Publications Archives

In their Bloomberg Law article “California’s Noncompete Ban Getting Sidestepped in Court Rulings,” partners Katherine V.A. Smith and Harris M. Mufson and of counsel Justin M. DiGennaro explain how employers are winning federal court disputes involving California’s ban on noncompete agreements by enforcing contractual choice-of-law provisions.

Gibson Dunn is monitoring regulatory developments and executive orders closely. Our attorneys are available to assist clients as they navigate the challenges and opportunities posed by the current, evolving legal landscape.

On May 9, 2025, President Trump signed an Executive Order aimed at combatting “overcriminalization in federal regulations.” Reviving an Executive Order that was issued in the last days of the first Trump administration and quickly revoked by President Biden, the new Executive Order seeks to prevent “abuse and weaponization” of criminal regulatory offenses against “unwitting individuals” who lack the “privileges [of] large corporations, which can afford to hire expensive legal teams to navigate complex regulatory schemes and fence out new market entrants.” To advance that goal, the Executive Order is meant to “ease the regulatory burden on everyday Americans and ensure no American is transformed into a criminal for violating a regulation they have no reason to know exists.”

This new Executive Order is likely to lead to fewer U.S. Department of Justice (DOJ) criminal investigations and enforcement actions related to whether an individual or corporation acted in violation of a regulation, especially for individuals accused of strict-liability offenses. But the Executive Order, in combination with the reorganization of certain DOJ components, also may result in more aggressive investigations and severe punishments in those criminal regulatory actions that do proceed. As discussed in this alert, companies should closely follow the agency announcements directed by the Executive Order to assess criminal regulatory enforcement risks; engage with agencies to advocate for clearer and reduced enforcement approaches; and address allegations that could give rise to continuing risk under the Executive Order. Further analysis of the broader enforcement landscape, including consideration of DOJ’s recently announced enforcement priorities, can be found in Gibson Dunn’s forthcoming alert.

Policy: The Executive Order states that “it is the policy of the United States” that “[c]riminal enforcement of criminal regulatory offenses is disfavored,” except as to “the enforcement of the immigration laws or regulations” or “laws or regulations related to national security or defense.”

“Prosecution of criminal regulatory offenses,” the Executive Order explains, “is most appropriate for persons who know or can be presumed to know what is prohibited or required by the regulation and willingly choose not to comply, thereby causing or risking substantial public harm.” Thus, “[p]rosecutions of criminal regulatory offenses should focus on matters where a putative defendant is alleged to have known his conduct was unlawful.”

The Executive Order “disfavor[s]” criminal enforcement of “strict liability offenses” for violations of regulations—a scenario that “allows the executive branch to write the law, in addition to executing it”—and states that “agencies should consider civil rather than criminal enforcement” in such instances, “if appropriate.”

The Executive Order also provides that agencies promulgating regulations “should explicitly describe the conduct subject to criminal enforcement, the authorizing statutes, and the mens rea standard applicable to those offenses.”

Directives: Federal agencies are required under the Executive Order to take the following actions:

Report on Criminal Regulatory Offenses—Each agency must identify in a public report all criminal regulatory offenses enforceable by the agency or DOJ, with the applicable mens rea standards and potential criminal penalties for each offense. The Executive Order “strongly discourages” criminal enforcement of any offense not identified in these reports.
Promote Regulatory Transparency—In promulgating new rules, agencies must identify any potential criminal implications for a violation of the rule and “explicitly state a mens rea”
Establish a Default Mens Rea for Criminal Regulatory Offenses—Each agency, in consultation with the Attorney General, must “examine the agency’s statutory authorities and determine whether there is authority to adopt a background mens rea standard for criminal regulatory offenses that applies unless a specific regulation states an alternative mens rea.”
Publish Guidance on Criminal Referrals—By June 23, 2025, agencies are required to publish guidance outlining the factors considered when referring regulatory violations to the DOJ for criminal enforcement. The Executive Order notes that agencies should consider factors such as the harm caused; the defendant’s gain; and whether the defendant had specialized knowledge, licensure, or general awareness of the unlawfulness of his or her conduct.

Historical Context: As noted, the new Executive Order mirrors President Trump’s January 2021 order titled “Protecting Americans from Overcriminalization through Regulatory Reform” (EO 13980),[1] which was intended to shield Americans from “unwarranted criminal punishment for unintentional violations of regulations.” That prior order required agencies to make explicit the mens rea element of criminal offenses and to focus enforcement on individuals who “know what is prohibited or required by the regulation and choose not to comply.” It also similarly stated that strict liability offenses were “disfavored” and that administrative or civil remedies should be pursued instead, “when appropriate.”

The new Executive Order also reflects ongoing legislative debate. Dating back to 2015, various Republican Senators and Representatives have proposed legislation seeking to establish a default mens rea standard for criminal offenses that lack an expressly required state of mind. Most recently, Representative Andy Biggs (R-AZ-5) introduced the Mens Rea Reform Act of 2025, H.R. 59, which, like its predecessors, would “establish [ ] a default mens rea standard . . . for federal criminal offenses—statutory and regulatory—that lack an explicit standard.” The bill is currently pending in the House Judiciary Committee.

Potential Enforcement Implications: It is uncertain what effect the new Executive Order will ultimately have on enforcement actions, especially those involving corporations, but we expect that it may result in fewer but more severe regulatory prosecutions.

The specific terms of the Executive Order afford plenty of leeway for corporate enforcement actions. By its terms, the Executive Order is focused on avoiding the prosecution of “unwitting individuals” for violations of regulations “they have no reason to know exist,” and contrasts such individuals with “large corporations” that “can be presumed to know what is prohibited or required by [a] regulation.” The Executive Order is also seemingly aimed at reducing the prosecution of conduct that allegedly violates a regulation interpreting or implementing a statute (where the “executive branch . . . write[s] the law, in addition to executing it”), as opposed to conduct that allegedly violates the express terms of a statute. That may be a meaningful distinction in the enforcement of statutes like the Federal Food, Drug, and Cosmetic Act that specify particularized violations and remedies, including strict-liability misdemeanor offenses, and are applied more frequently to corporations than individuals. Indeed, as described in Gibson Dunn’s forthcoming alert, DOJ’s Criminal Division announced, just days after the issuance of the Executive Order, that it “will prioritize investigating and prosecuting. . . . [v]iolations of the Federal Food, Drug, and Cosmetic Act,” among other areas.[2] The Executive Order’s explicit carveouts for conduct affecting immigration, national security, and defense also exempt a potentially broad range of corporate conduct from its mandates, especially under the administration’s expansive interpretation of those terms to date. And it may not prove challenging for prosecutors to assert that an investigation involving a possible regulatory offense is seeking to identify potentially knowing or intentional misconduct, or that the conduct under investigation “caus[ed] or risk[ed] substantial public harm.”

At the same time, the Executive Order’s clear policy statement is that “[c]riminal enforcement of criminal regulatory offenses is disfavored,” and DOJ leadership will presumably assess proposed investigations and enforcement actions with that policy in mind. Such assessments likely will lead to fewer DOJ actions involving alleged regulatory offenses, against both individuals and corporations. The policy also may be achieved, in part, by DOJ leadership’s significant streamlining of DOJ enforcement components that specialized in the enforcement of crimes related to regulated products or services, as well as the reduction (or elimination) of associated regulatory agencies. As a result, we expect that certain regulatory enforcement actions will be less frequent, especially those of the sort pursued by the Biden administration and relating to alleged violations of technical environmental, tax, and agency-reporting regulations.

Although the Executive Order will likely lead to less criminal enforcement of regulatory offenses, it may also increase the severity of allegations and punishments in those matters that do proceed. For example, DOJ has historically charged defendants with stand-alone, strict-liability misdemeanor offenses only in conjunction with a negotiated plea bargain; the offenses are almost never charged in a case that will be litigated. That has particularly been true of Federal Food, Drug, and Cosmetic Act misdemeanors charged under the “Responsible Corporate Officer Doctrine” (also known as the “Park Doctrine”), which allows prosecution of individuals without intent, knowledge, or direct participation in the alleged misconduct if they were “responsible corporate officers” who could have prevented it.[3] Park charges are almost exclusively brought in connection with negotiated resolutions, in which an executive accepts responsibility without admitting knowledge of or participation in misconduct in exchange for not being charged with more serious crimes. The predecessor Executive Order that President Trump issued in his first term (EO 13980) acknowledged this reality and included an exception for strict-liability misdemeanor prosecutions concluded via plea agreement. The new Executive Order includes no such exception. As a result, defendants against whom investigations proceed may now have fewer and more severe settlement options, likely encountering demands to plead guilty to a knowing violation or face trial. Yet either option risks significant costs and ramifications, including with respect to a defendant’s ability to contract with the federal government or receive federal funds.

This potential trend toward fewer but more severe regulatory prosecutions may also be accelerated by President Trump’s restructuring of the prosecutors based in DOJ’s Washington, DC, headquarters to consolidate criminal enforcement work in the Criminal Division. That consolidation may lead to more aggressive actions in those prosecutions that advance.

For instance, DOJ leadership has announced that the Civil Division’s Consumer Protection Branch (CPB) will be divided, with its civil work remaining in the Civil Division and its criminal work (and most of its personnel) moving to a consumer protection unit of the Criminal Division’s Fraud Section. For more than fifty years, CPB attorneys used both civil and criminal tools to enforce laws administered by the U.S. Food and Drug Administration, Federal Trade Commission, Drug Enforcement Administration, Consumer Product Safety Commission, and National Highway Traffic Safety Administration. CPB also oversaw all prosecutions by U.S. Attorney’s Offices under consumer protection laws like the Federal Food, Drug, and Cosmetic Act. CPB’s flexibility in remedies and familiarity with complex statutes allowed it to pursue investigations and reach resolutions involving complicated dynamics, often using civil or misdemeanor remedies to secure relief for consumers—collecting more than $20 billion in penalties and restitution since 2017—while allowing defendants to preserve important business functions. Both by their new placement in the Criminal Division and because of the new Executive Order, prosecutors investigating consumer protection matters may have less flexibility moving forward. In addition, criminal resolutions involving such offenses will now track the Criminal Division’s resolution templates and compliance requirements, which are more robust and have less consideration for the role of regulatory agencies than those used in most matters by CPB.

Industry Opportunities: This shifting enforcement landscape presents both opportunities and obstacles for companies. Companies should consider the following actions in the short and long term:

Monitor Agency Reports: Companies should pay close attention to all agency reports listing which criminal regulatory offenses are enforced by that agency, along with the offense’s mens rea standard. Considering the president’s directive that criminal enforcement of offenses not listed in these reports is “strongly discouraged,” the reports may be important guides for companies seeking to identify areas of enforcement risk.
Review and Update Compliance Programs: Given the Executive Order’s implication that “large corporations” with “expensive legal teams to navigate complex regulatory schemes” likely “can be presumed to know what is prohibited or required by . . . regulation,” it is important for companies to maintain effective internal audit and compliance programs to help demonstrate that any regulatory noncompliance was not “willingly” pursued.

