Four Freedoms

Dubrovnik, 4 June 2009

Goods• Two way street, access to Community market for Croatian products

and access for Community products to Croatian market

• Articles 23-25 Customs union – most obvious forms of protectionism occur through customs duties/charges having equivalent effect (charges made on goods crossing a border)

• Articles 90-93 Discriminatory tax provisions (internal fiscal policies of States)

• Articles 28-31 Imposition of quotas or measures having equivalent effect

EC Treaty rules• Article 28

“Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.”

• Article 29“Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.”

• Article 30 Exceptions -an exhaustive list of grounds for derogations: public morality, public policy: public security; protection of health and life of humans, animals or plants; protection of national treasures possessing artistic, historic or archaeological value; Provided restrictions are not discriminatory or a disguised restriction on trade between Member States

GoodsDassonville (Case 8/74): Measures having an effect equivalent to

quantitative restrictions

« All trading rules enacted by Member States which are capable of hindering , directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restriction ».

Cassis de Dijon (Case 120/78): Principle of mutual recognition

No Member State may prohibit the sale of a product lawfully manufactured or placed on the market in another MS, even if this product is manufactured according to technical or qualitative rules which are different from the rules which it imposes for its own products

GoodsIn other words: products lawfully manufactured or placed on the market in one Member State must be recognised in another Member States.

Examples from cases:German purity law for beer: rules banning additives in beer/”bier” (public health/consumer protection)Cheese must have a prescribed minimum fat content Margarine must be sold in cubic packaging so as to distinguish it from butterGovernment schemes to favour domestically produced goods over imports

Exceptions/mandatory requirements

Restrictions imposed by the importing Member State may not infringe Community law if they are justified by one of the Article 30 exceptions or by the mandatory requirements recognised by the European Court of Justice.

Article 30 EC - an exhaustive list of derogations: public morality, public policy: public security; protection of health and life of humans, animals or plants; protection of national treasures possessing artistic, historic or archaeological value; protection of industrial and commercial property.

Mandatory requirements - non-exhaustive list (but only to be applied where rules not discriminatory): fairness of commercial transactions and consumer protection, improvement of working conditions, protection of the environment.

The principles of necessity and proportionality also apply.

General rule

• The importation and marketing of products lawfully produced and marketed in another MS may only be restricted, in the absence of harmonization, by such national measures where they are necessary in order to satisfy mandatory requirements or derogations provided for by Article 30EC, are proportionate to the desired objective and the means of achieving that objective which least hinders trade.

• Burden of proof rests on the MS imposing restrictions.

Case law refinedECJ case law was re-examined in Keck following the increasing tendency of traders to invoke Article 28 as a means of challenging any rule whose effect was to limit their commercial freedom even when such rules were not aimed at products from other Member States.

In Keck, the traders were prosecuted for selling below cost, an activity outlawed in France at the retail (not wholesale) level. Other cases included “Sunday trading” cases.

In Keck, the Court considered that “selling arrangements” were outside Article 28 so long as they applied to all traders in the national territory and so long as they affected in the same manner in law and in fact the marketing of domestic products and imported products.

Other

• Note, if full harmonisation at Community level, no defences available under Article 30.

• Commission has developed new approach directives restricted to essential health and safety standards (e.g. toys, construction products, medical devices etc.).

• Various legislative measures now include obligations to notify Commission prior to adopting national measures that would affect free movement (Directive 98/34, Decision 3052/95, Regulation 2679/98).

• CE marking and standardisation bodies (CEN, CENELEC, ETSI) and notified bodies.

PersonsThe right to free movement means that every EU citizen is entitled to travel freely around the Member States of the European Union and to settle anywhere within the EU (Article 18 EC).

Directive 2004/38 consolidates updates and replaces most legislation governing rights of movement and residence of all previous categories of persons enjoying such rights (workers, self employed, students, etc) under the title of “citizens”.

Most significant judicial development of the concept of citizenship thus far has been the interpretation of Article 12 (non discrimination) and 18 of the Treaty in such a way as to extend the entitlement of EU nationals in host MS to equal treatment in access to various social benefits.

Freedom under SchengenSince the Schengen acquis was integrated into Community law, the concept of “free movement” is used in two senses: - in the traditional sense of free movement for EU citizens, i.e. the right to enter, stay and remain in another Member State;- in the sense of anyone being able to cross the internal borders without undergoing checks.

However, not all EU Member States participate fully in the Schengen arrangements and so it is not possible to travel across all EU internal borders without undergoing checks.

The Schengen provisions were not intended to regulate the right to long-term residence and work, neither for EU citizens nor for third-country nationals.

Article 39 - free movement of workers

• “Freedom of movement of workers shall be secured within the Community” Article 39.

• Rights, subject to justifications on the grounds of public policy, public security or public health.

• Court has gone beyond merely prohibiting direct or indirect discrimination on the basis of nationality and ruled that Article 39 applies to any obstacles that impede the free movement of workers (see Walrave and Koch, Bosman, Angonese).

