Iva Kuna: “Some Thoughts on Insolvency Proceedings of Corporate Groups Reflection on Case Agrokor”

This article is based on a paper presented by Prof. Dubravka Aksamovic, an associate professor at the Faculty of Law in Osijek, Croatia. The presentation was given at the EU Business Law Forum in Gyor, Hungary, in June 2017. The paper could be read in the publication of the aforementioned Forum that will be published in the second half of 2017.

 

Intro

The so called case Agrokor[1] took place in the beginning of 2017 when the word about Agrokor’s collapse was spread. What in the beginning seemed only as a rumour brought severe problems to the Republic of Croatia, but also to its neighbouring countries – Slovenia, Bosnia and Serbia in which Agrokor as a parent company has its subsidiaries and employs lots of their citizens. The main question was: what would happen to all the subsidiaries (in Croatia, Slovenia, Bosnia and Serbia) if a parent company Agrokor collapsed, would they be forced to undergo the insolvency proceeding as well? The answer to this question can be found in the new Insolvency regulation[2] that came into force in June 2017 and for the first time introduced the chapter on Insolvency Proceedings of Members of a Group of Companies[3]. According to that, this article will briefly reflect on the situation before the enactment of the new Insolvency regulation, on the new provisions of insolvency of group of companies and on the possible scenario of Agrokor’s insolvency[4].

The Path that Led to the New Insolvency Regulation

Group of companies or corporate groups are widely recognized and the most common structure of international enterprises. This is mainly because of the fact that the parent company has its own legal identity separated from the identity of its subsidiaries which means that the parent company has limited liability for the debts of its subsidiaries.[5] Member states benefit from corporate groups, because they improve employment and economic growth in the country. Because of the ubiquity of corporate groups on the markets of member states and since their great importance for the domestic economy, member states found it inevitable to tailor legal frames for corporate groups.

However, when it comes to the “closing the business” stage in the life of a corporate group, it has been neglected for many years. That led to the unregulated field of insolvency of groups of companies. Even when some member states regulated the insolvency proceedings of corporate groups, there were many different solutions in those legislations because it was “difficult to devise an international model that will be acceptable“[6] for all member states. So, those differences in legal approaches created many obstacles for insolvency proceedings of corporate groups.

Similar, the insolvency of group of companies was not regulated on the European level for a long time as well. Regulation 1346/2000[7] that was in force from May 31st 2002 till June 26th 2017 when the Regulation 2015/848 came into force, it lacked the provisions on insolvency proceedings for group of companies. In its Report from 2012[8] the Commission stated that Regulation 1346/2000, although functioning well, needed some improvements one of the reasons why improvement was needed was the lack of specific rules about the insolvency proceedings of the single legal entities members of the group of companies.

However, those long ten years in which the insolvency of groups of companies was not given any attention, did not mean that there were no such situations that groups of companies collapsed, so the courts and insolvency practitioners found themselves in difficult situations where they needed to derive some solutions from the available provisions which were tailored for single entities’ insolvency proceedings[9]. Those solutions were mostly connected to the questions such as: should the group of company be considered as a one legal entity in the insolvency proceeding; if the parent company undergo the insolvency proceeding should the insolvency proceeding be opened on its subsidiaries as well; should there be only one insolvency practitioner for all the insolvency proceedings etc.?

The Regulation 2015/848 finally introduced the chapter that deals with the insolvency of the group of companies. Even though the Regulation 2015/848 chose the “mild” approach that restrained from strictly binding rules that will demand strict procedures and special type of behaviour of courts and insolvency practitioners, it definitely brought novelties into corporate groups’ insolvency proceedings.  

What New the “New” Regulation Brought

To the Insolvency Proceedings of Corporate Groups

Regulation 2015/848 dedicated a new chapter V to the insolvency of groups of companies. It is structured in a way that first section of the chapter V pertains to Cooperation and Communication and second section to Coordination.