Advocate for Civil or Administrative Enforcement: Companies under investigation for regulatory offenses should evaluate the applicability of the Executive Order and, if appropriate, advocate for civil or administrative enforcement instead of criminal action. The Executive Order also provides an opportunity for industry to engage with agencies to advocate for reforms on the use of criminal enforcement in the regulatory context.
Investigate Allegations of Fraud: Following the Executive Order and the restructuring of DOJ components, it is perhaps more likely that regulatory violations may be pursued under fraud theories and statutes. Companies should diligently investigate and address internal and external allegations of wrongdoing, particularly those that could form the basis of a claim of fraud against the government.

[1] https://trumpwhitehouse.archives.gov/presidential-actions/executive-order-protecting-americans-overcriminalization-regulatory-reform/.

[2] Memorandum from Matthew R. Galeotti, Head of the Criminal Division, U.S. Department of Justice to All Criminal Division Personnel re Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime (May 12, 2025).

[3] 421 U.S. 658, 672 (1975).

The following Gibson Dunn lawyers prepared this update: F. Joseph Warin, Stephanie Brooker, Winston Chan, Gus Eyler, Courtney Brown, Matt Axelrod, Katlin McKelvie, Rachel Baron, Aquila Maliyekkal, and Alice Wang.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of Gibson Dunn’s White Collar Defense and Investigations practice group:

Washington, D.C.
F. Joseph Warin (+1 202.887.3609, fwarin@gibsondunn.com)
Stephanie Brooker (+1 202.887.3502, sbrooker@gibsondunn.com)
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Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.

From the Derivatives Practice Group: This week, two CFTC Commissioners announced their departure.

Commissioner Christy Goldsmith Romero Makes Statement on Departure from CFTC. On May 16, Commissioner Christy Goldsmith Romero announced that she intends to step down from the Commission and retire from federal service. Her final day at the Commission will be May 31. [NEW]
Commissioner Summer K. Mersinger Makes Statement on Departure from CFTC. On May 14, Commissioner Mersinger announced that she intends to step down from her position as Commissioner at the CFTC at the end of the month, to pursue new opportunities. [NEW]
CFTC Warns Public of Imposter Scam Targeting Fraud Victims. On May 14, the CFTC warned the public about a growing imposter scam involving individuals falsely claiming to represent the agency. According to the CFTC, scammers are contacting members of the public and claiming to represent the CFTC Office of Inspector General and promise to help financial fraud victims recover lost funds from foreign bank accounts. The CFTC Office of Inspector General stated that it will never contact individuals with offers to recover money lost to investment scams. [NEW]
Acting Chairman Pham Makes Statement on Court Sanctions Against CFTC. On May 13, CFTC Acting Chairman Caroline D. Pham made a statement regarding the Federal District Court report and recommendations for sanctions against the CFTC for misconduct in CFTC v. Traders Global Group Inc, highlighting proactive efforts to overhaul the CFTC’s Division of Enforcement and reform culture and conduct, develop staff, and leverage expertise and reduce siloing. [NEW]
CFTC Staff on Leave Pending Investigation. On May 5, pursuant to the President’s executive orders on lawful governance and accountability, the CFTC placed certain staff on administrative leave for potential violations of laws, government ethics requirements and professional rules of conduct. The CFTC stated it is committed to holding employees to the highest standards, as expected by American taxpayers. Investigations are currently ongoing into these matters and the CFTC has committed to provide updates as appropriate. [NEW]
SEC Publishes New Market Data, Analysis, and Visualizations. On April 28, the SEC’s Division of Economic and Risk Analysis has published new data and analysis on the key market areas of public issuers, exempt offerings, Commercial Mortgage-Backed Securities, Asset-Backed Securities, money market funds, and security-based swap dealers in an effort to increase transparency and understanding of our capital markets amongst the public.

New Developments Outside the U.S.

ESMA Delivers Technical Advice on Market Abuse and SME Growth Markets as Part of the Listing Act. On May 7, ESMA published its advice to the European Commission to support the Listing Act’s goals to simplify listing requirements, enhance access to public capital markets for EU companies, and improve market integrity. In relation to Market Abuse Regulation (“MAR”), the advice covers: protracted processes, identifying key moments for public disclosure; delayed public disclosure, listing situations where delays are not allowed; and Cross-Market Order Book Mechanism, indicating the methodology for the identification of trading venues with significant cross-border activity.
ESMA Consults on Rules for ESG Rating Providers. On May 2, ESMA published a Consultation Paper on draft Regulatory Technical Standards (“RTS”) under the Environmental, Social, and Governance (“ESG”) Rating Regulation. The draft RTS cover the following aspects that apply to ESG rating providers: the information that should be provided in the applications for authorization and recognition; the measures and safeguards that should be put in place to mitigate risks of conflicts of interest within ESG rating providers who carry out activities other than the provision of ESG ratings; the information that they should disclose to the public, rated items and issuers of rated items, as well as users of ESG ratings.
ESMA Publishes the Annual Transparency Calculations for Non-equity Instruments and Bond Liquidity Data. On April 30, ESMA, the EU’s financial markets regulator and supervisor, published the results of the annual transparency calculations for non-equity instruments and new quarterly liquidity assessment of bonds under MiFID II and MiFIR.
ESMA Report Shows Increased Data Use Across EU and First Effects of Reporting Burden Reduction Efforts. On April 30, ESMA published the fifth edition of its Report on the Quality and Use of Data. The report reveals how the regulatory data collected has been used by authorities in the EU and provides insight into actions taken to ensure data quality. The document presents concrete cases on data use ranging from market monitoring to supervision, enforcement and policy making. The report also highlights ESMA’s Data Platform and ongoing improvements to data quality frameworks as key advancements in tools and technology for data quality.
ESMA Issues Supervisory Guidelines to Prevent Market Abuse under MiCA. On April 29, ESMA published guidelines on supervisory practices to prevent and detect market abuse under the Market in Crypto Assets Regulation (“MiCA”). Based on ESMA’s experience under MAR, the guidelines intended for National Competent Authorities include general principles for effective supervision and specific practices for detecting and preventing market abuse in crypto assets. They consider the unique features of crypto trading, such as its cross-border nature and the intensive use of social media.

New Industry-Led Developments

IOSCO Concludes its 50th Annual Meeting. On May 15, IOSCO concluded its 50th Annual Meeting, which was hosted by the Qatar Financial Markets Authority (“QFMA”) in Doha. IOSCO welcomed near 500 participants over the course of three days, followed by the QFMA public conference. The IOSCO Annual Meeting brings all 130 member jurisdictions together to discuss the most relevant issues and risks with regard to global financial markets, and how to assist regulators in implementing standards through capacity building. [NEW]
ISDA Publishes Paper Exploring Use of Generative AI to Extract and Digitize CSA Clauses. On May 15, ISDA published a whitepaper that shows generative artificial intelligence can be used to accurately and reliably extract, interpret and digitize key legal clauses from ISDA’s credit support annexes, showing how this technology could increase efficiency, cut costs and reduce risks in derivatives processes that have traditionally been highly manual and resource intensive. [NEW]
ISDA Margin Survey Shows Leading Derivatives Firms Collected $1.5 Trillion of Margin at Year-end 2024. On May 14, ISDA published its latest annual margin survey, which shows that initial margin (“IM”) and variation margin collected by leading derivatives market participants for their non-cleared derivatives exposures increased by 6.4% to $1.5 trillion at the end of 2024. The 32 responding firms included all 20 phase-one entities (the largest derivatives dealers subject to regulatory IM requirements in the first implementation phase), five of the six phase-two firms and seven of the eight phase-three entities. [NEW]
ISDA Extends Digital Regulatory Reporting to Support Revised Canadian Reporting Rules. On May 13, ISDA extended its Digital Regulatory Reporting solution to cover new reporting rules in Canada and has made it compatible with a trade reporting messaging format used for North America reporting to maximize the benefit of adoption by those firms subject to the rules. The revisions are being implemented by the Canadian Securities Administrators and are scheduled for implementation on July 25, 2025. [NEW]
ISDA Publishes Governance Committee Proposal for CDS Determinations Committees. On May 8, ISDA published a proposal for a new governance committee for the CDS Determinations Committees (“DCs”), the first in a series of amendments to improve the structure of the DCs and maintain their integrity in changing economic and market conditions. The governance committee would be responsible for taking market feedback and adopting rule changes affecting the structure and operations of the DCs to ensure their long-term viability and meet market expectations for efficiency and transparency in credit event determinations.
ISDA Presents Proposed Charter for the Credit Derivatives Governance Committee. On May 8, ISDA presented the proposed Charter for the Credit Derivatives Governance Committee and accompanying DC Rule changes to implement. Pursuant to the announcement made in 2024, an ISDA working group formed from ISDA’s Credit Steering Committee has worked on producing the Governance Committee solution. ISDA views the Governance Committee as the first step in implementing the other recommended changes from the Linklaters’ report as part of an independent review on the composition, functioning, governance and membership of the DCs.
ISDA Responds to FASB Proposal on KPIs for Business Entities. On April 30, ISDA submitted a response to the Financial Accounting Standards Board’s (“FASB”) proposal on financial key performance indicators (“KPIs”) for business entities. In the response, ISDA addressed the implications of KPI standardization, its potential impact on financial reporting and risk management, and the broader cost-benefit considerations for preparers and investors. Based on proprietary analysis, ISDA does not view financial KPI standardization or the proposed disclosures as urgent priorities for the FASB at this time.
CPMI-IOSCO Assesses that EU has Implemented Principles for Financial Market Infrastructures for Two FMI Types. On April 28, CPMI-IOSCO released a report that assessed the completeness and consistency of the legal, regulatory and oversight framework in place as of October 30, 2019. The report finds that the implementation of the Principles for Financial Market Infrastructures is complete and consistent for all Principles for payment systems. The legal, regulatory and oversight frameworks in the EU for central securities depositories and securities settlement systems are complete and consistent with the Principles in most aspects. However, the assessment identified some areas for improvement, particularly in aspects where implementation was broadly, partly, or not consistent, including risk and governance principles.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, Karin Thrasher, and Alice Wang.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Derivatives practice group, or the following practice leaders and authors:

Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)

Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)

Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)

Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)

Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)

Adam Lapidus, New York (212.351.3869, alapidus@gibsondunn.com )

Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)

William R. Hallatt, Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )

David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)

Marc Aaron Takagaki, New York (212.351.4028, mtakagaki@gibsondunn.com )

Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@gibsondunn.com)

Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)

Partner and Co-Chair of our FDA and Health Care Practice Group, John Partridge, recently spoke to the Financial Times’ Agenda (subscription required) about the importance of maintaining strong internal reporting programs — even as corporate enforcement priorities shift.

John noted that, from the perspective of public companies, the variation in whistleblower programs across jurisdictions makes it “all the more important to have a well-resourced internal reporting and investigation function.”

