International Commercial Law Blog

New IVASS Regulation on simplification measures for contractual relationships

Following the public consultation launched on 18 March 2014, IVASS published the Regulation No. 8 of 3 March 2015 concerning measures to simplify the administration of contractual relationships between insurance undertakings, intermediaries and clients. The Regulation implements Article 22, paragraph 15-bis of Law Decree No. 179 of 18 October 2012, as converted into law which required IVASS to enact measures aimed at reducing the paper format requirements and promoting the use of digital documentation. Below are the main relevant provisions set out by the new Regulation.

Italian and EU insurance undertakings and intermediaries are required to foster the use of advanced electronic signature, qualified electronic signature and digital signature for the execution of the insurance agreements.

Furthermore, with an aim at promoting the use of traceable means of payment, insurance undertakings and intermediaries must allow clients to pay insurance premiums by means of electronic payment instruments.

In addition, before the execution of the agreement or the signing of the proposal, insurance undertakings and intermediaries may obtain the client’s consent – also through voice recordings or email – to the electronic transmission of the relevant documentation during both the pre-contractual and contractual phase of the relationship with the client.

Insurance undertakings and intermediaries must adopt a documentation management system aimed at avoiding requests to clients of documentation which is not necessary or which has been already obtained in relation to previous relationships with the same client.

Italian insurance undertakings and intermediaries must obtain a certified e-mail account (“Posta Elettronica Certificata” or “PEC”) and indicate the PEC address in any communication addressed to the public and on their website. However, it is worth noting that this obligation already apply, upon registering with the Companies’ Register, to companies (Law Decree 185/08, converted into Law no. 2 of 28 January 2009) and sole traders (art. 5 of Law Decree no. 179 of 18 October 2012).

Insurance undertakings and intermediaries will have 6 months from the entry into force of the Regulation (which shall occur 30 days from publication in the Italian Official Gazette) to comply with the new provisions regarding the PEC address and the establishment of the above-mentioned documentation management systems.

The Regulations apply to the promotion, distribution and management by companies and intermediaries of life and non-life insurance contracts. Instead the distribution of insurance products pursuant to the IVASS Regulation No. 34 of 19 March 2010 would remain excluded from the scope of the Regulation.

The Principality of Monaco cannot benefit from the protection of the trade mark MONACO in the EU in respect of certain goods and services

The word “monaco” designates the origin or geographical destination of the goods and services concerned and is devoid of distinctive character.

In 2010, the government of the Principality of Monaco was granted, by the World Intellectual Property Organisation (WIPO), an international registration covering the territory of the EU. That registration, which was based on the word mark “monaco”, was transferred to the Office for Harmonisation in the Internal Market (OHIM) to be processed.

In 2013, OHIM refused protection of the trade mark in the EU in respect of some of the goods and services applied for (i.e.: magnetic data carriers, paper and cardboard goods not included in other classes, printed matter, photographs, transport, travel arrangement, entertainment, sporting activities and temporary accommodation).

OHIM based its refusal on the descriptive character of the mark, in so far as the word ‘monaco’ designates the territory of the same name and could, therefore, be understood in any of the EU’s official languages as designating the origin or geographical destination of the goods and services concerned. OHIM further considered that the mark at issue was clearly devoid of distinctive character. Les Marques de l’État de Monaco (MEM), a Monegasque public-limited company which succeeded the government of the Principality of Monaco as the proprietor of the trade mark, contests OHIM’s decision before the General Court and seeks the annulment of that decision.

In its Judgment in Case T-197/13, Monaco v OHIM, the General Court (Eight Chamber) dismisses the application and upholds OHIM’s decision.

The General Court points out, first of all, that under EU law any legal entity, including a public law entity, may apply to benefit from the protection of the Community trade mark. This is, of course, true for companies based in the territory of a State which is not a member of the EU, but also for the non-member States themselves, since those States are, within the meaning of EU law, public law entities. As a result, when the Principality of Monaco formulated its request to have the EU designated for the international registration of the trade mark at issue, it placed itself within the scope of application of EU law and, therefore, one of the absolute grounds for refusal could be relied upon against it. In other words, the Principality of Monaco sought to benefit from the application of EU law and, therefore, became subject to its rules, without being able to rely on its entitlement in principle to be the proprietor of the trade mark “monaco”.

Moreover, the General Court observes that the word “monaco” corresponds to the name of a globally-known principality, not least due to the renown of its royal family, its organisation of a Formula 1 Grand Prix and its organisation of a circus festival. Knowledge of the Principality of Monaco is even more established amongst EU citizens, notably on account of its borders with a Member State (France), its proximity to another Member State (Italy) and its use of the same currency as 19 of the 28 Member States, the Euro. There is therefore no doubt that the word “monaco” will evoke, regardless of the linguistic background of the relevant public, the geographic territory of the same name. In addition, the General Court notes that OHIM correctly defined the relevant public (namely citizens of the EU) and correctly attributed to that public, in respect of the goods and services concerned, either an average or high degree of attentiveness.

According to the General Court rulings, OHIM was also correct to find that the word “monaco” could be used, in trade, to designate origin, geographical destination or the place of supply of services, so that the trade mark has, in respect of the goods and services concerned, a descriptive character. Furthermore, as a descriptive mark is necessarily devoid of distinctive character, the General Court holds that the trade mark “monaco” is devoid of distinctive character.

ISO 27018 sets data protection standards for the cloud

In July 2014, the International Organization for Standardization (“ISO”) and International Electrotechnical Commission (“IEC”) published ISO/IEC 27018 (ISO 27018), a code of practice that sets forth standards and guidelines pertaining to the protection of data consisting of “personally identifiable information” processed by public cloud service providers.

ISO/IEC 27018 is the first International Standard that focuses on protection of personal data in the cloud. Although only a few months old, the new standard should finally give cloud users confidence that their service provider is well-placed to keep data private and secure.

ISO/IEC 27018 specifies certain minimum types of security measures that cloud providers should adopt, if applicable, including encryption and access controls. The cloud standard also requires cloud providers to implement security awareness policies and make relevant staff aware of the potential consequences (for staff, the cloud provider and the customer) of breaching privacy and security rules.

