All Things Legal ……….April 2023Gordon Kerr

Gordon Kerr

EuRA Strategic Consultant Legal gordonkerr@gklegal.co.uk

I also provide an update on the EU’s continuing struggles to introduce its European Travel Information and Authorisation System (Etias) and possible delays with the EU-US Data Privacy Framework (which replaces the invalidated Privacy Shield).

Finally, I am drawing your attention to a new legal excuse for being late for work!

If there is a particular legal topic that you would like me to cover in a future edition of The EuRApean, please let me know.

Environmental sustainability – legal obligations

You will probably be aware that EuRA is working with other industry associations in the relocation sector to promote best practices in environmental sustainability. To link with this initiative, I am highlighting how regulators are starting to impose sustainability standards on companies.

A common complaint from DSPs is that unfair contract terms are often imposed upon them by clients, with little opportunity to discuss or negotiate these clauses. In some situations, courts may refuse to enforce an unreasonable clause. I share some examples of this below.

The G20-backed International Sustainability Standards Board (ISSB) recently approved "global baseline" rules for firms disclosing how climate change affects their business. This follows calls to curb greenwashing and to standardise climate reporting by businesses. The new standards are expected to come into effect next January for use in annual reports for 2024 and onwards.

The proposed new international standards are intended to address concerns among regulators about exaggerated climatefriendly claims. But businesses have a concern that they will have to comply with a patchwork of different international standards, particularly as the EU and the United States are currently creating their own corporate disclosure regulations. For example, around 50,000 firms will have to apply EU disclosure rules known as ESRS, with many of them also having to disclose under ISSB rules at the same time. The ISSB and EU have come under heavy pressure from regulators to make their climate-related disclosures "interoperable" to avoid clashes that bump up compliance costs. For the moment, some flexibility is being allowed for companies faced with different compliance rules under EU and ISSB regulations. So, progress is being made, but we are still a long way from having a single set of global standards for sustainability reporting. In the relocation industry, we are fortunate that we are witnessing international cooperation in action. EuRA is a founding member of the Coalition for Greener Mobility – along with WERC, CERC, FIDI, IAM and the Corporate Housing Providers Association. The aim of the Coalition is to deliver global initiatives which will ensure that our industry is playing its part in environmental sustainability. This is an excellent development and is very much in tune with the evolving legal landscape for global businesses.

Can an “unreasonable” contract term be enforced?

In most European countries, consumer protection laws give individuals legal protection against “unfair contract terms”. Companies doing business with individual consumers are unable to enforce clauses in contracts which are patently unfair on the customer. In a relocation context this means, for example, that relocation businesses have to be particularly careful in how they prepare contracts for home finding services for personal clients. But what happens if an unfair clause is written into a contract between two businesses, such as an RMC and a DSP?

In many European countries, including the UK, it is possible to have an “unfair” clause declared void. The legal reasoning is that smaller businesses can lack bargaining power against larger businesses, making them more likely to sign up to terms that, viewed objectively, are unreasonable or commercially unfair. For example, smaller businesses may feel they have no choice but to sign up to a contract with an excessive fixed duration at a fixed price. But courts will not interfere with a commercial contract unless there are very strong reasons. Generally, the law respects freedom of contract between businesses, whatever their size, so businesses are free to enter into whatever contracts they see fit. Therefore, the best starting point for businesses is always to ensure they are comfortable with the contract terms and their commercial implications before signing.

However, there are a few arguments that a business can pursue to invalidate or tone down the effect of a term that is unfair. The applicability and success of each of these depends on the facts.

Clauses which could be challenged on grounds of unfairness include those which:

• Excuse the dominant party from nonperformance of its own standard terms.

• Allow a party to suspend, postpone or terminate the contract early, at will.

• Place restrictive conditions on enforcement of a liability (e.g. a clause setting a very short time limit for claims or giving exclusive jurisdiction to an inaccessible court).

• Limit remedies (e.g. a clause unreasonably excluding rights of set-off).

• Exclude or restrict rules of evidence or procedure (e.g. a clause requiring the weaker party to bring claims in a foreign language).

• Excuse the client for late payment of invoices.

