Review of Portuguese Association of European Law’s webinar on the rule of law protection in the European Union

by Alessandra Silveira and Joana Covelo de Abreu (Editors)

On 28 May 2021 a webinar was held at the School of Law of the University of Minho under the theme “Rule of law protection in the European Union”, organized by the initiative of the Portuguese Association of European Law (APDE). The event had the moderation of Carlos Botelho Moniz (APDE’s President) and the interventions of Alessandra Silveira (Editor), Joana Covelo de Abreu (Editor) and José Manuel Fernandes (Member of the European Parliament, EPP’s Coordinator of the Committee on Budgets and Recovery and Resilience Facility Mechanism’s negotiator). In order to keep a record for future memory, some ideas presented by the participants will be reproduced in this review.

Speakers reflected on how the European Union has been playing a relevant role on the rule of law protection and has been proclaiming itself as a “Union of law”. They started by analysing the concept of rule of law and its implications from the Treaties, the CFREU and the Court of Justice jurisprudence – mainly from Les Verts[1] and Associação Sindical dos Juízes Portugueses[2] judgments (the later also known as “Portuguese Judges”)[3]. They also focused legal procedures that act against violations of the rule of law enshrined on Article 7 TEU, and the infringement procedure steaming from Article 258 TFEU, envisaging the possibility of Member States to explore the procedural way opened by Article 259 TFEU, namely because the political tension escalade within the European Union. But the preliminary ruling procedure of Article 267 TFEU was also mentioned as continuing to play an important role to national judicial authorities when they are facing the need to comply with EU law. Lastly, speakers also devoted their attention on the Rule of Law Conditionality (Regulation 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget) and on the debate around its approval and implementation.

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Editorial of June 2021

By Tiago Sérgio Cabral (Managing Editor)

Data Governance and the AI Regulation: Interplay between the GDPR and the proposal for an AI Act

It is hardly surprising that the recent European Commission’s proposal for a Regulation on a European Approach for Artificial Intelligence (hereinafter the “proposal for an AI Act”) is heavily inspired by the GDPR. From taking note of the GDPR’s success in establishing worldwide standards to learning from its shortcomings, for example by suppressing the stop-shop mechanism (arguably responsible for some of its enforcement woes).[1]

The proposal for an AI Act should not be considered a GDPR for AI for one singular reason: there is already a GDPR for AI, and it is called the GDPR. The scope and aims of the proposal are different, but there is certainly a high degree of influence and the interplay between the two Regulations, if the AI Act is approved, will certainly be interesting. In this editorial we will address one particular aspect where the interplay between the GDPR and the AI act could be particularly relevant: data governance and data set management.

Before going specifically into this subject, it is important to know that the AI Act’s proposed fines have a higher ceiling than the GDPR’s: up to 30,000,000 euros or, if the offender is company, up to 6% of its total worldwide annual turnover for the preceding financial year (article 71(3) of the proposal for an AI Act). We should note, nonetheless, that this specific value is applicable to a restricted number of infringements, namely:

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The rule of law and the defense of citizens against any power: on the case C-650/18 Hungary v European Parliament

by Alessandra Silveira (Editor) and Maria Inês Costa (Master´s student in Human Rights at the University of Minho)

The expression rule of law means that the exercise of public power is subject to legal norms and procedures – legislative, executive, judicial procedures –, which allow citizens to monitor and eventually challenge the legitimacy of decisions taken by the public power. The basic idea of the value of the rule of law is to submit power to law, restraining the natural tendency of power to expand and operate in an arbitrary manner – be it the traditional power of the State, or the power of novel political structures such as the European Union, be it the power of private organizational complexes – such as market forces, internet forces, sports forces, etc.

The procedure provided by Article 7 TEU is the most emblematic political instrument to defend the rule of law in the European Union. Article 7(1) TEU constitutes the initial phase in the procedure in the event of a clear risk of a serious breach by a Member State of the common values enshrined in Article 2 TEU. Article 7(2) TEU governs the next stage in which a serious and persistent breach by a Member State of the values laid down in Article 2 TEU can be established. Article 7(3) TEU ultimately provides for the issuing of sanctions against the Member State concerned.

Article 7(1) TEU provides that on a reasoned proposal by the European Parliament, the Council acting by a majority of 4/5 of its members may determine that there is a clear risk of a serious breach by a Member State of the common values of the Union referred to in Article 2 TEU. Moreover, Article 7(5) TUE provides that the voting arrangements applicable to the European Parliament are laid down in Article 354 TFEU – which provides that the European Parliament shall act by a 2/3 majority of the votes cast, representing the majority of its component Members.

