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June 07, 2017

A majority for Macron's labour reforms?

The French government laid out its road map for labour reform: a rough version of the bill will be presented by the government on June 28 before seeking authorisation from parliament to kick-start the process, with a vote envisaged in September. As promised on the campaign trail, Macron’s government would use so-called ordinances, executive decrees that shorten the debate in both houses, after consultations with the unions. If Macron were to win his absolute majority in the legislative elections, as the polls predict, he surely would have no trouble getting this through parliament. Street protests might be the only opposition left.

The road map was presented to trade unions yesterday. In the document labour minister Muriel Penicaud talks about focusing more on contractual work relationships at the enterprise and branch level, reducing the number of worker representation councils by merging at least three of them, and capping the damages to be paid for wrongful dismissals - a contentious issue with the labour unions. She also promised to pay more attention to small and medium enterprises, as the current labour law was written for large enterprises. Also the document already flags a reform to include independents into the unemployment insurance scheme starting in the summer 2018, as well as the gradual abolition of the employee contributions for health insurance and unemployment insurance as of January 1. There will be two consultation periods with trade unions, one in June/July and the second in September.

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June 07, 2017

Options for the future of defence

The Commission’s reflection paper on the future of the eurozone falls in the neither-here-nor-there category. The Commission has now launched a discussion paper on the future of European defence, as leaked to Frankfurter Allgemeine. This paper sets out the ambition to the turn the EU into a defence union by 2025 - which seems to be also the year targeted by the Commission for the completion of the monetary union. The paper, which will be officially presented today, foresees three options. The first is to continue as it is now, the second is to develop the EU into a strategic power but not in competition to Nato. The third is a full defence union, with common troops and a common defence procurement market. The Commission will, in addition, draw up legislation for a European Defence Fund - but we were rather shocked to see the tiny numbers - €25m for year 1, to be raised in subsequent years. Compare this to the total annual defence spending in the EU in the order of €200bn. This reminds of the Commmission’s much oversold and almost entirely ineffective investment fund. 

The article says that the Commission does not want to regard its discussion paper as a response to the recent transatlantic tensions. The pressure for more defence co-operation inside the EU has been building up for a while and became more urgent with Brexit.

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June 07, 2017

What happens to legal contracts after Brexit?

There is absolutely nothing to report on the British elections. We are at that phase of the campaign where newspaper find innovative ways to say "don’t know" when it comes to the polls, and they start making mostly noisy endorsements. These used to be important back in the 20th century, but have become a bit of a joke these days.

But we found an interesting, if rather pointy-headed, discussion on the legal implications of Brexit on commercial contracts, specifically contracts with no set termination date. Marc-Philippe Weller and Manuel Gonzalo Casas, lawyers at the University of Heidelberg, argue that Brexit might actually lead to an automatic end of this type of commercial contract. Typical contracts of this kind include supply contracts in the engineering sector, high-tech development joint ventures, and wholesale distribution contracts. These long-term contracts all have an underlying commercial basis, which will be affected by Brexit. The authors effectively make what is legally known to be a "frustration of purpose" argument. For example, the imposition of tariffs and quotas changes the basis of supply contracts. 

The commercial basis argument has a micro component, but also a macro component. For example, deep political, social, and economic changes have the capacity to impact legal contracts in a profound way. There are several historical examples. In 1918, France legislated the "Loi Faillot", which allowed companies to cancel debt contracts. In 1940, after the civil war, Spain legislated the "Ley sobre contratación en zona roja", which included a clause for the termination of commercial contracts. Post-unification Germany had to legislate adjustments to contracts made in the previous East Germany. The point the authors are making is that protectionism, resulting from Brexit, could constitute a macroeconomic disturbance of a similar kind that could allow member states to make a frustration of contract laws - each country for its own jurisdiction. The authors' recommendation is for the EU to achieve a common position.

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