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JURI European Parliament
Follow its sittingsAxel Voss
First, from my point of view, the implementation must be realistic and fast. Businesses cannot wait years before they see the benefits. We already have the eIDAS ecosystem. We already have European trust services. We should build on that and ensure rapid availability for companies, not long transition periods.
Second, this must strengthen Europe's digital sovereignty. So, the wallet should be based on European technology, European standards, and European cybersecurity requirements. At the same time, it must remain market-driven and technologically neutral, and innovation does not come from overregulation. It comes from competition. So, third, we must protect SMEs from new burdens.
The purpose of this proposal is simplification. So, onboarding must be simple, and costs must be proportionate. Micro enterprises and self-employed professionals should benefit, not be overwhelmed by complex compliance layers. If we get this balance right—speed, sovereignty, and simplicity—the European business wallet can become a cornerstone of a truly digital single market. And this, that is Europe, is our business need, and this is what we should have in mind when we are talking about this.
Ilhan Kyuchyuk
Thank you very much, Mr. Vos. And now I give the floor to Shadora Portur, starting with Waravautas for Sindhu Group.
Speaker 11
Thank you, Chair. Thank you to Axel for his exposé. And speaking for myself and having looked at the proposal, I warmly welcome the proposed business wallet and hope we can make a valuable contribution to it along the lines outlined by my colleague, Voss. I think that the digital sovereignty he mentioned, especially, is important in light of our previous agenda item. I think the simple onboarding sounds good.
And importantly, I also think that what we're doing now is exactly the type of simplification that we should be delivering. When we look at obstacles to the single market, actual obstacles, things we can do something about, this type of simplification needs to be addressed, and we need to ensure that companies in our single market can benefit from simple procedures and digitization. The devil, of course, as always, will be in the detail. A system that instills just as much trust as a stamp on paper, if not more, is what we should be after. And part of that will be clear identification and, as mentioned, I think, standards of data protection. This wallet also needs to be attractive to use and accessible for all sorts of organizations, including an ambitious rollout in the public sector, which we should look at.
Speaker 10
And for this, we should consider feasibility and support quite carefully. We should also avoid any confusion about what this proposal is and is not. It is something that can speed up compliance and paperwork. It could be an incredibly valuable tool for procedures requiring identification, such as the know your customer requirements for anti-money laundering. But what it isn't is a one-stop shop to comply with absolutely everything, and neither can it be.
It's a means to an end, and in my judgment, a very good one, but not an end in itself. Thank you very much.
Dainius Žalimas
Yes. Thank you very much. I really get the honor to read her remarks. Thank you, first of all, for organizing this exchange of views. I am very happy to see this proposal from the Commission to set up a European business wallet that builds upon the digital identity wallet system.
In this parliament, we talk a lot about simplification and competitiveness. And for me, this is the best example of how we can deliver a simpler business environment for our companies. It is by making use of new technologies and finding smart ways to improve all the necessary administrative processes. But it is not enough to just set up the system. We need to make sure that it will be adopted by companies if we want this solution to actually improve things.
So, my priority when looking at this proposal is to ensure that it gets a certain level of functionality so that it can actually be of value to companies. And we must keep in mind at all times that the final product should be easy to use for companies. I know that changing our way of doing things is always hard, and we will never convince our companies to switch to their business wallets if it is too complicated to understand. I will also look to see whether there are any opportunities to further strengthen the once-only principle. Because having to submit the same document to a different department has no place in this day and age.
Another important issue is making sure that we have interoperability or compatibility with existing systems and solutions in those countries that have already taken the first steps in providing digital identity solutions for their companies. I welcome the Commission's attention to this in the proposal because we have to avoid penalizing front-runners. Otherwise, we reach this incentivizing innovation. And lastly, I want to emphasize the role this can play in facilitating cross-border activity for companies. Bringing down internal trade barriers and friction is the easiest way to improve business conditions in Europe.
Together with a digital-first strategy, we can deliver real benefits to our economies. I look forward to working together to deliver a positive opinion on the commission's proposal. Thank you.
Ilhan Kyuchyuk
Mario Montovanni for ISIA. Not ready? Okay. Mister Ravadev, would you like to take the floor, please?
Speaker 17
Thank you very much, Chairman, colleagues. The European Commission's proposal to set out a framework for European business portfolios is an ambitious and strategically important step to ensure a genuinely functioning digital single market within the Union. When we speak about cross-border interoperability in the public sector, it must be clear that the problem no longer lies in the lack of digital services, but rather in the lack of legal and technical interoperability among those services. Nowadays, most public services are already available online at the national level, but beyond the border, they simply fail. And this is a serious impediment for citizens, for businesses, and for the functioning of the single market.
The Commission's proposal correctly emphasizes the mandatory evaluations of interoperability whenever new digital public services are developed. It also emphasizes common standards and the reuse of existing solutions. This is a step towards a genuine implementation of the once-only principle, and it is particularly important that the Commission proposes a horizontal approach linking different sectors, from tax registration to public procurement. At the same time, it must be clearer how the new obligations of interoperability will be combined with existing sectoral frameworks of reporting. We need good coordination because we cannot afford parallel procedures or new layers of bureaucracy.
Speaker 18
The new requirements addressed to public authorities and providers must not result in additional burdens, especially for smaller administrations. They must be an instrument to prevent future fragmentation, rather than a new bureaucratic burden. So, it is particularly important to have a proportionality clause and simplified procedures for SMEs and small public administrations. Let me emphasize that the proposal poses a risk of overreliance on future implementation acts. Such acts will be needed for the structure of the unique identifier and for the technical specifications and standards for the directory, which are prerequisites to limit parliamentary oversight over key elements of the system.
