Commercial Awareness Update – W/C 8th July 2024

AN IN-DEPTH ANALYSIS OF BEING ‘DELIBERATELY ABSENT’ IN EXTRADITION PROCEEDINGS

In extradition proceedings, the concept of being ”deliberately absent” plays a crucial role in determining whether an individual can be extradited for failing to appear at their criminal trial.

Recent decisions by the UK Supreme Court (UKSC) in Bertino v Public Prosecutor’s Office [2024] UKSC 9 and Merticariu v Judecatoria Arad [2024] UKSC 10 have provided significant clarity on the standards and evidence required to establish deliberate absence.

This article delves into these landmark decisions, their implications, and their broader context within the framework of extradition law.

Case summaries

Bertino v Public Prosecutor’s Office [2024]

In Bertino, the appellant, Bertino, was accused of committing a criminal offence in Italy in 2015 and moved to the UK. Although he was prosecuted in absentia, he claimed he never received the court summons. The UKSC was asked to consider whether deliberate absence requires proof of actual trial knowledge and the possibility of being convicted in absentia.

The Court unanimously held that for a person to be considered deliberately absent, it must be demonstrated to the criminal standard of proof that they had unequivocally waived their right to be present knowingly and intelligently.

Merticariu v Judecatoria Arad [2024]

In Merticariu, Romanian authorities sought the appellant under a European Arrest Warrant (EAW) to serve a sentence for a crime committed in absentia. The UKSC examined whether the right to a retrial in the requesting state must be unconditional.

The Court concluded that entitlement to a retrial or an equivalent review must not be contingent on findings other than purely procedural requirements. This ensures that the individual’s rights are protected and they have a genuine opportunity to contest their conviction upon extradition.

Burden of proof and deliberate absence

The UKSC’s decisions highlight the high burden of proof required to establish deliberate absence. It is not sufficient for the requesting state to merely assert that the individual was absent; they must provide clear and convincing evidence that the person knew of the trial and chose to excuse themselves knowingly and intelligently, setting a significant safeguard against wrongful extradition based on assumptions or incomplete information.

Right to retrial

The UKSC emphasised that a requested person must be unconditionally entitled to a retrial or a review amounting to a retrial. This means that the right to a retrial cannot depend on contingent factors other than procedural requirements.

The decision ensures that individuals facing extradition have a fair opportunity to defend themselves and contest their convictions, aligning with fundamental principles of justice and human rights.

The broader context and comparative analysis

European Arrest Warrant (EAW) Framework

The EAW framework facilitates streamlined extradition processes within the EU, premised on mutual trust and recognition of judicial decisions. However, the UKSC’s rulings underscore the need for rigorous safeguards to protect individuals’ rights within this system. The requirement for high standards of proof and unconditional retrial rights ensures that the EAW does not compromise the fairness and integrity of judicial processes.

International human rights standards

The UKSC’s decisions are consistent with international human rights standards, particularly those enshrined in the European Convention on Human Rights (ECHR).

Article 6 of the ECHR guarantees the right to a fair trial, and these rulings reinforce the need to uphold this right in extradition cases. The focus on the individual’s knowledge and the unconditional right to a retrial ensures compliance with these fundamental rights.

The way forward

Case preparation and evidence

Legal practitioners must meticulously prepare their cases, ensuring that all necessary evidence is presented to meet the stringent requirements set by the UKSC.

This includes providing detailed proof of the individual’s knowledge of their trial and their actions concerning their attendance. Ensuring comprehensive documentation and thorough investigation is crucial in these cases.

Drafting extradition agreements

When drafting extradition agreements, legal professionals must incorporate clear and explicit provisions regarding the notification of trial dates and the conditions under which absence may be deemed deliberate.

This can help prevent disputes and ensure that all parties understand the standards and expectations involved in the extradition process.

Impact on the legal sector

Drafting and interpretation of extradition clauses

Legal professionals must exhibit expertise in drafting and interpreting extradition clauses, ensuring clarity and precision. These clauses should clearly define all parties’ scope, procedures, and rights, minimising ambiguity and potential legal disputes.

Role of legal experts in extradition cases

Lawyers and other legal experts play a crucial role in educating clients about the nuances and implications of extradition law, particularly in light of these recent UKSC decisions. Providing informed advice and guidance can empower clients to make knowledgeable decisions during extradition.

The UKSC’s decisions in Bertino and Merticariu significantly impact the interpretation and application of extradition law, particularly concerning the concept of being ”deliberately absent”.

