A-G Szpunar: operational lease is covered by Services Directive Posted on 25 August 202321 May 2024 by Lucia Tellegen Advocate General Szpunar published an interesting opinion on may 11th 2023 on a case involving a Croatian company leasing cars to its customers (ECLI:EU:C:2023:401). This company was in dispute with a Croatian financial services authority. According to the authority, the company was not allowed to conduct leasing activities in the absence of a valid licence to offer financial services. Rental, financial lease or operational lease?To begin with, the AG gives a fine account of the differences between rental, financial lease and operational lease.Renting involves only one legal relationship: X rents a car from Y for a fee. This gives X temporary and (generally) short-term possession of the car. For example, for a holiday or a business trip.Like rental, leasing is also intended to make a car available to a customer for use. Leasing is therefore considered a form of a rental agreement in many legal systems. Compared to rental, however, leasing responds more to medium- and longterm needs. Usually, the owner purchases the car on behalf of the user, and then leases the car to the user.The difference between operational lease and financial lease, is that with operational lease, the user does not assume any ownership or residual value rise. The owner remains responsible for maintenance and repairs. With financial lease, the user assumes residual value risks and is responsible for maintenance and repairs. Another characteristic of financial leasing is that the car is “paid off” at the end of the defined period and ownership either passes to the user or the user has the option to purchase the car on payment of a final amount.Is operational lease a financial service?Article 2 of the Services Directive states that it does not apply to financial services. It specifically mentions banking services, credit, insurance and pensions. According to the AG, operational leasing does not qualify as a financial service. To this end, he has three arguments.First, activities listed in an annex to a 2006 Directive on the taking up and pursuit of the business of credit institutions (Directive 2006/48/EC) are excluded from the scope of the Services Directive. This annex mentions financial leasing but not operational leasing.Secondly, according to the AG, the focus of operational leasing is the temporary rental of a car and not the financial elements. These are secondary and cannot in themselves lead to operational leasing being classified as a financial service.Thirdly, the AG considers it irrelevant that the owner purchases the car on behalf of the user. According to the AG, this has no bearing on whether a transaction is a financial service because it typifies any form of lease.Licensing system for operating leasesIf the Services Directive applies to operational leasing, this has major implications for the ability of public authorities to regulate. Restricting access to this market with an authorisation scheme is permissible only if (a) the authorisation scheme does not have a discriminatory effect against the service provider concerned; (b) the need for an authorisation scheme is justified by an overriding reason of general interest; and (c) the objective pursued cannot be achieved by a less restrictive measure, in particular because ex-post control would be too late to be truly effective. The criteria on which an authorisation scheme is based must also meet strict requirements .In particular, the A-G sees a problem for the Croatian regulator in the context of the necessity and proportionality of the licensing scheme. The AG does not see why a licensing regime is necessary to protect consumers, as there is no particular vulnerability of a consumer in operational leasing. Consumers already receive general consumer protection. Nor does it involve significant risks to the financial sector. Above all, it is not clear to the AG why the aim of consumer protection cannot be achieved by a less limited measure, such as ex post control.Private leasing in the NetherlandsAlthough the facts of this case are set in Croatia, the case may still be relevant to the Netherlands. This is because leasing is also rife in the Netherlands. Especially cars, but now also other items such as washing machines or computers.Due to the “stormy” rise of leasing structures, the AFM still called for legal regulation and supervision of private leasing (operational leasing for consumers) in a legislative letter in 2020. Minister Hoekstra announced an investigation into the private lease market in 2020. The results of that investigation were presented in 2021. The Minister’s findings are largely positive, although a risk is seen in the group of consumers who opt for private leasing because of a financial need. Partly on the recommendation of the Dutch state, the European Commission made a proposal in 2021 to bring private leasing under the scope of the Consumer Credit Directive (Directive 2008/48/EC). That proposal does not seem to have made it.Lease constructions thus continue to occupy minds. We will keep you updated on further developments.
