Category: Articles

The EU hydrogen and gas decarbonisation package, consisting of Directive (EU) 2024/1788 and Regulation (EU) 2024/1789, was adopted in May 2024. It updates the rules on the EU natural gas market set out in the Gas Directive 2009/73/EC and the Gas Regulation 715/2009/EC. The revised gas market rules were published in the EU Official Journal on 15 July and entered into force 20 days later. Concerning the Directive, Member States will have two years to adapt their national legislation to the provisions of the Directive.

Scope and Purpose of the Hydrogen and Decarbonised Gas Market Package

The revised gas market rules establish a common framework for the decarbonisation of the markets for natural gas and hydrogen, in order to contribute to the achievement of the Union’s climate and energy targets. Its scope is to facilitate the Union’s objective to cut greenhouse gas emissions at the same time as ensuring security of supply and the proper functioning of the internal markets for natural gas and hydrogen.

In contrast to electricity, the role of natural gas will progressively decline in the future, which also affects the demand for infrastructure investments. Therefore, it will be necessary to strategically close and adjust part of the distribution system in order to phase out the supply of natural gas to household customers, thus ensuring the transition into a sustainable and effective system. The aim is to progress towards interconnected markets for hydrogen in the Union and thereby facilitate investment in cross-border hydrogen infrastructure. The gradual phase-out of natural gas also contributes to the resilience of the European energy supply.

The new Framework

The Hydrogen and Decarbonised Gas Market Package seeks to facilitate the penetration of renewable and low-carbon gases into the energy system, enabling a shift from natural gas and to allow for these new gases to play their needed role towards the goal of EU climate neutrality in 2050.

In order to achieve this, the updated regulatory framework of the Directive incorporates a series of measures designed to enhance the rights of customers and consumers. The measures include transparent pricing (e.g. access to a comparison tool free of charge), extended information obligations, the right to switch suppliers and new provisions for an independent, cost-effective and efficient out-of-court mechanisms for the settlement of disputes, as well as protection against energy poverty. Moreover, it strengthens the rights of active customers on the market for natural gas. Active customers should be entitled to operate directly and sell self-produced renewable natural gas using the natural gas system without suffering from any discrimination. In addition to consumer protection, the joint use of energy is also reinforced.

Another key point of the decarbonisation package is the switch from fossil gas to renewable alternatives such as hydrogen. In line with the EU Hydrogen Strategy, renewable hydrogen is expected to be deployed on a large-scale basis from 2030 onwards for the purpose of decarbonising certain sectors, ranging from aviation and shipping to hard-to-decarbonise industrial sectors.

The new Regulation provides for third-party access to hydrogen networks and storage facilities according to objective criteria and without discrimination. Therefore, from 1 January 2033, third party access will be subject to a regulated tariff regime. Member States have the possibility to allow for a negotiated third party access to hydrogen networks until 31 December 2032.

Moreover, the new Regulation establishes a network association for the operators of hydrogen transmission networks, called The European Network for Network Operators of Hydrogen’ (ENNOH). The tasks of ENNOH include writing relevant network codes, as well as developing union-wide, non-binding ten-year network development plans for the hydrogen sector.

In addition, unbundling provisions for hydrogen networks were implemented. The unbundling rules for hydrogen distribution network operators are generally aligned with the existing requirements for gas distribution system operators (unbundling in terms of legal form, organization and decision-making power). For hydrogen transmission network operators, ownership unbundling is generally required. Alternative options are the possibility of unbundling as an independent hydrogen transmission network operator or as an independent transmission network operator (so-called integrated hydrogen transmission network operator). In principle, combined grid operation of electricity, gas and hydrogen grids is permitted. However, the hydrogen transmission network operator must be organized in a separate legal entity (horizontal unbundling).

The Directive also requires Member States to provide for tariff discounts and incentives in order to facilitate their market and system integration, especially for the emerging hydrogen market, and so to ensure a just transition. Moreover, network development plans will be built on sector integration, the ‘energy efficiency first’ principle and prioritizing the use of hydrogen in hard-to-decarbonise sectors.

Measures relating to security of supply will also be strengthened by the new provisions. The updated Regulation provides for the introduction of a mechanism for the joint procurement of gas to avoid competition between Member States, as well as a pilot project to strengthen the EU hydrogen market.

Impacts and Effects

The updated revised gas market rules aim to decarbonise the energy sector and includes provisions on consumer rights, transmission and distribution system operators, third-party access and integrated network planning, and independent regulatory authorities. Those new provisions present a multitude of prospective opportunities for the energy market, which have the potential to benefit all market participants.

In the light of the increased consumer empowerment and protection established in the natural gas and hydrogen sectors, energy companies are obliged to provide their customers with comprehensive information on the terms and conditions of their contracts, the pricing structure, the availability of contract switching options, and the proportion of renewable energies in their gas mix. Furthermore, bills and billing information are required be accurate, easy to understand, clear, concise, user-friendly and presented in a manner that facilitates comparison by final customers

With regard to the new comprehensive consumer protection provisions, it is of the utmost importance for energy suppliers to obtain an overview of the new obligations at an early stage. To avoid lengthy procedures with customers, it is advisable to implement or adapt the internal control system to ensure compliance with the regulations.

Furthermore, certain gas pipelines will be rededicated to hydrogen or shut down completely. Therefore, gas distribution system operators must develop network decommissioning plans where a reduction in natural gas demand requiring the decommissioning of natural gas distribution networks or parts of such networks is expected. In consequence of the growing interconnection between the electricity, gas and hydrogen sectors, market participants must work more closely together. This also requires the joint development of energy supply plans.