When it comes to cooperation and communication, the Regulation 2015/848 obliges insolvency practitioners and courts to communicate and cooperate with each other in order to facilitate the effective administration of those proceedings. In its recital the Regulation 2015/848 says that insolvency practitioners and the courts involved in insolvency proceedings should have similar obligation to cooperate and communicate. That insolvency practitioners and courts do not have the same, but only similar obligations arises from the Art. 56, 57 and 58. When it comes to the communication and cooperation between insolvency practitioners and between courts the Regulation 2015/848 says that they “shall” cooperate with each other. On the other hand, when it comes to the relationship between insolvency practitioners and courts, there is a duty for the insolvency practitioners to cooperate with the courts, but vice versa it says that insolvency practitioners “may request the information from the court”, which means that there is no obligation for the courts to provide insolvency practitioner with requested information.[10]

However, it is important to mention that insolvency practitioners communicated in insolvency proceedings of group of companies even before the new Regulation was enacted. The communication helped them to retain the connection between the companies and it made insolvency proceedings faster and more effective. The only difference was that then cooperation and communication depended on their good will, and now they are obliged to cooperate and communicate. But, who will supervise the actual communication and cooperation or are they some sanctions for not behaving in that way? The Regulation 2015/848 does not regulate the liability for breaching the duty to cooperate, neither there are provisions on supervision of cooperation between insolvency practitioners and courts.

The section on Coordination is however much thoroughly regulated, but in substance the purpose of coordination is to achieve more coherence in the insolvency proceedings among members of the same group. The idea of group coordination is “to have a tool that allows insolvency proceedings opened in different member states in relation to different members of group of companies to be heard in a coordinated manner”[11].

Thus, the Regulation 2015/848 assigns insolvency practitioners that are appointed for one member of the group to request opening of the group coordination proceeding. The coordination is established only on a voluntary basis, unlike the cooperation and communication, and it refers to insolvency practitioners only, not to the courts.

The court will decide to open the group coordination proceeding if it finds that the opening of such proceedings is appropriate to facilitate the effective administration of the insolvency proceedings, that no creditor of any group member is likely to be financially disadvantaged, and that the proposed coordinator fulfils the requirements. However, the Regulation 2015/848 gives insolvency practitioners a right to object to the inclusion of the proceeding in which he has been appointed in group coordination proceedings or to the person proposed as a coordinator.

The group coordination proceeding is not obligatory. As it was mentioned before, the insolvency practitioners have a right to object. Then, even though the purpose of the group coordination proceeding is to achieve a higher coherence between the proceedings and insolvency practitioners shall consider recommendations of the group coordinator, they are not obliged to do so and the insolvency proceeding can be carried out without coordination.

So what would actually be different in the insolvency proceedings of members of group of companies now when the new Regulation was adopted? Firstly, each company will be considered as a separate legal entity, regardless the fact that they are members of the same group. This rule was set in Eurofood case before the Regulation 2015/848 was enacted. The Regulation 2015/848 also adopted the same rule.[12] Secondly, if one company, member of the group, becomes insolvent, that will not affect other companies (even if the parent company is the one that became insolvent it will not affect subsidiary companies). But, if several companies of the group or all companies of one group become insolvent there is an obligation for the insolvency practitioners and the courts to exchange information (to cooperate and communicate), or a right for the insolvency practitioner to request the opening of a coordination procedure. As the result, there will be more coherence between those companies in insolvency, which will hopefully result in faster, cheaper and more effective insolvency proceedings.

Case Agrokor through the Lens of the Regulation 2015/848

In the sense of everything that is mentioned for the insolvency proceeding of the group of companies under the new Regulation, some conclusion can be made for the possible Agrokor’s insolvency.

If the Agrokor as the parent company undergo the insolvency proceeding, its subsidiary companies do not have to undergo insolvency proceeding as well. They can continue doing business as before. However, in reality if Agrokor as the parent company collapses, it will indirectly definitely influence other members of group, especially if we consider the fact that some of the biggest Agrokor’s creditors are some of its subsidiaries. It is questionable if they will be able to continue doing business with such large debts.

Also, if some of the subsidiaries of the Agrokor concern become insolvent, they will be consider as separate legal entities, regardless the fact that they are all subsidiary companies of the parent company. They have their own legal personality, and are solely responsible for their debts. For each of them the separate insolvency proceeding will be open.

When it comes to the rules on cooperation and communication and coordination, if Agrokor faces the insolvency and some of its subsidiaries as well, they would have to follow the rules from Regulation 2015/848 that obliges them to cooperate and communicate. Then, the group coordination procedure might be open according to the rules from Regulation 2015/848, but only on subsidiaries in Croatia and Slovenia. The situation is different when it comes to the subsidiaries in Bosnia and Serbia. Since they are not members of the European Union, the rules on coordination are not applicable on them and they will just have to follow the rules on cooperation and communication which are regulated in their national laws (the section on international insolvency).

