Fast-track visa reimposition: a strengthened tool for EU immigration control and external relations policies?

 

Professor Steve Peers, Royal Holloway University of London

Photo credit: Sixflashphoto, via Wikimedia Commons 

How and why can short-term visa requirements be re-imposed, on a fast track basis? For the EU, this issue is decided collectively, on the basis of legislation that applies to all EU Member States (except Ireland), plus the Schengen associated countries of Norway, Switzerland, Iceland and Liechtenstein. A proposal to change those rules to reinforce EU immigration and asylum policy is moving closer to agreement; and as it does so, both Member States and the European Parliament seek to use the new law to reinforce EU external relations objectives more generally too.

Current legal framework

The EU has long had a law harmonising which non-EU States (and entities not recognised as States by some or all Member States) are – or are not – subject to visa requirement for their nationals to make short-term visits (90 days out of every 180 days) to visit the EU (Ireland has its own visa policy) and Schengen associated countries. The law was first amended to provide for fast-track reimposition of visa requirements on immigration and asylum policy grounds in 2013, to assuage Member States concerned about the impact of dropping visa requirements for most of the Western Balkans several years beforehand. These rules were amended in 2017, this time to assuage Member States concerned about dropping visa requirements for eastern neighbourhood countries (eventually visas were waived for Moldova, Ukraine and Georgia). Currently they are found in the codified version of the EU visa list Regulation, adopted in 2018.

At present, the countries whose nationals are not subject to EU short-term visa requirements (the ‘white-list’) comprise most non-EU European states (including the UK), North American and most Latin American countries, some wealthier Asian countries (such as Israel, the UAE, Japan and South Korea), Australia, New Zealand and a number of small middle-income islands in the Caribbean and the Indian and Pacific Oceans. All other countries (the ‘black-list’) are subject to visa requirements. Member States have some flexibility as regards some categories of people (such as holders of official passports), ie they can waive or impose visa requirements for these groups of people even if the non-EU countries as a whole are on the EU white-list or black-list.

For the countries on the black-list, the EU has agreed some visa facilitation treaties (usually in return for readmission treaties) which make it easier for their nationals to obtain visas. It has been willing to suspend these partly or wholly on political grounds (ie Russia and Belarus). The EU has also used its internal law (the visa code) in recent years to make (or threaten to make) visas harder and more expensive to get, if a country (in the EU’s view) does not cooperate sufficiently on readmission. A further proposal to restrict EU trade preferences for developing countries on these grounds has not yet been agreed (in part because it has been criticised for potentially breaching WTO law).

But our focus here is on the potential fast-track reimposition of visa requirements – ie, moving a country from the black-list to the white-list – in the first place. Under the current law, in addition to the separate possibility of a fast-track reimposition of visa requirements if a non-EU country does not waive its own visa requirements for EU citizens (a power that the EU has never used), visas can be reimposed on a fast track basis if there is ‘a substantial increase in the number of nationals of that third country refused entry or found to be staying in the Member State's territory without a right to do so’; or ‘a substantial increase in the number of asylum applications from the nationals of that third country for which the recognition rate is low’; or ‘a decrease in cooperation on readmission with that third country, substantiated by adequate data, in particular a substantial increase in the refusal rate of readmission applications submitted by the Member State to that third country for its own nationals’ (or nationals of other states who transited through that country, if a readmission treaty with the EU obliges the country concerned to readmit them); or ‘an increased risk or imminent threat to the public policy or internal security of Member States, in particular a substantial increase in serious criminal offences linked to the nationals of that third country’. The preamble to the Regulation defines some of these concepts further. A ‘substantial increase’ is more than 50%, although the Commission can use a lower threshold if it ‘deemed it applicable in the particular case’. A ‘low recognition rate’ for asylum applications is ‘around 3 or 4%’, although the Commission can deem a higher rate applicable in a particular case. There is no further definition of ‘serious criminal offences’, or any indications of what might otherwise comprise ‘an increased risk or imminent threat to the public policy or internal security of Member States’, given that the ‘serious criminal offences’ ground is only an example of such a risk or threat (‘in particular’). The reference period to assess these changes is a two-month period compared to the same period in the previous year, or compared with the last two months prior to dropping the visa requirement for a non-EU country. As for the process, after considering a complaint by a Member State for some issues, or on its own initiative for others, and holding discussions with the non-EU country concerned, the Commission can adopt an implementing act (ie subject to scrutiny by Member States’ representatives) suspending the visa waiver for some groups of that country’s nationals for nine months, followed (if the issues still persist) by a delegated act suspending the visa waiver for all nationals of that country for 18 months – which can be extended for six months if the Commission makes a legislative proposal (which would need to be agreed by the Council with a qualified majority of Member States, and the European Parliament) to make the move to the black-list permanent. As noted above, these rules were loosened in 2017, compared to the original 2013 version. The original version of the rules had: set a six-month reference period (instead of two months, with a seven-year time limit on the rule for countries moved to the white-list); required a ‘sudden’ increase creating an ‘emergency’ situation, and pressure on the asylum system as regards the ‘low recognition rate’ criterion’; and provided only for an implementing act reimposing visa requirements for all nationals of the country concerned for six months – possibly extended by 12 months if the Commission proposed legislation.   Despite this loosening of the rules, though, the EU has been reluctant to use them in practice. In fact, they have only been invoked once, to reimpose visa requirements for Vanuatu (see the implementing decision and the delegated act, later extended while the legislation was amended) after that Pacific micro-state introduced a form of ‘investor citizenship’, that the EU judged made it too easy for wealthy (and arguably dodgy) people from black-list countries to buy the nationality of the tropical island so they could visit the EU visa-free. (The question of whether a Member State – Malta – is breaching EU law by doing the same thing, is due to be decided by the CJEU next month). In the EU’s view, the ‘public policy’ ground for fast-track reimposition of visa requirements applied here. Proposal to change the rules After some period of generalised grumbling about the need to change the rules to reinforce the EU’s immigration and asylum policy – in particular to induce neighbouring countries to align their visa policies with the EU, to make it harder for nationals of black-list countries to reach the EU’s borders and claim asylum – the Commission tabled a proposed amendment to the visa list Regulation in 2023. The Council agreed its position on this proposed law in March 2024, and the European Parliament’s civil liberties committee agreed its position last week, as set out here.* (*updated 24 March 2025 to link to the final version of the committee's position)  The Commission proposal The Commission proposal keeps the existing four grounds for fast-track reimposition of visa requirements, with limited changes. There would have to be a significant risk to public policy, et al, rather than an increased risk (now expressly including ‘hybrid threats’, defined in the preamble as including ‘instrumentalisation’ of migrants, ie Belarus shoving them across borders). But there would be new grounds in addition: investor citizenship (which, as we have seen, is currently regarded as covered by the ‘public policy’ ground); non-alignment with visa policy; and non-compliance with commitments made to the EU when a country was moved to the white-list. The definitions of ‘substantial increase’ are moved from the preamble to the main text, and unchanged except for a power for the Commission to set them higher or lower than a 50% increase. For the asylum ground, the low recognition rate is set at 4%, but again the Commission can set it higher or lower than that. The Commission proposal also changes the details of how long visa requirements can be reintroduced for. An implementing act as regards some categories of people having to hold visas could apply for 12 months (instead of 9), and there would be a new power for the Commission to act urgently. A delegated act applying to all nationals of the country concerned could apply for 24 months, instead of 18. In either case, there would be a power to terminate the secondary measure in the event of a change in circumstances. The Council version The Council accepts most of the Commission’s proposal, but wants to make some changes. Its version would add ‘deficiencies in document security legislation or procedures’ to the public policy clause, and the preamble would refer to ‘terrorist offences and activities of organised criminal groups’ as regards public security. There would also be the possibility of reintroducing a visa requirement on external relations grounds:   a significant and abrupt deterioration in the Union’s external relations with a third country listed in Annex II, in particular when it relates to human rights and fundamental freedoms and is deriving from any of the following: (i) serious human rights violations and abuses; (ii) serious breaches of international law and standards, including human rights law and non-compliance with international court decisions and rulings   There would also be a fast-track possibility as regards ‘any other ground for suspension set out in a short-stay visa waiver agreement between the Union and a third country listed in Annex II, limited to the scope of application of such agreement’.   In the Council’s view, a ‘significant increase’ would be 30%, not 50%; and a low asylum recognition rate would be 20%, not 4% - matching the threshold for fast-tracking asylum applications under the recently agreed revised EU asylum procedures law.   The European Parliament   Like the Council, the European Parliament seeks to introduce a new external relations ground for fast-track reimposition of visas, although the Parliament’s text is worded differently:   a deterioration in the Union’s external relations with a third country listed in Annex II caused by: (i) serious breaches by that third country of the principles set out in the Charter of the United Nations; (ii) grave violations by that third country of the obligations deriving from international human rights law or international humanitarian law; (iii) violations by that third country of bilateral agreements between it and the Union; (iv) that third country carrying out hostile acts against the Union or Member States with the aim of destabilising or undermining society or institutions which are key for the public policy and internal security of the Union or the Member States; (v) non-compliance or non-alignment by that third country with relevant Union sanctions.