While the new framework for decarbonising the markets for natural gas and hydrogen will help European companies to remain competitive by giving them access to more predictable energy costs, it should be noted that there are also new strict rules that market participants must comply with. For example, with regard to the unbundling regulations, it is advisable that market participants who wish to operate in the hydrogen sector in the future familiarise themselves with the relevant regulations in in a timely manner. [1]

Overall, both households and companies have the chance to benefit from the lower costs of renewable energies, whose integration and availability will also be promoted by the new provisions on grid congestion, trading deadlines, load control and storage as well as auctions at EU level. [2] The entry into force of the new rules will also give energy companies the planning security they need to set the course for the energy transition towards green gas and hydrogen.

[1] Bisteghi/Dießner, Hochlauf der Wasserstoffwirtschaft in Österreich: das EU-Wasserstoff- und Dekarbonisierungspaket und der Gasmarkt von morgen, ecolex 2024, 653.
[2] Topal-Gökceli, Reformen des Strom- und Gasmarkts sowie neuer Rechtsrahmen zur Förderung der Entwicklung von Wasserstoff, ZfRV 2024, 107.

unyer Working Group Energy / Infrastructure

Sarina Illo Ortner

Roberto Padova

Holger Stappert

Relevance also for medical devices from 13 December 2024

The EU General Product Safety Regulation 2023/98 – GPSR, published on 23 May 2024, will enter into force on 13 December 2024 and will be directly applicable from that date. The GPSR lays down general rules for the safety of consumer products placed on the market in the European Union or made available for sale online or in shops on the EU-market.
For those products for which safety-relevant legal acts already exist, the GPSR can nevertheless be applied in addition. Foodstuffs and medicinal products for example are expressly excluded from the scope of the GPSR, but not medical devices.

The specific safety requirements for medical devices are primarily regulated by the Medical Device Regulation (Regulation (EU) 2017/745 – MDR). The GPSR imposes additional requirements, if certain safety risks are not fully covered by the MDR. Those areas of the GPSR that are not covered by the MDR, such as responsibilities of providers of online marketplaces, new information obligations in the case of distant sales, reporting obligations or consumer rights, also apply to medical devices that are intended for or used by consumers.

Some of these relevant provisions of the GPSR are, for example, the following:

• Providers of online marketplaces are subject to new information, monitoring and reporting obligations.
• All economic operators selling their products online must provide contact details, product information and product images. Warnings and safety information must be placed on the product or on the packaging or in an accompanying document in a language easily understood by the Member State in which the product is made available on the market.
• In future, all manufacturers will be obliged to report safety-related incidents via the European Safety Gate rapid alert system. This also provides for a web portal to inform the public, including the option of submitting complaints (Safety Gate portal).
• Consumers must be informed immediately of product safety recalls or safety warnings in writing and in an easily understandable manner, this can also be done via the consumer’s contact details stored for this purpose only or via other channels to reach all consumers. In the event of a product safety recall, the responsible economic operator must offer the consumer an effective, cost-free and timely remedy. The remedy shall not cause significant inconvenience or expense to the consumer.

The provisions of the GPSR bring significant changes, particularly in the digital trade in medical devices, which must be complied with from 13 December 2024. To avoid possible sanctions (to be set by the EU Member States) and collective consumer actions, all economic operators must familiarize themselves with the specific obligations that apply to them. It is also important to put in place internal procedures to be prepared for handling product recalls as well as safety complaints from consumers and to ensure that their rights are properly handled.

unyer Working Group Health Care & Life Science

Barbara Kuchar

Petra Artner

On 24 September 2024, the French national agency for the safety of medicines and health products (the “’ANSM’) announced the imposition of financial sanctions totalling nearly eight million euros against 11 pharmaceutical companies for non-compliance with their legal obligations to keep a contingency stock of so-called medicines of major therapeutic interest.

These sanctions have been imposed in a context where the risk of shortages is worsening: in 2023, the ANSM recorded almost 5,000 reports of out-of-stock medicines and risks of stock shortages ie one third more than in 2022 and six times more than in 2018. Moreover, they represent a significant increase compared to the six fines equalling a total of 560 000 euros handed out in 2023.

Consequently, these most recent fines appear to be particularly severe and raise questions about both the ANSM’s enforcement policies and the practical consequences of such heavy penalties.

Medicines of major therapeutic interest are defined in the French Code of public health as medicinal products “for which an interruption in treatment is likely to jeopardise the patient’s vital prognosis in the short or medium term, or represents a significant loss of opportunity for patients in view of the seriousness or potential evolution of the disease”.

In order to protect patients against such risks, the Code of public health places upon marketing authorisation holders (‘MAHs’) and wholesalers in particular a default obligation to keep a dynamic contingency stock of medicines of major therapeutic interest covering at least two months’ demand for the French market.

Moreover, where such a medicine has regularly been at risk of stock shortages or out of stock in the previous two calendar years, the ANSM may decide to increase the contingency stock duration requirement to a maximum of four months’ supply. Currently, 748 medicinal products are designated by the ANSM as requiring a 4-month contingency stock, compared with 422 in 2021 when these measures were added to the Code of public health.

In the event of non-compliance by a legal entity with these obligations, the ANSM may impose a fine of up 30% of the previous financial year’s turnover for the product or group of products concerned, up to a limit of one million euros.