Conclusion

Even though it is questionable if the new Regulation brought in substance anything new to the insolvency of group of companies, it should be greeted because it for the first time put insolvency of group of companies into spotlight. The provisions from the Regulation 2015/848 can be considered as the first steps towards more regulated and harmonized insolvency law. So, in the following years, we will see if the new Regulation will be sufficient to put in order insolvency proceedings of group of companies or some new rules should be made that will modify or replace existing ones.

 

Bibliography

Boone, J. William. International Insolvency – Jurisdictional comparisons (2012), Sweet&Maxwell

Insolvency proceedings in case of groups of companies: Prospects of harmonisation at EU level

Juric, Dioniz. Transparency of Groups of Companies (2006) Collection of the Faculty of Law in Rijeka (1991), v. 27, No. 2, 939-984 (2006)

Madaus, Stephen. Insolvency proceedings for corporate groups under the new Insolvency regulation

Mevorach,Irit. Appropriate treatment of corporate groups in insolvency: a universal view. European Business Organization Law Reiew (2007), 8 (2) ISSN 1566-7529

Moreno. Alberto Diaz. Comments to the new EU regulation on insolvency proceedings. Insolvency of members of a group of companies. Analysis GA&P, July 2015

Paulus, Christoph G., Group Insolvencies – Some Thoughts About New Approaches, Texas International Law Journal, vol. 42:819

Radović, Vuk. Corporate Group Insolvency – Major Problems and Dilemmas. Harmonius, No 1/2014, 271-299 (2014)

Vallens, Jean-Luc. Scope of the Insolvency Regulation and definition of insolvency – The Grand Project: Reform of the European Insolvency Regulation

Vuković, Ante; Bodul, Dejan. Bankruptcy Law in Transition – a Comparative Review, Croatian Challenges and Potential Solutions, Collection of the Faculty of Law in Split, 49, 3/2012

Wautelet, Patrick. Some Considerations on the centre of main interests as Jurisdictional Test under the European Insolvency Regulation. in Georges Affaki (ed) Cross Border Insolvency and Conflict of Jurisdiction: a US-EU experience (Bruylant 2007)

Zlatovic, Dragan. Affiliated Companies and the Transfer of Employees. (2017) Journal of the Croatian Bar Association, Zagreb, 3-4 2017, annual file 89

 

[1] Agrokor is the Croatian biggest retail company, a concern by its nature, has a network of companies in Bosnia, Slovenia and Serbia. More about Agrokor can be found here: http://www.agrokor.hr/en/

[2] Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, Official Journal of the European Union, L 141/19

[3] Chapter V of the Regulation 2015/848

[4] Even though the criteria for opening the insolvency proceeding on Agrokor were fulfilled, the proceeding was postponed by the new Law that was enacted by Croatian Parliament, which purpose was to “save” Agrokor from the collapse, because of the great importance of Agrokor for the Croatian economy. The text of the new Law in Croatian language can be reached here: http://narodne-novine.nn.hr/clanci/sluzbeni/2017_04_32_707.html

[5] Mevorach, Irit. Appropriate treatment of corporate groups in insolvency: a universal view. European Business Organization Law Review (2007), 8 (2) ISSN 1566-7529, pg 180

[6] Mevorach, Irit. Appropriate treatment of corporate groups in insolvency: a universal view. European Business Organization Law Review (2007), 8 (2) ISSN 1566-7529, pg 182

[7] Council Regulation (EC) No 1346/2000 of 26 May 2000 on insolvency proceedings, Official Journal of the European Communities, L 160/1

[8] Report from the Commission to the European Parliament, the Council and the European economic and social committee on the application of Council regulation (EC) No 1346/2000 od 29th May 2000 on insolvency proceedings, Strasbourg, 12.12.2012., COM(2012) 743

[9] For example in Eurofood case, where the Court of Justice of European Union stated that in insolvency proceedings of different companies members of the same group of companies should be treated as a one legal entity. But, then in the Collins and Aikman case, the court decided that it was the best to have the one procedure for all companies because they are all controlled by the same parent company.

[10] That duty to cooperate and communicate means to communicate relevant information to each other, to coordinate the administration and supervision of the affairs etc.