As the first-ever standard that deals with the protection of personal data for the cloud, ISO/IEC 27018 has the following key objectives:

  1. Help cloud service providers that process personally identifiable information to address applicable legal obligations as well as customer expectations
  2. Enable transparency so customers can choose well-governed cloud services
  3. Facilitate the creation of contracts for cloud services
  4. Provide cloud customers with a mechanism to ensure cloud providers’ compliance with legal and other obligation

ISO/IEC 27018 provides a practical basis to induce confidence in the cloud industry. At the same time, the public cloud industry will have clear guidance in order to meet some of the legal and regulatory concerns of its clients.

ISO/IEC 27018:2014 establishes commonly accepted control objectives, controls and guidelines for implementing measures to protect “personally identifiable information” in accordance with the privacy principles in ISO/IEC 29100 for the public cloud computing environment.

In particular, ISO/IEC 27018:2014 specifies guidelines based on ISO/IEC 27002, taking into consideration the regulatory requirements for the protection of “personally identifiable information” which might be applicable within the context of the information security risk environment(s) of a provider of public cloud services.

ISO/IEC 27018:2014 is applicable to all types and sizes of organizations, including public and private companies, government entities, and not-for-profit organizations, which provide information processing services as “personally identifiable information” processors via cloud computing under contract to other organizations.

The guidelines in ISO/IEC 27018:2014 might also be relevant to organizations acting as “personally identifiable information” controllers; however, “personally identifiable information” controllers can be subject to additional “personally identifiable information” protection legislation, regulations and obligations, not applying to “personally identifiable information” processors. ISO/IEC 27018:2014 is not intended to cover such additional obligations.

As a guiding principle, ISO/IEC 27018 standards and guidelines facilitate the retention by the cloud service customer of authority to determine the scope of any use and handling of its “personally identifiable information”. The following controls and implementation guidelines set forth in ISO/IEC 27018 as generally applicable to cloud service providers processing “personally identifiable information”:

  1. Customer and end user control rights:
    1. A cloud service customer should have the means to enable the individual to whom “personally identifiable information” relates to access, correct and/or erase such “personally identifiable information”;
    2. “personally identifiable information” should not be processed for any purpose except pursuant to the instructions of the cloud service customer;
    3. “personally identifiable information” should not be used for marketing or advertising purposes without the customer’s consent;
    4. Temporary files and documents associated with “personally identifiable information” processing should be erased or destroyed by a cloud services provider within a specified period;
  2. Restrictions on disclosure to or access of 3rd parties to “personally identifiable information”:
    1. Law enforcement requests for disclosure of “personally identifiable information” must be disclosed to a cloud service customer (unless such disclosure is prohibited by law);
    2. Other requests for disclosure of “personally identifiable information” should be rejected except to the extent authorized by a cloud service customer;
    3. Data relating to disclosures of “personally identifiable information” to third parties should be recorded;
    4. Subcontractors should be disclosed in advance by a “personally identifiable information” processor;
    5. Unauthorized access to “personally identifiable information” or processing equipment or facilities resulting in the loss, disclosure or alteration of “personally identifiable information” should be disclosed to a cloud service customer;
    6. Anyone (including cloud service provider employees) associated with the processing of “personally identifiable information” should be subject to a confidentiality obligation;
  3. Treatment of Media Containing “personally identifiable information”:
    1. A number of additional restrictions should be maintained for information security purposes, with respect to, inter alia, the creation of hard copy materials displaying “personally identifiable information”, data recovery or restoration efforts, “personally identifiable information” stored on transportable media, transmission of “personally identifiable information” over public networks, and user IDs for access to stored “personally identifiable information”.

Registration of the shape of the Rubik’s Cube as a Community trade mark is valid

The graphic representation of that cube does not involve a technical solution which would prevent it from being protected as a mark.

At the request of Seven Towns Ltd, a UK company which manages inter alia intellectual property rights relating to the ‘Rubik’s Cube’, the EU’s Trademark Office (OHIM) registered, in 1999, the shape of that cube in respect of “three-dimensional puzzles” as a three-dimensional Community trade mark.

Rubik’s CubeIn 2006, Simba Toys GmbH & Co. KG, a German toy manufacturer, applied to OHIM to have the three-dimensional mark cancelled on the ground inter alia that it involves a technical solution consisting of its rotating capability, since such a solution may be protected only by patent and not as a mark. OHIM dismissed its application and Simba Toys therefore brought an action before the General Court for annulment of OHIM’s decision.

In its Judgment in Case T-450/09, Simba Toys GmbH & Co. KG v OHIM, the General Court (Sixth Chamber) dismisses the action brought by Simba Toys.

In the first place, the Court finds that the essential characteristics of the contested mark are, first, the cube per se and, second, the grid structure which appears on each of its surfaces. According to the Court, the bold black lines which form part of that structure and which appear on the three representations of the cube by criss-crossing the inside of those representations are not suggestive of any rotating capability of the individual elements of the cube and therefore do not fulfil any technical function.

The rotating capability of the vertical and horizontal lattices of the Rubik’s Cube does not result either from the black lines or the grid structure, but from an internal mechanism of the cube which is invisible on its graphic representations. Consequently, the registration of the shape of the Rubik’s cube as a Community trade mark cannot be refused on the ground that that shape incorporates a technical function.

In the second place, the Court finds that the mark in question does not allow its proprietor to prohibit third parties from marketing all types of three-dimensional puzzles that have a rotating capability. The Court states that the proprietor’s marketing monopoly is limited to three- dimensional puzzles that have the shape of a cube the surfaces of which bear a grid structure.

In the third place, the Court finds that the cubic grid structure of the mark in question differs considerably from the representations of other three-dimensional puzzles available on the market. That structure therefore has distinctive character which enables consumers to identify the producer of the goods in respect of which the mark is registered.

Consultation on the Insurance Block Exemption Regulation

The Insurance Block Exemption Regulation (“IBER”) is a sector-specific legal instrument that allows (re)insurers to benefit from an exemption to the prohibition of anti-competitive arrangements laid down in Article 101 (1) of the Treaty on the Functioning of the European Union (TFEU). At present, the exemption covers two types of agreements between (re)insurance undertakings:

  1. Agreements with respect to joint compilations, joint tables and studies; and
  2. Common coverage of certain types of risks (co (re)insurance pools).

The insurance sector is one of three sectors that still benefits from a block exemption regulation, since the concept of the direct applicability of the exemption of Article 101 (3) TFEU was introduced with Council Regulation 1/2003. The IBER expires on 31 March 2017 and the Commission will consider whether any parts of it would merit a renewal. In this regard, the Commission is required to submit a report on the functioning and the future of the IBER to the European Parliament and the Council by March 2016. The Commission is therefore gathering views and market information to carry out its assessment.