On a European level, recently re-elected president of the European Commission Ursula von der Leyen has confirmed that the EU Commission “will propose a Critical Medicines Act to reduce dependencies relating to critical medicines and ingredients” in order to remedy the problem of “severe shortages of medical devices and medicines, with antibiotics, insulin, painkillers and other products becoming particularly difficult to obtain.”[1]

This follows the establishment in January 2024 of the Critical Medicines Alliance, a consultative mechanism whose mission is to “identify the best measures to address and avoid shortages of critical medicines” and which is scheduled to make recommendations and present a strategic plan by the end of 2024.

Although concrete details of a future EU act are yet to appear and the CMA’s work is ongoing, contingency stock measures are already under consideration at the EU level.

First, article 134 of the proposal for a regulation for the authorisation and supervision of medicinal products for human use, published in March 2023, states that the Commission may take in account, in particular, recommendations of the European Medicines Agency’s Executive Steering Group on Shortages and Safety of Medicinal Products (MSSG) and may consequently “impose contingency stock requirements of active pharmaceutical ingredient or finished dosage forms, or other relevant measures required to improve security of supply”.

In that regard, the MSSG has recently flagged that:

• “Several Member States have implemented provisions at national level to require supply chain actors to maintain a contingency stock in order to have a buffer when short-term shortages occur”; and
• “The MSSG may also issue a recommendation that certain supply chain actors maintain safety stocks to create a buffer stock of certain critical medicines to protect against fluctuations in demand or supply.”[2]

Moreover, a 2021 Commission report highlighted the “important benefits to patients and health systems, in the form of costs avoided and continuity of care, from avoided shortages or from shortages that are resolved more quickly or mitigated better”. [3]

It should be noted, however, that the report ultimately recommended introducing “legal obligations for MAHs and wholesalers to maintain a safety stock of (unfinished) products for medicines of major therapeutic interest at EU-level”.

In any case, national precedents including the French ANSM’s vigorous enforcement of its contingency stock obligations present a case study for the Commission to consider in weighing up potential measures that could be included in a future Critical Medicines Act.

Following the ANSM’s announcement, the French industry association representing generic medicines manufacturers, the GEMME, swiftly denounced the fines, saying in a press release that “These extremely serious sanctions were imposed even though the products were, in most cases, available on the market. This approach is not viable for a high-volume, low-price sector. Faced with the scale of the penalties or the risk of being penalised, manufacturers will be forced to withdraw from the market…”

These are all factors that the European legislator will need to take into account in its pursuit of securing the supply of critical medicines while simultaneously maintaining affordable prices for patients.

unyer Working Group Health Care & Life Science

Ruslan Churches
Attorney at Law, Senior Associate

Jean-Baptiste Chanial
Attorney at Law, Senior Partner

[1] ‘Political Guidelines for the Next European Commission 2024−2029’, Ursula von der Leyen, 18 July 2024.
[2] ‘Recommendations to strengthen supply chains of critical medicinal products’, Executive Steering Group on Shortages and Safety of Medicinal Products, 19 April 2024.
[3] ‘Future-proofing pharmaceutical legislation — Study on medicine shortages’, European Commission, December 2021.

From 9 February 2025, Italy too will be interconnected with the major European hub for verifying the authenticity of medicines before they are dispensed to patients.

Our country, together with Belgium and Greece, has taken advantage of a six-year derogation for the adaptation of the drug traceability system to the standards provided for by the European Directive 2011/62/EU – “Falsified Medicine Directive” supplemented by the Delegated Regulation (EU) 2016/161 of the European Commission, by virtue of the presence in our system of the so-called “vignino system” particularly efficient and structured for the traceability and control of drugs, based on the single national database and the stamp issued by the Istituto Poligrafico e Zecca dello Stato.

From 9 February 2025, Italy too will be interconnected with the major European hub for verifying the authenticity of medicines before they are dispensed to patients.
Our country, together with Belgium and Greece, has taken advantage of a six-year derogation for the adaptation of the drug traceability system to the standards provided for by the European Directive 2011/62/EU – “Falsified Medicine Directive” supplemented by the Delegated Regulation (EU) 2016/161 of the European Commission, by virtue of the presence in our system of the so-called “vignino system” particularly efficient and structured for the traceability and control of drugs, based on the single national database and the stamp issued by the Istituto Poligrafico e Zecca dello Stato.

The “new” European legislation, operational as of 9 February 2019 in all other Member States plus Iceland, Liechtenstein and Norway, envisages the affixing of a unique two-dimensional barcode, known as “Datamatrix 2D”, on drug packages and the implementation on them of an anti-tampering device to guarantee their integrity and non-compromise. The system will thus be based on a European interconnection of drug data to facilitate the free movement of medicines in the EU area, in a system aimed at protecting the health of patients.
The Council of Ministers of 30 August 2024 examined the legislative decree for the harmonisation of national legislation with European standards, introducing new obligations for the dispensing of prescription drugs, applicable to the entire drug supply chain: from manufacturers, wholesalers and distributors to pharmacists.

In particular, manufacturers who hold the marketing authorisation for drugs will generate the identifier and enter it into the single national archive linked to the European database. The identifier will be verified at each subsequent step within the supply chain; in fact, wholesalers and distributors will have to verify the unique code by comparing it with those in the system and consider it authentic only if they find a match in the national and European archives. The last check that the medicine undergoes, before reaching the patient’s hands, is carried out by the pharmacist, who must validate and remove the code at the time of dispensing after comparing it with the identifiers in the system. If the unique code is not present in the records, one could be faced with a counterfeit medicine.