[11] Moreno. Alberto Diaz. Comments to the new EU regulation on insolvency proceedings. Insolvency of members of a group of companies. Analysis GA&P, July 2015, pg 6

[12] This rule is based on the procedural consolidation approach. UNCITRAL defined procedural consolidation (or somewhere it is called coordination) as: „coordination of the administration of two or more insolvency proceedings in respect of enterprise group members. Each of those members, including its assets and liabilities, remains separate and distinct.“ UNCITRAL Legislative Guide on Insolvency Law – Part three: Treatment of enterprise groups in insolvency, 1st July 2010, pg. 2. The procedural consolidation approach is the opposite of the substantive consolidation approach.

Davit Jaiani: “Draft report for Symposium at Tbilisi State University –‘Cold War International Law’”

Last October, British Telegraph[i] reported –  ‘Russia and the West have entered a new Cold War that could lead to growing confrontations across the globe, as Vladimir Putin challenges American international hegemony’.

In the same piece, ex-head of international treaties department of the Russian MoD pointed out that – “If we talk about the last Cold War, we are currently somewhere between the erection of the Berlin Wall and the Cuban Missile crisis,”[ii]  

Cutting crossroads in occupied Abkhazia and ongoing process of erection of barbed wire fences in the heart of Georgia, occupied South Ossetia, will definitely fit in this comparison also.

Other than that, the Ukrainian territory of Crimea was annexed by the Russian Federation in March 2014, followed by the hybrid warfare in the eastern parts of the country. On the same year Edward Lucas, London based journalist, ex chief of the Economist magazine Moscow bureau, publishes his book – The New Cold War: Putin’s Russia and the Threat to the West[iii]

Not accidental might be that, the very comprehensive and highly visited website, providing information and analysis of the war in Ukraine is titled – New Cold War.org.[iv] 

So the question we face is – if we are witnessing the new cold war or not?

As it is evident even from this short introduction, that the issue of cold war, due to its complex characteristics has never been placed in the sole realm of Diplomacy and international relations, but shared with political science and economics, sociology and even geography, and of course international law.[v]

What is cold war international law?  Professor Simpson shared his introductory replies to these questions in the article with the same title last year, so having his contribution excludes me from addressing here the general issues. I would rather take your eyes from the states on east European map to the international organizations and report to this distinguished auditorium on their place and role in the post-cold war international society.

Namely, I would like to draw your attention to the most significant challenges of the present days – refugees and nuclear nonproliferation and focus on relevant major actors in these fields the IntAtomicEnAgency and the UN HC for Refugees.[vi]   

UNHCR

It is an institution that has undergone a fundamental mutation since the close of the Cold War, reinventing itself as a humanitarian actor, extending its activities into “countries of origin” and, most recently, providing increasing assistance to internally displaced persons. Mainstream narratives present this expansion of UNHCR activities as the realization of a humanitarian potential and a signal improvement in the organization’s work. On the other hand, some commentators argue that the use of a humanitarian discourse masks what is fundamentally a shift to policies of containment—and the pursuit of state, not refugee, interests — which have undermined the UNHCR’s protection mandate.

Several articles, I have reviewed, after a rough cadastral survey of the post-Cold War period suggest, that UNHCR’s mutation into a humanitarian agency has led to the sinking of its protection mandate and its instrumentalization by donor states. In a post 9/11 era in which fear and demagogy are staples of electoral politics, refugees are increasingly regarded with suspicion and perceived as a security threat. Long gone are the days when refugees were welcomed with open arms as ideological weapons against Communism. Tasked originally with protecting the interests of the most vulnerable individuals in need of shelter, UNHCR’s activities have increasingly been dominated by the concerns of states. If Western donor states are driving this transformation, other states are complicit. Authors like Gil Loescher[vii] acknowledge that UNHCR is increasingly constrained by the restrictive refugee policies of Western states, while nonetheless arguing that “UNHCR remains an indispensable international organization.” But indispensable for whom?[viii]

One more organization in the UN family, which is perceived to develop in the same environment of the cold war but in some different direction is – the International Atomic Energy Agency

IAEA

The IAEA is the child of the Cold War.[ix]

The Agency’s genesis was U.S. President Eisenhower’s “Atoms for Peace” address to the UN GA in 1953. The IAEA was created in 1957 in response to the deep fears and expectations generated by the discoveries and diverse uses of nuclear technology.[x]

