in nature, they can also be relevant for defence technology under certain circumstances.

The Federal Ministry for Economic Affairs and Energy is generally open to all technologies when it comes to ZIM. Defence technology companies can also receive ZIM grants, provided the project content can be used for civilian purposes - such as new material technologies, electronics or AI applications that could later be used for military purposes.

The same applies to BMBF programmes such as KMU-innovativ which offer calls for tenders in fields such as AI, electronics or security technologies. Although direct defence topics are excluded, security and defence as an area of application can benefit indirectly.

Cyber Innovation Hub of the Bundeswehr (German armed forces)

The Cyber Innovation Hub of the Bundeswehr (CIHBw) serves as an interface between the start-up scene and the Bundeswehr. It was launched as a pilot project to bring military users together with civilian innovations.

The CIHBw strengthened its partnerships in 2025. Particularly noteworthy is the strategic partnership concluded with the University of the Federal Armed Forces Munich on 11 February 2025. This alliance aims to closely link research and innovation with the requirements of the troops.

The hub also offers support for intrapreneurship and regularly organises innovation challenges - an exciting opportunity for innovative companies to develop their solutions directly with the Bundeswehr.

Strategic Orientation - What Is Being Promoted?

Anyone wishing to enter the defence sector should be guided by the National Security and Defence Industrial Strategy adopted in December 2024. This strategy defines clear key technologies that are prioritised for future funding:

• IT and communication technologies for military purposes
• Artificial intelligence (AI) and autonomous systems
• Naval shipbuilding
• Government shipbuilding
• Protected/armoured vehicles
• Sensors (reconnaissance, radar, optoelectronics)
• Protection technologies and electromagnetic combat

Other critical areas include quantum technologies, missiles and air defence, space technologies, munitions and unmanned systems (unmanned aerial vehicles).

Projects that fall into these categories have a much better chance of receiving funding and being awarded long-term contracts.

Practical Tips for Beginners

As experienced lawyers with a view to funding practice, we would like to give you some practical tips:

1. Use existing expertise: Cooperate with established companies in the defence industry to benefit from their experience.
2. Think dual-use: Develop technologies that can be used for both civil and military purposes. This strategy maximises your funding opportunities.
3. Form consortia: Cooperation with partners from other EU countries is essential for the European Defence Fund. Establish networks at an early stage.
4. Pay attention to safety aspects: The defence industry is subject to special security requirements. Make sure that your company fulfils the necessary requirements.
5. Plan early: The application deadlines are often long and the procedures complex. Start preparing at least six months before the deadline.

Conclusion - A Market in Transition

The current global political situation has caused fundamental changes in the defence sector. The massive investment in European security is creating completely new business opportunities - even for companies that were previously active in other areas.

The funding programmes presented offer various entry options. The combination of European funds (EVF) for research and development with national programmes for concrete implementation is particularly promising.

Those who act strategically now and adapt their civil expertise to the defence sector can benefit from this growth market in the long term.

Do you have questions about funding for defence technologies or need support with your application? Contact us - we will be pleased to help you!

Dennis Hillemann
Johannes Voß-Lünemann

High-Risk AI systems under the EU AI Act In a employment context, the new regulation concerns foremost: 
a) AI systems intended to be used for the recruitment or selection of natural persons, in particular to place targeted job advertisements, to analyze and filter job applications, and to evaluate candidates. 
b) AI systems intended to be used to make decisions affecting terms of work-related relationships, the promotion or termination of work-related contractual relationships, to allocate tasks based on individual behavior or personal traits or characteristics or to monitor and evaluate the performance and behavior of persons in such relationships.

The most important requirements for high-risk AI systems at a glance 

The providers of high-risk AI systems bear the following obligations: 

• Quality and risk management
• Technical documentation, record-keeping and logging obligations
• Consideration of accuracy, robustness, cybersecurity and accessibility during development
• Transparency and information obligations
• Registration in the relevant EU database and cooperation with the competent authority

Those who only deploy of high-risk AI systems generally have to fulfil fewer requirements than providers. However, there may be scenarios in which they can be subject to the same extensive obligations as the providers of high-risk AI systems.

Looking ahead, the AI Liability is poised to complement the EU AI Act. It aims to streamline legal pathways for individuals harmed by AI systems, including in employment related situations. However, the legislative process is still in its early stages and only rarely does a directive emerge from the legislative process in the form in which it was presented by the EU Commission.

You can download the entire newsletter by clicking ‘Download associate files’.

One element of this package of measures is the Action Plan for Affordable Energy. It presents a roadmap for affordable and secure energy supply. 

The following text gives you an overview of the key points of this roadmap.

I. The EU action plans

Energy prices in the EU have risen dramatically in recent years, affecting households, companies and industry alike. Energy-intensive industries in particular are facing rising costs that jeopardise their competitiveness on the global market. At the same time, geopolitical uncertainties and dependence on fossil fuel imports are exacerbating the situation.

At the end of January 2025, the European Commission already described and announced measures in its Competitiveness Compass for the EU, based on the Draghi Report, that are intended to accelerate the transformation of the EU and increase its competitiveness. 

The Green Industrial Deal has now been published as part of this Compass. In this context, the EU Commission presents, among other things, the Action Plan for Affordable Energy.

The aim of this Plan is to reduce energy costs in the short term, accelerate structural reforms and create a stable, climate-friendly and competitive energy system within the EU in the long term.

II. High energy costs in the EU

The Commission lists several factors that are responsible for the high energy costs. On the one hand, it mentions the heavy dependence on imported fossil fuels, especially gas. High price fluctuations on the global markets and geopolitical tensions are inflating costs. On the other hand, the report identifies a disadvantage in the still inadequate integration of the European electricity grid, which leads to grid bottlenecks and inefficiencies and therefore to higher costs. High taxes, grid fees and levies in the individual Member States are also cited as major factors causing high and rising energy prices.

III. The four pillars of the Action Plan

In order to reduce these high energy costs quickly and systematically and to make the energy system fit for the future, the Action Plan presents four pillars containing a total of eight actions: Lowering energy costs (Pillar 1), completing the Energy Union (Pillar 2), attracting investments (Pillar 3) and being ready for potential energy crises (Pillar 4).

Pillar 1: Lowering energy costs

In Pillar 1, the EU Commission defines four actions to lower energy costs.

Action 1: Make electricity bills more affordable

As a first step, network charges will be reduced and taxes and levies lowered. The Commission intends to introduce new pricing structures for this purpose, designed specifically to promote flexible grid use and grid stability. The Commission also wants to issue recommendations to the Member States on reducing taxes and levies, with the costs to be shifted to the national budgets. In addition, switching energy suppliers will be made easier for consumers, and energy communities will be promoted.

Action 2: Bring down the cost of electricity supply

Besides the above, the Commission plans to develop legal guidelines for power purchase agreements (PPAs) and contracts for difference (CfDs) to promote more favourable procurement models and the integration of renewable energies also for those consumers who have so far had little access to this type of electricity supply. Regulatory obstacles will be removed by the Member States and certain instruments will be introduced to minimise risk. 

The Commission also intends to make legislative proposals to further shorten authorisation procedures for grids, storage and renewable energies. Member States will be supported in their efforts to improve the human and financial resources of the authorisation authorities. This should reduce approval periods to less than six months for simpler projects, such as repowering projects in acceleration areas.

The presentation of a European Grid Package, which will build on the Network Action Plan already in place since 2023, is also aimed at accelerating the modernisation and digitalisation of the networks in Europe. System flexibility is going to be increased through the further expansion of storage capacity and also through demand response. To this end, the Member States should implement the EU regulations on market access more quickly and offer better incentives to make flexibility more attractive for the individual stakeholders.

Action 3: Ensure well-functioning gas markets

The competitiveness of the gas markets will be improved through fair prices. It is planned that a Gas Market Task Force will thoroughly scrutinise the market and take steps to ensure the proper functioning of the market and prevent market distortions. A broad stakeholder consultation will be launched in the areas of regulatory oversight, alignment and strengthening of energy and financial market rules, reduction of administrative burden for companies trading in energy financial markets and the introduction of a common harmonised database. The work of the task force is expected to be completed by the 4th quarter of 2025 with the delivery of a recommendation.