Outside the ordinary process, the various operators will only be able to remove the code in the strict cases provided for by the regulations, including, medicines distributed outside the European Union or, medicines that cannot be put back into the sales stock or destined for destruction or samples requested by the competent authorities.

The decree also deals with the identification of sanctions for non-compliance with the regulation, which, to date, seems to have a considerable impact on the activities of distributors and pharmacists and for which, at the current state of the art, several critical issues are already emerging:

• the integration and dialogue of the databases, the national one managed by the consortium company “Nmvo – National Medicine Verification Organisation” set up in January 2024 by all players in the drug supply chain and the European one, “European Medicines Verification Organisation”. A further connection is planned with the “Nsis – New Health Information System”, a database with which the systems of retail pharmacies will interface, which in turn will have to equip themselves with systems capable of interacting with the European Hub and with hospitals for drug decommissioning procedures.
• the provision of new optical readers, suitable for the new unique code, for pharmacists (old technological equipment will not be able to be decommissioned until the drugs in circulation with the “old sticker” are completely disposed of).
• the repeal by the Government of the current “vignette system” legislation to make way for the new “Datamatrix”.

More details will come with the technical specifications that the Ministry of Health will issue within 30 days of the government decree coming into force. For the time being, the first deadline set by the decree is 9 November 2024, when holders of marketing authorisations for drugs issued before the decree came into force will already have to have submitted an application to AIFA to adapt their authorisation to the new drug traceability system.

unyer Working Group Health Care & Life Science

Roberta Pirola
Partner

Alberto Santi
Partner

The digitalisation of the healthcare system is an important step towards more effective and efficient healthcare. Advances in medical technology such as Wearables, robot-assisted surgery and Artificial Intelligence (AI) are also being used more and more frequently in the healthcare sector. The EU and the German Federal Ministry of Health (Bundesministerium für Gesundheit; “BMG”) have set themselves the goal of making health data accessible for research purposes and improving healthcare through digital solutions.

The German Digital Act (Digital-Gesetz, “DigiG”) was introduced in March 2024 to simplify every-day treatment for doctors and patients with digital solutions. The most important contents include the Electronic Patient Records (ePA), which will be set up for all people with statutory health insurance at the beginning of 2025. The e-prescription has already become a binding standard in the provision of medicines in Germany and is currently being further developed.

Furthermore, the German Health Data Use Act (Gesundheitsdatennutzungsgesetz; “GDNG”) came into force in March 2024 as well. The main, but not final, contents are the establishment of a central data access and coordination centre for the use of health data in order to reduce bureaucratic hurdles and facilitate access to research data. The lead data protection authority for transnational research projects will be extended to all health data. In future, an opt-out procedure will apply to the release of data from the ePA. This will make it easier to utilise treatment data for research purposes. Only data that has been reliably and automatically pseudonymised will be transmitted.

‘Modern medicine needs digital help’, said Federal Health Minister Karl Lauterbach at the presentation of the new digitalisation strategy in March 2023. However, these modern developments are subject to strict regulatory requirements such as the European Medical Device Regulation (MDR) and the national Medical Device Law Implementation Act (Medizinprodukterecht-Durchführungsgesetz; MPDG) and pose a challenge for the development of the Metaverse around the digitalisation of medical technology. For example, the MDR and MPDG contain extensive requirements for the clinical evaluation of Wearables. As a rule, medical technology companies must conduct clinical studies and fulfil basic requirements for the safety and performance of the products.

For this reason, international companies are increasingly investing in the UK, Singapore, China and Vietnam, where the government is promoting the digitalisation of the healthcare system more strongly and setting the course for the future.

In Germany, even after facilitating the digitalisation of the healthcare system through national and European laws, there is still a need for action to create a legal framework that is open to digital innovations and does not impair the marketability of wearables, for example.

It remains to be seen whether legislators will respond to these developments with regulatory relief in order to improve Germany’s attractiveness as a centre of innovation for medical technology. Stay tuned!

unyer Working Group Health Care & Life Science
Dr. Christoph von Burgsdorff, LL.M.
Partner

Luisa Kramer
Associate

Numerous appeals are still pending before the Regional Administrative Court for Lazio against the deed issued in December 2022 by the Regions, based on Article  9-ter of the Legislative Decree No. 78/2015 (as amended by the Legislative Decree No. 115/2022), ordering the suppliers of medical devices to public administrations to pay a contribution for the partial offset (so-called payback) to cover the regional governments’ public expenditure on medical devices in excess of a certain limit for FY’s years 2015, 2016, 2017 and 2018, as certified by the Ministerial Decree dated 6 July 2022.

The Court, in nearly all pending cases, has temporarily suspended the effects of the payment requests and, in order to adopt the final decision on the merits, formally requested to the Constitutional Court, on 24 October 2023, to verify the constitutional legitimacy of the rules regulating the payback system.

The Constitutional Court, with its final judgement No. 140 published on 22 July 2024, confirmed the constitutional legitimacy of the rules governing payback, essentially affirming that the law can limit private economic initiative in case of social needs, providing a solidarity contribution, provided that it responds to the principles of reasonableness and proportionality.

This solidarity contribution, according to the Constitutional Court, would be ‘reasonable’, as it is aimed at guaranteeing the protection of the public healthcare system and the rationalization of its costs, and ‘proportionate’, taking into account the reduction of the contribution for all suppliers of medical devices to an amount equal to 48% of the payments requested by the Regions.