To that purpose the Commission has drawn a Questionnaire and invited all stakeholders to submit all relevant information on the functioning of the IBER, as well as their views on whether the Commission should renew any of the IBER provisions in a new block exemption regulation. Input from stakeholders will be a key element for the Commission’s assessment. The Commission welcomes comments in particular from (re)insurance undertakings, industry associations, insurance intermediaries, public authorities, consumer organisations and customers, as well as competition practitioners, researchers and think tanks. Comments from other stakeholders who have direct experience with the application of the IBER are also welcome.

The return of the Italian mandatory mediation procedure

On 24 October 2012, the Italian Constitutional Court declared invalid the provision of Legislative Decree n. 28 dated 4 March 2010 which had implemented the mandatory mediation procedure for the resolution of certain disputes.

Article 87 of the Italian Decree Law No. 69 of 21 June 2013 reintroduced the mandatory mediation for cross-border and domestic disputes, which had been covered by Italian Legislative Decree No. 28 of 4 March 2010.

The mediation procedure includes disputes on insurance matters (with the exception of motor third party liability litigation), medical and hospital liability.

Furthermore, among other changes it has been introduced Section 185 bis into the Italian Code of Civil Procedure, which requires the Court to “(…) formulate a proposal for amicable settlement or arrangement to the parties (…)”, also specifying that “(…) the rejection of the proposal made by the Court, without a justified reason, shall constitute conduct that may be considered (…) for the purposes of the ruling”.

The new provisions concerning the mandatory mediation shall enter into force on 21 September 2013.

EU to review regime for personal data transfers to the US

The Safe-Harbour provision, in place since the early years of the tech boom in the late 1990s, allows US companies to satisfy EU rules by signing up to a self-reporting scheme, supervised by the US federal trade commission. It is based on the principle that US data privacy standards are equivalent to those in Europe.

Viviane Reding, the commissioner overseeing data protection, told that her office had begun an assessment of the “Safe Harbour” used by Google and Facebook, as well as thousands of smaller US tech companies.

The Safe Harbor agreement between the EU and US is under review as it may be a “loophole” for data transfers to take place at a lower standard of data protection than EU law permits, the European Commission has said.

The European Union has therefore launched a commission to review the U.S. Department of Commerce’s Safe Harbor agreement. The review comes in the wake of PRISM, the US National Security Agency’s data collection program. Safe Harbor is a voluntary program for U.S.-based companies with operations in the EU to transfer personal data across EU borders.

The EU, indeed, argues that the Safe Harbor program may be using “loopholes” to skirt EU data privacy rules. The International Trade Association (ITA), acknowledges the “criticisms,” but disagrees, saying that the program operates within its framework. Safe Harbor is based on the EU Data Protection Directive, and, as noted by the ITA, is limited when national security or defense matters are in question.

EU officials would like to review Safe Harbor for compatibility with new EU laws on data protection. While the U.S. is open to discussions on Safe Harbor, it is not likely that they will tighten any restrictions on it.

At issue is the reach of the draft EU legislation. It would require non-European companies to comply with EU laws in full when serving European customers – something that US officials argue is extraterritorial. It would also allow Brussels to fine companies that did not comply up to 2 per cent of their total annual turnover.

A landmark in a long battle over European Union privacy laws

Advocate General’s Opinion in Case C-131/12 Google Spain SL, Google Inc. v Agencia Española de Protección de Datos, Mario Costeja González considers that search engine service providers are not responsible, on the basis of the Data Protection Directive, for personal data appearing on web pages they process.

In early 1998, a newspaper widely circulated in Spain published in its printed edition two announcements concerning a real-estate auction connected with attachment proceedings prompted by social security debts. A person was mentioned as the owner. At a later date an electronic version of the newspaper was made available online by its publisher.

In November 2009 this person contacted the publisher of the newspaper asserting that, when his name and surnames were entered in the Google search engine, a reference appeared linking to pages of the newspaper with these announcements. He argued that the proceedings had been concluded and resolved many years earlier and were now of no relevance. The publisher replied that erasure of his data was not appropriate, given that the publication was effected by order of the Spanish Ministry of Labour and Social Affairs.

In February 2010, he contacted Google Spain and requested that the search results show no links to the newspaper when his name and surnames were entered into Google search engine. Google Spain forwarded the request to Google Inc., whose registered office is in California, United States, taking the view that the latter was the undertaking providing the internet search service.

Thereafter he lodged a complaint with the Agencia Española de Protección de Datos (Spanish Data Protection Agency, AEPD) against the publisher and Google. By a decision on 30 July 2010, the Director of the AEPD upheld the complaint against Google Spain and Google Inc., calling on them to withdraw the data from their index and to render future access to them impossible. The complaint against the publisher was rejected, however, because publication of the data in the press was legally justified. Google Inc. and Google Spain have brought two appeals before the Audiencia Nacional (National High Court, Spain), seeking annulment of the AEPD decision. In this context, this Spanish court has referred a series of questions to the Court of Justice.

In today’s Opinion, Advocate General Niilo Jääskinen addresses first the question of the territorial scope of the application of national data protection legislation. The primary factor that gives rise to its application is the processing of personal data carried out in the context of the activities of an establishment of the controller (according to the Data Protection Directive, the “controller” is the person or body which alone or jointly with others determines the purposes and means of the processing of personal data) on the territory of the Member State. However, Google claims that no processing of personal data relating to its search engine takes place in Spain. Google Spain acts merely as commercial representative of Google for its advertising functions. In this capacity it has taken responsibility for the processing of personal data relating to its Spanish advertising customers.

The Advocate General considers that this question should be examined taking into account the business model of internet search engine providers. This normally relies on keyword advertising which is the source of income and the reason for the provision of a free information location tool. The entity in charge of keyword advertising is linked to the internet search engine. This entity needs a presence on national advertising markets and that is why Google has established subsidiaries in many Member States. Hence, in his view, it must be considered that an establishment processes personal data if it is linked to a service involved in selling targeted advertising to inhabitants of a Member State, even if the technical data processing operations are situated in other Member States or third countries. Therefore, Mr Jääskinen proposes that the Court declare that processing of personal data takes place within the context of a controller’s establishment and, therefore, that national data protection legislation is applicable to a search engine provider when it sets up in a Member State, for the promotion and sale of advertising space on the search engine, an office which orientates its activity towards the inhabitants of that State.

