### 50. regrets the fact that there are still unpaid trainees in eu delegations; encourages the eeas to take step to assure that trainees have means to support themselves; ### 50. is highly concerned that there are still unpaid trainees in the eu delegations; calls on eeas to always hire trainees on a paid contract with an allowance that covers at least the living costs; recommends to allocate more budget to pay trainees;


### 51. notes with appreciation that in 2019 the eeas adopted a mandate to set up an environmental management system for eeas headquarters with the intention to extend it to the network of delegations. ### 51. notes with appreciation that in 2019 the eeas adopted a mandate to set up an environmental management system for eeas headquarters with the intention to extend it to the network of delegations; urges the eeas to take all the necessary measures to decrease the carbon footprint of the headquarters and in the union delegations by implementing paperless processes and with emphasis on its energy mix , promoting and renewable sources of energy;


### 4. stresses the need to fight foreign propaganda and to expose disinformation and malicious foreign influence; underlines the importance of the eeas strategic communication task force and calls for the broadening of its mandate , including in relation to state sponsored disinformation originating in china , and providing it with further necessary financial and human resources; ### 4. stresses the need to fight malicious interference including disinformation; underlines the importance of the eeas strategic communication task force and calls for the creation of a dedicated stratcom task force on interference emanating from china , and providing it with further necessary financial and human resources;


### 10. notes the specific finding , concerning parliament , contained in the annual report of the court for 2019; notes with concern that the court found errors in one payment to one of the european political parties , which concerned non-compliance with the expenditure eligibility rules , specifically , no written contractual documents and no supporting evidence for costs actually incurred were provided; regrets the fact that the court had reported similar shortcomings in transactions relating to political groups and to a european party in its annual reports in 2014 , 2015 and 2016; notes , however , that although there is always scope for improvement there has been a lot of positive development over recent years; ### 10. notes the specific finding , concerning parliament , contained in the annual report of the court for 2019; notes with concern that the court found errors in one payment to one of the european political parties , which concerned non-compliance with the expenditure eligibility rules , specifically , no written contractual documents and no supporting evidence for costs actually incurred were provided; regrets the fact that the court had reported similar shortcomings in transactions relating to political groups and to a european party in its annual reports in 2014 , 2015 and 2016;


### 11. notes the response given by parliament in the adversarial procedure with the court , which re-examined and addressed the individual cases highlighted as a result of the court’s findings; recalls that , while parliament’s administration is the authorising service for the payment of the grant towards the european political parties , it is not responsible for their actual expenditure , and that the european political parties are themselves responsible for the legality and regularity of their transactions; notes that parliament provided european political parties with comprehensive information and guidance on topics in respect of which problems have been identified; ### 11. notes the response given by parliament in the adversarial procedure with the court , which re-examined and addressed the individual cases highlighted as a result of the court’s findings; recalls that , while parliament’s administration is the authorising service for the payment of the grant towards the european political parties , it is not responsible for their actual expenditure , and that the european political parties are themselves responsible for the legality and regularity of their transactions; notes that parliament provided european political parties with comprehensive information and guidance on topics in respect of which problems have been identified; calls on the court to check the european political parties' spending on a regular bases;


### - with regard to the audit of procurement and contract implementation in the catering sector (dg inlo) , achieving the internal control objectives through , notably , allowing longer time-limits for procurement that are proportionate to the complexity of the specifications; ensuring clearer , more relevant and accurate tender specifications; ensuring a transparent evaluation of tenders that is based on the published criteria and is properly documented; validating ad hoc contracts on concessions with the legal service; the critical importance of managing amendments to concession contracts in line with the rules; improved management monitoring and reporting; ### - with regard to the audit of procurement and contract implementation in the catering sector (dg inlo) , achieving the internal control objectives through , notably , allowing longer time-limits for procurement that are proportionate to the complexity of the specifications; ensuring clearer , more relevant and accurate tender specifications; ensuring a transparent evaluation of tenders that is based on the published criteria and is properly documented; validating ad hoc contracts on concessions with the legal service; the critical importance of managing amendments to concession contracts in line with the rules; improved management monitoring and reporting; recalls that these segments are essential for ensuring that public procurement procedures attract more offers , securing better competition and improved services over a certain time period;


### - with regard to the audit of visitors’ groups , increasing the assurance of the efficiency and effectiveness of implementation of the rules on financial contributions , including better definitions of eligible costs and of the eligibility period; improving the adequacy and effectiveness of ex-ante and ex-post controls over reimbursements; ensuring full compliance of the defrayal of visitors’ groups with the applicable rules; measures to ensure the full realisation of the visitors’ groups programme; ### - with regard to the audit of visitors’ groups , increasing the assurance of the regularity of payments and efficiency of implementation of the rules on financial contributions , including better definitions of eligible costs and of the eligibility period; improving the adequacy and effectiveness of ex-ante and ex-post controls over reimbursements; ensuring full compliance of the defrayal of visitors’ groups with the applicable rules; measures to ensure the full realisation of the visitors’ groups programme;


### 14. notes that the 2019 follow-up process resulted in the closure of 36 of the 93 open actions; notes with concern that in addition to these validated actions , there was a total of 124 open actions from audit reports , including those not yet due for implementation , and that 62 of this total number of actions address significant risk; expects an effort from different directorates-general’s in ensuring that the overdue actions are closed and that the agreed actions will be implemented in accordance with the set due-dates; ### 14. notes that the 2019 follow-up process resulted in the closure of 36 of the 93 open actions; notes with concern that in addition to these validated actions , there was a total of 124 open actions from audit reports , including those not yet due for implementation , and that 62 of this total number of actions address significant risk; expects an effort from different directorates-general’s in ensuring that the overdue actions are closed and that the agreed actions will be implemented in accordance with the set due-dates; calls on the secretary general to report back to the discharge authority on the closure of the remaining actions during his hearings in the committee on budgetary control in october and november 2021;


### 16. notes the fact that no action has been taken in response to some of the recommendations in parliament's resolution on discharge for 2018 , and that the discharge follow-up document does not provide any justification for this; stresses the importance of having more frequent discussions with the secretary-general on issues concerning parliament's budget and its implementation in parliament’s committee on budgetary control; ### 16. deplores the fact that no action has been taken in response to some of the recommendations in parliament's resolution on discharge for 2018 , and that the discharge follow-up document does not provide any justification for this; demands more frequent discussions with the secretary-general on issues concerning parliament's budget and its implementation in parliament’s committee on budgetary control; invites the bureau to adopt internal rules that describe its decision making;


### 18. welcomes the fact that the use of cash payments has decreased significantly , and that members have used the possibility offered by the revised rules to give the financial responsibility of sponsored visits to professionals , i.e. paying agents or travel agencies instead of accredited parliamentary assistants (‘apas’); notes , however , with concern that the secretary-general has not yet released an assessment of the new rules; emphasises that the experience of the internal auditor should be taken into account in the assessment of the existing procedures; ### 18. welcomes the fact that the use of cash payments has decreased significantly , and that members have used the possibility offered by the revised rules to give the financial responsibility of sponsored visits to professionals , i.e. paying agents or travel agencies instead of accredited parliamentary assistants (‘apas’); notes , however , with concern that the secretary-general has not yet released an assessment of the new rules and calls for preparing of such assessment; emphasises that the internal auditor should be consulted on existing procedures when preparing such assessment;


### 21. recalls that rule 11 of the rules of procedure has introduced an obligation for rapporteurs , shadow rapporteurs and committee chairs to publish information on meetings held with interest representatives in the context of their reports; notes with satisfaction that , since the start of the new legislature , the necessary infrastructure has been available on parliament’s website to allow members to publish scheduled meetings with interested representatives in order to improve transparency; ### 21. recalls that rule 11 of the rules of procedure has introduced an obligation for rapporteurs , shadow rapporteurs and committee chairs to publish information on meetings held with interest representatives in the context of their reports; notes with satisfaction that , since the start of the new legislature , the necessary infrastructure has been available on parliament’s website to allow members to publish scheduled meetings with interested representatives in order to improve transparency; stresses , however , that the tool for publication of meetings needs further improvement in order to fulfil its function to make parliament more open , transparent , and accountable to citizens;


### 41. recalls that in 2019 parliament’s internal auditor started an audit on the implementation of the new rules , and that in his findings , finalised in 2020 , the internal auditor highlighted that financial contributions for the visitors’ groups should be further aligned with the real costs incurred by the groups , that ex-ante controls should be reinforced when the first contribution is paid out , and that the existing system of ex-post controls should be reinforced; reiterates that the findings of internal auditor should be taken into account when evaluating existing procedures and developing tighter ex-ante controls in order to avoid possibilities for accumulating money beyond controls; demands further assessing the current level of ex-post controls; ### 41. recalls that in 2019 parliament’s internal auditor started an audit on the implementation of the new rules , and that in his findings , finalised in 2020 , the internal auditor highlighted that financial contributions for the visitors’ groups should be further aligned with the real costs incurred by the groups , that ex-ante controls should be reinforced when the first contribution is paid out , and that the existing system of ex-post controls should be reinforced; reiterates that the findings of internal auditor should be taken into account; demands further assessing the current level of ex-post controls;