Capital and payments - Articles 56-60

• Radically altered by TEU • “…all restrictions on the movement of capital between

MS and between MS and third countries shall be prohibited” Article 56(1)

• “…all restrictions on payments between Member States and between MS and third countries shall be prohibited” Article 56(2)

• Sanz de Lera ECJ notes that Article 56 has direct effect – a clear and unconditional prohibition for which no implementing measures are required – so can be relied on by individuals against State as well as against private individuals

Examples• For citizens, free movement of capital means the

ability to do many operations abroad, as diverse as opening bank accounts, buying shares in non-domestic companies, investing where the best return is, and purchasing real estate.

• National rules prohibiting the creating of mortgage in a foreign currency was in breach of Article 56 Westdeutsche Landesbank

• Restrictions on the acquisition and disposal of property (via prior administrative authorisation) were proscribed Konle v Austrian Republic

Exceptions Article 58• MS may apply provisions of their tax law which

distinguish between taxpayers who are not in the same situation with regard to place of residence or to place where capital is invested - Article 58(1)(a).

• MS may take measures to prevent infringements of national law in particular in the field of taxation and the prudential supervision of financial institutions or to lay down procedures for capital movement declarations for administrative or statistical purposes - Article 58(1)(b).

• but no arbitrary discrimination or disguised restrictions on trade - Article 58(3).

Exceptions in Articles 59 and 60

• Council can take safeguard measures with regard to third countries in exceptional circumstances where movements of capital to or from third countries cause or threaten to cause serious difficulties for EMU

• Unilateral actions may be taken against third countries by a MS in cases of serious political reasons and on grounds of urgency

ExceptionsExamples• Scientology International – national French law requiring

prior authorisation for capital investments that threatened public policy or security, could fall within Article 58(1)(b) exception. However, the particular French rule was too vague (did not specify the details of the threat).

• Commission v Belgium – a national rule vesting the Government with a “golden share” in gas and electricity companies allowing it to control later dispositions of strategic assets was justified under Article 58(1)(b) because it guaranteed energy supplies in event of a crisis and so within public security

Services/Establishment• Articles 43-48 EC on freedom of establishment

require the removal of restrictions on the right of individuals and companies to maintain a permanent or settled place of business in a Member State. – Establishment is defined as “the actual pursuit of an

economic activity through a fixed establishment in another Member State for an indefinite period”

• Articles 49-55 EC of the free movement of services require the removal of restrictions on the provision of services between Member States whenever a cross border element is present.

Establishment v services• Not the mere existence of an office in a MS but

rather the temporary or permanent nature of the economic activities.

• Logic is that services across a border are generally already subject to the law of the providing MS.

• Abuse or evasion theory: if you direct most or all services at the territory of a MS but maintain establishment in another “in order to evade its professional rules” in certain circumstances, that person may be treated as established and so fall within Article 43 rather than 49.

Lawyer establishment cases– Reyners, Dutch lawyer with Belgian qualifications refused access to Belgian

Bar on grounds of nationality 1974– Thieffry, Belgian lawyer whose Belgian qualifications were recognised by

French University in France was refused admission to training stage on the basis that he lacked a French degree (no justification allowed for such refusal) 1977

– Klopp, German lawyer refused admission to Paris bar on basis that he already maintained an office in another MS contrary to French rules 1984

– Vlassopoulou a Greek national with Greek law degree who had practiced German law in Germany for years, applied to Bar, was refused on basis that lacked the necessary qualifications (no German bar exams). Court held that authority must examine whether existing qualifications were equivalent.

– Gebhard, a German national against whom the Milan Bar took disciplinary proceedings for pursuing activity as avvocato in Italy on a permanent basis (without qualifications being recognised or admitted to Bar) 1995

For a national measure to survive…

• National measures liable to hinder or to make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must fulfill 4 conditions:– They must be applied in a non discriminatory manner– They must be justified by imperative requirements in

the general interest– They must be suitable for attaining the objective

pursued– And they must not go beyond what is necessary in

order to attain it

Services

• Will not apply to purely internal situations (but see DeLiege where Belgian judo player challenged Belgian selection rules – not excluded from doing so by lack of cross border basis, competitions in other MS, etc.)

• Kohll, requirement to get prior authorisation from social security institution was an unjustified restriction

• Watts – patient goes to another MS and pays for treatment, then claims reimbursement under NHS, Court considers this is a service under Article 49

• Humbel – Court considered that state funded education fell outside Article 49

Harmonising legislation

• Two important general pieces of secondary legislation dealing with services and establishment were adopted in 2005 an 2006;– a consolidating Directive on the recognitition of

professional qualifications which replace most of the previous and general sectoral legislation on this issue (Directive 2005/36/EC), and

– a general Directive on Services in the internal market (Directive 2006/123/EC).

Services Directive

• Covers both temporary service provision as well as freedom of establishment

• Retreat from “country of origin” for services to “country of destination”

• Points of single contact to be established• Series of exclusions of particular kinds of services

(negotiated out by EP)• Shorter list of mandatory requirements in Article

16 than ECJ has accepted but will the Court continue to allow the longer set of objective justifications?