Secondly, as for the legal position of Google as an internet search engine provider, Mr Jääskinen recalls that, when the Directive was adopted in 1995, the Internet and search engines were new phenomena and their current development was not foreseen by the Community legislator. He takes the view that Google is not generally to be considered as a “controller” of the personal data appearing on web pages it processes, who, according to the Directive, would be responsible for compliance with data protection rules. In effect, provision of an information location tool does not imply any control over the content included on third party web pages. It does not even enable the internet search engine provider to distinguish between personal data in the sense of the Directive, which relates to an identifiable living natural person, and other data. In his opinion, the internet search engine provider cannot in law or in fact fulfil the obligations of the controller provided in the Directive in relation to personal data on source web pages hosted on third party servers.

Therefore, a national data protection authority cannot require an internet search engine service provider to withdraw information from its index except in cases where this service provider has not complied with the exclusion codes or where a request emanating from a website regarding an update of cache memory has not been complied with. This scenario does not seem pertinent in the present case. A possible “notice and take down procedure” concerning links to source web pages with illegal or inappropriate content is a matter for national civil liability law based on grounds other than data protection.

Thirdly, the Directive does not establish a general “right to be forgotten”. Such a right cannot therefore be invoked against search engine service providers on the basis of the Directive, even when it is interpreted in accordance with the Charter of Fundamental Rights of the European Union (in particular, the rights of respect for private and family life under Article 7 and protection of personal data under Article 8 versus freedom of expression and information under Article 11 and freedom to conduct a business under Article 16).

The rights to rectification, erasure and blocking of data provided in the Directive concern data whose processing does not comply with the provisions of the Directive, in particular because of the incomplete or inaccurate nature of the data. This does not seem to be the case in the current proceedings.

The Directive also grants any person the right to object at any time, on compelling legitimate grounds relating to his particular situation, to the processing of data relating to him, save as otherwise provided by national legislation. However, the Advocate General considers that a subjective preference alone does not amount to a compelling legitimate ground and thus the Directive does not entitle a person to restrict or terminate dissemination of personal data that he considers to be harmful or contrary to his interests.

It is possible that the secondary liability of the search engine service providers under national law may lead to duties amounting to blocking access to third party websites with illegal content such as web pages infringing intellectual property rights or displaying libellous or criminal information. In contrast, requesting search engine service providers to suppress legitimate and legal information that has entered the public domain would entail an interference with the freedom of expression of the publisher of the web page. In his view, it would amount to censorship of his published content by a private party.

ICC releases revised International Code of Direct Selling

Since 1937, when the first Code of Advertising Practice was issued, ICC has produced, and successively revised, global sets of ethical rules, covering all main marketing disciplines. The ICC Code of Direct Selling forms part of that comprehensive ICC normative system.

In 2006 many of the marketing codes were consolidated into one document, the Consolidated ICC Code of Advertising and Marketing Communication Practice, revised in 2011. As direct selling is primarily a method of distribution, the Direct Selling Code remains a stand-alone document; however, by reference it is clearly linked to the Consolidated Code, which is the recognized global reference point for responsible marketing communications.

The ICC Code of Direct Selling was first published in 1978 and followed the already then well-established ICC policy of promoting high standards of ethics in marketing via self-regulatory codes, intended to complement the existing frameworks of national and international law.

Like its predecessor (2007), this edition has been developed in close co-operation with the World Federation of Direct Selling Associations (WFDSA). That has ensured the Code is based on the best available expertise, and kept apace with changes in practice and direct selling techniques. The WFDSA has also adopted a world code of conduct applicable exclusively to members of direct selling associations. There is conformity in substance between the ICC Code and the industry code. The ICC Code is to be followed by all involved in direct selling.

Direct selling, as defined by the ICC Code, “refers to the selling of products directly to consumers, generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations, where the direct seller may explain or demonstrate products.

The Direct Selling Code is an instrument for self-discipline, but may also be used by the courts as a reference document within the framework of applicable legislation. The ICC Code is also able to fill in the gap in countries which have not created direct selling laws.

The Direct Selling Code spells out responsible conduct towards consumers, such as the credo not to exploit a consumer’s age, that product demonstrations should be complete with regard to price and also covers recruitment practices in the direct selling industry.

Recent changes include a section on referral selling stipulating that consumers should not be induced to make a purchase based on the assumption of a reduced price for customer referrals. The ICC Code also requires that direct selling companies communicate the contents of the Code with their direct sellers and that compliance with the standards of the Code should be a condition for membership in the company’s distribution system. In keeping with the principle of truthfulness, the ICC Code specifies that “descriptions, claims, illustrations or other elements relating to verifiable facts should be capable of substantiation.

See the ICC International Code of Direct Selling

See the Consolidated ICC Code of Advertising and Marketing Communications Practice

UNCITRAL publishes its endorsement of the UNIDROIT Principles of International Commercial Contracts 2010

The United Nations Commission on International Trade Law (UNCITRAL) has published the Report on its forty-fifth session (25 June – 6 July 2012) at which it decided to endorse the UNIDROIT Principles of International Commercial Contracts 2010.

See Report of the United Nations Commission on International Trade Law, forty-fifth session (25 June-6 July 2012)

Where a Member State grants national companies the right to convert, the same right must also be granted to companies incorporated in another Member State

Hungarian law authorises Hungarian companies to convert, but does not allow a company governed by the law of another Member State to convert to a Hungarian company.

The Italian company Vale Costruzioni S.r.l. was incorporated and added to the commercial register in Rome in 2000. On 3 February 2006, that company applied to be deleted from that register as it wished to transfer its seat and business to Hungary, and to discontinue business in Italy. On 13 February 2006, the company was removed from the Italian commercial register, in which it was noted that ‘the company had moved to Hungary.

Once the company had been removed from the register, the director of Vale Costruzioni S.r.l. and another natural person incorporated Vale Építési Kft. The representative of Vale Építési Kft. requested a Hungarian commercial court to register the company in the Hungarian commercial register, together with an entry stating that Vale Costruzioni S.r.l. was the predecessor in law of Vale Építési kft. However, that application was rejected by the commercial court on the ground that a company which was incorporated and registered in Italy could not transfer its seat to Hungary and could not be registered in the Hungarian commercial register as the predecessor in law of a Hungarian company.