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Summaries of judgments: Ryanair DAC/Commission (T-388/20)

Summaries of judgments made in collaboration with the Portuguese judges and référendaire of the General Court (Maria José Costeira, Ricardo Silva Passos and Esperança Mealha)
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Judgment of the General Court of 14 April 2021 (Tenth Chamber) Case T‑388/20 Ryanair DAC v Commission

State Aid – Aid granted by Finland to Finnair in the context of the COVID-19 pandemic – Decision not to raise any objections- Compatibility with Article 107(3)(b) TFEU – Measure intended to remedy a serious disturbance in the economy of a Member State – Equal treatment – Freedom of establishment – Freedom to provide services – Duty to state reasons

1. Facts

On 13 May 2020, Finland notified the Commission of an aid measure in the form of a State guarantee in favour of the Finnish airline, Finnair, aimed at helping the latter obtain a loan of €600 million from a pension fund to cover its working capital needs. The guarantee, which was supposed to cover 90% of that loan, was limited to a maximum duration of three years.

Referring to its communication on the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, the Commission classified the guarantee granted to Finnair as State aid which is compatible with the internal market in accordance with Article 107(3)(b) TFEU. Under that provision, aid intended to remedy a serious disturbance in the economy of a Member State may, under certain circumstances, be considered to be compatible with the internal market.

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Covid-19: a matter of security

by Rafaela Figueiredo Garcia Guimarães (Master’s student in Human Rights at University of Minho)

We must declare war on this virus”, asserted the Secretary-General of the United Nations (UN), António Guterres, when commenting on the global response to the Covid-19 pandemic, on March 13, 2020[1]. On April 23, 2020, the Director-General of the World Health Organization (WHO), declared that “the war against Covid-19 is far from won by the Planet[2]. By the same token, Bruce Aylward, Senior Advisor on Organizational Change to the WHO Director-General, also stated at a press conference on March 26, 2021, that “we are at war with the virus, not against each other, and the common goal is to end the coronavirus[3]. Josep Borrell, the High Representative on behalf of the European Union (EU), in his declaration on April 3, 2020, proclaimed that “this is a time when we should spend all of our energy and resources in the fight against this common global threat – the coronavirus[4]. Likewise, German Chancellor Angela Merkel, in her speech to the nation on March 18, 2020, acknowledged that “there has not been a challenge like this since World War II, which depends so much on a joint action of solidarity[5], and the French President, Emmanuel Macron, on March 16, 2020, openly declared that “we are at war and that the enemy, although invisible, is here[6]. “This is a war! It is really a war we are dealing with,” assures the Portuguese President, Marcelo Rebelo de Sousa, on March 18, 2020, in his message to the Portuguese people[7]. Last but not least, the President of the United States of America, Joe Biden, on January 21, 2021, stated publicly the endorsement of a “large-scale war effort to fight the pandemic[8].

Since WHO’s public announcement, on March 11, 2020, the disease caused by the SARS-COV-2 coronavirus and on the fact that we were in the face of a pandemic, Covid-19 has been treated as a security issue, with coronavirus being the global enemy that needs to be tackled and eliminated. Thus, the health crisis Covid-19 gave rise to came to be considered a threat to global security.

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Much ado about the Social Summit?

by Graça Enes (Faculty of Law of the University of Porto and CIJE)

The Porto Social Summit was the high point of the Portuguese Presidency, a two-day event (May 7-8th) intended to achieve a strong commitment from Member States, European institutions, social partners, and civil society towards the implementation of the Action Plan for the European Pillar of Social Rights[1]. Several side events occurred along the weeks before the Summit, in Portugal and elsewhere[2], anticipating the debate.

In the days before, important members of the Portuguese Government made public statements stressing the ambition of the event. Ana Paula Zacarias, the Secretary of State for European Affairs, stated that the Porto Social Summit could “move principles to action”.

On May 7th, the Summit webpage announced: “Porto Social Summit starts today, defining EU policies for the next decade”. The stakes were high.

During the afternoon of the first day, a High-Level Conference was held for an extended debate, involving members of the Commission, the President of the European Parliament, the President of the European Council, Heads of Government, and social partners. In addition to the implementation of the European Pillar of Social Rights, issue that was addressed by the Commissioner for Jobs and Social Rights, Nicolas Schmitt, the discussion focused around three major subjects: work and employment; skills and innovation; welfare state and social protection. The participation in the debate went beyond the European Union, with the presence of the Director-General of the International Labour Organization and the Secretary-General of the Organization for Economic Cooperation and Development. The works of the conference were live streamed, and everyone could follow the debates taking place at the Alfândega building. At the opening session, António Costa declared: “We are here today to renew the European social contract, making a commitment, each one at their own level, to develop innovative and inclusive responses”. At the end of the day, Ursula von der Leyen stated: “The Porto Social Summit is our joint commitment to build a social Europe that is fit for our day and age and that works for everyone”. The tangible outcome of this debate was the “Porto Social Commitment”[3], an encompassing compromise of the EU institutions, Member States and European social partners that was being prepared for weeks and was solemnly presented by the three Presidents on the evening of May 7th.

