European Union Internal Market Law and Beyond

European Union Internal Market Law and Beyond
Professors Daniele Gallo/Dimitry Kochenov Luiss Guido Carli University September-December 2019 European Union Internal Market Law and Beyond

General and practical information
Myself and yourselves Attendance et similia Signatures and active participation Written tests/exam Program: slides + notes + materials (+ book for clarification) – characters in bold/not bold Book: to buy or not to buy and where to find it? Which one? Detailed lectures (parts, chapters etc.) Rationale of being “frequentanti” Teaching assistants: Eugenio Olita, Caterina Mariotti, Paolo Fernandes, Marianna Haddah – see office hours Co-Chair: Dimitry Kochenov (University of Groningen) Homepage + learn.luiss.it (both updated every week) Fluency of English not required

Part I – Introduction to the course
Ch. 1 – Examples Roaming Voile Vivendi Barges Flight cancellations Access to the Bar General regulation on privacy Copyright directive Remarriage and catholic hospitals Ban of q-tips/cotton buds and straws Shop openings on Sundays Same-sex couples

EU substantive/advanced law
Part I – Introduction to the course Ch. 2 – Overview on the concept of EU internal market EU substantive/advanced law What is not substantive? EU ‘institutional’ law which means… Law of the market of the EU as the dynamic and evolving part of EU law vs EU institutional law (unanimity, long procedures etc.) Why dynamic and evolving? At the core lie the freedoms of movement What does “freedom of movement” actually mean? The great majority of EU law is about EU internal market, which represents the true revolution brought in the 50s in Europe Why revolution? The creation of a common/single/internal market as the only means to achieve peace and unify the markets of Europe and via the markets also the peoples Goods: first tool to pursue a common market – which law shall apply? Which standards? Law of the country of origin + mutual trust (recognition) + harmonization … but derogations Persons: crucial tool to pursue more than a common market – EU citizens, employees-workers, EU and non EU nationals seeking a job (economic migration), humanitarian protection Services and establishment (joint freedoms?) – self-employed (temporary or permanent?) Capitals – bank transfers, investments EU originality (supra-nationalism vs other regional systems): primacy + direct effect (individuals as subjects of law) + broad applicable law Van Gend en Loos, Costa and other crucial rulings are on the internal market Broad scope: market and beyond the market – freedoms of movement as pillar of the EU economic and social constitution (along with competition law) Creation of the market/regulation of the market through negative (elimination of barriers) and positive integration (adoption of EU legislation)

In force since 1st December 2009
Part I – Introduction to the course Ch. 3 – Brief remarks on the Lisbon Treaty In force since 1st December 2009 Crucial institutional changes introduced by the Treaty: two treaties of equal nature – TEU and TFEU for us: TFEU not anymore three pillars but a single framework Nice Charter with the same legal value of the treaties QMV extended in many areas greater parliamentary involvement No relevant amendments on the internal market per se

Part I – Introduction to the course
Ch. 4 – The internal market in context: the EU and its crisis of legitimacy For many decades the EU seen as something positive (no war, no borders, peace through the market)… and now? Immigration and BREXIT Immigration and refugees: is the EU still the “land of rights”? Is the EU grounded in the principle of solidarity? How to fight against irregular migration? How fighting against terrorism by respecting fundamental rights? BREXIT What implications for the UK and the EU in general and from the standpoint of the internal market? An example for other MS?

EU internal market law’s principal aims
Part II – Internal market and freedoms of movement Ch. 1 –The interplay between the two concepts more in depth EU internal market law’s principal aims Integrating the national markets of MS into a single market by removing barriers What is the idea behind it? The ordo-liberal idea of homo oeconomicus: more market ensures more well-being/freedom/peace Ricardo: optimal allocation of resources The market as the only means to achieve peace But: not only economic concerns, factors of production/not only homo oeconomicus, market in the strict sense Also family law, migration, public intervention in the economy and public services, human rights Examples (impact on daily life + beyond economic concerns): GMOs, TAV, family reunification, Erasmus, healthcare and patients, same-sex couples etc.