The preamble of the Parliament’s version states that the hostile acts ‘could result from foreign interference in political processes, economic coercion, cyber operations, economic espionage or the sabotage of critical infrastructure’.

Compared to the Council’s position, the ‘deterioration’ in external relations in the Parliament’s version need not be ‘significant and abrupt’, and is not solely focussed on human rights – although as the Council’s text is non-exhaustive (‘in particular’), the Council could encompass other issues too. In any event, the Parliament’s version mentions ‘serious breaches’ of the UN Charter, instead of violations of international law and non-compliance with judgments; it also differs by expressly referring to ‘international humanitarian law’, breaches of treaties with the EU, ‘hostile acts’ and non-compliance or non-alignment with EU sanctions. (It should be noted that non-EU countries are not legally obliged to comply or align themselves with EU sanctions; although there may be some cases where the EU and non-EU countries will be bound by sanctions because they were adopted by the UN Security Council, non-compliance with those sanctions would in that case be covered by the reference to non-compliance with the UN Charter)

Furthermore, the Parliament’s position would set 40% as the new definition of ‘substantial increase’, and drop any change in the threshold of low recognition rates for asylum. The Commission’s power to adopt urgent measures would be limited to cases of ‘significant risk or imminent threat to the public policy or internal security of a Member State’; and when visa obligations are reintroduced, Member States would lose their power to reintroduce the visa waiver for categories of people, such as holders of official passports. This last point may be a response to the situation created by the recent EU decision to partially suspend its visa waiver treaty with Georgia on human rights grounds, so there is no longer a visa waiver for holders of official passports; yet arguably Member States such as Hungary still have the option under the visa list Regulation to retain such waivers. The Parliament’s version of the law would address such issues. *The Parliament's version would also create a new power for the Commission to require (on a fast-track basis) Member States to reimpose visa requirements for official passport holders from black-list countries (ie Member States could no longer exempt them from the visa requirements) - either due to a 'significant and abrupt' deterioration in external relations (using the same definition of 'deterioration' as for white-list countries) or a failure to cooperate on readmission (as defined by the visa code). [last sentence updated 24 March 2025]    

Comments

Negotiations between the Parliament and the Council will likely start soon. Their two versions of the proposal are not profoundly far apart, differing in particular on: some of the details of a new external relations ground (but not the idea of such a new ground), as summarised above; the thresholds for ‘substantial increase’ and low recognition rates for asylum; limiting the new prospect of adopting a requirement to reimpose visa requirements urgently (but not the idea of an urgent procedure as such); and removing the power of Member States to waive visa requirements for official passport holders when visa requirements are reimposed. On the other hand, both institutions broadly agree on several aspects of the Commission proposal: the new grounds of investor citizenship, non-alignment with visa policy and non-compliance with commitments previously made to the EU; the lengthened periods for reimposing visa requirements via implementing or delegated acts; and a possible early end to the secondary measures.

It’s tempting to extrapolate which non-EU countries might be in the Council or Parliament’s mind as regards the new external relations ground. For instance, the Trump administration’s designs on Greenland (among other things) could, if put into the form of some economic pressure or military action, be seen as ‘hostile’; Israel is often accused of breaching international humanitarian law; and the EU has concerns about the UK’s compliance with Brexit deals. But the Commission will have a great deal of discretion using these powers, and is subject to scrutiny by representatives of Member States if it uses them. And it should be recalled that the Commission has been reluctant to impose visa requirements on the US in the context of non-reciprocity as regards some Member States for the EU’s visa waiver for the US (the European Parliament even sued the Commission on this point, and lost); the Commission and many Member States have been at most mildly critical of the Israeli government; and the EU has shown an established preference to settle disputes with the UK by negotiation, not escalation.  

There may be more enthusiasm for using new powers relating to non-alignment with EU visa policy – although on this point it should be noted that this would entail asylum seekers being prevented from taking a relatively safe journey to the EU border – following a visa-free flight to Serbia, for instance – and may undertake an unsafe sea journey via payment of smugglers instead. With enemies like the EU’s interior ministries, the smuggling gangs don’t need friends.

The existing powers as regards overstay rates, readmission cooperation and asylum recognition rates might be more widely used if the thresholds for their use are lowered. (Note that the European Parliament has already accepted the 20% threshold for asylum recognition, as regards fast-tracking asylum applications as part of the asylum procedures law). In each case, though, the Commission might prefer to use the threat of using the fast-track visa reimposition power to obtain concessions from non-EU countries, rather than move straight to using such powers. Speaking softly, and carrying (but rarely using) a big stick, has been the guiding principle of the EU’s approach to reimposing visa obligations – at least so far. Whether a bigger stick might be used more often remains to be seen.

The Italy-Albania protocol before the Court of Justice of the European Union – hearing of the CJEU

  

Matteo Zamboni (human rights lawyer working between Italy and the UK. He is a partner to the Immigration Law and Policy clinic of Goldsmiths, University of London)

 

Photo: The towers of the Court of Justice in the Luxembourg fog (c) Matteo Zamboni

 

On Tuesday 25 February 2025 I attended the Grand Chamber hearing before the Court of Justice of the European Union regarding the compatibility with EU law of the infamous Italy-Albania Protocol on asylum applications and return procedures as a partner to the Immigration Law and Policy clinic of Goldsmiths, University of London. Here is my take.

 

Introduction

 

On 25 February 2025 the Grand Chamber of the Court of Justice of the European Union (CJEU) held the much anticipated hearing regarding the compatibility with EU law of the Italy-Albania Protocol on asylum applications and return procedures. More specifically, the CJEU was called to give an answer to four preliminary questions referred by the Tribunal of Rome in November 2024.

 

Much of the reports appeared on Italian and international press focus on the “U-turn” of the European Commission, which, differently from what it had argued in its written observations, at the hearing stated that EU law grants Member States the possibility to declare a third country as a ‘safe country of origin’ within the meaning of Directive 2013/32 (the current EU Directive on asylum procedures) despite the existence of exceptions for specific at-risk groups of people for whom the country is, in fact, not safe.

 

However, there is an underlying legal issue which seems to go above and beyond this; i.e., the guarantee of uniformity in the application of EU law on asylum procedures across the European legal space.

 

Outline of the post

 

While waiting for the opinion of the Advocate General (due on 10 April 2025) and obviously for the judgment of the Court (expected before the Summer) the present post gives an account of the hearing by (a) giving a brief description of the content of the Italy-Albania Protocol; (b) summing up the procedural steps before Italian courts that prompted the referral to the CJEU; (c) reporting on the oral arguments made by the parties at the hearing and on (d) the questions asked by the Advocate General and the CJEU Judges.

 

In so doing, the contribution draws upon previous blogs which give detailed information as to (a) the relevant EU legislation (essentially directives 2005/85 and 2013/32, and regulation 2024/1348, applicable from June 2026); (b) the interpretation of the concept of ‘safe country of origin’ (SCO) given by the CJEU in judgment of 4 October 2024 (case C-406/22); (c) the questions referred to the CJEU for a preliminary ruling; and (d) the existence of other requests for referral stemming from the application of the Italy-Albania Protocol.

 

At the outset: the Italy-Albania Protocol

 

In short, and as already detailed by multiple sources, the Protocol concluded between Italy and Albania on 6 November 2023 allows Italy to process asylum applications through an accelerated border procedure from two centres built on Albanian territory (one in the port of Shengjin, the other in the city of Gjader). As clarified in the instrument of ratification (law no 14 of 21 February 2024) and in the SOPs of the Ministry of the Interiors on the implementation of the Protocol (obtained by lawyers from ASGI by means of a freedom of information request), the procedure applies only to ‘migrants’ coming from countries identified as SCOs by Italian law in accordance with relevant EU legislation, and with the exclusion of women, unaccompanied minors, and individuals affected by clear pathologies.

 

The selection of these ‘migrants’ is made by using a so-called ‘hub vessel’. In practice, eligible individuals rescued by vessels of the Italian navy on the high sea are transferred into a dedicated vessel (the hub vessel) and then brought to the centre in Shengjin for initial reception and screening procedures. They are then moved to the centre in Gjader, and therein detained while their asylum claim is processed. These individuals are then made to apply for international (or other forms of) protection directly from the centre in Albania, where they are interviewed by the Commissione Territoriale per il Riconoscimento della Protezione Internazionale di Roma (Rome Regional Commission for the grant of international protection). In case of refusal, they can appeal before the Tribunale ordinario di Roma (District Court of Rome). For this purpose, the asylum seekers are connected into the hearing via video link and represented by lawyers in Rome, who are chosen from a list. During the entire procedure, the asylum seekers remain in detention in the centre of Gjader pursuant to the reference to Article 28-bis legislative decree no 25 of 28 January 2008 contained in the ratification instrument (Article 3 law 14/2024).   