Speaker 17
Overall, however, the Commission's proposal is a good one, strategically speaking. It recognizes that we are facing structural problems and that interoperability must be a legal requirement rather than a voluntary practice. It is our task as lawmakers to guarantee that the framework is at the same time mandatory and really implementable so that it reduces rather than redistributes administrative requirements. At the end of the day, if we want the single market to be a space without barriers, we should deepen legal integration and further develop digital infrastructure. Thank you.
The proposal.
Mario Mantovani
The European business wallet is something that we really need to discuss. I mean, giving businesses tools that enable them to interact with public administration, sign and seal documents, etc., is the kind of tool that the single market genuinely needs, I'm sure. But let me just say that we currently have 9 different digital tools that are aimed at businesses and administrations: Hebris, Boris, UTS, the business wallet, the 28th regime, the digital passport, etc. They're all complementary, but they all at least partially overlap. So, I want to share that concern of mine with colleagues and the commission.
I mean, I don't want us to try to resolve the fragmentation of the single market using fragmented tools that are burdensome for businesses. In addition, businesses continue to manage a whole series of identification codes: the single European identifying number, the obligatory international code, the customs code, and the national VAT codes. And none of these tools are being removed. On the content of the proposal, I would turn to Rapporto Vos, and I would like us to propose specific provisions at least for micro businesses, those with less than 10 employees, which will be good to have a non-burdensome access to the digital wallet, a multilingual interface, technical assistance for onboarding, and a set of obligatory functionalities that are in line with real requirements, for example, for requests for public funding or participation in public tenders. E.
These things that are quite common should have assistance and easy procedures. I mean, we need to ensure that we don't have the burden once again falling on those who have the fewest resources. Thank you.
Ilhan Kyuchyuk
Thank you. I don't see any other member wishing to speak on this matter, and I would like to invite the European Commission to take the floor if they wish. And I was informed that Madam Radu is here. Alina Radu, deputy head of unit for DigiConnect. You have the form, madam.
Speaker 19
Thank you very much. Indeed, this is a commission proposal aimed at simplification, very much in response to the Draghi and Leta reports, and very much to respond to the administrative burden that is currently lying with companies. We know that 55% of the SMEs in Europe report that administrative burden is their primary challenge, and this business wallet comes in response to that. As it has already been said, it will provide a unified, legally recognized, and secure digital tool for public administrations and businesses to identify themselves, sign, share documents, and communicate with each other and with public administrations. I also wanted to emphasize that it will cater to the needs of the self-employed and those of the sole traders.
Speaker 20
It also very much recognizes the issue of digital sovereignty that was raised here today. There is a provision in the commission proposal that business wallet providers are meant to be European companies established in the Union and not subject to control from third countries. Likewise, the proposal of the commission also recognizes that there are indeed existing systems that have to be considered and on which we are building, very much avoiding overlaps but still reusing the existing system precisely so that we don't add burden on companies. However, at the same time, although we have similar systems in some member states, they are not functioning cross-border. And this is something very important in the context we are discussing today.
Of course, the business wallet is expected to be the basis of the European digital public infrastructure, together with the EU digital identity wallets. And we are very much available and open for discussions whenever needed in this house. Thank you very much, and we look forward to the next steps.
Ilhan Kyuchyuk
Thank you for your intervention. Mister Rapporteur, back to you for 2 minutes.
Axel Voss
Thank you. Let me try in German this time. Firstly, I'd like to thank everyone who has spoken. Everyone is full of ambition, and I think that is a good thing because we all really do need to do something new. We don't want to get stuck in a rut, and we need to take advantage of what is already there.
I am grateful for the hint concerning overlapping legal acts. I'm not sure we'll be able to fix everything, but I appreciate the suggestion, and we'll have to see how to go about it. If we go into all of these things, like unraveling bureaucracy and wallet providers in the EU. These are all a good start. It's a way of fostering a digital single market.
It needs extra bits and pieces, but it is an important step forward. And I think that this ambition is good for the debate we're going to have. Thank you.
Ilhan Kyuchyuk
Thank you very much. Just to remind the members that the presentation of the draft opinion is planned for our jury meeting in April 2026, of course. So, with that, I close the meeting, and the next part will start at 05:00. So we have a 20-minute break.
Good planning.
Ilhan Kyuchyuk
Well, dear Commissioner McGrath, it's my great pleasure to welcome you once again to our meeting today. This time, for the annual structured dialogue as Commissioner for Democracy, Justice, Rule of Law, and Consumer Protection. Your portfolio includes issues that are at the very heart of our committee's remit. These include, among others, civil law, company law, the rule of law, subsidiarity, as well as the simplification of legislation within your areas of responsibility. The structured dialogue is thus key for establishing our common understanding of priorities in the policy areas of interest to us.
Our committee places, as you know, great value on such dialogue with you, and I hope that today's exchange will contribute effectively to the work of the commission and the Parliament in the areas of our common interests. As usual, following your initial intervention, I will open the floor for members for rounds of questions, starting with the coordinators. And Commissioner McGrath, I would like to give you the floor for 15 minutes. So, dear Michael, you have the floor.
Michael McGrath
Thank you very much, dear Chair Ilhan, honorable members. It's a pleasure to be before you again this afternoon, and I want to assure you I do value this engagement. My team and I get a lot out of it. So, it's great to be here with you and to have an opportunity to provide an update on the different work trends that we are advancing, but also to hear your views and take your questions. I very much appreciate these structured dialogues, as they provide me with an opportunity to comprehensively outline the commission's priorities and various work strands relevant to the work of your committee.