By setting high standards for proving deliberate absence and ensuring unconditional rights to a retrial, these rulings reinforce the importance of safeguarding individual rights within the extradition framework.

Legal practitioners must diligently adhere to these standards, ensuring that the principles of justice and fairness are upheld in all extradition proceedings.

• By Nawal Abdul Wahab

META’S DATA DILEMMA

Data commodification isn’t a novel concept. Titans like Alphabet (Google), Amazon, Meta, and Apple have long seen data as a core revenue stream. This reality prompted the European Commission to enact the Digital Markets Act (DMA) in March 2024.

The DMA aims to enhance the fairness and contestability of digital markets by imposing obligations and restrictions on “gatekeepers”. Last week, the European Union preliminarily found that Meta’s “pay or consent” advertising model violates the new act.

In this article, I’ll look at the objectives of the DMA, examine why Meta might be in breach of it, and discuss the potential implications of this ruling on data usage in Europe moving forward.

What is the DMA?

The DMA is one of the pioneering regulatory frameworks designed to curtail the gatekeeper dominance of major digital corporations. This legislation targets industry giants such as Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft, subjecting them to a stringent set of ‘do’s’ and ‘don’ts’ concerning data, advertising, and marketing practices.

Non-compliance with the DMA carries hefty penalties. Companies could face fines of 10% of their worldwide annual turnover, escalating to 20% for repeated violations. Additionally, periodic penalty payments can be imposed, reaching up to 5% of the average daily turnover.

What is Meta accused of?

The EU has preliminarily found that Meta’s “pay or consent” advertising model breaches new digital competition laws by failing to provide users with sufficient choice. Under Meta’s current policy, users must either pay a subscription fee for ad-free access to Instagram and Facebook or allow their data to be used for targeted ads.

The EU has clarified that while Meta can charge for its services or use interest-based advertising, it must also offer a free version with ads that use less user data, potentially leading to minimal or no revenue. This regulation effectively treats Meta as a public utility, with the EU determining pricing and profit margins.

Interestingly, the model objected to by the EU has been used without issue by many European newspapers for years. The biggest losers from this ruling may be small businesses in the EU that rely on targeted ads to reach customers.

The crux of the issue lies in the EU’s requirement for Meta to offer a product that does not use targeted ads but still provides an equivalent user experience. However, a product with irrelevant ads is not equivalent to one with relevant ads—it is arguably worse.

What could happen next?

Meta maintains that its ad model complies with EU regulations. However, if the EU’s preliminary findings are confirmed, Meta could face fines up to 10% of its global revenue, a significant figure given that Meta generated $35 billion in ad revenue in the first quarter alone, with 23% of that coming from Europe.

This evolving story has several commercial awareness points:

Regulation, regulation, regulation!

From AI to financial services, companies are all too aware of the impact that regulation has had and will continue to have on their growth. Companies sometimes encourage regulation (such as Open AI’s push for AI regulation), but sometimes, it isn’t welcomed.

This example shows how regulation can protect consumers effectively but potentially come at a cost to corporations.

Levelling the playing field?

The DMA goes beyond consumer protection by curbing the power of “gatekeepers.” This can foster increased competition and create opportunities for smaller players.

However, changes in advertising models may significantly impact small businesses that rely on targeted ads for customer acquisition. Understanding the trickle-down effects of such regulations is crucial.

Jurisdictions

It is important to note that this regulation is from the EU, meaning it does not affect the operations of ‘gatekeepers’ in other continents. While jurisdictions may strive for consistency in their regulatory approaches, this is not always the case.

As a result, companies may need to adopt different strategies in different regions. This underscores the advantage of having multijurisdictional lawyers and advisors who can guide companies on what they can and cannot do, depending on the specific regulations in each area.

• By Avishai Marcus

THE EU CORPORATE SUSTAINABILITY REPORTING DIRECTIVE

The CSRD is a transformative regulation that aims to enhance corporate transparency and promote sustainable business practices across the European Union.

Building on the Non-Financial Reporting Directive (NFRD), the CSRD provides more detailed and reliable information on companies’ ESG activities.

As sustainability becomes increasingly crucial globally, the CSRD ensures stakeholders have access to essential information about companies’ impacts on the environment and society.

The CSRD came into force on 5^th January 2023. However, its enactment is a phased implementation, with all EU member states to reflect these changes in their respective legislation by 6^th July 2024.