In this latter respect, in fact, the Constitutional Court itself, with the judgement No. 139 published on the same date of 22 July 2024, declared the constitutional illegitimacy of the known Government provision (referred to in Article 8 of the Legislative Decree No. 34/2023) which provided for the said 48% reduction as reserved only for operators who decided to waive to the claims raised before the Regional Administrative Court, since such reduction should have been acknowledged to all the operators with no distinction.

Following the rulings of the Constitutional Court, which effectively represent a compromise between the various positions taken by the public and private entities involved in the dispute, it is now believed that there is no margin for obtaining a complete annulment or further reductions of the requests for contributions of payback.

Therefore, it is expected that the Regions will issue, within a period of time difficult to foresee, new deeds, redefining the amounts due (equal to 48% of the amounts originally requested for the FY’s 2015, 2016, 2017 and 2018) and the payment methods of the same. This may lead to a consequent conclusion of the pending appeals before the Court due to a supervening lack of interest.

On 5 July, the Corporate Sustainability Due Diligence Directive (CSDDD), also known as the Supply Chain Act or, more technically, Directive (EU) 2024/1760 of 13 June 2024, was published in the Official Journal of the European Union. This directive represents a crucial step in promoting corporate sustainability and holding businesses accountable for their social and environmental impacts throughout their supply chains. In fact, following the Corporate Sustainability Reporting Directive (CSRD), entered into force on 5 January 2023, which imposed new and more demanding ways of conducting sustainability reports for larger companies, the CSDDD introduce an obligation for companies of a certain size to identify and mitigate – through careful and thorough due diligence – adverse impacts on human rights (such as child labour) and the environment (such as pollution) in their own operations, those of their subsidiaries and those of suppliers and sub-suppliers included in their business relationships, i.e. their supply chain.

The innovative scope of CSDDD Directive was recognised even before its entry into force, such that the European legislator was obliged, given the numerous objections from the Member States, to provide for its gradual application, proportionate and therefore inextricably linked to the size of the companies subject to its implementation: as of 26 July 2027, companies with more than 5,000 employees and a turnover of more than EUR 1,500 million; from 26 July 2028, companies with more than 3,000 employees and a turnover of more than EUR 900 million; and finally, from 26 July 2029, all other companies falling within its scope (i.e. those with more than 1,000 employees and a turnover of more than EUR 450 million).

Until recently, the lack of adequate and effective control over the supply chain allowed companies to remain passive, as there was no concrete reason, either from an economic or a productivity point of view, for them to monitor the performance of their suppliers and subcontractors in terms of compliance with human rights and environmental standards. This state was due to the absence of a real supply chain management and control system, which was limited to the signing of ethical codes and superficial, often cursory audits, instead of a real risk management system covering the entire chain and aimed at effectively monitoring suppliers in order to support them, both economically and in terms of know-how, on their way towards a more sustainable business model.

With the entry into force of the European Directive, large companies (and, consequently, the SMEs involved in their supply chain) will first have to carefully map the risks affecting the supply chain, necessarily involving all stakeholders, and provide appropriate training on CSDDD issues to all employees. In addition, at the documentary level, companies will be required to produce annual reports focusing on the impact of their activities on the environment, human rights and related risks.

These obligations will enable companies to adopt a sustainable and transparent business strategy that, although considerably burdensome in the short term, will bring significant benefits in the long term.

Each Member State will set up a specific supervisory authority with the power to carry out inspections, impose significant fines – up to 5% of the company’s total net turnover, plus compensation for any damage caused – and, in the event of non-compliance, issue public statements indicating responsibility and breach, with obvious negative repercussions on the reputational profile of the company involved.

Transparency, a culture of legality and competitive input will form the basis of the Supply Chain Act, with a commitment from companies to adopt appropriate compliance, accompanied by adequate contractual protection and negotiating safeguards – especially in the most commonly used types of contract in this fields, such as for contracting and subcontracting agreements – together with the creation of a competitive market favourable to SMEs, whose sustainable policies will be preferred to the selection of low-cost, foreign or socially and environmentally dumping suppliers.

On June 27, 2024, the European Union announced its withdrawal from the Energy Charter Treaty (ECT). This move potentially marks the end of a long and difficult negotiation process on the reform of the treaty, which was originally intended to promote and protect investment in the energy sector. Given the undisputed need to promote investment in renewable energy and thus combat climate change, this withdrawal raises a number of questions.

The Origins of the ECT

The ECT was signed in 1994 and came into force in 1998. Originally comprising almost 50 contracting parties from Europe (including all EU member states in addition to the EU), the successor states to the Soviet Union and Asia, it aims to create a stable framework for cross-border cooperation in the energy sector. This includes protecting investments in the energy sector and settling disputes between investors and states. The original political motivation was to secure access to the oil and gas sources there after the First Gulf War and the collapse of the Soviet Union.

So far unsuccessful reform negotiations

In recent years, criticism of the ECT has grown, particularly with regard to its alleged incompatibility with the EU’s climate targets and the Paris Agreement. Critics argued that the treaty protects fossil fuels and would thus hinder the transition to renewable energies. In 2022, after five years of negotiations, an agreement in principle was reached on a modernized treaty that would have significantly restricted protection for existing and new investments. However, as not all EU member states agreed to the details, a vote was postponed until 2023. In the meantime, however, numerous contracting parties, including Germany, Denmark, France, Italy, and Spain have declared their withdrawal from the ECT. Austria has also been considering an exit from the ECT for some time, but initially has postponed its final decision in view of the modernization efforts.