The myth of the seven differences Posted on 18 August 202331 May 2024 by Lex Bruinhof (AI and Copyright, Issue 4)We concluded the previous episode with the observation that ChatGPT and Dall-E are technically among the Merriest Multipliers one can think of. After all, they bring their final products into being – without any remorse – using the existing texts and images that were provided to them by their creators for learning. Everything they create is built from those, you might say. And since we noted last time that even a reproduction in modified form is still a reproduction, building that final product from existing copyrighted material should require the permission from the creators of those existing texts and images. Right?technical copy ≠ relevant copy under copyright lawWell… that depends. Actually, not every work that is technically constructed from elements of another work is automatically a reproduction in a modified form under copyright law. In the case of Chat GPT, this is also almost self evident. A user of that program would really have to make a huge effort when entering the “prompt” (the instruction to the program), to cause a text to be generated that even approximates an existing text.the girl with the pearl earringWith an image generator like Dall-E, this subject is a bit trickier. Last winter, for example, the Hague museum Mauritshuis lent Vermeer’s “Girl with the Pearl Earring” to another museum. It took the museum little effort to replace this masterpiece with several modern adaptations, cretaed with the use of AI. The place of honour was provided to a work by German artist Julian van Dieken, which had been created using Midjourney. Of course, everyone can immediately recognise the original painting in this work.Is this really a reproduction in a modified form? It very well could be[1]. And if Vermeer’s work had still been copyrighted, Van Dieken could have been sued for it, since he apparently edited the AI output himself (see section 3).Incidentally, the same would be the case if the whole AI intervention had not been there, but the arranger himself had gone directly to work with the original (as seems to have happened here, for example). And if we zoom out a bit further: everyone knows of works where it is obvious that the creator “took inspiration” from another artist’s work. Sometimes just a little too much, but usually this does not give rise to copyright conflicts. We may take our inspiration from anywhere, as long as we remain original ourselves.the seven differences -notSo where do we find the line between being inspired and copying? Funny thing is that in this context, some people give credence to “The myth of the seven differences”1. Where this myth originates is a mystery, but I still notice its existence myself every year among my students. The myth holds that you could get away with imitating someone else’s work, as long as you make sure there are seven (or in some versions: five) deviations from the original. Nice thought, but not true.Sometimes a work with seven (or as many as ten) differences will still be a reproduction in modified form. (Go ahead and count, in that aforementioned reproduction by Van Dieken.) Meanwhile it is also conceivable that a new, different work is created, even if there is only one actual difference. Indeed, it very much depends on what exactly is the same, or different.To examine that further, we must take a sharper look look at what makes a product a “work”, i.e. a copyrighted product of literature, science or art.Next time we will dive deeper into that.For those who are interested: the illustration accompanying this blog is again by Dall-E2. This time with the prompt: “Oil painting of the girl with the pearl earring with seven differences.”[1] Note that this would obviously not have any copyright implications here: the copyright has long since expired, since Vermeer died (much) more than 70 years ago.In English better known as “the 30 percent rule in copyright” ↩︎
