Dr Niall O’Connor, Lecturer in Law at the University of Essex, has authored an article exploring the significance, in the employment context, of freedom of contract as a fundamental right in article 16 of the EU Charter of Fundamental Rights (the Charter).
For the first half of its existence, few could have foreseen that article 16 would soon be at the centre of debates surrounding the precise place of business freedoms within EU employment law. This has changed following a number of controversial decisions in which the Court of Justice of the EU (CJEU) relied on article 16 to undermine the effectiveness of employee-protective legislation.
This article examines the nature of freedom of contract as both a fundamental right and a general principle of EU law and its effects in the employment context. Critical Legal Studies (CLS) is relied on to show that existing arguments as to the use of Article 16 as a radical tool in the employment context have been both exaggerated and underplayed.
Finally, the article explores potential counterweights to freedom of contract as a fundamental right, notably the right to work found in article 15 of the Charter.
The article was published as an Advance Article on 6 November 2019 in the Industrial Law Journal and is currently free to access here.
Dr. Marios Koutsias, Senior Lecturer in Law at the University of Essex, has a new publication in the European Business Law Review entitled ‘Exit Britain Enter the Stakeholders: Could Brexit End the Cultural Wars within the European Union Company Law and Give Birth to a Truly “European Company”?’
The history of European Union company law is a very troubled one. It is a history of national conflicts and debates which resulted in the inability of the EU to create a common body of EU company law. The article argues that national company laws are deeply rooted in national culture.
Corporate governance in particular evolved into an arena where fierce corporate culture wars were fought for decades. This is why the European Company – the so-called Societas Europea – failed to evolve into a truly supranational corporate form. While all member states have their own distinctive systems of corporate governance, the failure in question has been mostly fuelled by the conflict between the two widely-opposed corporate governance systems of the UK and Germany.
The UK endorses the so-called contractual model of corporate governance. Germany on the other hand employs the so-called stakeholder system of corporate governance. The rest of the member states of the EU lie between those two opposing poles. The conflict between the two European pillars of widely opposed corporate philosophies and consequently laws – the UK and Germany – has been so intense that it undermined any attempt to create a single European company.
The article argues that Brexit can change that. The exit of one of the two main pillars of the conflict may pave the way for the dominance of the stakeholder model of corporate governance in the EU. A post-Brexit EU would lack the most vocal and influential supporter of contractualism. This should allow the remaining member states to converge into a standard that would be closer to the stakeholder model.
The article appears in Volume 30, Issue 6, pp. 881-907 of the European Business Law Review.
Dr Johanna Hoekstra, Lecturer in Law at the University of Essex, published an article with Professor Olga Martin-Ortega, Director of the Business, Human Rights and Environment Research Group at the University of Greenwich, entitled Reporting as a Means to Protect and Promote Human Rights? The EU Non- Financial Reporting Directive. The article was published in November 2019 in Vol 44 of the European Law Review.
The paper analyses the adoption and content of the EU Non-Financial Reporting Directive 2014/95 (NFR Directive) in the context of current developments to protect and respect human rights through corporate human rights due diligence and transparency legislation and considers the potential role of the reporting obligations of the Directive in the wider debate regarding human rights reporting. The analysis presented in this article makes clear that the NFR Directive is not designed to protect and promote human rights.
The NFR-Directive entered into force in 2014 and was transposed by all Member States in December 2016. Non-financial reporting builds on corporate financial reporting and requires corporations that meet certain criteria with regards to income and size to publish a statement on policies and procedures regarding environmental protection, social responsibility and employee protection, anti-corruption and bribery, diversity on boards, and human rights protection. The Directive leaves it to the company to decide on the format of the report, the extent of the information that is disclosed, and the specific issues that are included in the report. The flexible criteria on what should be reported will make it more difficult to understand the company’s impact on society in an objective manner.
The Directive includes the possibility for Member States to require integrated reporting (the financial information is published alongside non-financial information) which creates a more holistic understanding of corporate activities and for Member States to require the information in the report to be independently verified by a designed institution. Most Member States choose not to transpose this second option because of worry that the additional costs would damage the competitiveness of their companies. The NFR Directive can be placed in the developing mandatory legal framework on corporate human rights responsibilities which include reporting laws such as the UK Modern Slavery Act and human rights due diligence laws such as the French Duty of Vigilance Law.
