The following members of McGuireWoods’ Brussels and London offices contributed to this issue:

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European Business Law

VoLUme 21 | SUmmer 2010

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UpdateFrédéric Van den Berghe (Associate, Brussels) focuses on antitrust, corporate services, mining and public procurement law. He is a member of the Brussels and New York Bars.

Dorothy McMahon (Senior Associate, London) practices in the areas of commercial litigation, including cross-border litigation, professional negligence, contract disputes, intellectual property, fraud, contentious employment, contentious construction.

Daniel Burns (Senior Associate, London) practices in the areas of general corporate and commercial advice, with a focus on mergers and acquisitions and corporate finance, often with a cross-border or international element, including competition law issues.

Steven Ongena (Partner, Brussels) focuses mainly on real estate and construction, distribution law and retail, complex contractual liability litigation and aviation law. He is a member of the Brussels Bar (Dutch).

Pol Cools (Associate, Brussels) focuses mainly on real estate law and commercial law, including antitrust and company law. He is a member of the Brussels Bar (Dutch).

By Steven Ongena and Pol Cools, Brussels

European Business Law Update is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. McGuireWoods does not intend to create an attorney-client relationship by offering this information, and anyone’s review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention. For further information, please contact a McGuireWoods lawyer. ©2010 McGuireWoods LLP

on may 12, 2010, the new Belgian Trade Practices Act of April 6, 2010, came into force. It modified the former Trade Practices Act of July 14, 1991, (former act) in the following ways.

Sales & Black-Out Periods (Period During Which Price Reductions May Not Be Advertised) 1. The former act limited sales to seasonal products, while the new act allows sales

for all products. Both current sales periods (January 3-31 and July 1-31) have been maintained.

2. The new act abolishes black-out periods, except for clothing, shoes and leather items.

3. For clothing, shoes and leather items, the black-out period has been reduced from six weeks to three weeks. Hence, the black-out period for winter sales starts Dec. 6 (instead of Nov. 15 under the former act) while the black-out period for summer sales starts June 6 (instead of may 15 under the former act).

4. The new act no longer contains prohibitions for the sectors of clothing, shoes and leather items, on announcing or suggesting, during the black-out periods, price reductions that will be made during the sales period. Therefore, it will be possible to advertise for the sales period during the black-out period.

5. Sales must not necessarily be held at premises to which the consumer has physical access. Hence, the sale of products offered during a sales period can also take place via the Internet. moreover, the new act also allows offering any products during a sales period that were offered in the past, and therefore not only products that were offered during the month prior to the sales period.

In June 2010, the ministry of economic Affairs filed a law suit with the Brussels Commercial Court against a clothing retailer that announced during the black-out period sales of up to 70% applicable in that period. The ministry of economic Affairs requested that a fine be imposed, amounting to 50.000 eUr for each breach of the provisions on black-out periods.

end of June 2010, the Brussels Commercial Court (competent for interim measures) considered the complaint without merit while the provisions on black-

New Belgian Act on Trade Practices...A First Judicial Challenge

(continued)

European Business Law Update

out periods would not be compatible with the 2005/29/eU Directive dated 11 may 2005 on unfair trade practices. The judgment has received a lot of attention in the national press and provoked many reactions.

The ministry of economic Affairs has announced its intention to appeal against the judgment hoping to have a decision prior to the winter black-out period (2010-2011). The minister of economic Affairs acknowledged however that in case the judgment would be upheld in appeal, the black-out periods should logically speaking disappear.

Indication of Price ReductionsUnder the new act, the indication of a price reduction that takes the form of an amount or percentage is no longer subject to the specific conditions as to the form that applied under the former act. However, when the new price is mentioned, the price that was subject to a reduction must be mentioned, or alternatively, consumers must have sufficient information to easily calculate the old price.

