Chapter 5

Question 1

What articles?

Answer 1

Articles 49 - 55 TFEU

Question 2

What does Article 49 say?

Answer 2

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.

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, subject to the provisions of the Chapter relating to capital.’

Question 3

What is ‘self employed’?

Answer 3

Janu

• outside any relationship of subordination concerning the choice of that activity, working conditions and conditions of remuneration
• under that person’s own responsibility
• in return for remuneration paid to that person directly and in full

Question 4

What is ‘establishment’?

Answer 4

Permanent presence by a person, a firm or a company
(stable and continuous basis)

Steymann
- activities carried out without a foreseeable limit

Commission v Germany (Insurance Services)

• ‘…an insurance undertaking of another Member State which maintains a permanent residence in
• even if that presence does not take the form of a branch or agency, but consists merely of an office managed by the undertaking’s own staff or by a person who is independent but authorised to act on a permanent basis for the undertaking, as would be the case with an agency

Factortame II
concept of establishment ‘involves the actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period’.

Gebhard
- ‘The concept of establishment within the meaning of the Treaty … is a very broad one, allowing a EU national to participate, on a stable and continuous basis, in the economic life of a Member States other than his State of origin and to profit therefrom, so contributing to economic and social interpenetration with the Union, in the sphere of activities of self-employed persons.’
This case contrasted it to Services

Question 5

What does Steymann say?

Answer 5

• activities carried out without a foreseeable limit

Question 6

What happened in Commission v Germany (Insurance Services)

Answer 6

• ‘…an insurance undertaking of another Member State which maintains a permanent residence in
• even if that presence does not take the form of a branch or agency, but consists merely of an office managed by the undertaking’s own staff or by a person who is independent but authorised to act on a permanent basis for the undertaking, as would be the case with an agency

Question 7

What did Factortame II say?

Answer 7

concept of establishment ‘involves the actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period’.

Question 8

What did Gebhard say?

Answer 8

Gebhard
German national disciplined for using title with no recognition

Definition of Establishment
- ‘The concept of establishment within the meaning of the Treaty … is a very broad one, allowing a EU national to participate, on a stable and continuous basis, in the economic life of a Member States other than his State of origin….’

Contrasted against Services

1. Regularity
2. Periodicity
3. Continuity

4 Conditions for Imperative Requirements

Question 9

Article 49 and Direct Effect

Horizontal / Vertical

Answer 9

Reyners
Article 49 has been capable of having DE since the end of the transition period

Reyners - could bring a claim in the national courts against the Belgian Bar for refusing him entry solely because he was not Belgian.
Vertical Direct Effect

Wouters
Article 49 also applied at least to regulatory organisations and associations not governed by public law

Viking

• The Article could be relied upon against a trade union or group of trade unions.
• ambiguity as to whether or not a collective dimension is still required before Article 49 can have direct effect against a private party.

Question 10

What happened in Reyners

Answer 10

Reyners a Dutch national who had obtained his legal education in Belgium, was able to bring a claim in the national courts against the Belgian Bar for refusing him entry solely because he was not Belgian.
DE against the State vertically

Question 11

What did Wouters say

Answer 11

the Court of Justice had indicated that Article 49 also applied at least to regulatory organisations and associations not governed by public law

Question 12

What did International Transport Workers Federation v Viking Line ABP say

Answer 12

• This case arose from a decision by Viking Line to transfer the registration of its ferry from Finland to Estonia to reduce labour costs.
• The Union representing its Finnish employees (the ‘FSU’) and the International Transport Workers Federation (ITWF), which the Union was affiliated to, threatened strikes and boycotts.
• The Grand Chamber of the Court of Justice rejected the ITWF’s argument that Article 49 could only apply horizontally against organisations or associations exercising a regulatory task or having quasi-legislative powers. It held that the Article could be relied upon against a trade union or group of trade unions.
• it took into account the function of trade unions in drawing up collective agreements to regulate paid work collectively and the fact that the actions of the ITWF and FSU were aimed at inducing Viking Line to enter into such an agreement. This left some ambiguity as to whether or not a collective dimension is still required before Article 49 can have direct effect against a private party.
• the Grand Chamber went on to hold that the collective action to prevent a Ferry being registered in another State would be a restriction on the freedom of establishment but that restriction could be justified by an overriding reason of public interest in protecting workers, as long as the collective action was proportionate.