Action 4: Energy efficiency - delivering energy savings

Another aspect of lowering energy costs is to reduce energy consumption, i.e. improve energy efficiency. Access to energy efficiency services will be facilitated and financial incentives increased, both for companies and consumers. Especially the latter will be offered easier access to energy-efficient products and products with a longer service life. To this end, labelling and ecodesign regulations will be adapted. 

Pillar 2: CompletIng the Energy Union

The Commission addresses the completion of the Energy Union in Pillar 2 of the Action Plan - which is also Action 5. Meeting this goal requires long-term structural measures. The Commission proposes, among other things, the introduction of an Energy Union Task Force for improved coordination between the Member States, the revision of the existing Energy Union Governance Regulations and the introduction of a Heating and Cooling Strategy. An investment strategy for clean energy and a strategic roadmap for digitalisation and AI in the energy sector will also be presented.

Pillar 3: Attracting investments

In Pillar 3, the Commission deals with the financing of the energy transition. Securing a stable and affordable energy supply for European industry in the long term will be made easier.

In Action 6, the Action Plan therefore provides for the creation of a favourable investment climate through a tripartite contract for affordable energy between energy producers, public sector and industry. The European Investment Bank (EIB), the Commission and the Member States are expected to support the parties involved. The aim is to provide predictability and scalability. 

Pillar 4: Being ready for potential energy crises 

Pillar 4 provides the Member States with appropriate instruments to enhance resilience of the energy market during future energy crises and to strengthen security of supply.

In Action 7, the Commission therefore announces a proposal to revise the current EU legal framework for the security of energy supply. The proposal will help to stabilise prices by drawing on the experience of the current energy crisis. This is aimed at ensuring better availability of energy at all times.

Action 8 guides the Member States on incentives through an appropriate remuneration system to reduce demand at peak times. Grid operators are encouraged to implement measures to reduce energy consumption at certain times. This is intended to keep the energy bill down and to reduce price volatility. Action 8 aims at stabilising the energy market and improving price control. In cases where a grid bottleneck or overload severely impedes the flow of energy, close cooperation between the transmission system operators (TSOs) and the national authorities will continue. Overall, cross-border electricity trading is to be maximised to mitigate local price peaks and guarantee the supply of energy.

IV. Conclusion and outlook

The measures presented in the Action Plan for Affordable Energy are numerous and range from specific adjustments to existing regulations all the way to reports by task forces yet to be established based on which specific measures will have to be developed. The Action Plan’s aim to reduce energy prices in the EU and thus strengthen competitiveness is certainly equally important and valid for all Member States, consumers and industry. It remains to be seen exactly which measures will be implemented and how they can and must be integrated into the German legal framework. The timelines for the implementation of the measures listed in the Action Plan range from ‘immediately‘, through the first calendar quarter of 2025, to the beginning of 2026. 

We will monitor the developments and the impact on individual market participants, analyse them and keep you informed.

Peter Meisenbacher
Dr Malaika Ahlers LL.M.

Sebastian Berg, Anton Buro und Dr Florian Böhm from our Energy team will also be happy to answer any questions you may have on energy law-related issues.

The first omnibus package contains the following steps:

• Make sustainability reporting more accessible and efficient  (relates to the Corporate Sustainability Reporting Directive – CSRD, more on it below)
• Simplify due diligence to support responsible business practices  (betrifft die Corporate Sustainability Due Diligence Directive – CSDDD bzw. CS3D, more on it below)
• Strengthen the carbon border adjustment mechanism for a fairer trade 
• Unlock opportunities in European investment programmes

For details see: Commission proposes to cut red tape and simplify business environment - European Commission

The individual steps are described more precisely on the linked pages. Regarding the first two steps, the EU Commission emphasises the following:

„Making sustainability reporting more accessible and efficient 

Specifically, the main changes in the area of sustainability reporting (CSRD and EU Taxonomy) will:

• Remove around 80% of companies from the scope of CSRD, focusing the sustainability reporting obligations on the largest companies which are more likely to have the biggest impacts on people and the environment;
• Ensure that sustainability reporting requirements on large companies do not burden smaller companies in their value chains;
• Postpone by two years (until 2028) the reporting requirements for companies currently in the scope of CSRD and which are required to report as of 2026 or 2027.
• Reduce the burden of the EU Taxonomy reporting obligations and limit it to the largest companies (corresponding to the scope of the CSDDD),  while keeping the possibility to report voluntarily for the other large companies within the future scope of the CSRD. This is expected to deliver significant cost savings for smaller companies, while allowing businesses that wish to access sustainable finance to continue that reporting.
• Introduce the option of reporting on activities that are partially aligned with the EU Taxonomy, fostering a gradual environmental transition of activities over time, in line with the aim to scale up transition finance to help companies on their path towards sustainability.
• Introduce a financial materiality threshold for Taxonomy reporting and reduce the reporting templates by around 70%.
• Introduce simplifications to the most complex “Do no Significant harm” (DNSH) criteria for pollution prevention and control related to the use and presence of chemicals that apply horizontally to all economic sectors under the EU Taxonomy – as a first step in revising and simplifying all such DNSH criteria.
• Adjust, among others, the main Taxonomy-based key performance indicator for banks, the Green Asset Ratio (GAR). Banks will be able to exclude from the denominator of the GAR exposures that relate to undertakings which are outside the future scope of the CSRD (i.e. companies with less than 1000 employees and €50m turnover).

Simplifying due diligence to support responsible business practices

The main changes in the area of sustainability due diligence will:

• Simplify sustainability due diligence requirements so that companies in scope avoid unnecessary complexities and costs, e.g. by focusing systematic due diligence requirements on direct business partners; and by reducing the frequency of periodic assessments and monitoring of their partners from annual to 5 years, with ad hoc assessments where necessary.
• Reduce burdens and trickle-down effects for SMEs and  and small mid-caps by limiting the amount of information that may be requested as part of the value chain mapping by large companies;
• Further increase the harmonisation of due diligence requirements to ensure a level playing field across the EU;
• Remove the EU civil liability conditions while preserving victims' right to full compensation for damage caused by non-compliance, and protecting companies against over-compensation, under the civil liability regimes of Member States; and
• Give companies more time to prepare to comply with the new requirements by postponing the application of the sustainability due diligence requirements for the largest companies by one year (to 26 July 2028), while advancing the adoption of the guidelines by one year (to July 2026).“

For details see: Commission simplifies rules on sustainability and EU investments

The proposals that have just been published will now have to be analysed more closely.

Please note: These are proposals for legislation by the EU Commission. The Commission has announced that it will submit these proposals to the European Parliament and the Council for examination and decision-making. So it remains to be seen when and with what specific content the EU Commission's proposals will ultimately be adopted.

Dr Daniel Walden
Dr André Depping

The treatment for indirect tax purposes of such after-sale maintenance packages should be carefully analyzed according to the tax laws of the State of residence of the manufacturing company and the tax laws of the State in which the product is sold.

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welcome to the February issue of ADVANT Beiten's International Briefing.

Our ADVANT M&A practice is pleased to share that in 2024 Mergermarket's Global and Regional Rankings, we were ranked among the top 20 law firms in Europe by deal count. You can download the report here. This Mergermarket highlight reflects the dedication of the whole team working seamlessly across ADVANT Altana, ADVANT Beiten, and ADVANT Nctm. We wish to thank our domestic and international clients for the growing trust in our offering on the European market.

In this issue we will also highlight interesting developments in the European and German legal landscape, give you an insight into our secondment program, invite you to meet us at international events, and tell you about our recent deals.

You can find our International Briefing by clicking here.

The financial distress of a company poses significant challenges for its directors, particularly in a cross-border setting. EU Directive No. 2019/1023 on preventive restructuring frameworks aims to provide alternatives to insolvency liquidation and ensure early warnings to safeguard businesses as going concerns.

Our brochure explores the responsibilities of directors across the ADVANT jurisdictions—France, Germany, and Italy—highlighting key actions, restructuring options, and potential liabilities. Gain valuable insights into legal obligations, early warning mechanisms, and restructuring frameworks.

Download now to navigate financial distress with confidence!

The current status is that, on 12 February 2024, the UK signed the Hague Convention of 2019 regarding the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (hereafter referred to as the “2019 Hague Convention”), and announced that it will ratify it as soon as possible. Once ratified, the 2019 Hague Convention will come into force after a period of 12 months, i.e. not before 2025. 

