Has the DSM Directive been correctly transposed in Belgium?

On September 26, 2024, the Constitutional Court in a judgment of no less than 182 pages ruled on the validity of the Belgian transposition law of DSM Directive 2019/790. The Constitutional Court referred 13 preliminary questions to the European Court of Justice.

Background

The DSM Directive was transposed in Belgium through the law of June 19, 2022. However, the law went beyond what was in the DSM Directive and also introduced a new compensation right for authors and performers.

It is this right to compensation, as well as the organization of press publishing rights, that was challenged before the Constitutional Court by five parties: Google, Spotify, Meta, Streamz and Sony.

In particular, the annulment of articles XI.216/1, XI.216/2, XI.228/4 , chapter 4/2, XI.228/10 and XI.228/11 of the Economic Law Code (WER).

Press publishing law (art. XI.216/1 and 216/2 WER)

Art. 15 of the DSM Directive introduced a new neighboring right for press publishers to control the online use of their press publications by information society service providers (abbreviated as: ISSPs).

The Belgian legislator not only introduced this new neighboring right, but also stipulated that press publishers and ISSPs must negotiate in good faith about the remuneration due. If no agreement is reached within four months, either party can turn to the Belgian Institute for Postal Services and Telecommunications (BIPT)., which will decide on the amount of compensation. BIPT's decisions can be challenged before local courts. Moreover, ISSPs are obliged to provide press publishers with up-to-date, relevant and complete information on the exploitation of press publications within 1 month of receiving a relevant request.

It is these provisions that are being challenged by Meta and Google because:
- the negotiation procedure under Articles XI.216/1 and XI.216/2 requires them to enter into negotiations even if they do not intend to use the content of a specific publisher (since such a publisher will eventually apply to BIPT);
- the BIPT is an administrative body that lacks the necessary expertise to determine the fee;
- the requirement that information must be shared is disproportionate and requires ISSPs to share confidential information.

It is also raised that press articles are often published behind pay walls and ISSPs are forced to pay for press articles that are not even accessible to their users.

The Constitutional Court therefore decided to submit 3 preliminary questions on this to the European Court of Justice.

Inalienable right to remuneration for authors and performers for use by OCSSPs (art. XI.228/4 WER)

When transposing Art. 17 DSM Directive, the Belgian legislator introduced a new inalienable right for authors and performers, who have transferred their public communication right for use by providers of an online content sharing service (abbreviated as: OCSSPs) to a third party, to receive remuneration from OCSSPs. This right to compensation is subject to mandatory collective management. This provision was previously criticized by the European Commission as being inconsistent with Art. 17 DSM Directive.

Google and Sony argued that this remuneration right is not foreseen in the DSM Directive and leads to a situation of double remuneration, with OCSSPs having to pay both the third party owner of the right (such as a music producer) and the author or performer. They also claimed that this new system goes against usual licensing practices in Europe and will lead to market fragmentation.

The Constitutional Court therefore decided to ask the European Court of Justice - through 5 preliminary questions - whether this new right to compensation is in line with Union law.

Inalienable right to remuneration for authors and performers for use by streaming platforms (XI.228/10 and XI.228/11 WER)

In the same vein, the Belgian legislator also introduced an inalienable right for authors and performers, who have transferred their public communication right for use by streaming platforms to a third party, to receive remuneration from streaming platforms. This right is also subject to mandatory collective management.

This remuneration right has no direct legal basis in the DSM Directive, although it can be seen as implementing Art. 18 thereof, which calls for appropriate and proportionate remuneration for authors and performers. According to Spotify, Streamz and Sony, this will lead to streaming platforms paying double remuneration.

Again, the Constitutional Court is questioning the European Court of Justice - through 5 preliminary questions - whether these Belgian provisions are in conformity with Union law.

Impact

It now falls to the European Court of Justice to determine whether the Belgian law is in conformity with EU law (and in particular the DSM Directive). In doing so, it will provide an interpretation of the most controversial articles of the DSM Directive and the judgment to be intervened will be of interest to the entire European Union.

The Constitutional Court ruling is already a disappointment for performers (Playright) who had hoped the Constitutional Court would reject the annulment appeals against the Belgian law. The online platforms and music producers its satisfied That the Constitutional Court is questioning the European Court of Justice.

A ruling by the European Court is not expected for another 2 years. Meanwhile, legal uncertainty reigns.