International Commercial Law Blog

About Massimiliano Di Martino

Massimiliano Di Martino is the Founding Partner of MDM Law firm, a Milan based law firm which provides a wide range of legal services to its Italian, US, UK and German based clients in their cross-borders transactions and day-to-day operations. MDM Law firm also advices in all areas of law arising in such matters, including International Law, Corporate, Intellectual Property, Competition, and potential Dispute Resolution. Massimiliano handled numerous Mergers & Acquisitions and investments in Italy by foreign acquirers. In addition, he represents his domestic clients in their cross-borders transactions, including mergers & acquisitions, joint ventures, licensing and development agreements with foreign counterparties. Massimiliano provides sophisticated legal and regulatory advice to Insurance & Reinsurance companies and their underwriters from the London and international insurance market in respect of Insurance issues, at both EU and Italian levels, and is specialised on the resolution of large and difficult claims. The firm regularly advises clients on the commercial use of their Intellectual Property through licensing, merchandising and other applications, as well as guide them through the IP aspects of Mergers & Acquisitions. Advising on related issues such as regulatory concerns, privacy, data protection, distribution agreements and branding and patenting strategies also forms a core part of the firm’s practice.

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.

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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.

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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

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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)

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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.

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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.

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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.

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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)

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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.

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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

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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.

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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.

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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.

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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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Oman joins the Apostille Convention as 101st Contracting State

On Thursday 12 May 2011, the Ambassador of the Sultanate of Oman, deposited Oman’s instrument of accession to the Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (the “Apostille Convention”). As a result, Oman has become the 101st Contracting State to the Apostille Convention (*).

The accession of Oman is significant as the first State of the Persian Gulf to join the Apostille Convention. It is also the first Hague Convention to which Oman will become party, making it the 139th State or organisation to be connected to the Hague Conference (i.e., by being a Member of the Hague Conference, or either signatory or Contracting State to at least one of the Hague Conventions).

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A prohibition against infringement, issued by a national court sitting as a Community trademark court, extends, as a rule, to the entire area of the European Union

In its Judgment in Case C-235/09 DHL Express France SAS v Chronopost SA the European Court of Justice ruled that the Council Regulation (EC) No 40/94 of 20 December 1993 on the Community Trade Mark (the Regulation) creates Community arrangements for trademarks whereby undertakings may obtain Community trademarks to which uniform protection is given and which produce their effects throughout the entire area of the European Union.

In order to ensure that protection, the Regulation provides that Member States are to designate in their territories “Community trademark courts” having jurisdiction for infringement actions and, if they are permitted under national law, actions in respect of threatened infringement relating to Community trademarks. Where a Community trademark court finds that a defendant has infringed or threatened to infringe a Community trademark, it is to issue an order prohibiting the defendant from proceeding with the acts which infringed or would infringe the Community trademark. It is also to take such measures in accordance with its national law as are aimed at ensuring that this prohibition is complied with.

In relation to this, the Court ruled that Article 98(1) of the Regulation shall be interpreted as meaning that the scope of the prohibition against further infringement or threatened infringement of a Community trade mark, issued by a Community trademark court whose jurisdiction is based on Articles 93(1) to (4) and 94(1) of the Regulation, extends, as a rule, to the entire area of the European Union.

Furthermore, Article 98(1), second sentence, of the Regulation No 40/94, shall be interpreted as meaning that a coercive measure, such as a periodic penalty payment, ordered by a Community trademark court by application of its national law, in order to ensure compliance with a prohibition against further infringement or threatened infringement which it has issued, has effect in Member States to which the territorial scope of such a prohibition extends other than the Member State of that court, under the conditions laid down, in Chapter III of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, with regard to the recognition and enforcement of judgments.

Where the national law of one of those other Member States does not contain a coercive measure similar to that ordered by the Community trademark court, the objective pursued by that measure must be attained by the competent court of that other Member State by having recourse to the relevant provisions of its national law which are such as to ensure that the prohibition is complied with in an equivalent manner.

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The Italian mandatory mediation procedure of cross-border and domestic disputes is effective as of 20 March 2011

By Legislative Decree No. 28 dated 4 March 2010 (the “Decree”), the European Mediation Directive 2008/52/EC (the Directive) has been implemented in Italy. The Directive is part of a European-wide initiative to promote and regulate the development of mediation throughout the EU. The Directive itself should apply only to mediation in cross-border disputes, but nothing should prevent Member States from applying such provisions also to internal mediation processes.

The mediation procedures introduced by the Decree, which covers both cross-border and domestic disputes, only apply to claims/rights which can be freely disposed of by the relevant parties (“Diritti Disponibili”) as opposed to rights which cannot be freely disposed of by the relevant individuals (e.g.: Italian family law).

