Hanover, 04 January 2024 | Political developments in the world have become more unstable in the past year, especially at the turn of the year. The wars against Ukraine and Israel in particular are more than worrying. However, power shifts in the political and economic world order from West to East and from North to South have also become more pronounced. For many companies, a downturn has become apparent in 2023, but economic experts still see opportunities for the new year, particularly due to technological developments.
20 years of Alliuris
The most important event for us last year was the 20th anniversary of the Alliuris Group, our global alliance of business law firms in the world’s key markets – in Europe, the USA, Latin America, Russia, China and India with a total of 450 lawyers. Last year, Chile and Bulgaria became new members. Since its foundation in 2003, we have run Alliuris from Hanover as an international management organisation. Alliuris is a highly personalised network of law firms and works in all major areas of corporate and commercial law.
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The Data Act is coming
The Data Act of the European Union is one of the most important milestones for the law of the digital economy in Europe. It gives the users of digital systems extensive rights vis-à-vis the operators of the systems and data holders. The Data Act contains a large number of provisions that restrict the de facto control of monopolistic data holders and strengthen the position of data-generating users. This can also be seen as a step towards recognising data ownership. The Data Act has now been adopted and was published in the Official Journal of the European Union on 22 December 2023. It will enter into force in September 2025.
For further reading:
The European Data Act, April 2022 (Alliuris Compact, Antonia Herfurth)
https://www.alliuris.org/the-european-data-act/
Legal framework for AI in Europe
Artificial intelligence is currently one of the key drivers for ground-breaking technological solutions and business models. In the second half of 2023, large language models (LLM) such as ChatGPT and others have come to the fore and attracted a great deal of interest. Like most new technologies, AI also entails unresolved legal issues and risks. The EU is addressing this and wants to minimise the risks of artificial intelligence with the Data Act through differentiated regulation according to risk levels, without making its development more difficult or hindering it. After lengthy negotiations, the European Commission, Parliament and Council reached an agreement on the AI Regulation on 8 December 2023. The regulation is currently expected to be finalised in spring 2024.
For further reading:
Artificial intelligence in Europe, September 2021 (Alliuris Compact, Ulrich Herfurth and Sara Nesler) https://www.alliuris.org/artificial-intelligence-in-europe/
Data protection: Germany is the European champion
Correct in principle, but excessive in detail and disproportionate for SMEs – this is how many companies see the legal requirements of the GDPR. Germany is regarded as a pioneer of strict supervisory practice, but in December the ECJ set limits to liability without culpable behaviour. Conversely, the ECJ has declared that companies are liable for data protection violations committed by their employees and not just their management bodies. The fine is now expressly determined by the group turnover of the liable company. In addition, a data processor is to be liable for attributable breaches by its contracted data processor, such as a cloud provider.
Compliance with the German Supply Chain Act
Companies in Germany must ensure compliance with human rights in their business. The obligations not only apply to their own company, but also to the actions of their suppliers. Accordingly, affected companies should update their supply contracts and supplement them with agreements on the fulfilment of due diligence obligations. As of the turn of the year 2024, companies with 1,000 employees or more will be subject to the law. In practice, however, large companies regularly require SMEs as suppliers to also fulfil the obligation catalogues.
The EU will impose stricter requirements with a new supply chain regulation: Application already to companies with 500 employees, liability for all upstream suppliers and all buyers in the chain, no exemption through certifications. In December, the representatives of the European Parliament and the federal states agreed on the content of the regulation. Formal confirmation from the Parliament and Council is expected soon.
On the Supply Chain Act:
The EU approach to supply chains, March 2022 (Alliuris Compact, Steffen Töhte)
https://www.alliuris.org/the-eu-approach-to-supply-chains/
Compliance with the Whistleblower Protection Directive
Whistleblowers on legal violations in companies are particularly protected. The Whistleblower Protection Directive of the EU serves to protect individuals who report EU legal violations (e.g. breaches of product safety and consumer protection) to internal or external reporting channels. Reports and disclosures of information containing trade secrets are particularly problematic for companies.
The obligations to set up internal reporting channels by private employers and to handle reports have applied to companies with more than 50 employees at the latest since 17 December in all member states.
In Germany, the provisions on fines under the Whistleblower Protection Act have also applied since 1 December 2023, with fines in the five-figure range. The appliable penalties and the application date vary among the member states, depending on their implementation laws. Affected companies that have not yet set up an internal reporting channel should do so immediately.
On the Whistleblower Directive:
The Whistleblower Directive of the EU, September 2023 (Alliuris Compact, Ulrich Herfurth and Sara Nesler) https://www.alliuris.org/the-whistleblower-directive-of-the-eu/
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