law stuff

i have absolutely no idea what im doing but i have to be doing something

Vertical Direct Effect

= an individual can rely on EU law to take action against the state or a public body in their national courts.

• You (a private citizen or company) can sue the government or a state-related organization if they fail to follow EU law.

It applies to certain types of EU legal acts, but only when used against the state (not private parties)

• applies to treaty articles, regulations and directives (but only if not implemented properly by the state)

Vertical = individual vs. state

Imagine an EU directive requires all buildings to be accessible for disabled people by 2024. Your country fails to implement this directive in time. You can sue a public housing authority in your country for not complying with the directive.

A Dutch transport company called Van Gend en Loos imported chemicals from Germany to the Netherlands. When they did, Dutch customs charged them a new import duty.

But Van Gend en Loos argued:

“This duty breaks EU law — specifically Article 12 of the EEC Treaty (now Article 30 TFEU) — which says EU countries can’t introduce new customs duties on goods moving between them.”

What did the EU Court say? The European Court of Justice (ECJ) said:


Yes, EU law can give rights directly to individuals, and


Yes, Van Gend en Loos can rely on EU law in a national court, even though it wasn’t specifically written into Dutch law yet.

Horizontal Direct Effect

= Horizontal direct effect means that an individual can rely on EU law to take action against another private individual or company not the state.

• You can use EU law in a legal case against another private party, such as your employer or a business

• Applies to treaty articles and regulations but not directives

horizontal = ind. vs ind.

• If it’s an EU Directive, you cannot use it directly against another private person or company.
  (You could only use it against the state — that’s vertical direct effect.)

direct effect (general concept)

Direct effect means that a provision of EU law can be relied on by individuals directly in national courts without needing national implementation, but only if it's sufficiently clear, precise, and unconditional.

• Direct effect makes EU law stronger, because citizens can rely on it directly.

• But not all EU laws have direct effect — only those that are clear enough to be applied by judges without needing extra rules.

EU internal market

• Free Movement of Goods

• Free Movement of Persons (labour)

• Free Movement of Services

• Free Movement of Capital

Free movement of Goods

• Fundamental to establish customs union and common market

• Ensures that goods can circulate freely within the EU

• Ensures that competition is neither prevented nor distorted by protectionism

• Provides consumers with lowest prices

• Ensures efficient production

Tarrif barriers vs Non-tarrif barriers

TFEU treaty-articles clearly prohibit:

• Tariff Barriers (any payment related obstacle to free trade)

• Non-Tariff Barriers (any obstacle to free trade of a non-financial nature)

Tarrif barriers

Tarrif barriers = Articles 28–33 TFEU

These articles deal with customs duties (taxes on imports) and similar charges.

What they do:

• Ban customs duties (import/export taxes) between EU countries.

• Ban Charges Having Equivalent Effect (CHEE) → These are fees or costs that act like a tax, even if they’re not called a “customs duty”.

Goal:

➡ Make trade between EU countries free from taxes and extra charges.

Non-Tarrif barriers

Non tarrif barriers = (Articles 34–36 TFEU)

These articles deal with rules or restrictions that limit imports, even if they’re not taxes.

What they do:

• Ban quotas (limits on how much can be imported).

• Ban Measures Having Equivalent Effect (MHEE) → These are rules or requirements that make it harder for foreign goods to be sold, like:

  • Product standards that only local goods meet

  • Packaging rules that discriminate against imports

  • Advertising restrictions targeting foreign brands

Goal:

➡ Make sure goods can move freely across EU borders, without hidden barriers

Internal Taxation

Internal Taxation (Articles 110–113 TFEU)

These articles control how countries tax goods inside their own market.

What they do:

• Article 110: Stops countries from putting higher taxes on imported goods than local goods.
  ➡ Imported wine can't be taxed more than domestic wine.

• Articles 111–113: Let the EU coordinate general rules on indirect taxes, like VAT (Value Added Tax), to avoid unfair competition between countries.

Goal:

➡ Prevent discrimination against foreign products within a country, and keep the tax system fair across the EU.

Article 28

= The EU shall be a customs union covering all trade in goods. It involves the prohibition of customs duties and CHEE between Member States and adoption of a Common Customs Tariff for goods from outside the EU.

‘To create one unified trading area where goods can move freely within the EU, and where all EU countries treat outside goods the same way.’

All EU countries apply the same customs duties when importing goods from non-EU countries (called "third countries").

➡ This is called the Common Customs Tariff — it keeps trade fair and unified with the outside world

‘Once a product is inside the EU’s customs union (either made in the EU or properly imported), it can move around freely, and no EU country can tax it again at the border.’

article 29

Article 29 builds on the Customs Union rules from Article 28. It explains when non-EU (third country) goods are treated like EU goods — meaning they can move freely within the EU.

• Goods coming from outside the EU (third countries) are treated like EU goods once they are in "free circulation".

What does “in free circulation” mean?

A non-EU product becomes “in free circulation” in the EU when:

1. It enters the EU legally (through an official port or customs point).

2. All import duties and charges (like customs taxes) have been paid.

3. It meets all import rules, such as safety or product standards.

• The goods are treated the same as EU-made goods.

• They can move freely between Member States without further checks or taxes.

article 30

= reinforces the ban on customs duties and similar charges between EU countries.

To ensure free movement of goods within the EU by eliminating all financial barriers at internal borders.

It doesn’t matter whether the barrier is direct (a tax) or indirect (a hidden charge) — they’re both banned.