### 47. expresses concern over the overdue actions agreed with the internal auditor in 2018 addressing significant residual risks regarding building maintenance , refurbishment and operation; calls on the bureau to adopt a comprehensive maintenance policy; welcomes the gradual phasing out of contracts regarding externalised management functions and the savings this generates; ### 47. expresses concern over the overdue actions agreed with the internal auditor in 2018 addressing significant residual risks regarding building maintenance , refurbishment and operation; calls on the bureau to adopt a comprehensive maintenance policy and report back to the discharge authority; welcomes the gradual phasing out of contracts regarding externalised management functions and the savings this generates;


### 56. takes note of the immediate actions , approved by the bureau at its meeting of 22 july 2020 , which included an awareness campaign , protection of valuable it equipment , prior notification of maintenance works , and provisions of separate master keys for each floor and strict limitation of their distribution; expects parliament to adopt long-term measures to prevent thefts including among those envisaged the introduction of different levels of access rights within parliament’s premises , increased cctv coverage , and further actions relating to keys’ management policy , including the possibility of installing electronic door locks taking due account of the necessary proportionality between the investments needed and the actual value of stolen items; ### 56. takes note of the immediate actions , approved by the bureau at its meeting of 22 july 2020 , which included an awareness campaign , protection of valuable it equipment , prior notification of maintenance works , and provisions of separate master keys for each floor and strict limitation of their distribution; expects parliament to consider long-term measures to prevent thefts including among those proposed the introduction of different levels of access rights within parliament’s premises ,increased cctv coverage , and further actions relating to keys’ management policy , including the possibility of installing electronic door locks taking due account of the necessary proportionality between the investments needed and the actual value of stolen items , as well as the preservation of privacy;


### 71. requests that it be ensured that appropriate security measures are taken regarding the implementation of cloud solutions for parliament to allow workloads to move between onsite and cloud-based computers as needs change and to provide therefore greater agility and more data deployment options via a hybrid cloud strategy; ### 71. requests that it be ensured that appropriate security measures are taken regarding the implementation of cloud solutions for parliament including those enabling its institutional sovereignty; insists that the latter should be obtained by ensuring data ownership , data localisation on union territory , no vendor lock-in effects and a multi-vendor approach allowing workloads and data to be migrated seamlessly between the different layers of the hybrid cloud (on premises , private and public cloud) as well as between cloud service providers as needs change and not only during the cloud services exit phase , in order to achieve greater agility and more data deployment options , as agreed by the ict innovation strategy working group and confirmed at the bureau last year;


### 1. welcomes the 31st annual report on the protection of the eu’s financial interests and the fight against fraud , which underlines the achievements of 2019 with regards to the consolidation of the institutional framework on the fight against fraud and irregularities at union level achieved by the transposition into national law by 12 member states of the measures provided for in the directive on the fight against fraud to the union’s financial interests by means of criminal law (‘the pif directive’) with the remaining 22 member states doing so by june 2020; ### 1. welcomes the 31st annual report on the protection of the eu’s financial interests and the fight against fraud , which underlines the achievements of 2019 with regards to the consolidation of the institutional framework on the fight against fraud and irregularities at union level achieved by the transposition into national law by 12 member states of the measures provided for in the directive on the fight against fraud to the union’s financial interests by means of criminal law (‘the pif directive’) , while 22member states did so by june 2020; regrets that the commission had to send reasoned opinions to ireland and romania on 3 december 2020 for failing to transpose into national law the pif directive;


### 6. urges member states together with the commission to cooperate more closely with regard to exchanges of information , improving data collection , and enhancing the effectiveness of controls; ### 6. urges member states together with the commission to cooperate more closely with regard to exchanges of information , improving data collection , and enhancing the effectiveness of controls; in this regard calls on member states to publish data on final beneficiaries in an uniform machine-readable format and ensure the interoperability with the commission monitoring tools;


### 9. notes from the 2020 vat gap report that in 2018 the eu vat gap dropped to eur 140 billion and could fall below eur 130 billion in 2019; however , is concerned that the vat gap may reach eur 164 billion in 2020 due to the covid-19 pandemic; ### 9. notes from the 2020 vat gap report that in 2018 the eu vat gap dropped to eur 140 billion and could fall below eur 130 billion in 2019; however , is concerned that the vat gap may reach eur 164 billion in 2020 and asks the commission for a thorough explanation on whether this increase was anyhow related to the covid-19 pandemic;


### 11. notes that between 2017 and 2019 the commission carried out on-the-spot inspections on the control strategy in the field of customs value in all member states and found that the union’s financial interests were not effectively protected , leading to significant losses of traditional own resources to the eu budget; notes that olaf has issued investigation reports with recommendations to six member states which have not fully implemented the necessary measures to tackle undervaluation fraud consistently; ### 11. notes that between 2017 and 2019 the commission carried out on-the-spot inspections on the control strategy in the field of customs value in all member states and found that the union’s financial interests were not effectively protected , leading to significant losses of traditional own resources to the eu budget; notes that olaf has issued investigation reports with recommendations to six member states which have not fully implemented the necessary measures to tackle undervaluation fraud consistently; calls on the commission to report back to the parliament specifically naming the member states which could share their best practice and also those where significant challenges remain;


### 12. notes that solar panels were the goods most affected by fraud and irregularities in monetary terms in 2019 , as was also the case in 2018 , and 2017; calls on the commission and member states to take action in this regard; ### 12. notes that solar panels were the goods most affected by fraud and irregularities in monetary terms in 2019 , as was also the case in 2018 , and 2017; calls on the commission to recognise the systemic nature of such fraud , fully informs the council and together with member states takes strong action in this regard;


### 14. reiterates that a combination of different detection methods (release controls , post-release controls , inspections by anti-fraud services and others) is most efficient for detecting fraud , and that the efficiency of each method depends on the member state concerned , the efficient coordination of its administration , and the ability of the relevant member state services to communicate with each other; ### 14. reiterates that a combination of different detection methods (release controls , post-release controls , inspections by anti-fraud services and others) is most efficient for detecting fraud , and that the efficiency of each method depends on the member state concerned , the efficient coordination of its administration , and the ability of the relevant member state services to communicate with each other; calls on the commission to inform the council which member states could share their 'best practice' experience and where significant challenges for improvements remain;


### 19. notes the complexity of the analysis on cohesion policy’s data and the different phases of pps 2007-2013 , notes that the financial amounts reported are significantly lower than the exceptional year of 2018 but on average are trending upwards for the cohesion fund; underlines the importance of cooperation with the judicial authorities and considers the need for closer attention to the unexpected downturn of fraudulent irregularities as well as non-fraudulent , excluding ‘exceptional’ cases , for pp 2014-2020 in 2019 of the financial amounts involved in fraudulent irregularities for all funds and in particular regarding the erdf; notes , moreover , the member states’ different reporting patterns in terms of their tendency to detect fraudulent irregularities with high financial amounts involved; ### 19. notes the complexity of the analysis on cohesion policy’s data and the different phases of pps 2007-2013 , notes that the financial amounts reported are significantly lower than the exceptional year of 2018 but on average are trending upwards for the cohesion fund; underlines the importance of cooperation with the judicial authorities and considers the need for closer attention to the unexpected downturn of fraudulent irregularities as well as non-fraudulent , excluding ‘exceptional’ cases , for pp 2014-2020 in 2019 of the financial amounts involved in fraudulent irregularities for all funds and in particular regarding the erdf; stresses an urgent need for the commission , the olaf and the eppo to fully investigate if member states’ different reporting patterns in terms of their tendency to detect fraudulent irregularities with high financial amounts involved are somehow related to possible conflicts of interests of member states' stakeholders or even criminal activity;


### 20. reiterates the transparency requirements for cap and cohesion policies , which oblige the responsible authorities of the member states to maintain a publicly available list of final beneficiaries; calls on member states to publish such data in an uniform machine-readable format and ensure the interoperability of the information; calls on the commission to collect and aggregate the data and publish lists of the largest beneficiaries from each fund in each member state; ### 20. reiterates the transparency requirements for cap and cohesion policies , which oblige the responsible authorities of the member states to maintain a publicly available list of final beneficiaries; strongly calls on member states to publish such data in an uniform machine-readable format and ensure the interoperability of the information; demands that the commission collects and aggregates the data and publish lists of the largest beneficiaries from each fund in each member state;