“This will help public companies to identify and remediate misconduct before it metastasizes to the point of driving someone to report to a whistleblower program.”

On May 14, 2025, the Governor of Texas signed SB 29 into law which introduced significant amendments to the Texas Business Organizations Code affecting Texas corporations, limited partnerships and limited liability companies.

Overview

On May 14, 2025, the Governor of Texas signed into law significant amendments to the Texas Business Organizations Code (TBOC). The new laws introduce consequential changes affecting governance, governing authority liability, shareholder rights, and internal management of corporations, limited liability companies, limited partnerships, and other entities organized under the TBOC. We have summarized the most significant changes reflected in the amendments below. These changes became effective on May 14, 2025.

Director, Officer, and Managerial Duties: New Presumptions and Protections

A central feature of the amendments is the codification of the business judgement rule. Specifically, the amendments codify the presumption that directors, officers, and other managerial officials of corporations, limited liability companies, and limited partnerships acted in compliance with their duties. The presumptions apply to entities that are publicly traded or that affirmatively opt in.

For corporations, the actions of directors and officers are presumed to be taken in good faith, on an informed basis, in the best interests of the corporation, and in obedience to the law and the corporation’s governing documents. To prevail in a cause of action claiming a breach of duty, the claimant must rebut one or more of these presumptions and prove (i) the act or omission was a breach of the person’s duties as a director or officer and (ii) the breach involved fraud, intentional misconduct, ultra vires acts, or knowing violations of law. These protections are in addition to any existing statutory or common law defenses.

For limited liability companies and limited partnerships, these amendments also clarify that governing documents may expand, restrict, or eliminate fiduciary duties and related liabilities, including the duties of loyalty, care and good faith.

Limitation on Derivative Actions

Publicly traded corporations or corporations that (i) have 500 or more shareholders and (ii) have made an affirmative election to opt in to the statutory presumptions that directors and officers acted in compliance with their duties, may institute a minimum ownership threshold for shareholders to bring derivative actions. The amendment allows such corporations to set a minimum ownership threshold of up to 3% of the outstanding shares of the corporation to initiate such proceedings.

Attorney Fee Awards

The amendments provide limitations on awards of attorney fees in derivative proceedings through limiting what is considered a substantial benefit to an entity. The amendments provide that substantial benefits to a corporation, limited partnership or limited liability company do not include additional or amended disclosures made to shareholders, limited partners, or members respectively.

Independence of Committees Reviewing Related Party Transactions

Boards of publicly traded corporations[1] may petition the Texas Business Court (or any other district court with proper jurisdiction, if the corporation’s principal place of business is not located in an operating division of the Texas Business Court) to make a determination on the independence of the committee of directors formed to review and approve transactions involving controlling shareholders, directors, or officers. After expedited proceedings to determine appropriate legal counsel to represent the corporation and its shareholders (other than any relevant controlling shareholder), the court will hold an evidentiary hearing and render a binding determination regarding the independence of the directors on the committee. The finding is “dispositive” absent facts not presented to the court.

Jury Trial Waivers and Exclusive Forum Selection

The amendments expressly permit entities to include, in their governing documents, waivers of the right to a jury trial for any internal entity claims. Under Texas law, internal entity claims include claims of any nature such as derivative claims that are based on (i) rights, powers, and duties of its governing authority, governing persons, officers, owners, and members; and (ii) matters relating to its membership or ownership interests. This includes, for example, claims of breach of fiduciary duties by directors of corporations. Such waivers are enforceable even if not individually signed by members, owners, officers or governing persons. A person is considered to have knowingly waived the right to a jury trial if the person voted for or ratified the document containing the waiver or acquired stock in the entity at, or continued to hold stock in a particular entity after, a time in which the waiver was included in the governing documents. Also, in their governing documents, entities may choose an exclusive Texas forum and venue for internal entity claims.

Inspection Rights

The amendments clarify and, in some respects, limit the ability of shareholders, members and partners to inspect records. Notably, emails, text messages, and social media communications are excluded from entity records, unless those records effectuate an action by the corporation, limited liability company or limited partnership. Furthermore, for publicly traded corporations or corporations that affirmatively elect to opt in to the statutory presumptions that directors and officers acted in compliance with their duties, inspection demands by a requesting holder with ongoing or expected litigation involving the corporation or derivative proceedings may be denied. However, these changes do not impair the right to obtain discovery of records from the corporation in an active or pending lawsuit.

Conclusion

Texas is a notable forum for corporate activity and innovation. These amendments provide enhanced protections for directors and officers of Texas entities and should reduce litigation risks, particularly for publicly traded Texas entities. The changes also impose new limitations on shareholders, especially regarding inspection and derivative actions. Additional proposed amendments to the TBOC are currently proceeding through the legislative system. Gibson Dunn will publish a later update summarizing these amendments as they become law.

Texas corporations should update their training for boards of directors and review their organizational documents, internal procedures, and compliance practices to carefully assess the impact of these changes. Gibson Dunn’s Texas lawyers are available to assist with any questions you may have regarding these developments.

[1] This section of the code also applies to corporations that opt in to the statutory presumptions that directors and officers acted in compliance with their duties.

The following Gibson Dunn lawyers prepared this update: Gerry Spedale, Jason Ferrari, and Hillary Holmes.

Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments. To learn more, please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Securities Regulation & Corporate Governance practice group, or the authors in Houston:

Gerry Spedale (+1 346.718.6888, gspedale@gibsondunn.com)

Hillary H. Holmes (+1 346.718.6602, hholmes@gibsondunn.com)

Jason Ferrari (+1 346.718.6736, jferrari@gibsondunn.com)

In the May episode of the Bloomberg Intelligence FICC Focus podcast, partner and Global Chair of our Business Restructuring and Reorganization Practice Group, Scott Greenberg, joins Bloomberg’s Negisa Balluku to discuss his extensive involvement in the liability management space and share his unique insight into the evolution of lender cooperation agreements.

The Civil Transactions Law codifies the rules governing liquidated damages clauses under Saudi law. This client alert outlines key considerations for contracting parties when adopting such clauses, and how courts may approach them in practice.

How Liquidated Damages Clauses are Recognized in Saudi Arabia

The Saudi legal framework recognizes liquidated damages as pre-agreed estimates of losses incurred by one party due to the other party’s breach of contract, including non-performance or delay in fulfilling contractual obligations.

Historical Context

Even prior to the Civil Transactions Law, Saudi courts recognized liquidated damages clauses based on Sharia principles. Such clauses have been upheld as valid and enforceable, except in cases where:

the breaching party had a legitimate excuse for non-performance or delay; or
the agreed amount was deemed excessively high, amounting to financial coercion, in which cases courts have assessed excessiveness based on prevailing customs and practices.[1]

How Liquidated Damages Operate Today

Validity:Parties can agree on liquidated damages, either in the original contract or a later agreement.[2]

Simplified Burden of Proof:Liquidated damages clauses render the occurrence of damages presumed. To enforce such a clause, the aggrieved party is not required to prove damage or causation – merely that a breach has occurred.[3]

Avoiding Liquidated Damages:A party may avoid liability under a liquidated damages clause by proving either:
- that the other party did not suffer any damage;[4] or
- that the damage was not caused by the party’s breach, but rather by the other party’s acts, omissions, or a force majeure event.
Reducing Liquidated Damages:The breaching party may be successful in reducing the sum of liquidated damages by proving either:
- that the pre-agreed amount is grossly exaggerated, thereby allowing the court to rule in accordance with the general principles of liability under Saudi law;[5] or
- that the breaching party has partially performed their obligations, thereby allowing the court to assess the extent of unperformed obligations and apply the liquidated damages clause accordingly.[6]
Court Discretion:Courts cannot freely adjust liquidated damages clauses. Their discretion is limited to:
- reducing the amount in cases of gross exaggeration or partial performance. A mere discrepancy between the damages incurred and the agreed sum is insufficient to warrant reduction[7]; or
- increasing the sum if the non-breaching party proves that deceit or gross negligence by the debtor caused the damage to exceed the agreed sum.[8]
Prohibition on Payment Obligations:In line with Saudi Arabia’s strict prohibition of interest payments[9], it is impermissible as a matter of public policy for liquidated damages to apply to payment obligations.[10]

How Saudi Arabia Compares to Neighboring Jurisdictions:Saudi Arabia’s approach towards liquidated damages clauses shares similarities with the approaches of UAE and Egypt, but there are some differences. For example:

Element	Saudi Arabi	UAE	Egypt
Default position on prior notice of imposition	No prior notice required.[11]	Prior notice required.[12]	Prior notice required.[13]
Court discretion to adjust liquidated damages	Relatively limited.[14]	Relatively broad.[15]	Relatively limited.[16]

Points to Consider When Drafting a Liquidated Damages Clause

Be specific. Clearly define what triggers the liquidated damages (delays, quality issues, etc.).
Consider industry benchmarks. Base estimates on market standards or historical data to avoid claims of exaggeration.
Expressly address partial performance. Specify how damages will be calculated if some of the triggering obligations are met.
Follow notice requirements. While Saudi law does not by default require notice to enforce liquidated damages, your specific contract might.
Understand burden of proof requirements. Know who bears the burden of proof in different scenarios to claim or defend tactically.
Consider all available remedies and seek them tactically. Parties may be precluded from enforcing liquidated damages clauses in conjunction with other contractual remedies.

[1] Resolution No. 25 dated 31/08/1394H by the Council of Senior Scholars: “The Council unanimously decides that the penalty clause stipulated in contracts is valid and legally binding, and must be upheld unless there is a legitimate excuse for the breach of the obligation that justifies it under Sharia. In such a case, the excuse nullifies the obligation until it ceases. If the penalty clause is, by customary standards, excessive to the extent that it serves as a financial threat and deviates significantly from the principles of Sharia, then fairness and equity must prevail, based on the actual loss of benefit or incurred harm.” Cases in which Saudi courts upheld the Council of Senior Scholar’s Resolution No. 25 include the General Court’s Decision No. 1 of 1439H: “The liquidated damages clause included in contracts is a valid and enforceable condition which must be upheld, unless there is a legitimate excuse for breaching the obligation that is recognized under Shari’a, in which case the excuse suspends the obligation until it ceases. If the amount of liquidated damages is excessive by customary standards, to the point that it constitutes financial coercion and departs from the principles of Shari’a, then recourse must be had to justice and fairness, based on the actual harm incurred or the benefit lost. The determination of such matters in case of dispute is to be made by the competent court with the assistance of experts and professionals.”

[2] Civil Transactions Law, Article 178: “The contracting parties may specify in advance the amount of compensation whether in the contract or in a subsequent agreement, unless the subject of the obligation is a cash amount. The right to compensation shall not require notification.”

