Upfront Obligations under the Data Act – Who Must Act First?

Seve­ral com­men­ta­ries on the Data Act have now been published. I mys­elf have con­tri­bu­ted to the upco­ming Bom­har­d/­Schmidt-Kes­sel com­men­ta­ry, whe­re I ana­ly­se Artic­les 8, 9 and 12 of the Data Act. Among other points, I argue that data hol­ders are gene­ral­ly under an obli­ga­ti­on to per­form first. This is a key point: if per­for­mance were con­di­tio­nal upon the pri­or con­clu­si­on of a FRAND-com­pli­ant agree­ment, data reci­pi­ents could be forced to enforce a con­trac­tu­al right to data access rather than rely on a direct sta­tu­to­ry claim.

In other words: may a data hol­der demand upfront com­pen­sa­ti­on befo­re making data available — or must the data be pro­vi­ded first?

I take the view that the data access obli­ga­ti­ons estab­lished under the Data Act con­sti­tu­te direct sta­tu­to­ry claims. This posi­ti­on is alre­a­dy con­tes­ted in some ear­ly com­men­ta­ries. I will return to this in the next edi­ti­on of the com­men­ta­ry and, in the mean­ti­me, explo­re key argu­ments here.

Background

The pur­po­se of the Data Act is to pro­mo­te the estab­lish­ment of func­tion­al data mar­kets. To this end, Chap­ter III sets out rules for access and use, inclu­ding obli­ga­ti­ons of data hol­ders under Artic­le 5. The­se rules also app­ly to other legal obli­ga­ti­ons of data pro­vi­si­on. (Artic­le 12 expli­cit­ly excludes the appli­ca­ti­on of this chap­ter to obli­ga­ti­ons under com­pe­ti­ti­on law.)

Artic­le 8 intro­du­ces the prin­ci­ple of FRAND terms in the con­text of data access obli­ga­ti­ons. Artic­le 9 regu­la­tes the com­pen­sa­ti­on mecha­nisms available to data hol­ders. Howe­ver, the Data Act does not estab­lish a stan­da­lo­ne right for the data hol­der to cla­im com­pen­sa­ti­on. Rather, Artic­le 9 sets the frame­work for agree­ments on compensation.

Arguments against an upfront obligation for data holders

It might be argued that:

• No express obli­ga­ti­on to per­form first is found in the text of the Data Act.
• Free­dom of con­tract allows par­ties to agree to advan­ce pay­ment, as long as the terms remain FRAND-compliant.
• The con­cept of “reasonable com­pen­sa­ti­on” could be inter­pre­ted as imply­ing a pro­tec­ti­ve mecha­nism for data hol­ders, allo­wing for upfront pay­ment to miti­ga­te default risk.
• The data hol­der may other­wi­se bear the enti­re insol­ven­cy risk — a risk which some belie­ve should be pas­sed on to the reci­pi­ent at least in part.

From this view, an upfront obli­ga­ti­on might only app­ly in nar­row cases, and advan­ce pay­ments could be jus­ti­fied under FRAND prin­ci­ples — unless such a request is found to be unfair.

Artic­le 9(4) sup­ports this limi­ta­ti­on: for some cate­go­ries of data reci­pi­ents, even a pro­por­tio­na­te advan­ce pay­ment may be dee­med unfair. Simi­lar­ly, cre­dit­wort­hi­ness checks on such reci­pi­ents may vio­la­te FRAND.

Arguments in favour of a primary obligation for data holders

The text its­elf alre­a­dy pre­sup­po­ses the exis­tence of a data access obli­ga­ti­on. Artic­le 8(1) states:

“Whe­re a data hol­der is requi­red to make data available to a data reci­pi­ent, the data hol­der shall agree with the data reci­pi­ent the arran­ge­ments for making the data available and…”

This impli­es that the obli­ga­ti­on to pro­vi­de data alre­a­dy exists — the agree­ment governs the moda­li­ties, not the exis­tence of the obli­ga­ti­on. Nota­b­ly, only the data hol­der is sub­ject to an obli­ga­ti­on; the reci­pi­ent is not.

Artic­le 9(1) rein­forces this:

“Any com­pen­sa­ti­on agreed bet­ween a data hol­der and a data reci­pi­ent for making data available […] shall…”

This phra­sing impli­es that com­pen­sa­ti­on is not a pre­con­di­ti­on, but rather an ele­ment to be addres­sed if an agree­ment is concluded.

From a struc­tu­ral per­spec­ti­ve, this means that the exis­tence of the obli­ga­ti­on (“whe­ther”) is sett­led by law, while the moda­li­ty (“how”) is open to con­trac­tu­al arran­ge­ments. A model that makes access con­di­tio­nal upon pri­or pay­ment could its­elf be dee­med unfair — par­ti­cu­lar­ly for reci­pi­ents lis­ted in Artic­le 9(4).

The pur­po­se of the Data Act is not to gua­ran­tee com­pen­sa­ti­on to data hol­ders but to ensu­re func­tio­ning data mar­kets. While full uncom­pen­sa­ted access is not expec­ted, even a sys­tem with pri­ma­ry data hol­der obli­ga­ti­on does not pre­clude com­pen­sa­ti­on — it only shifts the risk allocation.

This risk is fur­ther miti­ga­ted by Artic­le 11, which allows data hol­ders to invo­ke reme­di­al mecha­nisms in cases of abu­se or decep­ti­on — for exam­p­le, if the data reci­pi­ent mis­re­pre­sen­ted their wil­ling­ness or abili­ty to pay. Hence, the legi­ti­ma­te inte­rest in deman­ding advan­ce pay­ment is sub­stan­ti­al­ly weakened.

Practical Implications

The­se con­side­ra­ti­ons do not exclude com­pen­sa­ti­on — they mere­ly con­cern the timing of per­for­mance. That is why Artic­le 9 alo­ne can­not resol­ve the issue; Artic­le 8 and the fair­ness test for con­tract terms play a cru­cial role.

Data hol­ders may still jus­ti­fy advan­ce pay­ment in spe­ci­fic cir­cum­s­tances or pro­tect them­sel­ves using tech­ni­cal safe­guards. Howe­ver, the default posi­ti­on appears to requi­re per­for­mance prior to or inde­pendent­ly of payment.