While reporting is advocated as a measure to further corporate accountability with regards to human rights, the NFR-Directive is primarily framed as an accounting measure that is intended to stimulate economic investment through furthering transparency. The requirements in the NFR-Directive are framed in a way that they reduce the potential effectiveness of the reporting because of the flexible and general criteria and the lack of verification by an overseeing body in most Member States. This is aggravated by the divergence between the requirements of the NFR-Directive and the UN Guiding Principles of Business and Human Rights (UNGP). The 2011 UNGP are the main reference in the definition of corporate responsibilities regarding human rights and propose a three-pillar framework to address the actual and potential impact of companies on human rights: (1) the state’s duty to protect; (2) the corporate responsibility to respect; and (3) the victims’ access to remedies. As the NFR Directive was published later than the UNGP it is regrettable it did not take the reporting requirements of the UNGP as a starting point to further develop the law.
The NFR Directive differentiates between who should report and who should not report, based on the type of company and the number of employees whilst the UNGP acknowledge that all companies have a reporting obligation, although this obligation can differ depending on the sector in which the company operates. It adds that this process should draw on human rights expertise and involve meaningful consultation with stakeholders which is not part of the NFR Directive. The NFR Directive contains specific requirements as to environmental and social factors that the company should report on but uses the word “could” in relation to human rights reporting and only suggests this could include: “information on the prevention of human rights abuses.” The limited requirements mean that it is up to the company to decide on how they approach the issue. There is therefore a risk that reporting will be a mere box ticking exercise that does not involve any meaningful reporting, which to have a significant effect needs to be closely linked to due diligence.
Reporting cannot be equated with a meaningful due diligence process that identifies, prevents, mitigates and accounts for corporate impact on human rights. Reporting as the main legislative tool leaves in the hands of civil society organisations, shareholders, and consumers the task of monitoring the veracity of the information. This does not sit well with the substantive, far reaching and right holder centred concept of due diligence proposed in the UNGPs. The Directive does not recognise the consolidated approach to human rights responsibilities of businesses and there is a concern that it may limit existing social expectations expressed in soft law, including the UNGPs. This has led to a call for European legislation on corporate human rights due diligence.
In recent years the use of instruments characterised as “atypical acts” or “soft law” has proliferated in EU law. Memoranda of Understanding (MoUs) provide a good case in point as they comprise a convenient way to conclude what are perceived as non-binding agreements negotiated and adopted bilaterally by EU Institutions and third parties.
Dr Anastasia Karatzia, Lecturer in Law and Prof Theodore Konstadinides, Professor of Law have recently published an article on the nature, characteristics, and legal effects of MoUs signed between the European Central Bank (ECB) and third parties.
The article explores the practice of the ECB for two reasons: first, owing to historically making active use of MoUs, and secondly, owing to its new role of banking supervisor for the Euro area and the specific role accorded to MoUs in banking supervision. For instance, the ECB’s central role within the EU Banking Union, which requires a high level of co-operation between the ECB and national supervisory authorities, has increased the use of MoUs as co-operation tools. Taking stock of these developments, the article provides the first comprehensive mapping-out exercise of the legal nature and character of MoUs as instruments used by the ECB. It offers an empirical analysis of the respective MoUs and establishes a legal framework that should assist our understanding of their nature, operation, and legal consequences.
The authors’ full paper was published under the title ‘The Legal Nature and Character of Memoranda of Understanding as Instruments used by the European Central Bank’ in 2019 in Vol. 44 Issue 4 of the European Law Review pp. 447 – 467. It was prepared under the Legal Research Programme sponsored by the ECB. It is one of the first articles looking at the ECB’s role in signing Memoranda of Understanding beyond the context of financial assistance provided to EU Member States. Any views expressed are only those of the authors and do not necessarily represent the views of the ECB or the Eurosystem.
Dr Georgios Zouridakis, Lecturer in Law at the University of Essex, has published a new chapter in the edited collection Cross-Border Mergers: EU Perspectives and National Experiences (Springer 2019).
Dr Zouridakis’ study shows that shareholders championing corporate interests may face several obstacles following cross-border mergers within the EU, depending on whether the suit is temporally prior to the merger or vice versa. The fact that, post-merger, the company ceases to exist (and is succeeded by another entity in another jurisdiction), gives rise to issues regarding the application of rules intrinsic to the mechanics of derivative suits and particularly those on: continuous ownership; contemporaneous ownership; costs; and on the requirement for shareholders to first demand the board to take action.
Given that the derivative suit, in all its variations, is a form of shareholder-led representative action, provided by most European countries – and often the only such available – this chapter argues in favour of a policy facilitating such shareholders’ enforcement of corporate claims in the cross-border merger context.
Dr Zouridakis’ chapter is included in the collection Cross-Border Mergers, which was edited by Dr. Thomas Papadopoulos and published by Springer in October 2019.
This edited volume focuses on specific, crucially important structural measures that foster corporate change, namely cross-border mergers. Such cross-border transactions play a key role in business reality, economic theory and corporate, financial and capital markets law. Since the adoption of the Cross-border Mergers Directive, these mergers have been regulated by specific legal provisions in EU member states.