Mayor hauled back in line by judge: Pride on Amstelveld may continue until 00:00 hrs Posted on 19 July 202323 May 2024 by Anna Tsheichvili Although preparations are already in full swing and the city is already slowly getting into the mood, there was some last-minute suspense for Pride Amsterdam festivities on the Amstelveld in Amsterdam.judgment in preliminary relief proceedingsThe mayor of Amsterdam granted the Pride Amsterdam Foundation (hereinafter also referred to as the Foundation) a permit for Pride Amsterdam on 16 June 2023. Much to the displeasure of the Foundation, the mayor set the end time of the festival on the Amstelveld at 20:00, due to, in short, nuisance for the neighbourhood. The Foundation asked the Amsterdam District Court’s preliminary relief judge to intervene. The latter ruled in favour of the Foundation in its ruling of 12 July 2023(ECLI:NL:RBAMS:2023:4368).In its judgment, the preliminary relief judge stated that the mayor should act in accordance with its policy. This policy has been shaped, among other things, in the ‘Noise Policy for Events in Amsterdam‘ and in the ‘Location Profiles for Event Locations 2021’, according to the preliminary relief judge. In brief, this policy states that during events, music noise is allowed from 11:00 a.m. until no later than 11:00 p.m. and that, in certain cases, the end time can be extended to a maximum of 00:00 a.m. A request to this end is assessed on a case-by-case basis, with the interests of the residential environment being taken into account. In this, the duration and nature of the burden play a major role.The mayor must follow this policy, unless doing so would have consequences for one or more interested parties that, due to special circumstances, would be disproportionate in relation to the goals to be served by the policy rule. This follows from Article 4:84 of the General Administrative Law Act. The court in preliminary relief proceedings found that in this case, the mayor did not provide sufficient justification that there were such special circumstances that it was necessary to deviate from the policy to allow the party to take place only until 20:00.The mayor referred to nuisance to the neighbourhood – which was substantiated by only one opinion on nuisance from a local resident from 2016. Reference was also made to future policy for celebrating Pride, from which it will follow that this event will be shaped differently on Amstelveld. The preliminary relief judge found the one opinion on nuisance insufficient to substantiate nuisance for the neighbourhood and rules that the mayor should not involve future policy in this case. After all, that circumstance lies in the future.Interim reliefThe Foundation is thus vindicated and the preliminary injunction is granted. Specifically, this means that the end time of the festival on the Amstelveld is set at 00:00 on 4 and 5 August 2023. The festival will thus be allowed to take place as in previous years.Event policy in Amsterdam, as also follows from this ruling, is a sensitive issue. We are keeping a close eye on developments.
Register a trademark? You can currently do so very cheaply! Posted on 30 June 20237 May 2024 by Arjen Schram Do you have a small or medium-sized business and have you been planning to register one or more trademarks for your goods and/or services for some time? Then now is the time to apply for those trademarks. This is because you can currently apply for your trademarks at a discount of as much as 75%. Both at the Benelux Office for Intellectual Property(BOIP) and at the European Union Intellectual Property Office(EUIPO). You get the discount when you use the European subsidy scheme “Ideas Powered for Business SME Fund“. The grant scheme was initiated by the European Commission and aims to help small and medium-sized enterprises in the European Union protect their intellectual property rights.Discount ratesFor a trademark registration, you pay a fee to the office where you apply for the trademark. The subisidiarity rule applies to both national trademarks in the various member states and European trademarks. The basic fee for a Benelux trademark is normally at least € 244 and for a European Union trademark € 850. Thus, with the application of the subsidy scheme, the basic fee for a Benelux trademark is currently only € 61 and for a European Union trademark € 212.50. You also pay only a quarter of the application fee for additional classes. So a very generous subsidy scheme; especially if you wish to register several trademarks. The subsidy scheme is still valid until 8 December 2023, but under the condition: “first come, first served”. So don’t wait too long! More information on the terms and conditions of the SME voucher can be found here.We like to think along with youDo you need advice on applying for your trademark? For example, are you unsure about whether to choose a word or combined word-figurative mark? Or do you need help putting together the right goods and services for which you wish to apply for the trademark? We have a great deal of expertise about trademarks, are happy to think along with you and will work with you to ensure that your trademark soon enjoys optimal protection.Also read our page on registering trademarks. There you can read all the things you need to consider when filing a trademark application.