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Editorial of May 2021

Alessandra Silveira, Joana Covelo de Abreu, Pedro Madeira Froufe (Editors) and Tiago Sérgio Cabral (Managing Editor)

Conference on the future of Europe and the defence of European values

On March 10th, 2021, following a long negotiation, the Presidents of the European Parliament, the Council of the EU and the European Commission signed the “Joint Declaration” on the “Conference on the Future of Europe”, holding its joint presidency.[1] The Conference will be officially launched on May 9th, 2021 in an inaugural session in Strasburg and it will be extended until the Spring of 2022. It aims at creating a new public forum for an open, inclusive, transparent and structured debate with Europeans around the issues that matter to them and affect their everyday lives. A new Special Eurobarometer, published one day before the signing of the Joint Declaration, focuses on the Conference and measures attitudes towards it and some of the key themes to be covered.[2]

Three-quarters of Europeans consider that the Conference will have a positive impact on democracy within the EU: 76% agree that it represents significant progress for democracy within the EU, with a clear majority supporting this view in every EU Member State. The very vast majority of Europeans (92%) across all Member States demand that citizens’ voices are “taken more into account in decisions relating to the future of Europe”. While voting in EU elections is clearly regarded (by 55% of respondents) as the most effective way of ensuring voices are heard by decision-makers at EU level, there is very strong support for EU citizens having a greater say in decisions relating to the future of Europe. 45% of Europeans declare themselves “rather in favour of the EU but not in the way it has been realised so far”. Six in ten Europeans agree that the Coronavirus crisis had made them reflect on the future of the EU while 39% disagree with this.

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Summaries of judgments: DB v Commissione Nazionale per le Società e la Borsa (Consob) | A.B. and Others v Krajowa Rada Sądownictwa and Others

Summaries of judgments made in collaboration with the Portuguese judge and référendaire of the CJEU (Nuno Piçarra and Sophie Perez)

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Judgment of the Court (Grand Chamber) of 2 February 2021, DB v Commissione Nazionale per le Società e la Borsa (Consob), Case C-481/19, EU:C:2021:84

Reference for a preliminary ruling – Approximation of laws – Directive 2003/6/EC – Article 14(3) – Regulation (EU) No 596/2014 – Article 30(1)(b) – Market abuse – Administrative sanctions of a criminal nature – Failure to cooperate with the competent authorities – Articles 47 and 48 of the Charter of Fundamental Rights of the European Union – Right to remain silent and to avoid self-incrimination

1. Facts

The request for a preliminary ruling was made in proceedings between DB and the Commissione Nazionale per le Società e la Borsa (Consob) (National Companies and Stock Exchange Commission, Italy) concerning the lawfulness of two financial penalties imposed on DB for an administrative offence of insider trading and for failure to cooperate in the context of an investigation conducted by Consob. Regarding the latter, after applying on several occasions for postponement of the date of the hearing to which he had been summoned in his capacity as a person aware of the facts, DB had declined to answer the questions put to him when he appeared at that hearing.

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The importance of the European Banking Authority in harmonising the credit moratorium regime

by Marina Barata (Master's in Law)

The pandemic outbreak caused by COVID-19 and the government measures taken by several European Union countries to address or mitigate the spread of the disease had, and continue to have, dramatic consequences for the economy.

Individuals and companies were affected by the economic crisis arising from the successive states of confinement, which created situations of default, even if in some cases temporary, of their financial obligations.

This possible and imminent lack of liquidity on the part of debtors would have a devastating impact on credit institutions, since loans defaults would lead to an increase in the number of defaulters and greater and heavier capital requirements for institutions.

For this reason, credit moratoria were implemented broadly by most of the European Union’s Member States.

Traditionally, a moratorium is the granting of an extension of a line of credit’s payment period, whereby the payment of the instalments is suspended for the period during which the moratorium lasts and the deadline for their full payment is extended for the same period. In the expression of the law, the moratorium is the deferment of the fulfilment of the beneficiaries’ obligation towards the banking system.

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“Fintech”: in search of a legal definition

by Carlos Goettenauer (PhD Candidate at University of Brasília)

During the last decade, the term “fintech” gained popularity and became a topic of discussion among market agents and financial regulators all around the world. The term’s origin, however, can be traced to the early 1990s, when Citigroup established the “Financial Services Technology Consortium”[1]. As with any other nascent buzzword, its meaning remains a subject of debate and controversy among many social actors. Market agents tend to associate the term “fintech” with innovations on financial systems and on so-called “market disruptions”, linking it to other common Silicon Valley tropes, such as “disintermediation” and “consumer-empowerment”. On the other hand, financial industry incumbents, and even its regulators, may wish to broaden the meaning of the term “fintech”, in order to fit all sorts of technological innovation under its umbrella. Considering its many possible meanings, it is time we ask whether there is space for a legal definition of “fintech”.

The law often plays a major role in reducing polysemy in contested expressions. Legal predictability and normative stability require terms to be precisely defined and agreed upon. This way, a legal definition (or even a statutory definition) of “fintech” would aid authorities in grounding their regulatory efforts, thus producing a more stable and predictable legal environment for both entrants and incumbents.

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