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Archive for December, 2015

Are bitcoins and the like truly unregulated in Europe?

22/12/2015 | Bruno Fatier
Notwithstanding attempts made by some to include blockchain-based currencies into the scope of the forthcoming PSD2, bitcoins and similar cryptocurrencies are quite sensibly not generally seen as e-m

Notwithstanding attempts made by some to include blockchain-based currencies into the scope of the forthcoming PSD2,[1] bitcoins and similar cryptocurrencies are quite sensibly not generally seen as e-money or payment services regulated under the EMD[2] and (the existing and forthcoming) legislative PSD framework.[3] The main reasons are because there is no (responsible) issuer behind cryptocurrencies (which excludes their qualification as e-money) and the object of a service (cryptocurrencies) should not be mistaken for the service itself (a payment service consisting in “placing, transferring or withdrawing funds” within the meaning of PSD1[4]).

However, not all courts in Europe have yet become familiar and at ease with the quite complex scope of application of the harmonised payment legislative framework.[5] In addition, certain jurisdictions within the EEA have shown themselves, at least via their governments, regulators or courts, rather conservative in their approach to cryptocurrencies. France is unsurprisingly one example of such a jurisdiction.

Consequently, it is not that surprising that “pro-regulation” court decisions may pop up within the EEA[6] from time to time, in the wake of the Paris court of appeal decision held at the end of 2013[7] and followed by its regulatory backing in 2014.[8] In substance, the court of appeal of Paris held that trading in bitcoins, to the extent that it entails receiving euros from buyers and transferring them to sellers, amounted to providing a payment service requiring authorisation pursuant to (the French law provisions faithfully implementing) PSD1.

Unfortunately, the risk of inconsistency across the EEA has yet to be monitored by the ECJ,[9] notwithstanding the decision held in October this year[10] on the very subject of bitcoins and their trading within the EEA. Indeed, the VAT angle from which the subject was addressed,[11] as well as the reasoning behind the pragmatic conclusion reached by the ECJ should prevent one from drawing any non-VAT conclusion out of the ECJ court decision. As part of its reasoning, the ECJ arguably took the view that the trading in bitcoins should be seen as a service subject to same VAT exemption as currencies having legal tender status, even if bitcoins do not meet the explicit exemption condition of having legal tender status. Also, the ECJ supported the idea that bitcoins have “no purpose other than to be a means of payment”, which is questionable having regard to the fact that holding bitcoins may be seen as a purpose in itself, e.g. to make a speculative gain.

Faced with the real and often criminally sanctioned risk of on-boarding customers based in “pro-regulation” jurisdictions, businesses whose object is to provide services in connection with bitcoins and other cryptocurrencies should perhaps start considering the other side of the regulatory coin. Indeed, being authorised in one jurisdiction as a PSP[12] allows one to provide one’s services across the EEA (including the UK even after 2017, unless the BREXIT scenario comes true …) without having to worry about authorisation in all the other EEA host jurisdictions, thanks to the EU freedom to provide cross-border services and the EU right of establishment. Customers and regulators would feel more comfortable if a regulated entity was to remain responsible, given that the currencies in question are not real currencies. There is indeed no issuer or intermediary in the middle to provide a guarantee. One may argue that there is no need for a guarantee but one may also object that a guarantee provides at least some peace of mind and might perhaps come in useful, e.g. in a catastrophic scenario where regulators, investors and cryptocurrency holders will be desperate to find someone liable in the blockchain, other than an anonymous mining geek based on the other side of the world.

[1]  Proposal for a directive of the European Parliament and of the Council on payment services in the internal market and amending Directives 2002/65/EC, 2013/36/EU and 2009/110/EC and repealing Directive 2007/64/EC.
[2]  The so-called Electronic Money Directive 2009/110/EC of the European Parliament and of the Council dated 16 September 2009 (repealing the first electronic money directive adopted in 2000).
[3]  The so-called Payment Service Directive (otherwise referred to as “PSD1”) 2007/64/EC dated 13th November 2007.
[4]  Article 4.5 of PSD1.
[5]  Which also includes the issuance or administration of “means of payment” falling within the scope of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013.
[6]   European Economic Area.
[7]   Court of Appeal of Paris, 26 September 2013, SAS Macaraja versus SA Crédit Industriel et Commercial.
[8]   Position issued on 29th January 2014 by the French Autorité de Contrôle Prudentiel et de Résolution.
[9]   European Court of Justice.
[10] HEDQVIST ruling issued on 22nd October 2015.
[11] The request for a preliminary ruling made to the ECJ related to the interpretation of Articles 2(1) and 135(1) of Council Directive 2006/112/EC of 28th November 2006.
[12] Payment Service Provider, as defined by the PSD.