In the Q&A, we take a closer look at the consequences for enforcement law in France, Italy and Germany after Brexit and before the ratification by UK of the 2019 Hague Convention.

The European Court of Justice (CJEU) ruling of September 10, 2024, marks a milestone in antitrust law: By upholding the €2.42 billion fine against Google for abusing its dominant market position through self-preferencing, the court establishes this practice as a form of abuse under Article 102 TFEU. This decision sets important precedents for future competition cases and strengthens the enforcement of the Digital Markets Act (DMA).

Our brochure provides a concise Q&A overview of the key questions and implications of this historic judgment. Download now to learn more!

The Corruption Directive-D is intended to overcome obstacles that have been identified in cooperation between the authorities of the various Member States. The existing instruments, i.e. the Council Framework Decision 2003/568/JHA and the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union, are not comprehensive enough in the opinion of the Council, as corruption is prosecuted differently from Member State to Member State. The recitals of the Corruption Directive-D state, among other things, that:

[…] These instruments are, however, not sufficiently comprehensive, and the current criminalisation of corruption varies across Member States hampering a coherent and effective response across the Union.

"[…] Corruption is a transnational phenomenon that affects all societies and economies. Measures adopted at national or Union level, should recognise this international dimension. […]"

In Chapter 2 "Corruption Offences", the Corruption Directive-D provides for minimum standards for

• offences (see 1),
• penalties and measures for natural persons and/or legal persons (see 2), and
• a catalogue of mitigating circumstances (see 3).

1. Offences under the Corruption Directive-D

The following offences are proposed:

• Bribery in the public sector, Art. 7 Corruption Directive-D,
• Bribery in the private sector, Art. 8,
• Misappropriation, Art. 9,
• Trading in influence, Art. 10,
• Abuse of functions, Art. 11,
• Obstruction of justice, Art. 12, and
• Enrichment from corruption offences, Art. 13. 

Articles 7 to 9, Article 12 and Article 13 define minimum standards for offences already contained in the German Criminal Code (Sections 331 et seq., 299, 266, 246 (2), 240 and 261 of the German Criminal Code). In this respect, adjustments may need to be made at most. Necessary adjustments with regard to the definition of advantage (see 1.1) and the effects of the definition of "public official" (see 1.2) are to be emphasised.

Articles 10 and 11, on the other hand, define minimum standards for criminal offences that are not yet known in this form in German criminal law and would therefore have to be newly introduced. Of particular note here is the trading in influence (Art. 10) (see 1.3). Unlike the European Commission's proposal of 03 May 2023, the Corruption Directive-D does not provide for attempted criminal liability (see 1.4).

1.1 The "undue" advantage 

Art. 7 defines advantage differently from Sections 299 and 331 et seq. German Criminal Code. While any advantage is sufficient for criminal liability under Sections 299 and 331 et seq. German Criminal Code, Art. 7 requires an undue advantage. The German Criminal Code already recognises this addition from Sections 108e and 108f German Criminal Code. According to the explanatory memorandum to Section 108e German Criminal Code, it is intended to take account of the special nature of bribery of members of parliament, as there are benefits in the political arena that appear to be permissible under general parliamentary practice. However, it is doubtful whether this principle can also be applied to the other corruption offences under the German Criminal Code. 

1.2 The definition of "public official"

The term "public official" is used throughout Art. 7 et seq. and is legally defined in Art. 2 para. 2. Public officials are accordingly Union or national officials of a Member State or a third country as well as persons who have been entrusted with public functions under national law and carry out such functions or persons who have been entrusted with public functions for an international organisation or international court and carry out such functions.

The term ‘national official’ according to Art. 2 para. 2 lit. a) ii) covers any person holding an executive, administrative, or judicial office at national, regional or local level. Thus, the Corruption Directive-D assimilates any person holding a legislative office to a national official. According to these guidelines, the German legislator would have to abandon the current differing criminal law treatment of elected representatives and public officials and establish a harmonised system.

1.3 Trading in influence, Art. 10

Art. 10 criminalises the so-called trading in influence. In contrast to the bribery offences under the German Criminal Code, an offence is to be introduced in which the advantage is not promised or granted to a public official. The advantage is promised to a person who "exerts illicit influence over a decision or measure to be taken by a public official in the exercise of that official’s functions" with a view to obtaining an undue advantage from that public official. As a result, a preparatory act in a tripartite constellation of persons is criminalised, which the German Criminal Code has known for the first time since the introduction of Section 108f German Criminal Code and which we have already examined here.

1.4 Attempted misappropriation

Unlike the Proposal for a Directive of the European Commission on combating corruption dated 03 May 2023, the Corruption Directive-D does not provide for attempted criminal liability. The reason for this could be the criticism of the introduction of attempted misappropriation.

2. Penalties and measures for natural and legal persons

For natural persons, Art. 15 provides for minimum standards for a maximum term of imprisonment (at least two years to four years as a maximum). In addition, it will be possible under Article 15 para. 4 to impose further sanctions such as fines, the removal, suspension and reassignment from a public office, or withdrawal of permits and authorisations to pursue activities that resulted in or enabled the relevant offence.

For legal persons, the turnover-related fine (Art. 17 para. 3) is to be emphasised in particular. According to this, the maximum level of such fines should not exceed 3% or 5% of the total worldwide turnover of the previous financial year of the legal person, or alternatively at least EUR 24 million or EUR 40 million, depending on the offence.

3. Mitigating circumstances

Art. 18a contains a catalogue of mitigating circumstances that can be transposed into national law. This includes, in particular,

• the implementation of internal controls and compliance programmes to prevent corruption (both prior to or after the commission of the offence), and
• the voluntary self-disclosure and the initiation of remedial measures.

In particular, the consideration of compliance programmes in the assessment of fines now corresponds to established case law. 

4. Outlook for companies

As a result, companies are likely to face higher sanctions in cases of corruption. Companies should monitor further developments in order to be able to adapt their compliance requirements in good time if necessary. 

Dr Oliver Ofosu-Ayeh

While these Q&A answer many typical questions that businesses may have, they naturally cannot be exhaustive. You are invited to contact our experts at any time should you have any additional or clarifying questions. Our experts serve as trusted competition counsel to major industry players in many key sectors, and represent clients before the European Commission and national competition authorities. In the past year alone, we have successfully advised on numerous complex deals, and obtained unconditional clearances in the vast majority of cases. In doing so, we have often worked in close cooperation with our M&A team and have provided comprehensive regulatory advice, including on foreign direct investment control and foreign subsidies regulation. 

We advise clients on all aspects of merger control law – both at Europe-wide level and within national jurisdictions – to enable them to achieve their business goals while limiting exposure to merger control risks. We analyze filing requirements, conduct feasibility studies, conceive filing strategies and analyze risks for transactions falling in the new category of transactions below controlling thresholds. We then represent clients in merger control proceedings in the EU, France, Germany and Italy, and coordinate their foreign merger control filings. If unavoidable, we support our clients when negotiating remedies and when appealing adverse decisions. Finally, we regularly help third parties in dealing with information requests and intervening against their competitors’ acquisitions.

On 18 September 2024, the Supreme Court of the United Kingdom delivered a landmark ruling in UniCredit Bank GmbH v. RusChemAlliance LLC,¹ illustrating the importance of adopting a global judicial strategy when dealing with international disputes.

This case highlights the use of a procedural tool — the anti-suit injunction — which can prove crucial in preserving the integrity of arbitration, when one of the parties seeks to circumvent the jurisdiction of the arbitral tribunal by initiating parallel judicial proceedings before another jurisdiction.

Paradoxically, it was this UK equitable remedy, which could not be ordered by French courts, that ensured the arbitration could proceed as planned in Paris, by blocking parallel litigation in Russia, that would have conflicted with the arbitration clause.

What is an Anti-Suit Injunction?

An “anti-suit injunction” is an order, given by courts in some common law jurisdictions², to restrain a party from bringing foreign proceedings in breach of an arbitration agreement.

The rationale behind such order is that, without it, the claimant will be deprived of its contractual right to have disputes settled by arbitration, in a situation in which damages would be an inadequate remedy³.

Under English law, an anti-suit injunction may be granted against a foreign litigation if (a) the English forum has a sufficient interest in the matter, (b) the foreign proceeding causes sufficient prejudice to the applicant, and (c) the antisuit injunction would not unjustly deprive the claimant in the foreign court of a legitimate advantage⁴.