### 21. notes that in 2019 actions related to health infrastructure were affected by breaches of public procurement rules; among the fraudulent irregularities the most common issues detected concerned supporting documents; fifteen member states reported irregularities in actions related to health infrastructures; seven of these also detected fraud; notes that non-reporting of irregularities in this area by other member states is not an indication that they are not affected by such risks; ### 21. notes that in 2019 actions related to health infrastructure were affected by breaches of public procurement rules; among the fraudulent irregularities the most common issues detected concerned supporting documents; fifteen member states reported irregularities in actions related to health infrastructures; seven of these also detected fraud; notes that non-reporting of irregularities in this area by other member states is not an indication that they were not affected by such risks and calls on the commission , the olaf and the eppo that fraudulent activities , especially those related to fighting the covid-19 pandemic do not remain unresolved;


### 23. stresses the importance of prioritising the development and establishment of national anti-fraud strategies (nafss) by all member states , also in the light of the new challenges of the covid-19 crisis and the recovery and resilience plans; calls on member states who have not yet adopted a nafs to do so without delay; ### 23. stresses the importance of prioritising the development and establishment of national anti-fraud strategies (nafss) by all member states , also in the light of the new challenges of the covid-19 crisis and the recovery and resilience plans; is concerned that sixteen member states have not yet adopted a nafs; calls on member states who have not yet adopted a nafs to do so without delay;


### 33. stresses the importance of the early detection and exclusion system (edes); invites the commission to analyse the impact of a possible extension of edes to shared management; ### 33. stresses the importance of the early detection and exclusion system (edes); invites the commission to request an extension of edes to shared management in the upcoming review of the financial regulation; asks the commission to provide this system with the necessary financial and staff resources to operate on a full time basis;


### 37. notes that only 13 member states made use of arachne during their risk analysis; reiterates the importance of this tool , as well as of interoperability of it systems and databases for fraud risk analysis and fraud detection purposes; reiterates its call on the commission to consider making the use of arachne mandatory; ### 37. regrets that only 13 member states made use of arachne during their risk analysis; reiterates the importance of this tool , as well as of interoperability of it systems and databases for fraud risk analysis and fraud detection purposes; reiterates its call on the commission to make the use of arachne mandatory;


### 24. takes the opportunity to congratulate the ombudsman on the opening of an investigation (oi/2/2017) on the transparency of the council’s legislative work in 2017 in order to allow citizens to more easily follow the legislative process of the union; welcomes the recent positive echoing by the ombudsman of the new transparency steps taken by the council , for example by proactively publishing progress reports on negotiations on draft laws , a development which is in line with proposals made by the ombudsman as a result of her inquiries; ### 24. takes the opportunity to congratulate the ombudsman on the opening of an investigation (oi/2/2017) on the transparency of the council’s legislative work in 2017 in order to allow citizens to more easily follow the legislative process of the union; welcomes the recent positive echoing by the ombudsman of the new transparency steps taken by the council , for example by proactively publishing progress reports on negotiations on draft laws , a development which is in line with proposals made by the ombudsman as a result of her inquiries; nevertheless , recalls the ombudsman’s opinion that the council should further step up its transparency efforts by , inter alia , publishing council legislative documents including minutes of working group meetings , trilogue and other milestone working documents;


### 33. welcomes the ombudsman’s commitment to reducing its environmental footprint via concrete actions such as the extensive use of videoconference facilities for internal and inter-institutional meetings , and which have made it possible to reduce missions; notes the teleworking policy , which is used by many members of staff (and byall staff during the covid-19 crisis) , which limits individual transportation. ### 33. welcomes the ombudsman’s commitment to reducing its environmental footprint via concrete actions such as the extensive use of videoconference facilities for internal and inter-institutional meetings , and which have made it possible to reduce missions; notes the teleworking policy , which is used by many members of staff (and by all staff during the covid-19 crisis) , which limits individual transportation; encourages the ombudsman to continue undertaking actions aiming at reducing the carbon footprint as well as to pay close attention to the energy mix used by the institution , with emphasis on promoting clean and renewable sources.


### 8. acknowledges that the situation in terms of gender balance in middle and senior management positions has remained relatively stable since 2018 with 35 % of these positions being filled by women; acknowledges that a new equal opportunity strategy containing concrete objectives to be reached by 2025 is being adopted and should enter in force in 2020; ### 8. notes that the situation in terms of gender balance in middle and senior management positions has not improved since 2018 with 35 % of these positions being filled by women; acknowledges that a new equal opportunity strategy containing concrete objectives to be reached by 2025 is being adopted and should enter in force in 2020; calls on the committee to report back to the discharge authority on its implementation and first results on an annual basis;


### 10. appreciates the committee’s focus on developing and upholding high-quality health and well-being services based on prevention and early intervention through close cooperation between the hr services concerned , and awareness-raising programmes among staff and managers; welcomes the training sessions held with managers at both junior , middle and senior level on the topic of absence management and successful integration of colleagues after long-term absence; ### 10. appreciates the committee’s focus on developing and upholding high-quality health and well-being services based on prevention and early intervention through close cooperation between the hr services concerned , and awareness-raising programmes among staff and managers; welcomes the training sessions held with managers at both junior , middle and senior level on the topic of absence management and successful integration of colleagues after long-term absence; welcomes the increased flexitime and teleworking arrangements to improve the work-life balance of staff , as well as the continuation of the stress and burnout prevention programme;


### 14. underlines that an external evaluation of the communication strategy of the committee was carried out in accordance with the standards applied by all other union institutions using a shared framework contract; notes that the overall quality of the committee’s communication mostly meets audience needs and is effective as key stakeholders have a positive perception of the committee; ### 14. underlines that an external evaluation of the communication strategy of the committee was carried out in accordance with the standards applied by all other union institutions using a shared framework contract; notes that the quality of the committee’s communication did not always meet audience needs but is overall effective as key stakeholders have a positive perception of the committee;


### 15. requests the committee to report on how it plans to implement efficiently the recommendations of the evaluation report; notes that the biggest successes of the committee’s communication are the citizens' dialogues with the commission and the committee’s own local dialogues , the flagship events ‘europcom’ (european conference on public communication) and the ‘european week of the regions and cities’; ### 15. requests the committee to report on how it will implement the recommendations of the evaluation report; notes that the biggest successes of the committee’s communication are the citizens' dialogues with the commission and the committee’s own local dialogues , the flagship events ‘europcom’ (european conference on public communication) and the ‘european week of the regions and cities’;


### 16. is aware that the bureau of the committee adopted a digital strategy at the beginning of 2019 and that the implementation started following the adoption; notes that the main deliverables of the strategy are member-centric information systems to support the political work of the committee , information systems to support paperless administrative processes and a digital workplace programme; ### 16. welcomes that the bureau of the committee adopted a digital strategy at the beginning of 2019 , on the basis of the tallinn declaration on e-government with its core principle of 'digital by default' , and that the implementation started following the adoption; notes that the main deliverables of the strategy are member-centric information systems to support the political work of the committee , information systems to support paperless administrative processes and a digital workplace programme;


### 19. welcomes the fact that a series of measures has been implemented to ensure adequate building security standards , such as the installation of new equipment for access control; notes that the related security standards have reached the same level as the standards of parliament and the commission and that , moreover , first steps have been taken to buy a new visitor's management system that will be implemented in 2020; ### 19. welcomes the fact that a series of measures has been implemented to ensure adequate building security standards , such as the installation of new equipment for access control; notes that the related security standards have reached the same level as the standards of parliament and the commission and that , moreover , the procurement process started for the new visitor's management system that was planned to be installed in 2020;


### 23. notes that a compliance and effectiveness exercise was launched in 2019 to assess to what extent the committee complies with the 16 internal control standards; notes that the 2019 compliance exercise has shown that the overall state of implementation and effectiveness of the requirements remained satisfactory and stable as compared to 2018; notes , however , that areas for further improvement have been identified including the alignment of the committee’s mission and organisational structure with new priorities , further digitalisation of data storage and simplification of administrative processes as well as an in-depth revamp of the existing business continuity plan arising from the experiences acquired during the current covid-19 situation; ### 23. notes that a compliance and effectiveness exercise was launched in 2019 to assess to what extent the committee complies with the 16 internal control standards; notes that the 2019 compliance exercise has shown that the overall state of implementation and effectiveness of the requirements remained satisfactory and stable as compared to 2018; notes , however , that areas for further improvement have been identified including the alignment of the committee’s mission and organisational structure with new priorities , further digitalisation of data storage and simplification of administrative processes as well as an in-depth revamp of the existing business continuity plan arising from the experiences acquired during the current covid-19 situation; calls on the committee to report on the implementation of these much needed improvements in a follow-up to the 2019 discharge;