The Legfelsőbb Bíróság (i.e.: Supreme Court, Hungary), which has to adjudicate on the application to register Vale Építési Kft., asks the Court of Justice whether Hungarian legislation which enables Hungarian companies to convert but prohibits companies established in another Member State from converting to Hungarian companies is compatible with the principle of the freedom of establishment. In that regard, the Hungarian court seeks to determine whether, when registering a company in the commercial register, a Member State may refuse to register the predecessor of that company which originates in another Member State.

In its Judgment in Case C-378/10 VALE Építési Kft. the Court of Justice of the European Union notes that, in the absence of a uniform definition of companies in EU law, companies exist only by virtue of the national legislation which determines their incorporation and functioning. Thus, in the context of cross-border company conversions, the host Member State may determine the national law applicable to such operations and apply the provisions of its national law on the conversion of national companies that govern the incorporation and functioning of companies.

However, the Court of Justice points out that national legislation in this area cannot escape the principle of the freedom of establishment from the outset and, as a result, national provisions which prohibit companies from another Member State from converting, while authorising national companies to do so, must be examined in light of that principle.

In that regard, the Court finds that, by providing only for conversion of companies which already have their seat in Hungary, the Hungarian national legislation at issue, treats, in a general manner, companies differently according to whether the conversion is domestic or of a cross-border nature.

However, since such a difference in treatment is likely to deter companies which have their seat in another Member State from exercising the freedom of establishment, it amounts to an unjustified restriction on the exercise of that freedom.

Moreover, the Court notes, firstly, that the implementation of a cross-border conversion requires the consecutive application of two national laws to that legal operation. Secondly, the Court states that specific rules capable of substituting national provisions cannot be inferred from Articles 49 TFEU and 54 TFEU. In such circumstances, national provisions must be applied in compliance with the principles of equivalence and effectiveness designed to ensure the protection of the rights which individuals acquire under EU law.

Consequently, the Court finds, firstly, that the application by Hungary of the provisions of its national law on domestic conversions governing the incorporation and functioning of companies, such as the requirements to draw up lists of assets and liabilities and property inventories, cannot be called into question.

Secondly, where a Member State requires, in the context of a domestic conversion, strict legal and economic continuity between the predecessor company which applied to be converted and the converted successor company, such a requirement may also be imposed in the context of a cross-border conversion.

However, the Court finds, thirdly, that EU law precludes the authorities of a Member State from refusing to record in its commercial register, in the case of cross-border conversions, the company of the Member State of origin as the predecessor in law of the converted company, if such a record is made of the predecessor company in the case of domestic conversions.

Finally, the Court answers that, when examining a company’s application for registration, the authorities of the host Member State are required to take due account of documents obtained from the authorities of the Member State of origin certifying that, when it ceased to operate in the Member State of origin, that company did in fact comply with the national legislation of that Member State.

The free movement of goods may be restricted on grounds of protection of copyright

In its Judgement in Case C-5/11 Titus Alexander Jochen Donner, the Court of Justice of the European Union ruled that a Member State may bring an action under national criminal law against a transporter for the offence of aiding and abetting the prohibited distribution of copyright-protected works on national territory, even where those works are not protected by copyright in the vendor’s Member State.

Mr Donner, a German national, was found guilty by the Landgericht München II (Regional Court, Munich II, Germany) of aiding and abetting the prohibited commercial exploitation of copyright- protected works. According to the findings of the regional court, between 2005 and 2008 Mr Donner had distributed replicas of furnishings in the so-called “Bauhaus” (these included chairs from the Aluminium Group, designed by Charles and Ray Eames, Wagenfeld lights, designed by Wilhelm Wagenfeld, seating, designed by Le Corbusier, the occasional table called the “Adjustable Table” and “Tubelight” lamps, designed by Eileen Gray, and tubular steel cantilever chairs, designed by Mart Stam) style, which was protected by copyright in Germany, for sale to customers residing in Germany.

These replicas originated from Italy, where they were not protected by copyright between 2002 and 2007, nor were they fully protected at the relevant time because, according to Italian case-law, that protection was unenforceable against producers who had reproduced or offered them for sale and/or marketed them for a certain time. The replicas had been offered for sale to customers residing in Germany by the Italian undertaking Dimensione Direct through advertisements and supplements in newspapers, direct publicity letters and a German-language internet website.

For transport to customers residing in Germany, Dimensione recommended using the Italian transport undertaking In.Sp.Em, of which Mr Donner was the principal director. The In.Sp.Em drivers collected the items ordered by German customers in Italy and paid the relevant purchase price to Dimensione. The In.Sp.Em drivers then collected the purchase price and freight charges from the customer on delivery in Germany. From a legal point of view, ownership of the goods sold by Dimensione was transferred in Italy to the German customers. The transfer of the power of disposal over the goods, however, did not take place until the goods were handed over to the purchaser in Germany, with the help of Mr Donner. Thus, according to the regional court, the distribution for the purposes of copyright did not take place in Italy, but rather in Germany, where it was prohibited in the absence of authorisation from the copyright holders.

Mr Donner appealed on a point of law against the judgment of the regional court to the Bundesgerichtshof (Federal Court of Justice, Germany). That court seeks to know whether the application of German criminal law gives rise, in the present case, to an unjustified restriction on the free movement of goods, as guaranteed under EU law.

In its judgment delivered today, the Court of Justice observes, firstly, that the application of criminal law in the present case presupposes that there has been, on the national territory, a “distribution to the public” for the purposes of EU law (Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society in OJ 2001 L 167, p. 10). In that regard, it finds that a trader who directs his advertising at members of the public residing in a given Member State and creates or makes available to them a specific delivery system and payment method, or allows a third party to do so, thereby enabling those members of the public to receive delivery of copies of works protected by copyright in that same Member State, makes, in the Member State where the delivery takes place, such a distribution. In the present case, the Court leaves it to the national court to determine whether there is evidence supporting a conclusion that that trader did actually make such a distribution to the public.

Secondly, the Court finds that the prohibition on distribution in Germany which is sanctioned by national criminal law does constitute a restriction on the free movement of goods. Such a restriction may, however, be justified by reasons relating to the protection of industrial and commercial property.

The restriction in question is based on the differing conditions of copyright protection operating across the EU. These differences are inseparably linked to the very existence of those rights. In the present case, the protection of the right of distribution cannot be deemed to give rise to a disproportionate or artificial partitioning of the markets. The application of criminal law provisions may be considered necessary to protect the specific subject-matter of the copyright, which confers inter alia the exclusive right of exploitation. The restriction in question thus seems to be justified and proportionate to the objective pursued.