Anti-suit injunctions are intended to preclude litigation from proceeding in the foreign court, but are ordered in personam and directed against a party to a litigation (not the foreign court).

Failing to comply with the anti-suit injunction can amount to contempt of court, with serious legal consequences for the offending party. These can include fines, seizure of assets and even imprisonment⁵.

Antisuit injunctions can therefore be powerful tools for compelling compliance with an arbitration agreement.

Summary of the dispute 

In 2021, RusChem, a Russian company entered into two contracts with German companies (together referred to as “the Contractor”) for the construction of LNG plants in Russia. Under these contracts RusChem agreed to pay, in stages, circa. €10 billion, including advance payments of around €2 billion. RusChem made the advance payments to the Contractor. 

Performance of the Contractor’s obligations was guaranteed by bonds payable on demand, issued by UniCredit Bank GmbH, a German bank (hereafter referred to as “the Bank”). 

Each of the contracts contained in these bonds provided that the bond is governed by English law and that all disputes are to be settled by arbitration in Paris, France, under the rules of the International Chamber of Commerce (“ICC”). 

Following Russia’s invasion of Ukraine in February 2022, the European Union imposed sanctions on Russia and on designated Russian legal entities and individuals. Even though RusChem was not on the list of designated entities, in May 2022 the Contractor announced that, because of EU sanctions, it could not continue performing the contracts. 

As a result, RusChem terminated said contracts and requested the return of the advance payments. However, the Contractor, relying again on the EU sanctions, responded that it could not return the advance payments. 

In October 2022 and April 2023 RusChem made demands on the Bank for payment under the bonds. Like the Contractor, the Bank refused to pay, on the ground that payment was prohibited by EU sanctions⁶.

On 5 August 2023, RusChem, relying on article 248.1 of the Russian Arbitrazh Procedural Code, which purports to grant exclusive jurisdiction on Russian “Arbitrazh Courts” over disputes between Russian and foreign persons arising from foreign sanctions, issued proceedings in Russia against the Bank, claiming payment of €448 million under the bonds.

The Bank then applied to said Arbitrazh Court to dismiss RusChem’s claim, on the ground that the parties have agreed that all disputes arising out of the bonds are to be settled by arbitration in Paris under the rules of the ICC. 

Simultaneously, the Bank brought the matter before the London Commercial Court, and applied without notice for an interim injunction prohibiting RusChem from continuing the Russian proceedings until further order of the court, which was granted on 24 August 2023. 

A few days later, RusChem issued an application disputing the English court’s jurisdiction to hear UniCredit’s claim. 

The First instance Judge held that the English court did not have jurisdiction to hear the claim; but he nevertheless continued the interim anti-suit injunction until the process of appeal from his order had been exhausted.

This ruling was later overturned by the Court of Appeal which, on 29 January 2024, granted final relief including a mandatory injunction requiring RusChem to discontinue the Russian proceedings. 

RusChem was granted permission to appeal from the decision of the Court of Appeal, but only on the jurisdiction issue. 

On 23 April 2024, the UK Supreme Court unanimously dismissed the appeal, but the reasons for this dismissal were only formulated in the judgment issued on 18 September 2024.

The Jurisdiction Debate

A central issue in this case was the question of jurisdiction. RusChem disputed the competence of the UK courts, arguing that the arbitration clause specifying Paris as the seat of arbitration meant that the UK courts had no authority to issue an anti-suit injunction. 

The Supreme Court first observed that, in this matter, arbitration proceedings had not yet been initiated or proposed, which could have otherwise led to a different solution.⁷

According to RusChem, by choosing Paris as the seat of arbitration, the parties have chosen to be subject to the supervisory jurisdiction of the French courts, and it is therefore for the French courts to determine whether there was a breach of the arbitration agreements in the bonds and, if so, what relief to grant.⁸

The UK Supreme Court was not convinced by RusChem’s position. On the contrary, it held that exercise of coercive powers to enforce an arbitration agreement “is not a supervisory function which ought therefore to be left to the courts of the seat ⁹.” Indeed, “The role of the courts of the seat of arbitration is to supervise the arbitration itself. They are not the only courts that can prevent a party breaking his contract to arbitrate ¹⁰.”

This lead the UK Supreme Court to the conclusion that the mere fact that the parties have chosen to be subject to the supervisory jurisdiction of the French courts in relation to any arbitration which may in future be brought, “is not itself a reason why an English court cannot or should not uphold the parties’ bargain by restraining a breach of the arbitration agreement.¹¹” 

The Supreme Court was comforted in its opinion by observing that, in the matter at hand, the French courts would have been powerless to prevent RusChem from initiating legal proceedings in Russia: “[t]here is in fact no possibility that the French courts could be seized of the matter. Not only, as is agreed, do the French courts have no power to grant anti-suit injunctions, but uncontradicted evidence which was before the judge shows that the French courts would not have jurisdiction to determine a claim of any kind brought by UniCredit complaining of a breach by RusChem of the arbitration agreements in the bonds.”¹²

In addition, the Supreme Court ascertained that there would be no breach of comity as regards the French court, as France too is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). As such, French courts would have no objection to an English court taking steps to enforce the arbitration agreement in this case, even through the use of an anti-suit injunction by the English court.¹³

Brexit may have increased UK courts’ will to grant anti-suit injunctions 

The UniCredit v. RusChemAlliance decision is significant because, for the first time, the UK Supreme Court ruled that English courts could intervene to prevent actions in other jurisdictions that conflicted with an arbitration clause, even when the seat of the arbitration is located outside of England and Wales. 

This ruling highlights the will of the UK courts to extend their power to grant anti-suit injunctions, especially as, since Brexit, they are no longer restricted by ECJ case law which still largely prohibits the use of such procedural tool between EU Member States, considering that: “It is incompatible with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement”¹⁴.

Over time, the availability of anti-suit injunctions in presence of parallel litigation may prove to be a serious competitive advantage for UK courts in the hard-fought battle for attracting international disputes. Food for thought for EU jurisdictions?

[1] UniCredit Bank GmbH v. RusChem Alliance LLC [2024] UKSC 30.

[2] Most notably, the Courts of England and Wales (see e.g. Pena CopperMines Ltd. V. Rio Tinto Co.Ltd., (1911) 105 LT 846;  The Angelic Grace [1995] 1 Lloyd’s Rep. 87 (CA); Starlight Shipping Co. v Tai Ping Ins. Co. Ltd [2008] 1 Lloyd’s Rep. 230 (QB)) but also, although more sparingly, in the United States (see e.g., Paramedics Electro v.GE Medical Systems, 369 F. 3d 645 (2^nd Cir. 2004); Karaha Bodas Co. v. Perusahaan Pertambangan, 335 F.3d 357 (5^th Cir. 2003)) or in Singapore (see e.g. WSG Nimbus Pte Ltd. V. Board of Control for cricket in Sri Lanka [2002] 3 Sing. L.R. 603, 637).

[3] Aggeliki Charis Cia Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87, 96.

[4] G. Born, International Arbitration: Law and Practice (2012), 64.

[5] See e.g. Dell Emerging Markets (EMEA) Ltd v Systems Equipment Services SARL (2020) [2020] EWHC 1384 (Comm), the Court handed down sentences of between 9 and 18 months to the directors of one of Dell’s Lebanese distributors for procuring breaches of anti-suit injunctions.

[6] Article 11 of Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine.

[7] Ibid., §98.

[8] Ibid., §94.

[9] Ibid., §98.

[10] Quoting from IPOC International Growth Fund Ltd v OAO CT-Mobile LV Finance Group [2007] CA (Bda) 2 Civ; [2007] Bda LR 43, a decision of the Court of Appeal for Bermuda. 

[11] UniCredit Bank GmbH v. RusChem Alliance LLC [2024] UKSC 30, §100.

[12] Ibid. § 101.

[13] Ibid. § 80.

[14] ECJ 10 February 2009 (C-185/07), Allianz SpA and Generali Assicurazioni Generali SpA v West Tankers Inc (“Front Comor”).

The underlying analysis by Commission President Ursula von der Leyen at a press briefing is interesting: "Our business model has basically relied on cheap labor, from China presumably, cheap energy from Russia and partially outsourcing security and security investment. These days are gone."