What is not allowed under Article 30:

• Import/export taxes between EU countries

• Border fees that only apply to foreign goods

• Hidden charges that discourage trade

Charges that reflect the actual cost of a service provided (e.g., a fair inspection fee for all goods, both domestic and foreign)

• But only if it’s fair, non-discriminatory, and not a disguised tax.

No taxes or fees on goods traded between EU countries. Full stop.

It’s a key part of the EU’s single market.

A charge is per definition a form of payment, which is prohibited when goods cross a border in the EU.

article 34

= bans rules or actions by EU countries that restrict the free movement of goods coming from other EU countries.

In simple terms:

EU countries must not create laws or policies that stop or limit imports of goods from other EU Member States.

This includes quotas, bans, and even national rules that make it harder for foreign goods to be sold.

• Import bans or quotas
  e.g., "Only 500 Spanish tomatoes can be imported per year"

• Discriminatory product standards
  e.g., "All milk must be sold in glass bottles, but only local producers do that"

• Advertising restrictions that unfairly block foreign products
  e.g., "You can't advertise foreign beer on TV"

Germany tried to block French liqueur (Cassis de Dijon) because it didn’t meet German alcohol rules.

The Court said:
If a product is legally made and sold in one EU country, then it should be allowed in all others , this is the principle of mutual recognition.

Under Article 36, a country can restrict imports only if:

• It protects public health

• Ensures public safety

• Prevents fraud, etc.

👉 But even then, the restriction must be:

• Genuine

• Proportionate

• Not a disguised trade barrier

Principle of mutual recognition: a product for sale in another member state may in principle not be refused

article 35

Its goal is to ensure that no Member State can restrict or limit the amount of goods being exported to another Member State.

Article 35 TFEU bans export restrictions between EU countries to protect the free movement of goods. This includes both clear limits (like quotas) and indirect barriers (like unnecessary red tape). Any restriction must be justified and proportionate under Article 36.

Yes. Restrictions can be allowed under Article 36 TFEU, but only if they’re justified by:

• Public morality

• Public policy or security

• Protection of health and life of humans, animals, or plants

• Protection of national treasures

• Protection of industrial or commercial property

But even these must be proportionate — meaning the measure must be necessary and no more restrictive than needed.

article 36

=A country can restrict imports or exports — but only for very specific, justified reasons.

A Member State can restrict trade if it is genuinely needed for any of these reasons:

• Public morality
  e.g. banning pornographic materials if a country has strict moral standards

• Public policy
  e.g. banning exports of certain weapons to prevent civil unrest

• Public security
  e.g. restricting exports of sensitive technology

• Protection of health and life of humans, animals, or plants
  e.g. banning meat imports from a country with a disease outbreak

• Protection of national treasures
  e.g. preventing the export of historic art or archaeological finds

• Protection of industrial and commercial property
  e.g. stopping counterfeit goods from being traded

Even if a restriction is justified under Article 36, it still must follow two key rules:

• It must not be arbitrary
  → You can’t ban imports from one country and allow the same goods from another for no valid reason.

• It must not be a disguised restriction on trade
  → Countries can't pretend to protect health or culture just to favor local products.

This ensures that Article 36 can’t be abused for protectionism.

34 & 35

Ban restrictions on imports/exports between EU countries

36	Allows exceptions, but only if:

– The reason fits a legitimate category (e.g. health, security)

– The measure is genuine, non-discriminatory, and proportionate

Principle of mutual recognition (article 34)

= a product for sale in another member state may in principle not be refused

If a product is lawfully sold in one other EU member state, it should be allowed in all others, unless theres a very strong reason not to. (public health) (breach of article 34, if there is a strong reason not to, justified by article 36)

Article 110

deals with taxation and the internal market.

Member States cannot use internal taxes to:

1. Discriminate against products from other EU countries, or

2. Protect their own products by taxing foreign ones more heavily.

• Products imported from another EU country must be taxed equally compared to similar local products.

• If you tax imported wine more than local wine → violation of Article 110

The focus is on “similar” goods — i.e., products that:

• Have similar characteristics,

• Serve the same purpose,

• Are interchangeable from the consumer’s point of view.

Example:
You can't tax French beer at €1/liter and German beer at €2/liter just because it’s from abroad — that's direct discrimination.

A Member State cannot structure taxes in a way that makes foreign products less competitive, giving a domestic alternative an advantage.

Example:
If Italy heavily taxes German spirits while giving low tax rates to Italian wine — even if not identical products — it may still distort competition in favor of the local product.

Cant have different taxes on the same product from a different country and also not on similar products.

• you also cant do it to indirectly favor local products

Article 30 CHEE and unlawfullness

charges having equivalent effect (CEE) — even if it’s not called a "tax", any charge applied only to imports falls under this.

A CHEE is any charge imposed on goods when they cross a border that:

• Is not officially called a customs duty, but

• Has the same impact — it increases the cost of imported (or exported) goods, putting them at a disadvantage.

Even if the purpose of the charge is unrelated to trade (e.g., environmental, statistical, administrative), it can still be a CHEE if:

• It's only imposed on imported/exported goods

• It’s not also imposed on domestic goods

• It’s compulsory and linked to crossing the border

= The temporary charge on imported dairy is unlawful under Article 30 TFEU.
The EU does not allow any charge solely on imports, even for environmental or fiscal policy purposes.

is unlawful becuase the article doesnt allow for any charge solely on imports

FMOG

articles: 30,34,35,36,110

Free Movement of Persons (labour)

= how free movement rights under EU law apply differently depending on a person’s economic activity

• Free movement in the EU originally focused on people who contribute to the economy (workers, business owners), but over time has been extended to some non-workers (like retirees and students) — as long as they don’t rely on public funds in the host country.