Question 13

What does Article 51 say?

Answer 13

Shall not apply to activities which in that State are connected, even occasionally, with the exercise of official authority

Reyners
Official authority is that which arises from the sovereignty and majesty of the state; for him who exercises it, it implies the power of enjoying the prerogatives outside the general law, privileges of official power and powers of coercion over citizens

Question 14

What happens in Reyners?

Answer 14

• Refused entry to bar as not Belgian national

Official authority definition:
‘Official authority is that which arises from the sovereignty and majesty of the state; for him who exercises it, it implies the power of enjoying the prerogatives outside the general law, privileges of official power and powers of coercion over citizens.’

Direct DIscrimination

Question 15

What are ‘official authorities’ Article 51

Answer 15

Reyners
Official authority is that which arises from the sovereignty and majesty of the state; for him who exercises it, it implies the power of enjoying the prerogatives outside the general law, privileges of official power and powers of coercion over citizen

Commission v Greece
- excluded from the official authority exception the professional activity of road traffic experts who appeared as witnesses in court rooms.

Commission v Italy (data)
- he design, programming and operation of data-processing systems for public authorities was held not to fall within the official authority exception because it was of a technical nature and, therefore, unrelated to the exercise of official authority.

Commission v Italy (lottery)
- Same conclusion - provision and operation of a computerisation system for a national lottery.

Thijssen
- the post of commissioner of insurance companies did not fall within the exception, since although the post involved monitoring companies and reporting infringements of the penal code, it lacked final powers to stop insurance companies from pursuing certain policies.

Question 16

Can you apply Article 49 domestically?

Answer 16

Auer
Italian qualification as a vet. Returned to France + practices. prosecuted.
Article 49 ONLY concerns the nationals of other states

Knoors
Plumbing qualification in Belgium. Netherlands. Rejected as no Dutch qualifications. Article 49 didn’t apply. Directive 64/427 - MS had to accept knowledge and ability. This has DE

Auer I
- implementation date of Dealine 64/427 passed so could apply

Asscher
- Article 49 can itself be applicable in the home state of a Member State national in the absence of a directive so long as there is a sufficient cross border element involved.

Nino
Never purely internal

Question 17

What happened in Auer

Answer 17

Article 49 cannot be relied upon in this situation
Held: he could not rely on Article 49 as in each MS - the article only concerns nationals of other MS.

This case concerned a French national who held an Italian qualification in veterinary medicine.
He was being prosecuted in France for practicing as a veterinary surgeon there without authorisation from the French Ministry of Agriculture.
His applications for authorisation had previously been rejected on the ground that his Italian qualification was not the equivalent to that required in France.
The Court of Justice held that he could not rely on Article 49 as, in each Member State, that Article only concerns the nationals of other Member States.

THEN
This was to change a few years later when Dr Auer was prosecuted yet again for continuing to practise as a veterinary surgeon in France without authorisation from the French Ministry of Agriculture. By this time, the deadline for implementing the directives had passed but France had failed to implement them. In Auer v Ministere Public, the Court of Justice held that the directives now had direct effect and provided him with a right to practice as a veterinary surgeon in France so long as the requirements of the directives were satisfied.

Directive 64/427 which required the Member State to accept as sufficient evidence of knowledge and ability the fact that the activity in question had been pursued in another Member State for certain specified periods.

