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The Global Legal Monitor is an online publication from the Law Library of Congress covering legal news and developments worldwide. It is updated frequently and draws on information from official national legal publications and reliable press sources. You can find previous news by searching the Global Legal Monitor.

Ukraine: Law Liberalizing Currency Regime Comes into Effect

(Feb. 15, 2019) Ukraine’s Law on Foreign Exchange and Foreign Exchange Transactions (Foreign Exchange Law) was adopted by the Verkhovna Rada (Ukrainian legislature) on June 24, 2018, and took effect on February 7, 2019. (Law on Currency and Currency Transactions (Foreign Exchange Law), June 24, 2018, No. 2473-VIII, GOLOS UKRAINI [VOICE OF UKRAINE] (official publication of Verkhovna Rada, in Ukrainian).) The purpose of the Law is to “ensure unified state policy in the field of currency transactions and free exercise of currency transactions” (id.), and to bring the Ukrainian foreign exchange regime in compliance with its obligations under the EU-Ukraine Association Agreement signed on April 29, 2014. (Association Agreement Between the European Union and Its Member States, of the One Part, and Ukraine, of the Other Part, art. 144, 2014 O.J. (L 161) 3, European Commission Directorate-General for Trade website.)

In addition, the National Bank of Ukraine (NBU) adopted eight implementing regulations that establish a new framework for currency transactions in Ukraine. (Press Release, National Bank of Ukraine, NBU Approves New System of Currency Regulation, Publishes Roadmap of Currency Liberalization (Jan. 4, 2019), NBU website.)

The Foreign Exchange Law is replacing an outdated currency regulation decree from 1993. (Decree of the Cabinet of Ministers of Ukraine on the System of Currency Regulation and Currency Control, 1993, CIS Legislation website.)

 Principles of Currency Regulation

As stated in article 2 of the Foreign Exchange Law, residents have the right to enter into contractual relations in foreign currency. This includes opening accounts in financial institutions of other countries, acquiring foreign currency abroad, and transferring currency across borders. Nonresidents have the same rights with respect to currency transactions as residents. (Foreign Exchange Law art. 4.) The Law generally guarantees freedom of currency operations. Restrictions on currency transactions are to be imposed during times of monetary and economic distress, for reasons of national security, and in order to prevent money laundering. (Id.)

Trade in Currency Values

Trade in currency values is to be carried out by authorized agents in the foreign exchange markets of Ukraine and in international currency markets. (Id. art. 6.) The Law also stipulates that the cross-border transfer of currency values is to be carried out through authorized institutions. (Id. art. 7.) Any transboundary movement of currency in excess of approximately €10,000 (about US$11,000) must be declared in writing to the central executive body (Ministry of Finance), which has competencies over tax and customs policy. (Id. art. 8.)

Licensing

Banks require a banking license to carry out foreign currency transactions. Nonbank financial institutions must obtain a license issued by the NBU specific to the type of transaction in order to carry out currency transactions. (Id. art. 9.) The NBU’s license is valid indefinitely. Non-issuance, suspension, or revocation of a license can be challenged in court (Id. art. 9.)

Monetary Supervision and Protection Measures

 The Law stipulates that foreign exchange oversight is to be carried out by the currency oversight bodies and currency oversight agents accountable to the NBU. (Id. art. 11.) It also grants the NBU the right to introduce protective measures when financial and monetary distress seems to threaten the integrity of the financial system as a whole. (Id. art 12.) The Board of the NBU has the right to introduce such protective measures for a period not exceeding six months, with the right to extend these protection measures for up to six months. The total period of protection measures cannot exceed eighteen months within a twenty-four month period. (Id.)

The Foreign Exchange Law obligates the NBU to present to a Verkhovna Rada committee a detailed impact-assessment report outlining the effectiveness and results of the protective measures within three months after the protective measures have been extended or terminated. This report is considered a public document and must be published on the official website of the NBU and made available indefinitely. (Id.)

Deadline for Settlement of Import and Export of Goods

The Federal Exchange Law also gives the NBU the right to set a deadline for the settlement of export and import transactions, as well as to establish exceptions and minimum limits for such transactions. (Id. art 13.) Violations of the terms of a settlement period are punishable by a fine for each day of delay in the amount of 0.3% of outstanding cash under the contract.

