European Business Law

Question 1

What was the aim Euriopean unity?

Answer 1

Avoid another war

Question 3

What are some organisations that were geared towards european unity?

Answer 3

• NATO, 1948.
• Council of Europe, 1949.
• European Convention of Human Rights, 1950.

Question 4

What was the first step to reconsiliation between france and germany?

Answer 4

The creation of European Coal and Steel Community (ECSC).
- it established a common market for coal and steel.
- Lasted 50 years
- Partly economic, largely politic.
- Treaty signed on 18.04.1951 by six countries: Germany, France, Italy, Belgium, the Netherlands,
and Luxembourg.

Question 5

What was the European Atomic Energy Community (Euratom)

Answer 5

• signed in In 1957
  
  • by the same six countries from ECSC
  • Also called the treaty of ROME
  • entered into force in January 1958
  • done together witht the EEC

Question 6

What was the European Economic Community (EEC)

Answer 6

• signed in In 1957
  
  • by the same six countries from ECSC
  • Also called the Euratom Treaty
  • ## entered into force in January 1958

Question 7

Describe the institutional framework of the EAEC and EEC

Answer 7

• The Parliamentary Assembly and the Court of Justice were shared with the ECSC.
• There was an independent Council of Ministers.
• The Commission.
• A consultative Economic and Social Committee, shared with the Euratom Community.

Question 8

What happened during the 1965 merger treaty?

Answer 8

• Executive bodies of EEC and ECSC
  *

Question 9

What was the Single European Act (SEA)?

Answer 9

• Signed in 1986.
• It introduced institutional and substantive changes

Question 10

What institutional changes were introduced by SEA?

Answer 10

• It gave legal basis to European Political Cooperation.
• Formal recognition of the European Council.
• A Court of First Instance was established to assist the Court of Justice.
• Transformation of the role of the European Parliament and introduction of the cooperation procedure.

Question 11

What substancial changes were introduced by SEA?

Answer 11

the creation of Art. 100 EC (now 114 TFEU).

Question 12

What was the Maastricht Treaty?

Answer 12

• Also callled The Treaty on European Union
• (TEU) was signed in 1992 and entered into force in November 1993.
• It introduced the three-pillar structure

Question 13

What was the 3 pillar strucuter introduced by the Maastricht Treaty?

Answer 13

1. The Communities
* It increased Parliament’s legislative involvement by introducing the co-decision procedure.
* It established a European System of Central Banks (ESCB) and a European Central Bank (ECB).
* It introduces the concept of European citizenship.
* New provisions on economic and monetary union.
* New competences for the EC.

2. Common foreign and security policy (CFSP)

• Each Member State had an obligation to inform and consult each other on any common foreign and security policy matter of general interest.
• The Council defined the common position of the MS on such matters.
• The European Council was to define the principles and general guidelines of the CFSP.
• Parliament was to be informed on foreign and security policy and the Commission was to be fully involved in work in this area.

Justice and home affairs
initially regulating policies such as asylum and immigration, but gradually including cooperation on a range of
issues.

Question 14

What were the main points in the Treaty of Amsterdam?

Answer 14

The Treaty of Amsterdam was signed in 1997 and entered into force on 1 May 1999.

Main points
It added the the 3 pillars

Communities
* Establishment of the principle of openness.
* EU should respect the fundamental rights protected in the ECHR and national constitutions.
* The co-decision procedure was changed to increase the power of the European Parliament.
* Community legislative competence to combat discrimination based on sex, racial or ethnic origin,
religion or belief, disability, age or sexual orientation.

Common foreign and security policy (CFSP)
* creation of the High Representative for the CFSP. - is the only one that can conclude treaties in this field

Justice and home affairs
* was renamed “Police and Judicial Cooperation in Criminal Matters.”

Question 15

What changes were introduced by the Treaty of Nice?

Answer 15

The Treaty of Nice was concluded in December 2000 and entered into force on 1 February 2003.

Changes
* Weighting of votes in the Council: extension of qualified majority.
* Distribution of seats in the European Parliament (increased).
* Size and composition of the Commission (reduced).
* Enhanced cooperation.

Question 16

What were the ain points of the Lisbon treaty

Answer 16

• The Treaty of Lisbon entered into force in 2009.
• It amends the Treaty on European Union and the Treaty establishing the European Community.
• The European Union replaced the European Community.
• abolished the pillars system, but still different rules for the CFSP.