[3] For example: Board of Grievance’s decision in Case No. 20 of 1430H (predating the enactment of the Civil Transactions Law): “…and the administrative authority is not required to prove that it has suffered harm, given that [the liquidated damages] constitute an agreed-upon compensation for presumed harm, including harm resulting merely from delay.” Commercial Court in Riyadh’s decision in Case No. 4530906759 of 1445H: “The Law expressly provides that liquidated damages are not due to the creditor if the debtor proves that the creditor has suffered no harm. This is specifically stated in paragraph (1) of Article (179) of the same Law mentioned above,” presuming that liquidated damages are initially owed to the creditor upon breach, and it is the debtor’s burden to rebut this presumption by proving the absence of harm. This position is consistent with the literature of leading scholars in the region. For example, A. Sanhouri, ‘Al Waseet on the Explanation of the Civil Code’, Part Two, p. 817, concerning a similarly formulated legal provision in Egypt’s Civil Code: “[…] the presence of a Liquidated Damages Clause renders the occurrence of damage presumed, and the creditor would not be required to prove it. Therefore, if the debtor alleges that the creditor has not incurred damage, it is he who would bear the burden of proof, and not the creditor.”

[4] Civil Transactions Law, Article 179: “Compensation that is contractually agreed upon by the parties shall not be payable if the debtor proves that the creditor has sustained no harm.”

[5] Civil Transactions Law, Article 179(2): “The court may, upon a petition by the debtor, reduce the compensation if the debtor establishes that the agreed-upon compensation was excessive or that the original obligation was partially performed.” A. Almarjah, ‘Explanation of the Saudi Civil Transactions law,’ 1445H, Part One, p. 297: “Judicial intervention is limited to removing exaggeration in the liquidated damages clause, not to assessing its proportionality to the actual harm. Accordingly, if the agreed liquidated damages exceed the actual harm, but the excess is not deemed gross, the judge may not reduce the amount.”

[6] Civil Transactions Law, Article 179(2): “The court may, upon a petition by the debtor, reduce the compensation if the debtor establishes that the agreed-upon compensation was excessive or that the original obligation was partially performed.”

[7] A. Sultan, ‘A Brief on the General Theory of Obligation’, 1983, Section 2, p. 78, concerning a similarly formulated legal provision in Egypt’s Civil Code: “…if there is excess in the quantification, but it is not exaggerated, it is impermissible to reduce it, as the fundamental principle is that the Judge orders in accordance with what has been agreed-upon by the parties, and absent one of the conditions of the exception, it is obligatory to resort to the fundamental principle.” A similar opinion has been given by a Saudi scholar; A. Almarjah, ‘Explanation of the Saudi Civil Transactions law,’ 1445H, Part One, p. 297: “Judicial intervention is limited to removing exaggeration in the liquidated damages clause, not to assessing its proportionality to the actual harm. Accordingly, if the agreed liquidated damages exceed the actual harm, but the excess is not deemed gross, the judge may not reduce the amount.”

[8] Civil Transactions Law, Article 179(3): “The court may, upon a petition by the creditor, increase the amount of compensation to the extent necessary to cover the harm if the creditor establishes that an act of fraud or gross negligence by the debtor is what caused the harm to exceed the agreed-upon compensation.”

[9] Commercial Court in Jeddah, Case No. 4531041638 of 1445H: “…it is impermissible to agree on compensation where the subject of the obligation is a monetary amount. Given that this Article pertains to public order (public policy), the parties may not contract out of or override its provisions…”

[10] See, Resolution No. (109) (12/3) of the International Islamic Fiqh Academy: “It is permissible to stipulate a penalty clause in all financial contracts, except in contracts where the primary obligation is a debt, as this would constitute explicit riba (usury),” upheld by the Commercial Court in Jeddah in Case No. 433665897 of 1443H.

[11] Civil Transactions Law, Article 178: “The contracting parties may specify in advance the amount of compensation […] The right to compensation shall not require notification.”

[12] UAE’s Civil Transactions Law, Article 387: “Compensation is not due without the debtor being notified, unless otherwise provided by law or agreed upon in the contract.”

[13] Egypt’s Civil Code, Article 218: “Unless otherwise specified, compensation is not due without the debtor being notified.”

[14] Civil Transactions Law, Article 179(2): “The court may, upon a petition by the debtor, reduce the compensation if the debtor establishes that the agreed-upon compensation was excessive or that the original obligation was partially performed.” Id, Article 179(3): “The court may, upon a petition by the creditor, increase the amount of compensation to the extent necessary to cover the harm if the creditor establishes that an act of fraud or gross negligence by the debtor is what caused the harm to exceed the agreed-upon compensation.”

[15] There are some inconsistent court decisions noted across and within each of the jurisdictions. UAE’s Civil Transactions Law, Article 390(2): “The judge may, in all cases, at the request of one of the parties, amend such an agreement, in order to make the amount assessed equal to the damage. Any agreement to the contrary is void.”

[16] Egypt’s Civil Code, Article 224: “(1) Damages fixed by agreement are not due, if the debtor establishes that the creditor has not suffered any loss. (2) The judge may reduce the amount of these damages, if the debtor establishes that the amount fixed was grossly exaggerated or that the principal obligation has been partially performed. (3) Any agreement contrary to the provisions of the two preceding paragraphs is void.”

The following Gibson Dunn lawyers prepared this update: Mahmoud Abdel Baky, Rashed Khalifah, and Hamzeh Zu’bi*.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s International Arbitration, Judgment and Arbitral Award Enforcement, or practice groups, or the following authors in Riyadh:

Mahmoud Abdel-Baky (+966 55 056 6323, mabdel-baky@gibsondunn.com)

Rashed Z. Khalifah (+966 55 236 0511, rkhalifah@gibsondunn.com)

*Hamzeh Zu’bi is a trainee associate in Riyadh and not admitted to practice law.

Partner Matthew Axelrod and associates Justin duRivage and Hui Fang have written for Law360 about concrete steps that companies should consider taking to prepare for an aggressive approach to export enforcement.

Please join us for a presentation that focuses on the latest developments in two key markets: the UK and the Middle East. As regulatory landscapes and investor expectations evolve, companies seeking to go public in these markets should ensure that they are alive to the opportunities and challenges.

The session provides valuable insights for companies and shareholders preparing for IPOs, highlighting key IPO readiness steps that companies should be considering, and offering a strategic understanding of how to navigate regulatory complexities and market expectations.

MCLE CREDIT INFORMATION:

This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit.

Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact CLE@gibsondunn.com to request the MCLE form.

Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour in the General Category.

California attorneys may claim “self-study” credit for viewing the archived version of this webcast. No certificate of attendance is required for California “self-study” credit.

PANELISTS:

Jade Chu is a partner in the Dubai office of Gibson, Dunn & Crutcher, where he is a member of the Mergers & Acquisitions practice group.

He has significant experience advising corporates, government-related entities, sponsors and financial institutions on a wide range of corporate transactions (including cross-border public and private M&A, JVs and equity capital markets) and general corporate advisory matters.

Marwan Elaraby is the partner in charge of the Dubai office where he is a member of the Mergers & Acquisitions and Capital Markets Practice Groups.

Marwan advises clients on M&A and private equity transactions, as well as governments on strategic and regulatory matters. He also advises both issuers and underwriters on equity and debt securities offerings.

Chris Haynes is a corporate partner in the London office of Gibson Dunn.

Chris has extensive experience in equity capital markets transactions and mergers and acquisitions including advising corporates, investment banks and shareholders on initial public offerings (including multi-track processes), rights issues and other equity offerings as well as on public takeovers, private company M&A and joint ventures. He also advises on corporate and securities law and regulation.

Ibrahim Soumrany is a partner in the Dubai and Riyadh offices of Gibson, Dunn and Crutcher and is a member of the firm’s Capital Markets practice group.

Ibrahim’s capital markets experience includes advising public and private issuers and investment banks on a broad range of capital markets transactions including equity offerings (IPOs and secondary offerings) and debt offerings (conventional and Islamic). Ibrahim has extensive experience advising on transactions across a number of jurisdictions in the Middle East, the US and Europe. Ibrahim also regularly advises on public M&As as well as companies and their boards on listing requirements, securities and corporate governance matters and reporting obligations.

On May 12, 2025, the United States and China announced that each country would reduce tariff rates on the goods of the other country by 115%, marking a significant breakthrough in the rapidly escalated trade war.

On May 12, 2025, the White House released a Joint Statement with the People’s Republic of China, accompanied by a Fact Sheet, announcing a significant step back from the high tariff rates each country had imposed on the goods of the other since the beginning of April. On the same day, President Trump issued an Executive Order titled “Modifying Reciprocal Tariff Rates to Reflect Discussions with the People’s Republic of China” (“May 12 Order”), directing relevant U.S. agencies to implement reduced tariffs on goods from China. This alert provides an overview of the impactful commitments made in the Joint Statement by the United States and China, where both governments recognized “the importance of the critical bilateral economic and trade relationship between both countries and the global economy” and committed to take certain actions by May 14, 2025, to substantially reduce the previously imposed tariffs.

The Joint Statement marks a significant breakthrough, signaling that both the United States and China have pulled back from the brink of a more serious trade war and a potential collapse in bilateral economic relations. As noted by Treasury Secretary Scott Bessent, the United States does “not want a generalized decoupling from China.” While the Joint Statement involves mutual concessions, it remains expressly a temporary measure rather than a comprehensive or lasting resolution. While much remains to be negotiated, the Joint Statement represents a hopeful step forward.

I. U.S. Reduces Tariffs on Chinese Goods Imposed under IEEPA to 30% for the
Initial Period of 90 Days

The May 12 Fact Sheet notes that the United States and China will each lower tariffs by 115% while retaining an additional 10% tariff. Consistent with this statement, effective May 14, 2025, Chinese goods, including those originating in Hong Kong and Macau, will be subject to a total of 30% tariffs imposed under the International Emergency Economic Powers Act (IEEPA) for an “initial period of 90 days.” These emergency tariffs will be applied in addition to any other applicable tariffs, including tariffs imposed under Section 232, Section 301, or “most favored nation” duties. Specific breakdowns are provided below.

10% So-Called “Reciprocal” Tariffs

Pursuant to Section 2 of the May 12 Order, effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 14, 2025, all articles imported into the United States from China, including Hong Kong and Macau, will be subject to an additional ad valorem tariff of 10% under the so-called “reciprocal” tariffs imposed by Executive Order 14257 of April 2, 2025. The prior April 2 executive order had imposed broad-reaching so-called “reciprocal” tariffs on all U.S. trading partners except for Mexico and Canada. The original country-specific rate for goods from China announced in that order was 34%. Under the May 12 Order, 24 percentage points are “suspended” for 90 days and replaced by the 10% duty. The May 12 Order removes the retaliatory tariff rates announced in subsequent executive orders of early April, notably the increased tariffs imposed by Executive Order 14259 (increasing the rate to 84%) and Executive Order 14266 (increasing the rate to 125%).

As a consequence of the May 12 Order, if a new deal is not reached during the initial period of 90 days, it appears that the United States may raise the “reciprocal” duty rate on Chinese goods to the originally announced 34%.

