Diversity of systems. In the context of market infrastructures, the notion of system refers to four varieties: trading systems, clearing systems, securities settlement systems and payment systems.These systems have distinct regimes depending on their purpose, which requires a closer look at their respective functioning (Section 1), before showing that they have in common that they are contracts (Section 2).

Section 1. MARKET INFRASTRUCTURE SYSTEMS

The different systems will be presented according to their sources. Indeed, while the law on trading systems originates from MiFID 2 (§ 1), the law on payment, clearing and settlement systems originates from the Finality Directive (§ 2). However, there is no common regime for the supervision of systems (§ 3).

§ 1. TRADING SYSTEMS

Notion of trading systems. Among the different varieties, trading systems are the most important in that they constitute the financial market in the strict sense of the term: they organise trading and determine the price of transactions. It should be noted that there are different ways of matching orders and, consequently, different categories of trading platforms: regulated markets, multilateral trading facilities and organised trading systems.Despite this diversity, the unity of the notion of trading platform stems from the fact that they always constitute a multilateral system. MiFID 2 defines the latter concept as ‘a system or arrangement within which multiple third-party buying and selling interests in financial instruments may interact’.In addition to this first criterion, which is based on the system's function, there is a second criterion that is specific to the manager's role in these negotiations.Indeed, for a market to be qualified as a ‘multilateral system’, case law states that the manager must not intervene in a personal capacity in the negotiations.This common function of organising the negotiations and the manager's independence, however, leaves a great deal of room for the different ways of organising the negotiations, which is reflected in the scope of these rules.

European managers of financial infrastructures are licensed under the law of their registered office. This affiliation dictates not only the local application of company law, but also of prudential and insolvency law. The particularity of infrastructure managers is that they are subject to an administrative connecting factor, which may be with the authority of a Member State, according to a decentralised coordination model, or directly with an EU agency, according to a centralised model (Chapter 1). As a matter of principle, the provision of access to a market infrastructure on the territory of the Union triggers the applicability of European law; by way of exception, it is possible for certain third-country operators to be subject only to the law of their headquarters. This limitation of European law is then based on the equivalence method. However, it should be noted that this method is not the only mechanism for self-limitation of local law and that the objectives of substantive law may lead to the eviction of all forms of self-limitation of European law when the provision of clearing services on its territory is at stake (Chapter 2).

Regime of the notion of system. Market infrastructures are systems, which have in common that they consist of a legal element, the rules of the system, and a physical element, the computer system. The most emblematic systems are trading systems, referred to as trading platforms, of which the topical example is the regulated market and whose lower forms are multilateral trading facilities and organised trading systems. This classification as a trading platform has a number of consequences: not only does it entail the application of a specific regime for its manager and for the members of the system, as provided for in MiFID 2, but it also entails a special regime for investors. In fact, the qualification of a regulated market makes applicable, for those who make use of this infrastructure, the legislative package constituted by the Transparency, Takeover and Market Abuse Directives, i.e. it dictates the regime to which investors wishing to conclude market transactions are subject. This explains why, from an international point of view, the connecting factor of the trading platform to the regulation of market operations is possible.

A specific regime is also attached to the qualification of a system within the meaning of the Finality Directive, i.e. to the qualification of clearing, securities settlement and money settlement systems. Indeed, the Finality Directive gives transactions using these systems a definitive character: collective proceedings can no longer call into question the operation. However, the use of the latter systems can be imposed. This is, first of all, the case for people who wish to use the financial market, including the issuer. If the issuer wishes to admit its securities to trading on a financial market, it is obliged by the market rules to deposit them with a central security depository (CSD). The use of these systems can also be imposed independently of the use of a financial market: private persons wishing to conclude an OTC financial contract subject to the clearing obligation will thus have to use a clearing house.