 

Finally, it needs to be underscored that, in Italian law, the list of SCOs was originally set out with a decree of the Minister of Foreign Affairs (lastly on 7 May 2024) adopted on the basis of Article 2-bis legislative decree 25/2008. However, following the CJEU judgment in case C-406/22 (which ruled out the designation of part of countries of origin as ‘safe’, under the current asylum procedures Directive), the Italian government, with the support of its parliamentary majority, passed decree-law no 158 of 23 October 2024, which directly provide an updated list of countries considered as SOCs by Italy. For our purpose, it is important to note that, along with other 18 countries, this list includes Bangladesh.

 

The case in Italy and the questions referred to the Court of Justice

 

The first transfer to Albania was performed on 14 October 2024 and concerned sixteen men – ten Bangladeshis and six Egyptians. Their requests for protection were rejected by the Regional Commission. However, ruling on an appeal brought by two individuals from Bangladesh (identified, in the procedure before the CJEU, with the fictitious names of Alace and Canpelli), the District Court of Rome did not validate their detention in the centres in Albania. Moreover, the District Court referred to the CJEU four questions regarding the concept of SCO under EU law.

 

The questions, which refer to Articles 36, 37, and 39 of Directive 2013/32 (concerning ‘safe countries of origin’), interpreted in the light of Article 47 of the EU Charter of Fundamental Rights (the ‘Charter’) and Articles 6 and 13 of the European Convention on Human Rights (‘ECHR’), ask the CJEU in Luxembourg whether EU law:

 

(1) precludes Member States from designating SCOs by means of legislative instruments (acts of Parliament); 

 

(2) requires national legislation to publish the sources relied on for the designation of a specific country as a SCO;

 

(3) allows national judges called to review the designation of SCOs to use information from sources other than those referred to in directive 2013/32; and

 

(4) precludes a non-EU country from being designated as a SCO where there are categories of people for whom the substantive conditions for such a designation laid down in Annex I to directive 2013/32 are not met.

 

The oral arguments made by the parties

 

This section resumes the arguments made by the parties at the hearing.  

 

The defence

 

The legal teams for Mr Alace and Mr Canpelli coordinated their oral pleadings. The defence thus opened by underlining that the designation of a country as a SCO bears critical consequences, as it triggers the application of the accelerated procedure, entailing serious hindrances to the right of the individual requesting international (and/or other forms of) protection, including shorter time-limits, the presumption (albeit rebuttable) that no protection is needed, and (under Italian law implementing the protocol) the detention pending the examination of the request.

 

That said, the defence moved very quickly on the first question, as it seems rather obvious that EU law does not mandate nor prevent Member States from resorting to specific acts (legislative or others; e.g., ministerial decrees) to implement the rules set out in secondary EU legislation. So, in this case, nothing prevents Italy from designating SCOs by means of legislation; i.e., acts of Parliament.

 

According to the defence, however, this should always guarantee the principle of legal certainty and the respect of the right to an effective remedy. As a consequence, with reference to the second and third question, the defence argued that Member States are under the obligation to make public the sources used to proceed to the designation of SCOs and that national judges cannot be prevented from performing their own research and use other sources to review the decision to consider one country as safe, in the specific case.

 

As regards the fourth question, the defence maintained that the letter of directive 2013/32, and especially its Annex I, read in the light of the subsequent amendments to the relevant EU legislation, leaves no doubt as to the absolute impossibility to designate a country as a SCO whenever there are elements to hold that the country is, in fact, not safe for specific categories of people.

 

The Italian government

The Italian government began the pleadings by addressing the fourth question, concerning the possibility to designate a country as ‘safe’ notwithstanding the existence of exceptions for certain categories of people. Relying on recital 42 in the preamble of directive 2013/32, the government argued that the expression ‘generally and consistently’ contained in Annex I is to be interpreted as meaning that a country is to be deemed safe when it is such for the majority of its nationals. Otherwise, it would be impossible to designate SCOs. In fact, in the view of the Italian government, most countries are in fact ‘un-safe’ for certain categories of persons. In this regard, the government added that the contrary interpretation, according to which a country can be designated as ‘safe’ under EU law only when it is such for the generality of its nationals, would be ‘desirable but unrealistic’ and overall ‘unreasonable’. In support of this argument, the government cited Article 59 § 2 of new regulation 2024/1348 (even though it does not apply yet).

 

In closing on this point, the government argued that the accelerated procedure still guarantees all of the substantive rights of the asylum seeker. The Italian government, thus, openly disavowed the interpretation given by the CJEU in case C-406/22 (see, in particular, § 71), where the Court held that, due to its exceptional nature, the interpretation of the rules concerning the accelerated procedure should always be a restrictive one. To the contrary, according to the Italian government, the accelerated procedure guarantees in full the right to asylum and the possibility to obtain judicial review, so that it should not be seen as ‘exceptional’ when compared to the ordinary one. The only difference, the Government said, is that the accelerated procedure is faster, which goes to the benefit of the State concerned as well as of the asylum seekers.

 

Finally, and this is the core of the Italian case, the government stressed that EU law leaves discretion to Member States when issuing the list of SCOs.

 

Turning to the other questions, the Government stated that Italy has a right to designate SCOs by an act of Parliament and that there is no need to make the sources used for the designation publicly available, as transparency is guaranteed by internal parliamentary rules stating that discussion in Parliament is public. In addition to more detailed arguments taken from the letter of directive 2013/32, the Government argued that EU law cannot impact on the constitutional system of Member States. Therefore, in accordance with the principle of the separation of powers enshrined in the Italian constitution, it is for the Legislature to designate SCOs in general terms, while the power of national judges is confined to evaluate whether, in a specific case, the designation applies to a given asylum seeker. At the most, the national judges can refer the question regarding the general designation of SCOs to the (Italian) constitutional court.

 

The other Member States

 

Thirteen Member States (Czech Republic, Germany, France, Cyprus, Hungary, Malta, the Netherlands, Austria, Poland, Slovakia, Finland, and Sweden) participated in the proceedings by filing written observations and seven Member States (Bulgaria, Czech Republic, Germany, Latvia, Lithuania, Hungary, and Sweden) were present at the hearing.

 

Generally speaking, all of these countries supported the position of the Italian Government. Among them, the arguments made by Germany, Hungary, and Sweden seem worth mentioning.

 

The German government focussed on the issue of which national authority has the power to designate a country as a SCO and which remedies may be enacted to challenge this designation at the domestic level. According to Germany, EU law (directive 2013/32) distinguishes between the general designation of a country as a SCO, on the one hand, and the application of the concept in a specific case, on the other hand. The former assessment is based on general considerations, while the latter is based on the specific circumstances of the asylum seeker concerned.

 

Against this background, the position of Germany is as follows: Every national court has the power to perform the second assessment (application of the general designation of a country as a SCO to a specific case). However, the first assessment (general designation of a country as a SCO) must remain separate from this, and reserved to the Legislature. This is so because EU law leaves ‘leeway’ to Member States in performing the first assessment. Therefore, in the opinion of the German government, a system that reserves the first (general) assessment to Parliament is not only compliant with EU law, but actually more transparent and democratic. This general assessment can be reversed by the constitutional court, which has the power to review the constitutionality of legislation. Instead, if a national court believes that the general assessment that prompted the designation of a country as a SCO goes against the Constitution and/or EU law, it will have to raise a challenge of constitutionality before the constitutional court.

 

The government of Hungary stretched this argument to the widest possible extent. In their view, only national constitutional courts have the power to review the (lack of) legality of the legislation establishing the list of SCOs. In reaching this conclusion, the Hungarian government insisted on the concept of ‘room for manoeuvre’, arguing that Member States enjoy wide discretion in the implementation of EU law. 

 

Finally, the pleadings of the government of Sweden differed from the previous ones in that they highlighted that the questions referred to the CJEU are relevant to the whole of the EU, since asylum procedures must be effective throughout the European Union legal space, without prejudice to the right of all individuals to effective judicial protection in terms of individual examination of their requests. Moreover, the Scandinavian State pointed out that, in its domestic legal system, there is no general list of SCOs. Instead, it is for each national court adjudicating on asylum claims to determine whether a legal principle that is being challenged is compatible with EU law.

 

All the same, in addressing the first two questions the Swedish government stood with Italy, arguing that the way in which the Italian Legislature decides to designate SCOs is not a matter for EU law. This position was justified by referring to the principle that it is incumbent on each Member State to organise its legal system in accordance with the overarching principles stemming from EU law and from its constitutional settlement.