In March of this year, the European Commission therefore proposed a three-stage process in which the EU first withdraws from the treaty, then the EU member states agree to no longer block the conclusion of the modernized treaty, and subsequently all other EU member states withdraw from the non-modernized ECT.

Effects of the phase-out on existing investments

A crucial point in connection with the EU’s withdrawal is the sunset clause in Article 47 of the ECT. This clause states that existing investments continue to be protected by the treaty for up to 20 years after the withdrawal of a contracting party. This applies both to foreign investors and to investors of this contracting party abroad.

However, the relevance has so far been low, as proceedings have almost always been initiated against EU member states. The withdrawal is also likely to be of little relevance for investors from the EU, as all EU member states were also parties to the ECT. Despite the withdrawal of these states, the issue will also have little relevance in the future, as the sunset clause also applies to the member states. Whether this can be abolished retrospectively is at least doubtful.

Impact on new investments and renewable energies

Probably the most serious effect of the withdrawal concerns new investments. While existing investments, whether fossil or renewable, will remain protected, no new investments, whether fossil or renewable, will be protected against EU measures.

The need for private investment in the energy transition is undisputed. According to the International Energy Agency (IEA), annual investment in clean energy must increase to around USD 4 trillion by 2030 in order to achieve the goals of the Paris Agreement.

Interestingly, the majority of arbitration proceedings under the ECT were directed against European states such as Spain, Italy and Germany and concerned the renewable energy sector. These proceedings were often initiated by investors who felt disadvantaged by changes in the support conditions for renewable energy. Spain, for example, was confronted with a large number of lawsuits after it retroactively reduced the feed-in tariffs for solar energy. This shows that renewable energies also require considerable investment protection in order to ensure confidence and stability for investors.

Conclusion: a double-edged sword

The EU’s withdrawal from the Energy Charter Treaty is a complex issue with far-reaching consequences. While existing investments continue to be protected and European companies in third countries continue to benefit from the ECT, the lack of protection for new investments, particularly in the area of renewable energies, could hamper the EU’s climate protection efforts.

It remains to be seen whether the European Commission’s strategy of overcoming resistance to the adoption of the modernized ECT will work. In the short term, however, it represents a setback for the protection of urgently needed investments in renewable energies.

Authors of the unyer Energy & Infrastructure working group

Dr Richard Happ
Manuel Tomas
Roberto Padova
Nicolas O. Zenz 

The German Civil Code (BGB) has been getting increasingly complex for years, in part due to several EU Directives and in part due to domestic legislative changes. This development constantly creates new challenges for companies and might lead to an increased application of the “United Nations Convention on Contracts for the International Sale of Goods” (CISG).
The CISG is an international law for trading of goods, which contains its own legal system of rights and obligations for buyers and sellers. It is recognized in 97 Contracting States, includ-ing most European nations and many others like the USA, China or Japan. In theory, the CISG would apply to most cross-border commercial contracts for the sale of goods, as long as the contract is subject to the law of one of the Contracting States. In fact, many contracts exclude the application of the CISG, because companies and their legal advisors favour their familiar domestic civil codes.

Regarding the German jurisdiction, it might be worth to reconsider. The CISG is easy to un-derstand, less complex than the German Civil Code and allows greater freedom of contract.
In the past years more and more provisions have been added to the German Civil Code, e.g. provisions on the sale of consumer goods or provisions on recourse. “Recourse” means a sellers claim against his supplier. It differs partially from general warranty claims that the seller might be entitled to and only applies to contracts on certain goods, such as consumer goods or newly manufactured things.

As of January 1st 2022 the Directive (EU) 2019/770 (“Digital Content Directive”) and the Di-rective (EU) 2019/771 (“European Sales of Goods Directive”) have been implemented into domestic law. Since then, the German Civil Code also contains special provisions on the sale of digital products and the sale of goods with digital elements, each with their own pro-visions on warranty and recourse. The changes of 2022 have also abolished the fixed limita-tion period for recourse. And the changes have extended the period of shifted burden of proof, regarding defects of consumer goods, up to one year. Many of these new provisions are mandatory rules, that can not be modified by contract.

In contrast, the CISG does not differentiate between different types of products and only con-tains one set of provisions. It only stipulates general warranty rights, like claims for damages, reduction of price or declaring the contract avoided. These rights are time-barred after a peri-od of two years. Furthermore, most provisions of the CISG are default rules and subject to modification by the contracting parties. Overall the CISG is subject to less legislative change compared to the German Civil Code.

In conclusion, the CISG might be a suitable alternative for cross-border sales contracts. It enables contracting parties to agree on terms and conditions that would be invalid under domestic German law. Finally, because the CISG is recognized in many countries, it allows for the use of the same contract template for business dealings in different countries.

unyer Working Group Commercial & Trade Law
Dr Christoph von Burgsdorff
Dr Robert Burkert

On October 17, 2023, the French pharmaceutical industry signed its first sector-wide agreement on ecological transition and sustainable mobility. The agreement, signed between Leem and the CFDT, CFTC, FO and Unsa federations, requires companies to carry out a carbon assessment of their activities by October 17, 2024, and to adopt two best practices from among those proposed, such as adjusting executive compensation, collective catering, responsible transport and purchasing.

The agreement highlights the importance of integrating ecological issues at every stage of the drug life cycle without compromising jobs or working conditions. In line with the French Climate and Resilience Act of August 22, 2021, which incorporated the ecological transition into negotiations on job and career path management (GEPP), the agreement goes further by requiring that all company negotiations now include the ecological dimension.