### 38. congratulates the committee on the ongoing efforts in the framework of the environmental management system as regards the lowering of the carbon footprint and plastic , food and paper waste; agrees that the reduction of the carbon footprint is among the most important objectives for the coming years; encourages the committee to participate in related projects with the other union bodies and to elaborate a comprehensive plan for the committee to implement the principles and recommendations presented in the european green deal , with the general objective of becoming climate neutral by 2030; ### 38. congratulates the committee on the ongoing efforts in the framework of the environmental management system as regards the lowering of the carbon footprint and plastic , food and paper waste; agrees that the reduction of the carbon footprint is among the most important objectives for the coming years; calls on the committee to pay due attention to the energy mix of its sources of electricity and encourages the procurement of electricity generated by wind , solar , bio and hydroplants; encourages the committee to participate in related projects with the other union bodies and to elaborate a comprehensive plan for the committee to implement the principles and recommendations presented in the european green deal , with the general objective of becoming climate neutral by 2030;


### 1. grants the commission discharge in respect of the implementation of the budget of the eighth , ninth , tenth and eleventh european development funds for the financial year 2019 / postpones its decision on granting the commission discharge in respect of the implementation of the budget of the eighth , ninth , tenth and eleventh european development funds for the financial year 2019; ### 1. postpones its decision on granting the commission discharge in respect of the implementation of the budget of the eighth , ninth , tenth and eleventh european development funds for the financial year 2019;


### 1. approves the closure of the accounts of the eighth , ninth , tenth and eleventh european development funds for the financial year 2019 / postpones the closure of the accounts of the eighth , ninth , tenth and eleventh european development funds for the financial year 2019; ### 1. postpones the closure of the accounts of the eighth , ninth , tenth and eleventh european development funds for the financial year 2019;


### b. whereas it is crucial to ensure that development aid is used in accordance with its original purpose as stated in article 208 of the treaty on the functioning of the european union , with due consideration for aid and development effectiveness principles; ### b. whereas it is crucial to ensure that development aid is used in accordance with its original purpose , meaning to reduce and ultimately to eradicate poverty , as stated in article 208 of the treaty on the functioning of the european union , with due consideration for aid and development effectiveness principles;


### e. whereas the alignment of union development cooperation with partner countries’ own development priorities is a key element of the 2030 agenda for sustainable development; ### e. whereas the alignment of union development cooperation with partner countries’ own development priorities should be always and fully respected and is a key element of the 2030 agenda for sustainable development;


### f. whereas policy coherence and complementarity of various external policies should be carefully looked at , especially when several policies are being implemented in a single partner country , with the view to promoting synergies and trade-offs between existing policies and to avoiding as much as possible unnecessary administrative burden; ### f. whereas policy coherence and complementarity of various external policies should be carefully looked at , especially when several policies are being implemented in a single partner country , with the view to promoting synergies and trade-offs between existing policies and to avoiding possible damaging consequences of one single eu policy on an area otherwise dealt with by another policy and , as much as possible , unnecessary administrative burden;


### i. whereas budget support , while playing a key role in driving change and in addressing the main development challenges , carries a considerable governance risk and should be granted only if the beneficiary state is able to demonstrate a sufficient level of transparency , accountability and human rights prior to receiving budget support assistance; ### i. whereas budget support , while playing a key role in driving change and in addressing the main development challenges , carries a considerable governance risk and should be granted only if the beneficiary state is able to demonstrate a sufficient level of transparency , accountability , respect for the rule of law and human rights prior to receiving budget support assistance , followed by thorough ex-post checks;


### 8. is concerned that the estimated level of error surpassed the materiality threshold , with 3 ,5 % of expenditure affected for the eighth , ninth , tenth and eleventh edf (compared to 5 ,2 % for 2018 , 4 ,5 % in 2017 , 3 ,3 % in 2016 , 3 ,8 % in 2014 and 2015 , 3 ,4 % in 2013 and 3 % in 2012); notes that the growing trend of the estimated level of error has stopped; expects , nevertheless , that the commission reflect on the root causes of the succession of adverse opinions and take all steps necessary to further reduce the estimated level of error; ### 8. is concerned that the estimated level of error surpassed the materiality threshold , with 3 ,5 % of expenditure affected for the eighth , ninth , tenth and eleventh edf (compared to 5 ,2 % for 2018 , 4 ,5 % in 2017 , 3 ,3 % in 2016 , 3 ,8 % in 2014 and 2015 , 3 ,4 % in 2013 and 3 % in 2012); notes that the growing trend of the estimated level of error has temporary stopped; expects , nevertheless , that the commission reflect on the root causes of the succession of adverse opinions and take all steps necessary to further reduce the estimated level of error;


### 15. notes the court’s observation , as in previous years , that the frequency of identified errors , including some contained in final claims which had been subject to ex-ante external audits and expenditure verifications , points to weaknesses in those checks; notes that this is not only problematic in terms of the effectiveness of the checks but also in terms of the efficiency of the management and control system because the checks performed did not prevent or correct the error; calls on dg intpa to continue efforts to improve the assessment of both effectiveness and efficiency of its control system by identifying key performance indicators for both , to set realistic and ambitious targets and to monitor and improve its control system; ### 15. is worried about the court’s observation , as in previous years , that the frequency of identified errors , including some contained in final claims which had been subject to ex-ante external audits and expenditure verifications , points to weaknesses in those checks; notes with concern that this is not only problematic in terms of the effectiveness of the checks but also in terms of the efficiency of the management and control system because the checks performed did not prevent or correct the error; reiterates its expectation that the control system should be more rigorous and calls on dg intpa to continue efforts to improve the assessment of both effectiveness and efficiency of its control system by identifying key performance indicators for both , to set realistic and ambitious targets and to monitor and improve its control system;


### 16. notes dg intpa’s eighth rer study , which resulted in an rer of 1 ,13 % , up from 0 ,85 % in 2018 and below the 2 % materiality threshold fixed by the commission; notes the court’s observation that four major factors distort the rer , namely the insufficient coverage of certain aspects of procurement procedures , the very low number of on-the-spot-checks in the country of project implementation , which is deemed insufficient to detect errors that are not apparent in documents , the method for determining the rer , which results in a rate that does not necessarily reflect the actual residual errors , and possible overreliance on previous control work; calls on dg intpa , as in previous years , to liaise with the court and to address those issues in an update of the methodology and in a more thorough performance of next year’s rer study; ### 16. notes dg intpa’s eighth rer study , which resulted in an rer of 1 ,13 % , up from 0 ,85 % in 2018 and below the 2 % materiality threshold fixed by the commission; notes the court’s observation that four major factors distort the rer , contributing to the underestimation of the residual error rate , namely the insufficient coverage of certain aspects of procurement procedures , the very low number of on-the-spot-checks in the country of project implementation , which is deemed insufficient to detect errors that are not apparent in documents , the method for determining the rer , which results in a rate that does not necessarily reflect the actual residual errors , and possible overreliance on previous control work , which is contrary to the purpose of the rer study , namely to identify the errors that have evaded precisely those controls; calls on dg intpa , as in previous years , to liaise with the court and to address those issues in an update of the methodology and in a more thorough performance of next year’s rer study;


### 17. notes with concern the court’s statement that the absence of reservations in the 2019 annual activity report is unjustified; further notes the court’s consideration that it results partly from the limitations of the rer study and partly from the introduction of a ‘de minimis rule’ , which states that a reservation is not needed if the individual spending area it would cover represents less than 5 % of total payments and has a financial impact of less than eur 5 million; recalls that a reservation is a keystone in the accountability construction and therefore constitutes a preventive and transparency instrument within the assurance building of dg intpa , reflecting ongoing challenges or remaining and recurring weaknesses faced at headquarters or within union delegations; ### 17. notes with concern the court’s statement that the absence of reservations in the 2019 annual activity report is unjustified; further notes the court’s consideration that it results partly from the limitations of the rer study and partly from the introduction of a ‘de minimis rule’ , which states that a reservation is not needed if the individual spending area it would cover represents less than 5 % of total payments and has a financial impact of less than eur 5 million; consequently , reservations are no longer made in some cases where they were made in previous years , even if corresponding risks remains and the errors remain the same; recalls that a reservation is a keystone in the accountability construction and therefore constitutes a preventive and transparency instrument within the assurance building of dg intpa , reflecting ongoing challenges or remaining and recurring weaknesses faced at headquarters or within union delegations;


