7. Freedom of Establishment

Question 1

What is an Establishment?

Answer 1

Article 49 TFEU, has v Deff (Reyners) & horizontal Deff (Viking Line).

TEST: The person or business must have a physical permanent or semi-permanent presence in the MS (Insurance Services). This requires a “stable and continuous basis” (Gebhard) with “no foreseeable limit to its duration” (Steymann).
- buying premises or licenses can constitute evidence of permanence (Factortame).

Can be applied domestically if the person/business has not abused Community rights + a cross-border element exists (Asscher).

Question 2

Limitation: The Exercise of Official Authority

Answer 2

Found in Art 51 TFEU.

Official Authority = Authority that derives from the sovreignty of the state implying the power to enjoy special perogatives, public power, etc (Reyners (AG Miras))
- It must have a DIRECT + SPECIFIC connection to official authority. (Reyners).

Is interpreted narrowly. The following didn’t fall within Art 51 TFEU:

• The legal profession (Reyners)
• Computer services for a state lottery (Commission v Italy)
• Road Traffic Experts (Commission v Greece)

Question 3

Restriction on FofE

Answer 3

Restrictions on FofE are restricted by Art 49 TFEU.

Def: a national measure liable to “prohibit, impede, or render FofE less attractive” (Caixabank). SETS THE BAR VERY LOW for what a restriction can be.

Can be any of the following:

• DIRECT DISC (Reyners): disc on basis of nationality.
• IND. DISC. (Klopp, Thieffry): have the EFFECT of disc on basis of nationality.
• INDISTINCTLY APPLICABLE MEASURES (Gebhard, Caixabank): a non-disc. measure that prohibits, impedes or renders less attractive the exercise of FofE.

Question 4

Justifiability: Derogations

Answer 4

Relevant derogations for MS regarding FofE are found in Art 52(1) TFEU.

MS can derogate on grounds of PUBLIC POLICY, PUBLIC SECURITY OR PUBLIC HEALTH.

The derogation MUST be PROPORTIONATE and, it’s objective must not be solely economic (Kohll).

When the derogation is based upon Public Policy, there must be a genuine and sufficiently serious threat towards a fundamental interest of society (Comm v UK(Open Skies)).

Question 5

Justifiability: Imperative Requirements (the “Rule of Reason”)

Answer 5

A measure will be justified in restricting FofE where it is (Gebhard):

• NON-DISCRIMINATORY, not available to any disc. measures at all.
• Justified by an imperative requirement.
• Suitable for achieving the objective and
• Proportionate to achieving that objective.

EG. Only allowing pharmacists to open pharmacies on the grounds of public health was proportionate (Comm v Italy(Pharmacies)).

Question 6

Issues: Companies

Answer 6

Establishment of Companies (Art 54 TFEU)

• FofE includes the right to EST companies and self-emp., and the right not to be discriminated against (Factortame (No. 2)).
• The use of Right to Strike may infringe upon the FofE of companies if used disproportionately (Viking Line).

TO BE A COMPANY…

• must be making a profit (Art 54 + Steinhauser)
• Registered office, central admin. or principal place of business must be in a MS.
• must have been incorporated complying to the law of the relevant MS.
• –Incorporation Doctrine (UK): Co. formed where the registered office is.
• –Real Seat Doctrine (French): Co. formed where Head Office is.
• -Whichever doctrine applies, it will apply to the Co. across all MS, mutual recognition (Uberseering, Kamer van Koophandel).
• -Once est., all co. branches covered by Art 49 TFEU. Restriction of right to form branches is a breach of Art 49 (Centros). Right to set up branches (Inspire Art).

Corporate Taxes

• Disc Taxation of Co. branches in MS is a breach of Art 49 (Comm v France).
• Where national corporate taxes aren’t harmonised, may be able to restrict freedom without breach.
• lawful restrictions must be proportionate (M&S v Halsey).

Question 7

Issues: Recognition of Qualifications - EU

Answer 7

EU Qualifications
Principle of Mutual Recog. applies (Thieffry).
- Aim: ensure the adequacy of qualification whilst ensuring disc. not taken place.
- A MS must have OBJECTIVE reasons for not recognising a qualification (UNECTEF v Heylens).
- MS must take individuals EXPERIENCE into account if they lack appropriate qualification (Vlassopolou, Hocsman).

A MS may require further training to be undertaken if qualification isn’t equal to equivalent standard of the qualification in that MS (Bobadilla):

• Not equal to equivalent qualification,
• objectively justified, AND,
• It doesn’t require more training than necessary to reach required level.

Question 8

Issues: Recognition of Qualifications - Non-EU

Answer 8

Non-EU Qualifications
GR: no general right to mutual recognition or permission to practice (Tawil Albertini).
— For a MS to recognise a Non-EU Q, must undergo 3 years professional experience in the MS (D2005/36). No requirement for a MS to recognise a Q because another MS has.
- EXCEPTION 1: where an individual with non-EU Q gains experience in any MS, all MS must recognise the experience (Haim).
- EXCEPTION 2: a Q that involved training outisde of the EU must be recognised (Tennah-Durez):
—if the Q meets any relevant directive requirements AND
—the MS granting the Q recognises the Q’s training.

Question 9

Issues: Recognition of Qualifications - Professional

Answer 9

Governed by D2005/36.

• Art 10-15 categorise the levels of PQs.
• where Q is not covered by the Directive, case law should be followed.

MS may require applicants to complete aptitude tests or adaptation period (max. 3 yrs) where (Art 14(1) D2005/36):

• duration of training is one year shorter than that required by MS.
• training recieved covers VASTLY different material than Q’s required in MS.
• the profession has regualted professional activities that covers different matters.

MS must offer the choice between aptitude test or adaptation period (Art 14(1) D2005/36).

D98/5 = Lawyer Establishment Directive

Question 10

Issues: Social Benefits

Answer 10

Found within D2004/38.

• Self-emp. have RofR, even when not eco active, provided they don’t become a burden on the social system of the MS (Art 7(1)(a)&(b) D2004/38.
• UnionC in lawful residence are entitled to equal treatment with nationals of MS (Art 24(1) D2004/38).

Question 11

Issues: Lawyers

Answer 11

Lawyers may rely on 3 Directives to practice in another MS without being restricted from using their professional title.

• Lawyers Service Directive 77/249
• Lawyers Establishment Directive 98/5
• Recognition of Professional Qualifications Directive 2005/36.

Question 12

Limitations: Internal Matters

Answer 12

(Knoors)

The matter has to have a cross-border element. Otherwise does not really concern FofE and EU.