Largely limited to the “economically active”: rights tied to:

• “worker status”;

• self-employed: exercising right of establishment & providing services in other Member States and family members

Extension for non-economically active:

• retired persons

• students

provisions FMOP

Free movement of workers:

• Article 45 - 48

Freedom of establishment:

• Article 49 - 55

Freedom to provide services:

• Article 56 – 62

Article 45

= guarantees the free movement of workers within the EU.
It includes:

• The right to move freely between Member States to work

• The prohibition of discrimination based on nationality

• The right to accept job offers, work, stay, and remain after employment

• Exceptions for public policy, public security, or public health

Article 45 TFEU protects the right of EU citizens to work in any Member State without discrimination based on nationality.
It ensures:

• Equal treatment

• Right to move, work, and stay

Some limited public interest exceptions

The free movement of workers can be restricted on grounds of:

• Public policy

• Public security

• Public health

However, these exceptions are interpreted narrowly by the Court of Justice (CJEU) and must be justified.

Who is a worker:

Article 45 TFEU restricts its application to workers who are nationals of the Member State

definition of term ‘worker’ has been held to be a matter for Union law and therefore not the national legislature of the MS!

definition of ‘worker’ includes a person who is currently unemployed, but capable of taking another job.

public service exception

• Article 45(4) TFEU allows Member States to reserve certain public service jobs for their own nationals.

only if:

1. The job involves exercising powers conferred by public law, and

2. The job’s duties are aimed at safeguarding the general interests of the state.

f.e:

• Armed forces

• Police

• Judiciary

• Diplomatic service

• Tax and customs officials

but not:

• Teachers

• Nurses

• Admin staff in public hospitals or local governments

• Postal workers

Even if the employer is public (e.g., a government agency), the job must meet the strict ECJ test to be reserved for nationals.

Article 56

= free movement of services

• EU citizens and companies must be free to provide services across borders within the EU,

• without being subject to unjustified restrictions by another Member State,

• as long as they are legally established in one Member State.

1. Freedom to provide services

This means a person or company can:

• Offer services in another Member State,

• Without needing to set up a permanent base there (unlike "establishment" in Article 49).

Examples:

• An architect from France designing a building in Spain

• A German consultant advising an Irish company

• A Dutch dentist treating patients temporarily in Belgium

2. Established in a different Member State

• The service provider must be based in one EU country,

• The service recipient can be in another.

This cross-border nature is what triggers Article 56 protection.

3. Prohibition of restrictions

Member States cannot impose rules that:

• Make it harder for foreign service providers to operate

• Favor domestic providers unfairly

• Direct effect: Individuals and companies can rely on Article 56 in national courts to challenge unjustified restrictions.

• Member States must justify any barriers (e.g., for public policy, safety, consumer protection) — and they must be proportionate.

The EU may choose to extend this freedom to non-EU nationals (e.g., Americans, Canadians, etc.) if they are established within the EU.

But:

• This is not automatic — it requires legislation from the European Parliament and the Council (ordinary legislative procedure).

Element	Explanation
What it protects	The right to provide services across EU borders
Who it covers	EU nationals and companies established in an EU Member State
What it prohibits	Unjustified restrictions by host countries
Exceptions	Public policy, safety, health (must be proportionate)
Third-country nationals	May be included by EU law, but not by default

freedom of establishment = Articles 49–55 TFEU

This freedom gives individuals and businesses the right to:

• Set up and operate a stable and permanent business in another EU Member State.

“The actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period.”

• Fixed = A physical presence (e.g., office, branch, shop)

• Indefinite = Not temporary or occasional — it's ongoing and long-term

Member States must eliminate:

• Discrimination based on nationality or origin

• Unjustified obstacles to setting up and operating a business

freedom to provide services = Articles 56–62 TFEU

This freedom allows people and companies to:

• Offer and perform services across borders in the EU, without needing to settle permanently in the host country.

The service provider stays based in their home country

• The service is temporary or occasional, not long-term or permanent

• There is a cross-border element (provider and recipient are in different countries)

Member States must eliminate:

• Restrictions on cross-border service provision (e.g., extra licensing, unfair taxes, or residence requirements)

Differences articles 49-55 and 56-62

Feature	Freedom of Establishment	Freedom to Provide Services
Articles	49–55 TFEU	56–62 TFEU
Type of activity	Permanent, ongoing business	Temporary, one-off or short-term service
Physical presence	Yes – fixed place of business	No – often cross-border without setting up
Examples	Opening a branch or company	Offering online consulting or project-based work
Requires?	Setting up in the host country	Staying based in home country, but operating abroad

article 57

Article 57 explains what counts as a "service" under EU law.

• Article 56 says: “restrictions on the freedom to provide services shall be prohibited.”

• Article 57 clarifies what counts as a "service" so that the protections of Article 56 apply.

1. Be provided for payment (not necessarily by the recipient, but someone must pay).

2. Be cross-border — i.e., the provider and recipient are in different Member States.

3. Not fall under other freedoms (like goods, capital, or workers).

services like:

• activities of an industrial character,

• activities of a commercial character,

• activities of craftsmen,

• and activities of the professions.

Regulation 1251/70: the right 
to remain in the territory

= Protects the rights of workers from one Member State who have worked in another Member Stateand want to stay there even after they retire, become disabled, or stop working.

It applies to:

• EU workers who have been employed in another Member State

• Family members of those workers

1. Retirement

A worker can stay if:

• They retire, have worked for at least 12 months, and

• Have lived in that country for at least 3 years continuously.