Question 18

What happened in Knoor

Answer 18

This case involved a Dutch national who had obtained his qualifications and experience as a plumber in Belgium. He had returned to the Netherlands and had applied for an authorisation to carry on this trade there. However, his application had been rejected on the ground that he lacked the requisite Dutch qualifications.
He sought to challenge this by relying on Directive 64/427 which required the Member State to accept as sufficient evidence of knowledge and ability the fact that the activity in question had been pursued in another Member State for certain specified periods.
The Court of Justice accepted that Article 49 could not apply to purely internal situations. However, the Court then went on to hold that this did not prevent Knoors relying on the directive as the directive had defined the scope of its own applicability in terms that drew no distinction between the nationals of the Member State concerned and those of other Member States.

Question 19

What happened in Asscher

Answer 19

Article 49 can itself be applicable in the home state of a Member State national as there is a sufficient cross border element involved.

Dutch national in Belgium. Taxed at higher rate in Holland as a non-resident.
Article 49 TFEU did not apply to purely internal situations BUT situation here was not purely internal because he was being taxed differently as a result of him exercising his Treaty rights.

Could be justified by the Member State if the differences between the two groups were genuine objective differences. On the facts of the case, they were not found to be.

Question 20

What happened in Nino

Answer 20

the Court of Justice held that Article 49 did not to apply to the prosecutions of four Italian nationals who, having qualified as biotherapists and pranotherapists while resident in Italy, had provided biotherapy and pranotherapy treatment in Italy without being granted authorisation to practise as medical doctors there. The prosecutions involved situations which were purely internal to Italy.

Question 21

What is a restriction under Article 49?

Answer 21

Direct, Indirect and Measures which make it less attractive
Direct
Reyners
- based on nationality

Thieffry

• expanded to indirect
• refused admittance to Parisian bar even though qualifications recognized

Klopp
—- Parisian Bar prevented members maintaining offices in other Member States w

Measures made less attractive
Gebhard
—- a German national disciplined by the Milan Bar Council for using the title ‘avvocato’ without having first obtained a formal recognition of his qualifications.

Caixa
— Any national measures which ‘prohibit, impede or render less attractive’ the pursuit of an occupation in more than one Member State is a restriction

Question 22

What are the derogations?

Answer 22

Article 52 TFEU
> public policy
> public security
> public health

Question 23

What is Article 52

Answer 23

Derogations

1. The provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of
   public policy,
   public security or
   public health.

Question 24

What happened in Commission v UK (Open Skies)

Answer 24

Attempt to derogate
(failed)

• The United Kingdom had entered into an air services agreement with the United States of America which provided for operating authorisations to be granted to British airlines by the United States and to American airlines by the United Kingdom
• It also provided for the revocation, suspension or limitation of operating authorisations for non-British airlines by the United States at the request of the United Kingdom and of non-American airlines by the United Kingdom at the request of the United States.
• Directly discriminated against the airlines of MS - excluded them from benefits accorded to British airlines
• rejected the United Kingdom’s argument that the discrimination could be justified on the ground of public policy
• The Court held that the public policy derogation under Article 52 TFEU presupposes the need to maintain the discriminatory measure in order to deal with a genuine and sufficiently serious threat affecting one of the fundamental interests of society.
• direct causal link between the threat, which must be current, and the measure adopted to deal with it
  The air services agreement could not be justified as the refusal authorisations were not limited to circumstances where an airline poses a threat to public policy and, in any event, there was no direct link between any threat to the public policy of the United Kingdom and the generalised discrimination against EU airlines in the agreement.

Question 25

Can you justify discrimination?

Answer 25

Direct discrimination - Treaty (Article 52)
Indirect discrimination: Treaty + Imperative Requirements

Thieffrey
- FoE subject to the need for national professional rules justified by the general good

Gebhard
- four conditions in order to be justified:

• 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 attaining the objective which they pursue.
• They must not go beyond what is necessary to attain that objective

These imperative requirements Mirror mandatory requirement from Cassis
— - imperative requirements in general interest

eg
effectiveness of fiscal supervision
public health
fairness of commercial transactions
consumer protection
\+ pressing reasons in the public interest for the free movement of persons

Distinctly applicable measures - that is direct discrimination - may only be justified using the Treaty.
Indistinctly applicable measures may be justified using Treaty/imperative requirements contained in Gebhard.