Disciplinary Measures for Violation of Currency Legislation

The Federal Exchange Law grants the NBU a number of punitive tools to apply in cases of currency-legislation violations. Such tools include restricting, suspending, or terminating certain foreign exchange transactions, or revoking licenses for foreign exchange operations (Id. art. 14.) According to the Law, punitive measures may be applied within six months after the violations have been detected, but no later than three years after the violation has been committed. For each violation only one measure is to apply. (Id. art. 15.)

Impact of New Foreign Exchange Law

 The governor of the NBU, Yakiv Smolii, speaking of the potential impact of new Foreign Exchange Law, noted that “the Law on Currency and Currency Operations will create favorable, transparent and safe conditions for doing business in Ukraine and open doors to foreign investors. Ukrainians in their turn will have the right to invest in securities on global markets and deposit funds to bank accounts in any bank in the world.” (Press Release, National Bank of Ukraine, Verkhovna Rada of Ukraine Approved the Law on Currency and Currency Operations in the Second Reading and as a Whole (June 22, 2018), NBU website.) However, according to Alexander Okhrimenko, president of the Ukrainian Analytical Center, the NBU still wields considerable intervention tools under the new Law “[to keep] the currency market under control,” and thus he believes the enacted Law is not radical enough. (Yuriy Hryhorenko, Law “On Currency”: Pros and Cons of Currency Liberalization, 112.UA (July 4, 2018).) Others are of the opinion that liberalization of transboundary currency transactions under the new Federal Exchange Law will create favorable conditions for the outflow of Ukrainian capital abroad. (Id.)

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Germany: State of Brandenburg Passes Act on Gender Parity in Politics

(Feb. 14, 2019) On January 31, 2019, the German state of Brandenburg became the first state in Germany to pass an act on gender parity in politics (Parity Act). The goal of the Parity Act is to counter the current underrepresentation of women in the Parliament of Brandenburg, where they make up 38.6% of parliamentarians, even though they represent 51.02% of the population eligible to vote. (Second Act to Amend the State Voting Act of Brandenburg – Parity Act, Feb. 12, 2019, STATE GAZETTE OF LAWS AND ORDINANCES I 2019, No. 1, Landesrecht Brandenburg website (in German); Press Release No. 020, President of the Parliament Britta Stark: “Parity Act Is a Major Victory for Democracy” (Jan. 31, 2019), Parliament of Brandenburg website (in German).)

Contents of the Parity Act

Germany uses a personalized proportional voting system that combines a personal direct vote for a particular candidate in a district (first vote) with a party vote (second vote). The Parity Act provides that all parties must present an equal number of female and male candidates on the electoral party lists (second vote). The party lists must alternate between a man and a woman, but the parties remain free to decide whether to start the list with or man or a woman. Once there are no more women or no more men left from among the party members intending to run, only one more person from the other gender can be put on the list. People who legally identify as a third gender may freely decide whether they would like to be counted as a woman or a man. These rules do not apply to parties whose bylaws restrict membership to one gender. (Parity Act art. 1, para. 1.)

The original draft Parity Act proposed that parties must also have an equal number of female and male candidates for direct votes (first vote). The draft provided that parties must nominate duos consisting of a man and a woman. The draft Parity Act therefore raised the number of direct votes that voters have from one to two. (State Parliament Brandenburg: Parliamentary Document  [LT-Drs.] 6/8210, at 4, § 1, para. 2 (in German).) The number of electoral districts was halved and restricted to 22 to avoid doubling the total number of directly elected parliamentarians. (Id. at 8, § 15.) Voters would have been able to select a duo from one party or split their vote between one female and one male candidate from different parties in the same electoral district. (Id. at 5, § 2 & 10, § 21, para. 6.) However, the governing coalition of the Social Democratic Party of Germany (SPD) and the Left Party submitted an amendment to the original draft of the Parity Act to eliminate the parity requirement for the first vote in order to avoid passing an unconstitutional law. (LT-Drs. 6/10466, at 3.) The Parity Act was passed in the amended version.

