Freedom Of Services Notes
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Freedom Of Services Revision
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EU Law: freedom of services
Freedom to provide services (FTPS)—governed by Art 56 and 62 TFEU. Relationship between freedom of establishment (Art 49); and freedom to provide services (Art 56)
In many respects, FTPS is the counterpart to FoE: applies to same entities, echoes many of same principles governing both; even shares some of same provisions.
Content of treaty provisions is similar; and ECJ has interpreted them in similar ways.
However, key difference-temporal character: FTPS differs from FOE in a key respect: establishment entails a permanent present; but provision of services entails only a temporary presence, or no presence at all. Article 56
Applies to: o Self-employed persons (defined in Jany, actually a case relating to FTPS) same as for FoE. o Companies & Firms (Art 62 applying Art 54 to all matters covered by FTPS)
(though Art 56 makes clear: the provider of services must already have a place of establishment within the EU, and must be a national of a MS).
Prohibits: o Restrictions on Freedom to provide services.
Includes: o Right to receive services (Van Binsbergen).
The general right in Art 56 supplemented by Art 59 TFEU: which provides for directives to be issued for the purpose of liberalising a particular service.
And the power to issue directives for mutual recognition of professional qualifications is also made applicable to FTPS by Art 62 applying Art 53 TFEU. Art 54, direct effect (Van Binsbergen)
Similar issues to Freedom of Establishment under Art 49 explored by ECJ in Reyners, re unconditionally.
Unconditional?: similar issues to FOE under Art 49. Original EEC Treaty gave right of FTPS under Art 56 conditional upon a programme being drawn up to abolish restrictions to the freedom, and directives being enacted to implement the programme (Art 59 opening words: 'within the framework of the provisions set out below'). Treaty of Rome 1957 placed an obligation on the Council, acting on proposals from the Commission, to draw up a general
programme for abolition of restrictions on FTPS. Seemed to make the implementation of FTPS conditional upon the enactment of positive legislative measures. o This seemed to make the right incapable of fulfilling the 'unconditional' requirement of Van Gend. o However, Treaty also provided for the abolition of restrictions to FTPS to be completed by end of the transition period. The deadline had passed, without that objective being achieved.
ECJ in Van Binsbergen v Bestuur: Art 56 capable of having direct effect since the end of the transition period, at which date restrictions on FTPS should have been abolished. What constitutes a service? (Art 56 only applies to services)
Services differ from 'establishment' under Art 49: services can be temporarily pursue activity in MS (Art 57): a person providing may, to do so, temporarily pursue the activity in the MS (Art 57) where the service is provided.
i.e. must maintain a temporary presence in the MS to provide a service there.
i.e. temporary presence OR no physical presence in MS of service.
So if there's a permanent presence in a MS—Art 49, FOE, applies; if only temporarily presence, or no presence at all, then Art 56, FTPS, applies
Not just about 'duration': a presence in a MS, can manifest itself in a variety of ways, and patterns of presence & absence may be more complex.
So Gebhard (re distinguishing service from establishment), degree of temporality determined in light of: o Duration o Regularity o Periodicity o Continuity.
(2)-2nd requirement for a 'service', remuneration o Remuneration, Art 57: Services = those 'normally provided for remuneration'. o However, remuneration need not be paid by the person receiving the service, can be paid by a 3rd party (Deliege). o Deliege v Ligue Francophone de Judo, re Belgian judo competitor, re rules for partaking in international competitions: o Concerned a Belgian judo competitor. She complained she was being improperly prevented by Belgian judo authorities from taking part in international competitions. o Belgian judo authorities argued: Art 56 did not apply, because she was an amateur competitor .
o ECJ disagreed. HELD: EC rejected argument that Art 56 could not apply because she was an amateur. o Held: sporting activities fall within Art 56, even if some services are not paid for by those for whom they are performed. The remuneration can be paid by a 3rd party: o by participating in sporting events, amateur athletes allow the organisers of the events to sell tickets, to sell broadcast rights, and advertising; in turn, the athletes themselves may be paid by their sponsors. rd (3) 3 requirement (Steymann)—'Genuine and effective economic activity', not merely one which is marginal or ancillary (Steymann). Same as for workers. o An activity pursued for remuneration will be regarded as an economic one (Steymann). o Thus, in HM Customs & Excise v Schindler (1994), ECJ held that lotteries are an economic activity, as they are services provided for remuneration constituted by the price of the ticket, and remuneration = economic activity (from Steymann). o [[several MSs had argued that lotteries are not a service, as are controlled by public authorities in the public interest, and have no economic purpose since are based on chance—
ECJ rejected this argument.]]