Part II – Internal market and freedoms of movement
Ch. 2 – Legal sources on the internal market in the TEU and in the TFEU TEU and TFEU: overview on the most relevant provisions Art. 26 TFEU Art. 114 TFEU Crucial legal basis for adopting EU legislation aimed at harmonizing (partly or exhaustively) different MS’ laws (removing obstacles to trade arising from national divergences) Almost unlimited competence to harmonize national laws in the filed of internal market (but what does market actually mean?) Constitutional base for positive integration through directives and other secondary law measures No unanimity -

Is harmonization also about prohibiting trade accross the EU?
Part II – Internal market and freedoms of movement Ch. 3 – Harmonization of laws and EU competence to legislate Is harmonization also about prohibiting trade accross the EU? Tobacco Directive saga Factual background and directive’s internal market purpose (non discrimination) Objections to the directive: minimal intra-State level and no distortions on competition/disguised health measure (Art TFEU) CJEU on the scope of Art. 114: not possible to harmonize primarily MS’s legislations in the field of healthcare but possible to integrate public health considerations into harmonizing measures (see Art TFEU) Tobacco Advertising II case The focus is only on radio, printed media and sponsorship of events (not anymore posters, parasols, ashtrays and other articles used in hotels, restaurants and cafés) + public health not the main objective The Court found the new directive valid

Preemption + progressive integration of non trade concerns
Part II – Internal market and freedoms of movement Ch. 4 – Harmonization revisited Preemption + progressive integration of non trade concerns Preemption: without an EU act it will be likely that MS would adopt different laws on the product, thus creating obstacles to trade Spain v. Council and protection of medicinal patents Vodafone on a EU regulation setting a maximum on mobile phone roaming charges Non trade concerns: consumer protection Seal Products on a EU regulation prohibiting the import of seal products into the EU Internal market purposes (some countries yes, some others not) or environmental/animal welfare considerations?

Non-economic interests and harmonization: Art. 114.3-5 TFEU
Part II – Internal market and freedoms of movement Ch. 5 – Non-economic interests and the internal market 2 big issues Non-economic interests and harmonization: Art TFEU Non-economic interests beyond harmonization: balancing between rules (internal market oriented) and exceptions (of public interest) Discriminations justified and restriction of access to the market permitted Derogations (in the Treaty)…for ex. public morality or health Mandatory requirements (case law)…for ex. environment or consumer protection Necessity and proportionality Non economic considerations

Part III – Free movement of goods
Ch. 1 – Legal framework Art. 28 ff. TFEU Why beginning with goods? They circulate more easily … First step towards greater integration … a precondition for building up the internal market (no goods no market) Easier to impose the freedom of movement in the field of goods (less sensitive area)

Ch. 2 – Customs Union Art. 28 and 29 TFEU Internal and external dimensions of customs union Art. 30 TFEU Absolute prohibition Not only customs duties – defined as such by the MS – but also charges having equivalent effect Bauhuis (7-11) Steinike (28) Economic/pecuniary charge (impact on the seller/producer)

Ch. 3 – Art. 34 TFEU Art. 34 TFEU on QR and MEQRs QR (rare) Limit on the amount of imports with different forms No pecuniary charge and no absolute prohibition MEQRs (more common) Not setting limits but same effects of a QR Dassonville: umbrella definition (de facto/indirect discrimination) Cassis de Dijon: product standards/rules (how goods are produced) (de facto/indirect discrimination) Rules requiring producers to change aspects of the physical product or its packaging before the selling (foodstuffs, alcohol, containers for soft drinks) Mutual trust + principle of the law of the country of origin Mandatory requirements Keck: selling arrangements (how goods are marketed/sold) Advertising, shop openings Prima facie legitimate measures

Part III – Free movement of goods Ch. 4 – Dassonville and beyond
Factual background No express discrimination but yes in reality there was a discrimination Indirect/de facto discrimination Form: any sort of measure, including administrative practices without a formal legal basis Examples: requirement to obtain a licence for importing goods, government campaigns encouraging consumers to purchase domestic goods etc. AGM concerning Italian vehicle lifts No de minimis Not also domestic situations: should Belgian authorities have required only to Belgian drinks prepared in Belgium to have a certificate from the town of origin, there would have been no problem at all Mathot Private actors, broad notion of State and disguised horizontal effect Apple and Pear Development Council Strawberries Schmidberger

Ch. 5 – Cassis and beyond Facts At that time no harmonization on alcohol Indistinctly applicable measures (not direct discriminations) Law of the country of origin and mutual trust Multiculturalism + different but equal Problems: vs local democracy (product quality?) … MS’ different conceptions of food, security etc. Ex.: Parma ham – it is not the meat but the procedure that qualifies ‘Parma ham’ … but: protected designations of origin and protected geographical indications PDOs/PGIs Justifications/mandatory requirements What kind of objectives? What kind of criteria (necessity, proportionality)?