The Decree has introduced two kinds of mediation procedure:

  • a mandatory procedure which applies to any possible litigation in relation to insurance, banking and financial agreements as well as other matters such as joint ownership, property rights, division of assets, hereditary and family law, leases in general, gratuitous loans, leases of going concern, compensation for damages due to car/nautical accidents, medical liability or defamation/libel; and
  • a non-mandatory procedure which applies to any civil and commercial litigation regarding matters other than those listed above.

The mandatory mediation procedure is effective as of 20 March 2011 except for any possible litigation in relation to joint ownership and compensation for damages due to car/nautical accidents which will be effective as of 20 March 2012.

The procedure is mandatory in the sense that from such date all plaintiffs prior to bringing legal proceedings shall have to try to settle disputes falling within this “mandatory” category by mediation. Legal advisers to the relevant parties shall also have a duty to inform their clients about mediation and are under obligation to try to resolve disputes by way of mediation.

The mediation procedures established under the Decree may be brought before any of the mediation organisations mentioned in Article 16 of the Decree and the applicable procedure shall follow the rules applied by the body chosen by the parties.

However, where there are alternative mediation procedures available, the plaintiffs will have the option to use either the procedure as set out in the Decree or the alternatives. Two alternative mediation procedures are currently in force in Italy, which can be used instead of the mediation procedure under the Decree in relation to certain banking and financial disputes (see Legislative Decree No. 179 dated 8 October 2007 and art. 128 bis of the Italian Banking Law).

The European Court of Justice, in its Judgment in joined cases C-317/08, C-318/08, C-319/08, and C-320/08 for a preliminary ruling issued on 18 March 2010, held that EU directives and general principles do not preclude national legislation which imposes prior implementation of an out-of-court settlement procedure, provided that that procedure does not result in a decision which is binding on the parties, that it does not cause a substantial delay for the purposes of bringing legal proceedings, that it suspends the period for the time-barring of claims and that it does not give rise to costs – or gives rise to very low costs – for the parties, and only if electronic means is not the only means by which the settlement procedure may be accessed and interim measures are possible in exceptional cases where the urgency of the situation so requires.

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The rule of unisex premiums and benefits will apply with effect from 21 December 2012

Directive 2004/113/EC prohibits all discrimination based on sex in the access to and supply of goods and services. Thus, in principle, the Directive prohibits the use of gender as a factor in the calculation of insurance premiums and benefits in relation to insurance contracts entered into after 21 December 2007.

By way of derogation, however, the Directive provides that Member States may, as from that date, permit exemptions from the rule of unisex premiums and benefits, so long as they can ensure that the underlying actuarial and statistical data on which the calculations are based are reliable, regularly updated and available to the public. Member States may allow such an exemption only if the unisex rule has not already been applied by national legislation. Five years after the transposition of the Directive into national law (i.e.: 21 December 2012) Member States must re-examine the justification for those exemptions, taking into account the most recent actuarial and statistical data and a report to be submitted by the Commission three years after the date of transposition of the Directive.

In its Judgment in Case C-236/09 Association belge des Consommateurs Test-Achats ASBL and Others v Conseil des ministres, the European Court of Justice first points out that equality between men and women is a fundamental principle of the European Union. Reference is made to Articles 21 and 23 of the Charter of Fundamental Rights of the European Union which prohibit any discrimination on grounds of sex and require equality between men and women to be ensured in all areas and to Article 2 of the Treaty establishing the European Community which provides that promoting such equality is one of the Community’s essential tasks. Similarly, Article 3(2) of the Treaty requires the Community to aim to eliminate inequalities and to promote equality between men and women in all its activities.

In the progressive achievement of that equality, it is for the EU legislature to determine, having regard to the development of economic and social conditions within the European Union, precisely when action must be taken. Thus it was – the Court states – that the EU legislature provided in the Directive that the differences in premiums and benefits arising from the use of sex as a factor in the calculation thereof must be abolished by 21 December 2007 at the latest. However, as the use of actuarial factors related to sex was widespread in the provision of insurance services at the time when the Directive was adopted, it was permissible for the legislature to implement the rule of unisex premiums and benefits gradually, with appropriate transitional periods.

In that regard, the Court notes that the Directive derogates from the general rule of unisex premiums and benefits established by the Directive, by granting Member States the option of deciding, before 21 December 2007, to permit proportionate differences in individuals’ premiums and benefits where, on the basis of relevant and accurate actuarial and statistical data, sex is used as a determining factor in the assessment of risks.

Any decision to make use of that option is to be reviewed five years after 21 December 2007, account being taken of a Commission report, but, ultimately, given that the Directive is silent as to the length of time during which those differences may continue to be applied, Member States which have made use of the option are permitted to allow insurers to apply the unequal treatment without any temporal limitation.

Accordingly, the Court states, there is a risk that EU law may permit the derogation from the equal treatment of men and women, provided for by the Directive, to persist indefinitely. A provision which thus enables the Member States in question to maintain without temporal limitation an exemption from the rule of unisex premiums and benefits works against the achievement of the objective of equal treatment between men and women and must be considered to be invalid upon the expiry of an appropriate transitional period.