 

The EU Commission

 

Finally, the lawyer for the Commission made the following points:

 

(a) in general terms, the national judge who finds that the definition of a third country as ‘safe’ is problematic must refer the question to a specific judicial authority; e.g., the constitutional court;

 

(b) in the specific case, the national judge has the power to find that the designation of a third country as a SCO does not apply to the individual(s) whose case is under examination, meaning that, for them and only for them, the country cannot be considered as safe;

 

(c) the fact that the exception concerning categories of people was established in directive 2005/85, but not replicated in directive 2013/32, does not in itself preclude Member States from providing for such exception in the national lists of ’safe countries’;

 

(d) Article 37 of directive 2013/32 empowers Member States to make a discretionary evaluation as to which countries to include in the list of SCOs; 

 

(e) consequently, nothing prevents Member States from including in the list of SCOs countries that may not be safe for a category of persons;

 

(f) it is irrelevant whether these categories include a large number of individuals (e.g. the category of ‘women’); what matters is that each category is clearly defined;

 

(g) the formula ‘generally and consistently’ contained in annex I to directive 2013/32 needs to be interpreted as meaning that a country cannot de deemed to be ‘safe’ under EU law when there are ‘systematic’ violations of human rights.

 

The questions from the Advocate General and the Court

 

The questions asked after the first round of pleadings give an indication as to the possible approach that the Court will take on the matter.

 

To begin with, the Judge rapporteur asked the Commission to clarify its position regarding the fourth question; i.e., the possibility to consider a country as a SCO notwithstanding the existence of specific at-risk categories. Interestingly, the question was reinforced by the President of the Court, which noted the possibility of a misunderstanding due to the very nuanced position taken by the EU institution. In its reply, the Commission clarified that, in its opinion, directive 2013/32 does not preclude this possibility.

 

As noted in the press, this position is different from the one stated by the Commission in its written observations, where it was argued that ‘Directive 2013/32 does not allow for the designation of a third country as a safe country of origin where a significant number of persons belonging to the same category are systematically persecuted or face a risk of suffering serious harm […]’.

 

Secondly, the Advocate General asked the Italian Government some specifics as to the review of constitutionality in the Italian system. Among other things, he enquired whether the Constitutional Court is empowered to review compliance of Italian law with EU law (including Annex I of directive 2013/32) and if a question of constitutionality can be raised by the local/district courts (courts of first instance).

 

The Italian government replied in the affirmative, holding that the question of constitutionality can be raised by all national judges and that the constitutional court can indeed evaluate compliance of national law with EU law. Moreover, the government reminded the CJEU that the constitutional court could, if it deems it useful, raise preliminary questions to the CJEU. In so doing, the Italian government unreservedly affirmed its view that the challenge of constitutionality provided for in the Italian legal system constitutes an effective remedy for the purpose of EU law.

 

In a second round of questions, the AG asked the Italian government about the periodic update of the Italian list of SCOs, that was due on 15 January but, as of the date of the hearing, was not published. In particular, the AG asked whether resorting to an act of Parliament for each and any update of the list of SCOs did not risk to excessively slow down the process.

 

In reply, the Italian Government informed the Court that the new list was about to be published and that the legislative process is not excessively burdensome (!) and thus not liable to cause undue delays.

 

Moreover, the AG questioned the reasons why the sources used by Parliament to designate a country as a SCO could not be made public and asked whether the Italian Government is perhaps using confidential sources.

 

The Government denied using confidential sources, but defended the position not to make them publicly available, trailing back to the argument that the legislative process is transparent, and that parliamentary discussion is public.

 

Finally, two Grand Chamber judges pressed the Italian government on the underlying issue of supremacy of EU law. In their questions, the judges asked whether a national judge that has no doubt over the non-compatibility of the national legislation designating SCOs with the criteria set out in Article 37 and Annex I of directive 2013/32 would, in any event, be forced to raise a question of constitutionality. This point was compounded by the apt reminder that, under the general principles of EU law as interpreted by the consistent case law of the CJEU, every national judge, including in first-instance proceedings, is empowered to assess the compliance of national law with the acquis communautaire.

 

Even there, however, the Italian government stuck to the position that it is only for the Constitutional Court to look at whether a manifest and general error was made in the general designation of a country as a SCO, while the power of lower courts is confined to the evaluation of the specific case. In the government view, it is to be reiterated that this is so because Member States enjoy discretion when making the general designation of SCOs.

 

Conclusion

 

While it is impossible to second-guess the outcome of the case, it is rather safe to assume that, contrary to what was held in press reports, the judgment on the four questions referred to the CJEU will not put an end to the litigation over the Italy-Albania protocol.

 

As noted by the CoE commissioner on human rights, future litigation may involve questions regarding the overall fairness of asylum procedures, the possibility of automatic detention without adequate judicial review, access to legal aid, and respect of the right to an effective remedy. On the same vein, in a report to the Italian Parliament of 30 November 2024, Professor Satvinder S. Juss from Kings College raised the question as to whether EU asylum law can be applied outside the EU.

 

Moreover, as already noted in the literature, the case insists on wider considerations concerning the ‘consistent interpretation’ of EU law.

 

Admittedly, during the hearing the issue remained in the background. The defence did not really push on it, while the Italian Government and the intervening Member States did so only implicitly, by heavily relying on the principle of procedural (and constitutional) autonomy (as evidenced, for example, by the pleadings of Sweden).

 

Yet, the questions of the Grand Chamber’s judges demonstrate that the issue is very much on the table.

 

Actually, it seems that this can be better dealt with if divided in two separate points:

 

-          first, whether the national (Italian) judge adjudicating in first instance on a request for international protection submitted by an individual coming from a country that has been designated as a SCO by Italian law is empowered to refer the question over the compatibility of national law with directive 2013/32 to the CJEU, pursuant to Article 267 TFEU, or whether this has to go, first, to the Italian Constitutional Court, who would then refer the question to Luxembourg;

-          second, whether the national judge is empowered to disapply the national legislation designating SCOs if he or she finds that this is contrary to directive 2013/32, and in particular to Articles 37 and 38 and Annex I thereto.

 

The first limb of the matter seems clearer, as it appears safe to assume that the argument of the Italian government (with support from the intervening Member States, especially the Hungarian government) on the need to raise a question of constitutionality contravenes the overarching principle that the principle of ‘the primacy of EU law […] requires […] national court[s] to be free to refer to the Court of Justice for a preliminary ruling any question that [they] considers necessary, at whatever stage of the proceedings [they] consider[…] appropriate’ (see joined cases C-188/10 and C-189/10 Aziz Melki, Sélim Abdeli).

 

The second limb of the question is not as straightforward.

 

As to the general principles, it is commonplace that, under the well-established case law of the CJEU,

 

(a) if a provision of EU law is directly effective, domestic courts must apply it in priority and are thus empowered to disapply conflicting provisions of national legislation without the need to request or await the prior setting aside of such provision by legislative or other constitutional means (see case C-106/77 Simmenthal and following case-law);

 

(b) specific provisions contained in EU directives are ‘capable of producing direct effects’ (see e.g. case C-9/70 Franz Grad and C-41/74 Van Duyn);

 

(c) the direct effect of provisions contained in a directive depend on whether they are ‘unconditional and sufficiently precise’ (see e.g. case C-236/92 Comitato di Coordinamento per la Difesa della Cava);

 

(d) if so, these provisions can be invoked by individuals appearing before national courts ‘whenever the full application of the directive is not in fact secured, that is to say, not only where the directive has not been implemented or has been implemented incorrectly, but also where the national measures correctly implementing the directive are not being applied’ (see case C-62/00 Marks and Spencer).

 

Therefore, the question is whether Articles 37, 38 and Annex I of directive 2013/32 are ‘unconditional and sufficiently precise’.

 

The existing jurisprudence is only relatively useful. True, the CJEU has already stated that, under these provisions, ‘it is for each Member State to designate safe countries of origin […] in accordance with the procedure laid down in Articles 36 and 37 and in Annex I to Directive 2013/32, namely, in particular, the adoption by the national legislature of a list of third countries in accordance with the criteria laid down in Annex I’ (see case C-404/17). Moreover, in the above-mentioned case C-406/22 the Court confirmed that, due to its exceptional nature, Article 37 must be interpreted restrictively. However, it does not seem that the Luxembourg judges had, so far, had the chance to decide over the question of direct effects of these provisions.

 

This seems indeed complicated.

 

On the one hand, the argument of the Italian Government (and of all the intervening Member States) according to which directive 2013/32 leaves discretion to States in designating SCOs seems to have some merits, and resonates with a stream of CJEU case law excluding direct effect of EU law provisions which are ‘subject […] to the to the taking of […] measure[…] by the Member States’ (e.g. case C-263/92 at § 9 and 12-14).