Ch. 6 – Keck and beyond Sunday trading cases Too intrusive approach of the ECJ… Keck: need for a clearer differentiation between prohibited measures and non prohibited measures … between product requirements (characteristics of the products) and selling arrangements (how products are sold) The latter prima facie outside Art. 34 if they affect in the same way national and foreign products

Part III – Free movement of goods Ch. 7 – Justifications/public goods
Fair balance Once again: local democracy vs free market/side effects of globalization Art. 36 and mandatory requirements: regulatory interest No harmonization Non economic considerations Burden of proof on the State Proportionality: suitable/appropriate measure to achieve the goal (in principle) – necessary/not beyond what is necessary to achieve the intended outcomes (less restrictive means) Static vs dynamic Henn Gourmet

More than internal market in the strict sense
Part IV – Free movement of persons. EU citizenship Ch. 1 – General remarks and overview EU citizenship: rights and obligations associated with the status of EU citizen Who are EU citizens? More than internal market in the strict sense Maastricht: Art TFEU Not only political rights but above all Art , combined with Art. 18

Part IV – Free movement of persons. EU citizenship
Ch. 2 – The relationship between EU citizenship and national laws on national citizenships and the fundamental status of EU citizen EU citizenship as fundamental status Baumbast (not economically active citizens have a right to be resident) D’Hoop Freedom to attribute national citizenship (and EU: ius soli for instance) and limits on the loss Rottmann Art. 21 TFEU and citizenship directive 2004/38 Coman: citizenship’s rights prevail over MS’ discretionary powers in the field of family law Evolving interpretation of the term “spouse” and focus on the effectiveness of right to move and to reside in the EU

Right to move and the hierarchy of rights
Part IV – Free movement of persons. EU citizenship Ch. 3 – Right to move and family reunification Right to move and the hierarchy of rights Precondition for the exercise of other rights? Art Charter Static and dynamic citizens: internal situations not covered …. But Chen, Zambrano But McCarthy (residual criterion) and Dereci (fundamental rights and ECHR) Side effects on migration policy, ius soli etc. Cross border criterion + Zambrano criterion (infringement of a core of rights + obligation to leave EU)

Implementation by secondary law since 1960s Role of CJEU
PART V – FREE MOVEMENT OF WORKERS CH. 1 – GENERAL BACKGROUND AND RATIONALE General Background Articles TFEU Implementation by secondary law since 1960s Role of CJEU Rationale of free movement of workers, economic (optimal allocation of resources, maximization of work value) and social integration aspects (fostering a closer Union of the peoples of Europe). Workers’ protection and the internal market. Example: freedom of establishment and Embraco.

Article 45 (1) TFEU: the notion
PART V – FREE MOVEMENT OF WORKERS CH. 2 – RELEVANT TREATY PROVISIONS AND SECONDARY LAW ACTS IN THE FIELD Article 45 (1) TFEU: the notion Article 45 (2) (3) : non-discrimination (national treatment) and the rights enjoyed by workers in EU 1

Van Duyn (1974) – direct effect of (present) Article 45 TFEU
PART V – FREE MOVEMENT OF WORKERS CH. 3 –BENEFICIARIES – NOTION OF WORKER Van Duyn (1974) – direct effect of (present) Article 45 TFEU Beneficiaries of free movement: workers who are Union citizens, and, upon certain conditions, job-seekers, employers, retired workers Notion of worker under EU Law, irrelevance of unilateral national definition, focus on the key elements of the work relationship: an individual performing services for and under the direction of another person for remuneration (Lawrie Blum, 1986) Examples: part-time workers, paid trainees, etc.

