The EEIG - an Alternative Legal Vehicle for European Research Infrastructures?
Updated: Oct 12, 2020
Early stage research infrastructure (“RI”) will often go through the exercise of considering the most appropriate legal framework for their design, implementation, construction and/or operation phase. While doing so, they are likely to consider issues such as the nature and characteristics of the RI, the feature of the RI (centralized or distributed), the services offered, the size and possible economic activities, rules for membership, commitment from participating entities/countries, funding schemes, links with industry and liability issues, to name but a few.
A wide range of legal entities is available for European RIs, including the European Research Infrastructures Consortium (ERIC), which is a bespoke legal vehicle that facilitates the establishment and operation of RIs with European interest. While an ERIC is likely to be a natural choice for many European RIs, early stage RIs may not yet be ready for it, for example, due to the limitation that membership in an ERIC is restricted to states and international organisations only. Some RIs’, especially early stage, may have not yet managed to secure sufficient political support from their relevant ministries or may not be admitted to the relevant national roadmaps or indeed, the ESFRI roadmap.
RIs that wish to adopt a separate legal entity in order to operate more effectively (i.e., enter into contracts, employ staff, receive contributions, etc.) but are not yet ready to apply for an ERIC will need to consider interim solutions. One of such solution may be the European Economic Interest Grouping (EEIG) - an entity fostered by the EU to encourage cross-border alliances.
The EEIG must have members based in at least two countries within the EU or the EEA and be non-profit making. It is designed to facilitate and/or develop the activities of its members by a pooling of resources, activities or skills and to produce better and more efficient results compared to the members acting alone. Its activities must be related and must not be more than ancillary to the activities of its members. When considering the EEIG as a legal vehicle for RIs, the following advantages appear to emerge:
- it has full legal capacity recognised in all EU Member States;
- it has a strong EU dimension;
- membership is open to legal and natural persons (not only countries);
- it is relatively simple to establish;
- it has a flexible governance and operations;
- there are no initial capital requirements;
- members’ contributions may be in cash or in-kind;
- it may participate in H2020 and receive EU grants;
- it may be easy to transit to an ERIC when political support reaches matureness.
On the other hand, there are a number of key issues that participating members may wish to consider before opting for the EEIG as a legal vehicle:
- as a counterweight to the contractual freedom which is granted to the EEIG, and the fact that members are not required to provide minimum capital, each member of the EEIG has unlimited joint and several liability for the debts of the EEIG. This liability is subsidiary, meaning that creditors will have to exhaust their efforts vis-à-vis the EEIG before they turn to members. Moreover, members may reduce risks by limiting the ability of the EEIG to undertake financial commitments, if it is envisaged that the EEIG is likely to enter into contracts or undertake any activities which involve legal or financial risks.
- unlike ERICs, EEIGs do not benefit from a specific exemption from the application of the EU public procurement rules and VAT. This may not be an issue for distributed research infrastructures with limited purchasing activity, but it is a potential consideration for capital intensive RIs, particularly during construction or upgrade phases.
- the EEIG does not allow for membership by entities from non-EU/EEA counties. While there are a number of ways to bypass this requirement, it will be something for consideration if non-EU membership is envisaged.
To sum-up, the EEIG is a well-established legal entity fostered by the EU to encourage cross-border alliances. An EEIG has an independent legal personality, taking a similar form and being recognised in all EU jurisdictions. The EEIG is rather simple to establish, it benefits from a flexible governance and has a strong EU dimension. An EEIG does not require direct involvement of sovereign states, thereby allowing institutions to become full members at the highest governing body and take full control of decisions. The downside is that the EEIG does not allow direct membership by non-EU/non-EEA countries; it does not provide for VAT and procurement exemptions, and most importantly, it requires members to provide an unlimited (albeit subsidiary) joint and several liability for the debts of the EEIG. Food for thought!