 

On the other hand, this stance can be said to have been overtaken by more recent case law that, in addition to their wording, focusses on the context and purpose of the EU law provisions at stake in determining whether they are capable of being directly effective. For example, this allowed the CJEU to hold that, although it required actions from the part of the Member States, the Annex to Directive 80/987 (on the protection of employees in the event of insolvency of their employer) regarding the categories of employee whose claims may be excluded from the scope of that directive within the meaning of Article 1(2) was, indeed, directly effective (see case C-441/99, in particular § 39 and 40, where the Court stated that ‘the Member State concerned has [made the designation required by the Annex]’ and therefore ‘made full use of the discretion which it enjoy[ed] […] in the implementation of the Directive’ (see case C-441/99 Riksskatterverket).

 

Against this background, the good news is that this question was referred to the CJEU by the district court of Bologna in another case concerning the application of the Italy-Albania Protocol (case C-750/24 Ortega).

 

It will no doubt be interesting to see the way in which this question will be addressed by the Luxembourg Judges. What is sure is that the case touches upon cornerstone principles of EU law and that specific expertise will be needed from the defence in order to stand up to the legal arguments made by Italy with the support of the EU commission and virtually all the other Member States.

 

 

 

The EU Directive on Women on Corporate Boards: Steering Out of the Limitations and Leveraging Opportunities

 

Dr Joy A. Debski, Lecturer in Law, School of Law and Social Sciences, Robert Gordon University

Photo credit: André Corboz, via Wikimedia Commons

 

Synoptic Data Inquiry and Understanding the Directive

Although women constitute about 51% of overall population in the EU, statistics show a rather concerning reality that despite accounting for about 60% of recent university graduates, women only account for 32.2% of board members and 8% of board chairs. Conversely, women hold more part-time and lower-paid jobs, with 27.8% employed part-time compared to only 7% for men, indicating limited engagement in key economic roles. These results point to a considerably low engagement of the women workforce in critical economic roles.

The conversations and efforts to mitigate the gender gap of women on boards within the European Union (EU) led to the Union’s Gender Balance on Corporate Boards Directive (directive) 2022. Member States had until December 28, 2024, to implement the directive, and companies (listed companies) must meet the targets set out in the Directive by June 30, 2026. The directive sets the target that at least 40% of non-executive director positions or 33% of all director positions be held by the underrepresented sex (women). The directive, however, accommodates some limitations, such as the provision that the priority of women, when they are equally qualified with men, should not have automatic application. Hence, the provision can be displaced by a candidate’s lack of predetermined qualifications and the operation of other diversity goals that the company seeks to attain (which must be objectively set and not be of retrospective application) – paragraph 40 to the preamble of the directive. The compulsory quota targets, even though influential, may not ensure continued inclusion after the quota is met.

The Directive aligns itself with existing frameworks such as Article 157 of the Treaty on the Functioning of the European Union (on equal pay) and paragraphs 49 and 58 to the preamble of the Corporate Sustainability Reporting Directive 2022/2464, which seek to minimize the gender gap of women in professional roles.  

Through its legislation, the EU is attempting to bridge the gender gap. However, women now have their roles in ensuring that the goals of the directive for a fairer and more diverse corporate environment in the EU are realized. Women need to be informed of the inherent limitations, and they can harness the benefits of diversity in advancing their careers.

Steering Out of the Limitations and Leveraging Opportunities

Enhance Qualifications and Skills: Despite the boldness of the directive, especially regarding the priority rule, equal qualifications of candidates must first be met before the consideration of applying priority to women candidates. (all things being equal). This makes it imperative that women must “accelerate action” and decisively engage in preparations that align with corporate board roles, in order to increase competitiveness. Hence, thoughtful investment in professional development, such as undertaking chartered secretary and governance professional qualifying exams organised by specialist and accredited institutions, may be a crucial step to take in preparation for management roles. Additionally, board-relevant skill acquisition (such as professional experience in managerial tasks, international experience, leadership financial literacy, strategic planning, governance, etc) are strongly advised. Paragraph 39 to the preamble of the directive points to this clearly.

Pursue Board Positions: The directive as transposed by Member States must be followed by decisive career actions by the female population, boldly disregarding assumptions about (fear of) traditional discrimination. With the directive promoting a minimum quota representation of women in directorship positions to address inequalities, women should actively pursue roles in corporate boards beyond listed companies after acquiring board-level qualifications and experience. Despite the odds (non-automatic application), the priority rule for equally qualified candidates crafts a more favourable environment for women to be considered for these positions.

Monitoring Company Compliance: women should themselves, be the first defenders of the provisions of the directive by being diligent with the recruitment process and proactive in their inquiries about set recruitment standards. Knowledge of how exactly the directive is transposed by the country that pertains the candidate is important.  This will aid in checkmating companies against absolute non-compliance and unjustified application of exceptions to choose against female candidates for board roles – see the requirement of the directive in paragraphs 42 – 44 of the directive’s preamble.

Explore litigious avenues: The directive empowers members of the underrepresented sex to demand the company to provide their criteria for selection into the board. Hence, upon any detection of discrimination or non-compliance with the directive, or the non-disclosure of full criteria or misleading disclosure; a valid recourse to court is possible.  The application of positive action measures (as an instance) in the protection of underrepresented sex in recruitment, has obtained judicial interpretive attention that makes it permissible in some instances. For instance, in the case of Marschall v Land Nordrhein- Westfalen (2000), upon the positive action measure being challenged, the court ruled that the positive action measure which favoured women is permissible  (as long as the recruitment and assessment criteria were objectively met)  and its application does not amount to automatic preference over men.  The earlier case of Kalanke v Freie Hansestadt Bremen further strengthens a stance against absolute application of the positive action measure. While the possibility of approaching the court upon non-justified misapplication of the priority rule is noted, these two cases are of guidance to any litigious move in determining the permissiveness and appropriate application of the positive action measure or otherwise.

Other strategies include ensuring professional visibility, participating in specialized training programs designed for prospective corporate board members, and strategically networking with women advocacy groups, for awareness and support for rights enforcement. Also, women who are current board members and CEOs must endeavour to mentor and support ideas of inclusiveness in their different capacities.

Conclusion

On a wider economic justification of gender equality, the European Institute for Gender Equality (EIGE) forecasts that by the year 2050, increased EU (GDP) per capita of 6.1 - 9.6% (EUR1.95 to EUR3.15 trillion), will be on account of improving gender equality. This further envisages the creation of about 10.5 million jobs in 2050. To achieve this positive reality within the context of EU Directive 2022/2381, listed (and other) companies within the EU must be poised to bridge the employment gap between women and their counterparts in their Boards. While the efforts of the directive hinges on quota targets and deadlines, long-term cultural changes toward inclusivity in corporate governance are recommended, and women have critical roles to play in the directive’s broader success. The laws are in your favour; what are you doing better to take benefit?

 

Revolutionizing Law? Exploring experimental regulations and artificial intelligence Sandboxes in the AI Act

 

 

Davide Rauhe

 

Photo credit: Chief Photographer, MoD

 

Executive Summary

 

This blog post explores the emergence of experimental regulations and policies with focus on its gained prominence within the European Union in the recent years.

 

As emerging technologies, especially in the field of artificial intelligence (AI), continue to shape our societies, there is a growing need for flexible regulatory approaches that can adapt to rapidly evolving technological landscapes. Experimental regulation and Regulatory sandboxes have gained popularity as a potential solution to foster innovation while ensuring the maintenance of minimum standards in fundamental rights and ethical questions.

 

Therefore, special focus shall be laid upon the significance of regulatory sandboxes and their implementation in the new AI Act on EU-level. This post analyzes the significance of these new law-making methods and answers the question whether or not lawmakers can benefit from them.