20% IEEPA-Fentanyl Tariffs and Other Tariffs that Continue to Apply

The May 12 Fact Sheet clarifies that the United States will retain all duties imposed on China prior to April 2, 2025, including: (i) Most Favored Nation tariffs; (ii) tariffs imposed under Section 301; (iii) industry-sector tariffs imposed under Section 232; and (iv) tariffs imposed pursuant to IEEPA related to the fentanyl-related national emergency announced and expanded in Executive Order 14195.

By way of background, on February 1, 2025, President Trump issued an executive orderimposing an additional 10% ad valorem rate of duty to all articles that are products of China or of Hong Kong, citing a national emergency with respect to illegal drugs entering the United States and China’s alleged failure to arrest, seize or otherwise intercept chemical precursor suppliers and money launderers connected to the illegal drug trade. President Trump subsequently increased such duties on China to 20%, effective March 4, 2025, citing China’s continued failure to adequately respond to the emergency. Thus, the total IEEPA-related tariffs imposed on goods from China is now 30%.

In addition, the Section 301 tariffs, imposed during the first Trump Administration in response to certain technology transfer practices in China, generally range from 7.5% to 25%, with certain products subject to higher duties up to 100%. Consequently, the effective average rate of duty for goods from China is approximately 40%-55%.

De Minimis Tariffs Adjustments

Section 4 of the May 12 Order decreases the tariff rate applicable to low-value imports from China (i.e., goods previously eligible for duty-free treatment under the de minimis exclusion) from 120% to 54%.

By way of background, the de minimis statutory exemption allows many shipments valued at $800 or less to enter the United States duty-free. Section 2(c)(i) of Executive Order 14256 of April 2, 2025 (Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports) eliminated the de minimis exception for China imports, effective May 2, 2025. Subsequently, Executive Order 14259 and Executive Order 14266 increased the duty rate on such goods.

The May 12 Order decreases the ad valorem rate of duty for low-value shipments from China and Hong Kong from 120% to 54% (this is still higher than the originally proposed low-value shipment rate of 30%). However, the May 12 Order retains the alternative “specific duty” option for low-value shipments delivered to the United States from China or Hong Kong via the international postal network at $100 per postal item, though this rate is no longer subject to the automatic increase originally scheduled to go into effect on June 1, 2025.

While the de minimis exclusion has been removed for goods from China and Hong Kong, it is still presently in place for imports that originate in other jurisdictions. However, President Trump has previously directed the Secretary of Commerce to develop mechanisms to collect IEEPA-based duties on low-value shipments from other jurisdictions.

II. Chinese Actions and Consultation Mechanism

China Lowers Tariffs on U.S. Goods to 10%

Pursuant to the Joint Statement, China issued an Announcement of the Customs Tariff Commission of the State Council No. 7 of 2025 on May 13, 2025, local time, that suspends the prior 34% tariff on goods from the United States originally announced on April 4, 2025, for a matching 90 days, while retaining a parallel 10% tariff during the period of the pause.

China to Remove Non-Tariff Barriers

In the Joint Statement and accompanying Fact Sheet, China committed to “adopt all necessary administrative measures to suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025.”

By way of background, China announced a range of non-tariff retaliatory measures on April 4, 2025, including the following:

China’s Ministry of Commerce added 11 U.S. companies to its list of so-called “unreliable entities,” which bars them from engaging in all import and export activities in China and making new investments in China.
Beijing added 16 U.S. entities to its export control list, which prohibits exports of dual-use items to the listed firms. Nearly all of the firms so targeted operate in the defense and aerospace industries.
The Ministry of Commerce announced the launch of an anti-dumping probe into imports of certain medical computed tomography tubes from the United States and India.
Beijing launched an anti-monopoly investigation into the PRC subsidiary of a major U.S. chemical company.
Beijing announced export controls on seven types of rare earth minerals to the United States, which are vital to end uses ranging from electric cars to defense. Notably, the United States imports its rare earth materials predominantly from China, which produces approximately 90% of the world’s supply.

Parties to Establish a Consultation Mechanism

The Joint Statement also promises that the U.S. and China “will establish a mechanism to continue discussions about economic and trade relations,” and that such discussions may be conducted alternately in China and the United States, or a third country upon agreement of the parties.

Conclusion

These developments involving the critical bilateral trading relationship between the United States and China, a relationship valued at an estimated $582 billion worth of annual goods trade, underscores the ongoing fluidity in global trade policy. We will continue to closely monitor developments related to tariffs and the progress of this and other anticipated trade deals. Gibson Dunn lawyers are prepared to help clients navigate this evolving landscape.

The following Gibson Dunn lawyers prepared this update: Hui Fang, Adam M. Smith, Donald Harrison, and Samantha Sewall.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. For additional information about how we may assist you, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s International Trade Advisory & Enforcement practice group:

United States:
Ronald Kirk – Co-Chair, Dallas (+1 214.698.3295, rkirk@gibsondunn.com)
Adam M. Smith – Co-Chair, Washington, D.C. (+1 202.887.3547, asmith@gibsondunn.com)
Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, shandler@gibsondunn.com)
Donald Harrison – Washington, D.C. (+1 202.955.8560, dharrison@gibsondunn.com)
Christopher T. Timura – Washington, D.C. (+1 202.887.3690, ctimura@gibsondunn.com)
Matthew S. Axelrod – Washington, D.C. (+1 202.955.8517, maxelrod@gibsondunn.com)
David P. Burns – Washington, D.C. (+1 202.887.3786, dburns@gibsondunn.com)
Nicola T. Hanna – Los Angeles (+1 213.229.7269, nhanna@gibsondunn.com)
Courtney M. Brown – Washington, D.C. (+1 202.955.8685, cmbrown@gibsondunn.com)
Amanda H. Neely – Washington, D.C. (+1 202.777.9566, aneely@gibsondunn.com)
Samantha Sewall – Washington, D.C. (+1 202.887.3509, ssewall@gibsondunn.com)
Michelle A. Weinbaum – Washington, D.C. (+1 202.955.8274, mweinbaum@gibsondunn.com)
Roxana Akbari – Orange County (+1 949.451.3850, rakbari@gibsondunn.com)
Karsten Ball – Washington, D.C. (+1 202.777.9341, kball@gibsondunn.com)
Hugh N. Danilack – Washington, D.C. (+1 202.777.9536, hdanilack@gibsondunn.com)
Hui Fang – Washington, D.C. (+1 202.777.9577, hfang@gibsondunn.com)
Mason Gauch – Houston (+1 346.718.6723, mgauch@gibsondunn.com)
Chris R. Mullen – Washington, D.C. (+1 202.955.8250, cmullen@gibsondunn.com)
Sarah L. Pongrace – New York (+1 212.351.3972, spongrace@gibsondunn.com)
Anna Searcey – Washington, D.C. (+1 202.887.3655, asearcey@gibsondunn.com)
Audi K. Syarief – Washington, D.C. (+1 202.955.8266, asyarief@gibsondunn.com)
Scott R. Toussaint – Washington, D.C. (+1 202.887.3588, stoussaint@gibsondunn.com)
Lindsay Bernsen Wardlaw – Washington, D.C. (+1 202.777.9475, lwardlaw@gibsondunn.com)
Shuo (Josh) Zhang – Washington, D.C. (+1 202.955.8270, szhang@gibsondunn.com)

Asia:
Kelly Austin – Denver/Hong Kong (+1 303.298.5980, kaustin@gibsondunn.com)
David A. Wolber – Hong Kong (+852 2214 3764, dwolber@gibsondunn.com)
Fang Xue – Beijing (+86 10 6502 8687, fxue@gibsondunn.com)
Qi Yue – Beijing (+86 10 6502 8534, qyue@gibsondunn.com)
Dharak Bhavsar – Hong Kong (+852 2214 3755, dbhavsar@gibsondunn.com)
Arnold Pun – Hong Kong (+852 2214 3838, apun@gibsondunn.com)

Europe:
Attila Borsos – Brussels (+32 2 554 72 10, aborsos@gibsondunn.com)
Patrick Doris – London (+44 207 071 4276, pdoris@gibsondunn.com)
Michelle M. Kirschner – London (+44 20 7071 4212, mkirschner@gibsondunn.com)
Penny Madden KC – London (+44 20 7071 4226, pmadden@gibsondunn.com)
Irene Polieri – London (+44 20 7071 4199, ipolieri@gibsondunn.com)
Benno Schwarz – Munich (+49 89 189 33 110, bschwarz@gibsondunn.com)
Nikita Malevanny – Munich (+49 89 189 33 224, nmalevanny@gibsondunn.com)
Melina Kronester – Munich (+49 89 189 33 225, mkronester@gibsondunn.com)
Vanessa Ludwig – Frankfurt (+49 69 247 411 531, vludwig@gibsondunn.com)

An article in Law360 reports on the task force created by Gibson Dunn to help clients navigate the challenges posed by increasingly active State Attorney General investigations and litigation across major U.S. industries.

Read the article, “Gibson Dunn Launches State Attorneys General Task Force,” in Law360 [PDF].

Pohl v. Cheatham, No. 23-0045 – Decided May 9, 2025

On May 9, the Texas Supreme Court held that Texas’s civil barratry statute doesn’t apply to soliciting legal-services contracts outside Texas.

“We reaffirm our longstanding presumption that a civil statute does not have extraterritorial effect unless the Legislature makes clear that such effect is intended.”

Justice Huddle, writing for the Court

Background:

Two Texas lawyers entered into legal-services contracts with clients in Louisiana and Arkansas to represent those clients in personal-injury cases filed in courts outside Texas. After those cases settled, the clients sued the Texas lawyers under Texas’s civil barratry statute, seeking to void their legal-services contracts. The clients alleged that the lawyers directed and financed out-of-state case runners to solicit clients, and that the lawyers coordinated and funded these efforts from their Texas offices.

The Texas lawyers moved for summary judgment, arguing that Texas’s civil barratry statute doesn’t apply because the alleged solicitation occurred outside Texas. The trial court granted summary judgment, but the court of appeals reversed. It held that applying Texas’s civil barratry statute wouldn’t be impermissibly extraterritorial because some of the lawyers’ acts, such as financing the out-of-state runners, occurred in Texas.

Issue:

Does Texas’s civil barratry statute apply to acts of solicitation that occurred outside Texas?

Court’s Holding:

No. Nothing in the civil barratry statute’s text overcomes the strong presumption against extraterritoriality. Applying the statute to the clients’ claims in this case would be impermissible because the statute’s focus is on the acts that procured the legal-services contracts—all of which occurred outside Texas.