The material scope: the necessity of a cross-border element;
PART V – FREE MOVEMENT OF WORKERS CH. 4 - DEFINING THE SCOPE OF APPLICATION The material scope: the necessity of a cross-border element; Addressees: States Non-State Actors Secondary law addressed to Non-State Actors Horizontal direct effect Bosman

Prohibition of direct discrimination, French Sailors, 1974
PART V– FREE MOVEMENT OF WORKERS CH. 5 - THE CONTENT UNDER CJEU CASE-LAW Prohibition of direct discrimination, French Sailors, 1974 Prohibition of indirect discrimination → residence requirements of the worker under CJEU case-law, Petersen 2008;

PART V – FREE MOVEMENT OF WORKERS CH. 6- PERMITTED JUSTIFICATIONS
Article 45 (3) Public policy, security, public health; Article 45 (4) Public Services exception: - the meaning and the ratio of the derogation, the reference to the exercise of public powers; - a qualified interpretation in a Commission Comunication (COM (2002) 694 fin ) : police, armed forces, fiscal authorithies, judiciary, diplomacy; sectors excluded (e.g. public transport, public utilities, civil research, education, radio and television services); Necessity and Proportionality Test

Ch. 1 – Scope of the two freedoms and legal framework
Part VI – General remarks on free movement of services and freedom of establishment Ch. 1 – Scope of the two freedoms and legal framework Vs workers (employed) Self-employed persons: no subordination, not directed by an employer, no remuneration/salary as a compensation for such subordination Self-employed persons who move on temporary basis or establish their activities on permanent (also quasi…) basis in a MS different than that of origin Establishment is about services as well EU sources: TFEU + case law + secondary law (especially directives) Differences Principle of the country of origin or destination? Gebhard: establishment is characterized by a stable and continuous basis while under free movement of services activities are provided on a temporary basis Direct effect Horizontality – Viking and Laval: also private subjects

Ch. 2 – The concept of ‘service’
Part VI – General remarks on free movement of services and freedom of establishment Ch. 2 – The concept of ‘service’ Economic activity: remuneration + also trilateral relationship + functional criterion (irrelevant factors of national legal orders) Watts and the problem of finding a balance between patients’ rights and protection of welfare state

Stable and continuous basis – Gebhard
Part VII – Freedom of establishment Ch. 1 – Legal framework and personal scope Self employed persons and legal persons (companies, firms ex Article 54 TFEU) Direct effect + Articles 50 and 53 TFEU (positive integration through the adoption of legislative measures) Stable and continuous basis – Gebhard Periodicity, continuity and regularity of the activity…but also an office, rather than a branch or agency, i.e., exclusive presence in the host State is not needed

Part VII – Freedom of establishment
Ch. 2 – Material scope Art TFEU: distinction between primary and secondary establishment Primary: change of establishment from the State of origin to a different State Secondary: once stablished in a State, opening up a second centre of activity in another State Discriminatory measures on the basis of nationality Direct and indirect Direct discrimination Reyners: direct effect – a Dutch national, with a Belgian diplome, excluded from the Belgium Bar may invoke directly Article 49 Indirect discrimination Gebhard Thieffry: a Belgian national was refused admission to training at Paris Bar owing to the lack of a degree in French Law – Member States shall evaluate the qualification to exercise a profession acquired in another Member State if it is equivalent Both: direct and indirect Factortame Non discriminatory Commission v. Greece

Part VII – Freedom of establishment Ch. 3 – Companies: personal scope
Articles 49 and 54 TFEU Profit oriented legal persons and formed in accordance with the national law of a MS Definition of companies National criteria and MS’s autonomy in the field Two main theories exist: real seat theory (physical link between the national legal personality of the company and its primary residence) and incorporation theory (legal personality attributed to all companies properly incorporated under national law, i.e. in the State of their registered office) Home State restrictions and differences with the treatment of natural persons: Daily Mail…unlike for natural persons, companies are creatures only of national law, not of EU law Host State restrictions: is EU law deferent only to home State definition of company or also to the definition of the host State? Centros: Article 54’s reference to the formation of a company “in accordance with the law of a Member State” exclusively refers to the law of the State in which the company was first incorporated Freedom left for States only for the determination of the formal status of the company