The social and economic committees (CSE) of companies with over 50 employees must be informed about the environmental impact of projects. As with the human impact study of projects, the environmental impact study is becoming essential. Acculturating and training the social partners on CSR/ESG issues will help ensure common understanding and effective collaboration.

Companies will have to include environmental criteria in their profit-sharing agreements and are encouraged to offer employee savings funds with the “socially responsible investment” (SRI) label.

Lastly, the agreement encourages the inclusion of environmental criteria in compensation policies, particularly for top executives, as the involvement of management (the tone at the top) is a key factor in effective environmental policy. Companies must also sensitize their employees to environmental issues, with initiatives such as eco-driving and everyday actions.
This agreement is a significant step towards a more responsible and sustainable pharmaceutical industry, integrating environmental concerns at the heart of its strategy.

Against this backdrop, the role of lawyers as expert advisors is essential in explaining the legal implications of the new regulations and enabling business leaders to build effective sustainable strategies, avoiding greenwashing and socialwashing, to reduce the litigation risk. As trusted advisors to business leaders, lawyers play a strategic role in managing these paradigm shifts within companies.

Caroline Ferté
unyer Working Group Health Care & Life Science

The Supreme Court (OGH) dealt with this question in its recently published decision of March 19, 2024 on 4 Ob 42/24s and commented on a few fundamental questions.
The use of Ozempic in people who are not severely obese or do not suffer from diabetes, but want to lose weight easily, has been the subject of much controversy for several months. Only recently there was a dispute between two well-known Hollywood actresses.

In the case in question, a specialist doctor in plastic, aesthetic and reconstructive surgery had given several patients in his two surgeries who were suffering from obesity the drug Ozempic for self-administration at home for the entire duration of the treatment. The defendant doctor had taken a fee for this. One of the preparations, which he had not purchased from an Austrian pharmacy, also turned out to be a counterfeit. After using the counterfeit preparation, the patient using it suffered a seizure and hypoglycemia.
The Austrian Chamber of Pharmacists based its action on Section 1 of the Unfair Competition Act (UWG) and asserted a breach of Sections 57 and 58 of the Austrian Medical Practitioners Act (ÄrzteG – permissible dispensing of medicinal products) and Section 58 of the Austrian Medicinal Products Act (AMG – pharmacy reservation). The courts issued the requested interim injunction against the doctor.

In its decision, the Supreme Court emphasized that the pharmacy reservation anchored in Section 59 para. 1 AMG means that the supply of medicines to the population by public pharmacies has primacy, from which there are only narrow, legally defined exceptions.

It is true that, depending on the nature of their practice and local conditions, all doctors must keep the necessary medicines for first aid in stock. This requirement is interpreted restrictively by the courts, according to which an urgent case of dispensing a medicine to a patient can only ever exist if it is no longer possible to obtain the medicine from a public pharmacy in good time. This exception therefore only applies to medicines that must be administered to patients without delay in order to provide first aid. Under no circumstances does this regulation apply to medicines that are used for further therapy.

Furthermore, a doctor is not prohibited from keeping medicines in stock that are required for the treatment contract. Such use by the doctor also includes the provision of small quantities of a medicine for self-taking if (i) the direct connection with the treatment in the surgery and (ii) medical supervision are ensured.

These requirements were not met here; the defendant doctor unlawfully interfered with the pharmacy reservation by providing patients with not small quantities (namely a whole month’s supply) of the medicinal product, including injection devices, for the purpose of self-injection over several weeks without any medical supervision.
The main proceedings following the interim injunction have not yet been concluded, but the conclusive reasoning of the Supreme Court in the summary proceedings does not suggest a different outcome.

unyer Health Care & Life Science Working Group
Barbara Kuchar
Beatrice Blümel

1. Background

On May 7, 2024, Regulation (EU) 2024/1106, better known as “REMIT II“, came into force. This marks the first amendment to REMIT, the Regulation on Wholesale Energy Market Integrity and Transparency, which has been in force since early 2012. The adoption of REMIT II is part of the European package of measures to reform the electricity market design. This European package aims to utilise the experiences gained during the energy crisis to achieve long-term stabilisation of the electricity markets.

The most important changes introduced by REMIT II are as follows:

2. Extension of the scope of application

REMIT II changes the definition of wholesale energy products. Both contracts for the supply of LNG and storage contracts are now included. Additionally, REMIT II includes contracts for the supply of electricity and derivatives related to electricity which may result in a delivery in the Union as a result of single day-ahead and intraday coupling in the electricity sector. For trading orders placed in a third country participating in the Union’s single day-ahead and intraday coupling, the optimal matching of bids may result in a contract for the supply of electricity for delivery within the Union. The legislator clarifies that these contracts shall also be subject to the REMIT regulatory regime.

The existence of a wholesale energy product is the essential prerequisite for the applicability of the market abuse prohibitions and reporting obligations. By changing this definition, the legislator expands the scope of their applicability.

Additional elements are introduced in the provisions on market manipulation and insider trading. The regulation expands the list of actions that potentially fulfil the provisions on market abuse, introducing additional alternatives. REMIT II also introduces catch-all provisions to address previous difficulties in subsuming certain trading practices under the legal provisions. These amendments align REMIT with financial market regulation, which served as a model for the wholesale energy markets’ protection regime in 2011.