What It Means:

The Court reaffirmed the strong presumption against extraterritoriality: “[T]he Legislature generally legislates with Texas concerns in mind, and Texas legislation therefore is meant to apply only within Texas’s borders.” Op. 15. The decision makes clear that defendants can challenge a plaintiff’s statutory claim on the ground that it seeks to give the statute an impermissible extraterritorial effect.
The Court rejected the position that a civil statute should be applied extraterritorially “merely because some or any conduct related to the violation occurs in Texas,” explaining that “the presumption would be meaningless if any domestic conduct could defeat it.” Op. 21–22. Instead, the Court stressed that courts must “home in on the core conduct the Legislature sought to address—the object of the statute’s solicitude—and determine where that conduct occurred.” Op. 22.
Relying heavily on the U.S. Supreme Court’s extraterritoriality precedents, the Court adopted a two-step framework for analyzing the extraterritoriality of Texas statutes. First, Texas courts consider whether the statutory text expresses a clear intent to overcome the “strong presumption against extraterritorial application of a Texas statute.” Op. 17–18. If not, courts must then assess whether applying the statute to the plaintiff’s claim would be an impermissible extraterritorial application. To do so, courts must “identify the ‘focus’ of the Legislature’s concern underlying the provision at issue” and “ask whether the conduct relevant to that focus occurred within or outside Texas.” Op. 21.

The Court’s opinion is available here.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Texas Supreme Court. Please feel free to contact the following practice group leaders:

Appellate and Constitutional Law Practice

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Texas General Litigation

Trey Cox +1 214.698.3256 tcox@gibsondunn.com	Collin Cox +1 346.718.6604 ccox@gibsondunn.com	Gregg Costa +1 346.718.6649 gcosta@gibsondunn.com
Mike Raiff +1 214.698.3350 mraiff@gibsondunn.com	Russ Falconer +1 214.698.3170 rfalconer@gibsondunn.com

This alert was prepared by Texas of counsels Ben Wilson and Kathryn Cherry and Texas associates Elizabeth Kiernan, Stephen Hammer, and Andrew Mitchell.

In an article for the Spring 2025 edition of Real Estate Finance Journal, partners Stephenie Gosnell Handler and David Wolber, of counsel Michelle Weinbaum, and associates Roxana Akbari, Mason Gauch, and Chris Mullen provide an overview of the final rule of the Committee on Foreign Investment in the United States which expands its jurisdiction over real estate transactions subject to national security review, and offer a series of takeaways for transaction parties.

London partner Sandy Bhogal shared his insights on the OECD’s landmark global tax deal for the Financial Times article “US Engaging on OECD Global Tax Deal Despite Donald Trump’s Defiance.” Sandy is Co-Chair of the Gibson Dunn Tax Practice Group.

Read the article in the Financial Times (registration required): https://www.ft.com/content/6ec6816d-063b-47c6-af28-bc9b67ada20e

A new CFIUS “fast-track” pilot program—designed to streamline the investment process for foreign investors from allied and partner countries—aims to enhance efficiencies in the CFIUS review process while maintaining robust national security protections.

On May 8, 2025, the U.S. Department of the Treasury, in its capacity as Chair of the Committee on Foreign Investment in the United States (CFIUS), announced plans to establish a “fast-track” pilot program to expedite its review of investments from allied and partner countries. This program will include a first of its kind “Known Investor” portal, where CFIUS can collect information from foreign investors pre-filing with the aim of accelerating the review process. Treasury will launch this initiative as a pilot program with plans to refine it over time, though further details have not been provided at this time.

This development closely tracks President Trump’s America First Investment Policy (the “Policy”) issued on February 21, 2025, which outlined a dual policy goal: making the United States “the world’s greatest destination for investment dollars,” while also enhancing the “ability to protect the United States from new and evolving threats that can accompany foreign investment.” The Policy announced that the U.S. would create a “fast-track” process to facilitate greater investment from “specified allies and partner sources” based on “objective standards,” though a formal list of qualifying jurisdictions was not released. At the same time, the announcement underscored that CFIUS would maintain rigorous scrutiny on non-passive investments by the People’s Republic of China.

Looking forward, the “Known Investor” program could be particularly valuable for European and Middle Eastern investors, particularly for transactions with minimal national security risks. At this stage, it remains unclear whether the implementation will follow a notice and comment procedure via the Federal Register or whether guidance will be issued directly through the CFIUS website. The exact timeline for implementation also remains unclear.

Our team at Gibson Dunn is closely monitoring this new development and is actively advising clients on preparing for the new program.

The following Gibson Dunn lawyers prepared this update: Roxana Akbari, Sarah Burns, Stephenie Gosnell Handler, and Chris Mullen.

United States:
Ronald Kirk – Co-Chair, Dallas (+1 214.698.3295, rkirk@gibsondunn.com)
Adam M. Smith – Co-Chair, Washington, D.C. (+1 202.887.3547, asmith@gibsondunn.com)
Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, shandler@gibsondunn.com)
Donald Harrison – Washington, D.C. (+1 202.955.8560, dharrison@gibsondunn.com)
Christopher T. Timura – Washington, D.C. (+1 202.887.3690, ctimura@gibsondunn.com)
Matthew S. Axelrod – Washington, D.C. (+1 202.955.8517, maxelrod@gibsondunn.com)
David P. Burns – Washington, D.C. (+1 202.887.3786, dburns@gibsondunn.com)
Nicola T. Hanna – Los Angeles (+1 213.229.7269, nhanna@gibsondunn.com)
Courtney M. Brown – Washington, D.C. (+1 202.955.8685, cmbrown@gibsondunn.com)
Amanda H. Neely – Washington, D.C. (+1 202.777.9566, aneely@gibsondunn.com)
Samantha Sewall – Washington, D.C. (+1 202.887.3509, ssewall@gibsondunn.com)
Michelle A. Weinbaum – Washington, D.C. (+1 202.955.8274, mweinbaum@gibsondunn.com)
Roxana Akbari – Orange County (+1 949.451.3850, rakbari@gibsondunn.com)
Karsten Ball – Washington, D.C. (+1 202.777.9341, kball@gibsondunn.com)
Hugh N. Danilack – Washington, D.C. (+1 202.777.9536, hdanilack@gibsondunn.com)
Mason Gauch – Houston (+1 346.718.6723, mgauch@gibsondunn.com)
Chris R. Mullen – Washington, D.C. (+1 202.955.8250, cmullen@gibsondunn.com)
Sarah L. Pongrace – New York (+1 212.351.3972, spongrace@gibsondunn.com)
Anna Searcey – Washington, D.C. (+1 202.887.3655, asearcey@gibsondunn.com)
Audi K. Syarief – Washington, D.C. (+1 202.955.8266, asyarief@gibsondunn.com)
Scott R. Toussaint – Washington, D.C. (+1 202.887.3588, stoussaint@gibsondunn.com)
Lindsay Bernsen Wardlaw – Washington, D.C. (+1 202.777.9475, lwardlaw@gibsondunn.com)
Shuo (Josh) Zhang – Washington, D.C. (+1 202.955.8270, szhang@gibsondunn.com)

Europe

04/28/2025

CJEU | Fact Sheet | Case Law on Personal Data Protection

The Court of Justice of the European Union (“CJEU”) has updated its “case law fact sheet” on personal data protection which compiles its key rulings in the field.

For further information: CJEU Website

04/23/2025

European Data Protection Board | 2024 Annual Report

The European Data Protection Board (“EDPB”) has published its annual report for 2024.

The report provides an overview of the EDPB work in 2024 and highlights key achievements such as the adoption of the 2024-2027 strategy and an increase in the consistency opinions under Article 64(2) GDPR (e.g., on “Consent or Pay” models, the use of personal data to train AI models). The report also emphasizes the EDPB’s contribution to cross-regulatory cooperation for new pieces of legislation such as the Digital Services Act (DSA) and the AI Act.

For further information: EDPB Website

04/14/2025

European Data Protection Board | Guidelines | Personal data and blockchain

The European Data Protection Board (“EDPB”) has published Guidelines 02/2025 on processing of personal data through blockchain technologies, open to public consultation until 9 June 2025.

The guidelines describe the blockchain technologies and provide a framework for organizations considering their use. They outline key GDPR considerations for processing activities (e.g., data retention periods, data subjects’ rights), and clarify the responsibilities of different actors involved in a blockchain related processing.

For more information: EDPB Website

04/11/2025

European Commission | Public Consultation | EU Cybersecurity Act

The European Commission has opened a public consultation on the evaluation and revision of the 2019 EU Cybersecurity Act.

The EU Commission is seeking stakeholders’ feedback on key areas for the contemplated revision, including the mandate of the European Agency for Cybersecurity (ENISA), the European Cybersecurity Framework, challenges related to ICT supply chain security, and the simplification of cybersecurity measures. The public consultation is open until 20 June 2025.

For more information: European Commission Website

04/10/2025

European Commission | Guidelines | Generative AI in Research

The European Commission has updated its Living Guidelines on the responsible use of generative AI in research.

The guidelines provide recommendations for researchers and organizations to ensure they promote and support responsible use of generative AI in their research activities. They are regularly updated to reflect the technological developments in the field.

For more information: European Commission Website, Guidelines

04/10/2025

European Data Protection Board | Report | Large Language Models

The European Data Protection Board (“EDPB”) has published a report on AI Privacy Risks and Mitigations Large Language Models (“LLMs”).

The report provides a risk management methodology to help developers and users of LLMs identify, assess and mitigate privacy risks in the development and use of LLM systems. As such, it complements the Data Protection Impact Assessment process (Art. 35 GDPR) and supports requirements regarding data protection by design and by default (Art. 25 GDPR) and security of personal data (Art. 32 GDPR).

For more information: EDPB Website

04/02/2025

European Commission | Report | B2B Data Sharing & EU Data Act

The European Commission’s Expert Group has issued its final report on B2B data sharing and cloud computing contracts under the EU Data Act.

The report contains model contractual terms (MCTs) covering different data sharing scenarios (e.g., data holder to user, user to data recipient), as well as standard contractual clauses (SCCs) for cloud computing contracts.

For more information: European Commission Website

03/27/2025

European Commission | DORA Directive | Infringement Procedures

The European Commission has launched infringement procedures against 13 Member States (including France, Spain, and Belgium) for failing to fully transpose the Digital Operational Resilience Act (“DORA”) Directive within the given deadline (17 January 2025).

The Member States have two months to complete their transposition and notify the adopted measures to the Commission.

For more information: European Commission Website

France

04/29/2025

French Supervisory Authority | Annual Report | Enforcement

The French Supervisory Authority (“CNIL”) has released its 2024 annual report, recording 17,772 complaints, 87 sanctions, and over €55 million in fines.

The CNIL has stepped up enforcement efforts with 331 corrective actions and observed an increase in the use of simplified procedures. It has also strengthened its response to growing cybersecurity threats and expanded its oversight on AI and digital innovation.

For more information: CNIL Website [FR]

04/24/2025

French Supervisory Authority | Public Consultation | Multi-terminal Consent

The French Supervisory Authority (“CNIL”) has launched a public consultation for its draft recommendation on multi-terminal consent across various devices.

The draft recommendation concerns stakeholders which intend to collect multi-terminal consent when users are authenticated on an account. They offer concrete recommendations on how to validly collect multi-terminal consent. The public consultation will end on 5 June 2025.