Question 26

What are the four conditions to justify indirect discrimination?

Answer 26

Gebhard
4 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 attaining the objective which they pursue.
- They must not go beyond what is necessary to attain that objective

Question 27

Establishment of companies

Answer 27

Article 54
Extends freedom of establishment to companies

‘Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Union shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States.

“Companies or firms” means companies or firms constituted under civil or commercial law, including cooperative societies, and other legal persons governed by public or private law, save for those which are non-profitmaking

Question 28

What did Factortame II say

Answer 28

the Court of Justice held that requirements in the Merchant Shipping Act 1988 breached Article 49 by requiring the majority of shareholders in a company owning UK ships to be British.
This requirement applied irrespective of whether the shareholder was a person or another company. The Court held that this discriminated against both persons and companies who were nationals from other Member States.

Question 29

What are the two doctrines?

Answer 29

The incorporation doctrine

• connecting factor is where the company was legally incorporated and has its registered office. Used in UK, Ireland, Netherlands, Scandinavia
• ** will normally permit a company incorporated in that Member State to transfer its central administration to another Member State ***

Real Seat Doctrine
The connecting factor is the place where the company’s central administration is located
Belgium, France, Hungary, Germany, Greece, Luxembourg, Portugal and Spain
* will either prohibit a company incorporated in that Member State from transferring its central administration to another Member State or will only permit it to do so under certain specific conditions*

Question 30

What are the rights of the Member State of incorporation

Answer 30

The Member State in which the company is incorporated retains the right to determine the conditions of incorporation of that company and the conditions under which the company may transfer its central administration to another Member State

Daily Mail

• company incorporated in the UK
• UK tax leg provided that a company was resident in the UK for tax purposes if its central management + control was located in the UK. Only companies which were resident in the UK for tax purposes were liable for corporation tax
• DM wished to move its central management + control to the Netherlands (permitted to do so) but tax legislation said that a company wpuld be considered resident in UK for tax purposed until consent. (ie would remain liable for corporation tax)
• argued this was against Article 49
• CoJ - held that TFEU article 49 did not apply, and so the rules requiring UK Treasury permission could operate.
• Article 49 did NOT confer a right for a company incorporated in one Member State to transfer its central management and control to another Member State while retaining its status as a company incorporated under the legislation of the first Member State.

Question 31

What are the rights of a company to set up agencies, branches and
subsidiaries

Answer 31

If it satisfied the requirements of Article 54 it can set up agencies, branches or subsidiaries without restrictions (under Article 49)

Segers
- when if it conducts its business SOLELY through an agency in another MS and none in the MS it is incorporated in

Centros

• incorporated in UK but never traded there
• set branch in Denmark but was refused
• CoJ said this was a restriction
• accepted it could be justified to prevent advantage taking

Kamer

• incorporated in UK but traded only in Netherlands
• dutch law - any foreign company which established a branch in the Netherlands to maintain share capital at least equal to the minimum share capital required by Dutch companies
• made the directors liable for company’s failure to comply with share capital requirements
• this impeded freedom of establishment

Question 32

What is the principle of mutual recognition (company)

Answer 32

A company which has been incorporated in accordance with the law of one Member State must be recognised as a valid company with legal capacity in other Member States in which it seeks to establish itself

Uberseering BV v Nordic Construction

• company incorporated in the Netherlands
• transferred central admin to Germany
• German law did not recognise the capacity of a company which had been incorporated outside Germany.
• therefore couldn’t bring proceedings in court
• CoJ - necessary precondition of the freedom of establishment that companies are recognised by any Member State in which they wish to establish themselves