 

I. Introduction

 

Regulation and legislation can have strong impacts on the economy and society of a country. However, both are still regarded as a merely bureaucratic action, despite its influence on economic and social development. Indeed, legislation is by some even considered a major force in enabling capitalistic structures, assuming that law itself can create capital by allocating resources either by allowing, shaping or even prohibiting certain economic behaviors.^[1] This is particularly the case when sudden and impactful technological improvements are made as with them usually a shift in political and economic power is recorded as well – its design and scope is therefore of even greater importance.^[2] This applies especially to the European Union as legislator, because the EU as a regulative body influences other jurisdictions all over the world – a process often describes as the so-called Brussels-effect.^[3]

 

With the emergence of increasingly complex technological and innovative economic models in various economic sectors such as finance, commerce and others, there has been a greater demand for more diverse and innovative regulatory approaches in various sectors. However, the protection of fundamental rights standards takes a key role in this discussion as well as the age of “information” or “surveillance” capitalism comes with an increased danger for fundamental rights. Furthermore, new technologies often tend to change the distribution of wealth within societies and therefore possibly lead to either the reduction or the growth of inequality depending on how they are regulated.^[4] The misalignment of innovation and regulation can therefore be extremely problematic for societies.^[5] Major reasons for a misalignment have been localized in information gaps of regulators, the inability of regulators to fully grasp the innovational model itself and the invisibility of certain innovational flaws only until they become critical and therefore unmissable.^[6]

 

Experimental regulations and regulatory Sandboxes may provide a fitting and promising remedy to these conditions. Both concepts promise to handle innovative business models more effectively through the implementation of different adaptability and adjustment measures while also securing a sophisticated human rights standard. The discourse over these specific forms of regulation gained more prominence with the recent improvements of artificial intelligence (AI), a generic term that encompasses various technologies that are considered to have some form of intelligent behavior, and its spreading usage in various economic and scientific sectors. Especially with the public roll out of ChatGPT and other artificial intelligence powered Large Language Models (LLM), the potential of Artificial intelligence became more apparent to a greater circle of persons, including policymakers.^[7]

 

With the next technological milestones in artificial intelligence development already on the horizon, generally referred to as superintelligence, a dedicated and consistent approach is essential here.^[8] The goal in this regard is to reach so-called superalignment, which translates to agile and adaptive regulation combined with state of the art monitoring and reactional measures for any form of super-intelligent machines.^[9] But there is still a long way to go. Until then, however, the goal must remain to reach an alignment as far as possible.

 

Due to the rapid evolution of this technology and its improvements and changes, experimental regulation and sandboxes seem to serve here as the right method to effectively regulate this technology while not preventing economic and/or scientific growth using it. As seen in the recent implementation of the AI Act and its use of experimental legislation and sandboxes these lawmaking forms found their way into one of the most discussed and anticipated EU regulations in the recent years. The EU's AI Act represents therefore a significant milestone, using the concept of regulatory sandboxes on the EU-Level for probably the technology of the 21st century.

 

This blogpost tries to assess whether this legislative approach is the right measure to tackle artificial intelligence by analyzing its historical background and the legal implications of it. After that, the case of experimental regulations and legislative sandboxes and their effective provision in the AI act will be addressed through a case study on the AI act.

 

II. Experimental Regulation and Regulatory Sandboxes

 

To comprehensively analyze the concept of experimental regulation and regulatory sandboxes, particularly in the realm of AI, it is essential to clarify its specific meaning.

1. Experimental Regulation

 

Experimental Regulation is inherently designed to serve as a more adaptive and collaborative approach to regulatory compliance in comparison to more conventional regulation methods, offering a framework that fosters innovation while ensuring accountability. Generally speaking, experimental regulation can be seen as legislation which authorizes, monitors and executes legal experiments.^[10]

 

In its core, experimental regulation serves as an evidence-based form of law making in opposition to the conventional “trial & error” approach.^[11] Experimental regulation tries to limit the unpredictability of that approach to an acceptable amount.

 

The most notable features of experimental regulation are its temporal nature, its derogation from current, already existing statutes and finally the evaluation of the results stemming from the execution of the experiment.^[12] It can be therefore defined as a form of legislation that includes legislative measures on trial that serve the sole purpose of evaluating its effectiveness and practicability before its widespread and definitive implementation.

Experimental regulations are therefore a method for piloting fresh rules on a limited scale to assess their practical efficacy, tailor them to evolving conditions, and empower regulatory authorities to gain insights from the outcomes acquired in real-world scenarios.^[13] In this regard experimental regulation serves as a form of anticipatory and flexible regulation which encompasses preventive citizen protection while promoting innovation at the same time; its experimental framework and limited scale allows private actors and state authorities to analyze possible outcomes of technologies as well as of the regulation itself in a more detailed, safe and overall sophisticated way.^[14] Due to real-time feedback and constant evaluating of outcoming results, it is specially feasible for subjects and industries that require a fast and reactive regulative response to practical issues.

Furthermore, experimental regulation can easily adapt to cultural changes in economic behavior as itself is changing and adapting constantly as well.^[15] While it does not make sense to apply old regulation, which for instance was made for regulating taxi and cab services to more innovative transport companies like Uber, experimental regulation could adapt and adjust its rules to the seemingly similar, but essentially different business models of new market players more easily.^[16] The case-by-case approach of experimental regulation promises here a coherent and up to date regulation even in times with increasingly faster changing industries and economic realities.^[17] Moreover, it can even lead to a better cost-effectiveness of state spending as potential negative monetary impacts can be detected faster and the regulation can be adjusted before its widespread establishment.

2. Regulatory Sandboxes

 

Another and more recent form of experimental regulation is Regulatory Sandboxes. As has been the case with experimental regulation, one reason why sandboxes are being promoted is that traditional legislation is no longer regarded as adequately fitting to regulate innovative business models. These frequently outpace regulatory development, which can stifle innovation or lead to unregulated deployments, which could be seen in the case of Big Tech. Here, traditional legal measures like competition law weren’t capable of regulating these companies effectively during their rise-ups.^[18] In fact it could be even argued that their entire business-model cannot be monitored with previous existing measures.^[19]

The alternative to the mere adjustments of already existing regulatory frameworks could be the introduction of regulatory sandboxes. Introduced for the first time in 2016 within the UK for the enhancement of innovation within the fintech sector, regulatory sandboxes can serve as a method to effectively promote innovation while mitigating compliance with regulation.^[20]

Sandboxes facilitate close cooperation between public and private entities and provide secure environments for fostering innovation by either temporarily applying an alternate regulatory framework to a (pre-)selected group of companies or by providing guidance on compliance through public actors.^[21] Usually, but not necessarily, both is the case. It therefore is a safe space for (often) start-ups and established companies to test new technologies, products, or services that are usually not compliant with current legislations within a limited, well-defined scope and under public supervision.^[22]

 

These controlled, yet real-world environments allow for a sophisticated testing of services, products and/or market approaches while minimizing the risks associated with unchecked and new technologies as they affect here only a limited circle of individuals and/or companies with proper safeguards provided.^[23] The sandboxes‘ duration depends on the decision-making authority, but they usually last up to 12 months.^[24]

While the private parties involved in the sandbox regime gain important information on client impressions, lawmakers can learn from emerging technologies and refine already existing regulations, ensuring this way the maintenance of an ethical but also efficient regulation.^[25] In contrast to experimental regulation in the narrow sense, regulative sandboxes do not always foresee the derogation of existing legislature within the laboratory-like framework.^[26] Here, the focus lies more on the collaborative factor between companies and the regulator and sometimes even only between companies and other private actors.^[27]

 

By offering a safe space for experimentation, sandboxes shall promote ideally innovation and learning on both sides, facilitating a two-way dialogue between innovators and regulators. This dialogue is instrumental in fine-tuning the regulatory framework as technologies advance since the knowledge necessary for effectively regulating increasingly more complex economic models becomes more and more complex itself.

 

The micro-optimizing and technology-specific approach promises to lead to satisfactory results, that can then be applied to a greater scale or other sectors/technologies.^[28] It also minimizes knowledge gaps between regulators and innovators as the constant exchange of information lets the legislator gain a wider understanding of new products, which makes it in turn easier to adjust regulation to the specifics of the product.^[29] Here, it is crucial to adjust regulation in the early stages of the development process as later changes may be already outdated or even harmful to the new standard, which the innovation usually gains more quickly after a certain period of time.^[30] Overall Sandboxes can therefore lead to better informed and tested regulation, making it likely to prevent flaws in legal regimes like the before-mentioned competition law.

 

Furthermore, sandboxes can accelerate efficient, coherent, and ‘bullet-proof’ regulation, thus also improving legal certainty for businesses.^[31] On top of that they also make it easier for companies to comply with upcoming regulation, as the experiences from the sandbox can already be used to amend or adjust the companies’ respective services, products and mechanisms while the legislative process is still running. Therefore, the time for these products and services to be deployed onto the respective markets can be significantly shortened. An established and well-planed learning and knowledge sharing mechanism could then foster the achieved results and make them useful for future sandboxes and thus amplify the gained knowledge. Sandboxes therefore promise to serve as a framework for nurturing innovation, but also compliance. Regulation thus often turns here into some sort of Governance based on enhanced communication.^[32]

 

III. The ‘smart’ legal framework in practice: The AI Act

 

The most recent and significant use of sandboxes can be found in the new AI Act of the EU, which came into effect in August 2024, trying to regulate Artificial Intelligence and its usage.^[33]  In general, the EU chose to follow a horizontal regulating approach with implementing the AI Act.^[34] In this regard many artificial intelligence tools already fall under current legislation regarding several different sectors, like data protection law or competition law.^[35] This is usually not due to the peculiarities of the artificial intelligence used, but rather of varying reasons connected to other issues regarding the product or the company.