Now having grown to adulthood, the Agency faces the rigors and challenges of adulthood, a less hierarchical world, yet one filled with the possibilities and fears, that now characterize a post-Cold War world in an age of terror. The story of the Agency can be told in two parts: the first addresses the origins of the IAEA as an organization related to the UN, though not strictly one of its specialized organizations, but more closely related to the rise of the Cold War international system, in which states possessing nuclear weapons exercised hegemony not only through political, military and economic supremacy but also through policies designed to ensure that nuclear weapons would not be acquired by other states, in return for which, benefits flowing from the peaceful use of the atom could be shared with all nations. The IAEA Statute[xi] is thus a product of a different time and perhaps a different world from the one in which we now live.

The second part of the story addresses how, with the fall of the Cold War system and the rise of new transnational threats and opportunities, the IAEA became more deeply involved in the multilateral system, more deeply and actively cooperating with the UN but at the same time acquiring its own voice and, to a certain extent, autonomy as an international organization.

In brief, therefore, one can view the evolution of the IAEA as a mirror the international system, both with respect to its changing structure and the relevant set of threats the system faces. The relative degree of independence of the IAEA flows then, not only from its own internal dynamic, but also from the interaction of the IAEA with the changing demands of the international system and the degree to which IAEA autonomy is tolerated. 

If past is prologue, then we should anticipate further evolution of the role of the IAEA. At the end of the Cold War, however, the attempt to invoke special inspections (in a way that was inspired by the challenge inspection provisions of the Treaty of Tlateloco) evidenced the endeavor of the IAEA to reassert its institutional credibility in the face the apparent failure of routine inspections to provide timely warning of an undeclared nuclear program in Iraq. At the same time, the breakdown of international stability at the end of the Cold War may have raised the value to many states of nuclear weapons possession, and the emergence of the threat of nuclear terrorism by non-state actors increased the potential danger of nuclear proliferation. Therefore, with the changing balance between the costs of proliferation and the potential benefits of peaceful nuclear cooperation, it was not surprising that the IAEA (in its 93+2 reform program, including the Additional Protocol), sought to enhance the effectiveness of safeguards.

Yet, however much the IAEA might have increased the effectiveness of its own system, it seems clear that today the IAEA is in a form of institutional competition with formal legal institutions, such as the UNSC 1540 Committee[xii], and non-institutional forms of international cooperation, such as the Proliferation Security Initiation – the PSI, established in 2003[xiii]. The notion that there is, in fact, some sort of law that can be called a special regime of nuclear law is, perhaps, a weapon deployed by the IAEA in this emerging institutional competition. Yet, there may be limits on how much the IAEA can evolve to face this competition. If, because of certain failures in international governance of nonproliferation, the demand for prohibition and prevention, rather than safeguards and timely warning of diversion, continues to increase, one may well expect that the IAEA in the future will enter into a period of decline, with new international institutions and other forms of informal cooperation emerging to address the current and, probably increasing threat of catastrophic failures in international security.

What seems clear is that we are in a period in which the balance between nuclear security and nuclear trade needs to be re-though, and the debate must be conducted without presumptions about the interests of all the parties in the debate. As the autonomy of the IAEA increases, it becomes a player on the international stage, one having its own institutional interest and agenda, no longer a faithful agent of states.

Abovementioned two cases of international organization changing normative behavior, when due to the development and diversification of the international law its subjects follow only their sole interests and regulations, is sometimes named as ‘managerialism’ in international legal scholarship and constitutes a part to a much wider ongoing challenge inherent to the international law that is – Fragmentation.

                                                                                                                           

[i] http://www.telegraph.co.uk/news/2016/10/22/unyielding-russia-and-us-heading-for-a-new-cold-war/.

[ii] Lt. Gen. Evgeny Buzhinsky.

[iii] https://www.amazon.com/New-Cold-War-Putins-Russia/dp/1137280034.

[iv] https://www.newcoldwar.org/about/.

[v] http://www.coldwarinternationallaw.org/.

[vi] Major parts of this report has been based upon the literature and sources processed during the one month research visit at the Europa-Institut, University of Saarland, under the grant kindly financed by the University and the DAAD.

[vii] https://www.rsc.ox.ac.uk/people/gil-loescher.