Defects of consent are part of the general protection afforded to contracting parties in French law. These conditions of validity are subject by the Rome I Regulation to the lex contractus.However, the formation of the contract is likely to be disrupted by the application of certain rules traditionally excluded from the domain of the law of contract, either in order to protect the persons concluding financial contracts or in order to protect the underlying asset affected by the conclusion of the financial contract. These rules can be divided into two sets. The first set consists of legislation on the capacity of persons.In French law, however, these do not interfere much with the conclusion of financial contracts, as the enactment of an incapacity regime has more disadvantages than advantages (Section 1). This is why French law favours a second set of rules, relating to the marketing of financial contracts, to ensure the protection of its residents (Section 2). The rules relating to the protection of the underlying are intended to prevent the financial contract, thanks to the rule of autonomy which characterises it, from constituting for the parties an instrument for circumventing the rules applicable to the underlying (Section 3).

Section 1. THE CAPACITY

On the face of it, French law provides for a measured regime of incapacity that tends to promote the hedging function of the financial contract while preventing it from being used for speculative purposes; on reflection, however, the criterion of speculative intent appears dysfunctional (§ 1). In relation to financial contracts, the enactment of an incapacity regime is tantamount to an incapacity of enjoyment (incapacité de jouissance), not of exercise (incapacité d’exercice): when applicable to legal persons, the regime should be aimed at the ability to contract (§ 2).

Mode of negotiation and connection. As a financial contract is a commercial contract, it falls within the material scope of the Rome I Regulation. In order to ensure that the parties’ choice of law is respected, the contract must be international. If the contract is concluded through a financial market, it will necessarily be concluded by its members. Internationality will not pose any difficulty since the law applicable to the financial contract will most often be the law of the trading platform;this connection is nevertheless not really decisive since the contract is then recorded with the clearing house.On the other hand, if the financial contract is concluded over-the-counter, the internationality of the financial contract needs to be characterised. This characterisation is fundamental insofar as it conditions, on the one hand, the very possibility of relying on a choice of law in an area where the law of the contract is likely to determine the enforceability of contractual guarantees, in particular those relating to setoff in the event of insolvency, and, on the other hand, the possibility of relying on a set of legal benefits depending on the applicable law.According to the criteria of the Rome I Regulation, the internationality of the financial contract is characterised, as it is most frequently concluded in an international situation (Section 1). From the point of view of connection, internationality allows the parties, through the selection of a given law, to attribute jurisdiction to the legal system most favourable to the possible contentious enforcement of the contract. This choice is all the more important as in practice the possible interference of the derogatory rule of the Rome I Regulation specific to consumer contracts is rare: it requires, in addition to the characterisation of consumer, the existence of a solicitation by the professional (Section 2).

The current state of market infrastructure is the result of several recent distinctions: first, between the different infrastructures needed for the functioning of the financial market and, second, between the infrastructure and its manager. For a long time, these different aspects were concentrated in the statute of the stockbrokers, instituted by the State. Through this, the financial market managed by the stockbrokers was already attached to the State. This legal, rather than geographical, attachment was already serving as a basis for the regulation of private relations that the infrastructure allowed. In order to observe this, it is necessary to retrace the history of French financial markets from the Middle Ages to the present day (Section 1.). The connecting factor of infrastructures has nevertheless changed, in particular because of the evolution of the institutional context, now European, in which infrastructures are embedded (Section 2.).

Section 1. THE CONFIGURATION OF FRENCH FINANCIAL MARKETS

The contemporary configuration of French financial markets is based on three distinctions. The first is that between the manager and the system. The second distinction is between the systems necessary for the proper functioning of the financial market: trading systems, also called trading platforms, clearing systems and securities settlement systems. The third distinction is between the different categories of trading platforms within trading systems. These three types of separation, which structure the contemporary organisation of financial markets (§ 2), are the result of the historical development of financial markets (§ 1).

Conflicts of laws relating to the ownership of securities most often arise in connection with their transfer.The transfer of securities, like the contractual assignment of claims is, from the point of view of conflict of laws, at the intersection of three distinct laws: the law of the object transfered, the law applicable to the transfer and, finally, the law applicable to the third party ‘effect’ (‘enforceability’) of the transfer. As regards the law of the object transferred, it should simply be recalled that, from the point of view of transfer transactions, the decisive aspect of the regime of securities is their negotiability. Negotiability is dependent on the form assigned to the securities, decided by the law of the issuer or the contract of issue.As regards the contract of transfer, which determines the contractual relations between the transferor and the transferee, this is subject to its own law; the lex contractus will depend on the means by which the contract is concluded. In the context of the financial market, three cases must be distinguished. First, the transfer contract may result from the issuance of an order on the trading platform, in which case the applicable law will be that of the trading platform between the membersand the contract between the member and its client.Secondly, in the case of a public offer of securities, the applicable law will be that designated by the offer.Thirdly and lastly, in the case of an over-the-counter transfer of securities admitted to trading, the applicable law will be that determined by the transfer contract or, in the absence of choice of law, by the domicile of the seller.