The Merry Multiplier Posted on 30 June 202331 May 2024 by Lex Bruinhof (AI and copyright – episode 3)Anyone who has read the earlier installments in this series knows by now that the Instructor (the person who instructs the AI program) can very easily elevate himself or herself to the status of Maker. And thus obtain copyright on the AI creation. All they have to do is add a personal touch to the output of the AI – a small modification that makes the creation just that little bit different. This creates a reproduction of the AI creation in a modified form, which, according to Section 10 of the Copyright Act (please scroll to paragraph 2), is protected as an independent work.This answers the opening question of this series. It is not the machine (the program itself: ChatGPT, Dall-E, or my new favourite Perplexity.ai), nor the creators of that program, but under certain circumstances the Instructor who can copyright a creation created (mainly) by AI. Simply by making a reproduction of it. But a special kind of reproduction.Two types of reproductionReproducing is one of the two core rights of the copyright owner. The other is disclosure to the public. Owning the copyright on a work provides, within certain limits, the exclusive right to reproduce or disclose that work. Reproduction comes in two forms. First of all, “ordinary” reproduction: i.e. just plain copying. And secondly: reproduction in a modified form. A lot can be categorised under that second term. Think of the stage adaptation, film adaptation, or simply translation of a book; a hip-hop adaptation of a Golden Oldie, or a photograph of a sculpture. In general, as Section 13 Copyright Act summarises it, “any complete or partial adaptation or imitation in modified form, which is not to be considered a new, original work“. (As the spelling in Dutch shows, this is one of the few articles that has not been amended since the introduction of the “Copyright Act 1912”).Such a reproduction in modified form is still a reproduction and can therefore “simply” be prohibited by the copyright owner. This was experienced in the 1980s by the (different) makers of the Suske and Wiske1 parodies De Keizerkraker and De Glundende Gluurder. One album was an anarchic and the other a pornographic parody of the Suske and Wiske stories. Both creators depicted the well-known cartoon characters and their entourage in completely different circumstances or poses than Suske and Wiske creator Vandersteen had ever done. However, they were still sucessfully sued for copyright infringement.[1]Protected as independent workBut if that was the case… how then could Instructors of an AI work ever be protected by means of making a reproduction? This has to do with another aspect of the reproduction in modified form. This is not only a reproduction, it is also an independent work! The reproduction side is governed by Section 13 and the work side by Section 10(2) of the Copyright Act. The latter section provides, as we saw earlier, that the reproduction in modified form is protected as an independent work, albeit without prejudice to the copyright on the original work.So what does this mean? Well, quite simply, he or she who reproduces in a modified form remains “indebted” to the creator of the original work. A translation of a book may not appear on the market without the original author’s permission. But the translation itself is also protected. Permission or not: everyone must also keep their fingers off of the translation. If that would be circulated without the translator’s consent, whoever does so will have to deal with both the translator and the author of the original work.The merry multiplierBut what is the most happy circumstance for the adapter of an AI creation? That this AI creation itself is not protected! (see parts 1 and 2 of the series). So there is no “original work” to be protected: the AI creation is not a human creation and therefore not a work within the meaning of the Copyright Act. This means that the Instructor who makes an adaptation is not indebted to anyone, but is himself protected under Section 10(2). That is, within the existing system – in other words: as long as legislature or case law do not provide otherwise …Meanwhile, we should note that ChatGPT and Dall-E are of course (at least technically speaking) the Merriest Multipliers of them all! After all, they rake together their end products from all existing texts and images fed to them by their creators and plucked from the Internet. But wait. Doesn’t this in itself constitute a reproduction in modified form, which the Instructor then builds on?More on that next time.(Meanwhile, I was curious to see what Dall-E would do with the instruction “Suske en Wiske playing with a photocopier”. It turned out to be nothing – not a Vandersteen creation in sight. Not even when I repeated the instruction in English (“Willy and Wanda playing with copiers”)-see the image accompanying this blog. Could the creators already have built in safeguards, in view of the Vandersteen case law? )[1] And their reliance on the so-called “parody exception” did not hold up either – they had stayed too close to the originals for that.US: “Willy and Wanda”; UK: “Bob and Bobette” ↩︎