Related Discussions

Introducing acts on gender parity in politics to achieve equality between men and women has also been discussed in Germany at the federal level as well as in other states besides Brandenburg. However, it remains unclear whether such acts are constitutional. Opponents of such rules allege that they would violate the German Basic Law, the country’s Constitution, in particular articles 28 and 38, which codify the principles of general, free, and equal elections. Proponents on the other hand argue that the state objective to “promote the actual implementation of equal rights for women and men and take steps to eliminate disadvantages that now exist” requires that the state take positive actions to eliminate the underrepresentation of women. (For more information, see Jenny Gesley, 100 Years of Women’s Suffrage in Germany (Nov. 30, 2018), IN CUSTODIA LEGIS; Grundgesetz [GG] [Basic Law], May 23, 1949, BUNDESGESETZBLATT [BGBl.] [FEDERAL LAW GAZETTE] I at 1, as amended, German Laws Online website.)

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Egypt: New Constitutional Amendments Proposed

(Feb. 13, 2019) On February 5, 2019, the General Committee of the Egyptian Parliament approved a petition signed by 120 members of the House of the Representatives to amend some articles of the Egyptian Constitution of 2014 and add some new ones. (Nour Ali, General Committee of Parliament Approves Proposed Constitutional Amendments by Two-Thirds Majority, AL-YOUM AL-SAABE‘ (Feb. 5, 2019) (in Arabic).) Most prominent among the amendments are provisions to extend the presidential term of office. Egypt’s Parliament’s Legislative and Constitutional Affairs Committee has now taken up the matter for debate, which will be followed by a final vote on February 17 by the entire Parliament. Approval is likely as the Parliament is largely made up of supporters of current president, Abdel Fattah Al-Sisi. If Parliament approves the proposed amendments, they will be put to a national referendum. (Gamal Essam El-Din, Ahram Online’s Guide to Egypt’s Newly Proposed Constitutional Amendments, AL-AHRAM (Feb. 4, 2019); Egypt Opposition Rejects Move to Extend Al-Sisi’s Rule, NEWS24 (Feb. 6, 2019).)

Amended Constitutional Provisions

Among the 2014 constitutional provisions to be amended are articles 102, 140, 185, 189, and 204. The proposed changes to these articles are as follows:

  • Amended article 102 would require that at least one quarter of the seats in the Parliament be allocated to women and reduce the number of the seats in the House of Representatives from 596 to 450.
  • Amended article 140 would increase the term of the presidency from four years to six years and remove the limitation on the president’s being reelected only once, replacing it with the limitation that the president “may not hold the presidency for more than two consecutive terms.”
  • Article 185, under the new amendments, would grant the president the authority to appoint all chief justices of Egyptian judicial bodies, and article 189 would authorize the president to appoint Egypt’s public prosecutor.
  • Article 204 would be amended to enable military-court trials for civilians even when they have not committed a direct assault against a military building or military personnel. (Proposed Constitutional Amendments: Nine New Provisions and Twelve Amended, MADA MASR (Feb. 4, 2019) (in Arabic); CONSTITUTION OF THE ARAB REPUBLIC OF EGYPT, 2014, Constitute Project website.)

Proposed New Constitutional Provision

Among the new articles that the members of the House proposed is a provision establishing a new chamber of Parliament called “the Senate.” The Senate would have the same legislative powers as the House of Representatives, including the power to propose draft laws, approve multinational and bilateral agreements, pass draft laws referred to it from the president, and approve the general budget. The Senate would consist of 250 members, two-thirds of whom would be elected and one-third of whom would be appointed by the president, with their terms of office lasting for five years. (Id.)

Endorsement of the Constitutional Amendments

Members of Parliament who have endorsed the amendments, including Parliament speaker Ali Abdel-Aal, have declared that the proposed amendments would play a vital role in increasing women’s representation in Parliament and, through the new Senate, broaden participation in political and parliamentary life. (Ahram Online’s Guide to Egypt’s Newly Proposed Constitutional Amendments, supra.)