Consequently, the Court rules that, in the insurance services sector, the derogation from the general rule of unisex premiums and benefits is invalid with effect from 21 December 2012.

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Cloud computing and International Law related issues

Cloud computing relates to IT services and resources – including infrastructure, platforms and software – which can be provided to customers via the internet, rather than by on-site installations of IT hardware and software (for a technical definition of cloud computing  see National Institute of Standards and Technology).

Cloud computing allow companies to benefit of financial savings, share of costs with the other customers on the same cloud, and efficiency while their IT infrastructure is constantly upgraded and updated by the cloud computing provider.

Notwithstanding such benefits, cloud computing shall be duly considered in light of the risks involved in it such as – among others – security, performance, service availability, contractual remedies and supplier stability.

From an International Law perspective the key difference between traditional IT outsourcing and cloud computing is “where” the data resides or is processed as data may be dispersed across and stored in multiple data centers all over the world. Moreover, the use of a cloud platform can result in multiple copies of such data being stored in different locations. This is true even for a “private cloud” that is run by a single customer.

In fact, corporate customers shall consider that cloud computing is vulnerable to damage or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service attacks, or other attempts to harm the relevant systems. Data centers may be located in areas with a high risk of major earthquakes or may be subject to break-ins, sabotage, and intentional acts of vandalism, and to potential disruptions if the operators of these facilities have financial difficulties.

Above all, systems are not fully redundant, and disaster recovery planning cannot account for all eventualities.

In addition, cloud computing products and services are highly technical and complex and may contain errors or vulnerabilities. Any errors or vulnerabilities in such products or services, or damage to or failure of such systems, could result in interruptions in the services, which could reduce revenues and profits, or damage the corporate brand. Finally, internet, technology, and media companies own large numbers of patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights related to the cloud.

In light of the above, as corporate customer explore cloud computing as IT outsourcing strategy, there are several legal issues that shall be carefully considered. Implications of outsourced data handling, contract terms and conditions, intellectual property rights and proper insurance coverage are among others the key elements to be addressed from an International Law perspective. Therefore, the carry out of a due diligence of the proposed cloud vendor is a crucial risk mitigation step.

Among others, the following key issues shall be addressed:

  • Location: where the data are located at a given time and which law governs the contract and settlement of potential disputes; the customer may or may not be able to control this issue by contract as the applicable law in some jurisdictions can prevent the application of the relevant contractual provisions;
  • Security and Performance: backup, data restoration, disaster recovery, security and service levels applicable; what to do if the data center crashes as a result of an event of “force majeure” or if the Internet crashes or the cloud is hacked? How these risks can be allocated by contract?
  • Legislation and Regulatory (including Privacy): each jurisdiction provide for stringent rules on defence, health, and financial services related information, which directly impact on cloud computing. Stringent regulatory provisions and restrictions concerning the transfer of certain types of data across borders and export or trade restrictions may impact on where data in the cloud can be stored and who can store it or on the transfer itself of the data and applications to and from the cloud;
  • Intellectual Property: IP rights granted to the customer and IP claims against vendor shall be properly assessed and trade secret and attorney-client privileged information protection shall be mitigated by appropriate non-disclosure provisions;
  • Data Retention: there are several legal and tax reasons in each jurisdiction which require corporate customers to retain data longer than cloud vendor may be prepared to do;
  • Insurance related issues.
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Participation in the general meeting of listed and non-listed Italian companies by electronic means

Legislative Decree No. 27, dated 27 January 2010 (the “Decree”), transposed in Italy the Directive 2007/36/EC on Shareholders’ Rights, introducing several significant amendments to the legal framework applicable to the rights of shareholders of listed companies.

Among others, the Decree expressly provides that the by-laws of listed and non-listed companies may allow attendance at the shareholders’ meeting and the exercise of voting rights by “electronic means” notably any or all of the following forms of participation:

(a) real-time transmission of the general meeting;

(b) real-time two-way communication enabling shareholders to address the general meeting from a remote location;

(c) a mechanism for casting votes, whether before or during the general meeting, without the need to appoint a proxy holder who is physically present at the meeting.

The exercise of voting rights by electronic means entails an interactive Web site able to allow during the shareholders’ meeting the direct interaction in real time of shareholders, directors and auditors in different physical locations.

From 31 October 2010 the option is available for non-listed companies while Consob, by Resolution No. 17592, dated 14 December 2010 has set forth the rules applicable to the companies listed on Italian or other EU-regulated exchanges, governing remote attendance at the shareholders’ meeting by telecommunication systems and voting by mail and/or electronic means.

Reference shall be made for non-listed companies to Section 2370 subsection 4 of the Italian Civil Code, and for listed companies also to art. 127 of the Legislative Decree No. 58, dated 24 February 1998, as replaced by art. 3 of the Decree, and art. 143 bis of the Consob Regulation No. 11971, dated 14 May 1999, as amended by Consob Resolution No. 17592, dated 14 December 2010.

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