Part VII – Freedom of establishment
Ch. 4 – Companies: the problem of regulatory (and fiscal) competition Due to the freedom for companies to choose in which jurisdiction to incorporate their business, there is now regulatory competition between national legal orders Letter-box companies and ‘Delaware effect’: how to deal with this phenomenon? Some States claimed that companies must reincorporate in the host State if the company has its central seat of business there…but Centros Abuse of rights doctrine but restrictive interpretation, as explained in Centros The CJEU, by not demanding any economic link between the State of incorporation and the company, closed off the abuse of rights doctrine for letter box companies … but see the Caldbury Schweppes case

Part VII – Freedom of establishment Ch. 5 – Exemptions and Derogations
Articles 51 and 52 TFEU Notaries case and Art. 51 TFUE: ex ante exemption Commission v. Greece: express derogation Justifications: non written derogation Gebhard Servizi ausiliari Measures must be adequate and proportionate

Part VIII – Free movement of services
Ch. 1 – Legal framework Art. 56 and 57: scope of the freedom Cross border but not always physical movement (TV, banking services) Not only the provider but also the recipient (tourism) Restrictions on the movement of services Direct and indirect discriminations are prohibited Not only measures which prohibit but also impede or render less advantageous for a foreign provider to deliver his or her service in another MS Direct: Cowan (tourism and compensation only for French citizens) Indirect: Van Binsbergen (habitual residence not an admissible requirement) and also Cowan Non discriminatory measures Sager

Exercise of official authority Express derogation
Part VIII – Free movement of services Ch. 2 – Exemptions and derogations Art. 62 TFEU Exercise of official authority Express derogation Example: Commission v. Spain Mandatory requirements/non written justification Consumer’s protection, intellectual property rights, cultural and artistic heritage, etc.

Directive on professional qualifications 2005/36
Part IX – Recognition of diplomas and professional qualifications under free movement of services and establishment Ch. 1 – Legal framework Mutual Recognition Approach: Directive 89/48/CE on general system for the recognition of higher education diplomas awarded on completion of professional education All regulated professions with at least three years of university training Mutual Trust: a Member State must recognize the entry in a profession of a national who holds the qualification provided for by another Member State Member States, if deem inadequate the training or qualification, have the power to impose additional training requirements (adaptation period, aptitude test etc.) Directive on professional qualifications 2005/36 Services: articles 6, 7 and 9 Establishment: general regime in Art (non automatic recognition – compensation measures such as traineeship) + specific sectors Lawyers: Directive 98/5/EC (art. 2, 4 and 10) Torresi

Part X – Free movement of capitals and payments
Ch. 1 – General remarks and legal framework Main goal: maximization of capital flows Slow process of liberalization due to the link with the stability of economic and monetary policy of MS and the risks of capital drain and positive integration through Directive 88/361/EEC Maastricht Treaty and introduction of amendments to free movement of capitals provisions Notion(s) of capital (cross border activities) Foreign direct investment (FDI), including investments which establish or maintain lasting links between a provider of capital (investor) and an enterprise (setting up, taking-over, or acquiring relevant stakes in a company or institution) … establishment rules do not apply anymore to this kind of investments; real estate investments or purchases; securities investments (e.g. in shares, bonds); granting of loans and credits and all other operations with financial institutions Capitals and payments Luisi and Carbone Art. 63 TFEU Direct effect (vertical and horizontal) in Sanz de Lera Direct and indirect discrimination, and non-discriminatory measures Also extra EU investments ... Vs other freedoms of movement where a territorial link with the European territory is needed Art. 65 and 66 TFEU

Part X – Free movement of capitals
Ch. 2 – Golden shares and the issue of sanctions Golden shares Measures liable to dissuade investors to invest in that MS (State’s authorization for the acquisition of shares in companies established in its territory or for the carrying out of operations/transfers etc) are prima facie prohibited Art. 65.1b) and other general interest exceptions Commission v. Belgium Only Belgium…a national rule vesting the government with a golden share in gas and electricity companies that had been privatized, enabling it to control certain subsequent dispositions of strategic assets, deemed to fall within Art. 651b because it guaranteed energy supplies in the event of a crisis and hence fall under public security The case of extra-EU golden shares (SOEs and SWFs) Proposal on FDI screening Sanctions Article 215 TFEU vs non-EU States Article 75 TFEU vs individuals From Kadi (and use of Art. 352 TFEU – implied powers doctrine) to the Lisbon Treaty

End of lessons THANKS! GOOD LUCK!

European Union Internal Market Law and Beyond

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