The consequence of this: the EU Commission's plans for the three core areas of action: innovation, decarbonization and security, which are based on the recommendations of the Draghi report and described in more detail in the Compass. The Commission's aim is to make Europe the place where tomorrow's technologies, services, and clean products are invented, produced and marketed, while staying on course for climate neutrality. The Compass thus provides a first perspective on the question of whether the ESG topic is facing an end in light of the current political developments in the EU (for some basic thoughts on this, see our blog post Is this the End for ESG? | ADVANT Beiten). At least from the perspective of the compass, it appears rather unlikely that the transformation of the economy as such will be put on hold for the time being.

What is obviously set to change significantly, however, are the means: In the Compass, the EU Commission describes five so-called "horizontal enablers for competitiveness" with which it intends to achieve its goals in the three pillars of innovation, decarbonization and security. The first enabler, "simplification", is particularly relevant from a regulatory perspective, as it aims to drastically reduce regulatory and administrative burdens. This simplification is complemented by the reduction of barriers to the Single Market, the idea of a "European Savings and Investment Union" to finance the whole project, the promotion of skills and quality jobs and better coordination of policies at EU and national level.

The aspect of simplification mentioned in the Compass obviously requires a fundamental change. The EU Commission itself wants to make progress here and has already announced a first series of "Simplification Omnibus packages" for February 2025. One - and also the first - omnibus is to cover far-reaching simplification in the fields of sustainability finance reporting, sustainability due diligence and taxonomy. This refers to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Taxonomy Regulation. The EU Commission had already announced facilitations in this regard following the Budapest Declaration on the "New European Competitiveness Deal" last fall. According to the agenda for the upcoming Commission meeting on February 26, 2025, Commission President Ursula von der Leyen herself is now responsible for the corresponding agenda item "Omnibus package: Chapeau communication and omnibus proposal" alongside Vice-President Stéphane Séjourné. This may reflect the political importance of this project and the many demands made on it (e.g. by the EPP as well as the German and French governments).

A first indication of the content of this "first omnibus" can already be found in the Compass: In order to ensure that regulation is proportionate to the size of the company, the EU Commission intends to propose a definition for a new category of company, the so-called "small micaps". These are to be companies that are larger than SMEs but smaller than large companies. The EU Commission announces that "thousands of companies in the EU will benefit from a tailored regulatory simplification in the spirit as SMEs". This could mean that the scope of application of the CSRD, which currently includes all large corporations as defined in Section 267 (3) of the German Commercial Code (HGB) from January 1, 2025, will be narrowed accordingly.

What does this mean for companies? As a rule, the implementation of the announced simplifications by the respective legislator alone will not be sufficient. In a second step, these simplifications will have to be implemented by the individual companies. The extent to which the processes set up by the respective company can and should be adapted in a meaningful way will have to be examined. The mere removal of a legal requirement does not automatically render an established process obsolete. To illustrate: If, for example, the obligation of the management board of a listed stock corporation to establish an appropriate internal control system (ICS) and risk management system (RMS), which was included in Section 91 (3) of the German Stock Corporation Act (AktG) in the wake of the Wirecard scandal, were to be repealed, it would be unwise to immediately abolish the ICS and RMS completely. However, it remains useful and necessary to keep an eye on what regulatory simplifications will result from the changes announced by the EU Commission over time, and how these can then be translated into corresponding simplifications in internal processes. Companies would have more room for maneuver, at least as long as it is ensured that decisions can be made on the basis of appropriate information, including ESG aspects where relevant. It therefore seems unlikely that ESG issues will cease to play a role for companies. On the contrary, the transformation of the economy and the resulting opportunities and risks for the business models of almost all companies remain on the agenda.

Dr Daniel Walden
Dr André Depping

All of this could be criticised as a hectic back and forth which seems to be rather far from the goals of clear and efficient guidance, predictability, and planning security. At the same time, the question is how this potential 'chopping and changing' on the part of the legislature may be perceived by the companies concerned. However, regardless of the ongoing political debate about the new ESG regulations, there are also some legal determinants for the ESG issue which can be expected to continue to be there in any scenario:

Laws already in force must of course be observed ('compliance') for as long as they will be in force. The mere possibility of a law being repealed is no justification for not abiding by it before this happens. This is true, for example, for the German Supply Chain Due Diligence Act which has been German law since 1 January 2023 (see our above-mentioned blog post). Applicable laws, however, also include the traditional general duty of care of board members and managing directors, where modifications − particularly with regard to the legal consequences of a breach of duty in the form of liability for damages - are discussed from time to time, but not their complete abolishment: 'In managing the affairs of the company, the members of the management board are to exercise the due care of a prudent manager faithfully complying with the relevant duties', section 93 (1) sentence 1 of the German Stock Corporation Act (Aktiengesetz, AktG). And sentence 2 of the provision makes it clear that entrepreneurial decisions are to be taken on the basis of adequate information and in the best interests of the company. What does this mean for entrepreneurial decisions − and especially key decisions on the corporate strategy and the business model, for which (also) ESG aspects are relevant and, therefore, part of the adequate information base? The management board should take adequate account of these ESG aspects when taking a decision (in addition to all the other relevant aspects) if it does not want to be exposed to allegations of breach of duty and liability claims later in the event of an unsatisfactory development of the company. And this regardless of CSRD, Taxonomy Regulation, CSDDD and the announced omnibus regulation (for details see Walden, NZG 2020, p 50 et seq: 'Corporate Social Responsibility: Rights, Duties and Liability of the Management Board and Supervisory Board').

Another closely related issue can be found in the field of banking supervision. Some years ago already, the supervisory bodies emphasised the relevance of ESG risks and the need to identify them in traditional risk management. Meanwhile, the minimum requirements for risk management of the German Financial Supervisory Authority (Mindestanforderungen an das Risikomanagement, MaRisk) contain numerous detailed provisions in this regard. And only on 9 January 2025, the European Banking Authority (EBA) published its 'Guidelines on the management of environmental, social and governance (ESG) risk' (Final Guidelines on the management of ESG risks.pdf). The executive summary states:

'ESG risks, in particular environmental risks through transition and physical risk drivers, pose challenges to the safety and soundness of institutions and may affect all traditional categories of financial risks to which they are exposed. To ensure the resilience of the business model and risk profile of institutions in the short, medium, and long term, the guidelines set requirements for the internal processes and ESG risk management arrangements that institutions should have in place. […] Institutions should integrate ESG risks into their regular risk management framework by considering their role as potential drivers of all traditional categories of financial risks, including credit, market, operational, reputational, liquidity, business model, and concentration risks.' (Emphasis added by the author)

This implies two things for companies in the real economy: Firstly, if ESG risks are relevant for financial institutions, then they are also relevant, and even more so, for their clients because ESG risks of the institutions often are the result of ESG risk of their clients, for instance where such a risk is passed on to the institution as a credit risk. Therefore, not only the institutions, but also the companies in the real economy do well to consider ESG risks in their traditional risk management systems (a legal requirement for listed companies under section 90 AktG since the Wirecard affair) in order to possibly avoid potential negative effects of any missing or inadequate consideration of ESG risks for the company. And secondly, regardless of the structure of the companies' own risk management, a 'trickle-down' effect can also be expected as the institutions must try to obtain relevant information from their clients for their own risk management processes and their clients are therefore confronted with corresponding requests for information. Thus, the inclusion of ESG aspects in the loan processes of institutions has already begun.

On the other hand, board members and managing directors should keep an eye on possible ESG opportunities in addition to ESG risks. For many companies, the transformation of the economy may also offer new business opportunities which need to be treated like any other business opportunities. 

All this, of course, applies primarily to the classic outside-in perspective of companies, but in some circumstances also indirectly to the inside-out perspective addressed by the CSRD from the point of double materiality, i.e. the impacts of business activities on the environment and society. This is because such negative impacts can reflect on the company if they are seen in a critical light by relevant reference groups such as (potential) customers and employees. And finally, looking into the supply chain is also nothing new, at least since the coronavirus and increasing geopolitical uncertainties.