2. Permanent Incapacity to Work

A worker can stay if:

• They become permanently unable to work due to illness or disability,

• Even before 3 years of residence — if the incapacity is due to a work-related accident or illness, they can still stay.

3. Reaching Pension Age

If they reach the legal pension age, even after working a shorter period, they may still qualify (depending on national rules and EU law developments).

• Spouses, children, and dependents also have the right to remain under certain conditions.

• If the worker dies after retirement or becoming incapacitated, the family may still retain residence rights.

Situation	Right to Remain?	Conditions
Retired	✅	Worked ≥12 months, lived ≥3 years
Permanently incapacitated	✅	No minimum stay if work-related
Family members	✅	Can remain under certain conditions
Based on EU worker status	✅	Not for students or non-economically active individuals (those are under other rules)

differences 45, 49-55, 56-62

• Freedom of Services (56–62): You provide services temporarily without moving your business there permanently.

• Free Movement of Workers (45): You physically move and work as an employee in another country.

• Freedom of Establishment (49–55): You set up and run a permanent business or professional activity in another country.

Arts. 49 and 56-57 TFEU.= Self-employed people, apply to EU nationals in cross-border situations.

Art. 49 TFEU applies to permanent economic activities

Arts. 56-57 TFEU apply to temporary ones.

Art. 45 TFEU applies to EU migrant workers in cross border situations.

45 = rights of workers

49 = right to establish a company abroad

56 = right to give services abroad

Intellectual Property Rights (IPRs)

= are legal rights that protect creations of the mind — like inventions, brands, artistic works, and designs. They give creators exclusive rights to use and benefit from their work for a certain period.

Brand

= A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers.

Trademark

= The trademark symbol ™ is a symbol to indicate that the preceding mark is a trademark, specifically an unregistered trademark. It complements the registered trademark symbol ® which is reserved for trademarks registered with an appropriate government agency.

Patent

= A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention.

How can companies handle patent expiration

1. "Evergreening" Patents

Filing patents on slight modifications (e.g., new formulations, delivery methods).

2. Brand Loyalty Campaigns

Run discount card programs and direct-to-consumer marketing to encourage people to stay on the brand-name.

3. Authorized Generics

Partner with a generic manufacturer to sell "authorized generics" (generic drugs made by the original manufacturer), allowing them to keep some market share.

4. Product Line Diversification

Invest heavily in developing new drugs before major patents expire.

Copyright

Moral right

Pecunairy right

= A copyright is a type of intellectual property that gives its owner the exclusive legal right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time.

= to be recognized as the author

= You decide on the distribution (and get paid for it)

Article 118 TFEU

This article empowers the EU to create a uniform system for IPR protection across all Member States.

It’s the basis for EU-wide rights like:

European Union Trade Mark (EUTM)

Community Design

Unitary Patent (coming into force with the Unified Patent Court Agreement)

The goal here is harmonization — making IPRs easier and more predictable across the whole EU.

Article 118 gives the EU institutions the legal basis to create uniform intellectual property (IP) rights that apply across all EU Member States.

It supports the development of:

• EU-wide patents

• EU trademarks

• EU designs and copyrights

It also allows for:

• Centralized systems for registering and managing these rights (e.g., the European Union Intellectual Property Office – EUIPO).

• To ensure equal protection of IP throughout the entire EU, rather than relying on national systems alone.

• To remove barriers to the free movement of goods and services caused by inconsistent IP protection between countries.

• To strengthen innovation, creativity, and competitiveness across the EU internal market.

Doctrine of exhaustion

• When a product protected by intellectual property rights (like a trademark, patent, or copyright) is lawfully sold or put on the market anywhere in the EU by the IP rights holder (or with their permission), the IP rights on that specific product are said to be “exhausted.”

• This means that after that first sale, the IP owner cannot stop or control the resale, distribution, or further use of that specific product within the EU

• It prevents IP rights holders from using their rights to control or restrict the movement of goods across EU Member States.

• It ensures the free movement of goods in the EU internal market by stopping market segmentation.

• The single market is protected from being fragmented into isolated national markets by IP-related restrictions.

• Suppose a company owns the trademark for a smartphone.

• It sells the smartphone legally in Germany.

• After that first sale, the company cannot stop someone from buying the phone in Germany and reselling it in France, even if the company originally intended to sell only in Germany.

While the TFEU does not explicitly use the term "doctrine of exhaustion," the principle arises from Articles 34–36 TFEU, which prohibit quantitative restrictions and measures having equivalent effect on imports and exports between Member States, unless justified under Article 36 for reasons such as protection of industrial and commercial property.

While IP rights are recognized under Article 36 TFEU as a valid justification for restricting trade, they cannot be used to partition the internal market

Because that would block parallel imports and violate 34

Article 101

competition law

• DOES NOT APPLY TO SUBSIDIARIES OR BRANCHES! (agreements between undertakings = businesses)

• ”concerted practices” happens when two or more undertakings do something at the same time.

Article 101 prohibits agreements between companies, decisions by associations of companies, and concerted practices that:

• Prevent, restrict, or distort competition within the internal market;

• And which may affect trade between Member States.

Examples include:

• Price fixing;

• Market sharing;

• Limiting production or technical development;

• Other practices that restrict competition.

in other words:

• forbids companies from working together to try and get the most market share and so ruin it for the competition.

Exemptions:

Some agreements can be exempted if they contribute to improving production or distribution or promote technical or economic progress, while allowing consumers a fair share of the benefits, and without eliminating competition.

