The Relationship between Four Market Freedoms and Fundamental rights Specialization Seminar in Human Rights, Winter/Spring 2007 Turku Law School / Åbo Akademi Tuomas Ojanen

The Four Market Freedoms Fundamentally fundamental principles of EU Law which have been invoked in an offensive mode against measures adopted by Member States susceptible of hindering the realization of the internal market (cf. the defensive function of fundamental rights in the EU’s constitutional structure Restrictions of market freedoms are, in principle, contrary to EU law unless there is an objective justification for these restrictions Criteria for assessing whether a restriction is justified: Non-discrimination (on the basis of nationality) Legitimate interest which is capable of justifying a restriction Proportionality – (a restriction must be necessary and proportionate; it is necessary to balance between the interests involved

The market freedoms-fundamental rights interface The four market freedoms feature as ”the rule” The protection of fundamental rights has traditionally emerged as one dimension of EU law only The more effectively a Member State wishes to protect fundamental rights, the more difficult it may be for that State to justify such restrictions on market freedoms

Recent Case-Law by the ECJ Recent case-law by the ECJ on the relationship between fundamental rights and the four market freedoms: Case C-112/00 Schmidberger, [2003] ECR I-5659; Case C-71/02 Karner [2004] ECR I-3025; Case C-36/02 Omega, [2004] ECR I-9609 Other case-law by the ECJ suggesting that fundamental rights are increasingly shifting into focus as a force and direction for European integration - C-432/04 Commission v Cresson [2006] ECR I-0000) - C‑540/03 Parliament v. Council.

Excursus: C-112/00 Schmidberger FACTS: A peaceful demonstration of limited duration on the Brenner motorway, found to be lawful as a matter of national constitutional law by national authorities An action by a company (Schmidberger) before the Austrian courts, seeking compensation from Austria, which the company considered to be liable for a restriction of the free movement of goods contrary to Community law

Schmidberger (national court) National court: It is necessary to determine whether the principle of the free movement of goods requires Member States to ensure free access to major trunk routes and whether that obligation prevails over fundamental rights, including the freedoms of expression and assembly in issue in this case Reference for a preliminary ruling by the ECJ under Art. 234EC

Schmidberger (the reasoning of the ECJ) The free movement of goods is one of the fundamental principles of the Community Any restriction of that freedom must be eliminated as between the MS. Where a MS abstains from adopting the measures required to deal with obstacles to intra-Community trade it may be held liable, even if they are not caused by the State and result from actions taken by private individuals the fact that Austria did not ban a demonstration which closed that motorway for almost 30 hours is a restriction of intra-Community trade in goods within the Union and is, in principle, incompatible with Community law unless there is an objective justification for that restriction.

Schmidberger (the reasoning of the ECJ) In assessing whether that obstacle to free movement may be justified it is necessary to take into consideration the objective pursued by the national authorities in considering whether to grant authorisation In this case, the respect for the demonstrators' fundamental rights of freedom of expression and freedom of assembly guaranteed by the Austrian Constitution and the European Convention of Human Rights (ECHR) It is necessary in such a situation to weigh the interests involved - the protection of the freedom of expression and assembly, on the one hand and compliance with the free movement of goods, on the other - and, having regard to the specific factors submitted for its attention, to decide whether a fair balance between those interests was struck.

Schmidberger (the reasoning of the ECJ) The demonstrators exercised their rights of expression and assembly peacefully and within the limits of the law; they took care to warn the road users concerned on both sides of the border in good time; and they blocked access to a single route, on a single occasion and for a limited period, which enabled the Austrian authorities to pass on the information in turn and to take accompanying measures to limit, as far as possible, the disruption to road traffic (e.g. by setting up alternative routes) The wide margin of discretion which must be accorded to national authorities in the matter

Schmidberger (the conclusion of the ECJ) The national authorities were reasonably entitled to conclude that the legitimate objective pursued by that demonstration could not be achieved by measures less restrictive of Community trade. The authorization of that demonstration did strike a fair balance between safeguarding the fundamental rights of the demonstrators and the requirements of the free movement of goods. The Austrian authorities cannot be said to have committed a breach of Community law such as to give rise to liability on the part of the Member State concerned.

Concluding Remarks on Schmidberger Confirms that a Member State may justify imposing certain restrictions on the market freedoms where a Member State seeks to protect fundamental rights recognized in Community law, the Member State necessarily pursues a legitimate objective The crucial element is balancing between market freedoms and fundamental rights “Balancing” does not include a strict examination of necessity, and a Member State enjoy a wide margin of discretion – the Member States are not too strictly obliged to respect the market freedoms, provided that the restriction is not discriminatory and is reasonably linked to the protection of fundamental right The protection of fundamental rights may justify greater restrictions on the four market freedoms than other restrictions

Fundamental Rights in the Current State of Evolution of EU Law Do the four market freedoms still feature as “the rule”? Do fundamental rights still remain construed as exceptions to market freedoms even in the current state of evolution of EU law? The old “market-oriented paradigm” is already too weak to predominate so powerfully than previously, but the new one based on the effective protection of fundamental rights is still too weak and controversial to assert itself completely Future challenges: - The clarification of the status of fundamental rights in EU law, especially in relation to market freedoms - The need for new understanding of the functions of fundamental rights within the EU (fundamental rights as a set of positive obligations, as a mandate to fulfill) - The need to improve the preventive and retrospective dimension of compliance of the EU and its Member States with fundamental rights