As a result, dealing with the ESG risks and ESG opportunities relevant for the specific company appears to be appropriate with a view to the general duty of care of management board members and managing directors, even regardless of the CSRD. Interestingly, the Chief Sustainability Officers (CSOs) of more than 400 French companies who are members of the French C3D organisation have recently addressed the EU Commission regarding the EU Commission's omnibus plans and emphasised that 'ESG reporting and value chain assessment' are essential 'for resilience' as well as 'for survival, growth, and long-term competitiveness' of European companies. In addition, it would strengthen Europe's sovereignty by European norms setting global standards instead of leaving this to other, competing jurisdictions (presumably referring to what is known as the Brussels Effect). The French CSOs therefore advise the EU Commission to take practical measures to improve the clarity and effectiveness of the regulations without jeopardising their strategic goals. As has already been made clear at the beginning, there certainly are enough voices advocating the opposite view and seeing an unchanged continuation as a serious competitive disadvantage.

So, it definitely will be interesting to see how this discussion will develop. Neglecting relevant ESG aspects 'only' for this reason could prove risky for company managers. Making well-considered decisions on an adequate information basis is the be-all and end-all (also) in this respect.

Dr Daniel Walden
Dr André Depping

welcome to the October issue of ADVANT Beiten's International Briefing.

On 15 September 2021 three independent law firms ALTANA from France, Beiten Burkhardt from Germany, and Nctm from Italy have launched their European alliance ADVANT and recently we celebrated our 3rd birthday.

ADVANT has changed and enriched our work, allowing us to rely on extensive practice and insights of our Member Firms to provide a better and seamless experience for our clients across our ADVANT jurisdictions and beyond. We have achieved a lot, and we strive for more.

In this issue, of course, we will highlight interesting developments in the European and German legal landscape, invite you to meet us at international events and tell you about our clients’ successes.

Enjoy the read!

You can find our International Briefing October 2024 here.

Commission President

Ursula von der Leyen was re-elected Commission President with 401 votes, more than expected given the result of the elections to the European Parliament in June which changed the composition of the Parliament in many respects.

The newly elected members of the European Parliament met for the first time this week in Strasbourg and among their first tasks was the election of the Commission President. The European Council had already met before and designated the Estonian Prime Minister Kaja Kallas to become the next High Representative for Foreign Affairs and Security Policy and the elected former Portuguese head of government Antonio Costa as President of the European Council.

European Parliament

The European Parliament kicked things off with the election of its own president. With a large majority (562 out of 623 valid votes), MEPs elected the Christian Democrat Roberta Metsola from Malta. The 45-year-old has held the highest office in the EU in terms of protocol since 2022 and has herself been a member of the European Parliament since 2013. The President of the European Parliament presides over all activities of the plenary, gives the floor to speakers, represents the Parliament externally and signs laws. Metsola wants to campaign for a "strong Parliament" and eliminate the "imbalances between the institutions". Metsola is considered a great supporter of Ukraine and during her first term of office, campaigned for a fair distribution of migrants within the EU, which led to the adoption of the Asylum and Migration Pact in 2024.

The European Parliament moreover elected its 14 Vice-Presidents which together with its president drafts Parliament's budget and sets the agenda. Of the 14 positions, six went to the Social Democrats, three to the EPP, two to the ECR and one each to the liberal Renew Group, the Greens and the Left. The more "right-wing" parties, which had hoped for more seats on the Bureau, were disappointed with the outcome.

Future European Commission

On 18 July the eagerly awaited election of the Commission President took place. The European Council nominates the Commission President by qualified majority, whereby, according to the EU Treaty, this must take into account the result of the European elections. In the 2014 European elections, the "Spitzenkandidat principle" was informally agreed between the European parties for the first time, which states that the European Council may only nominate the candidate whose party achieved the best result in the European elections. At that time, the principle was not followed and Ursula von der Leyen was instead elected. She was up for re-election this time.

Not only did Ursula von Leyen have to face the new majority situation in Parliament, but a court ruling on 17 July 2024 also challenged the Commission's decision not to disclose detailed information about the purchase of coronavirus vaccines. The German left-wing lead candidate Fabio di Masi then demanded that Ursula von der Leyen renounce her candidacy. Nevertheless, Ursula von der Leyen was the clear winner in the end. She received 401 votes out of a possible 719. This meant that she not only achieved a better result than in 2019, but also surprised many critics with a clear victory in the first round of voting. In her speech before the election, she pugnaciously emphasized that she wanted to stand by the Ukraine for "as long as necessary" and that her goal is "to build a real European defence". To the surprise of many observers, von der Leyen also spoke out in favour of the approval of e-fuels within the EU for the first time. In her opinion, the political guidelines of the transport regulation should be re-examined. In doing so, she gave way to the conservative parties, who have been calling for this technology for some time now. EPP leader Weber briefly commented on this with the words: "This is the end of the ban on combustion engines after 2035".

As part of her organizational powers, the Commission President directs the work of the Commission and convenes the meetings of the College of Commissioners. The President decides on the areas of responsibility of the Commissioners, which she can also reassign during her term of office. Certain restrictions apply to the High Representative of the Union for Foreign Affairs and Security Policy.

The other members of the European Commission will be selected within the next weeks by its President and needs to be confirmed by the Parliament and accepted by the 27 Member States. The Commission President’s discretion in the selection of the Commissioners and their portfolios is somehow limited by the influence of the Member States. The number of Commissioners is generally set at one Commissioner per country. The High Representative for Foreign Affairs and Security Policy is nominated by the European Council, while the other Commissioners are proposed by the national governments of the Member States and nominated by the Council of the European Union by qualified majority. Although the President of the Commission can object to the appointment of a Commissioner, the proposals of the governments are normally discussed beforehand with the country concerned. The Commissioners usually come from the parties that form the governments in their respective countries. The European Parliament questions the candidates individually and issues an opinion in which it can approve or reject the Commission as a whole. After approval by the Parliament, the Commission is appointed by the European Council by qualified majority.

The next few days will show how the positions within the Commission will be distributed. As mentioned, the Estonian Prime Minister Kaia Kallas, who was nominated by the European Council on 28 June 2024, is set to become the EU's foreign policy chief. She is a member of the liberal ReNew Europe group and represents a tough foreign policy stance towards Russia. Virginijus Sinkevicius (Greens/EFA), Janusz Wojciechowski (ERK) and Adina Valean (EPP) will definitely no longer be part of the Commission, as they are all leaving their positions for various reasons. In the course of the new composition of the Parliament, the areas of agriculture, transport and the environment in particular will receive new Commissioners.

Another top EU position was already awarded to the former Portuguese head of government and Social Democrat Antonio Costa. His term of office is two and a half years, but it is customary for a second term to follow.

The defining issues of the next legislative period will be migration, European defense, Ukraine and the Green Deal. The progressive Green Deal program in particular will face major challenges due to the Greens' loss of votes and the strengthening of right-wing parties. It remains to be seen how the future Commission will react to this.

Prof Dr Rainer Bierwagen
Dr Dietmar Reich
Christian Hipp
Gábor Bàthory

Therefore, the European Commission's first overhaul of its Notice on the definition of the relevant market in over twenty-five years had been eagerly awaited among competition law practitioners and beyond. The Commission finally published it on 22 February 2024. In the following, we present both the Commission's revised Notice and its very first applications by the French Competition Authority, the European Court of Justice and the Commission itself.

The Bible of Market Definition

While the revised Market Definition Notice may convey the impression of being a modest administrative document by the European Commission, it is in fact the bible of market definition across Europe. The original Notice had been a point of reference for authorities and courts both at the EU and at the national level since its publication in 1997. The revised Notice is the result of a close cooperation between the Commission and national competition authorities in the EU, and reflects input received from further stakeholders.

Evolution, not Revolution

It is therefore no surprise that the French Competition Authority used the revised Market Definition Notice less than three months after its publication when issuing a cartel fine decision against eleven companies on 21 May 2024. Regarding the pre-cast concrete products at stake, the Authority recalls that the relevant product market comprises all those products that customers regard as interchangeable or substitutable, and that the relevant geographic market comprises the geographic area in which, inter alia, the conditions of competition are sufficiently homogeneous. These basic principles remain largely unchanged in the revised Notice compared to the previous Notice.