The power of the prompter Posted on 26 May 20237 May 2024 by Lex Bruinhof (AI and copyright, episode 2)In the previous episode, to answer the question of who owns the copyright to the creations of Chat GPT and Dall-E, we left off with the instructor, the person who whispers the prompts to these creation robots. Instructions such as (to CGPT): “Write a short explanation about the copyright protection of texts created by ChatGPT“. Or (to DALL-E): “create a painting of artists that struggle about ownership of a work of art, in the style of Salvador Dali.”[1]Is giving such an instruction, a prompt, after which the machine does the work, sufficient to acquire a copyright on the result?Well… About the instructions mentioned above, we can at this point already state that they are inadequate . They are so general in nature that you can still follow many paths when it comes to the design (yes, even within the style of Dali). All that is prescribed are the subjects, and with the painting there is also a style indication. For our purpose this is still too general.concrete designAs we saw in the previous episode, copyright is all about concrete design. To my students, I sometimes summarize: “Protected is not what you say, but how you say it.” If five journalists were to independently write a report on the Eurovision Song Festival finals, these would contain many of the same facts and sub-topics. Still, there would be no chance of plagiarism. Everyone would have used their own descriptions, emphasized certain events, used a certain structure, used their own tone of voice. It is these elements that individually shape a text, that make it original, that put a personal stamp on it. The above mentioned instructions to the machine do none of that.highly detailed, creative promptsBut exceptions can be imagined. I don’t dare to rule out that certain instructions could be so detailed, and make such clear creative choices within this detailing, that thinking up the instruction itself already meets the work-test (see part 1 for an explanation of this concept). Be aware that in such a case, it could still be in question whether that would immediately mean that the picture created on that basis would also yield a copyright for the instructor, but it is certainly a step in that direction.A step, incidentally, for which it is difficult to determine where the lower limit lies. Prof Dirk Visser, who holds the chair of IP at Leiden University, has been working for several months to shed more light on this, among other things, with the help of a number of interesting propositions submitted to the vox populi (download pdf – in Dutch). The first of these is whether a picture created from the AI prompt “blue horse, purple dog & yellow hippopotamus” is copyrighted. Well, I think not. Even this instruction, although original, is still too little detailed to my taste.the prompt as brush?One might even wonder whether, at the current state of the art, AI programs are capable of expressing (or rather, in this example, “conveying“) such a level of detail, that the outcome of the question (using a necessarily more detailed prompt) could be different. This is also where my aforementioned second question comes in. That this will one day be different, is nonetheless almost a certainty by now – developments are happening so fast. Once we get to that point, the instruction, the prompt, will have become the creator’s instrument, as it were, like a brush is for a painter and a camera (or even better: Photoshop) for a photographer. But the creator would then always need to place a firm personal stamp in his prompt (which remains a tall order to fill).adding ones own touchWe have probably not yet reached that point at the moment. It is a lucky thing for the instructor however, that such a highly detailed prompt is not at all necessary to obtain copyright. Note that at this point in our search for a possible human copyright holder to an AI-creation, we have not found anyone yet. In fact, we may safely conclude that no copyright rests on the average AI-output. This is highly convenient for the instructor in this context. After all, this entails not only that anyone may freely reproduce and publish the AI-creation. But also that anyone may freely “build on” to it. In other words, anyone may edit the AI-creation to their heart’s content, give it their own (possibly only minor) spin. Post-editing (in text or image) does not require very much to add its own original character to the creation.Under Dutch copyright law, we speak here of a so-called “reproduction in modified form”. Section 10(2) of the Copyright Act teaches us that such a reproduction is protected as an independent work, albeit without prejudice to the copyright on the original work. But if, due to the absence of human creative choices, the original creation is not copyrighted, that limiting conclusion (“without prejudice…”) does not come into play. The instructor is the first person to observe the still unprotected AI work – and, if he wants, the only one. This creates a unique opportunity to remain the only one to obtain copyright by means of a simple post-processing operation if, as at present, the “prompt” by itself will almost always be insufficient to reach that goal. This is now happening on an ongoing basis.we have a winnerIn short: We have a winner – even if they have to perform a little additional action themselves. More on modfified reproduction and the position of the modifier in the next instalment.[1] This was the instruction for the picture posted with this blog: “Create a painting of artists that struggle about ownership of a work of art, in the style of Salvador Dali“. It was no coincidence that “the style of Salvador Dali” was chosen. In fact, the programme’s name DALL-E is, according to its creators, an amalgamation of the name of the Pixar robot WALL-E and Salvador Dali’s surname.