 

However, the EU legislator attempted to at least minimize negative consequences of artificial intelligence in particular before the implementation of the AI Act in a non-centralized and somewhat chaotic approach, enshrining some regulative measures in different legal initiatives like the GDPR, cf. Art. 22 or 35.^[36] Most of these regulations were of vertical nature, mostly born out of pressure to quickly react to fast-changing technologies and the legal vacuum they nurtured from.^[37] The amendments were necessary due to the lack of a general law constraining and defining the powers and limits of this technology.^[38] With the AI Act such a law now exists, crossing the threshold of regulation being predominantly reactive to being increasingly more structural and therefore preventive.^[39] Through its implementation the EU now seeks to create a comprehensive framework and ecosystem to enable citizens to nurture the benefits of artificial intelligence while simultaneously minimize its risks EU-wide.^[40]

 

The EU followed in this regard a mostly risk-based approach, meaning that it categorizes artificial intelligence systems and foundation models into different risk categories with different compliance standards according to the specific risk level the respective artificial intelligence systems falls under.^[41] Providers as well as deployers of such systems will then be obliged to perform certain duties and comply with the regulation in order to mitigate risks stemming from risky artificial intelligence.^[42] This approach does justice to the different types and areas of application of artificial intelligence, some of which have very different potential risks for society.

 

The AI Act introduces different forms of governance and regulation including complete prohibitions, the possibility of substantive fines, reporting, record keeping, documentation, transparency and human oversight obligations, but also providing among others the option to establish regulatory artificial intelligence sandboxes.^[43] Proponents of regulatory sandboxes saw this as a great opportunity for the successful implementation of this legal measure on a large scale. Thus, the EU followed other legislators who already established AI-Sandboxes in their own respective jurisdictions, for example Russia,^[44] Brazil, Norway, United Kingdom or Spain.^[45]

 

But how and how well did the EU design these sandboxes? As outlined above the specific operationalization and the actual design of a sandbox are extremely influential on its success.

 

IV. The AI Act as a Case Study

 

If regulatory sandboxes are regarded as a sub-category of experimental regulation, both forms of legislation have found their place in the AI Act in the form of a regulatory AI sandbox, which can be found in Art. 57 ff. AI Act. According to these Articles each Member State shall establish at least one AI regulatory sandbox alone or jointly with other Member States and their competent authorities, cf. Art. 57(1) AI-Act. Accordingly, Member States must either introduce such an AI regulatory sandbox themselves or participate in a sandbox established by another Member State. This applies to the extent and only if participation in the sandbox of the other Member State is comparable to the establishment of its own. In this respect, this should be of particular interest and advantage to smaller member states if their own AI sector is too small to introduce an AI regulatory sandbox. Larger member states are likely to regularly fail this restrictive condition, unless the scale of the desired sandbox is correspondingly large.

To prevent segmentation and fragmentation of regulatory sandbox regimes across the EU, the Commission is obliged under Art. 58(1) of the AI Act to adopt an implementing act in which the modalities for the establishment, development, implementation, operation and monitoring of the AI sandboxes. Art. 58 of the Act lists numerous points that must be observed by the national authorities when establishing and operating sandboxes. It is to be welcomed that the national authorities are given an appropriate amount of leeway to shape the concrete form of the sandboxes without it being too extensive. For example, the authorities can determine the length of the respective sandbox themselves, which makes sense in line with the concept of sandboxes based on individual projects, cf. Art. 58(2)(h) AI-Act.

 

As outlined above, the success of regulatory sandboxes and experimental regulation is also highly dependent on the evaluation process as it is a crucial part of conducting the sandbox and gaining important information for future regulation attempts. Here, the national competent authorities responsible for the establishment and operation of the sandboxes must send annual reports to the AI Office and the European artificial intelligence Board – two organs introduced by the AI Act in order to monitor and guarantee the success of the regulation ­– in accordance with Art. 57(16) AI Act, in which they report on the progress and results of the implementation of these sandboxes, including best practices, incidents, lessons learned and recommendations on their establishment and, where appropriate, application and possible revision of this Regulation. Depending on whether the expected and previously mentioned implementing act of the Commission further specifies these evaluation obligations, the standard of the respective assessments could even be increased accordingly.

 

Furthermore the AI-Act provides several organizational points that should guarantee the successful implementation of European Union AI sandboxes. Pursuant to Art. 57(1) AI-Act the Commission may provide assistance in the form of technical support, advice or the providing of tools for the establishment as well as the operation of such AI regulatory sandboxes. Depending on whether – and if yes on how – the support is actually given, the sandbox framework in the AI Act may turn out as a success or a failure. This of course also depends on whether the support of the Commission is needed in the first place. Since the sandboxes will probably remain national to the greatest extent and according to Art. 57(1) AI-Act might be even conducted on a regional or local level, the centralized expertise of the Commission might turn out to be unnecessary. However, when two or more member states establish and/or operate an AI sandbox together according to Art. 57(1) Para. 1, 2 AI-Act, it may be useful to obtain information from a supranational body like the Commission as it might have more supranational resources in the first place.

 

According to Art. 53(17) AI-Act the Commission must create a comprehensive interface to give stakeholders and interested parties an overview of the sandboxes and, if necessary, contact options, which should make the access to the sandboxes easier. The attempt to amplify supranational cooperation and cross-border innovation is reflected several times within the regulation, cf. Art. 57 Para. 1 or 4 AI Act, which stipulate that the sandboxes should be designed in such a way that competent authorities from other member states can also participate if needed. Also, there is the possibility of a European Union AI regulatory sandbox for the EU institutions themselves, which can be established by the European Data Protection Supervisor.

 

All the above-mentioned points promise to guarantee a successful implementation of regulatory AI-sandboxes on an EU level. However, there are also points in which the EU only partly succeeds in establishing a coherent and effective sandbox environment. To effectively attract applicants to participate in a regulatory sandbox there should be exemptions from the existing regulatory burden. However, there is no mention of this in the AI Act, at least not explicitly. The reason for this is not entirely clear. Here too, the legislator could have easily continued to pursue the risk-based approach and made the derogation from existing rules and regulation dependent on the respective risk level of the respective artificial intelligence technology. There should still be incentives for companies to participate in the sandbox, such as faster distribution of products to the European Union market. Especially with a complex technology such as artificial intelligence, it would have made sense to offer incentives to deviate from the now comprehensive legislation in order to try out new approaches and ideas.^[46]

 

Rather, a genuine "experimentation clause" should have been chosen here, which would have given the supervisory authority a certain amount of leeway to act flexibly in the application of the existing legal framework and to deviate from it accordingly if necessary.^[47] Furthermore, applicants could also be attracted by monetary incentives. Here the providers of artificial intelligence systems that fall under the AI-Act are spared administrative fines as long as they respect the sandbox plan and the terms and conditions for their participation and followed the guidance given by the national competent authority, Art. 57(12) AI-Act.

 

It also has to be noted that AI Sandboxes introduced by the AI-Act do not play a too prominent role in regard to the rest of the regulation. Due to the partly extensively broad wording and categorization of certain artificial intelligence systems, there remains the fear of overregulating the technology;^[48] this could have been easily mitigated or even prevented if the sandbox would have been given a more central role in the legislation as this is exactly one of the main advantages of regulatory sandboxes: balancing regulating and innovation.

 

It can be said that by establishing AI regulatory sandboxes, the AI Act has taken an important and necessary step towards the flexible and innovative regulation of artificial intelligence, perhaps the most important technology of this century. The EU has indeed successfully fulfilled many of the points that should be considered when establishing and designing regulatory sandboxes. However, some other points, in particular the lack of flexibility to deviate from the provisions of the AI Act within the sandbox, were implemented rather inadequately by the EU. This is particularly unfortunate because, due to the importance and significance of the AI Act, a full-fledged regulatory sandbox would have sent an important signal to stakeholders, companies and citizens: namely that the EU is an innovative and progressive legislator. After analyzing the sandboxes in the AI Act, this can only be partially attributed to the EU.

 

Since artificial intelligence would have been an excellent application example for effective sandboxes outside of fintech ­– both in terms of the concept of the technology itself and the importance and potential market capitalization of AI-driven business models – it is particularly unfortunate that the EU has only created a partially promising sandbox here.