Reaction to the Proposed Amendments

Eight Egyptian human rights organizations have announced their rejection of the proposed amendments because they would allow President Sisi to run for two more six-year terms after his second four-year term expires in 2022, enabling him to remain in office until 2034. These organizations issued a statement calling on Sisi to leave office as soon as his second term ends in June 2022. (Eight Egyptian Human Rights Groups Reject Calls to Amend the Constitution, MIDDLE EAST MONITOR (Jan. 26, 2019) Egypt’s Sisi Could Potentially Be in Power Until 2034, TRTWORLD (Feb. 4, 2019).)

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China: Rules on Blockchain-Based Information Services Issued Requiring Authentication of Users’ Real Identities

(Feb. 12, 2019) On January 10, 2019, China’s cyberspace information regulator, the Cyberspace Administration of China (CAC), issued the Administrative Provisions on Blockchain Information Services, a set of rules governing blockchain-based information services. The Provisions will take effect on February 15, 2019. (Administrative Provisions on Blockchain Information Services (Jan. 10, 2019, effective Feb. 15, 2019) (Provisions), CAC website (in Chinese); Stephanie Wu et al., Internet Watchdog Issues First Measures to Regulate Blockchain Services, LEXOLOGY (Nov. 30, 2018).)

According to the Provisions, the CAC formulated these rules on the basis of the Cybersecurity Law passed in 2016, the Administrative Measures for the Internet Information Services issued by the State Council in 2000, and a 2014 State Council circular granting the CAC the power to regulate internet information contents in China. (Id. art. 1.)

The Provisions regulate blockchain-based information services provided in China. “Blockchain information services” refers to services providing information to the public through websites or applications that are based on blockchain technology or systems. (Id. art. 2.)

“Blockchain information service providers” is broadly defined to include (1) entities and nodes that provide blockchain-based information services to the public, and (2) institutions and organizations that provide technical support to such entities. “Blockchain information service users” under the Provisions refers to organizations and individuals that use blockchain information services. (Id.)

The Provisions notably require blockchain information service providers to authenticate the identity of the users on the basis of their organization codes, ID card numbers, or mobile phone numbers. The service providers must not provide services to any users who do not perform the identity authentication. (Id. art. 8.)

The Provisions prohibit blockchain information service providers and users from using the services to engage in activities prohibited by laws or administrative regulations that endanger national security, disturb social order, or infringe the legitimate rights and interests of others. They must not generate, copy, publish, or disseminate information content prohibited by laws and administrative regulations. (Id. art. 10.)

Blockchain information service providers are required to censor postings and store user data. When users violate laws, regulations, or service agreements, service providers must take measures such as issuing warnings to the users, restricting their accounts’ features, or deregistering their accounts. Service providers must also take relevant measures to prevent the spread of “illegal information content.” (Id. art. 16.) They are also required to record user posts and logs for no less than six months and to provide such records upon the request of law enforcement agencies. (Id. art. 17.)

The Provisions are the first set of rules specifically targeting blockchain technology, which is the basis for cryptocurrencies such as Bitcoin and “is known for providing anonymity for users.” (Zheping Huang, China Requires Blockchain-Based Information Service Providers to Register Users Using Real Names, Censor Postings And Store User Data, SOUTH CHINA MORNING POST (Oct. 22, 2018).)

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Germany: Federal Court of Justice Prohibits Uber Black App

(Feb. 11, 2019) In a decision published on January 29, 2019, the German Federal Court of Justice (Bundesgerichtshof, BGH), Germany’s supreme court for civil and criminal cases, held that booking cars for hire with professional drivers through the app Uber Black, the luxury chauffeur service, is prohibited. (BGH, Dec. 13, 2018, Docket No. I ZR 3/16, ECLI:DE:BGH:2018:131218UIZR3.16.0, BGH website.) The Court stated that the Uber Black app violates section 49 of the German Passenger Transport Act, which provides that chauffeur services  may accept only those assignments received at the chauffeur company’s place of business. (Personenbeförderungsgesetz [PBefG] [Passenger Transport Act], Aug. 8, 1990, BUNDESGESETZBLATT [BGBl.] [FEDERAL LAW GAZETTE] I at 1690, German Laws Online website.) In the opinion of the Court, the prohibition is compatible with the European Union (EU) freedom to provide services codified in article 56 of the Treaty on the Functioning of the European Union (TFEU). (BGH at 1; Consolidated Version of the Treaty on the Functioning of the European Union [TFEU], 2016 O.J. (C 202) 1, EUR-Lex website.)