Accordingly, the Court’s answer is that EU law does not preclude a Member State from bringing an action under national criminal law for the offence of aiding and abetting the prohibited distribution of copyright-protected works where such works are distributed to the public on the territory of that Member State (Germany) in the context of a sale, aimed specifically at the public of that State, concluded in another Member State (Italy) where those works are not protected by copyright or the protection conferred on them is not enforceable as against third parties.

Under EU law on freedom of establishment and freedom to provide services, economic operators cannot be required to have a share capital of EUR 10 million in order to be entitled to collect local taxes

Italian legislation on the reorganisation of local taxationauthorises the provinces and municipalities to organise their own revenues, including taxes, by means of regulations. Local authorities may choose to award the tasks of assessment and collection of taxes and all local revenues to third party operators. In that case, those activities are awarded by means of concessions which comply with EU legislation on the tendering of the management of local public services.

The concession holders first collect the tax revenue covered by the contracts and then, after retaining a “collection charge”, pay the amounts in question over to the public authorities at the end of each quarter. The profit of the concession holders is also generated by financial market transactions carried out using the funds which they hold.

Italian legislationalso provides that private companies seeking to carry out those activities must be entered in a register of private undertakings authorised to perform activities relating to the assessment and collection of taxes. They must have a fully paid-up share capital of EUR 10 million, whereas companies in which a majority of the share capital is in public ownership are not subject to that condition. The award of those services to operators which fail to satisfy that financial requirement is null and void. Such operators may not be awarded new contracts, and may not participate in tendering procedures initiated for that purpose, unless they increase their share capital accordingly.

The Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court, Lombardy) is required to rule in several sets of proceedings between private companies and regional municipalities in Lombardy. Those private undertakings submitted tenders for the award of concessions but were excluded from the procedure because they did not have a fully paid-up share capital of EUR 10 million.

The Italian court has referred questions to the Court of Justice concerning the compatibility of the Italian legislation with European Union law and, in particular, with the rules on freedom to provide services and freedom of establishment.

In its Judgment in Joined Cases C-357/10 to C-359/10 Duomo Gpa Srl and Others v Comune di Baranzate and Others, the Court’s reply is that the Italian legislation amounts to a restriction on freedom of establishment and freedom to provide services inasmuch as it contains a condition relating to minimum share capital and forces private operators wishing to pursue those activities to incorporate and to have a fully paid-up share capital of EUR 10 million.

Consequently, such a provision impedes or renders less attractive the freedom of establishment and the freedom to provide services.

The Court then goes on to examine whether such a restriction may be justified by overriding reasons in the public interest.

The only ground of justification raised before the Court is the need to protect public authorities against possible non-performance by the concession holder, in the light of the high overall value of the contracts which have been awarded to it. In practice, the concession holders, by first collecting the tax revenue, hold and deal with millions of euros which they are required to pay over to the public authorities.

The Court does not rule out the possibility that such an objective may constitute an overriding reason in the public interest – and not a reason that is purely economic in nature. However, it notes that a restriction of the fundamental freedoms may be justified only if the relevant measure is appropriate for ensuring the attainment of the legitimate objective pursued and does not go beyond what is necessary to attain that objective.

According to the referring court, however, other provisions are capable of providing adequate protection for public authorities; proof, on the part of the operator concerned, of its technical and financial capacity, creditworthiness and solvency, or, in addition, the application of minimum thresholds for share capital that vary depending on the value of the contracts actually awarded to the concession holder.

Consequently, the Court finds that, as the Italian provision goes beyond the objective of protecting the public authorities against non-performance by concession holders, it contains disproportionate, and therefore unjustified, restrictions of the fundamental freedoms.

On those grounds, the Court ruled that Articles 43 EC and 49 EC must be interpreted as precluding a provision, such as that at issue, under which economic operators, except companies in which all or a majority of the share capital is in public ownership, are required, if necessary, to increase their fully paid up capital to a minimum of EUR 10 Million in order to be entitled to pursue the activities of assessment, verification and collection of taxes and other local authority revenue; and the award of those services to operators who fail to satisfy the minimum requirement of share capital is to be null and void, and it is prohibited to obtain new contracts or participate in tender procedures for the operation of those services until the abovementioned requirement to adjust share capital has been met.

San Marino Accedes to United Nations Convention on Contracts for the International Sale of Goods

With its accession to the United Nations Convention on Contracts for the International Sale of Goods (“CISG”), San Marino becomes the 78th State Party to the Convention. The Convention will enter into force for San Marino on 1 March 2013.

The adoption of the CISG by San Marino has taken place in the context of a joint initiative between the Government of San Marino and the UNCITRAL Secretariat aimed at modernizing the law of international sale of goods and of electronic transactions in that country.

The United Nations Convention on Contracts for the International Sale of Goods provides an equitable and modern uniform framework for the contract of sale, which is the backbone of international trade in all countries, irrespective of their legal tradition or level of economic development. The CISG is therefore considered to be one of the core conventions in international trade law.

The CISG, which has been adopted by a large number of major trading countries, establishes a comprehensive code of legal rules governing the formation of contracts for the international sale of goods, the obligations of the buyer and seller, remedies for breach of contract and other aspects of the contract.

See 1980 – United Nations Convention on Contracts for the International Sale of Goods (CISG)

The tenth edition of the Nice Classification will come into force on 1 January 2012

A new edition of the International Classification of Goods and Services for the Purposes of the Registration of Marks (the “Nice Classification”) will enter into force on 1 January 2012. It will be available on the International Bureau of the World Intellectual Property Organization’s (WIPO) web site, at the following address: www.wipo.int/classifications/en/.

The International Bureau of WIPO will apply the tenth edition of the Nice Classification to all international applications that are received by the Office of origin on or after 1 January 2012.

In conformity with its previous practice, the International Bureau of WIPO will not reclassify, in accordance with the tenth edition of the Nice Classification, the list of goods and services of an international registration that is the subject, after 31 December 2011, of a renewal, subsequent designation or any other change affecting the list of goods and services.

The Nice Classification was established by an Agreement concluded at the Nice Diplomatic Conference, on 15 June 1957, was revised at Stockholm, in 1967, and at Geneva, in 1977, and was amended in 1979.

The countries party to the Nice Agreement constitute a Special Union within the framework of the Paris Union for the Protection of Industrial Property. They have adopted and apply the Nice Classification for the purposes of the registration of marks.