Question 33

What are the specific Rights under Article 49

Answer 33

Right to enter and reside
- Directive 2004/38
Implicit

Social Rights
- entitled nationals of a MS to have access to certain social rights on the same basis as nationals

Commission v Italy (Italian Housing)
- Italian legislation allowing only Italian nationals to purchase or lease housing built with the help of public funds and to obtain a reduced rate mortgage
- breach of Article 49 TFEU as a national of a Member
State who wishes to pursue an activity as a self-employed person in another Member State would need to obtain housing on the same conditions as nationals of the Member State.
- Any restriction not only to the right of access to housing but also on the various facilities granted to those nationals is an obstacle to the freedom of establishment.

Question 34

What happened in Commission v Italy (Italian Housing)

Answer 34

• Italian legislation allowing only Italian nationals to purchase or lease housing built with the help of public funds and to obtain a reduced rate mortgage
• breach of Article 49 TFEU as a national of a Member State who wishes to pursue an activity as a self-employed person in another Member State would need to obtain housing on the same conditions as nationals of the Member State.
• Any restriction not only to the right of access to housing but also on the various facilities granted to those nationals is an obstacle to the freedom of establishment.

Question 35

The Recognition of Professional Qualifications (Directive history)

Answer 35

Article 53 of TFEU provides for the issuing of directives for the mutual recognition
Initially harmonisation
Move to mutual recognition
Directive 89/48
- once a regulated professional was recognised in one MS, that person could not be refused entry to that profession in another
Member State.

Followed by Directive 92/51
Amended by Directive 2001/19
Replaced by 
Directive 2005/36
Amended by Directive 2013/55

Directive 2005/36 (The Professional Qualifications Directive)

Question 36

Principle of Mutual Recognition in CoJ (qualifications)

Answer 36

Thieffry

• Parisian bar refused admission as no french law degree
• CoJ - could not deny as once his Belgian diploma had been recognised by the French University as the equivalent to the French law

UNECTEF v Heylens

• any decision by MS must have an objective basis + person must be fully informed of the reasons which should itself be subject to legal redress.
• this was acc abt FMOP
• belgian footbal qual - refused french equiv by france

Vlassopoulou

• CoJ extended its approach even to situs where no provision of national law existed
• a Greek national with a Greek law degree who had practised German law in Germany for several years before applying for admission to the German bar. Refused on the grounds that she had not passed German examinations
• CoJ - if the qualification is equivalent then the host State MUST recognise the qualification.
• if partially correspond - can do a course or by practical experience.

APPLICATION:
Museo
- a Spanish national - postgraduate course w/ with a grant from the Spanish national museum of Prado. Worked on a temporary contract for Prado museum. Application for a permanent post was rejected on the ground that the qualification obtained in the UK had not been recognised as equivalent to the relevant Spanish degree.
- CoJ - could rely upon the Vlassopoulou principles in her own MS
- + Prado museum had made the grant to Bobadilla to enable her to undertake the postgraduate qualification at issue and it had already employed her on a temporary basis in the post to be filled

Question 37

What is The Professional Qualifications Directive

Answer 37

Directive 2005/36

Three Systems of recognition of professional qualifications
1) automatic recognition
7 regulated professions - harmonised

2) professional experience recognition
manufacturing, industrial etc
MS must recognise the pursuit of that activity for the time period

3) general system of recognition
When profession dependent on skills/qualification, MS must permit access if they have the s/q needed for their home MS
— can require an a) adaption period b) aptitude test
IF
1. training is substantially different or
2. profession has different activities

Must be proportionate

Question 38

What are the three systems of recognition in Directive 2005/36

Answer 38

1) automatic recognition
7 regulated professions
doctors, nurses, dentists, vets, pharmacists and architects
MS are required to recognise formal qualifications awarded in other Member States in relation to those professions which meet harmonised minimum requirements specified in the directive.

