International Commercial Law Blog

The refusal to recognise hallmarks for precious metals affixed by a Member State assay office infringes EU law

The Commission brought an action before the Court of Justice against the Czech Republic for failure to fulfil obligations, on the ground that the Czech Republic refuses to recognise the hallmarks for precious metals affixed by WaarborgHolland, an independent assay office in the Netherlands. The Commission complains that the Czech Republic requires precious metals hallmarked by WaarborgHolland and imported into the Czech Republic to be marked with an additional Czech hallmark.

The Czech Republic, supported by France, claims that the refusal of recognition is justified by the fact that some of the WaarborgHolland hallmarks are affixed to precious metals by its branches outside the EU. According to the Czech Republic, hallmarks affixed in a third country need not be recognised by the Member States. Further, the Czech Republic says that since the WaarborgHolland hallmarks are identical, it is not possible to distinguish those affixed outside the EU from those affixed in the territory of the EU and it is therefore obliged to refuse recognition of all hallmarks from that assay office.

In its Judgment in Case C-525/14 the Court of Justice observes that the Czech Republic’s practice of requiring a fresh hallmarking of precious metals which have been hallmarked and marketed1 in a Member State, or hallmarked in a third country in accordance with Netherlands legislation and put into free circulation in the EU, constitutes a restriction of the free movement of goods.

On the question whether the restriction may be justified on consumer protection grounds, the Court finds that a Member State may in principle, under EU law and outside the cases governed by an international agreement, consider that hallmarks affixed in the territory of third countries do not offer a level of protection of consumers equivalent to that guaranteed by hallmarks affixed by independent bodies in the territory of the Member States.

However, Member States cannot rely on that justification if the results of the control carried out in the Member State of export meet the requirements of the Member State of import. That is so with the precious metals hallmarked by WaarborgHolland in a third country, put into free circulation in the EU and, before being exported to the Czech Republic, marketed in a Member State which, like the Czech Republic, does not allow its own assay office or offices, or other bodies authorised to affix hallmarks in its territory, to affix their hallmarks in a third country. In that case, the control exercised by that Member State when the precious metals are marketed in its territory satisfies the requirements of the Czech Republic, since the two Member States are pursuing equivalent levels of consumer protection.

The Court finds, moreover, that the Member State of import also may not prevent the marketing in its territory of precious metals imported from other Member States, where they have been both hallmarked by an independent body and marketed in a Member State.

Consequently, as regards the above cases, the Court finds that the Czech Republic’s refusal to recognise the WaarborgHolland hallmarks cannot be justified, and the failure of that Member State to fulfil its obligations is made out.

On the other hand, the results of the control exercised by the Member State of export do not satisfy the consumer protection requirements of the Czech Republic where precious metals which have been hallmarked by WaarborgHolland in the territory of a third country and put into free circulation in the EU are exported to the Czech Republic without first having been marketed in a Member State. The same applies with respect to such goods which, after being put into free circulation, have been marketed in a Member State which does not require hallmarking by an independent body or in a Member State which, like the Netherlands, requires such hallmarking but allows it to be done in the territory of third countries.

The Court points out, however, that the Czech practice complained of concerns precious metals bearing WaarborgHolland hallmarks generally, not only precious metals hallmarked in the territory of third countries, and does not distinguish according to the circumstances in which the precious metals are exported to the Czech Republic. The Court observes that such a practice is not proportionate to the objective of consumer protection. Thus it would be possible to require from the importer into the Czech Republic documentation to show the place where the hallmark in question was affixed and, as the case may be, the place where the precious metals concerned were put into free circulation and marketed in the EU, which would be a measure less prejudicial to the free movement of goods.

In those circumstances, the Court concludes that, even in the cases in which the practice complained of may be justified, its disproportionate nature likewise means that the failure of the Czech Republic to fulfil its obligations is made out.

European Commission launches EU-U.S. Privacy Shield

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On 2 February 2016 the European Commission and the U.S. Government reached a political agreement on a new framework for transatlantic exchanges of personal data for commercial purposes: the EU-U.S. Privacy Shield (see IP/16/216). The Commission presented the draft decision texts on 29 February 2016. Following the opinion of the article 29 working party (data protection authorities) of 13 April and the European Parliament resolution of 26 May, the Commission finalised the adoption procedure on 12 July 2016.