Cartel

= is a formal or informal agreement between competing firms to collude—rather than compete—with each other, typically to:

• Fix prices

• Limit production or supply

• Allocate markets or customers

• Rig bids

article 102

= prohibits any abuse by one or more undertakings of a dominant position within the internal market (or a substantial part of it), insofar as it may affect trade between Member States.

• Dominant position: A company has significant market power — it can behave independently of competitors, customers, and consumers.

• Abuse: The company uses its dominant position unfairly to eliminate or reduce competition.

• Effect on trade: The abusive conduct affects trade between EU Member States.

102, single undertaker, applies if the company has a dominant position in the market, theres abuse and it has an effect on trade, cheats alone.

101, 2 or more undertakers together, cheat together

Article 101

Bans anti-competitive agreements between companies (e.g. cartels).

Article 102

Bans abuse of dominant position by a powerful company acting alone.

nothing is mutually exclusive, they can both be true at once

• VW told its German dealers not to sell cars to buyers from other countries.

• This limited cross-border trade, violating Article 101.

parallel imports

Parallel imports are products that are:

• Legally produced and first sold with the permission of the intellectual property (IP) owner (e.g. trademark or patent holder),

• Then imported and resold in another country without the IP owner’s direct involvement or permission.

Because of doctrine of exhaustion and IP rights

= Re-selling genuine products legally bought in one country to another, without the IP owner's permission.

articles 36,118,101 &102

Article 36 TFEU: Allows restriction of free movement to protect industrial and commercial property (IPRs), but no disguised protectionism allowed.

Article 118 TFEU: Empowers EU to create uniform IPR systems (e.g., EU trademarks, unitary patents).

Article 101 TFEU: Prohibits anti-competitive agreements (like price-fixing, market sharing) — even if based on IP.

Article 102 TFEU: Prohibits abuse of a dominant position — even if dominance comes from IPR ownership.

Doctrine of exhaustion: once a product protected by IPR, e.g., a trademark, patent, or copyright) is lawfully put on the market within the EU by the rights holder or with their consent, the IP rights are considered "exhausted". This means the IPR holder can no longer oppose the resale, distribution, or use of that product within the EU.

dominance: dominant role in the market article 102

=

• Act independently without taking account of competitors

• Exploitation of consumers (high prices)

• Wearing out competition (bankruptcy through predatory pricing)

Take into account:

1. relevant market, if its easy for a consumer to switch to an alternative than no dominance.

2. market power/market share, >80%, or depends on the market size

3. vertical integration, control of supply

4. access, if competitors have easy access, than no dominance

Article 107

= It prevents governments of EU countries from giving unfair financial advantages to certain companies or industries if that support distorts competition and affects cross-border trade within the EU.

• A government gives tax breaks to only one car manufacturer.

• A public body cancels debts owed by a struggling airline.

• A city offers subsidised rent only to one hotel chain.

execptions:

Article 107(2) – Automatically allowed:

• Aid for natural disaster victims

• Aid to help individual consumers, not specific companies

• Aid for social reasons (e.g. public transport for disabled people)

Article 107(3) – Allowed with Commission approval:

• Aid to help develop poorer regions

• Aid for important economic projects

• Aid for research, innovation, environmental protection, or digitalisation

• Rescue and restructuring aid for failing firms (under strict conditions)

While Article 107 defines what state aid is and when it’s allowed,
Article 108 explains how that aid is monitored, approved, or blocked by the European Commission.

Basic letter of credit transaction

= A Letter of Credit is a guarantee from a bank that a seller (exporter) will be paid by the buyer (importer)—providedthat the seller presents the required documents proving they shipped the goods as agreed.

It reduces risk for both sides in cross-border transactions.

1. Buyer ↔ Seller sign sales contract

2. Buyer → Bank: requests L/C

3. Issuing Bank → Seller's Bank: issues L/C

4. Seller → ships goods → collects documents

5. Seller → Bank: submits documents

6. Bank → Payment to Seller

7. Buyer → gets documents → receives goods

For Seller (Exporter)	For Buyer (Importer)
Bank guarantees payment if documents are correct	Only pays if goods are shipped as agreed
Reduces non-payment risk	Ensures compliance with shipping terms

smart contract

A smart contract is a self-executing agreement written in computer code that automatically performs actions when certain conditions are met. It runs on a blockchain—a decentralized, tamper-proof digital ledger.

Blockchain-based Letter of Credit vs. Traditional Letter of Credit

= A Letter of Credit is a guarantee by a bank that the seller will receive payment as long as they provide specific documents showing they shipped goods as agreed.

A traditional LC is secure but slow and paper-heavy.
A blockchain LC is faster, cheaper, and more transparent—but it depends on digital readiness and legal frameworks.

blockchain has low trust and a tradiona most trust becuase a bank is involved

Convention on the International Sale of Goods (CIGS)

= The CISG is an international treaty that provides uniform rules for cross-border contracts for the sale of goods. It’s a treaty (a type of international law) created to make it easier to do business across borders—specifically when selling goods internationally.

The CISG provides a standard set of rules that apply automatically to contracts for the international sale of goodsbetween businesses in different countries.

Think of it as a neutral, international contract law that both sides (buyer and seller) can use instead of relying on just one country’s national law. only B2B

to:

• Avoid conflict about which national law applies.

• Create a neutral legal framework for both parties.

why not domestic law:

• It’s biased toward one party.

• It increases legal complexity and transaction costs for the foreign party.

• Each side’s lawyer might need to study another country’s legal system—expensive and inefficient.