Concept of financial contract. Financial contracts constitute, alongside securities, the other component of financial instruments. Positive law does not provide a criterion for distinguishing between the two, but their function and regime make it possible to distinguish them. Unlike securities, financial contracts do not have a financing purpose,are not issued or represented by a security, and do not benefit from the negotiability regime; their circulation is ensured by other techniques.Financial contracts are therefore fundamentally contracts. However, their definition by enumeration shows different varieties of contracts.Different typologies of financial contracts have therefore been developed, depending on their economic purpose, the nature of the risk taken, the obligations entered into, the underlying, the settlement or the negotiation methods.However, this enumeration has the disadvantage of not allowing a spontaneous conceptual understanding of the notion.A financial contract can be defined as a contract in which a person undertakes to pay a sum of money or to deliver goods according to the evolution of the value of an underlying asset, with performance being postponed to a later date.This discrepancy between the date of conclusion of the contract and its execution is one of the most distinctive features of financial contracts, allowing the parties to take opposing positions on the change in the value of the object taken into consideration by the contract, referred to as the underlying. Two observations must be made here.

Firstly, the time lag between the conclusion of the contract and its execution appears to be central, to the extent that it was previously included in the very title of the concept when it was described as a futures instrument.This time lag is in fact likely to allow the speculativeand insurance functionstraditionally pursued by financial contractsto be fulfilled, and which have always been the subject of controversy. These two functions make it possible to account for the purpose of the financial contract, which is to transfer a risk.

The preceding discussion has shown the impasse to which the plural connection of the proprietary status of bearer securities leads. A unitary solution to the conflict of laws is desirable. It already exists in the law of registered securities: it is the law of the issuer, which would benefit from being extended to securities registered within a blockchain (Section 1). In fact, a unitary solution already exists for book-entry securities within a chain of intermediaries. This is the law of the securities settlement system, applicable to the proprietary status of securities held by the insolvent participant. It will be shown here that this connecting factor to the law of the securities settlement system should be generalised to all bearer securities registered in the accounts of a central depository (Section 2).

Section 1. THE CONNECTION TO THE LAW OF THE ISSUER OF REGISTERED SECURITIES

The proprietary status of registered securities has always been subject to a single law: the lex societatis. The solution, which originated from academics, nevertheless remains ambiguous today as to the jurisdiction of the lex societatis in the event of dissociation between the place where the register is kept and the registered office of the company. It seems to us that this difficulty can be resolved by relying on the objective of the registered form in French law, which dictates the application of the lex societatis, independently of the location of the possible registrar (§ 1). The appearance of securities registered on a blockchain extends to the possible modes of representation of registered securities, without changing the function assigned to the registered form or the solutions it promotes (§ 2).

§ 1. SOLUTIONS ARISING FROM THE LAW APPLICABLE TO REGISTERED SECURITIES

It has already been observed that French law allows a foreign law to be applied to the form of securities.It was then observed that if the issuer's law is sovereign as to the characterisation of the form it intends to impose on the securities issued by the companies it governs, this sovereignty allows, at least in French law, the election of a third law – that of the negotium – to the form assumed by the claim in question.

Securities in bearer form have long been materialised on a paper medium and thus subject to the lex situs. The latter reproduced the impasses of the thesis of the plurality of connections, whereas a unitary solution of the conflict of laws based on the law of the issuer was possible (Section 1). Paper documents, although still in use in some jurisdictions, have been replaced by book-entry securities. This method of representing securities is based on intermediation. However, on the one hand, intermediation has different effects in different legal systems and, on the other hand, intermediation chains are often international, resulting in their entanglement (Section 2). Such a situation makes the plurality of connections particularly inappropriate, although it is envisaged both by the rules of the European Union and by the Hague Securities Convention (Section 3).