And before looking ahead to what's to come, please allow me to start by recalling some of our key achievements from this past year, both legislative and policy-related. We successfully concluded several legislative proposals. And here, I would like to specifically mention the first simplification package and the insolvency directive. One year ago, the Commission presented its first omnibus simplification package, which contained proposals to streamline sustainability due diligence and reporting processes and to reduce regulatory burdens wherever possible. Over the course of a year, we worked tirelessly, and together, we were able to deliver on our commitment to finalize the legislative process and provide businesses with the legal certainty and predictability they need.
These changes will bring simplification both for large businesses within the scope and for their smaller partners in their value chain. As businesses strengthen their supply chains, they become more appealing to investors and consumers. This makes sustainability a competitive edge for businesses. And this is why we also hope that corporate sustainability due diligence will go global, seeing the ongoing UN treaty negotiations on this. And our simplification efforts did not cease with the sustainability omnibus.
As you know, since then, we have moved at speed and presented nine other omnibus proposals, including the small mid-caps omnibus and the digital omnibus. Our goal with this omnibus fleet is clear: to reduce reporting obligations by 25% overall and by 35% for SMEs, unlocking potential annual savings for EU companies of up to 37.5 billion euros. When it comes to the insolvency directive, let me thank this committee and the rapporteur, Mr. Radev, for your excellent work on this proposal. In my view, it is an important initiative that contributes to the creation of a genuine integrated capital market within the EU and will help encourage cross-border investment within the EU's single market. I look forward to the formal vote during the March plenary session on the political agreement that was reached last November.
I would also like to use this opportunity to thank the committee for its support of two other pending civil justice files on parenthood and the protection of adults. On the protection of adults, the co-legislators are expected to start the trialogues in March, and my aim is to fully support the co-legislators to swiftly conclude the work on this file. On the policy side, at the beginning of last year, I launched the high-level fora on justice for growth and on the future of EU criminal justice. These fora have brought together a remarkable community of expertise and experience, enabling a frank and sometimes challenging, but always constructive, dialogue on how to shape a vision for the future of criminal, civil, and commercial justice in the European Union. The High-Level Forum on the Future of EU Criminal Justice delivered one very clear message.
The European area of criminal justice is solid, but it must continue to evolve carefully, coherently, and with full respect for fundamental rights. One area of particular interest to your committee, where some openness emerged, was the protection of legal professional privilege. Participants supported EU-level guidance, in particular by compiling relevant Court of Justice case law and helping practitioners have an overview of the EU standards of protection in this respect. The High Level Forum on Justice for Growth, in turn, developed ideas for future policy work, driving competitiveness, removing barriers in the single market, and achieving regulatory simplification. I'm grateful to the stakeholders for sharing their perspectives, and to the chair of this committee, Ilhan, for actively engaging in the discussion and contributing valuable ideas and insights throughout the work of the forum.
In fact, we have already followed up on some of the initiatives. For example, through our digital justice package presented last November, which includes the digital justice strategy and the European judicial training strategy to 2030. Our goal for 2030 is clear. All justice professions in Europe must possess the digital skills and EU law knowledge required to confidently operate in the digital market environment. And last but not least, in terms of last year's achievements, let me recall the rule of law report for 2025.
It presents a clear picture of significant national developments, both positive and sometimes negative, based on a transparent and objective methodology developed in dialogue with the member states. The report, now in its sixth edition, has become a cornerstone of our rule of law policy. It is a tool for dialogue, a mirror reflecting strengths and weaknesses, and a roadmap for reform. Importantly, for the first time, as you know, the 2025 Rule of Law report included a single market dimension. Now that I've presented what we regard as some of our main achievements from last year, let me turn to what is at the top of my agenda.
Next month, I will present a proposal for the corporate legal framework of the 28th regime, which we call EU Inc. This will be a major step forward for European companies, making it easier to set up, grow, and attract investment across the single market, while strengthening European competitiveness. The Parliament's own-initiative legislative report has made an important contribution to shaping the Commission's proposal, and I thank MEP Repassi and all of your colleagues for the immense amount of work that you put into it. I greatly appreciate the close cooperation and regular exchanges we have had, which have helped to bring our work, I believe, largely into alignment. My objective is to deliver an ambitious but balanced corporate legal framework.
It will provide a fully digital, modern system for companies, building on the existing EU company law, a key. I aim to respond particularly to the needs of start-ups, scale-ups, and innovative companies, while also taking into consideration the interests of other stakeholders. I believe the proposal will significantly improve the investment environment, enabling fully digital share transfers and capital operations, modern financing instruments, and better access to public equity markets. The attractiveness of the 28th regime proposal will also be enhanced by the inclusion of targeted measures relating to taxation, employment, and digitalization of insolvency. We also plan a chapeau communication to bring together the ancillary elements of the EU Inc proposal, the European Innovation Act, as well as future initiatives in other areas that can help companies.
These include the upcoming fair labor mobility package, the business wallet, and a single digital gateway. Work on the proposal is progressing fast, and it will be presented next month. While the negotiations on the 28th regime have not yet started, there's already an important legislative file keeping the parliament very busy. And this is the proposal for the next MFF, which includes important elements for both justice and the rule of law. The proposal for the next justice program, which I had the opportunity to present to this committee on January 19 last, includes a proposed budget of almost €800,000,000.
And I look forward to cooperating with you on the next Justice program, which reflects an ambitious approach to further developing the Union area of justice, strengthening democracy, and protecting fundamental rights. The current program has provided unique added value and strengthened the Union's area of justice based on the rule of law, mutual recognition, and mutual trust. The proposed additional resources will further develop an efficient, inclusive, resilient, and digitalized Union area of justice, and they will enhance the ability of national justice systems to connect and exchange information with our counterparts across Europe. The new justice program presents synergies with the national and regional partnership plans, as proposed, to support equal access to justice, especially for vulnerable groups, and to foster progress on the digitalization of national justice systems. Beyond this specific sector proposal, the Commission has embedded a robust rule of law conditionality framework in its proposals for the next MFF.