Examples of services
Art 57 outlines 4 types of service coming under Art 56: o (a) Industrial activities o (b) Commercial activities o (c) Craftsmen o (d) Professionals
Other examples, this list not exhaustive, ECJ broad approach: o Abortions (Grogan)
Society for Protection of Unborn Children v Grogan (1991): HELD: the medical termination of a pregnancy, performed for remuneration in accordance with law of MS, = a service.
Case arose from proceedings in Ireland, where abortions are prohibited by the constitution, to prevent the officers of student associations from distributing info to students re location of abortion clinics in UK.
ECJ refused to engage in an assessment of the morality of abortions [it was not for it to substitute its own assessment for that of the legislature in the MS]. o Prostitution (Jany)—jany v Staatssecretairs van Justittie (2001)
ECJ refused to engage in the question of morality of these activities (abortions and prostitution). It held they were services.
Prostitution = a service. o Sport (Deliege). o But NOT state education (Humbel): state education is not a service. Because the state provides an education system to fulfil its duties towards its own population; it does not do so in order to make a profit. o Further, education system is generally funded from the public purse, not by pupils or their parents.
Matters falling outside the scope of Art 56 TFEU
Three matters falling outside Art 56:
1. Official authority exemption (Art 62 applies Art 51).
2. (Art 57(1)): Where provisions for goods, capital or persons govern (qualified in Omega)
3. Purely internal situations
(1) Official authority exemption (Art 62 applies Art 51,
[[same rules as FoE, Reyners for definition of official authority (p,p,p) and 'direct & specific' connection]]
o Same exemption provided by Art 51 TFEU for FoE o Is extended to FTPS by Art 62 TFEU, which applies Art 51 to FTPS. o So principles laid down re public service exemption in Reyners, in FoE lecture, apply equally to FTPS. o Removed activities from scope of Art 56 where they are connected in a MS, even occasionally, with the exercise of official authority. o Principles same as governing FoE. o Indeed, both Commission v Greece (1991) (road traffic expert witnesses not included) and Commission v Italy (1994) (computerisation system for lotteries not included), addressed in FoE, concerned the application of the exception not only under FoE Art 49, but also FTPS under Art
(2) Art 57(1)): Where provisions for goods, capital or persons govern (qualified in Omega) o Art 57(1): Art 56 will only apply in so far as the services are not governed by the provisions relating to free movement of goods, capital or persons. o Hence Art 56 is a residual category of freedom. o But Omega: Art 56 will still govern, where the other applicable freedom is entirely secondary to the FTPS—
re ban on laser-combat games. o Omega involved a ban on laser combat games—players attempting to shoot each other with laser guns. Omega was
providing the games as a franchisee, under an agreement with a British company. o The ban had effect of impeding the supply of services provided by that British company to Omega, under the franchise agreement. o However, it also had effect of restricting the import of equipment used in the games (a restriction on free movement of goods). o ECJ: any restriction on the imported goods (on free movement of goods), was secondary to the primary restriction on the supply of services under the franchise agreement. So Art 56 was applicable. o FTPS subordinate to FoE --Gebhard v Consiglio (1995): the chapters in the Treaty of free movement of workers, FoE, and FTPS, are mutually exclusive; and the FTPS is subordinate to FoE.
(3) Purely Internal situations (Art 56) o Art 56: Follows from Art 56 which prohibits FTPS only 'in respect of nationals of MSs who are established in a MS other than that of the person for whom the services are intended'. (Art 56 = nationals of MS who are established in another MS). o Hence Art 56 doesn't apply to purely internal situations, confined in a single MS. o Procureur du Roi v Debauve (1980), no Art 56 if purely internal situation. ECJ: Art 56 does not apply to activities whose relevant elements are confined to a single MS. o However, ECJ has held art 56 to be applicable where there is a cross-border element:
Deliege (re judo athlete, participate in judo competitions in another MS): sufficient that an athlete would participate in a competition in another MS. Notwithstanding that the dispute was between a judo competitor and her own national judo federation of the same MS.
De Coster v College des Bourgmestre (2001), re tax on satellite dishes—would reduce broadcasts from other MSs: concerned a local tax imposed by a municipal council on ownership of satellite dishes in its locality. Art 56 held to be applicable, because satellite dishes could receive broadcasts from other MSs, so the effect of a tax on them would have effect of: dissuading ppl from having satellite dishes, and thus receiving the broadcast services from other MSs.