Section 1. THE IMPASSES OF THE LEX SITUS FOR TRANSFERS OF BEARER SECURITIES

The rule resulting from the plurality of connections exists in the same terms within bearer securities representing shares or claims. The cumbersome heritage of the lex situs of securities (leads to the application to their transfer of the law of the location of the instrumentum (§ 2). However, it would have been preferable to apply the law of the issue (§ 3). § 1. THE CUMBERSOME LEGACY OF THE LEX SITUS TO SECURITIES

Since the Kantoor de Maas judgment,French law is ‘solely applicable to proprietary rights in movable property situated in France’.If the influence of the lex situs has been so persistent on securities while claims have been released from it, it is because of the metaphor of the incorporation of the right into the security. The purpose of this metaphor, however, was never to subject securities to the law of situation of the certificate, but to facilitate the transmission of securities. In view of this masterpiece of confusion, we should remember that in France the lex situs was not originally intended to apply to movable property, nor was it intended to apply to transfer transactions.It is not by chance that intangible movables have progressively moved away from it (I); on the other hand, it is a misfortune that securities are still subject to it (II).

The connecting factors of market infrastructures. Today, market infrastructures are systems that have in common, on the one hand, that they are made up of a legal element, the rules of the system, and a material element, the computer system, and on the other hand, that they are managed by an infrastructure manager. For a long time, these different aspects were confused. The contemporary connecting factor of market infrastructures requires a study of the history of the French organisation of financial markets, as well as the European institutional context in which it is embedded today.

At first sight, the contemporary connecting factor of infrastructure managers is not very original: like legal persons under private law, these managers are connected to the legal system of their registered office. However, their uniqueness becomes apparent once it is observed that the registered office in question is their real seat, and that the law of the seat has a particularly broad scope, applying to corporate, prudential and insolvency legislation. This correlation seems to give an additional dimension to the ‘universal law of private international law’, according to which ‘the more liberal the connecting factor, the more the field of the designated law narrows or competes with the attempts to apply third party laws’. In fact, in the same way, the less liberal the connecting factor, the more the field of the conflict rule expands, making the criterion used the preferred instrument for deploying the legislative policy of the legal system designated by the conflict rule.

From the foregoing, it should be noted that the financial market is a multilateral trading system, distinct from its operator, but that the connecting factor of the latter dictates that of the former. However, it is this system, i.e. the trading platform, and not the operator, that is likely to constitute the connecting factor of the law of the financial market. In other words, as Mr Daigre has written, if the financial market is ‘an organisation and a mechanism’,it is the law applicable to this second aspect that forms the basis for the law of transactions between private persons who use it. However, it is necessary to delimit the hypotheses where, precisely, the law of the financial market truly aims to protect the mechanism it has instituted. Indeed, the law of the financial market is deployed in distinct ways, and according to a different regime, depending on whether its object is relations with issuers or with investors. In its dealings with issuers, this law is most often applied under its objective of investor protection and as the law of the place of solicitation. In fact, the rules which seek to protect the savings of residents could probably be integrated into a single category, the connecting factor of which would be based on a material criterion, that of the solicitation of residents. The regime of these rules would allow them to be selflimiting when the issuer's law also provides for their application and when they are equivalent. In its dealings with investors, however, the law of the financial market pursues the objective of the proper functioning of the financial market. The latter is also likely to allow for the establishment of a synthetic category, which could this time be bilateral and based on the trading platform.

INTRODUCTION

Belgium has been hit, from the end of 2021 and throughout 2022, by multiple insolvencies and bankruptcies of energy suppliers. This rather unprecedented phenomenon was provoked by multiple ‘new factors’ which could be seen as ‘the straw that broke the camel's back’.

Not only did serious questions arise from those bankruptcies regarding the applicable regulatory framework in such cases, but it also shed the light on the changing realities of the energy market, notably for energy supply and some paradoxical effects of the liberalisation of those markets.

This contribution will analyse in §2 the main causes of the risks causing energy suppliers’ bankruptcies on the Belgian market(s). Then §3 will analyse some of the preventive actions taken by the Belgian authorities to address these risks. Next, §4 discusses briefly the regime of ‘supplier of last resort’, its challenges, and mitigation measures to protect consumers from the effects of an energy supplier's bankruptcy. Finally, §5 will provide a conclusion.