For more information: CNIL Website [FR]

04/23/2025

French Supervisory Authority | Publication | Data Breach

The French Supervisory Authority (“CNIL”) has published a fictional data breach use case to help professionals better understand and prevent risks related to unauthorized access to data handled by processors.

The use case outlines a typical data breach based on a real-life incident that was reported to the CNIL.

For more information: CNIL Website [FR]

04/14/2025

French Supervisory Authority | 2025-2028 European and International Strategy

The French Supervisory Authority (“CNIL”) has released its European and international strategy for 2025-2028.

The strategy focuses on three priorities: improving European cooperation, promoting high international data protection standards while supporting innovation, and reinforcing CNIL’s global influence.

For more information: CNIL Website [FR]

04/09/2025

French Supervisory Authority | Public Consultation | Session Recording and Replay Tools

The French Supervisory Authority (“CNIL”) has launched a public consultation on browsing session recording and replay tools.

These tools, which capture detailed user interactions, raise significant privacy concerns due to their potential to collect sensitive personal data without users’ awareness. The goal of the consultation is to develop practical recommendations to help tool providers and website editors ensure GDPR compliance and better protect user privacy.

For more information: CNIL Website [FR]

04/08/2025

French Supervisory Authority | Guidelines | Mobile Applications

The French Supervisory Authority (“CNIL”) has published an updated version of its recommendations on mobile applications recommendations.

The CNIL has published an updated version of its recommendations on mobile applications, originally adopted in July 2024 and released in September 2024. The revised version includes corrections and clarifications in response to stakeholder feedback, and an annotated version is available to highlight the updates.

For more information: CNIL Website [FR]

04/01/2025

French Supervisory Authority | Guidelines | Multi-Factor Authentication (MFA)

The French Supervisory Authority (“CNIL”) has published a recommendation on the implementation of multi-factor authentication (“MFA”) to help online services implement privacy-compliant cybersecurity solutions.

The guidance aims to support controllers and solution providers in aligning MFA practices with the GDPR—covering legal bases, data minimization, retention periods, and the appropriate use of authentication factors such as biometrics, SMS codes, and employee devices.

For more information: CNIL Website [FR]

04/01/2025

ANSSI | Cybersecurity | Information System Security Accreditation

The French National Cybersecurity Agency (“ANSSI”) has published updated guidance on the security accreditation of information systems.

This publication details the steps and documentation required to accredit an information system, including risk assessment, security objectives, and verification processes. It aims to ensure a structured and high-assurance approach to system security within both public and private organizations. The guidance forms part of ANSSI’s broader efforts to promote cybersecurity resilience and regulatory compliance in France.

For more information: ANSSI Website [FR]

Germany

04/29/2025

Hamburg Supervisory Authority | Data Act | Guidance

The Hamburg Supervisory Authority (“HmbBfDI”) has published guidance on the new European Data Act, which will apply from 12 September 2025.

The HmbBfDI’s guidance provides an overview of the new obligations for companies under the Data Act, in particular in relation to data sharing obligations applicable to manufacturers of connected devices. The guidance also identified the key steps companies should take to prepare for the application of the Data Act (e.g., data mapping, updating contracts, marking trade secrets). Since the Data Act applies without prejudice to the GDPR, the guidance analyses the interactions between obligations related to personal data under the GDPR and those related to personal data under the Data Act. Finally, the HmbBfDI has highlighted the responsibilities of supervisory authorities.

For further information: HmbBfDI Website [DE]

04/24/2025

Hamburg Supervisory Authority | Compliance Review | Third Party Services

The Hamburg Supervisory Authority (“HmbBfDI”) has reviewed 1.000 websites for data protection compliance regarding the use of third-party cookies and services and identified deficiencies in 185 of them.

The HmbBfDI found that although most of the websites reviewed met the data protection requirements, deficiencies were found for approximately 185 websites. Most violations result from the fact that certain tracking technologies are activated immediately when the page is first accessed, with the result that users are tracked before consent is obtained.

For more information: HmbBfDI Website [DE]

04/24/2025

Hamburg Supervisory Authority | Q&A | Tracking

The Hamburg Supervisory Authority (“HmbBfDI”) has published FAQs on tracking via third-party services on websites.

The HmbBfDI emphasises that tracking is only permitted with the explicit consent of the respective data subject. The authority included guidance on the design of consent banners, emphasising the need to implement a “reject all” option on the same level as an “accept all” button. The guidance highlights the importance of complying with the requirements of the ePrivacy Directive (transposed into national law) in relation to tracking, alongside the provisions of the GDPR.

For more information: HmbBfDI Website [DE]

04/10/2025

Federal Commissioner for Data Protection and Freedom of Information | Annual Report

The German Federal Commissioner for Data Protection and Freedom of Information (BfDI) has published its annual report.

The Federal Commissioner for Data Protection and Freedom of Information is responsible for monitoring data protection at federal public bodies and at companies that provide telecommunications and postal services. The report shows that most proceedings are related to information and transparency obligations.

For more information: BfDI Website [DE]

04/09/2025

New German Government | Coalition Agreement | Future of Data Protection

The new German Government consisting of the CDU/CSU (Christian Democratic Union of Germany/Christian Social Union of Germany) and SPD (Social Democratic Party of Germany) have published their coalition agreement.

The new German government intends to liberalize data protection law at both national and EU level and work towards “data utilization”, “data sharing” and a “data economy”. It is planned to bundle the data protection authorities of the individual federal states into a nationwide authority. At EU level, the coalition intends to exclude low-risk data processing activities as well as small and medium-sized enterprises from the scope of the GDPR.

For more information: SPD Website [DE]

02/20/2025

Federal Labour Court | Judgement | Right to Compensation

The Federal Labour Court (BAG) ruled in a recently published decision that a delay in providing information under Art. 15 GDPR does not by itself justify a claim for compensation.

According to the BAG, a delayed provision of information under Article 15 GDPR by a former employer does not by itself constitute non-material damage within the meaning of Article 82(1) GDPR. The BAG held that a mere delay, absent specific and substantiated fears of data misuse or an actual loss of control over personal data, does not give rise to a claim for damages. Subjective emotional responses such as worry, annoyance, or nervousness are not sufficient unless they are objectively substantiated by a real risk of data misuse.

For more information: Official Court Website [DE]

Greece

04/08/2025

Greek Supervisory Authority | Guidance | AI and GDPR

The Greek Supervisory Authority (“HDPA”) offers training sessions on AI and GDPR.

The HDPA published educational materials and provides training programs developed by external experts from the European Data Protection Board (“EDPB”). It notably offers a Data Protection Officers and Privacy Professionals Program, as well as a program for ICT Professionals. The material covers various topics such as core concepts of AI, Data Protection and Large Language Models, and Transparency.

For more information: HDPA Website [GR]

Netherlands

04/16/2025

Dutch Supervisory Authority | Survey | Algorithmic Data Processing

The Dutch Supervisory Authority (“AP”) has published survey results showing that many companies feel unprepared to manage algorithms processing personal data. Businesses often lack clarity on whether and how such algorithms are used.

The AP plans to provide guidance and practical tools, as well as and collect best practices to improve responsible algorithm procurement and use. More specifically, the AP is currently developing a checklist for businesses to adequately deal with the rights of people who are subject to algorithmic decision-making.

For more information: AP Press release [NL]

United Kingdom

04/29/2025

CPPA & Information Commissioner’s Office | International Cooperation | Privacy Enforcement

The California Privacy Protection Agency (“CPPA”) and the Information Commissioner’s Office (“ICO”) signed a declaration of cooperation to strengthen international collaboration on data protection.

The agreement will enable joint research, best practice sharing, and coordinated enforcement efforts. It marks the CPPA’s third international partnership, following agreements with Korea’s PIPC and France’s CNIL, and reflects its broader commitment to global privacy cooperation.

For more information: CPPA Press release

The following Gibson Dunn lawyers prepared this update: Ahmed Baladi, Vera Lukic, Kai Gesing, Joel Harrison, Thomas Baculard, Billur Cinar, Hermine Hubert, Christoph Jacob, and Yannick Oberacker.

Gibson Dunn lawyers are available to assist in addressing any questions you may have about these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Privacy, Cybersecurity & Data Innovation practice group:

Privacy, Cybersecurity, and Data Innovation:

United States:
Abbey A. Barrera – San Francisco (+1 415.393.8262, abarrera@gibsondunn.com)
Ashlie Beringer – Palo Alto (+1 650.849.5327, aberinger@gibsondunn.com)
Ryan T. Bergsieker – Denver (+1 303.298.5774, rbergsieker@gibsondunn.com)
Keith Enright – Palo Alto (+1 650.849.5386, kenright@gibsondunn.com)
Gustav W. Eyler – Washington, D.C. (+1 202.955.8610, geyler@gibsondunn.com)
Cassandra L. Gaedt-Sheckter – Palo Alto (+1 650.849.5203, cgaedt-sheckter@gibsondunn.com)
Svetlana S. Gans – Washington, D.C. (+1 202.955.8657, sgans@gibsondunn.com)
Lauren R. Goldman – New York (+1 212.351.2375, lgoldman@gibsondunn.com)
Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, shandler@gibsondunn.com)
Natalie J. Hausknecht – Denver (+1 303.298.5783, nhausknecht@gibsondunn.com)
Jane C. Horvath – Washington, D.C. (+1 202.955.8505, jhorvath@gibsondunn.com)
Martie Kutscher Clark – Palo Alto (+1 650.849.5348, mkutscherclark@gibsondunn.com)
Kristin A. Linsley – San Francisco (+1 415.393.8395, klinsley@gibsondunn.com)
Timothy W. Loose – Los Angeles (+1 213.229.7746, tloose@gibsondunn.com)
Vivek Mohan – Palo Alto (+1 650.849.5345, vmohan@gibsondunn.com)
Rosemarie T. Ring – San Francisco (+1 415.393.8247, rring@gibsondunn.com)
Ashley Rogers – Dallas (+1 214.698.3316, arogers@gibsondunn.com)
Sophie C. Rohnke – Dallas (+1 214.698.3344, srohnke@gibsondunn.com)
Eric D. Vandevelde – Los Angeles (+1 213.229.7186, evandevelde@gibsondunn.com)
Benjamin B. Wagner – Palo Alto (+1 650.849.5395, bwagner@gibsondunn.com)
Frances A. Waldmann – Los Angeles (+1 213.229.7914,fwaldmann@gibsondunn.com)
Debra Wong Yang – Los Angeles (+1 213.229.7472, dwongyang@gibsondunn.com)

Europe:
Ahmed Baladi – Paris (+33 1 56 43 13 00, abaladi@gibsondunn.com)
Patrick Doris – London (+44 20 7071 4276, pdoris@gibsondunn.com)
Kai Gesing – Munich (+49 89 189 33-180, kgesing@gibsondunn.com)
Joel Harrison – London (+44 20 7071 4289, jharrison@gibsondunn.com)
Lore Leitner – London (+44 20 7071 4987, lleitner@gibsondunn.com)
Vera Lukic – Paris (+33 1 56 43 13 00, vlukic@gibsondunn.com)
Lars Petersen – Frankfurt/Riyadh (+49 69 247 411 525, lpetersen@gibsondunn.com)
Christian Riis-Madsen – Brussels (+32 2 554 72 05, criis@gibsondunn.com)
Robert Spano – London/Paris (+44 20 7071 4000, rspano@gibsondunn.com)

Asia:
Connell O’Neill – Hong Kong (+852 2214 3812, coneill@gibsondunn.com)
Jai S. Pathak – Singapore (+65 6507 3683, jpathak@gibsondunn.com)

From the Derivatives Practice Group: This week, the CFTC placed certain staff on administrative leave pending ongoing investigations.