### 21. notes the continued commitment of the united kingdom to pay all its obligations under the current multiannual financial framework and previous financial perspectives as if it were still a member state , as expressed in the agreement on the withdrawal of the united kingdom of great britain and northern ireland from the european union and the european atomic energy community (the ‘withdrawal agreement’); notes furthermore that the withdrawal agreement states that the united kingdom is to remain party to the edf until the closure of the eleventh edf and all previous unclosed edfs , and is to , in this respect , assume the same obligations as the member states under the internal agreement by which it was set up , as well as the obligations resulting from previous edfs until their closure and that the united kingdom may participate , as an observer , without voting rights , in the edf committee; ### 21. notes with satisfaction the continued commitment of the united kingdom to pay all its obligations under the current multiannual financial framework and previous financial perspectives as if it were still a member state , as expressed in the agreement on the withdrawal of the united kingdom of great britain and northern ireland from the european union and the european atomic energy community (the ‘withdrawal agreement’); notes furthermore that the withdrawal agreement states that the united kingdom is to remain party to the edf until the closure of the eleventh edf and all previous unclosed edfs , and is to , in this respect , assume the same obligations as the member states under the internal agreement by which it was set up , as well as the obligations resulting from previous edfs until their closure and that the united kingdom may participate , as an observer , without voting rights , in the edf committee;


### 26. notes with appreciation that sub-saharan africa is still the largest recipient of budget support with a share of 36 %; observes furthermore that the share of low income countries decreased to 32 % (compared to 38% in 2018) and that lower middle income countries , with 47 % of the total ongoing commitments , represent the largest beneficiaries of budget support; ### 26. notes with appreciation that sub-saharan africa is still the largest recipient of budget support with a share of 36 %; observes with concern that the share of low income countries decreased to 32 % (compared to 38% in 2018) and that lower middle income countries , with 47 % of the total ongoing commitments , represent the largest beneficiaries of budget support;


### (2) the system established by regulation (ec) no 182/2011 has , overall , proven to work well in practice and struck an appropriate institutional balance as regards the roles of the commission and the other actors involved. that system should therefore continue to function unchanged except for certain targeted amendments concerning specific aspects of procedure at the level of the appeal committee. these amendments are intended to ensure wider political accountability and ownership of politically sensitive implementing acts without , however , modifying the legal and institutional responsibilities for implementing acts as organised by regulation (eu) no 182/2011. ### (2) the system established by regulation (ec) no 182/2011 has , overall , proven to work well in practice and struck an appropriate institutional balance as regards the roles of the commission and the other actors involved. that system should therefore continue to function unchanged except for certain targeted amendments concerning specific aspects of procedure at the level of the appeal committee. these amendments are intended to ensure wider political accountability and ownership of politically sensitive implementing acts and to take greater account of the precautionary principle without , however , modifying the legal and institutional responsibilities for implementing acts as organised by regulation (eu) no 182/2011.


### (7) while the commission is empowered to decide in such cases , due to the particular sensitivity of the issues at stake , member states should also fully assume their responsibility in the decision-making process. this , however , is not the case when member states are not able to reach a qualified majority , due to , amongst others , a significant number of abstentions or non-appearances at the moment of the vote. ### (7) while the commission is currently empowered to decide in such cases , due to the particular sensitivity of the issues at stake , member states should also fully assume greater responsibility in the decision-making process. where the act concerns the protection of the environment , as well as the protection of the health or safety of humans , animals , or plants , greater weight should be given to the precautionary principle. when , in such cases , member states are not able to reach a qualified majority in favour of proposals to grant authorisation for a product or substance , authorisation should be deemed to have been refused.


### (8) in order to increase the added value of the appeal committee its role should therefore be strengthened by providing for the possibility of holding a further meeting of the appeal committee whenever no opinion is delivered. the appropriate level of representation at the further meeting of the appeal committee should be ministerial level , to ensure a political discussion. to allow the organisation of such a further meeting the timeframe for the appeal committee to deliver an opinion should be extended. ### (8) in order to increase the added value of the appeal committee , to reduce the risk of no opinion being delivered and to provide an incentive for member states to take a clear position , qualified-majority voting should apply.


### (9) the voting rules for the appeal committee should be changed in order to reduce the risk of no opinion being delivered and to provide an incentive for member state representatives to take a clear position. to this end only member states which are present or represented , and which do not abstain , should be considered as participating member states for the calculation of the qualified majority. in order to ensure that the voting outcome is representative a vote should only be considered valid if a simple majority of the member states are participating members of the appeal committee. if the quorum is not reached before expiry of the time-limit for the committee to take a decision , it will be considered that the committee delivered no opinion , as is the case today. ### (9) the voting rules for the appeal committee should be changed in order to reduce the risk of no opinion being delivered and to provide an incentive for member state representatives to take a clear position. to this end , a product or substance should be deemed to be authorised only if member states reach a qualified majority.


### (10) the commission should have the possibility , in specific cases , to ask the council to indicate its views and orientation on the wider implications of the absence of an opinion , including the institutional , legal , political and international implications. the commission should take account of any position expressed by the council within 3 months after the referral. in duly justified cases , the commission may indicate a shorter deadline in the referral. ### (10) the commission should have the possibility , in specific cases , to ask the european parliament and the council to indicate their views and orientation on the wider implications of the outcome of the vote in the appeal committee , including the institutional , legal , political and international implications. the commission should take account of any position expressed by the european parliament and by the council within 3 months after the referral. the position expressed by the council should also be sent to the european parliament without undue delay.


### (11) transparency on the votes of member state representatives at the appeal committee level should be increased and the individual member state representatives' votes should be made public. ### (11) transparency should be increased throughout the legislative process , including the appeal committee's examination procedure. in particular , the votes of member state representatives at the appeal committee level should be increased and the individual member state representatives' votes should be made public. where the act concerns particularly sensitive sectors , such as the protection of consumers , the health or safety of humans , animals or plants , or the protection of the environment , greater importance should be given to the precautionary principle. substantive reasons for votes on those sensitive acts should be given by each member state representative. the commission should also provide information on the composition of committees , including the persons present and the authorities and organisations to which those persons belong , as well as the agendas of the meetings and the documents and texts being discussed.


### (11) transparency on the votes of member state representatives at the appeal committee level should be increased and the individual member state representatives' votes should be made public. ### (11) transparency on the votes of member state representatives at the appeal committee level should be increased and the individual member state representatives' votes should be made public. there should also be more transparency on the agendas of the meetings and the documents and texts being discussed.


### (1) in article 3(7) , the following sixth subparagraph is added: ### deleted


### in paragraph 1 , the following second subparagraph is added: ### deleted


### 3a. where no opinion is delivered in the appeal committee , the commission may refer the matter to the council for an opinion indicating its views and orientation on the wider implications of the absence of opinion , including the institutional , legal , political and international implications. the commission shall take account of any position expressed by the council within 3 months after the referral. in duly justified cases , the commission may indicate a shorter deadline in the referral. ### 3a. where no opinion has been delivered by the appeal committee , the commission may ask the european parliament and the council to express their views on the wider implications of the outcome of the vote in the appeal committee. those expressions of views shall be delivered within three months of the commission’s request.


### the voting results including , in the case of the appeal committee , the votes expressed by the representative of each member state; ### the voting results , broken down by representative of each member state , together with the reasons for the vote;


### 5. the references of all documents referred to in points (a) to (d) , (f) and (g) of paragraph 1 as well as the information referred to in points (e) and (h) of that paragraph shall be made public in the register. ### 5. all documents and information referred to in paragraph 1 shall be made public in the register.


### this regulation shall not apply to pending procedures on which the appeal committee has already delivered an opinion on the date of entry into force of this regulation. ### this regulation shall apply to pending procedures.