[viii] https://goo.gl/ViocGJ.

[ix] https://goo.gl/hqTavc.

[x] https://www.iaea.org/about/overview/history.

[xi] https://www.iaea.org/sites/default/files/statute.pdf.

[xii] http://www.un.org/en/sc/1540/about-1540-committee/general-information.shtml.

[xiii] https://www.armscontrol.org/act/2004_06/Joseph.

Katarina Đurđenić:”Rethinking the New EU Prospectus Regime on Croatian Example”

Introductory note: The information that follow have been presented in a research paper of Đurđenić, Krunić and Simić; Prospekt vrijednosnih papira – gdje smo i kamo idemo; Pravo u gospodarstvu; 2016/2; p. 281-305.

 

Prospectus is a document that should provide investors all the necessary information on the company that issues securities in which they plan to invest as well as all the necessary information on these securities. Securities can come in different forms but the most common are stocks and bonds. Prospectus usually needs to be published before offering securities to the public or admitting them to trading.

Till recently, the Directive 2003/71/EC defined when it is necessary to publish a prospectus and what are the exemptions thereof, what is the procedure of its approval and who bares the responsibility for the stated data. In Croatia, this directive has been implemented through the provisions of Capital Markets Act (Zakon o tržištu kapitala). The mere content of the certain prospectus is determined by a special legislative act, namely by Regulation (EC) No 809/2004 that implements the mentioned directive.

However, in May 2017 the Council has adopted a new Regulation of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market that replaced the afore mentioned directive (hereinafter referred to as New Prospectus Regulation). This change has been part of the bigger legal reform aimed at creating a capital market union. It has been also described as a way of facilitating the access to financial markets, especially to small and medium sized companies.

After reading the New Prospectus Regulation and comparing it to the previous one, its main novelties can be summarized as follows:

  • no prospectus if the securities are included in an offer where the total consideration for the offer in the EU is less than EUR 1 000 000, whereas member states can raise this amount up to EUR 8 000 000 (till now the regime exempted the offers up to EUR 5 000 000, but member states could have chosen a lighter prospectus regime for the offers between EUR 100 000 till EUR 5 000 000),
  • less disclosure for secondary issuances in certain cases according to the delegated act that is to be adopted by the Commission,
  • less disclosure for small and medium enterprises according to the delegated act that is to be adopted by the Commission including the new (broader) definition of SME,
  • more simple prospectus summary,
  • universal registration document that should facilitate frequent issuances,
  • more specific risk factors that should not be generic and formulated as disclaimers whereas Commission can choose to adopt delegated acts to specify criteria for this specification.

The full impact of the New Prospectus Regulation in Croatia is still hard to determine since it will largely depend on the Croatian legislature that will have to decide up to which amount can securities be offered to the public without a prospectus. If the legislature chooses to lower the current EUR 5 000 000 threshold, this could enhance the investor protection, but also burden the issuers.

Less disclosure in certain categories like SME-s and secondary issuances are generally to be positively viewed but it is a shame that the New Prospectus Regulation does not already contain details of this regime but leaves it to further delegated acts. Thus, the necessary information will not be composed in the single piece of legislation, but scattered around several regulations and delegated acts which will make it harder for the issuers as well as for the regulating authorities that need to supervise them.

It is plausible that the New Prospectus Regulation aims to summarize the summary even more, but it remains unknown why did it not try to decrease the extensive demand of information for the prospectus in general.

Universal registration document will for sure facilitate the procedure for the frequent issuers. However, in Croatia there is hardly ever a company that had more than one issue in the year so this change will have no major impact there.

Specification of risk factors is to be welcomed.

If we want to show the application of the above stated legislation in Croatia, it is best to take a look at the recent practice of prospectus regime there.[i] In 2015 Croatian Agency for Supervision of Financial Services as a competent authority for the approval of prospectuses has approved 15 prospectuses. In the same year, 57 exemptions from the prospectus regime were announced. Average number of pages in the prospectus was 363.  This means that in almost 4/5 of the cases when securities are offered to public or admitted to trading, there was no need to issue a prospectus whereas in all the other cases the compliance with prospectus regime resulted with documents of several hundred pages.