Who owns the copyright to an AI creation? Posted on 12 May 20237 May 2024 by Lex Bruinhof (AI and copyright – episode 1)That artificial intelligence (AI) is now capable of producing products that can compete with “works of literature, science or art 1” no longer needs to be questioned. ChatGPT and DALL-E have become household terms in recent months. Almost everyone has tried these computer programmes (because that’s just what they are) by now, only to be amazed by the results. To wit: easy-to-read Dutch texts and beautiful pictures, apart from the occasional anglicism or a sixth finger on a hand.a right for the machine?When people produce something like this, the product is easily subject to copyright. As soon as it can be said that a product contains its own original character and the personal stamp of the creator, it meets the so-called “work-test” and protection is a given. So does a machine now get this protection?We can quickly answer to that: No, a machine cannot own a copyright. The Dutch Supreme Court closed that road in 2008, in the famous Endstra judgment, by explaining what the above-mentioned elements of the work-test mean. The problem lies mainly in the element “personal stamp of the creator”. According to the Supreme Court, this means that the work must contain “a form that is the result of creative human labour and thus of creative choices, and which is as such the product of the human mind.”A photo creation by DALL-E and a text by ChatGPT have no such form. Sure: both computer programmes have calculated themselves silly to create a form, but that form is neither the result of creative human labour nor a product of the human mind. So: exit DALL-E and ChatGPT as copyright owners. (Not to mention, of course, the fact that the law does not recognise them as persons, as legal subjects, as a result of which they cannot own any rights to begin with).a right for the makers of the machine?Their creators then, perhaps? The writers of the code underlying ChatGPT and DALL-E? No, those programmers do not own the copyright to the AI-creation either. They do, however, won a copyright to the result of their programming: the computer programmes they wrote are undoubtedly copyrighted. But once these programmes are running and, as a result, certain concrete design has been produced in text or image, we no longer attribute this to the programmer. They may have created the possibility that these programmes are capable of producing copyrightable works. But such a work is only protected once ot is there: when there is actually a sensory perceptible concrete design. With this concrete design, the programmers have nothing to do – that was the work of the machine.the instructor then?OK – not the programmer(s) then either, but what about the instructor? The person that gave the prompt to the programme that produced the work? Here we are already getting a lot closer to a suitable candidate. Not yet close enough, probably, but we can fix that… More on this in the next instalment of this series.(The image accompanying this blog was created by Dall-E from the instruction: “oil painting depicting a robot that is confused about copyright”)the description of a copyrightable work in the Dutch Copyright Act (Auteurswet) ↩︎
Rules on artificial intelligence: the European Union is working on it! Posted on 21 April 202331 May 2024 by Arjen Schram Stephen Hawking predicted in 2014 that artificial intelligence might destroy humanity in the future… While that may still sound like science fiction, the fear of the consequences of artificial intelligence is increasing at the moment. This, of course, has everything to do with the rapid development of intelligent systems – of which ChatGPT in particular has been in the spotlight recently.The end of humanity may still be a bit far fetched, but we already saw in the Dutch childcare benefits scandal (“Toeslagenaffaire“), for example, that AI systems can intentionally or unintentionally lead to discriminatory outcomes. Among other things, based on nationality, family composition and salary, an algorithm of the tax department decided who was checked manually. The Data Protection Authority announced in January that it would start additional monitoring of “life-threatening” algorithms.And recently, 1100 techprominent people even called for a temporary brake on the development of artificial intelligence in an open letter. We should all take at least six months to think about how to plan and control the development of artificial intelligence with care. Right now, AI labs would be caught up in a race to develop increasingly powerful digital minds, and even their creators would no longer be able to understand, predict or reliably control those minds. Advanced artificial intelligence could radically alter the history of life on Earth, according to the letter’s signatories. Elon Musk, one of the founders of OpenAI and a co-signatory of the letter, announced – somewhat surprisingly – just last week that he was working on a new algorithm: Truth GPT; an alternative to Microsoft and Google’s algorithms.Regulation artificial intelligenceLegislators have not been idle in recent years either, although there has been considerably less focus on this. The European Union has been working on a new regulation to regulate artificial intelligence since 2017, and it will take some time before it actually enters into force.In the draft proposal, the European Commission considers that artificial intelligence can help achieve beneficial social and environmental outcomes, and provide important competitive advantages for businesses and the European economy. At the same time, the European Commission also signals that artificial intelligence poses new risks or negative consequences for individuals or society. Given the speed of technological change and potential challenges, the new regulation should result in a balanced approach in the field of artificial intelligence.Main purposesOn the one hand, the regulation aims to ensure that AI applications are safe and comply with European Union values and, on the other, it regulates AI applications economically. In summary, the new regulation should:Ensuring that AI systems within the European Union are safe, comply with existing