Price Isn't Everything

However, there are also significant changes compared to the previous version. Such a change is the recognition by the Commission of “extra-economic" competition parameters when defining the relevant product market. This is a real innovation as compared to the previous Notice which focused on price to define the market. Under the revised Market Definition Notice, the Commission considers non-price parameters such as the degree of innovation of the product, its quality, the image it conveys or even its sustainability are relevant parameters to define the market. Far from simply clarifying the concepts covered by the previous Notice, the revised Notice also provides additional guidance relating to specific types of markets:

New Tools for New Markets: Pipeline Products

The Commission notes that innovation and related R&D investment have become a key parameter in many sectors, such as high-tech and pharmaceuticals. To capture new product markets ahead of the marketing stage, the Commission now reserves the right to include “pipeline products” in its competition assessment among a new product market or a pre-existing one. This perception has major consequences, particularly for merger control, where merging companies will have to increasingly consider ongoing development projects as potential substitutes of existing products.

New Tools for New Markets: Multi-Sided Platforms

The revised Market Definition Notice also addresses multi-sided platforms (such as online marketplaces and social media), where demand from one group of users can affect demand from one or more other groups (buyers, advertisers, for example), so-called “indirect network effects”. The revised Notice provides new guidance by explicitly stating that multi-sided markets can be defined either as a whole, thus encompassing the different groups of users concerned, or as separate markets, depending on the facts of the case.
These principles of the revised Notice were used by Advocate General Collins in its opinion of 6 June 2024 when defining the market on which Booking.com is active. In his opinion, he views Booking.com as a provider of online intermediation services to hotels, thereby assuming separate markets for the two sides of the market.

New Tools for New Markets: Ecosystems

The Commission also recognizes the specificities of after-markets, bundles and digital ecosystems, where the consumption of a primary product leads to the consumption of a secondary product. According to the revised Market Definition Notice, it is appropriate to define these markets either as a single market encompassing primary and secondary products, or as separate markets (multiple markets or dual markets).

The Commission applied these rules when authorizing the establishment of a joint venture for smart farming products on 25 March 2024. The Commission's investigation revealed significant substitutability between the individual products (displays, receivers etc.) on the one hand and guidance systems on the other hand. Namely, the individual components can be easily assembled to create a combined system, and several integrators are actively engaged in such bundling. The Commission hence assumed a single system market.

New Market Share Metrics

Another key contribution of the revised Market Definition Notice is the possibility explicitly offered by the European Commission to calculate companies' market shares based on metrics other than their sales revenues or sales volumes. From now on, the Commission may also use benchmarks such as the number of suppliers, the number of visits/views/downloads or even R&D expenditures to measure companies' market shares. This additional flexibility is particularly relevant for the digital sector, the pharma sector and nascent markets in general.

Conclusion

The revised Notice embraces the societal transformations induced by digitization and the increasing importance of sustainability factors. Furthermore, we can only welcome with satisfaction the Commission's advice on delineating the relevant market in settings such as two-sided markets or product bundles. The first use cases of the revised Notice already show that its innovations are very relevant for the decision-making practice of competition authorities.

However, one point raises concerns for legal certainty: The Commission emphasizes in its revised Notice that it will not be bound by its precedents. This statement raises fears that the Commission may overrule previous market definitions depending on alleged market developments or on the specific competition parameter concerned. As a result, the additional legal certainty that should be provided by a definition of relevant markets becomes dangerously fragile.

Still, the revised Market Definition Notice promises to be a milestone in the evolution of EU competition law over the coming years. It therefore deserves to be reviewed carefully.

Christoph Heinrich
Lucie Giret (ADVANT Altana)
Francesco Mazzocchi (ADVANT Nctm)

An Overview Q&A

Article 11 of the EU Directive no. 2006/112 (the VAT Directive) authorizes the EU Member States to consider as a single VAT 
entity the VAT taxable persons established in their territory who are legally independent but closely linked to each other by 
financial, economic and organizational relationship (so-called “VAT Group”).

This Q&A provides an overview of VAT policy requirements and modalities for introducing the VAT Group regime in France, 
Germany and Italy, and also covers their consequences in terms of advantages and implications.

Please find our brochure in the download area below.

welcome to the July issue of ADVANT Beiten's International Briefing.

We are pleased to share that the ADVANT alliance has once again been recognised by the prestigious Chambers and Partners and the Legal 500 rankings. This year ADVANT lawyers ranked an impressive 43 times across 23 practice areas in the Chambers Europe Guide 2024. Additionally, the Chambers Global Guide 2024 ranked 8 departments and 13 ADVANT lawyers across multiple practice groups. In the Legal 500 EMEA 2024 rankings, ADVANT's expertise and experience was highlighted in 58 practice areas, with 38 professionals ranked individually and over 100 professionals recommended.

It has been another few busy months for the ADVANT Midwest and Northeast teams as they have travelled to the U.S. for a series of meetings with American law firms and clients to make the unique ADVANT offering known. And the next trips are already planned for September and October. Please be in touch with Barbara Mayer and Hans-Josef Vogel if you would like to meet us on one of the upcoming ADVANT's US strategy trips.

This year ADVANT's China Outbound EU Investment Forum was a great success once again. The forum began early April in Beijing, with further events in Shanghai and Guangzhou throughout the week. ADVANT delegates together with representatives from agencies and high-ranking representatives of Chinese companies discussed developments and challenges of doing business in the EU, such as greenfield investment and distressed M&A, dispute resolution, and cross border employment.

Additionally, for the enterprises registered in the People’s Republic of China (“PRC”) and their shareholders a flyer "China: Revised Company Law", prepared by the team of ADVANT Beiten in China (Susanne Rademacher, Jenna Wang-Metzner, Lelu Li, and Kelly Tang), can be of interest as it flags the issues that must be complied under the revised PRC Company Law and related regulations, which all entered into effect on 1 July 2024.

In circumstances of increasing global economic tensions and protectionism, when every cross-border M&A deal requires analysis under foreign trade law, expertise in this area is becoming more and more important. Christian von Wistinghausen (ADVANT Beiten) was ranked among the 50 leading German foreign direct investment control experts. The full piece can be read online here (subscription required).

We would like to also mention that Andreas Lober (ADVANT Beiten) was quoted in Compliance Week on the Digital Services Act and Digital Markets Act and the impact on Big Tech across the EU. The full piece can be read online here (subscription required). Please see our Privacy Ticker and Tech Law Briefing for information and updates on IT, the Law of Data, and Intellectual Property. Martin Seevers (ADVANT Beiten) wrote an article for the Yearbook "Perspectives 2024" of the Association of Foreign Banks in Germany, where he talks about changes in requirements for tax compliance in the financial sector as a result of current measures and legislative initiatives in the area of tax transparency and to combat tax evasion and tax fraud.

Among ADVANT publications in this issue we would like to highlight:

ADVANT M&A Deal Point Study. We looked into more than 4,000 data points of our M&A deals from 2023 to keep record of our performance and to be on the lookout of M&A industry trends to provide our clients with the best services. If you wish to read our Deal Point Study, you may request a free copy here.

Overview Q&A: The VAT Group regime in France, Germany and Italy. Philippe de Saint-Bauzel, Marie Darcq (both ADVANT Altana), Markus P. Linnartz, Helmut König (both ADVANT Beiten), Andrea Mantellini, Barbara Aloisi (both ADVANT Nctm) provide an overview of VAT policy requirements and modalities for introducing the VAT Group regime in France, Germany and Italy, as well as covering the advantages and implications.

Despite our busy schedules and work commitment, to foster better connections our teams meet in person as well. Members from the Corporate / M&A practice group from across ADVANT Altana, ADVANT Beiten and ADVANT Nctm met in Freiburg in June for a productive day of workshops and talks, including from ADVANT Beiten practice group coordinators Barbara Mayer and Hans-Josef Vogel as well as Bruno Nogueiro, Lucia Corradi, and Gerhard Manz. It was great to get everyone together for a day of collaboration and fun, and to end the meeting together with a dinner party at the Rieger winery.

In the "local" news: ADVANT Beiten is further expanding its tax practice by welcoming Heiko Wunderlich as equity partner in Munich office from 1 July 2024. We are delighted to have gained another highly experienced and established expert in the market like Heiko Wunderlich, whose tax expertise, particularly in the areas of succession, restructuring and transactions, is an excellent addition to our advisory portfolio both at our Munich office and throughout the firm.

In this edition, of course, we highlight interesting developments in the European and German legal landscape as well.

You can find our briefing here.

Let's see, in a nutshell, its main contents.

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Why issue guidelines?

To provide, while waiting for the approval of a punctual regulatory measure, uniform guidelines to municipal administrations, including from the urban and environmental point of view.