National courts apply the CISG as part of their own legal system (if both countries are CISG parties).

The CISG applies automatically if:

1. Both parties are from countries that are signatories to the CISG,
   OR

2. Private international law rules lead to applying the law of a CISG country.

Article 7 (CISG)

• The CISG should be interpreted:

  • Internationally: Don’t use national legal concepts unless necessary.

  • With the aim of uniformity: Courts in different countries should try to apply the CISG in the same way.

  • With good faith in mind: The idea is to encourage fair dealing in global trade.

Example: Don’t interpret a CISG term like "fundamental breach" using only Dutch or French contract law—it has an international meaning.

Sometimes the CISG doesn't answer a specific question (e.g., who bears the burden of proof in a certain situation).

Then the court/arbitrator should:

1. First look at the general principles behind the CISG (like party autonomy, good faith, risk sharing).

2. If that doesn’t help, fall back on national law—specifically, the law chosen under the rules of private international law (PIL).

Example: The CISG doesn’t talk about interest rates on late payments. So a court would:

• First ask: Does a general principle in the CISG apply?

• If not, use the national law determined by conflict-of-law rules.

Key Point	Explanation
International interpretation	Avoid local bias; use CISG as an autonomous international system
Uniformity	Aim for consistent application across all courts and countries
Good faith	Core value in applying and interpreting CISG rules
Gap filling	Use CISG principles first, and national law only if necessary

application of CIGS

topics covered by CIGS

obligations of the seller

The seller must deliver the goods to the buyer.

how: In the agreed way

• If not, CISG Article 31 gives default rules.

• The seller must make sure the goods are clearly identified as belonging to that buyer:

  • With markings (labels, packaging etc.)

  • Or by notifying the buyer that the goods are ready or have been shipped

when:

• Delivery must be:

  • On a fixed date,

  • Or within a defined period,

  • Or at least within a reasonable time, depending on what was agreed or expected.

where

• The seller must also deliver any documents (e.g., invoices, transport documents, certificates) at the time and place stated in the contract.

The CISG wants to make sure that the buyer gets the goods:

• At the right place

• In the right condition

• At the right time

• With the necessary documents

And if there's no agreement on some parts, the CISG rules fill in the gaps (like Article 31).

Article 35 CIGS

= This article tells us what kind of goods the seller is required to deliver under an international sales contract.

1. the goods must match what was promised.

2. These are default expectations. If the contract is unclear, the CISG assumes these basic standards apply.

📌 Article	What it means
35(1)	The goods must match the contract
35(2)	If not specified, they must be fit for normal use, properly packed, etc.
35(3)	No responsibility if buyer knew about the defect

Article 38 and 39

= Articles 38 and 39 of the CISG deal with the buyer’s responsibility to inspect the goods and notify the seller if there’s a problem. These articles are crucial because the buyer loses their right to claim defects if they don’t act in time

38 = "The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances."

39=

1. The buyer loses the right to claim non-conforming goods unless they notify the seller of the problem:

Within a reasonable time after they discovered (or should have discovered) the defect.

• The notice must describe the problem clearly.

2. In any case, the buyer must notify the seller within 2 years after the goods were actually handed over — unless the seller was dishonest and hid the problem.

Article	Key Point	Buyer's Responsibility
38	Must examine the goods	As quickly as practicable
39(1)	Must notify seller of defects	Within a reasonable time
39(2)	Absolute deadline	No more than 2 years from delivery, unless fraud

what are the obligations of the buyer

• The buyer must pay for the goods as agreed in the contract. If it's not clearly agreed, CISG rules apply to fill the gap.

• The buyer must take action to receive the goods properly.

Buyer’s Obligation	Details
Pay the price	As agreed, or based on market price
Pay at	Seller’s place of business or delivery location
Pay on time	By a set date, or when accepting/inspecting
Accept delivery	Take over the goods and help make delivery possible

when is the risk passed from buyer to seller?

= It refers to the point at which the buyer becomes responsible for loss, damage, or destruction of the goods—even if they haven't yet received them.

• article 31,67,69

without incoterms 2020

1. Article 31(a) & Article 67

• Situation: If the contract involves carriage

• Rule: Risk passes when the seller hands the goods over to the first carrier.

• Example: The moment the goods are loaded onto a ship or truck—even if the buyer hasn’t received them yet.

2. Article 31(b) & Article 69(1)

• Situation: If parties agree at the time of signing where the goods will be made available (but no carriage is involved).

• Rule: Risk passes when the buyer takes over the goods at the agreed location (e.g., the seller’s warehouse).

• Example: Buyer is responsible once they collect the goods from the seller’s warehouse.

3. Article 31(c) & Article 69(2)

• Situation: In all other cases (no specific place or carriage agreed).

• Rule: Risk passes when the buyer takes possession of the goods.

• Example: Buyer visits the seller’s place of business to collect the goods, and then the risk is transferred.

CISG applies only if no Incoterms 2020 clause is added.

• It's recommended to include an Incoterm (like FOB, CIF, EXW) to make responsibilities clearer.

• If you don’t use Incoterms, CISG default rules apply as shown on the left of the slide.

Remedies for breach of contract by seller

Remedies for breach of contract by buyer

Nachfrist’s rights buyers and sellers

Nachfrist = A grace period given to the breaching party to perform their obligations before the contract can be terminated.

Article 47 CISG – Buyer’s Right

• Buyer gives seller a final deadline to deliver or perform.

• If the seller fails, buyer can terminate under Article 49.

Article 63 CISG – Seller’s Right

• Seller gives buyer a final deadline to pay or take delivery.