This book analyses various aspects of the directive, closely examining this harmonised area of EU company law and critically evaluating cross-border mergers as a method of corporate restructuring in order to gain insights into their fundamental mechanisms. It comprehensively discusses the practicalities of EU harmonisation of cross-border mergers, linking it to corporate restructuring in general, while also taking the transposition of the directive into account.
Exploring specific angles of the Cross-border Mergers Directive in the light of European and national company law, the book is divided into three sections: the first section focuses on EU and comparative aspects of the Cross-border Mergers Directive, while the second examines the interaction of the directive with other areas of law (capital markets law, competition law, employment law, tax law, civil procedure). Lastly, the third section describes the various member states’ experiences of implementing the Cross-border Mergers Directive.
10 May 2019 10.00am – 5.00pm University of Essex, Wivenhoe Park, Colchester, CO4 3SQ
The
UK’s withdrawal from the EU will result in far-reaching, significant
consequences for the regulatory spheres of both the UK and the remaining Member
States. Even after the completion of the withdrawal process, EU laws will still
impact businesses operating in the UK, both directly and indirectly. Fields
which are most likely to be affected include product specifications,
competition, employment, health and safety, banking and financial services,
company law, insolvency, consumer protection and insurance. Despite this, there
continues to be gaps in the research which has been carried out to explore the
ultimate consequences of Brexit on the business regulatory environment.
This
workshop, organised by the Commercial Law Cluster at the University of Essex,
aimed to cover this research gap by exploring the opportunities and risks faced
by UK business in this time of legislative change. In particular, this workshop
focused on three key legal fields: (i) finance and banking law; (ii) corporate
law; and (iii) maritime and insurance law.
The purpose of this workshop was to raise awareness and foster debate on the rules that will govern the UK after Brexit. The regulatory changes for each of these three economic sectors were discussed in separate panels. In each panel, invited speakers provided an overview of the opportunities and challenges faced by businesses. Invited discussants then complemented these presentations with views from both academia and legal practice.
The
programme and speakers included:
Welcome: Professor Theodore
Konstadinides (University of Essex)
Keynote Presentation: Professor Takis
Tridimas (King’s College London; Matrix Chambers)
Session One: Finance
and Banking
Financial Markets: Professor Stuart Weinstein (Aston University) and Dr Flora Huang (University of Essex)
Banking Supervision: Dr Menelaos Markakis (Erasmus University Rotterdam) and Dr Anastasia Karatzia (University of Essex)
Session Two: Corporate
Law
Chair: Dr Eugenio Vaccari
Company Law: Professor Janet Dine (Queen Mary University of London) and Dr Marios Koutsias (University of Essex)
Insolvency Law: Hamish Anderson (Norton Rose Fulbright) and José Carles (Carles Cuesta Abogados y Asesores Financieros, Madrid)
Employment Law: Dr Jennifer Gant (University College Cork) and Dr Niall O’Connor (University of Essex)
Session Three:
Maritime, Shipping and Insurance
Chair: Dr Lijie Song
Shipping: Zoumpoulia (Lia) Amaxilati (Queen Mary University of London) and Dr Durand Cupido (University of Essex)
Insurance: Dr Keren Wu (University of East Anglia) and Dr Anna Antoniou (University of Essex)
Closing Presentation: Professor Steve Peers
(University of Essex)
Dr Yseult Marique, Senior Lecturer in Law, University of Essex
Dr Yseult Marique and her co-author Enguerrand Marique have published a chapter, entitled ‘Uber in London: The battle between public and private regulation’, in the collection Uber & Taxis: Comparative Law Studies, which was edited by D Renders and R Noguellou (Bruylant 2018).
The expansion of Uber as a major transport provider over the last ten years transforms deeply what is expected from transportation policies in many capitals around the world. It also draws the attention on the digital economy and its social and economic consequences for drivers. Tensions arise about the best ways to tackle the externalities arising from the digital economy: should Uber be banned all together as it has been the case in Spain and France? Should it be more strictly regulated as in California? Or should the market be left to bring competition and self-regulation of some kinds? To try to better understand the strategies followed across the world, the book Uber & Taxis: Comparative Law Studies brings contributions pertaining to 22 countries together, looking in a systematic way into two specific areas: first, how were taxis regulated before the advent of Uber and similar digital platforms? Secondly, how has regulation changed since Uber appeared and how does it address the specific social, economic and environmental challenges posed by Uber?
Our book chapter tries to answer these questions in the specific case of London. London is especially emblematic for its taxis and black cabs. It has also undergone a dramatic expansion of private hire (‘PH’) (such as Uber) in a very short time: in 2011, there were only 77,000 taxis and PH drivers throughout England. In 2017, the taxi and PH market in London represented ca. 150,000 drivers, i.e. nearly 40 % of the overall 356,000 licenced drivers on the English market. Very few aspects of this market are regulated. The quality of taxi drivers, the standards of vehicles and fares are subject to regulation mainly. However, the number of taxis is not limited, and taxis have no monopoly: besides taxis, PH has been operating since the 1960s and regulated since 1998. Therefore, the market is left largely unregulated regarding its outcomes themselves.