### a. whereas third party litigation funding (tplf) is a growing practice whereby commercial investors (‘litigation funders’) who are not a party to a dispute invest in legal proceedings and pay legal and other expenses , in exchange for a share of any eventual award; whereas tplf does not only occur in collective redress cases but also in arbitration and insolvency proceedings; ### a. whereas third party litigation funding (tplf) is a growing practice whereby ‘litigation funders’ who are not a party to a dispute invest in legal proceedings and pay legal and other expenses; whereas sometimes these funders can be commercial investors asking in return for a share of an eventual award; whereas tplf can occur in collective redress cases as well as in arbitration and insolvency proceedings;


### b. whereas litigation funders involved in legal proceedings act in their own economic interest , rather than in the interest of claimants; whereas they can seek to control the litigation and demand an outcome that pays them the greatest return3 ; ### b. whereas litigation funders involved in legal proceedings can act in the interest of claimants , in support of a general public interest and/or in their own economic interest;


### c. whereas litigation funders often demand a disproportionate share of the proceeds that exceed the typical returns of other types of investments; whereas the rates of returns for litigation funders can be up to 300% or in some cases even 3 000%4 , directly taking from the compensation available for claimants5 ; ### c. whereas it has happened in cases outside the union that litigation funders demanded a disproportionate share of the proceeds that exceed the typical returns of other types of investments;


### d. whereas litigation funders seem to argue that only they can provide access to justice , there are in fact other ways to seek redress , such as mediation , adr/odr , the ombudsman or through grievance systems managed by companies; whereas , those solutions could result in faster and more adequate compensation for claimants; ### d. whereas there are different ways to seek redress , such as through litigation , mediation , adr/odr , the ombudsman or through grievance systems managed by companies;


### e. whereas , although tplf is widespread in australia , it has not had a positive impact on the administration of justice in that jurisdiction; whereas , empirical data6 show that litigation funders typically pick and choose between cases to find the best returns , and would not invest in cases they regard as too risky or not profitable enough; ### deleted


### f. whereas the number of litigation funders is increasing with currently more than 45 known to operate in the eu; whereas , the practice of tplf however remains largely unregulated in the union , despite presenting material risks to the administration of justice; ### f. whereas , tplf remains rarely used and largely unregulated in the union;


### g. whereas the current regulatory vacuum enables litigation funders to operate in secrecy , with the result that courts can , on occasion , make awards to claimants without realising that a large majority of the award will subsequently be redirected to litigation funders; whereas the lack of transparency can also mean that even the potential beneficiaries have little or no knowledge about the distribution of awards or the funding agreements , in particular in members states with an opt-out system; ### deleted


### h. whereas directive (eu) 2020/1828 identifies certain safeguards relating to litigation funding , which are , however , limited to representative actions on behalf of consumers taken under that directive , and therefore exclude many other types of action or categories of claimants; whereas , effective safeguards should apply to all types of claims; ### h. whereas directive (eu) 2020/1828 identifies certain opportunities and safeguards relating to litigation funding , which are ,however , limited to representative actions on behalf of consumers taken under that directive , and therefore exclude many other types of action or categories of claimants; whereas , enabling measures and effective safeguards should apply to all types of claims;


### 1. observes that third party litigation funding is a rapidly expanding commercial practice in the union , which has a significant impact on justice systems as well as on european citizens. notes that litigation funding is so far largely unregulated in the union; ### 1. notes that litigation funding is so far rarely used and largely unregulated in the union;


### 2. firmly believes that in order to ensure that justice systems prioritise redress for victims of injustice , and not the interests of investors who may seek commercial opportunity from disputes , a regulatory regime addressing key issues relevant to litigation funding , including transparency , fairness , and proportionality , is necessary; ### 2. believes that in order to ensure access to justice for all and to build justice systems that prioritise redress for victims of injustice , a regulatory regime addressing key issues relevant to litigation funding , including transparency and proportionality , is useful;


### 3. strongly believes that only the regulation of litigation funders will allow regulators to exercise effective oversight and adequately ensure that the interests of claimants are protected. points out that voluntary regulatory mechanisms and codes of conduct have not been subscribed to by the large majority of funders , leaving claimants significantly exposed; ### 3. believes that the regulation of litigation funders will support regulators to exercise effective oversight and adequately ensure that the interests of claimants are protected. points out that also no or hardly any voluntary regulatory mechanisms and codes of conduct have been put in place;


### 4. recommends the establishment of a system of authorisation for litigation funders , permitting the introduction of corporate governance requirements and supervisory powers to protect claimants , and to ensure that funding is only provided by entities that are committed to complying with minimum standards in terms of transparency , governance and capital adequacy , and observing a fiduciary relationship vis-à-vis claimants and intended beneficiaries; ### 4. recommends the establishment of a system of authorisation for litigation funders , which enables genuine access to justice for all. believes that such system should include corporate governance requirements and supervisory powers to protect claimants , and to ensure that funding is only provided by entities that are committed to complying with minimum standards in terms of independence , transparency , governance and capital adequacy , and observing a fiduciary relationship vis-à-vis claimants and intended beneficiaries;


### 5. recommends that litigation funders be obliged to respect a fiduciary duty of care requiring them to act in the best interests of a claimant. believes that litigation funders should be prevented from exercising control over the legal proceedings they fund , which should be the sole responsibility of the claimant and their legal representatives. points out that such control over the legal proceedings they fund can consist both of formal control , such as a contractual power to make decisions , and informal control , such as the threat to withdraw the funding; ### 5. recommends that litigation funders be obliged to respect a fiduciary duty of care requiring them to act in the best interests of a claimant. stresses that litigation funders cannot have any control over the legal proceedings they fund , which must be the sole responsibility of the claimant and their legal representatives. points out that such control over the legal proceedings they fund can consist both of formal control , such as a contractual power to make decisions , and informal control , such as the threat to withdraw the funding;


### 6. underlines that conflicts of interest may arise where there are relationships between litigation funders , qualified entities , law firms , aggregators , including claims-collection and award-distribution-platforms , and other actors who may be involved in claims. notes that there is a trend of an increasingly close cooperation , with , for example , litigation funders agreeing to finance law firms across a series of future cases (portfolio funding)7 . recommends that safeguards are adopted to prevent such conflicts , set out claimants’ rights and to require that details of relationships between litigation funders and the other involved parties are disclosed; ### 6. underlines that conflicts of interest may arise where there are pre-existing contractual relationships between litigation funders , law firms , aggregators , including claims-collection and award-distribution-platforms , and other actors who may be involved in claims. notes that there is a trend of an increasingly close cooperation , with , for example , litigation funders agreeing to finance law firms across a series of future cases (portfolio funding)7 . recommends that safeguards are adopted to prevent such conflicts , set out claimants’ rights and to require that details of relationships between litigation funders and the other involved parties are disclosed;


### 8. believes that , just like claimants , litigation funders should be responsible for the defendants’ costs arising from unsuccessful litigation (such as an adverse cost award). is of the opinion that regulation should prevent litigation funders from limiting their liability to costs in the event of an unsuccessful outcome; ### 8. believes that , just like claimants , litigation funders should be responsible for the defendants’ costs arising from unsuccessful litigation (such as an adverse cost award). stresses that regulation should prevent litigation funders from limiting their liability to costs in the event of an unsuccessful outcome;


### 9. considers that legislation should impose limits on the proportion of the award that litigation funders are entitled to by virtue of a funding agreement. believes that only under exceptional circumstances arrangements between litigation funders and claimants should vary from the rule that a minimum of 60% of the gross settlement or damages is paid to the claimants; ### 9. considers that legislation should impose limits on the proportion of the award that litigation funders are entitled to by virtue of a funding agreement. believes that only under exceptional circumstances arrangements between litigation funders and claimants should vary from the rule that a minimum of 70% of the gross settlement or damages is paid to the claimants;


### 10. considers that there should be transparency regarding the involvement of litigation funding in legal proceedings , including obligations for claimants and their lawyers to disclose funding agreements to courts and defendants. notes that , currently , courts or administrative authorities and defendants are often not aware that a claim is funded by a commercial actor. points out that this can also hinder a court or administrative authority in properly considering costs issues and in ensuring that awards compensate claimants adequately; ### 10. considers that there should be transparency regarding the involvement of litigation funding in legal proceedings , by having claimants and their lawyers inform courts and defendants that they receive commercial third-party funding for the case at hand. notes that , currently , courts or administrative authorities and defendants are often not aware that a claim is funded by a commercial actor. points out that this can also hinder a court or administrative authority in properly considering costs issues and in ensuring that awards compensate claimants adequately;


### 12. requests the commission to submit a proposal for a directive to regulate third party litigation funding , following the recommendations set out in the annex hereto; ### 12. requests the commission to submit a proposal for a directive to regulate commercial third party litigation funding , following the recommendations set out in the annex hereto;


### (1) third-party litigation funding is a commercial practice which is quickly developing into a litigation services market without any proper legislative framework being in place at union level. despite the fact that litigation funders are regularly established and operating in various member states , domestically or across borders , they have so far been subject to different national rules and practices. diverging rules and practices in member states are likely to constitute an obstacle to the functioning of the internal market. a lack of clarity on the terms on which commercial third party litigation funders (‘litigation funders’) may operate , in particular taking into account that litigation funders can easily be attracted by cross-border cases , is not compatible with the proper functioning of the internal market. divergences in the legal framework applicable in each member state entail a risk of forum shopping by litigation funders , which could be influenced by the favourability of certain national rules concerning their establishment , the law applicable to funding agreements and national procedural rules. ### (1) commercial third-party litigation funding is a practice which could develop into a litigation services market without any specific legislative framework being in place at union level. there is a lack of clarity on the terms on which commercial third party litigation funders (‘litigation funders’) may operate , in particular as regards potential abuses by market competitors that may result in effects that would be not compatible with the proper functioning of the internal market. divergences in the legal framework applicable in each member state entail a risk of discrimination in access to justice between claimants in different member states , in particular in cases with a cross-border element.