New Developments

CFTC Staff on Leave Pending Investigation. On May 5, pursuant to the President’s executive orders on lawful governance and accountability, the CFTC placed certain staff on administrative leave for potential violations of laws, government ethics requirements and professional rules of conduct. The CFTC stated it is committed to holding employees to the highest standards, as expected by American taxpayers. Investigations are currently ongoing into these matters and the CFTC has committed to provide updates as appropriate. [NEW]
SEC Publishes New Market Data, Analysis, and Visualizations. On April 28, the SEC’s Division of Economic and Risk Analysis (“DERA”) has published new data and analysis on the key market areas of public issuers, exempt offerings, Commercial Mortgage-Backed Securities (“CMBS”), Asset-Backed Securities (“ABS”), money market funds, and security-based swap dealers (“SBSD”) in an effort to increase transparency and understanding of our capital markets amongst the public.
Paul S. Atkins Sworn in as SEC Chairman. On April 21, Paul S. Atkins was sworn into office as the 34th Chairman of the SEC. Chairman Atkins was nominated by President Donald J. Trump on January 20, 2025, and confirmed by the U.S. Senate on April 9, 2025. Prior to returning to the SEC, Chairman Atkins was most recently chief executive of Patomak Global Partners, a company he founded in 2009. Chairman Atkins helped lead efforts to develop best practices for the digital asset sector. He served as an independent director and non-executive chairman of the board of BATS Global Markets, Inc. from 2012 to 2015.
CFTC Staff Seek Public Comment Regarding Perpetual Contracts in Derivatives Markets. On April 21, the CFTC issued a Request for Comment to better inform them on the potential uses, benefits, and risks of perpetual contracts in the derivatives markets the CFTC regulates (“Perpetual Derivatives”). This request seeks comment on the characteristics of perpetual derivatives, including those characteristics which may differ across products. as well as the implications of their use in trading, clearing and risk management. The request also seeks comment on the risks of perpetual derivatives, including risks related to the areas of market integrity, customer protection, or retail trading.
CFTC Staff Seek Public Comment on 24/7 Trading. On April 21, the CFTC issued a Request for Comment to better inform them on the potential uses, benefits, and risks of trading on a 24/7 basis in the derivatives markets the CFTC regulates. This request seeks comment on the implications of extending the trading of CFTC-regulated derivatives markets to an effectively 24/7 basis, including the potential effects on trading, clearing and risk management which differ from trading during current market hours. The request also seeks comment on the risks of 24/7 trading, and the associated clearing systems, including risks related to the areas of market integrity, customer protection, or retail trading.

New Developments Outside the U.S.

- ESMA Delivers Technical Advice on Market Abuse and SME Growth Markets as Part of the Listing Act. On May 7, ESMA published its advice to the European Commission to support the Listing Act’s goals to simplify listing requirements, enhance access to public capital markets for EU companies, and improve market integrity. In relation to Market Abuse Regulation (“MAR”), the advice covers: protracted processes, identifying key moments for public disclosure; delayed public disclosure, listing situations where delays are not allowed; and Cross-Market Order Book Mechanism, indicating the methodology for the identification of trading venues with significant cross-border activity. [NEW]
- ESMA Consults on Rules for ESG Rating Providers. On May 2, ESMA published a Consultation Paper on draft Regulatory Technical Standards (“RTS”) under the ESG Rating Regulation. The draft RTS cover the following aspects that apply to ESG rating providers: the information that should be provided in the applications for authorization and recognition; the measures and safeguards that should be put in place to mitigate risks of conflicts of interest within ESG rating providers who carry out activities other than the provision of ESG ratings; the information that they should disclose to the public, rated items and issuers of rated items, as well as users of ESG ratings. [NEW]
- ESMA Publishes the Annual Transparency Calculations for Non-equity Instruments and Bond Liquidity Data. On April 30, the European Securities and Markets Authority (“ESMA”), the EU’s financial markets regulator and supervisor, published the results of the annual transparency calculations for non-equity instruments and new quarterly liquidity assessment of bonds under MiFID II and MiFIR.
- ESMA Report Shows Increased Data Use Across EU and First Effects of Reporting Burden Reduction Efforts. On April 30, ESMA published the fifth edition of its Report on the Quality and Use of Data. The report reveals how the regulatory data collected has been used by authorities in the EU and provides insight into actions taken to ensure data quality. The document presents concrete cases on data use ranging from market monitoring to supervision, enforcement and policy making. The report also highlights ESMA’s Data Platform and ongoing improvements to data quality frameworks as key advancements in tools and technology for data quality.
- ESMA Issues Supervisory Guidelines to Prevent Market Abuse under MiCA. On April 29, ESMA published guidelines on supervisory practices to prevent and detect market abuse under the Market in Crypto Assets Regulation (“MiCA”). Based on ESMA’s experience under Market Abuse Regulation (“MAR”), the guidelines intended for National Competent Authorities (“NCAs”) include general principles for effective supervision and specific practices for detecting and preventing market abuse in crypto assets. They consider the unique features of crypto trading, such as its cross-border nature and the intensive use of social media.
- ESMA Assesses the Risks Posed by the Use of Leverage in the Fund Sector. On April 24, ESMA published its annual risk assessment of leveraged alternative investment funds (“AIFs”) and its first analysis on risks in UCITS using the absolute Value-at-Risk (“VaR”) approach. Both articles represent ESMA’s work to identify highly leveraged funds in the EU investment sector and assess their potential systemic relevance.

New Industry-Led Developments

ISDA Presents Proposed Charter for the Credit Derivatives Governance Committee. On May 8, ISDA presented the proposed Charter for the Credit Derivatives Governance Committee and accompanying DC Rule changes to implement. Pursuant to the announcement made in 2024, an ISDA working group formed from ISDA’s Credit Steering Committee has worked on producing the Governance Committee solution. ISDA views the Governance Committee as the first step in implementing the other recommended changes from the Linklaters’ report as part of an independent review on the composition, functioning, governance and membership of the DCs. [NEW]
ISDA Publishes Governance Committee Proposal for CDS Determinations Committees. On May 8, ISDA published a proposal for a new governance committee for the CDS Determinations Committees (“DCs”), the first in a series of amendments to improve the structure of the DCs and maintain their integrity in changing economic and market conditions. The governance committee would be responsible for taking market feedback and adopting rule changes affecting the structure and operations of the DCs to ensure their long-term viability and meet market expectations for efficiency and transparency in credit event determinations. [NEW]
ISDA Responds to FASB Proposal on KPIs for Business Entities. On April 30, ISDA submitted a response to the Financial Accounting Standards Board’s (“FASB”) proposal on financial key performance indicators (“KPIs”) for business entities. In the response, ISDA addressed the implications of KPI standardization, its potential impact on financial reporting and risk management, and the broader cost-benefit considerations for preparers and investors. Based on proprietary analysis, ISDA does not view financial KPI standardization or the proposed disclosures as urgent priorities for the FASB at this time.
CPMI-IOSCO Assesses that EU has Implemented Principles for Financial Market Infrastructures for Two FMI Types. On April 28, CPMI-IOSCO released a report that assessed the completeness and consistency of the legal, regulatory and oversight framework in place as of October 30, 2019. The report finds that the implementation of the Principles for Financial Market Infrastructures is complete and consistent for all Principles for payment systems. The legal, regulatory and oversight frameworks in the EU for central securities depositories and securities settlement systems are complete and consistent with the Principles in most aspects. However, the assessment identified some areas for improvement, particularly in aspects where implementation was broadly, partly, or not consistent, including risk and governance principles.
ISDA/IIF Responds to EC’s Consultation on the Market Risk Prudential Framework. On April 22, ISDA and the Institute of International Finance (“IIF”) submitted a joint response to the EC’s consultation on the application of the market risk prudential framework. The associations believe the capital framework should be risk-appropriate and as consistent as possible across jurisdictions to ensure a level playing field without competitive distortions due to divergent rules.
ISDA and FIA Respond to Consultation on Commodity Derivatives Markets. On April 22, ISDA and FIA submitted a joint response to the EC’s consultation on the functioning of commodity derivatives markets and certain aspects relating to spot energy markets. In addition to questions on position management, reporting and limits and the ancillary activities exemption, the consultation also addressed data and reporting and certain concepts raised in the Draghi report, such as a market correction mechanism to cap pricing of natural gas and an obligation to trade certain commodity derivatives in the EU only.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, Karin Thrasher, and Alice Wang.

Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)

Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)

Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)

Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)

Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)

Adam Lapidus, New York (212.351.3869, alapidus@gibsondunn.com )

Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)

William R. Hallatt, Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )

David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)

Marc Aaron Takagaki, New York (212.351.4028, mtakagaki@gibsondunn.com )

Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@gibsondunn.com)

Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)

In an article for Bloomberg Law, partner Michael Kahn explains that while a 2024 U.S. Supreme Court decision left unanswered questions on how courts should analyze securities fraud claims challenging risk factor disclosures, an earlier decision provides a framework for treating risk factors as statements of opinion. He argues that this approach offers a clearer legal standard and reduces uncertainty for both companies and courts.

Read: “Treat Risk Disclosures as Opinions to Clean Up Fraud Challenges” [PDF]

In “Global Trade: What to Expect on Tariffs and Related Risks” (Financier Worldwide magazine, May 2025), Washington, D.C. partner Adam M. Smith and associates Scott Toussaint and Lindsay Bernsen Wardlaw describe the U.S. policy objectives that tariffs are designed to advance, explain the legal authorities on which President Trump has relied to impose increased tariffs, and assess the characteristics of companies that may be best able to withstand (and perhaps even thrive in) this new environment.

Adam is Co-Chair of our firm’s International Trade Advisory and Enforcement Practice Group and Sanctions and Export Enforcement Practice Group.

Read the full article in Financier Worldwide [PDF].

Partner and Co-Chair of our Tax Practice Group, Eric B. Sloan, was recently quoted by Tax Notes (subscription required) on the future of the U.S. Internal Revenue Service’s audit and litigation strategy for partnership related-party basis-shifting transactions following the repeal of Biden administration guidance.