FREE MOVEMENT OF SERVICES AND THE RIGHT OF ESTABLISHMENT IN THE EU Prof. dr.sc. Iris Goldner Lang Faculty of Law, University of Zagreb

A RTICLE 49 TFEU (1) … restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. (2) Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 54, under the conditions laid down for its own nationals by the law of the country where such establishment is effected…

A RTICLES 56 AND 57 TFEU Art. 56(1) … restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended. Art. 57(1) concept services: “where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons ”. Art. 57(3) … the person providing a service may, in order to do so, temporarily pursue his activity in the Member State where the service is provided, under the same conditions as are imposed by that State on its own nationals.

N OTES 1) What is prohibited? - Art. 49 & 56 talk about “restrictions” and “same conditions” 2) Does Art. 49 give right only to EU citizens in a MS other than the MS of their nationality? 3) Does free movement of services apply only to the movement of service provider? (cross-border element) 4) Direct effect 5) Subsidiary nature

1) “R ESTRICTIONS ” I NTERPRETATION OF A RT. 49 & 56 TFEU  Originally interpreted as mainly prohibiting a MS from discriminating individuals or companies from other MSs   More recently, the CJ has held that Art. 49 and 56 prohibit any national measures which hinder or make less attractive the exercise of the right of establishment and free movement of services. → discrimination approach  obstacle approach market access test

“R ESTRICTIONS ” AND J USTIFIED L IMITATIONS Gebhard (C-55/94) Measures liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must fulfil four 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 securing the attainment of the objective which they pursue They must not go beyond what is necessary in order to attain it

E STABLISHMENT V. S ERVICES Establishment v services: permanent v temporary Establishment – stable and continuous basis on which the economic or professional activity is carried on S ervice - performance of economic activities on a temporary basis - duration,regularity,periodicity and continuity Example: a bank with an office in another MS: establishment, not services A bank which sells a product in another MS over the internet: services The fact that the provision of services is temporary does not mean that the provider of services may not equip himself with some form of infrastructure in the host MS (including an office, chambers or consulting rooms) in so far as such infrastructure is necessary for the purposes of performing the services in question.

“R ESTRICTION ” Same principle as Cassis de Dijon : non-discriminatory measures are caught “all measures liable to hinder or make less attractive the exercise of fundamental freedoms” – “to prohibit, impede, make less attractive” Again emphasis on “market access” Basic issue: to draw the line between what effectively restricts market access and what does not

I MPERATIVE R EQUIREMENTS Examples: Protection of workers ( Rush Portuguesa ) Consumer protection ( Schindler ) Maintenance of order in society ( Schindler ) Good reputation of financial sector( Alpine Investment ) Preservation of national historical and artistic heritage (C-180/89 Commission v. Italy ) Protection of recipients of services ( Van Wesemael ) Protection of intellectual property ( Coditel )...

3) F REE M OVEMENT OF S ERVICES W HO M OVES -C ROSS -B ORDER E LEMENT (1) Service provider (MS 1) → Service recipient (MS 2) (2) Service provider (MS 1) ← Service recipient (MS 2) (186/87 Cowan ) service (3) Service provider (MS 1) ↔ Service recipient (MS 2)

4) D IRECT E FFECT Vertical direct effect of Art /74 Reyners 36/74 Walrave and Koch (para. 17): “Prohibition of such discimination does not apply to the action of public authorities, but extends likewise to rules of any other nature aimed at regulating in a collective manner gainful employment and the provision of services” C-438/05 Viking (para. 65): “There is no indication in that case-law that could validly support the view that it applies only to associations or to organisations exercising a regulatory task or having quasi-legislative powers.”

V IKING L INE - F ACTS Viking is a Finnish ferry operator Suffers from Estonian competition: Finnish wages too high Seeks to ‘reflag’ the Rosella, to conclude new collective agreement with trade unions Finnish trade union and International Transport Federation take collective action Viking relies on the right of establishment

V IKING L INE - H ELD Trade union collective action not outside scope of Treaty provisions on establishment Right to take collective action is a fundamental right (see also Charter), but can be limited Balance must be struck: collective action justified in so far as ‘jobs or conditions of employment are jeopardised or under serious threat’

T HANK Y OU !