### (2) union law seeks to ensure a balance between access to justice and providing appropriate safeguards to those engaged in proceedings , to prevent their wish to access justice from being unjustly exploited. when litigation funders provide financing for legal proceedings in exchange for a share of any compensation awarded , a material risk of injustice can arise. that risk includes litigation funders being able to take advantage of claimants , or those they represent , including where relevant consumers whose interests are represented by qualified entities , to serve their own purposes and to maximise their own return , thus leaving claimants or intended beneficiaries materially disadvantaged. the risks can be particularly acute where those expecting to benefit from litigation are consumers , who might welcome the involvement of a litigation funder ready to pay for proceedings , without appreciating that their interests could be subverted in favour of the litigation funder’s own interests. ### (2) union law should seek to enable access to justice for all , as enshrined in article 47 of the charter of fundamental rights of the european union. however , recent experiences , such as the dieselgate scandal , have shown that individuals are not in a position to obtain compensation and damages in cases where their rights under union law are infringed. individuals are in numerous cases prevented from taking up their right to an effective remedy due to the high costs of entering and pursuing legal proceedings. these difficulties can also lead to distortions of fair competition between undertakings that cause harm and those that do not. in those circumstances , mechanisms to facilitate litigation to obtain compensation and damages such as third-party litigation funding , in particular in case of a not-for profit interest on behalf of the funder , could help lift this barrier and should be encouraged. at the same time , it is important to provide appropriate safeguards to those engaged in proceedings , to prevent their right to access justice from being unjustly exploited. when litigation funders provide financing for legal proceedings in exchange for a share of a compensation awarded , a material risk of injustice could arise. that risk includes litigation funders being able to take advantage of claimants , or those they represent to maximise their own return to an extent that it is leaving claimants or intended beneficiaries materially disadvantaged. the risks can be particularly acute where those expecting to benefit from litigation are consumers , who might welcome the involvement of a litigation funder ready to pay for proceedings , without appreciating that their interests could be subverted in favour of the litigation funder’s own interests.


### (3) as the internal market facilitates increasing cross-border trade , as disputes are increasingly cross-border , and as the activities of litigation funders are global in nature , the risk of material divergences in member state approaches to safeguards and the protections necessary with regard to third party funding is acute. voluntary approaches have not been successful or subscribed to by the majority of the industry , and , in any event , non-legislative measures would not be appropriate in light of such material risks , including to consumers. ### (3) as the internal market facilitates increasing cross-border trade , as disputes are increasingly cross-border , and as the activities of litigation funders are global in nature , there is a potential risk of material divergences in member state approaches to safeguards and the protections necessary with regard to third party funding.


### (4) this directive aims to regulate third-party litigation funding , a commercial practice whereby third-party entities not directly involved in a dispute invest for profit in legal proceedings , typically in exchange for a percentage of any settlement or award. third-party litigation funding does not include provision of funds to sponsor litigation on a charitable or donated basis , or similar activities carried out on a pro bono publico basis. this directive also aims to lay down safeguards to prevent conflicts of interest , abusive litigation as well as the disproportionate allocation of monetary awards to litigation funders. ### (4) this directive aims to regulate commercial third-party litigation funding , a practice whereby third-party entities not directly involved in a dispute invest for profit in legal proceedings , typically in exchange for a percentage of any settlement or award. third-partylitigation funding does not include provision of funds to sponsor litigation on a charitable or donated basis , or similar activities carried out on a pro bono publico basis. this directive also aims to lay down safeguards to prevent conflicts of interest and abusive litigation , especially in competitive situations , as well as the disproportionate allocation of monetary awards to litigation funders. it does not cover any recuperation of costs but is strictly limited to situations in which a commercial actor seeks to recoup part of the compensation or damages awarded by a court in civil litigation , in order to further its business interest.


### (5) the term ‘litigation funder’ should be understood to refer to any undertaking that is not a party to proceedings , but enters into a third-party litigation funding agreement (‘third-party funding agreement’) in relation to those proceedings. in line with the case-law of the court of justice of the european union , the concept of ‘undertaking’ includes any entity engaged in an economic activity , regardless of its legal status and the way in which it is financed , and therefore includes any legal person , including its parents , subsidiaries or affiliates and could include professional litigation-funding providers , financial services providers , claims management firms or other service providers. the concept of litigation funder is not intended to include lawyers representing a party in legal proceedings , or regulated providers of insurance services to such a party. ### (5) the term ‘litigation funder’ should be understood to refer to any commercial undertaking that is not a party to proceedings , but enters into a third-party litigation funding agreement (‘third-party funding agreement’) in relation to those proceedings. in line with the case-law of the court of justice of the european union , the concept of ‘undertaking’ includes any entity engaged in an economic activity , regardless of its legal status and the way in which it is financed , and therefore includes any legal person , including its parents , subsidiaries or affiliates and could include professional litigation-funding providers , financial services providers , claims management firms or other service providers. the specification that an undertaking is commercial clarifies that the undertaking must be established with the intention to make profits. this excludes non-governmental organisations , foundations and other organizations working for the public interest as well as public entities. the concept of litigation funder is not intended to include lawyers representing a party in legal proceedings , or regulated providers of insurance services to such a party.


### (6) in accordance with the legal traditions and autonomy of the member states , it is for each member state to determine whether , and to what extent , the provision of litigation funding should be permitted within its own legal system. where member states choose to permit such third party litigation funding , this directive provides for minimum standards for the protection of funded claimants , so that those who might have recourse to litigation funding in the union are covered by a minimum level of protection , which is consistent across the union. ### (6) in accordance with the legal traditions and autonomy of the member states , it is for each member state to determine whether , and to what extent , the provision of litigation funding should be permitted within its own legal system. where member states choose to permit such commercial third party litigation funding , this directive provides for minimum standards for the protection of funded claimants , so that those who might have recourse to litigation funding in the union are covered by a minimum level of protection , which is consistent across the union.


### (7) where third party litigation funding activity is permitted , a system for the authorisation and supervision of litigation funders by independent administrative bodies in the member states is necessary to ensure that such litigation funders meet the minimum criteria and standards laid down in this directive. litigation funders should be subject to oversight in a manner similar to that of the existing prudential supervision system applicable to financial services providers. ### (7) where third party litigation funding activity is permitted , a system for the authorisation and supervision of commercial litigation funders by independent administrative bodies in the member states is useful to ensure that such litigation funders meet the minimum criteria and standards laid down in this directive. litigation funders should be subject to oversight in a manner similar to that of the existing prudential supervision system applicable to financial services providers.


### (8) litigation funders active in the union should be required to conduct their business from within the union , be authorised within the union , and to conclude their third-party funding agreements subject to the laws of the member state of the proceedings or , if different , the member state of the claimant or intended beneficiaries , in order to ensure that supervision under union and national law is adequate. ### (8) commercial litigation funders active in the union should be authorised within the union , and to conclude their third-party funding agreements subject to the laws of the member state of the proceedings or , if different , the member state of the claimant or intended beneficiaries , in order to ensure that supervision under union and national law is adequate.


### (9) supervisory authorities within the union granting authorisations to conduct third-party litigation funding activities should be empowered to require that litigation funders comply with minimum criteria laid down by this directive. such criteria should include provisions relating to governance , transparency , capital adequacy , and observance of a fiduciary duty to claimants and intended beneficiaries. supervisory authorities should be empowered to make any necessary orders , including the power to receive from litigation funders applications for authorisation and to decide upon them , to gather any necessary information , grant , deny or withdraw any authorisation or to impose any condition , restriction or penalty upon any litigation funder , as well as to investigate any complaint against any litigation funder conducting activities within their jurisdiction. ### (9) supervisory authorities within the union granting authorisations to conduct commercial third-party litigation funding activities should be operating independently from any private , political or governmental influence. they should be empowered to require that litigation funders comply with minimum criteria laid down by this directive. supervisory authorities should be empowered to make any necessary orders , including the power to receive from litigation funders applications for authorisation and to decide upon them , to gather any necessary information , grant , deny or withdraw any authorisation or to impose any condition , restriction or penalty upon any litigation funder , as well as to investigate any complaint against any litigation funder conducting activities within their jurisdiction. during a litigation procedure , a complaint coming from a defendant against a litigation funder who is funding the ongoing case against them , should be considered non-admissible , as the funding agreement will already be reviewed by the competent court or administrative authority and additional possibilities to challenge the funding would obstruct the main proceedings.