legislation and fundamental rights, and are in line with European Union values;introduce effective enforcement for safeguarding fundamental rights;introduce better safety regulations for AI systems; andIntroduce a unified market for secure and reliable AI applications and facilitate investment and innovation in AI systems.Prohibited and risky AI systemsThe draft regulation puts words in action and includes a long list of prohibited AI applications in Article 5. For example, AI applications that interfere with the behaviour of individuals without their awareness are prohibited by definition, or applications that take advantage of the vulnerability of specific groups – e.g. with disabilities – that are likely to cause physical or mental harm.Article 5 also prohibits government agencies from using AI applications to assess or classify the reliability of individuals based on their social behaviour or personality traits if the resulting score results in unfavourable treatment of those individuals and is disproportionate to their social behaviour. Perhaps such a system sounds like something that could only exist in TV series like Black Mirror, but a social credit system is currently being implemented in China. Lower social status in that system could, for example, make it harder to obtain a mortgage. And in 2019, it was even reported that millions of Chinese with a lower social score were prevented from buying air and train tickets. As far as we are concerned, this is a very welcome ban in the draft regulation.The regulation also includes a definition for high-risk AI systems. These include, for example, when systems pose risks to physical or mental health or when systems pose risks to fundamental rights. Such systems must meet various technical conditions, among others. For example, they must incorporate a “risk management system” that identifies and analyses certain risks on an ongoing basis.To be continuedIn summary, developments in the field of artificial intelligence are rapid and concerns about the potential negative social consequences of artificial intelligence are high. At the same time, serious European legislation is in the pipeline within the European Union to regulate artificial intelligence to safeguard fundamental rights. We are following these developments with great interest and will no doubt blog about them more often in the coming period.
Statutory interest rate and statutory commercial interest rate to rise from 1 January 2023 Posted on 19 January 202329 May 2024 by Joost Van der Grinten Statutory (commercial) interest as compensation for delay damageIf your debtor does not pay on time, you (potentially) suffer delay damages. Your liquidity decreases. You may not be able to pay your own creditors or you may have to delay your investments. You are deprived of an opportunity for returns. This is subject to liquidated damages: statutory interest and statutory commercial interest.Statutory (commercial) interest is liquidated damagesBecause damages for delay in payment of a sum of money are difficult to determine, the legislator has fixed damages for delay in payment of a sum of money at a fixed percentage of statutory (commercial) interest, irrespective of whether the creditor has actually suffered damages and irrespective of their amount, if any. This avoids uncertainties of an evidentiary nature, among others.For non-commercial transactions (including transactions with consumers), the statutory interest rate under Section 6:119 of the Civil Code applies; for commercial transactions, the statutory commercial interest rate under Section 6:119a of the Civil Code applies.Interest rates go to 4% and 10.5% respectively from 1 January 2023From 1 January 2023, new, higher rates of statutory interest and statutory commercial interest will apply. From 1 January 2023, the statutory interest rate will be 4%. That was 2%. As of 1 January 2023, statutory commercial interest will be 10.5%. That was 8%. The new percentage for statutory interest was set by Order in Council dated 15 December 2022. The new commercial interest rate automatically follows the refinancing rate set by the European Central Bank pursuant to Article 6:120(2) of the Civil Code. See also this central government website.When is statutory (commercial) interest due?Statutory interest is due from the day following that on which the debtor defaulted on payment of the sum of money (See, for example, HR 20 June 2014, ECLI:NL:HR:2014:1490, paras 5.1 and 5.2) until the debtor is no longer in default.The main rule is that for default to occur, the debtor must be given notice of default by means of a written demand for payment in which he is given a reasonable period for performance and performance is not achieved within this period (Article 6:82 paragraph 1 of the Civil Code). In addition to this main rule, default may also occur, inter alia, if the debtor fails to perform within a fatal term (Article 6:83 opening words and under a BW) and if an obligation arising from an unlawful act or an obligation to pay damages (within the meaning of Article 6:74 BW) is not immediately complied with (Article 6:83 opening words and under b BW) and if the creditor must infer from a communication from the debtor that he will not perform (Article 6:83 opening words and under c BW).For more on default, see our 31 December 2019 blog in the Contract Law Series.For commercial transactions – in brief – the statutory commercial interest due on account of delay in the payment of a sum of money is payable from the day following the day agreed as the final day for payment up to and including the day on which the debtor has paid the sum of money and, if no final day for payment has been agreed, from 30 days after the commencement of the day following that on which the debtor received the invoice.Update 16 January 2024With effect from 1 January 2024, the statutory interest rate and statutory commercial interest rate were again increased, this time to 7 and 12.5% respectively. See our blog of 16 January 2024 on this subject.Wieringa Advocaten is happy to assist youDo you want to collect a debt? Or do you have questions about interest, damages or default? Feel free to contact us. Wieringa lawyers will be happy to assist you.