Question 17

What were the objectives of the Lisbon treaty?

Answer 17

• A politician chosen to be president of the European Council for two-and-a-half years.
• A smaller European Commission.
• A redistribution of voting weights.
• The Parliament will be on an equal footing with the Council for most legislation.
• Removal of national vetoes in a number of areas.

Question 18

Describe the composition and powers of the European commision?

Answer 18

Also know as the gurdian of the treaties

Composition
* 27 independent members, including the President and eight vice-presidents.
* It is divided into departments known as Directorates-General (DGs).
* Elected every 5 years.

Powers
* It is the European Union’s Executive branch.
* Sole legislative initiative in the European Union. i.e only one that can propose legislation
* Ensure the application of the Treaties, and of measures adopted by the institutions pursuant to them.
* Oversee the application of Union law.
* Execute the budget.
* Ensure the Union’s external representation.
* Also known as the guradian of the treaties

How are members of the the commision elected?
- Appointed by Parliament

Question 19

Name 7 institutions of the EU

Answer 19

• European commission
• European Council
• Council of the European Union
• European Parliament
• Court of Justice
• European Central Bank
• Court of Auditors

Question 20

Describe the composition and powers of the European council?

Answer 20

Composition:
* Heads of the MS together with its President and the President of the EC.
* The High Representative shall take part in its work.
* President elected for 2.5 years. it used to be rotating before that

Powers
* * Decides on the EU’s overall direction and political priorities.
* * Deals with complex or sensitive issues that cannot be resolved at lower levels of intergovernmental cooperation.
* * Sets the EU’s common foreign & security policy, taking into account EU strategic interests and defense implications.
* * Nominates and appoints candidates to certain high profile EU level roles.

Question 21

Describe the composition and powers of the Council of the European Union?

Answer 21

Composition
* Ministers from each member state.
* Does not have a fixed number. membership depends on topic
* The Council of Foreign Ministers will be headed by the High Representative. This one is always fixed
* All other Council meetings are chaired by the minister of the country holding the rotating presidency.

Powers
* Negotiates and adopts EU laws, together with the European Parliament, based on proposals from the European Commission.
* Coordinates EU countries’ policies.
* Develops the EU’s foreign & security policy, based on European Council guidelines.
* Concludes agreements between the EU and other countries or international organizations.
* Adopts the annual EU budget - jointly with the European Parliament.

Question 22

What is the difference between the European council and thd council of europe?

Answer 22

In the council of Europe we have the European convention of Human rights while In the European Union we have the Charter of fundamental rights

Question 23

What is the difference between the European court of justice and the European court of Human Rights?

Question 25

Describe the composition and powers of the European Parliament?

Answer 25

Composition:
* decreasing proportionality (705 members).
* Seats are allocated according to the principle of degressive proportionality, meaning that larger states have more MEPs, but fewer MEPs per inhabitant than smaller states.
* No MS can have more than 96 members
* No MS can have less than 6 (validate this number)
* Member states are represented according to population
* MEPs are grouped by political affiliation, not by nationality.
* There are several political groups in the Parliament, each representing a range of political perspectives from across the EU.
* MEPs can also choose to sit as non-attached members if they do not wish to join any political group.

The work of Parliament comprises two stages:
* Committees: to prepare legislation. Each committee deal with a specific area. They receive and work on legislation.
* Plenary sessions: to pass legislation.

Powers
1. Legislative Power
* Passing EU laws, together with the Council of Europe.
* Decides on international agreements.
* Decides on enlargements.
* Reviews the Commission’s work programme and ask it to propose legislation.

2. Budgetary power
* The EP and Council share budgetary power. If the Parliament rejects the budget proposals because it feels that Union’s needs are not met, the budgetary procedure starts all over again.
* Approves the “Multiannual Financial Framework”.

3. Supervisory power/Control of the executive
* Democratic scrutiny of all EU institutions.
* Elects the Commission President and approving the Commission.
* Examines citizens’ petitions and setting up inquiries.
* Discusses monetary policy with the European Central Bank.
* Questions referral to the Commission and Council.