Facts of the Case

The plaintiff is a taxi company from Berlin. The defendant, Uber Black, a company headquartered in the Netherlands, provided chauffeur services with professional drivers via its smartphone app. To provide such services, the defendant collaborated with companies that had licenses for passenger transport. The cars used by these companies where labeled as “Uber.” The pricing, processing of payments, and advertising were provided by the defendant, and rides were subject to its general terms and conditions. (BGH, para. 1.) Requests for cars were routed via the defendant’s server in the Netherlands to the driver who was closest to the passenger. When the driver confirmed the ride request, an email was simultaneously sent to the chauffeur service company that owned the car. (Id. at 2.)

On August 13, 2014, the city of Berlin prohibited Uber Black and similar apps. (Id. at 3.) In addition, Uber was sued by the plaintiff. The courts held in favor of the plaintiff. (Id. at 8.) The Federal Court of Justice on appeal stayed the proceedings and referred the questions to the European Court of Justice (ECJ) for a preliminary ruling. However, after the ECJ decided a similar case on Uber referred by a Spanish court, the Federal Court of Justice withdrew its request for a preliminary ruling. (Id. at 10–12; for more information on the Uber case referred by the Spanish court, see Catharina Schmidt, Uber at the ECJ – The Legal Saga in Europe Continues, IN CUSTODIA LEGIS (Mar. 8, 2018).)

Ruling

The Federal Court of Justice held that the Uber Black app violates section 49, paragraph 4, sentence 2 of the German Passenger Transport Act. (BGH, para. 31.) The provision states that a chauffeur service may accept only those assignments that were previously received at the place of business of the company or individual that owns the cars. The driver must return to the company’s place of business after the conclusion of the ride. (Id. at 32.) The Federal Court of Justice ruled that the requirement to receive the ride request at the company’s place of business is not fulfilled when the driver receives the request directly, even if the company is informed simultaneously. It is irrelevant whether passengers instruct the driver directly or whether they use an app. (Id. at 33 & 34.) Taxi passengers on the other hand are allowed to directly hail a cab and instruct the driver. (Id. at 33.) The Federal Court of Justice qualifies the requirement for chauffeur services to accept only assignments received at the place of business as an occupational- or professional-practice rule that does not affect the constitutionally guaranteed freedom of occupation, but rather determines only in what manner members of a profession or occupation must carry out their occupational activities. (Id. at 35–37; Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], 81 Entscheidungen des Bundesverfassungsgerichts] [BVerfGE] [Decisions of the Federal Constitutional Court] 70, at 84–97, DFR website; Grundgesetz [GG] [Basic Law], May 23, 1949, BGBl. I at 1, art. 12, para. 1, German Laws Online website.)

Furthermore, the Federal Court of Justice opined that the prohibition of the Uber Black app is compatible with the EU freedom to provide services codified in article 56 TFEU and the EU Directive on Services in the Internal Market. (BGH, at 45; Directive 2006/123/EC of the European Parliament and of the Council on Services in the Internal Market, Dec. 12, 2006, 2006 O.J. (L 376) 36, EUR-Lex website.) According to article 58 of the TFEU, the freedom to provide services does not apply to transport services. The Federal Court of Justice reiterated that, according to its jurisprudence and that of the ECJ, the services that Uber provides are transport services. (BGH, para. 45.) The intermediation service Uber provides is “an integral part of an overall service whose main component is a transport service.” Uber determines the service conditions—for example, by setting a maximum price—and the passengers would not be able to use the services of the drivers without the intermediation service. (Id. at 46–50.)

The Federal Court of Justice held that it is irrelevant that the ECJ case did not concern professional drivers. (Id. at 52.) The definition of “services in the field of transport” in ECJ case law as “any service inherently linked to any physical act of moving persons or goods from one place to another by means of transport” does not mention nonprofessional drivers. (Id. at 53.)

Finally, the Federal Court of Justice concluded that Uber is vicariously liable for the competition law infringements of the companies and their drivers. (Id. at 62.)

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