Compliance with the rule of law and fundamental rights will be a prerequisite for receiving support. And speaking of the rule of law, let me share that the work on the 2026 Rule of Law report was launched a few weeks ago. Almost all member states have sent us their input. We have received around 200 written submissions so far from stakeholders all over Europe. And for the first time, eight of the country visits concluded in the member states are taking place in person in the capitals of the concerned member states.
The 2026 report will be adopted before the summer recess, as in previous years. The European Parliament's own initiative report on the 2025 Commission rule of law report is very much welcome in this context to inform our work. With this, allow me to now look ahead briefly to future work strands that will still be upcoming during the current year. An important initiative in preparation to drive EU competitiveness is the update of the Shareholder Rights Directive. This initiative aims to reduce fragmentation and help unlock cross-border investment by contributing to a transparent, competitive, and attractive environment for investment in Europe.
We launched an open public consultation and a call for evidence on February 11, just gone, and the adoption of our proposal to review the Shareholder Rights Directive is foreseen for December. Finally, I would like to highlight our legislative plans in the criminal justice area, which I know are also of your interest. By June, we will propose a revision of the Eurojust regulation to ensure that Eurojust is equipped to fully achieve the potential that I know you and I share for it. Building on the outcome of ongoing evaluations, the commission will also adopt proposals to review three interrelated instruments: the EPO regulation, the OLAF regulation, and potentially the third PIF directive on the protection of the Union's financial interests. The adoption of this package will be accompanied by a communication and will represent a major outcome of the ongoing review of the EU's anti-fraud architecture.
So, dear Chair, honorable members, thank you very much for the opportunity to set out those opening remarks, and I look forward to the exchange that will now follow. Thank you.
Ilhan Kyuchyuk
Thank you very much, dear commissioner, for the opening remarks. And now I would like to give the floor to the coordinators for the replacements. And for the first round, we'll have Axel Voss, Rene Repassi, Mario Mantovani, Daniel Zalimas, and Tineke Stryk. Then you'll have the opportunity to answer their questions, and then we go for the second round. First is Axel Voss on behalf of the EPP for two minutes.
Thank you.
Axel Voss
Thank you very much. I'll switch back to German. A couple of very general questions. Firstly, overlapping files. Would it be possible to mandate a study to see where overlaps are taking place, particularly in the digital area, where often the commission comes with a very sectoral approach without a harmonious presentation of an overview of how they all interlock?
With the first, as we've just discussed with Marianne Weissmann, omnibus package, what is missing for me is a general overview. We've got supply chain, sustainable reporting, but conflict minerals, batteries, deforestation, which are also small supply chain-related, seem to be absent. So, is there a possibility of getting a kind of coordinated overview of that? Second question, more on the digital area. Digitalization of law is something that we need to move forward with so that we can develop our own AI through intensive training based on our needs.
And in a broader field, legal tech, I have the sense that automating documents to fully tap the potential of digitalization is something we need to look at. So, in terms of the digitalization of this field, I would seek further focus. Unfortunately, I won't be able to wait for your answer. My colleague Adrian will be paying very close attention and report back to me, but those are the things that are on my mind at the moment.
Speaker 25
Thank you, Chair, and thanks a lot, Mr. Commissioner, for being indeed, once again, present for a structured dialogue. It will hardly come as a surprise what my questions will be relating to, given our joint efforts on the 28th regime. I'm indeed very much looking forward to it at 18 when the proposal is made. Having heard your introductory remarks and knowing the sensitivities among some stakeholders, in particular trade unions, I would like to give you the opportunity to specify what you meant when you said that you are going to address employment with this particular proposal. It might help us at that moment to already have an input given to the debate, as labor law should not be touched by the proposal. And obviously, employee board representation rights should be included, but they are also related to corporate law.
If you would like to specify this, I would like to invite you to do so, in particular, as you have referred to it in your introductory remarks. Second, it refers to a file that is loosely related to the 28th regime, namely the European Cross Border Association's proposal, which the commission, to our biggest disappointment, has decided to withdraw. We are now in a state where the institutions can present their resistance to this. On behalf of the S and D group, we would like to express our deep disappointment at the withdrawal of this, as the issues related to it, such as public security concerns, can be solved, and the legal basis issue is, at best, disputed among lawyers, at least according to the arguments presented by the council. Do you have any specific justification for why this proposal should be withdrawn, as it is actually nothing more than the nucleus of what the 28th regime is?
And it's basically the same kind of creature as the 28th regime, which is now one of the star projects of the commission. And final question: do you see the poster still hanging there? We just had a hearing on the immunity of International Criminal Court officials. The European Commission has a tool in its hand to protect sanctioned judges on the territory of the European Union, which is the blocking statute. The Commission has to adopt a delegated act to include these US sanctions, and the US Commissioner, who is also in charge of sanctions, intends to initiate this process to activate the blocking statute within the Commission. Thank you.
Thank you.
Mario Mantovani
You, Chairman. And I'd like to echo the thanks we've heard for your frequent presence here during these discussions. But I do want to bring up a specific issue that relates to SMEs. Simplifications for SMEs are one of the key priorities of this parliamentary term because we're constantly talking about European competitiveness. Now, I agree with Omnibus IV and the idea of extending simplification measures to midsized companies as well. Supporting the growth of businesses without penalizing them when they reach a certain size is the right way to go, I think.