What are data centers?

They are rooms, buildings or physical facilities that house the IT infrastructure for the creation, execution and deployment of applications and services and for the storage and management of data associated with those applications and services.

How are data centers classified?

Based on size, energy requirements and computing power. Specifically, they are distinguished into:

• Hyperscale: large facilities, with energy requirements of more than 100 MW, that have, as a rule, phased development with successive implementation times dictated by the gradual growth of service requirements for end customers.
• Colocation: medium-sized facilities, with energy requirements of more than 5 MW.
• Edge: usually small facilities (sometimes just a container), with energy requirements of less than 1 MW.
• Pure crypto-mining ("mining"): small containers or buildings with high energy requirements, but operated with a few simple resources.

To the above must then be added HPCs (high performance computing), which can be of various sizes and with different energy requirements, but, in general, are facilities with high demands on computing capacity for purposes such as artificial intelligence, machine learning, and other complex computing operations.

What is the intended use of data centers?

Data Centers are compatible with manufacturing and office uses.

Where can Data Centers be located?

Municipalities can assess the suitability of the location of medium and large facilities based on the following criteria:

• presence of adequate infrastructure and availability of low-cost energy (preferably renewable energy) or self-generation of energy, with priority given to idle sites or brownfield areas, areas to be regenerated, areas with low density of facilities, areas where system economies can be realized, ecosystem facilities (district heating, CER, ...), climatically more suitable areas;
• environmental risk;
• landscape quality of different areas;
• possible impacts on ecological networks and green networks for use;
• presence, nearby, of infrastructure, such as roads, tpl, waterworks, power lines, sewers, technological pipelines, etc;
• presence of other data centers or to the presence of other activities that could benefit from the aforementioned settlement, also for the purpose of safeguarding employment and productive fabric.

What environmental permits are required?

• Where the nominal thermal power of the emergency power units is greater than 50 MW, one falls into an activity subject to AIA, such that it is necessary for the proponent to acquire in advance the measure of exclusion from EIA or, in the case of a total power exceeding 150 MW, the measure of environmental compatibility, in priority to the issuance of the AIA and any other authorization.
• For medium and large Data Centers, it is necessary to verify, based on the municipal planning, whether the intervention falls within the scope of SEA.

What is the impact on the permitting process?

Applications for medium- and large-scale facilities must be evaluated at a service conference where the Province or Metropolitan City territorially concerned will give an opinion on the compatibility of the intervention based on the provisions of these guidelines.

The aim of the transaction is to create a European player with commercial and industrial synergies that will strengthen the competitive position of the new entity while offering a broader and more diversified range of products.

ADVANT Altana advised the sellers, the Jeuland family who founded LUISINA, on this transaction with a team comprising Gilles Gaillard, Alexandra Ferrier and Agnès Millet on the corporate M&A aspects, Philippe de Saint Bauzel and Marie Darcq on the tax aspects, Pierre Lubet on the employment aspects, Marie Hindré on the competition aspects and Jean-Guy de Ruffray and Claire Borgel on the IP/IT aspects.

The aim of the transaction is to offer consumers healthy food accessible to all in supermarkets and hypermarkets.

ADVANT Altana advised Eureden Group on this transaction with a team consisting of Jean-Nicolas Soret, Géraldine Malfait and Christina Crenn on the corporate M&A aspects and Pierre Lubet on the social aspects.

welcome to the first issue of ADVANT Beiten's International Briefing in 2024.

We are vigorously working on ADVANT-wide synergy to provide our clients and friends with the "best of both worlds": deep local market expertise combined with international vision and reach.

The recent example when the European ADVANT Alliance with its three law firms ADVANT Nctm (Italy), ADVANT Beiten (Germany) and ADVANT Altana (France) joined their forces to ensure the smooth European legal experience is a comprehensive legal advice to Cogne Acciai Speciali S.p.A. (CAS) on the acquisition of all shares in Mannesmann Stainless Tubes GmbH (MST) in a cross-border transaction. CAS, based in Aosta (Italy), is a 70% subsidiary of Walsin Lihwa Corporation (Walsin) from Taiwan. The ADVANT law firms advised CAS under the leadership of Italian partner Vittorio Noseda comprehensively across multiple jurisdictions and locations. ADVANT Beiten, led by partners Christian von Wistinghausen, Marion Frotscher and Tassilo Klesen, advised on all matters of German law. Please see our other deals in the respective section below.

Also, in this edition we would like to highlight publications created by the ADVANT law firms together, relying on our extensive joint matter experience to assist you or your clients with navigating complex and nuanced legal and commercial landscape of Europe.

• In European M&A Outlook Partners of the ADVANT firms discuss the 2024 forecast for European M&A activity to compare notes on what awaits European dealmakers this year.
• Please assess how prepared you are for a litigation dispute in China or Russia with the help of our overview of key issues a party to litigation in China and Russia is likely to face.
• Our ADVANT-wide Restructuring and Insolvency team explores how company directors react to financial distress and risk in our publication "Company Directors Facing Financial Distress: A Cross-Border Perspective".
• Additionally, for an overview of the European Tech Law regulation that applies to all companies doing business in the European Union, whether they are registered within the EU or not, please read ADVANT Beiten's Tech Law Briefing.

To deliver our message across the Atlantic in January, February and March 2024 partners of the ADVANT firms visited New York, Boston, San Francisco, and Miami where they met representatives of the American law firms and corporates to establish new connections and explore business opportunities. Please connect with Gildas Robert (ADVANT Altana), Markus Ley, Hans-Josef Vogel (ADVANT Beiten) and Guido Fauda (ADVANT Nctm) during their ADVANT's Midwest US Roadshow of 15 – 19 April 2024 and see our other events in the respective section below.

We are also delighted to share some "local" news. On 16 March 2024 ADVANT Beiten has elected its new Management Committee to lead the firm for the next three years. In addition to re-elected Dusseldorf office Partner Guido Krüger, the partners have elected Munich office Partner Martin Fink, and Freiburg office Partner Barbara Mayer. Our fellow editor Barbara will be in particular responsible for international relationships of the firm. The Management Committee remains loyal to creating lasting value for our clients and teams and to continuing ADVANT efforts to solidify its position as a European legal industry leader.

At the turn of the year ADVANT Beiten's Corporate / M&A practice group grew by winning two Equity Partners: Eva Kreibohm (Berlin office) and Jan Eltzschig (Dusseldorf office). Eva's partnership is an important step towards strengthening and succession planning for our notary's office in Berlin. With Jan, we are gaining an established expert in the market who will work closely with our ADVANT partner law firms in this area.

Our Hamburg office has grown its team as well. We are welcoming Oliver Korte as a highly experienced colleague in the area of commercial and distribution law. Trade and distribution are firmly anchored in the Hanseatic city and Mr Korte is sharpening our profile in this area in particular. We are also delighted to have Martin Seevers and his team on board as experts who can provide comprehensive advice to both companies and private individuals in all areas of corporate and tax criminal law.

With these new additions, ADVANT Beiten's Corporate/M&A practice group comprises a total of 78 professionals, including 26 Equity Partners, 2 Of Counsels, 28 Non-Equity Partners, and 22 Associates.

In this edition, of course, we highlight interesting developments in the European and German legal landscape as well.

You can find the newsletter here.

This acquisition will enable Cogne Acciai Speciali, a 70% owned subsidiary of the Taiwanese Waslin Group based in Italy, to consolidate its position in Europe. Mannesmann Stainless Tubes GmbH employs nearly 1,000 people in its subsidiaries and plants in Germany, France, Italy and the United States.

The transaction is subject to the approval of the competition authorities.

Cogne Acciai Speciali was advised on this transaction by a cross-border team consisting of ADVANT Altana, ADVANT Nctm and ADVANT Beiten.

ADVANT Altana advised CAS on the French corporate M&A aspects with Bruno Nogueiro (partner), Arthur Boutemy (counsel) and Théodore Sabot. The ADVANT Altana team also included Marie Hindré (partner) and Delphine Laget on competition and economic law; Mickaël d'Allende (partner), Alexandre Véran and Anissa Froz on employment law; Cécile Ferouelle (partner) and Victor Pouget on real estate and planning; and Jean Guy de Ruffray (partner) and Etienne Nicolet on intellectual property.

Download the press release