Price Reduction by a Retailer A retailer can announce price reductions by referring to its own price that applied before. Contrary to the former act, it does not result from the new act that such announcement can only be made if the concerned product or service has been indicated at a higher price for an uninterrupted period of one month prior to the date on which the reduced price will be applied. Under the new act, it is sufficient that the reduced price is lower than the lowest price applied during the month prior to the first day on which the reduced price is announced.

Joint OfferJoint offers to consumers are permitted, provided that such offers do not qualify as “disloyal” trade practices (i.e., aggressive or misleading offers). However, the current prohibition of joint offers is maintained for financial services, with a number of exceptions.

Distance Selling (Including but not limited to Internet shopping.) 1. The consumer’s cooling-off period is increased from seven working

days to 14 calendar days.

2. The former act prohibited distance sellers from requiring payment prior to the expiry of the cooling-off period. According to the new act, distance sellers are allowed to require an immediate payment. In case of exercise of the consumer’s rejection right, the retailer must reimburse any amounts paid by the consumer. The reimbursement must be carried out within 30 days following the rejection.

3. The new act provides for an “opt-in” system for sales via the Internet. Therefore, it is prohibited from using default options that must be actively rejected by the consumer in order to avoid the purchase of an additional product.

Abolishment of Prohibition of Selling with an Extremely Small Net Profit Margin Under the former act, the sale with an extremely small net profit margin qualified as a sale at a loss and was therefore prohibited. The new act abolishes the prohibition of selling with an extremely small net profit margin. The sale at a loss is still prohibited, it being understood that there are a number of exceptions including but not limited to sales at a loss of products, the sales price of which is brought into line with the sales price asked by the competition for the same product or for a competing product.

Where an agreement has an international aspect, in order to establish certainty regarding which court has jurisdiction

in respect of disputes arising from the agreement, it is essential that the parties decide on jurisdiction when the agreement is drafted. It is usual to elect the courts of a specific country.

Under eC law, if one or more of the parties to an agreement is domiciled in an eC member State, eC regulation No. 44/2001 applies. Where the parties have agreed that the courts of a member State are to have jurisdiction, Article 23 of the eC regulation implies that those courts have exclusive jurisdiction. However, Article 27 of the regulation states that where proceedings on the same facts are brought in courts of a non-eC country, then the courts of the country whose courts were first seized must decide whether they in fact have jurisdiction.

Until such a decision has been reached, proceedings brought in any other country must be stayed. Clearly Articles 23 and 27 are in conflict. It should be noted that the eC regulation of 2001, on jurisdiction and the recognition and enforcement of judgments is known as the “Brussels regulation,” and it applies to all eC member States with the exception of Denmark.

The forerunner of the Brussels regulation was the Brussels Convention of 1968, which still applies to Denmark. Article 5 of the Brussels Convention confers jurisdiction on the courts of the seat of performance of the obligation arising from the agreement. Article 17 of the Convention provides that where parties have agreed the courts to have jurisdiction in the event of a dispute, that those courts would have jurisdiction only if the formal conditions in Article 17 are complied with.

Case Law In the case of erich Gasser GmbH v misat Srl.[2005] 1 QBD 1, the eCJ held that the equivalent provision to Article 27 of the Brussels regulation (i.e., Article 21 of the Brussels Convention) prevailed over an exclusive choice of jurisdiction made by the parties. This means that the party that decided to sue first would have any other proceedings stayed, while the court in which it brought its case decided on jurisdiction, despite the fact that the contract had an exclusive jurisdiction clause.

Jurisdiction Clauses – Be Careful Where You End Up!By Dorothy McMahon, London

(New Belgian Act, continued)

This is a rather unsatisfactory situation given that the courts first seized could take significant time to determine the jurisdiction point. The decision in Gasser was held to be fair in order to prevent the possibility of two courts in different jurisdictions hearing a case on the same facts and arriving at different decisions.