Question 26

Describe the legislative procedure in European Parliament

Answer 26

The standard procedure now is the ordinary legislative procedure

• Commission presents a proposal to Parliament and the Council.
• In its first reading, Parliament may send amendments to the Council.
• The Council can either adopt these amendments or send back a “common position” that the Parliament
  may either approve or reject by an absolute majority.
• The Parliament may also adopt further amendments by absolute majority.
• If the Council does not approve of the amendments, a “Conciliation Committee” is formed.
• Once a position has been agreed upon, it must be approved by the Parliament‘s simple majority.

Question 27

Define and explain the terms Conciliation Committee, absolute majority, simple majority, common position in EU parliamentary legislative procedures

Question 27

What is the special Procedure in EU parliament Legislation process?

Question 27

Describe the composition and powers of the Court of Justice?

Answer 27

Composition
* Two level jurisdiction:
* 1. Court of Justice: 27 judges appointed by member states and 11 advocates-general.
* 2. General Court: 2 judges from each country.

Powers
* Interpreting the law (preliminary rulings).
* Enforcing the law (infringement proceedings).
* Annulling EU legal acts (actions for annulment).
* Ensuring the EU takes action (actions for failure to act).

NOTES
- When you need to go to court, you first go to the General court and if that does work, you can escalate to to court of justice

Question 28

Describe the composition and powers of the European Central Bank?

Answer 28

Composition:
* Governing Council.
* Executive Board.
* General Council.

Powers
* EU institution tasked with administrating the monetary policy of the member states forming the Eurozone.
* Sets the interest rates at which it lends to commercial banks in the Eurozone.
* Manages the Eurozone’s foreign currency reserves and the buying or selling of currencies to balance exchange rates.
* Ensures that financial markets & institutions are well supervised by national authorities, and that payment systems work well.
* Ensures the safety and soundness of the European banking system.
* Authorizes production of euro banknotes by Eurozone countries.
* Monitors price trends and assesses risks to price stability.

Question 29

Describe the composition and powers of the Court of Auditors?

Answer 29

Composition:
* Court members are appointed by the Council, after consulting the Parliament, for renewable 6-years.
* The Court is divided into audit groups called ‘chambers’.

Powers
* Financial audits.
* Compliance audits.
* Performance audits.

Question 30

Name 10 sources of EU law

Answer 30

Sources of European Union (EU) law are diverse and structured hierarchically. They include primary law, secondary law, and supplementary sources. Here’s a detailed overview:
Primary Law
1. Founding Treaties: The core treaties that establish the EU, including the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU).
2. Amending Treaties: Treaties that have modified the founding treaties, such as the Treaty of Amsterdam, the Treaty of Nice, and the Treaty of Lisbon.
3. Accession Treaties: Treaties that stipulate the terms and conditions of new member states joining the EU.
4. Protocols and Annexes: These are integral parts of the treaties and have the same legal value.

5. Charter of Fundamental Rights of the European Union:
This charter has the same legal value as the treaties and consolidates the fundamental rights protected in the EU.

General Principles of Law
General principles of law are fundamental principles that the Court of Justice of the European Union (CJEU) has developed through its case law. They include:

• Fundamental Rights: Derived from the constitutional traditions common to the member states and the European Convention on Human Rights (ECHR).
• Principles such as proportionality, legal certainty, non-discrimination, and respect for fundamental rights.
• These principles guide the interpretation and application of both primary and secondary EU law and fill in gaps where written law is silent.

International Agreements (Article 216 TFEU)
Under Article 216 TFEU, the EU has the capacity to conclude agreements with third countries and international organizations. E.g WTO, TRIPPS,Marakesh aggreement
These agreements are:

• Binding on the institutions of the Union and on its Member States.
• These agreements can cover a wide range of issues, including trade, cooperation, and association agreements.
• Examples include: Trade agreements (like the Comprehensive Economic and Trade Agreement with Canada) and association agreements (like the one with Ukraine).

Secondary Law (Article 288 TFEU)
Secondary law consists of legal acts adopted by the EU institutions to implement the objectives and policies set out in the treaties.
Examples include: ,
According to Article 288 TFEU, these include:

• Regulations: Directly applicable in all member states without the need for national implementation measures. They have general application and are binding in their entirety. e.g GDPR
• Directives: Bind member states as to the result to be achieved but leave national authorities the choice of form and methods. Member states must transpose directives into national law within a set deadline.
• Decisions: Binding in their entirety upon those to whom they are addressed (e.g., an EU country, an enterprise, or an individual).
• Recommendations and Opinions: Non-binding instruments that suggest a course of action or express an opinion.

Question 31

What is direct effect in EU law?