Appearance of power of representation Posted on 28 October 202229 May 2024 by Joost Van der Grinten If a person enters into a legal act on behalf of another while he is not authorised to represent, the other is in principle not bound by that legal act. This is different if the counterparty was entitled to trust that there was authority on the basis of which the legal representation was valid. We then speak of an appearance of power of representation.In this blog, we discuss the Supreme Court ruling of 14 October 2022 (ECLI:NL:HR:2022:1456). The Supreme Court confirms previous case law on imputation of appearance of power of representation.Power of attorney and appearance of power of representationPower of attorney is the authority granted by a principal to another, the proxy, to perform legal acts in his name (Article 3:60(1) of the Civil Code). If a legal act has been performed in the name of another, if the counterparty has assumed on the basis of a statement or conduct of that other party and under the given circumstances could reasonably assume that an adequate power of attorney had been granted, the inaccuracy of this assumption cannot be invoked against the counterparty (Article 3:61 paragraph 2 of the Civil Code).The counterparty’s reliance on the power of representation of the (pseudo)proxy may have arisen from a statement or conduct of the (pseudo)principal. The conduct may also consist of a non-doing and may also take place after the conclusion of the legal act (HR 1 March 1968, ECLI:NL:HR:1968:AB6642, HR 12 January 2001, ECLI:NL:HR:2001:AA9429 and HR 24 April 2015, ECLI:NL:HR:2015:1119, our blog of 5 June 2015). In addition, an appearance of power of representation can also arise if the circumstances giving rise to it should be at the risk of the pseudo-principal (HR 19 February 2010, ECLI :NL:HR:2010:BK7671). This risk principle does not go so far as to leave room for its application also in cases where the trust created vis-à-vis the other party is based solely on statements or conduct of the unauthorised person (HR 3 February 2017, ECLI:NL:HR:2017:142).Supreme Court ruling of 14 October 2022The case that led to the Supreme Court judgment of 14 October 2022(ECLI:NL:HR:2022:1456) involved the question of whether a health insurer and a healthcare institution had entered into a healthcare agreement. The healthcare institution believed that they had not; the healthcare insurer believed that they had. On behalf of the healthcare institution, the agreement had been signed by a person who was not authorised to represent the healthcare institution. The court ruled in favour of the health insurer, the court of appeal ruled in favour of the healthcare institution. The court ruled that there was no power of attorney or appearance of power of attorney. The health insurer appealed in cassation. The health insurer complains, successfully, that the court of appeal rejected the health insurer’s reliance on the appearance of power of representation with insufficient comprehensible reasons. The Supreme Court rules as follows (translated).“3.2 If the court of appeal considered it decisive for the dismissal of the reliance on the appearance of power of representation that both directors of [the health care institution] did not in any event create this appearance vis-à-vis [the health care insurer], on the ground that the contact with [the health care insurer] took place exclusively through [the health care institution’s general affairs manager], then it erred in law. Attribution of the appearance of granting a power of attorney to [the health care institution] may also be justified in the event that [the health care insurer] legitimately relied on the granting of a power of attorney on the basis of facts and circumstances concerning [the health care institution] and for the risk of [the health care institution], from which, according to common opinion, such an appearance of power of representation may be inferred. Such facts and circumstances may also exist in the event of a failure to act, including allowing a particular situation to continue.“This is in line with previous Supreme Court case law.Wieringa LawyersLegal acts performed by a person who is not authorised to represent may also be binding. This depends on the circumstances of the case. Do you have questions about power of attorney or apparent power of representation? Feel free to contact us. We will be happy to assist you!For a more general overview of the main topics in contracting, please refer to the Contract Law Series.