A similar situation was encountered in the case of JP Morgan Europe Limited v Primacom [2005] EWHC 508 (Comm). Primacom issued proceedings in Germany, despite an exclusive jurisdiction clause in favour of the english courts. The english proceedings (which had been issued by JP morgan subsequent to Primacom’s default on a loan) had to be stayed pending the German court’s decision on jurisdiction, since both proceedings were in respect of the same cause of action, and Article 27 had to be applied.

This was despite the fact that there was evidence that Primacom had commenced proceedings in Germany as frustrating tactics. During the nine months it took for the German courts to decide at full trial that they did not have jurisdiction, JP morgan were unable to enforce the loan.

Two Very Recent CasesSecret Hotels 2 ltd v EA Traveller Ltd [2010] EWHC 1023 (Ch) (May 11, 2010): The parties issued two claims in two jurisdictions; Cyprus and england on exactly the same facts. It was held

that the two claims were closely enough connected for the purposes of an equitable set-off, and thus a stay of the later, i.e., the english proceedings was upheld under regulation 44/2001 and Article 27(2).

Astrazeneca Uk Ltd v (1) Albemarle International Corporation (2) Albemarle Corporation Ltd [2010] EWHC 1028 (Comm) (May 13, 2010): The english court had jurisdiction over claims for breach of contract, duress and conspiracy, however as a matter of discretion, the duress and conspiracy claims should be stayed on the basis that they fell within an exclusive jurisdiction clause in favour of South Carolina. The contract claims in train in the english court should not be stayed pending the outcome of the appeal in the South Carolina proceedings.

Given that the courts of member States are meant to give effect to the party’s choice of jurisdiction under Article 23, it could be expected that any attempt by a party to circumvent this by using Article 27 would perish. Unfortunately, the reality is rather different. It is important to consider that there might be a considerable delay in the first seized member State’s arrival at a decision, in addition to the appeal process being concluded if invoked.

This can take several years in some countries. Following such a delay, would come the inevitable problem

of recovering costs. Whilst the courts of members States should give effect to the choice of jurisdiction clause, unfortunately there is always the possibility that the party in breach will argue that the requirements of local law mean that the relevant agreement should not be enforced.

one way parties might protect themselves from such eventualities would be to issue proceedings in the agreed jurisdiction, before the other party has time to issue its own domestic or other proceedings. Such proceedings might be stayed where the parties wish to resolve their dispute by negotiation.

It should be noted that since the decision in the case of Turner v Grovit [2004] IRLR 899, anti-suit injunctions are prohibited in the eU as a means of stopping proceedings brought in a court of a member State other than that nominated in the exclusive jurisdiction clause. (An anti-suit injunction is an interim order attaching a penalty that prevents another party from bringing parallel proceedings in another jurisdiction).

The rationale for this decision by the european Court of Justice was that anti-suit injunctions interfered with the jurisdiction of the court of the member State where proceedings had been brought, which was considered to be incompatible with the spirit of mutual trust that is intended to be fundamental to the convention.

In December 2006, the european Parliament and Council adopted Directive 2006/123/eC on services in the internal market (services directive). It covers a range of services provided to businesses and consumers such as legal and tax

advice, management consultation, real estate services, construction, trade services, tourism, and leisure services. However, the directive does not deal with labor law or the posting of workers, and the following services are excluded from its scope: financial services, healthcare, certain aspects of telecommunications services, transport and port services, social services relating to social housing, childcare and aid for persons in need, activities of a non-economic nature provided by the state, temp agencies, private security services, gambling and audiovisual services.

Belgium and UK Implement “Bolkestein” Services DirectiveBy Frédéric Van den Berghe, Brussels and Daniel Burns, London

(continued)

For more details on the contents of this issue, please contact the individual authors by e-mail or:

Hubert André-Dumont • McGuireWoods LLP • +32 (0)2 629 42 60 • handredumont@mcguirewoods.com Bengt Grundberg • McGuireWoods London LLP • +44 (0)20 7632 1634 • bgrundberg@mcguirewoods.com

European Business Law Update

The directive makes it easier for businesses in one member State to establish a business in another member State, by reducing administrative formalities and allowing online registration of businesses through one or several points of single contact in each member State.