So, this is positive. But I do want to point out one thing, which risks being left behind: micro businesses. So, businesses with fewer than 10 employees and less than 2,000,000 in turnover. I mean, these are the backbone of the EU economy. These are people who own small shops.
They have startups. They have a small warehouse, etc. And we have some proposals on AI, the Digital Network Act, and the next omnibus, but the tendency is to treat SMEs as a homogeneous group. So, there are benefits, but it doesn't take into account the difference between a business that has 750 employees and 150,000,000 turnover, and a family business with just three employees. I mean, their administrative capacity is very different.
I think this is something that should be looked at in a cross-cutting manner. I mean, this is something that's important to us, to all political groups, and also to the commission. So, in my amendments, I systematically propose exemptions for micro businesses because they have different requirements, and therefore, different rules should apply to them. So, to conclude, could you come up with appropriate impact assessments and measures for micro businesses? Could you commit to doing that, to assessing the impact on them?
This "think small first" principle means doing exactly that, I think. Thank you very much.
Dainius Žalimas
Thank you, Chair. Dear Commissioner, I would also like to thank you for your close cooperation and effective dialogue with this committee. And I have the first question on the rule of law. At its plenary session last December, the Venice Commission adopted the updated Rule of Law checklist, which represents the most comprehensive and authoritative articulation of European constitutional standards on the rule of law. The revised text reflects emerging challenges, including those linked to technological developments and ongoing rule of law regression, and introduces two important new chapters on checks and balances and constitutional review.
Given this relevance and methodological depth, would you agree that it is necessary to systematically use the updated checklist as a primary benchmark when assessing member states' compliance with the treaties, in particular within the framework of the annual rule of law cycle? And how do you see the commission's structured cooperation with the Venice Commission evolving in this regard? And my second question is related to the withdrawal of a number of pending legislative proposals as part of the Commission's effort to streamline its work program, removing initiatives considered obsolete or blocked, some of which were actively discussed within this committee. How would you assess this practice from the perspective of the principles of sincere cooperation and institutional balance under the treaties? Would you agree that a more structured and transparent engagement with the Parliament should precede any decision to withdraw proposals that fall within our committee's legislative competence?
Thank you.
Tineke Strik
Yeah. Thank you, Chair. Thank you very much, Commissioner, for being here and addressing us. Yeah. I have a few questions.
On the rule of law report, I look forward to the next one, of course. But what the Parliament has called for a longer time now is that the Commission uses the Rule of Law report with very clear and concrete themes. What are the infringements committed by the member states? What are the recommendations, what are the deadlines, and what are the actions by the commission if the deadlines are not met for fulfilling the recommendations? And I wonder to what extent this is being implemented in the new Rule of Law report.
What can we see about this? We also often call for more support and protection for NGOs, which are increasingly under pressure in many member states. So, on the one hand, more practical support, but also measures against member states that keep oppressing or violating their rights. And then, specifically on Hungary, in Europe, the report of the European Parliament called upon the Council to finally and effectively apply the Article 7 procedure, to start with the recommendations or otherwise withdraw the voting rights. We see now what is happening because the council is refusing to use its resources.
The blackmailing, the blocking of our EU security policy, and actually serving Putin's agenda. So, is the commission prepared to do the proposal to the council to trigger Article 7, paragraph 2? And my last point is about transparency and clear communication regarding the measures that the commission takes to freeze or unfreeze funding. We have now also seen the opinion of the Attorney General concurring with the European Parliament when we went to the Court of Justice, saying, "Look, this decision to unfreeze the funding was not based on justified grounds." How do we prevent these kinds of proceedings?
Are you ready to communicate more properly and to be more consistent in your policies on freezing funding? My final call on the justice program, and this is related to that. We see that the Commission tends to sideline the Parliament when it comes to scrutiny, if you look at the Justice program and also under the framework of flexibility.
Thank you.
Tineke Strik
Being less transparent and less clear. And I hope that the commission will change its course in that direction.
Michael McGrath
Okay. Thank you very much, Chair, and thanks to all of the members for those contributions and questions. And just to reassure you of my commitment, my engagement with this committee is absolute and will continue, both in plenary like this and, as colleagues will know, I always endeavor to make myself available when you do request direct bilaterals as well, because I think it's important we continue to talk, hear each other out, and understand each other's perspectives and limitations. But thank you for the different questions. I'll go through them as best I can, and forgive me if I don't manage to cover each one because there were a lot.
But to MEP Vas, on the question of the overall picture around simplification, he highlighted in particular the digital area, where we do hear this feedback from stakeholders from time to time about overlap. I think that's one of the reasons why the executive vice president and her colleagues in DG Connect are embarking on this fitness check in the digital area. So it builds on the digital omnibus that has been brought forward as a legislative proposal, but there is a further fitness check of digital legislation, which I think we'll need to take account of the points that the MEP made about the need for a coherent, coordinated, overall plan for any further reforms. I think that's important. He also raised the topic of digitalization.
And as I said in my opening remarks, we have the new digital justice package that we're very committed to implementing. We are also committed to promoting the responsible use of AI in judicial proceedings. As I know, this committee states that high-risk AI systems will be implemented with strict safeguards to ensure compliance with fundamental rights, including transparency, accountability, and nondiscrimination. The commission will elaborate guidelines on the use of high-risk AI systems in justice under the AI Act, as we are obliged to do. And the council, as colleagues will know, has invited the commission to explore further the potential of AI in the justice field and to support member states in their efforts to collect and share information on the use of AI in justice.