In both above 2 cases, the provider of the service, and the recipient, were in different MSs.
However, the provider & recipient can be based in the same MS, as long as there is still a cross-border element to the service: Hubbard v Hamburger (1993), re UK solicitor, UK client, bringing a claim in Germany 5
courts, re German law requiring security for costs, was discrim on grounds of nationality: Concerned a solicitor in UK, acting as an executor of a will under English law. Cross-border dimension: he was seeking to bring a claim in the German courts, in relation to property in Germany, for the benefit of the beneficiaries under the will. Both the provider of the service (the solicitor), and the recipient (his client) were based in the same MS, the UK. But solicitor was able to rely on Art 56 to challenge a German rule, which required non-German nationals bringing claims in German courts to provide security for costs. Held this was a breach of Articles 18 and 56 TFEU. Was discriminatory on grounds of nationality.
What constitutes a restriction under Art 56?
The scope has expanded over time. On basis of Articles 56 (prohibits restrictions on FTPS in respect of nationals of MSs who are established in another MS of the person for whom the services are provided) and Art 57 (the person providing a service may temporarily pursue the activity in the MS under same conditions as nationals of that MS) , Arts 56 + 57 clearly prohibit measures which discriminate against service provides on basis of nationality, and on residence. Van Binsbergen v Bestuur (1974): extended not only to (1) discrimination based on nationality, but also (2) discrimination based on residence. o Re a Dutch law which provided that only persons established in the Netherlands could act as legal representatives there. This prevented Van Binsbergen from being represented by his choice of Dutch lawyer, who had initially been habitually resident in the Netherlands, but had later moved to Belgium. Belgium tried to prevent the lawyer's capacity to represent his client in court, on basis that only persons established in Netherlands could act as legal representative. o ECJ held: unlawful as it discriminated on basis of residence. Such a requirement (that legal representative must be established in the Netherlands) would deprive Art 56 of all useful effect and so was prima facie incompatible with that Article. Initially, ECJ reluctant to extend Art 56 to non-discriminatory measures which acted as obstacles to FTPS: o Societe General v Koestler (1978), re losses on Paris stock exchange through French bank, West German law about wagering contract - debt not recoverable, : a French bank had undertaken certain speculative transactions on the Paris stock
exchange, on behalf a German national living in France at first but subsequently moved back to Germany. German national refused to pay the losses which had been incurred as a result of the transactions. A West German court held these transactions were to be treated in the same way as a wagering contract, and so the debt was not recoverable under West German law. o ECJ: treated Articles 56 and 57 as prohibiting either direct or indirect discrimination against the service provider, and held that no such discrimination arose in this case as the West German rule applied equally to any service provider established in Germany. But, reluctance eroded, Extended in subsequent cases extended to non-discriminatory obstacles to FTPS. Commission v Germany (Insurance Services) (1986), re West German rules that agent/intermediary for insurance services must be established in Germany: o Concerned West German rules which provided that an insurance undertaking that wished to provide insurance services in West Germany through an agent or other intermediary, could only do so through an agent or intermediary who was both established in West Germany and authorised by West German authorities. o ECJ: Articles 56 and 57 TFEU prohibited not only discrimination against a provider of a service on grounds of nationality, but also 'all restrictions on his freedom to provide services imposed by reason of the fact that he is established in a MS other than that in which the service is to be provided'. o Whilst the principal aim of Art 57 was to enable the service provider to pursue his activities without discrimination, it did not follow from that Article that all national legislation applicable to nationals of a MS had to be applied in its entirety to the activities of undertakings established in other MSs. o This indicated that discrimination was not a necessary requirement for a measures to be 'restriction' under Art 56. Even non-discriminatory measures which applied without distinction to both domestic nationals and those established in other MSs, may still be prohibited if they acted as restrictions on the freedom of the foreign national to provide services. o On the facts, ECJ held: the West German rules were restrictions under Art 56. In particular, the requirement that the agent or intermediary be established in West German was held to negate the very idea of FTPS. Säger v Dennemeyer (1991), re need for licence to provide patent services in Germany: Put beyond doubt that Art 56 not confined to abolition of discriminatory obstacles, also applied to indistinctly applicable measures. o Art 56 applies to, any measure liable to: 7
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