2) professional experience recognition
predominantly manufacturing, industrial and trade activities where the host Member makes the access to or pursuit of one of these activities dependent upon the possession of particular knowledge and skills, it must recognise the pursuit of that activity in another Member State for the relevant period of time specified in the Directive for that activity as sufficient proof that the applicant has the required knowledge and skills.

3) general system of recognition
all prof not covered above
where access is dependant upon possession of specific professional qualifications, the competent authority of that host MS is required to permit an applicant to access and pursue that profession, under the same conditions as apply to its nationals, if that applicant possesses an attestation of competence or evidence of formal qualifications required by another Member State in order to gain access to and pursue that
profession in that other Member State (Article 13).
must fall within one of the 5 levels of qualification outlined in article 11

Under Article 14(1), the host Member State may still require the applicant either to
_ complete an adaptation period of up to three years under a qualified member of the profession or
- to take an aptitude test set by the competent authorities of the host Member State
ONLY if:
> The applicant’s training covered substantially different matters from those covered by the formal qualification in the host MS; or
> The regulated profession in the host MS comprises regulated professional activities which do not exist in the corresponding profession in the
applicant’s home Member State.

PS - lawyers
The directive governing freedom of establishment
for lawyers is and remains Directive 98/5 (the Lawyers Establishment Directive). This is
confirmed in recital 42 of Directive 2005/36.

Question 39

Non EU qualifications

Answer 39

Qualifications obtained outside the European Union

Tawil-Albertini

• french - dentistry qual in Lebanon which was recognised in Belgium
• applied to practice in France, which refused to recognise his Lebanese qualification on the grounds that it was not included in Directive 78/686 which provided for mutual recognition by Member States of qualifications in dentistry
• The Court of Justice held that the simple fact that one Member State accepted the equivalence of qualifications did not bind other Member States where those qualifications were not listed in the directive.

Haim
- diploma in dentistry had been obtained in Turkey but he had practised in Belgium and he was authorised to practise in Germany
- refused to permit him to practise within the German social security system as he had not completed the two-year training period required by German law
- BUT
- the Court held that it was not permissible under
Article 49 for the national authority to refuse to register a person who had lawfully practiced in another Member State without first examining whether his experience corresponds to that required by the relevant harmonising Directive.

Article 3(3) of Directive 2005/36

• the conditions under which a diploma, certificate or other evidence of a qualification awarded outside the EU must be recognised by a Member State as evidence of a formal qualification.
• The effect of this article is to ensure that such a qualification can only be relied upon for the purpose of the systems of recognition if the holder of the qualification has three years’ professional experience in the profession concerned in the territory of another Member State which has itself recognised that qualification.

Question 40

How do the directives/principle of mutual recognition gel together?

Answer 40

The principles in case law are applicable even where a mutual recognition directive covers the profession in question

Hocsman
- Dr who had qualified as a doctor in Argentina.
Argentinian qualification had been recognised in Spain as the equivalent to the Spanish degree in medicine and he had been allowed to practice medicine there. He undertook further training in Spain as a specialist in urology and obtained a diploma. Became a Spanish national.
France - but French Government refused to allow him to practice medicine on the ground that his Argentinian qualification did not entitle him to practise medicine there.
- !!! Coj - the applicant could rely directly upon Article 49 TFEU even though there was a harmonising directive and his Argentinian qualification did not satisfy that directive.
- The legal ambit of the principle of mutual recognition established in Vlassopoulou and other cases could not be reduced as a result of the adoption of these
directives. Therefore, a person who does not satisfy the requirements of a mutual recognition directive could still rely on the principles derived from those cases.

Question 41

Does Article 49 TFEU meet the Van Gend en Loos criteria? Why?

Answer 41

Initially
No
Not capable of satisfying VGEL criteria of “unconditionality” for a treaty article to have direct effect.

Now,
Reyners
Ruled that Article 49 TFEU was capable of having direct effect.
- Since the end of the transition period.
- “laying down the freedom of establishment shall be attained at the end of the transitional period”.
VERTICALLY