 3. Harmonisation of fines

The practice of setting fines varies significantly among Member States, particularly regarding the amounts imposed. In recent years, fines have ranged from low four-digit amounts to tens of millions. With REMIT II, the legislator goes further in intervening in national sanction laws than before. REMIT I stipulated that sanctions must be effective, dissuasive, and proportionate, considering the nature, duration and seriousness of the infringement, the damage to consumers, and the potential gains resulting from trading. REMIT II substantiates this requirement: the regulation raises the upper limit of fines by setting maximum amounts for fines that a Member State must at least provide for the fining of a violation. For example, for market manipulation, the national regulatory authority must be able to impose a fine of at least 15% of the annual total turnover in the preceding financial year against a legal entity. In future, fines of at least up to 5 million euros can be imposed on a natural person. This requirement contains a clear mandate to the Member States to increase the maximum amounts provided for under their national laws.

4. Strengthening cooperation between authorities

According to the REMIT concept, a broad information base is essential for enforcing the prohibition of abuse. To this end, REMIT II strengthens cooperation between national authorities. In particular, it promotes the sharing of information, which is intended to close information gaps at individual authorities. However, REMIT II does not only focus on energy regulators, but also takes supervisory authorities from other markets into consideration. For example, the exchange of information between financial and energy regulators will be intensified.

5. New powers for ACER

In addition to its market surveillance function, ACER can also investigate suspected cases with cross-border relevance on the basis of REMIT II. The reason behind this change was the realisation that market abuse is increasingly taking place across borders. In the past, difficulties have arisen in prosecution when determining responsibilities. ACER’s involvement creates new capacities for investigating suspected cases. Under REMIT II, for example, ACER is authorised to carry out on-site inspections, request information, and impose penalty payments to enforce the investigative measures. However, the right to sanction violations remains exclusively with national regulatory authorities.

6. Expansion of reporting obligations

REMIT II expands existing reporting obligations and introduces new ones. For example, the reporting obligation for persons professionally arranging transactions is expanded. In future, they will no longer only have to report suspicious transactions, but also suspicious trading orders. With the expansion of the definition of wholesale energy products, existing reporting obligations are correspondingly expanded. REMIT II also implements additional reporting obligations, for example, for operators of algorithmic trading. These changes must be taken into account when (re-)organising internal reporting processes.

7. Algorithmic trading

REMIT I, which came into force in 2012, did not yet contain any regulations on algorithmic trading. This type of trading has increased significantly in recent years, partially surpassing manual trading. Due to its relevance, ACER clarified in its application guideline that trading by means of algorithms can also fall under abuse prohibitions.

REMIT II contains additional requirements for the resilience of algorithms. Market participants must design their algorithms to avoid causing disruptions in the market. REMIT II also stipulates monitoring and documentation obligations. Market participants engaging in algorithmic trading are also required to notify the national regulatory authority and ACER. The national regulatory authority can request specific evidence from market participants. Therefore, the newly introduced retention periods must be particularly observed.

8. Need for action

Market participants must immediately review and, if necessary, adjust their trading and reporting processes and internal compliance regulations to the new legal framework. The amended regulations regularly require significant adjustments to established practice, which demand time and resources. In light of the stricter sanctions, these adjustments must be carried out all the more carefully.

unyer Working Group Energy / Infrastructure
Lilith Boos
Dr Holger Stappert
Manuel Tomas

The safety of medical devices is of utmost importance for the health of patients around the world. Numerous regulations, particularly by the European Commission, are therefore commonplace in this industry. Just recently, the EU launched the AI Act to regulate artificial intelligence, with further requirements explicitly for the manufacture of medical devices. However, while the authorisation of medical devices is based on complex international standards, subsequent liability due to any product defects has not yet been part of international legislation. Medtech companies that sell their products on the German market should therefore obtain an overview of national liability law.

Neither the European Medical Devices Regulation nor the German Medical Device Law Implementation Act (MPDG) contain regulations on product liability. In fact, the industry-independent German Act on Liability for Defective Products and the German Civil Code are actually the basis for liability claims.

The Act on Liability for Defective Products is the key liability base. It provides for a no-fault claim for damages by the injured party if they have suffered physical damage due to a design, instruction or manufacturing defect. Damages due to defective monitoring of the product after market entry are not covered.

Proving a mistake is the key of product liability litigation. In principle, the injured party must pro-vide evidence that the product was defective. In practice, however, this is not an overly strict standard, as even a basic presentation of the relevant circumstances places a secondary burden of proof on the manufacturer. It is then up to the manufacturer to demonstrate that its product is in order.

However, this product liability does not only apply to traditional end-manufacturers, but also to companies that claim to be the manufacturer of a product by affixing their trade mark or that im-port a product into the European Economic Area. Even distributors can be held liable. In the event of a justified claim, they are obliged to name the manufacturer. If the manufacturer cannot be identified, the distributor is itself liable.

In addition to liability due to a product defect, fault-based liability of all market players in accordance with the general provisions of tort law must also be considered. In particular, this can also be used to assert a breach of a product monitoring obligation even after market launch.

Companies in the medtech sector should therefore protect themselves with a detailed documentation. This certainly begins with the manufacturing process due to the extensive EU regulations, but should by no means end with market authorisation. Admittedly, German law does not provide for such high compensation payments as in the USA, for example. Nevertheless, the conditions for a claim are quickly met and, in particular, are not linked to fault by the manufacturer.

Dr. Christoph von Burgsdorff, LL.M. (University of Essex)
Working Group Healthcare & Life Science

Luisa Kramer
Working Group Healthcare & Life Science