I do hope that the proposals we have made in the MFF will survive the negotiations to come. We have provided a lot of in-built flexibility through this proposal for national and regional partnership plans, and I will be encouraging member states to prioritize investment in digital justice as part of their national proposals, which can then attract EU funding under this mechanism. That would be important. To MEP Rapazzi on the 28th regime, the language that I have used today is consistent with the language we have been using throughout the process so far. And I say that because we're at the point of making decisions, and there won't be much longer to wait before you see the full proposal from the commission.
But in the Competitiveness Compass, as you know, and the startup and scale-up strategy, single market strategy, this language has been used. So we have examined all of these areas that have been referenced, including in my remarks today. I think it is important for me to take the opportunity to provide reassurance that, either directly or indirectly, the 28th regime proposal will not be designed, and I expect will not have the effect of diminishing employment rights in the European Union. I think it's important that we are clear on that. You and I have engaged directly on the co-determination issue, which I know is important in Germany and is also important in other member states.
We are engaging directly with stakeholders on that issue, right up to this point in time. There will be an orientation debate at the College of Commissioners on Thursday this week. We remain on track for the eighteenth of March for the tabling of the proposal. We did present the impact assessment before the Regulatory Scrutiny Board. And overall, that went well, and we'll take on board the comments of the RSB.
But I think, with goodwill on all sides and among all stakeholders, we can address the outstanding issues, and we can provide the necessary reassurance that the existing provisions in national law in a number of member states, but not all, around employee participation can be accommodated and certainly not contradicted. It is not the intention in any way that this 28th regime vehicle could be the basis of circumvention of such national requirements. But at the same time, I don't believe that we should be imposing obligations on twenty-eighth regime companies that go beyond the obligations on companies already established under national law. So, we are very much tuned in to the specific issue that you've raised, which I know is important to you and many other stakeholders. And I believe that we will be able to come up with a design that accommodates the key concerns, but at the same time, uses the overall goal that we have a simple structure, digital by default, that is flexible, has modern governance tools that can be set up quickly, and has all of the characteristics that you recommended in the report that you brought to Parliament as well.
In relation to the European Cross Border Association proposal, we did indeed, as a commission, announce a withdrawal of it in the work program for 2026, fundamentally because discussions in the council were simply not progressing. We are awaiting a response from the council, and indeed the parliament. Only then can we make a decision on how to follow up. But despite the practical advantages that the proposal would have brought to improve the functioning of the internal market, the discussions have not progressed to date in the Council. That is a reality.
The proposal has been on the agenda of 10 company law working party meetings, which have not resulted in finding an agreement on a general approach. A number of member states were concerned about possible risks of abuses of the ECBAs. Some raised possible concerns about security. Member states were also doubtful about the legal basis that had been chosen by the Commission: Articles 50 and 114 of the TFEU. And the Commission was of the view that the matters raised by member states could have been resolved in the co-legislation process.
That was the view of the commission. We showed openness to adding further safeguards against possible abuses in the proposal, and the Commission expressed its willingness to look at the question of the legal basis. But despite all of this, the achievement of progress proved elusive at the council level. So we await the feedback from Parliament and Council, and then we will decide on the final next steps in that regard. I think the position of the commission on the International Criminal Court has been laid out on many occasions.
We strongly support the work of the ICC. And on a day like today, when the fourth anniversary of the full-scale Russian invasion of Ukraine is marked, it is more important than ever that we reaffirm that support and the principles as set out in the Rome Statute. We respect the court's independence and impartiality. We are strongly committed, as the EU, to international criminal justice and the fight against impunity. And I would recall the Council conclusions of 2023, where the Council calls upon all states to ensure full cooperation with the Court, including by the prompt execution of outstanding arrest warrants and by entering into voluntary agreements.
The EU will continue to operate and cooperate fully with the ICC within the framework of their agreement on cooperation and assistance, including pursuant to Article 6 of the agreement, by adopting initiatives to promote the dissemination of the principles, values, and provisions of the statute. We are keeping under constant review the need to do more to support the ICC arising from the US sanctions against a number of ICC judges. And our engagement with the ICC is continuing, and indeed with the Dutch authorities in relation to what further may need to be done in that regard. In relation to micro enterprises, which are the backbone of many of our economies throughout the European Union, I want to assure all of the colleagues in the house of our full support for them. We engage on a cross-service basis with DG Grow and the other directorates-general in the Commission who have responsibility for competitiveness, the single market, and indeed the environment in which micro enterprises and SMEs continue to operate. I will give consideration to the point that MBP Montevani has made about whether we should have specific impact assessments taking into account the needs of micro enterprises, or at least that we would have within the impact assessments a particular consideration of the needs of micro enterprises, micro businesses.
That's something we'll take on board, and I will discuss that with my colleagues. To MVPs, Alimas, thank you for your questions. What I would say is that we have, as a commission, our own methodology and our own checklist for the rule of law process that we follow every year. We keep it under review, and we take into account international developments in this area by the Venice Commission and other respected international organizations. And I want to assure you that we do endeavor to practice that principle of sincere cooperation and to take on board fully the views of the other institutions, including the Parliament.
But I'm happy to engage directly with you on any specific changes that you think we should make to the methodology and the checklist that we have as a commission in respect of the rule of law report. And the process for 2026 is already, as I said, well underway at this stage. To MVP Strick, thank you for your questions on the rule of law and your steadfast support for the rule of law process, and indeed your desire for it to go further and be strengthened even more. I do hope that in the context of the next MFF, we can achieve that strengthening at an institutional level, and I know that you will be a strong advocate for what the Commission has proposed and perhaps even will advocate going further. We have to give effect to what we say: the importance of the link between the rule of law, the Charter of Fundamental Rights, and access to EU funds.