Each of the countries party to the Nice Agreement is obliged to apply the Nice Classification in connection with the registration of marks, either as the principal classification or as a subsidiary classification, and has to include in the official documents and publications relating to its registrations of marks the numbers of the classes of the Classification to which the goods or services for which the marks are registered belong.

Use of the Nice Classification is mandatory not only for the national registration of marks in countries party to the Nice Agreement, but also for the international registration of marks effected by the International Bureau of WIPO, under the Madrid Agreement Concerning the International Registration of Marks and under the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, and for the registration of marks by the African Intellectual Property Organization (OAPI), by the African Regional Intellectual Property Organization (ARIPO), by the Benelux Organisation for Intellectual Property (BOIP) and by the European Union Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM).

The Nice Classification is also applied in a number of countries not party to the Nice Agreement.

New ICC Arbitration Rules will come into force on 1 January 2012

On 12 September 2011, the International Chamber of Commerce (ICC) has launched a revised version of its Rules of Arbitration with the aim of better serving the existing and future needs of businesses and governments engaged in international commerce and investment.

The new ICC Arbitration Rules (the “Rules”) will come into force on 1 January 2012 and take into account current requirements and developments in arbitration practice and procedure, as well as developments in information technology, since they were last revised in 1998.

The revision process began in 2008 and was undertaken by a small drafting committee of up to 20 members, supported by a wider task force of 202 members and a consultation process with ICC national committees around the world and the ICC Commission on Arbitration. The new Rules were approved in Mexico City by the ICC World Council on 11 June 2011.

Additions to the Rules include provisions to address disputes involving:

  • multiple contracts and parties;
  • updated case management procedures;
  • the appointment of an emergency arbitrator to order urgent measures; and
  • changes to facilitate the handling of disputes arising under investment treaties and free trade agreements.

Other amendments have also been made to ensure that the arbitral process is conducted in an expeditious and cost-effective manner.

Unless parties stipulate otherwise, the new ICC Arbitration Rules will automatically apply to all arbitrations under the auspices of the International Chamber of Commerce commenced after 1 January 2012, save for the emergency arbitrator provisions.

In answer to the growing demand for a more holistic approach to dispute resolution techniques, the new Rules are published in a booklet that also includes the ICC ADR Rules, which provide for mediation and other forms of amicable dispute resolution. Both sets of Rules define a structured, institutional framework intended to ensure transparency, efficiency and fairness in the dispute resolution process while allowing parties to exercise their choice over many aspects of procedure.

See ICC Rules of Arbitration

A clause in a selective distribution contract banning the distributors from selling the products online amounts to a restriction on competition by object

Article 101 TFEU prohibits agreements which have as their object or effect the restriction of competition. Article 101(3) TFEU provides, subject to certain conditions, for agreements which improve the distribution of products or contribute to promoting economic progress to be granted an individual exemption. In addition, various regulations provide that certain categories of agreements may qualify for a block exemption. One of those regulations, the Vertical Agreement Block Exemption Regulation, provides such an exemption for distribution agreements which meet certain conditions. However, that regulation contains a list of agreements which may not benefit from a block exemption.

Pierre Fabre Dermo-Cosmétique (“PFDC”) is one of the companies in the Pierre Fabre group. It manufactures and markets cosmetics and personal care products and has several subsidiaries, including, inter alia, the Klorane, Ducray, Galénic and Avène laboratories, whose cosmetic and personal care products are sold, under those brands, mainly through pharmacists, on both the French and the European markets.

The products in question are not classified as medicines and are, therefore, not covered by the pharmacists’ monopoly laid down by French law. However, distribution contracts for those products in respect of the Klorane, Ducray, Galénic and Avène brands stipulate that sales must be made exclusively in a physical space and in the presence of a qualified pharmacist, thereby restricting in practice all forms of internet selling.

In October 2008, following an investigation, the Autorité de la concurrence (French Competition Authority) decided that, owing to the de facto ban on all internet sales, PFDC’s distribution agreements amounted to anti-competitive agreements contrary to both French law and European Union competition law. The Competition Authority found that the ban on internet selling necessarily had as its object the restriction of competition and could not benefit from a block exemption. The Authority also decided that the agreements could not benefit from an individual exemption either.
PFDC challenged that decision before the Cour d’appel de Paris (France), which has asked the Court of Justice whether a general and absolute ban on internet selling amounts to a restriction of competition “by object”, whether such an agreement may benefit from a block exemption and whether, where the block exemption is inapplicable, the agreement may benefit from an individual exemption under Article 101(3) TFEU.

In its Judgment in Case C-439/09 Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la Concurrence and Others, the European Court of Justice recalls that in order to assess whether a contractual clause involves a restriction of competition “by object”, regard must be had to the content of the clause, the objectives it seeks to attain and the economic and legal context of which it forms a part.

As regards agreements constituting a selective distribution system, the Court has already stated that such agreements necessarily affect competition in the common market. Such agreements are to be considered, in the absence of objective justification, as “restrictions by object”. However, a selective distribution system is compatible with European Union law to the extent that resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion, that the characteristics of the product in question necessitate such a distribution network in order to preserve the product’s quality and ensure its proper use, and, finally, that the criteria laid down do not go beyond what is necessary.

After recalling that it is for the referring court to examine whether a contractual clause which de facto prohibits all forms of internet selling can be justified by a legitimate aim, the Court provides the referring court for that purpose with guidance on the interpretation of European Union law to enable it to reach a decision.

Thus, the Court points out that, in the light of the freedoms of movement, it has not accepted – as it has already stated in the context of the sale of non-prescription medicines and contact lenses – arguments relating to the need to provide individual advice to the customer and to ensure his protection against the incorrect use of products, put forward to justify a ban on internet sales. Similarly, the Court rules that the need to maintain the prestigious image of PFDC’s products is not a legitimate aim for restricting competition.

As to whether a selective distribution contract may benefit from a block exemption, the Court recalls that the exemption does not apply to vertical agreements which have as their object the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade. A contractual clause which de facto prohibits the internet as a method of marketing at the very least has as its object the restriction of passive sales to end users wishing to purchase online and located outside the physical trading area of the relevant member of the selective distribution system. Consequently, the block exemption does not apply to that contract.

However, such a contract may benefit, on an individual basis, from the exception provided for in Article 101(3) TFEU, if the referring court finds that the conditions laid down in that provision are met.