RISKS LEADING TO ENERGY SUPPLIER's BANKRUPTCIES

MARKET RISKS

Some risks are inherent to the activity of suppliers in every liberalised energy market, i.e. market risks. Among these risks, price volatility and the design of the Belgian energy markets can be considered as the main threats for energy suppliers.

Soaring Prices and Related Risks

After a period of relative stability on the electricity and gas markets, notably characterised by stable and low prices on wholesale (and therefore retail) markets, the average day-ahead prices of electricity in Belgium rose from €31.90 per MWh in 2020 (the lowest on record in the last 15 years) to €104.10 per MWh in 2021,2 while gas prices (long-term price of the Dutch TTF being used as reference) went from €9.40 per MWh to €96.70 MWh.

INTRODUCTION

The need to protect offshore energy infrastructure in the EU is obvious, especially following the high-profile sabotage of the Nord Stream Pipeline in September 2022. The new directive on Resilience of Critical Entities passed into law shortly after, in December 20222 and the time is surely ripe to consider whether the regulatory approach envisaged by that directive is sufficient given that the targeting of critical infrastructure in the context of war appears no longer to be a hypothetical, but now an actual problem.

The initial focus of this chapter is accordingly on the obligations of Member States in the context of the new directive. What is it that they must do having transposed it into national law? How do those obligations differ from those imposed by its predecessor, the Critical Infrastructure Directive 2008?

That relatively straightforward task complete, the focus shifts to the extent to which the new directive applies to (and thus hopefully protects) offshore energy infrastructure. This question should be examined from two perspectives. First, to what extent does the directive apply to offshore energy infrastructure? Second, to what extent does it apply to offshore energy infrastructure? The first perspective yields reassuring results, though the coverage of relevant infrastructure is perhaps not as comprehensive as might be hoped. The second perspective, however, gives rise to deeper concerns. In short, the wording of the directive does not offer reassurance that infrastructure that is not only critical but also highly vulnerable due to its location offshore is clearly within its ambit.

INTRODUCTION

Since the early 2000s, the future of Europe's energy system has been on top of the political agenda, particularly after the conclusion of the Paris Climate Agreement in December 2015 and the Russian attack on Ukraine on 24 February 2022. Climate change, security of supply and energy prices are dominating the debate, forming the cornerstone of the energy trilemma. Transitioning from a fossil fuel-based energy system to a net-zero one is the EU's new mantra. This move started after the signing of the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) in 1997 and will continue to pre-occupy Europe for the coming decades independent of the energy market turmoil, due to the Ukraine war. Compared to other regions, the European Union (EU) has early on become a key player in climate policy. For example, in 2005, the EU took the lead by establishing a CO2 emissions trading system covering installations in the energy sector and manufacturing industry of its Member States (the so-called EU Emissions Trading System – EU ETS).

The EU has viewed the energy transition as an opportunity and a necessity for a new growth agenda for Europe which has led to the adoption of the 2050 climate neutrality goal and the European Green Deal (EGD).

The European Energy Law Report XV presents a selection of the most important developments in the field of international, European Union (EU) and national energy and climate law as discussed at the 32nd and 33rd European Energy Law Seminars, which took place in The Hague (the Netherlands) in May 2022 and November 2023 respectively.

Although a wide range of topics were discussed at the seminars, four general themes emerged from the presentations. They range from internal market and climate change developments (Part I), the governance of energy suppliers and the supply chain (Part II), the relationship between the EU and third countries (Part III) and, finally, challenges affecting the energy system and system security (Part IV). These issues are discussed in fourteen chapters divided over four parts of this volume. Noticeably, the impact of the war in Ukraine is a recurring matter in several chapters.

INTERNAL ENERGY MARKET AND CLIMATE CHANGE: JUDICIAL AND LEGISLATIVE DEVELOPMENTS

Part I offers a review of some landmark legislative and judicial developments with regard to the internal energy market and climate change. Apart from a review of EU case law in the energy sector, this part also offers a review of the effects of climate change litigation on energy companies and a review of the EU ‘Fit for 55’ legislative package.