• If the buyer fails, seller can terminate under Article 64.

Purpose of Nachfrist:

• Acts as a final chance to perform.

• Prevents immediate termination.

• Encourages performance and fairness before legal remedies.

article 25 CIGS

= A fundamental breach is a breach of contract that causes such harm to the other party that it substantially deprives them of what they were entitled to expect under the contract.

• It must be foreseeable: The breaching party must have foreseen (or a reasonable person would have foreseen) that this kind of loss would result.

To qualify as a fundamental breach, two things must happen:

1. Substantial Deprivation

   • The breach seriously damages the value of the contract for the other party (not just minor inconvenience).

2. Foreseeability

   • The breaching party knew—or should have known—that this would happen.

• Not Fundamental: Delivery is 3 days late, but the buyer still gets the goods in time to resell them. → Minor breach.

• Fundamental: Seller delivers completely different goods (e.g., steel instead of aluminum). Buyer can’t use them at all. → Fundamental breach.

Article 25 defines when a breach is serious enough to justify ending the contract:
✔ It must substantially deprive the other party of what they expected,
✔ And the harm must have been foreseeable.

article 47 CIGS

• What it does:
  Allows the buyer to give the seller an additional (reasonable) period of time to fulfill their obligations (e.g., deliver goods).

• Why it matters:
  If the seller still fails to perform within that grace period, the buyer can use Article 49 to terminate (avoid) the contract.

article 49 CIGS

• When the buyer can terminate (avoid):

  1. If the seller commits a fundamental breach (as defined in Article 25),
     OR

  2. If the seller fails to deliver within the Nachfrist set under Article 47.

• Effect:
  Buyer is released from the contract and may claim damages.

Seller breaches → Buyer sets a final deadline (Art. 47) →
If seller still doesn’t perform → Buyer can cancel the contract (Art. 49)

force majeure doctrine

Force majeure excuses a party from liability when extraordinary events prevent them from performing the contract.

Conditions:

1. Outside their control

2. Unforeseeable – OR – unavoidable even if foreseeable

3. Makes performance impossible or extremely difficult

Notice Requirement:

• Must notify the other party within a reasonable time to rely on force majeure.

Purpose:

• Protects parties from being penalized for non-performance caused by extreme, unexpected events (e.g., natural disasters, war, pandemic).

article 50 CIGS

If the goods delivered are not conforming (e.g., defective, damaged, wrong quantity or quality), the buyer can reduce the price in proportion to the loss in value.

article 74 CIGS

A party who suffers a breach of contract is entitled to damages equal to the loss suffered, including loss of profit, as a consequence of the breach.

Article 75

When it applies:

• The contract is avoided (terminated), and

• The injured party makes a substitute transaction (e.g., resells or repurchases similar goods).

How damages are calculated:

• Damages = Difference between the contract price and the price in the substitute transaction,
  + any further losses (as per Article 74).

Example:
Seller was to deliver for $1,000 but fails.
Buyer buys the same goods elsewhere for $1,300.
→ Damages = $300 (plus any extra costs like shipping, etc.)

article 76

When it applies:

• The contract is avoided,

• But no substitute transaction was made.

How damages are calculated:

• Damages = Difference between the contract price and the current market price at the time of avoidance (or time of delivery, if that gives a fairer result),
  + any further losses (as per Article 74).

Example:
Contract price = $1,000
Market price at time of breach = $1,400
→ Damages = $400

article 77

• A party who suffers a loss because the other party breached the contract must take reasonable steps to reduce (mitigate) the loss.

• If the injured party fails to take such steps, the amount of damages they can claim may be reduced accordingly.

Incoterms 2020

INCOTERMS 2020



Adopted by the ICC in Paris, have to be specifically agreed upon in the contract.

Deal with 


1. Transportation costs 


2. Passing of risk for damage/loss of the goods 


3. Place of delivery of the goods
.

• Part of the contract for sale of goods

• contract of carriage

• a contract for the transportation of the goods by air, road or water.



ANY MODE OF TRANSPORT

basically rules for transport and import/export

• if something goes wrong during transport who is responsible for what

exworks exw

= The seller makes the goods available at their premises (factory, warehouse, etc.), and the buyer is responsible for all costs and risks from that point onwards.

• Under EXW, the seller’s obligation is fulfilled once the goods are made available at their premises (e.g., factory, warehouse) on the agreed date and time.

• The buyer bears all risks and costs from that point forward, including loading the goods onto a vehicle and all subsequent transport, insurance, customs clearance, etc.

Free Carrier Address (FCA)

=

Buyer arranges main transport

Two risk transfer options:

1. Risk transfers when the goods are loaded at the seller’s place of business or warehouse

2. Risk transfers when the goods are ready for unloading at a named place/port of delivery

Free Alongside Ship (FAS)

Buyer arranges main transport

Delivered and risk passes when the goods are ready for loading alongside the vessel

Free On Board (FOB)

Buyer arranges main transport

Delivered and risk passes when the seller places the goods on board the vessel

bill of lading process

• The Bill of Lading is a critical document in international trade as it shows proof of shipment and ownership.

• The Incoterm determines who arranges transport and receives the B/L, influencing risk and cost responsibilities.

• Proper handling of the B/L ensures smooth transfer of goods and payment.