A trade mark containing the geographical indication “Cognac” cannot be registered to designate a spirit drink not covered by that indication as the commercial use of such a mark would adversely affect the protected indication

Under the regulation on the protection of geographical indications for spirit drinks (see Regulation (EC) No 110/2008 of the European Parliament and of the Council of 15 January 2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks and repealing Council Regulation (EEC) No 1576/89), it is possible to register as a geographical indication the name of a country, region or locality from which a spirit drink originates, where a given quality, reputation or other characteristic of that drink is essentially attributable to its geographical origin. A registration of that kind is made upon application by the Member State of origin of the drink. The application must be accompanied by a technical file listing the specifications which the drink must meet if it is to be able to be designated by the protected geographical indication.

Furthermore, the regulation prohibits the registration of trade marks which may adversely affect a protected geographical indication and states that, as a general rule, where such a mark has already been registered, it must be invalidated. The regulation mentions “Cognac” as a geographical indication identifying wine spirits originating from France.

Gust. Ranin Oy, a Finnish company, applied in Finland for the registration, for spirit drinks, of two figurative marks in the form of a bottle label bearing descriptions of the spirit drinks containing the term “Cognac” and its Finnish translation, “konjakki”. Although the Finnish authorities have accepted the application for registration, the Bureau national interprofessionel du Cognac – a French organisation of cognac producers – contests the legality of that registration before the Finnish courts.

The Korkein hallinto-oikeus (i.e.: Supreme Administrative Court, Finland) asks the Court of Justice whether it is permissible under the regulation to register national trade marks containing the term “Cognac” for products which, in terms of manufacturing method and alcohol content, do not meet the requirements set for the use of the geographical indication “Cognac”.

In its judgment given today (see Judgment in Joined Cases C-4/10 and C-27/10 Bureau national interprofessionel du Cognac v Gust. Ranin Oy), the Court states, first of all, that although the contested marks were registered on 31 January 2003 – that is to say, before the regulation entered into force – that regulation is applicable in the present case. In that connection, the Court observes that the retrospective application of the regulation does not undermine the principle of legal certainty or the principle of the protection of legitimate expectations. The obligation on Member States to prevent the use of a geographical indication identifying spirits for alcoholic beverages which do not originate from the place designated by that indication has existed in EU law since 1 January 1996.

Next, the Court observes that the two Finnish trade marks, registered on 31 January 2003, cannot benefit from the derogation provided for under the regulation, in accordance with which the use of a mark which was acquired before the date of protection of the geographical indication in the country of origin (or before 1 January 1996) is permitted, even if it adversely affects the geographical indication concerned. In that regard, the Court points out that, independently of the protection it enjoys under French law, the term “Cognac” has been protected as a geographical indication under EU law since 15 June 1989.

The Court also finds that the use of a mark containing the term “Cognac” for products which are not covered by that indication constitutes a direct commercial use of the protected indication. Such a use is prohibited by the regulation in so far as it concerns comparable products. The Court finds that this may be the position in the case of spirit drinks.

Likewise, the Court finds that the fact that the two Finnish marks incorporate part of the name “Cognac” means that, when the consumer is confronted with the name of the marks on the bottles of spirit drinks not covered by the protected indication, the image triggered in his mind is that of the product whose designation is protected. The Court points out that such “evocation” is also prohibited under the regulation.

In those circumstances, the Court holds that the Finnish authorities must invalidate the registration of the contested marks.

Liechtenstein Accedes to Convention on the Recognition and Enforcement of Foreign Arbitral Awards

With its accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention), effected on 7 July 2011, Liechtenstein becomes the 146th State party to the Convention. The Convention will enter into force for Liechtenstein on 5 October 2011.

The “New York” Convention is widely recognized as a foundation instrument of international arbitration and requires courts of contracting States to give effect to an agreement to arbitrate when seized of an action in a matter covered by an arbitration agreement and to recognize and enforce awards made in other States, subject to specific limited exceptions.

The United Nations Commission on International Trade Law (“UNCITRAL”) is the core legal body of the United Nations system in the field of international trade law. Its mandate is to remove legal obstacles to international trade by progressively modernizing and harmonizing trade law. It prepares legal texts in a number of key areas such as international commercial dispute settlement, electronic commerce, insolvency, international payments, sale of goods, transport law, procurement and infrastructure development. UNCITRAL also provides technical assistance to law reform activities, including assisting Member States to review and assess their law reform needs and to draft the legislation required to implement UNCITRAL texts. The UNCITRAL Secretariat is located in Vienna and maintains a website at www.uncitral.org.

New edition of UNIDROIT Principles of International Commercial Contracts adopted

The Governing Council of UNIDROIT at its 90th session formally adopted on 10 May 2011 the third edition of the Principles of International Commercial Contracts (“UNIDROIT Principles 2010″).

The UNIDROIT Principles 2010 contain new provisions on restitution, illegality, plurality of obligors and obligees, and conditions, while with respect to the text of the 2004 edition the only significant changes made relate to the Comments to Article 1.4.

The new edition of the UNIDROIT Principles consists of 211 Articles (as opposed to the 120 Articles of the 1994 edition and the 185 Articles of the 2004 edition) structured as follows: Preamble (unchanged); Chapter 1: General provisions (unchanged); Chapter 2, Section 1: Formation (unchanged), Section 2: Authority of agents (unchanged); Chapter 3, Section 1: General provisions (containing former Articles 3.1 (amended), 3.2, 3.3 and 3.19 (amended)), Section 2: Ground for avoidance (containing former Articles 3.4 to 3.16, 3.17 (amended), 3.18 and 3.20, and a new Article 3.2.15), Section 3: Illegality (new); Chapter 4: Interpretation (unchanged); Chapter 5, Section 1: Content (unchanged), Section 2: Third Party Rights (unchanged), Section 3: Conditions (new); Chapter 6, Section 1: Performance in general (unchanged), Section 2: Hardship (unchanged); Chapter 7, Section 1: Non-performance in general (unchanged), Section 2: Right to performance (unchanged), Section 3: Termination (containing former Articles 7.3.1 to 7.3.5, 7.3.6 (amended) and a new Article 7.3.7), Section 4: Damages (unchanged); Chapter 8: Set-off (unchanged); Chapter 9, Section 1: Assignment of rights (unchanged), Section 2: Transfer of obligations (unchanged), Section 3: Assignment of contracts (unchanged); Chapter 10: Limitation periods (unchanged); Chapter 11, Section 1: Plurality of obligors (new), Section 2: Plurality of obligees (new).

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