By Dec. 28, 2009, various member States’ authorization schemes had to be monitored to check that they were necessary, justified, proportionate and non-discriminatory. If they were not, they had to be removed or replaced. A number of other restrictions such as nationality requirements or economic needs tests also had to be abolished. other restrictions also had to be reviewed, such as those limiting the numbers of outlets or imposing fixed tariffs.

Under the “freedom to provide services” clause, member States are required to respect service providers’ rights to provide services in a member State other than that where they are established, and to ensure that they receive free access to a service activity and can exercise it freely.

member States can no longer insist that a service provider be established in that member State, that it only use the national language of that member State, or that it be incorporated in a particular form of legal entity. However, member States may impose restrictions on grounds of public security and protection of public health or the environment, and may impose their rules on employment conditions. There are also specific derogations to the freedom to provide services in sectors such as postal, electricity, water and gas.

Implementation ScheduleBy Dec. 28, 2009, member States had to present to the european Commission a report containing the screening of the authorizations and requirements they impose on service providers. The Commission is to circulate the national reports to the member States, which must submit their views on each of the reports within six months of receipt.

Within the same time period, the Commission is to consult interested parties on the reports. The Commission will analyze these observations and present a summary report no later than Dec. 28, 2010, to the Council and the european Parliament, accompanied where appropriate by proposals for additional initiatives.

Belgium ImplementationBelgium implemented the services directive mainly through four laws. These laws entered (retroactively) into force on Dec. 28, 2009, the service directive’s implementation date. In addition to the above laws, several royal and ministerial decrees implement the services directive at the regulatory level. Belgium’s five federated entities are also in the process of implementing the services directive through a number of decrees.

1. The law of Dec. 7, 2009, designates the existing “company dockets” as “points of single contact.”

2. The law of Dec. 22, 2009, renders a number of particular laws, including those on time-sharing, opening hours, and authorizing commercial establishments, compliant with the services directive.

3. The law of march 26, 2010, on services is the main instrument implementing the services directive in Belgian law and follows its wording closely. It regulates the freedom of establishment, freedom to provide services across the border, quality of services, information and transparency, and protects personal data.

4. The law of march 26, 2010, “on services concerning certain legal aspects” enables the commercial court’s president to grant a cease and desist order where certain provisions of the law on services are infringed.

UK ImplementationThe services directive was implemented in the UK by the Provision of Services regulations 2009 (PoS regulations) which came into force Dec. 28, 2009.

PoS regulations impose obligations on certain businesses providing services within the UK (service providers). These obligations may broadly be summarized as follows:

• To make certain information about service providers easily available to their customers.

• To deal with customer complaints promptly.

• Not to discriminate in the provision of services on the basis of customer location.

Where a breach of PoS regulations harms the collective interests of consumers, the office of Fair Trading or other body concerned with enforcing consumer legislation has a right to take action under Part 8 of the enterprise Act 2002. equally, such an enforcement body may take action where it considers that such a breach has potential to affect consumers or a group of them. A single customer affected by a breach will have to seek redress on his or her own initiative.

Implementation in Other Member StatesAccording to a February 2010 report by eurochambers, two-thirds of the eU’s 27 member States failed to implement the services directive in a timely fashion. The report1 lays down three implementation levels: good implementation2 (i.e., legal and operational implementation3 are completed fully and on time); average implementation4 (i.e., either legal or operational implementation is late, unfinished or insufficient); and bad implementation (i.e., legal and operational implementation are late or unfinished).

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1 The report does not contain updated data for Lithuania.2 Czech republic, Denmark, estonia, Finland, Germany,

Hungary, the Netherlands, Sweden and the UK.3 Austria, Belgium, Cyprus, France, Luxembourg, malta,

Portugal, romania and Spain. 4 Bulgaria, Greece, Ireland, Italy, Latvia, Poland, Slovakia

and Slovenia.

(“Bolkestein” continued)