There are two particular contract clauses which are likely to be declared void by a court:

1. Penalties – if a very high compensation figure is imposed for a breach of contract, the court may void the clause if it rules that the contractual penalty is out of all proportion to the loss suffered by the innocent party.

2. Restrictive covenants - restraint of trade clauses are void if they go further than reasonably necessary to protect a legitimate business interest. This rule often affects non-compete or nonsolicitation clauses.

A business may be so worried about an unfair term in a contract that it wants to get out of the whole contract. Possible grounds to explore if that is the end goal include:

• Termination. Check the contract terms for a termination right. If these allow no exit, there may still be an unwritten right to terminate. Or, if the contract is silent on both term and termination, it may be possible to end the contract by reasonable notice.

• Change of circumstances If a contract has become burdensome to perform, a force majeure clause may offer an escape, or some other clause designed to deal with a change of law, ownership or other circumstances.

• Misleading practices. Was the business misled into entering into the contract containing the unfair term? Misrepresentation or fraud would each make the contract voidable.

It has to be emphasised again that courts will only intervene in business contracts in exceptional cases. If you have any concerns about an unusual clause in a draft contract it makes sense to speak to your lawyer – or, if you are a EuRA member, you can contact me for confidential advice.

The European Union has delayed the launch of its new visa-waiver scheme for a second time.

Brussels had been preparing to introduce the European Travel Information and Authorisation System (Etias) in November, with arrivals from outside the bloc required to apply online before travel. However, the Commission now says it is “expected” that the scheme will become operational at some point in 2024, although an exact date has not been given.

Under the terms of Etias, approval will be required to enter any of the EU member states (except UK citizens entering Ireland), with 1.4 billion people from more than 60 visa-exempt countries, required to apply. The scheme will work in a similar way to the American Esta. It will cost €7 and last for three years.

This is the second time the system has been delayed, as the original plan had been to launch the scheme in May this year.

The EU has also been forced to delay the introduction of its new entry-exit system (EES), which was also due to be launched in May. This means that, for the moment, travellers to the EU will be spared having their fingerprints registered and picture taken, a process that was expected to cause big border queues.

EU-US Data Privacy Framework – expect delays.

For the many relocation companies which transfer personal data from Europe to the US, the proposed Privacy Framework cannot arrive quickly enough. Ever since the previous EU-US agreement, called the Privacy Shield, was declared invalid by the European Court of Justice, relocation companies have been faced with extra documentation. In particular, contracts with clients and suppliers have been amended to incorporate the lengthy wording of the EU’s Standard Contractual Clauses.

The new Privacy Framework is intended to simplify data transfers again – and the original intention was a go-live date in March 2023. But as with so much decision-making in the EU, things appear to have got delayed. The latest word is that an EU body called the European Data Protection Board has expressed concern about certain aspects of the new

Framework. Even if these concerns are fully addressed, the approval process still has to go through a committee of country representatives before it gets back to the European Commission for final sign-off. At times like these it’s hard not to sympathise with those who complain about the levels of bureaucracy within the EU,

And finally …. a new excuse for being late for work!

A British court has ruled that employers should not hold workers with dyslexia to strict timekeeping, backing a dismissed employee who was routinely 20 minutes late for work.

Dyslexia is commonly accepted as a condition that affects literacy and reading ability. But experts now say that because dyslexia affects how an individual processes information, it can also harm their perception of time. In a recent UK court case, a judge ruled that those with the disorder who struggle with timekeeping should be allowed to enjoy more flexible working hours. The judge found that the employee had been discriminated against after informing his bosses about his dyslexia, which he said resulted in him being “disorganised” to the point where he frequently misread his alarm clock in the morning. The employee insisted he was often likely to be late and asked his managers for “leeway” in turning up 15 or 20 minutes after his official start time. However, after a succession of late starts he lost his job. His response was to accuse his employer of discrimination and a failure to make reasonable adjustments for his disability. Much to everyone’s surprise, the court in Nottingham, England upheld the employee’s claims, and concluded that his dyslexia made it “difficult” for him to wake up early, plan ahead and read the time. He is now set to receive compensation. It seems strange that this employee didn’t ever turn up 20 minutes early for workI suspect that this decision may go to appeal!

For further information on either of these new legal services, please contact me at gordonkerr@gklegal.co.uk or call +44 (0)7850 080170