### (11) litigation funders should be required to commit to being bound to a duty to act fairly , transparently and in the best interests of claimants and intended beneficiaries of claims. a lack of a requirement to place the interests of claimants and intended beneficiaries ahead of a litigation funder’s own interests creates the risk of proceedings being directed in a manner that ultimately serves the interests of the litigation funder , rather than those of the claimant. ### (11) litigation funders should be required to commit to being bound to a duty to act in the best interests of claimants and intended beneficiaries of claims. a lack of a requirement to place the interests of claimants and intended beneficiaries ahead of a litigation funder’s own interests creates the risk of proceedings being directed in a manner that ultimately serves the interests of the litigation funder , rather than those of the claimant.


### (12) to prevent circumvention of the requirements of this directive , agreements entered into with third party funders not having the necessary authorisation should have no legal effect. the burden to acquire the necessary authorisations should be on litigation funders themselves , and therefore claimants and intended beneficiaries should be indemnified in respect of any harm caused by a litigation funder not having the necessary authorisation. ### (12) to prevent circumvention of the requirements of this directive , agreements entered into with commercial third party funders not having the necessary authorisation should have no legal effect. the burden to acquire the necessary authorisations should be on litigation funders themselves , and therefore claimants and intended beneficiaries should be indemnified in respect of any harm caused by a litigation funder not having the necessary authorisation.


### (13) this directive should regulate the activities of litigation funders , but should be without prejudice to any other regulatory obligations or regimes that may apply. ### (13) this directive should regulate the activities of commercial litigation funders , but should be without prejudice to any other regulatory obligations or regimes that may apply.


### (16) to facilitate the provision of cross border litigation funding services in those member states where it is permitted under national law , member states should be able to cooperate , share information , and should be required to take full account of each other’s authorisation decisions. ### (16) to facilitate the provision of cross border litigation funding services in those member states where it is permitted under national law , member states should be able to cooperate , share information , and should be required to take full account of each other’s authorisation decisions. in line with article 56 tfeu , member states should mutually recognise prior authorisations and therefore automatically grant authorisation to litigation funders operating in their member state , that have been authorised to operate in another member state for as long as the initial authorisation continues to exist. in case a supervisory authority in a receiving member state is aware of irregularities in the conduct of the litigation funder , it should directly inform the responsible supervisory authority.


### (17) member states should ensure that decisions regarding the relevant legal proceedings , including decisions on settlement , are not unduly influenced by the litigation funder in a manner that would be detrimental to the interests of the claimants concerned by that action. ### (17) member states should ensure that decisions regarding the relevant legal proceedings , including decisions on settlement , are not unduly influenced or controlled by the litigation funder in a manner that would be detrimental to the interests of the claimants concerned by that action.


### (18) courts or administrative authorities should be empowered to ensure the provision of sufficient disclosure of relevant information on all third-party litigation funding activity relevant to the legal proceedings under their responsibility. ### deleted


### (22) the adequacy of supervision of litigation funders and third-party funding agreements cannot be ensured absent obligations on litigation funders to be transparent regarding their activities. this includes transparency vis-à-vis courts or administrative authorities , defendants and claimants , and therefore obligations should apply to disclose third party funding agreements in full to courts or administrative authorities and defendants , subject to appropriate limitations to protect any necessary confidentiality. ### (22) the adequacy of supervision of litigation funders and third-party funding agreements cannot be ensured absent obligations on litigation funders to be transparent regarding their activities. this includes transparency vis-à-vis courts or administrative authorities , and claimants , and therefore obligations should apply to disclose those parts of third party funding agreements that are needed for the competent courts or administrative authorities to assess the legality of the agreement , subject to appropriate limitations to protect any necessary confidentiality.


### (25) litigation funders that have a direct interest in the financial outcome of proceedings may be incentivised to claim unfair , disproportionate or unreasonable rewards at the expense of claimants. courts or administrative authorities should be empowered to assess the context of third-party funding agreements relevant to the case before them , including the legal position and the knowledge of the claimants , in order to determine effectively whether in all the circumstances the third-party funding agreement is fair and complies with the laws of the member state concerned. ### (25) litigation funders that have a direct interest in the financial outcome of proceedings may be incentivised to claim disproportionate or unreasonable rewards at the expense of claimants. courts or administrative authorities should be empowered to assess the context of third-party funding agreements relevant to the case before them , including the legal position and the knowledge of the claimants , in order to determine effectively whether in all the circumstances the third-party funding agreement is fair and complies with this directive and all relevant laws of the member state concerned.


### (27) as the share of any reward received by litigation funders reduces any relief obtained by claimants , courts or administrative authorities should exercise oversight over the value and proportion of this share to prevent any disproportionate allocation of monetary awards to litigation funders. save in exceptional circumstances , when a share of any reward claimed by a litigation funder would dilute the share of any total award (including all damages amounts , costs , fees and other expenses) available to claimants and intended beneficiaries to 60% or below , it should be presumed unfair and invalid. ### (27) as the share of any reward received by litigation funders can reduce any relief obtained by claimants , courts or administrative authorities should exercise oversight over the value and proportion of this share to prevent any disproportionate allocation of monetary awards to litigation funders. as the share payable to the litigation funder can be considered as an additional legal or procedural cost , the competent court or administrative authority can decide to count this as an additional charge to be compensated by the defendant in case the latter loses the case. save in exceptional circumstances , when a share of any reward claimed by a litigation funder would dilute the share of any compensation and damages award (including all damages amounts , costs , fees and other expenses) available to claimants and intended beneficiaries to 70% or below , it should be presumed unfair and invalid.


### (28) additional conditions should be put in place to ensure that litigation funders do not influence the decisions of claimants in the course of proceedings in a manner that would benefit the litigation funder itself. in particular , litigation funders should not direct or influence decisions on how cases are pursued , which interests are prioritised , or whether or not claimants should accept any particular outcome , award or settlement. ### (28) additional conditions should be put in place to ensure that litigation funders do not influence the decisions of claimants in the course of proceedings in a manner that would only benefit the litigation funder itself. in particular , litigation funders should not direct or influence decisions on how cases are pursued , which interests are prioritised , or whether or not claimants should accept any particular outcome , award or settlement.


### (30) where litigation funders have instigated , supported or funded proceedings which are not successful , they should be jointly liable with claimants for any adverse costs they caused defendants to incur and that may be awarded by courts or administrative authorities. courts or administrative authorities should be granted adequate powers to ensure the effectiveness of such an obligation , and third party funding agreements should not exclude responsibility for such adverse costs. ### (30) where commercial litigation funders have instigated , supported or funded proceedings which are not successful , they should be jointly liable with claimants for any adverse costs they caused defendants to incur and that may be awarded by courts or administrative authorities. courts or administrative authorities should be granted adequate powers to ensure the effectiveness of such an obligation , and third party funding agreements should not exclude responsibility for such adverse costs.


### (33) the objectives of this directive , namely to ensure the harmonisation of member states’ rules applicable to litigation funders and their activities , and thus to ensure that common minimum standards for the protection of the rights of funded claimants and intended beneficiaries in proceedings financed wholly or in part by third-party funding agreements apply in all member states , cannot be sufficiently achieved by the member states as litigation funders operate in multiple member states and are subject to different national rules and practices , but can rather , by reason of the scale of the emerging market of third-party litigation funding , the need to avoid diverging rules and practices that are likely to constitute an obstacle to the proper functioning of the internal market and the need to avoid ‘forum shopping’ by litigation funders seeking to optimise national rules , be better achieved at union level. the union may thus adopt measures , in accordance with the principle of subsidiarity as set out in article 5 of the treaty on european union. in accordance with the principle of proportionality , as set out in that article , this directive does not go beyond what is necessary in order to achieve those objectives. ### (33) the objectives of this directive , namely to ensure the harmonisation of member states’ rules applicable to commercial litigation funders and their activities , and thus to enable access to justice while ensuring that common minimum standards for the protection of the rights of funded claimants and intended beneficiaries in proceedings financed wholly or in part by third-party funding agreements apply in all member states , cannot be sufficiently achieved by the member states as litigation funders could operate in multiple member states and could be subject to different national rules and practices , but could rather , by reason of the scale of the slowly emerging market of third-party litigation funding , the need to avoid diverging rules and practices that are likely to constitute an obstacle to the proper functioning of the internal market and the need to avoid ‘forum shopping’ by litigation funders seeking to optimise national rules , be better achieved at union level. the union may thus adopt measures , in accordance with the principle of subsidiarity as set out in article 5 of the treaty on european union. in accordance with the principle of proportionality , as set out in that article , this directive does not go beyond what is necessary in order to achieve those objectives.