Cost and Freight (CFR)

Seller arranges main transport

Delivered and risk passes when the seller places the goods on board the vessel

Cost Insurance and Freight (CIF)

Seller arranges main transport and insurance

Delivered and risk passes when the seller places the goods on board the vessel

Cost Paid To (CPT)

Seller arranges main transport

Risk transfers and delivery takes place when goods are loaded on first carrier

Carrier Insurance Paid to (CIP)

Seller arranges main transport and insurance

Risk transfers and delivery takes place when goods are loaded on first carrier

Delivery At Place (DAP)

Risk transfers and delivery when the goods are at agreed place ready for unloading

Most costs born by seller, excl import duties

Delivery at Place Unloaded (DPU)

Risk transfers and delivery when the goods are at agreed place unloaded

Most costs born by seller, excl import duties

Delivery Duty Paid (DDP)

Risk transfers and delivery when the goods are at agreed place ready for unloading

Most costs born by seller, incl import formalities

incoterms 2020 picture

international transport: carriage

• The sender (also called shipper or consignor) is the contractual counterpart of the carrier.

• This means the sender hires the carrier to transport goods under an agreed contract.

• Different transport modes have their own international rules:

  • Sea: Hague Rules, Hague-Visby, Hamburg, Rotterdam (pending)

  • Air: Warsaw, Montreal Conventions

  • Road: CMR Convention

Carriers operate under strict liability, i.e. only the result counts. If the result is not achieved by the carrier, in principle the carrier can be held liable.

• Limits in liability for carriers

• Limited period of claims against a carrier

Limits in liability for carriers

The maximum liability limit in the CMR Convention (and similar transport treaties) exists to balance legal, economic, and practical concerns between carriers and shippers.

1. Risk & Predictability:
   Limits make carrier risk measurable and insurable, protecting them from huge losses on undeclared high-value goods.

2. Encourages Insurance:
   Shippers should declare valuables and get their own insurance, not rely on carrier liability as free coverage.

3. Prevents Abuse:
   Limits help stop fraudulent or exaggerated claims.

4. Standardization:
   Uniform rules across countries make international transport fair and predictable, avoiding legal “forum shopping.”

5. Fair Pricing:
   Without limits, carriers would charge more or refuse high-risk goods; limits keep prices reasonable while encouraging proper insurance.

air transport

Central document in international transport: Consignment Note/Air Waybill

• Receipt for proper reception of goods transported

• Evidence for a contract of transportation

sea transport

International Sea transport document: Bill of Lading:

• Evidence for existence of contract of transprtation

• Receipt for goods

• Document of Title

Hague-Visby Rules

= an international set of rules that govern the carriage of goods by sea, particularly the responsibilities and liabilities of carriers (typically shipping companies) and the rights of cargo owners.

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (1924), as amended by the Visby Protocol (1968).

• Commonly referred to as the Hague-Visby Rules (or simply the Hague Rules when referring to the original 1924 version).

• They are used in many countries as the legal basis for maritime shipping contracts, especially under bills of lading.

Carrier’s Responsibilities:

Must exercise due diligence to:

• Make the ship seaworthy.

• Properly man, equip, and supply the ship.

• Ensure the ship is fit for carrying the goods.

Carrier’s Liabilities:

• Responsible for loss or damage to cargo due to failure in their duties (e.g. unseaworthiness, improper care).

Not liable for loss or damage due to excepted perils, like:

• Acts of God

• Perils of the sea

• War

• Negligence in navigation or management of the ship

Limitation of Liability:

Liability is limited to 666.67 SDRs per package or 2 SDRs per kilogram, whichever is higher (as amended by the Visby Protocol).

An SDR (Special Drawing Right) is an international reserve asset created by the IMF. Its value is based on a basket of major currencies; its value fluctuates daily.

Time Limit:

A claim must be made within one year from the date of delivery or the date the goods should have been delivered.

it matters because:

• It balances the interests of carriers and shippers.

• Provides legal certainty in sea transport contracts.

• Widely adopted in shipping contracts worldwide

road transport : CMR Convention (Convention on the

Contract for the International Carriage of

Goods by Road)

= To standardize conditions for contracts in international transport of goods by road between member countries.

• Applies to contracts for the international transport of goods by road when at least one of the countries is a signatory.

• Covers carriers, senders, and consignees.

CMR Document:

• A CMR consignment note is used as a proof of the transport contract.

• Contains details like sender, consignee, carrier, goods description, and route.

Carriers are liable for loss, damage, or delay unless caused by:

• Fault of the sender

• Inherent nature of goods

• Circumstances beyond control (force majeure)

Compensation:

• Compensation is generally limited based on the weight of goods unless higher value is declared and paid for.

Legal disputes are handled by courts in the country where:

• The defendant is based

• The contract was made

• The goods were taken over or delivered

Article 17 CMR

• 17.1: Carrier is liable for loss, damage, or delay from taking over goods until delivery.

• 17.2: Carrier is not liable for loss caused by:

  • Shipper’s own fault,

  • Shipper’s instructions not attributable to carrier,

  • Inherent defects in the goods,

  • Unavoidable events beyond carrier’s control.

• 17.3: Carrier can’t avoid liability due to faulty vehicles or negligence by hired drivers or their staff.

• 17.4: Exceptions related to the nature of goods or packaging faults.

article 23 CMR

= sets strict deadlines for making claims against the carrier related to loss, damage, or delay of goods in international road transport

• Claims for damage or loss:
  Must be made within 7 days after the goods are delivered or should have been delivered.

• Claims for delay:
  Must be made within 21 days after the goods are delivered or should have been delivered.

• If the claimant fails to notify the carrier within these periods, the carrier is discharged from liability, except in cases of fraud or bad faith.

1978 franc thing

• 25 Goldfrancs or 8.33 SDR per kg

• as compensation per kg per cargo