I think what we have proposed in the MFF would represent significant progress, if we can get it over the line. For example, in order to have their plans approved, member states will first have to demonstrate that they have adequate mechanisms to ensure compliance throughout the implementation of the funds. So, this is in the context of the national regional partnership plans that we have proposed. There will be a possibility to block part or all payments at any time, as you know, during implementation, in line with the principle of proportionality and taking into account the nature, duration, gravity, and scope of the identified breach. And member states will have to address the identified breach in a timely manner, within a year, or face a reduction of EU support.
I know you called for us to go further and to do more within the existing framework. I am certainly open to doing that and to making the case for the hard tools to be used more quickly and more often where appropriate. That's a process that we have to go through in-house as part of our overall decision-making process as well. And can I just say on Hungary and Article 7, it is the preserve of the Council whether or not to take the next step? For my part, and I've been involved in a number of Article Seven discussions at the GAC at this stage as commissioner, I always take the opportunity to set out the Commission's analysis of the situation, and it hasn't been a positive analysis, as you know.
And I have made it clear that, in our view as a commission, the Article 7 procedure should remain live for as long as the issues that gave rise to its triggering by the Parliament remain valid, and they do remain valid. But the taking of the next step to concluding on Article 7.1, the reaching of the four-fifths majority at council level, and the putting of the question indeed to the member states for a vote. It is the preserve of the council. I have to respect the allocation of competencies in that regard. But for sure, the Article 7 procedure should remain live because the issues that gave rise to it, in my perspective, remain largely unaddressed.
And indeed, we've seen a lot of changes in the seven or eight years since, including deterioration across a number of different areas. Thank you, Chair.
Ilhan Kyuchyuk
Thank you for your prompt answers, Commissioner. And now I go for the second round. And I have Abadia Hoffer, Marian Wassmann, Mikhail Vavrikiewicz, Adrian Vasquez Wazzara, and Emi Radev for the second round. So, one minute each, colleagues, starting with Abadia Hoffer.
Maravillas Abadía Jover
I'm going to speak in Spanish. Thank you.
You, Chairman. Thank you, Commissioner, for your presentation. I want to focus on competitiveness, and more specifically on the upcoming 28th regime that we've heard a bit about already. Europe needs a qualitative leap if it wants its businesses not only to be born here, but also to grow, be funded, and consolidate here. And the 28th regime is a genuine opportunity to move towards a more integrated single market, but its success will depend on the level of ambition with which we design it.
And in particular, its consistency with the package that we're coming up with: the savings and investment union, the European business wallet, and, in general, an architecture that combines the macro digital identity and effective access to capital. Now, these are complex issues. I mean, the labor area and the tax issues are complex. But if we focus on what we've already built during recent years, we have an appropriate starting point: the interconnection of registers, the Eyaktis portal, etc., which shows that we're not starting from scratch. We've started to build European infrastructure that people can trust.
So my question is, which role does the commission envisage for the progress that we've already made on the 28th regime? And how can you ensure its consistent integration into the existing ecosystem? Thank you very much.
Speaker 30
Commissioner, thank you very much for this excellent exchange. Now, I have a question about the Stop Destroying Video Games European Citizens' Initiative. Now, as you'll be aware, this initiative relates to the increasing practice of making video games unplayable by switching off servers or essential online functions. And that raises issues of consumer protection. I mean the long-term possibility to use content that you expect to be able to use.
And so, I have a couple of questions for the commission on that. Firstly, is.
Speaker 30
Is it envisaged to address this issue in a regulatory manner? I mean, is this something that you're going to address in the Digital Fairness Act? And if not, why not? Which alternative legislative tools would you consider appropriate to protect consumers here? And could DG Competition look into this, perhaps?
Next is Mihael Warwick.
Speaker 34
Thank you very much, Commissioner, for all of your efforts in the area of justice, rule of law, and human rights. But as we are facing today the fourth anniversary of the beginning of the war in Ukraine, I would like to ask you about the convention to establish the international claims commission for Ukraine. Thank you very much for signing this convention in the name and on behalf of the commission. I believe this is the milestone in our Europe's collective effort to ensure accountability and justice in Ukraine. So I have a general question about this convention.
Speaker 33
What is your assessment when it comes to the process of ratification across all the member states? And when it comes to detailed specific issues related to this convention and the operation of this claims commission, do you have any idea about the assessment of the claims, the collection of evidence, legal confirmation of the value of the claims, what will be the method of determining the amount of losses, and as a consequence, of damages? Could you tell us more about that? Thank you.
Speaker 32
Thank you, Chairman. I'm glad to see you here, Commissioner. Two quick questions. Could you tell us a little bit about how it went in the regulatory scrutiny board? Any news on that?
The thing went through with no problems or issues. And the second one is more on IP-related issues when it comes to the EU's interaction with existing EU IP tools, such as the unitary patent. Do you think that we will need further convergence to deliver real value mainly for scale-ups? Thank you.
Thank you.
Speaker 17
Commissioner McGrath, first of all, I would like to thank you for our excellent cooperation. The justice program for 2028-2034 will go along with a significant increase in the budget up to nearly €798,000,000, with the ambition to enhance the rule of law, the efficiency of judicial systems, access to justice, and cross-border cooperation among member states. At the same time, it places digitalization at the very heart of those efforts because it is a key instrument for modernizing judicial processes. As a shadow rapporteur, I have these questions. First, how will the commission guarantee that the enhanced emphasis on digitalization will result in genuine interoperability among national judicial systems, rather than in fragmented national solutions funded at the European level?
And secondly, how will you guarantee that this increased budget will spill over into long-term structural improvements rather than funding separate short-term projects? There are no fixed percentage shares for the different targets. So, how will the commission guarantee fair geographic access to funding, including for member states with smaller administrative capacity? Thank you.