The Reasoning of the ECJ in Schmidberger Case C-112/00 Schmidberger, [2003] I-5659 76 In the present case, the national authorities relied on the need to respect fundamental rights guaranteed by both the ECHR and the Constitution of the Member State concerned in deciding to allow a restriction to be imposed on one of the fundamental freedoms enshrined in the Treaty. 77 The case thus raises the question of the need to reconcile the requirements of the protection of fundamental rights in the Community with those arising from a fundamental freedom enshrined in the Treaty and, more particularly, the question of the respective scope of freedom of expression and freedom of assembly, guaranteed by Articles 10 and 11 of the ECHR, and of the free movement of goods, where the former are relied upon as justification for a restriction of the latter. 78 First, whilst the free movement of goods constitutes one of the fundamental principles in the scheme of the Treaty, it may, in certain circumstances, be subject to restrictions for the reasons laid down in Article 36 of that Treaty or for overriding requirements relating to the public interest, in accordance with the Court's consistent case-law since the judgment in Case 120/78 Rewe-Zentral (Cassis de Dijon) [1979] ECR 649.

Schmidberger... 79 Second, whilst the fundamental rights at issue in the main proceedings are expressly recognised by the ECHR and constitute the fundamental pillars of a democratic society, it nevertheless follows from the express wording of paragraph 2 of Articles 10 and 11 of the Convention that freedom of expression and freedom of assembly are also subject to certain limitations justified by objectives in the public interest, in so far as those derogations are in accordance with the law, motivated by one or more of the legitimate aims under those provisions and necessary in a democratic society, that is to say justified by a pressing social need and, in particular, proportionate to the legitimate aim pursued (see, to that effect, Case C-368/95 Familiapress [1997] ECR I-3689, paragraph 26, Case C-60/00 Carpenter [2002] ECR I-6279, paragraph 42, and Eur. Court HR, Steel and Others v. The United Kingdom judgment of 23 September 1998, Reports of Judgments and Decisions 1998-VII, § 101).

Schmidberger... 80 Thus, unlike other fundamental rights enshrined in that Convention, such as the right to life or the prohibition of torture and inhuman or degrading treatment or punishment, which admit of no restriction, neither the freedom of expression nor the freedom of assembly guaranteed by the ECHR appears to be absolute but must be viewed in relation to its social purpose. Consequently, the exercise of those rights may be restricted, provided that the restrictions in fact correspond to objectives of general interest and do not, taking account of the aim of the restrictions, constitute disproportionate and unacceptable interference, impairing the very substance of the rights guaranteed (see, to that effect, Case C-62/90 Commission v Germany [1992] ECR I-2575, paragraph 23, and Case C-404/92 P X v Commission [1994] ECR I-4737, paragraph 18). 81 In those circumstances, the interests involved must be weighed having regard to all the circumstances of the case in order to determine whether a fair balance was struck between those interests. 82 The competent authorities enjoy a wide margin of discretion in that regard. Nevertheless, it is necessary to determine whether the restrictions placed upon intra-Community trade are proportionate in the light of the legitimate objective pursued, namely, in the present case, the protection of fundamental rights.

Omega 35 Since both the Community and its Member States are required to respect fundamental rights, the protection of those rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by Community law, even under a fundamental freedom guaranteed by the Treaty such as the freedom to provide services (see, in relation to the free movement of goods, Schmidberger, paragraph 74). 39 In this case, it should be noted, first, that, according to the referring court, the prohibition on the commercial exploitation of games involving the simulation of acts of violence against persons, in particular the representation of acts of homicide, corresponds to the level of protection of human dignity which the national constitution seeks to guarantee in the territory of the Federal Republic of Germany. It should also be noted that, by prohibiting only the variant of the laser game the object of which is to fire on human targets and thus ‘play at killing’ people, the contested order did not go beyond what is necessary in order to attain the objective pursued by the competent national authorities. 40 In those circumstances, the order of 14 September 1994 cannot be regarded as a measure unjustifiably undermining the freedom to provide services.

Limitations on Fundamental Rights Case C-71/02 Karner, [2004] I-3025 50. Whilst the principle of freedom of expression is expressly recognised by Article 10 ECHR and constitutes one of the fundamental pillars of a democratic society, it nevertheless follows from the wording of Article 10(2) that freedom of expression is also subject to certain limitations justified by objectives in the public interest, in so far as those derogations are in accordance with the law, motivated by one or more of the legitimate aims under that provision and necessary in a democratic society, that is to say justified by a pressing social need and, in particular, proportionate to the legitimate aim pursued (see, to that effect, Case C-368/95 Familiapress [1997] ECR I-3689, paragraph 26; Case C-60/00 Carpenter [2002] ECR I-6279, paragraph 42; and Schmidberger, cited above, paragraph 79).

Karner... 51. It is common ground that the discretion enjoyed by the national authorities in determining the balance to be struck between freedom of expression and the abovementioned objectives varies for each of the goals justifying restrictions on that freedom and depends on the nature of the activities in question. When the exercise of the freedom does not contribute to a discussion of public interest and, in addition, arises in a context in which the Member States have a certain amount of discretion, review is limited to an examination of the reasonableness and proportionality of the interference. This holds true for the commercial use of freedom of expression, particularly in a field as complex and fluctuating as advertising (see, to that effect, Case C-245/01 RTL Television [2003] ECR I-12489 , paragraph 73; judgments of the ECHR of 20 November 1989, Markt intern Verlag GmbH and Klaus Beermann, Reports of Judgments and Decisions series A No 165, paragraph 33; and of 28 June 2001, VGT Verein gegen Tierfabriken v Switzerland, Reports of Judgments and Decisions 2001-VI, paragraphs 69 to 70).