 

IV. Conclusion

 

While the two discussed forms of smart legislation – experimental regulation and regulatory sandboxes – offer several advantages, they also have flaws that can be mitigated under the right conditions. These approaches introduce innovation and empiricism to a traditionally bureaucratic and slow legislative process, with the aim of rationalizing lawmaking, especially in technocratic fields. However, politics is not always purely rational and should account for emotions and ideologies, as long as they avoid extremism. While these legislative models can be useful in managing disruptive technologies and national emergencies, their effectiveness depends on careful design by legislators. As seen in the AI Act case study, success is not guaranteed, but with continued use, these approaches are likely to improve, benefiting both society and the legislative process. It was expected that the goal of super-alignment could not have been reached by the AI-Act and its use of experimental regulation. However, the EU did take a big step towards a modern approach of law-making and an alignment as far reaching as possible when it comes to the AI-Act. Whether this approach will be successful in regulating such an important and influential technology as AI remains to be seen.

 

 

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[1] Pistor, The Code of Capital, passim.

[2] Sabeel Rahman, Artificial Sovereigns: A quasi-constitutional Moment for Tech?, https://lpeproject.org/blog/a-quasi-constitutional-moment-for-tech/.

[3] Bradford, who coined the term in her article, The Brussels Effect, Northwestern University School of Law 2012, Vol. 107, No. 1; see also Siegmann et al., The Brussels Effect of AI Regulations, https://www.governance.ai/research-paper/brussels-effect-ai for further insights on the Brussels Effect in regard to the AI Act. However, it should be noted that the impact of the Brussels effect in the case of the AI Act is questioned by some, as artificial intelligence itself is often already (co-)regulated by other laws that actually focus on data security or intellectual property, for example, cf. Engler, The EU AI Act will have global impact, but a limited Brussels Effect, https://www.brookings.edu/articles/the-eu-ai-act-will-have-global-impact-but-a-limited-brussels-effect/.

[4] Markovits, Are we prisoners of technological fate?, https://lpeproject.org/blog/are-we-prisoners-of-technological-fate/.

[5] Cf. Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 17.

[6] Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 18.

[7] Smuha, Internet Policy Review 2021, Vol. 10, Iss. 3.

[8] Burkhard, Was ist Superalignment und warum ist es wichtig?, https://medium.com/@pratheekburkhard/was-ist-superalignment-und-warum-ist-es-wichtig-52b94fe37e22.

[9] Heaven, Now we know what OpenAI’s superalignment team has been up to, https://www.technologyreview.com/2023/12/14/1085344/openai-super-alignment-rogue-agi-gpt-4/; Burkhard, Was ist Superalignment und warum ist es wichtig?, https://medium.com/@pratheekburkhard/was-ist-superalignment-und-warum-ist-es-wichtig-52b94fe37e22.

[10] Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 5.

[11] Van Gestel/Van Dijck, European Public Law 2011, 539.

[12] Cf. Ranchordas, The whys and woes of experimental legislation, p. 419, 420.

[13] Ranchordas, Sunset Clauses and Experimental Regulations: Blessing or Curse for Legal Certainty?, p. 29.

[14] Ranchordas, Experimental Regulations for AI: Sandboxes for Morals and Mores, p. 94.

[15] Dutil/Williams, Canadian Public Administration 2017, p. 562, 571.

[16] Dutil/Williams, Canadian Public Administration 2017, p. 562, 571.

[17] Soeteman-Hernandez et al., NanoImpact 2021, 10031, p. 6.

[18] Cf. among others Khan, Amazon’s Antitrust Paradox, passim, in which the author outlines how the legal framework of antitrust law isn’t capable of effectively addressing the challenges Amazon’s business model established.

[19] Khan, Amazon’s Antitrust Paradox, passim.

[20] Ahern, European Business Organization Law Review 2021, p. 395, 405; Nabil, Reforming the European Union’s Proposed AI Regulatory Sandbox, https://www.internationalaffairs.org.au/australianoutlook/reforming-the-european-unions-proposed-ai-regulatory-sandbox/#:~:text=More%20specifically%2C%20an%20AI%20sandbox,for%20compliance%20with%20relevant%20laws.

[21] Ranchordas, Experimental Regulations and Regulatory Sandboxes – Law Without Order?, p. 2.

[22] Cf. Ringe, Why we need a regulatory sandbox for AI, https://blogs.law.ox.ac.uk/oblb/blog-post/2023/05/why-we-need-regulatory-sandbox-ai.

[23] https://www.consilium.europa.eu/en/press/press-releases/2020/11/16/regulatory-sandboxes-and-experimentation-clauses-as-tools-for-better-regulation-council-adopts-conclusions/.

[24] Ahern, European Business Organization Law Review 2021, p. 395, 411.

[25] Ringe, Why we need a regulatory sandbox for AI, https://blogs.law.ox.ac.uk/oblb/blog-post/2023/05/why-we-need-regulatory-sandbox-ai.

[26] Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 6.

[27] Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 7.

[28] Omarova, Journal of Financial Regulation 2020, p. 78.

[29] This way the so-called Collingridge Dilemma is avoided (at least to a certain extent), cf. Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 16.

[30] Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 16.

[31] Ringe, Why we need a regulatory sandbox for AI, https://blogs.law.ox.ac.uk/oblb/blog-post/2023/05/why-we-need-regulatory-sandbox-ai.

[32] Ranchordas/Vinci, Regulatory Sandboxes and innovation-friendly Regulation, p. 11.

[33] Friedl/Gil Gasiola, Examining the EU’s Artificial Intelligence Act, https://verfassungsblog.de/examining-the-eus-artificial-intelligence-act/; Smuha, Internet Policy Review 2021, Vol. 10, Iss. 3.

[34] https://www.psa.ac.uk/psa/news/ai-act-it-golden-standard-or-just-another-over-regulation-symphony-brussels.

[35] Cf. Dotan, AI Regulation: A Step Forward or Ethics Washing?, https://www.spiceworks.com/tech/artificial-intelligence/guest-article/ai-regulation-and-ethics/.

[36] See also Art. 9 GDPR, which prohibits the processing of special categories of personal data under certain conditions and through this for instance the use of biometric categorization systems; Ranchordas, MORALS + MACHINES 1/2021, p. 89, 90.

[37] Chen, China sets restrictions on generative AI, but leaves room for innovation, https://thechinaproject.com/2023/07/21/chinas-new-regulations-on-generative-ai-sets-restrictions-but-leaves-room-for-innovation/.

[38] Chen, China sets restrictions on generative AI, but leaves room for innovation, https://thechinaproject.com/2023/07/21/chinas-new-regulations-on-generative-ai-sets-restrictions-but-leaves-room-for-innovation/.

[39] Chen, China sets restrictions on generative AI, but leaves room for innovation, https://thechinaproject.com/2023/07/21/chinas-new-regulations-on-generative-ai-sets-restrictions-but-leaves-room-for-innovation/; Pasquale, The second wave of alghoritmic accountability, https://lpeproject.org/blog/the-second-wave-of-algorithmic-accountability/.

[40] Ranchordas, MORALS + MACHINES 1/2021, p. 90.

[41] Fraser/Villarino, European Journal of Risk Regulation 2023, p. 1, 4; Friedl/Gil Gasiola, Examining the EU’s Artificial Intelligence Act, https://verfassungsblog.de/examining-the-eus-artificial-intelligence-act/.

[42] Friedl/Gil Gasiola, Examining the EU’s Artificial Intelligence Act, https://verfassungsblog.de/examining-the-eus-artificial-intelligence-act/.

[43] Friedl/Gil Gasiola, Examining the EU’s Artificial Intelligence Act, https://verfassungsblog.de/examining-the-eus-artificial-intelligence-act/; MacCarthy/Propp, Machines learn that Brussels writes the rules: The EU’s new AI regulation, https://www.brookings.edu/articles/machines-learn-that-brussels-writes-the-rules-the-eus-new-ai-regulation/; Smuha, Internet Policy Review 2021, Vol. 10, Iss. 3.

[44] Russia even introduced a sandbox, which also covered Artificial Intelligence applications already back in 2021, cf. Ranchordas, MORALS + MACHINES 1/2021, p. 95.

[45] Nabil, Reforming the European Union’s Proposed AI Regulatory Sandbox, https://www.internationalaffairs.org.au/australianoutlook/reforming-the-european-unions-proposed-ai-regulatory-sandbox/#:~:text=More%20specifically%2C%20an%20AI%20sandbox,for%20compliance%20with%20relevant%20laws.

[46] Ringe, Why we need a regulatory sandbox for AI, https://blogs.law.ox.ac.uk/oblb/blog-post/2023/05/why-we-need-regulatory-sandbox-ai.

[47] Ringe, Why we need a regulatory sandbox for AI, https://blogs.law.ox.ac.uk/oblb/blog-post/2023/05/why-we-need-regulatory-sandbox-ai.

[48] Cf. Streitbörger, Kann der was? Ein kritischer Blick auf die letzten Änderungsvorschläge für den AI-Act, https://blog.ai-laws.org/kann-der-was-bewertung-der-jungsten-anderungsvorschlage-fur-den-ai-act-der-eu/.