 

Whistleblowing Rights – The new personal side of the Public Interest requirement

04/12/2015 | Adam Gray
The Employment Appeal Tribunal (“EAT”) has recently ruled in the case of Underwood v Wincanton plc (2015) that a dispute between four employees (together “Underwood”) and their employer (“W

The Employment Appeal Tribunal (“EAT”) has recently ruled in the case of Underwood v Wincanton plc (2015) that a dispute between four employees (together “Underwood”) and their employer (“Wincanton”) over the terms of their employment contracts could amount to a public interest that warranted protection under the Public Interest Disclosure Act 1998 (the “PIDA”).

Facts and Background 

PIDA provides employees with protection against dismissal, victimisation and other detriments in the event that they report (i.e. blow the whistle) on certain types of activities to defined “prescribed persons”, one of which is their employer.

To secure the protection of the legislation and seek legal redress under PIDA, employees must ensure:

  • they make one of the six designated types of protected “qualifying disclosure”;
  • they hold a reasonable belief that the information disclosed demonstrates malpractice; and
  • that their disclosure is “in the public interest”.

One type of qualifying disclosure is a “failure to comply with a legal obligation/requirement”. In the instant case, Underwood (the Claimant) was a haulage driver working at Wincanton’s depot. He and three other colleagues had submitted a complaint to Wincanton (their employer) about the method used to distribute overtime amongst the drivers under their employment contracts; namely that drivers who were conscientious about vehicle safety were being denied extra hours. Subsequently, Underwood was dismissed.  He did not have the requisite 2 years’ service to bring a claim for unfair dismissal.

Underwood brought a claim however that, among other things, the complaint to his employer was a protected disclosure and, as a result of it, his dismissal was automatically unfair.  The Employment Tribunal (“ET”) judge held that the operation of the employment contract between the employer and an individual employee could not meet the public interest test and Underwood’s claim was struck out. He subsequently appealed.

Overturning the ET’s decision, the EAT recognised that the ET’s judgment had been given before:

  • any substantive guidance on the meaning of “public interest” had been given; and
  • the conclusion of Chesterton Global Ltd v Nurmohamed (“Chesterton”) in which it was held that the complaints of 100 managers in relation to their employment contracts was a section of the public large enough to meet the public interest test.

Outcome 

In light of the above guidance given in Chesterton, the EAT held that “public”, as defined in section 43B(1) of the Employment Rights Act, could constitute a subsection of the public (i.e. not just the public at large). It was also stated that the disclosure of contractual disagreements between an employer and employee could therefore potentially be “in the public interest”.

Comment 

Previously, it was believed that any dispute under PIDA, which was based on a breach of employment contract issue (under the qualifying disclosure heading of “breach of a legal obligation”), would fail to be “in the public interest” and so would not be covered by the legislation.  This decision however shows that a disclosure relating to a contractual dispute can potentially be in the public interest if the number of employees affected constitutes a sufficient portion of the public. In light of this case, HR professionals should be aware that it is possible for employees to bring whistleblowing related claims based on their own contracts. It should also be noted that any employee able to demonstrate that his/her dismissal resulted from a protected disclosure will:

  • not need the usual two years’ requisite service to bring a claim of unfair dismissal (this is a ‘day one’ employment right);
  • be deemed to have been automatically unfairly dismissed; and
  • be eligible to receive uncapped compensation.

This article should not be taken as definitive legal advice on any of the subjects covered. If you do require legal advice in relation to any of the above, please contact Adam Gray of these offices on 020 7955 1518 or by e-mail at adamg@rosenblatt-law.co.uk

Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another – APPEAL DISMISSED

04/12/2015 | Kirsty Ellis
Further to my eBulletin dated 5 February 2015 the Supreme Court has now dismissed Marks and Spencer plc’s appeal and confirmed that landlords are not required to repay rent paid in advance which r

Further to my eBulletin dated 5 February 2015 the Supreme Court has now dismissed Marks and Spencer plc’s appeal and confirmed that landlords are not required to repay rent paid in advance which relates to the period after a break date unless there is express wording in the lease which requires the same.

Therefore where a break date falls within a quarter, depending on the wording of the lease, a tenant may be required to pay the full quarters rent in advance to validly exercise its break and it will not be entitled to a refund of the rent attributable to the period after the break.

Should you require any assistance with the drafting of a break right, the interpretation of any break rights contained within a current lease or would like to discuss the Supreme Court’s judgment, please do not hesitate contact Kirsty Ellis of these offices by email at kirstye@rosenblatt-law.co.uk or by telephone on 020 7955 1514.

 

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