This leads us to conclusion that there is a very steep line in information requirements when issuing securities which goes from no demand on information at all to hundreds of pages of information. The New Prospectus Regulation as it seems may have reduced disclosure requirements for some of the cases but considering the small number of prospectuses in Croatia in general, these reductions will not be very significant in the practice. This conclusion can apply to other EU member states that share the similar prospectus practice as Croatia.

Furthermore, since the Commission did not try to reduce the scope of information in prospectus in general and has only increased the number of legislative acts that regulate the prospectus, the prospectus regime will still be considered as burdensome and complicated and for that reason it is not sure that the aims of the reform will be fully achieved.

 

Kanad Bagchi: “EU Accession to the ECHR: In Defense of the ECJ”

Comments on The Fallibility of The European Union Accession Project

Opinion 2/13 received considerable criticism from the academic world both in terms of its uncompromising stance and inaccurate reasoning.[1] That apart, literature depicting the Court of Justice of the European Union (“ECJ”/ “Court”) as a power hungry and haughty institution received a renewed boost along with increasing skepticism concerning the current status quo of the relationship between Europe’s twin courts.[2] In the melancholy that followed, it is surprising to notice the near absence of judicial deference to a constitutional court’s onerous task of striking a balance between constitutional vigil and progressive latitude. The purpose of this article is not to assuage the ECJ of all its criticisms, but to equitably measure the feasibility of an alternative outcome. In this regard, the opinion of Advocate General (“AG”) Juliane Kokott[3] presents a rather nuanced approach towards all but two objections advanced by the ECJ on the Draft Accession Agreement (“Accession Agreement”),[4] which notably has eluded critical appraisal. In what follows, the author briefly addresses the commonality of the issues that drew the attention of both the AG and the ECJ, partly to elucidate the unassailable position of the Court and partly to substantiate his own assessment of the opinion. read more

Oskar Josef Gstrein: “The European Union and its Reidentification as a Guardian of Human Rights”

Introductory note: This text is based on a public speech delivered at the University of Heidelberg as part of the “Monday Conferences” in the Summer Term of 2014.

 

I. Introduction

Ladies and Gentlemen,

First, I would like to thank you for inviting me to speak to you today. It is a great pleasure to share my thoughts on the topic “The European Union and its reidentification as a guardian of human rights”.

Let me say right away that we are all witnesses to a tremendously exciting phase in the development of Europe’s legal systems. For lawyers it is thus a great challenge to understand the complex constellations of the European multi-level systems in detail and even more so to illustrate them. Our topic today holds a key position in this context.

Since the beginning of the European integration movement in the aftermath of the Second World War, the relationship of the European Union and its predecessor organisations with the protection of fundamental rights has not been an easy one. The European Economic Community (EEC) (established on 25 March 1957 in Rome by its six founding nations) as well as its successor organisations, the European Community (EC) and today’s European Union (EU) are a ”creation of law”,[1] and as such they necessitate a strong link to historically and politically legitimising elements such as the safeguarding of fundamental and human rights. Only such a legitimisation can prevent the codifying of this supranational legal order[2] in a way that EU citizens would perceive as an unjustifiable subjugation.

In this context, the following question arises: What does the protection of fundamental rights need to look like in order for the EU to be perceived as just and humane and to bear out its claims to be a home for its citizens? read more

Prof. Dr. Thomas Giegerich LL.M.: “Essentials of European Law: Antidiscrimination Law”

 

I. Introduction

Both the Council of Europe and the European Union adhere to and try to implement the principle of equal rights and non-discrimination for all. Their respective efforts reinforce and complement one another. Since 1950, Art. 14 of the European Convention on Human Rights (ECHR) of 1950 (see below II.) has set out an accessory prohibition of discrimination based on a non-exhaustive list of problematic grounds. The exact content of this provision has been clarified by numerous decisions of the European Court of Human Rights (ECtHR). All the EU Member States are bound by the ECHR whose provisions are used by the Court of Justice of the EU (ECJ) as a means to interpret EU law. It took the Council of Europe Member States fifty years to draw up an independent and comprehensive prohibition of discrimination which is included in Protocol No. 12 of 2000. While the Protocol has meanwhile entered into force only a minority of the Convention States (and only eight of the EU Member States) have ratified it. Apparently, many of them are disinclined to give the ECtHR the final say on whether or not distinctions they make in their laws are “reasonable”. The European Union is about to accede to the ECHR, but not Protocol No. 12. read more