Michael McGrath
Yeah. Thank you very much, Chair. Thanks to the members for those additional questions. In relation to the twenty-eighth regime, it will very much build on the existing key framework that we have in EU company law, and it will be complementary to the reforms that have been announced and introduced in recent years, including the PRICE, which you directly referenced in your contribution. And we have yet to make a final decision in relation to the legal basis or indeed the instrument.
I have been on record as saying my preference would be for regulation insofar as possible. But clearly, there are constraints. And, in the parliament's own report, you've acknowledged the challenges in that regard. You could have a maximum harmonization directive. You could have a regulation, or you could have a package, or a combination of both. Insofar as possible, remain with the few regulations as the preferred instrument, but it remains to be seen.
And we have to be fully governed by or guided by the legal advice in that regard. But we will embed the existing reforms and the recent developments in EU company law, including the register and the systems that have been set up, and they will be complementary to the 28th regime. On the stop video games initiative, I have to be somewhat careful because it is now in the formal European Citizens' Initiative process. And in fact, only yesterday, we had the formal hearing that we are required to hold with the organizers who collated over 1 million signatures, and I commended them for the initiative and for the amount of work involved in getting to that point. And we had a good hearing yesterday.
EVP Verkunen was present along with me, and they made a presentation to us. Then, our officials put a series of questions to them, which they answered. I know there will be a hearing here before the parliament as well, and I believe that we are required, under the ECI initiative, to provide a response within six months. So by a date in July, I believe, of this year, we have to come up with a response. So, I think it would be unfair to go into detail or give any personal opinion because I'll be part of the decision-making process within the commission.
But we went through a range of issues yesterday. First of all, under existing consumer legislation, is there more that can or should be done in relation to the rights of consumers when you buy a video game, specifically regarding the length that the game will be available to you? Of course, they are generally now internet-based games, and so the ability to turn them off is something that is a relatively new phenomenon. Whereas not that long ago, you would go into a shop and buy a disc for the game, and you could continue to play it for as long as the disc worked. But now they're Internet-based; you're playing with friends and other people.
And so it does require a level of support or of the game being maintained, and so on. So there are questions around consumer protection, questions around ownership and copyright. Those who put together the petition were clear that ownership would remain with the publisher of the game, and that there would be no encroachment on copyright law and copyright entitlement that the publishers have. We also spoke about licensing arrangements. So we went into quite an amount of detail about the issues involved, and we now have to consider the proposal in full and come forward with our response.
And we will do that by July, and we either fully support this, reject this, or say, well, actually, this is what should be done in the area of enforcement or strengthening consumer rights, and so on. But no final decision has been made, but there will be one by July. But we'll be monitoring the parliament's hearing, which I think will be coming up shortly, and the commission will be, I think, there as an observer. On the claims commission, the international claims commission for Ukraine, we are very supportive as the EU. And as soon as the formal mechanisms have been put in place, we look forward to formally joining the claims commission.
I think the question of what will be the source of funding is going to be a key one, ultimately, that will have to be determined. As you know, in the financing arrangement that was agreed by the European Council back in December, which has hit a roadblock in the last 24 hours or so, but can hopefully be overcome, there was built into that by design some flexibility, that some of that funding could be used to finance the work of a claims commission or to meet at least some of the cost of the claims that will be made by the people of Ukraine. As you know, this builds on the excellent work of the register of damages. And I can assure you that as soon as the Council of Europe and other international partners are ready to move ahead, we, as the European Union, will be ready to formally sign and become part of the actual operation itself. What I would say is that the more inclusive the process is, and the more international partners that sign up, the better the prospect that the claims commission has of working.
But your support, the support of this committee, and the Parliament are deeply appreciated. Back to the twenty-eighth regime on IP, if I understood your question correctly about whether we see a need for changes to the law when bringing in the twenty-eighth regime. What I would say is that we have to be certain that the 28th regime can safely facilitate innovation and be a safe repository for IP that may be required to secure the outcome of that innovation. And we will ensure within the 28th regime vehicle that that is the case. Otherwise, it will not be an attractive vehicle for founders who are investing considerable time, energy, resources, and capital in developing innovation.
So happy to talk offline with you on the details of that, Adrian, to see what your concern may be and to ensure that we have fully taken it into account. And finally, to MBP Radiv, again, thank you for your work on this issue, and thank you for your support. We are very much focused on that question of interoperability. It is crucial because systems across the European Union in this area need to be interoperable. They need to talk to each other.
As you know, we have the e-justice council working party. So we're working with member states to ensure that all the actions that we have set out in the digital justice package are well implemented. Everything that we are doing is for the benefit of the judicial administrations in the member states. The toolbox is for them. The exchange of best practices is for them, and the funding is there for them.
We have encouraged the member states that are more advanced in the digitalization journey in the justice area to be as generous as possible in providing information about their systems, providing the necessary software, and so on for this portal, which can be shared with the member states that are perhaps less advanced because we want to support all member states to accelerate the digitalization of justice. So, I'm happy to engage further with the committee on the progress that we are making and that we intend to make on implementing the Digital Justice 2030 strategy. I know it's a priority for you; it's a priority that I share as commissioner as well. Thank you, Chair.
Ilhan Kyuchyuk
Thank you very much, Commissioner McGrath, for taking part in today's exchange of views and also for answering all the questions from the members. And, for the future, we don't expect anything less than what you have delivered so far. With that, I would like to thank all the colleagues for their contributions today. Next item is any other business. That is not the case.
The next committee meeting will be held in March here in Brussels. That was it.
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