The EU-U.S. Privacy Shield Framework was designed by the U.S. Department of Commerce and European Commission to provide companies on both sides of the Atlantic with a mechanism to comply with EU data protection requirements when transferring personal data from the European Union to the United States in support of transatlantic commerce. On July 12, the European Commission deemed the Privacy Shield Framework adequate to enable data transfers under EU law.

The Privacy Shield program, which is administered by the International Trade Administration (ITA) within the U.S. Department of Commerce, enables U.S.-based organisations to join the Privacy Shield Framework in order to benefit from the adequacy determination. To join the Privacy Shield Framework, a U.S.-based organization will be required to self-certify to the Department of Commerce and publicly commit to comply with the Framework’s requirements. While joining the Privacy Shield Framework is voluntary, once an eligible organisation makes the public commitment to comply with the Framework’s requirements, the commitment will become enforceable under U.S. law. All organizations interested in joining the Privacy Shield Framework should review its requirements in their entirety.

The new framework protects the fundamental rights of anyone in the EU whose personal data is transferred to the United States as well as bringing legal clarity for businesses relying on transatlantic data transfers.

The EU-U.S. Privacy Shield is based on the following principles:

  • Strong obligations on companies handling data: under the new arrangement, the U.S. Department of Commerce will conduct regular updates and reviews of participating companies, to ensure that companies follow the rules they submitted themselves to. If companies do not comply in practice they face sanctions and removal from the list. The tightening of conditions for the onward transfers of data to third parties will guarantee the same level of protection in case of a transfer from a Privacy Shield company.
  • Clear safeguards and transparency obligations on U.S. government access: the US has given the EU assurance that the access of public authorities for law enforcement and national security is subject to clear limitations, safeguards and oversight mechanisms. Everyone in the EU will, also for the first time, benefit from redress mechanisms in this area. The U.S. has ruled out indiscriminate mass surveillance on personal data transferred to the US under the EU-U.S. Privacy Shield arrangement. The Office of the Director of National Intelligence further clarified that bulk collection of data could only be used under specific preconditions and needs to be as targeted and focused as possible. It details the safeguards in place for the use of data under such exceptional circumstances. The U.S. Secretary of State has established a redress possibility in the area of national intelligence for Europeans through an Ombudsperson mechanism within the Department of State.
  • Effective protection of individual rights: any citizen who considers that their data has been misused under the Privacy Shield scheme will benefit from several accessible and affordable dispute resolution mechanisms. Ideally, the complaint will be resolved by the company itself; or free of charge Alternative Dispute resolution (ADR) solutions will be offered. Individuals can also go to their national Data Protection Authorities, who will work with the Federal Trade Commission to ensure that complaints by EU citizens are investigated and resolved. If a case is not resolved by any of the other means, as a last resort there will be an arbitration mechanism. Redress possibility in the area of national security for EU citizens’ will be handled by an Ombudsperson independent from the US intelligence services.
  • Annual joint review mechanism: the mechanism will monitor the functioning of the Privacy Shield, including the commitments and assurance as regards access to data for law enforcement and national security purposes. The European Commission and the U.S. Department of Commerce will conduct the review and associate national intelligence experts from the U.S. and European Data Protection Authorities. The Commission will draw on all other sources of information available and will issue a public report to the European Parliament and the Council.

Since presenting the draft Privacy Shield in February, the Commission has drawn on the opinions of the European data protection authorities (Art. 29 working party) and the European Data Protection Supervisor, and the resolution of the European Parliament to include a number of additional clarifications and improvements. The European Commission and the U.S. notably agreed on additional clarifications on bulk collection of data, strengthening the Ombudsperson mechanism, and more explicit obligations on companies as regards limits on retention and onward transfers.

The “adequacy decision” will be notified today to the Member States and thereby enter into force immediately. On the U.S. side, the Privacy Shield framework will be published in the Federal Register, the equivalent to our Official Journal. The U.S. Department of Commerce will start operating the Privacy Shield. Once companies have had an opportunity to review the framework and update their compliance, companies will be able to certify with the Commerce Department starting August 1. In parallel, the Commission will publish a short guide for citizens explaining the available remedies in case an individual considers that his personal data has been used without taking into account the data protection rules.

The EU-U.S. Privacy Shield reflects the requirements set out by the European Court of Justice in its ruling on 6 October 2015, which declared the old Safe Harbour framework invalid.

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