Key features

Scope expansion: The businesses within the scope of the CSRD are large EU public interest entities (PIEs) and issuers, large EU entities and issuers, EU-listed SMEs which will be granted an extended transition period, and non-EU companies with EU activities, providing they meet specific criteria as scheduled in the CSRD.

Detailed reporting requirements: Companies must report on various sustainability issues, including ESG factors. This includes their policies, outcomes, risks, and targets related to sustainability matters.

Mandatory auditing: Sustainability reports must be audited to ensure the reliability and comparability of data. According to the Commission, this will “contribute to the European Green Deal objectives by reducing companies’ negative impacts on climate, human rights, and social matters.”

Digital reporting: Companies must prepare their sustainability reports in a digital, machine-readable format, facilitating data accessibility and analysis. This crucial step aims to instil confidence in the transparency of the reporting process.

Alignment with international standards: The CSRD aims to align EU reporting standards with global frameworks, such as those developed by the International Sustainability Standards Board (ISSB). The Commission noted, “We need a global baseline for sustainability reporting that provides a common language for companies to communicate their sustainability performance.”

Impact on the UK

Although the UK is no longer a member of the EU, the CSRD’s implications for the UK economy are significant due to the interconnected nature of global markets and regulatory standards.

Market access and compliance costs: UK companies operating within the EU or with EU-based subsidiaries must comply with the CSRD if they meet certain thresholds, such as generating a net turnover of more than €150 million within the EU and having at least one EU subsidiary or branch generating significant turnover.

Therefore, UK companies may incur additional costs to comply with stringent reporting requirements and maintain their competitive edge. This entails adapting their reporting practices to meet the new requirements, which may involve additional data collection, auditing, and reporting infrastructure costs.

Investment and capital flow: Enhanced transparency and standardised reporting can attract sustainable investments. UK companies aligning with CSRD standards may find it easier to attract European investors who are increasingly prioritising ESG criteria. Conversely, companies that need to meet these standards might face challenges securing investment, potentially impacting their economic performance.

Trade relations: The CSRD may influence trade relations between the UK and the EU. Companies not complying with EU sustainability reporting requirements might face barriers or additional scrutiny, affecting their ability to trade freely. On the other hand, adherence to CSRD standards could facilitate smoother trade operations and bolster economic ties.

Concerns regarding implementation

The Directive promotes greater corporate accountability and transparency regarding environmental and social issues. This can lead to more informed decision-making by consumers, investors, and other stakeholders, potentially driving positive changes in corporate behaviour and societal outcomes.

Increased transparency may also empower civil society organisations to hold companies accountable for their sustainability practices. Nonetheless, several concerns have been raised regarding its implementation:

Compliance burden: The expanded scope and detailed reporting requirements may significantly burden companies, particularly SMEs. Smaller firms may need more resources and expertise to meet the stringent reporting standards, potentially leading to increased operational costs.

Audit and assurance challenges: The mandatory auditing of sustainability reports poses challenges regarding capacity and expertise. The auditing industry may need more professionals skilled in sustainability assurance, leading to potential delays and increased costs for companies.

Data quality and comparability: Ensuring the reliability and comparability of sustainability data is a complex task. Concerns about the consistency and accuracy of the information companies provide may affect the reports’ credibility and the CSRD’s effectiveness.

Alignment with global standards: While the CSRD aims to align with international sustainability reporting frameworks, differences between regional standards may create challenges for multinational companies. Harmonising various reporting requirements remains a critical issue for global businesses.

Implications for the legal sector

According to Fiona Reynolds, CEO of PRI (Principles for Responsible Investment), “the CSRD is a game-changer that will fundamentally alter the landscape of corporate transparency and accountability.” As a result, the CSRD demands new legal expertise in sustainability reporting and compliance.

Law firms and professionals must develop specialised knowledge to advise clients on meeting the directive’s requirements. This includes understanding the intricacies of sustainability data, audit requirements, and the potential legal risks associated with non-compliance, particularly for companies with cross-border operations.

As companies grapple with the new reporting requirements, disputes may arise regarding the interpretation and implementation of the CSRD. Legal professionals will play a crucial role in resolving such disputes, whether through litigation, arbitration, or other forms of dispute resolution. Therefore, the CSRD heralds new areas of expertise and advisory services for the legal sector, highlighting the need for ongoing adaptation and learning in response to evolving regulatory standards.

As stated by the EC, “the new rules will ensure that investors and other stakeholders have access to the information they need while ensuring a level playing field across the EU”, and a the CSRD takes effect, its impact will be closely watched by all those with vested interests in corporate sustainability.

• By Aqua Koroma