Such an expansion brings specific
challenges for London in terms of the number of drivers to control and how to
ensure that this control could be maintained at an appropriate level. It also
means that many Uber drivers were not professional as black cab drivers had previously
been, making the need arise for a range of driving practices to be policed (e.g.
taxi ranks and priority lanes). Yet, London manages to address these challenges
without new powers being delegated to it or without having to invent new
regulatory tools. In short, the regulatory toolbox is at first sight
satisfying. Let us unpack this claim before reflecting on it.
Transport for London’s (TfL) toolkit includes licensing, which has two main noticeable features: a) a fit for purpose test for drivers and b) a licensing fee. These two features have been tweaked in the case of Uber. Firstly, the fit for purpose test is no longer applied by Transport for London itself in the PH system (such as Uber). It has been transferred to Uber which now bears the risks of poor assessment of drivers’ qualities (i.e. withdrawal of the license). Secondly, the licensing fee became more differentiated. In the case of Uber, it has been multiplied by 1000 (Yes!) and stands now at £ 2,900,000 payable over 5 years. Other aspects such as a technical test, an English test, waiting times, tariffs and taxi meters, and hotlines have all been subjects to discussions and tensions. For instance, establishing a hotline for non-urgent matters is a significant burden for Uber, while not proving efficient. Similarly, the use of a taximeter, and of smartphone computing time and distance into a price, has been challenged, but ultimately accepted by the courts. Small differences remain to distinguish taxis from PH. For instance, upon a reference for a preliminary ruling to the European Court of Justice by English courts, the court recognized that ‘instant hailing’ was distinct from ‘hailing’. Waiting time and waiting areas cannot end up decreasing public safety. Yet, regulatory principles basically have not been changed after the advent of Uber in London.
The regulation of Uber in London triggers three
comments. First, the main problem brought by Uber is not the availability of
regulatory tools to address Uber’s innovative features, but the need for TfL to
adapt its enforcement strategy. In looking for ways to ensure compliance in a
changed environment, more inspectors are needed, which is costly for TfL, yet
extremely important to ensure clients’ security all over the city. Here, TfL
made Uber bear in the first place the extra costs that it generated for TfL.
Secondly, the London Mayor is not satisfied with the current solution and he
has asked the national level to get broader powers to regulate private hire
(and to impose a maximum number of licence). Thirdly, Uber is only one part of
the transport policy in London. The overall policy objective in London is to
ensure more sustainable transport, which means that too many cars – Uber car or
otherwise – are not welcome in London. A range of measures are thus taken to
seek to limit their use in general. At the same time, a broad range of transport
means is welcome as it makes mobility more flexible. In short, London can see
Uber both as a blessing and a curse – what matters is not to ban it, only to
keep it within reasonable measure. This leads TfL to seek to tweak Uber’s
licence to adapt it to the ongoing changes in the ways in which mobility
platforms work. Here a striking
development is the fact that Uber is now operating in London under a short-term
licence that is regularly renewed subject to modifications. Such practice of short-termism
compels economic actors to behave on their best at all time, mindful to take
social interest to hart rather than thinking about price cuts in the long term.
A creative way to keep Uber under TfL’s control without making any drastic
innovative changes to the regulatory tools?
A newly published book, The Triangular Constitution: Constitutional Pluralism in Ireland, the EU and the ECHR, by Tom Flynn, lecturer in law at the University of Essex, offers a fresh account of modern European constitutionalism. It uses the Irish constitutional order to demonstrate that, right across the European Union, the national constitution can no longer be understood on its own, in isolation from the EU legal order or from the European Convention on Human Rights.
The constitution is instead triangular, with these three legal orders forming the points of a triangle, and the relationship and interactions between them forming the triangle’s sides. It takes as its starting point the theory of constitutional pluralism, which suggests that overlapping constitutional orders are not necessarily arranged ‘on top of’ each other, but that they may be arranged heterarchically or flatly, without a hierarchy of superior and subordinate constitutions.
However, it departs from conventional accounts of this theory by emphasising that we must still pay close attention to jurisdictional specificity in order to understand the norms that regulate pluralist constitutions. It shows, through application of the theory to case studies, that any attempt to extract universal principles from the jurisdictionally contingent interactions between specific legal orders is fraught with difficulty. The book is an important contribution to constitutional theory in general, and constitutional pluralism in particular, and will be of great interest to scholars in the field.
Essex Law Research Blog 