Answer 31

Direct effect is a principle in European Union (EU) law that allows individuals and entities within member states to invoke provisions of EU law directly before national courts. This principle enhances the enforcement and effectiveness of EU law by ensuring that individuals can rely on it directly in their national legal systems.

Question 32

What is primacy of EU Law?

Question 33

What are mixed treaties?

Answer 33

Mixed treaties are international agreements to which both the European Union (EU) and its member states are parties. These treaties cover areas of shared competence, meaning that neither the EU nor the member states have exclusive authority to enter into agreements independently in these areas.

Question 34

What are exclusive competencies?

Answer 34

Exclusive competences are areas in which only the European Union (EU) is authorized to legislate and adopt legally binding acts. Member states can act in these areas only if they are empowered to do so by the EU or for the implementation of EU acts.

Areas of Exclusive Competence
The Treaty on the Functioning of the European Union (TFEU) outlines the areas of exclusive competence in Article 3. These areas include:

1.Customs Union:

The EU has exclusive competence to establish the customs union and ensure its proper functioning. This includes setting common customs tariffs and managing trade with non-EU countries.

2.Competition Rules for the Internal Market:

The EU is responsible for establishing competition rules necessary for the functioning of the internal market. This includes regulations to prevent anti-competitive practices and ensure fair competition.

3. Monetary Policy for the Euro Area:

The EU has exclusive competence in monetary policy for member states that have adopted the euro as their currency. The European Central Bank (ECB) plays a central role in managing monetary policy within the Eurozone.

4. Conservation of Marine Biological Resources Under the Common Fisheries Policy:

The EU manages the conservation of marine biological resources and regulates fisheries to ensure sustainable use of marine resources.

5. Common Commercial Policy:

The EU has exclusive competence to manage trade relations with non-EU countries, including negotiating and concluding international trade agreements on behalf of the member states.

6. Conclusion of International Agreements:

The EU has the exclusive competence to conclude international agreements when:
The agreement is necessary to exercise the EU’s internal competence.
The agreement might affect common rules or alter their scope.

Question 35

What is transposition

Question 36

What is a preliminary ruling?

Question 37

Under what conditions does a treaty provision Produce direct effect?

Answer 37

1. Clarity and Precision:

The provision must be clear and precise, meaning that it clearly defines the rights and obligations it sets out. It should be specific enough for national courts to apply it without ambiguity.
Example: A provision stating that “All discrimination on grounds of nationality shall be prohibited” (Article 18 TFEU) is clear and precise.

2. Unconditional:

The provision must be unconditional, meaning that its application does not depend on any further action by the EU institutions or member states. It should not be subject to any conditions or require any additional measures to be taken.
Example: A provision that directly prohibits a specific action, such as “Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States” (Article 30 TFEU), is unconditional.

3. Not Dependent on Further Implementation:

The provision must not require further implementation measures by member states or EU institutions. It should be capable of being applied as it stands.
Example: A provision that is fully operational without the need for national legislation to specify its details or procedures.

NOTES:
Direct effect of treaties is both Horizontal and vertical

Question 38

What are horizontal and vertical direct effects?

Answer 38

Vertical Direct Effect: Individuals can use EU treaty provisions to challenge actions or legislation of member states that violate those provisions.
Horizontal Direct Effect: Individuals can rely on EU treaty provisions in disputes with other private parties.

Question 39

What are some important case laws supporting Vertical and Horizontal direct effect of treaties?

Answer 39

Van Gend en Loos (1963):
Established the principle of direct effect, allowing individuals to invoke treaty provisions against the state.
Vertical Direct Effect Example: The case involved invoking Article 12 of the EEC Treaty (now Article 30 TFEU) against Dutch customs authorities.

Defrenne v. Sabena (1976):

Confirmed the horizontal direct effect of treaty provisions related to equal pay (Article 157 TFEU).
Horizontal Direct Effect Example: An individual successfully invoked Article 157 TFEU in a claim against a private employer for gender discrimination in pay.

Question 40

Under what conditions does General principles of EU law produce direct effect?

Answer 40

1. Clarity and Precision:

The general principle must be sufficiently clear and precise so that it can be applied by a national court. It must define rights and obligations in a way that leaves no significant ambiguity.
Example: The principle of non-discrimination is clear and precise as it directly prohibits unequal treatment without justification.

2. Unconditional Nature:

The principle must be unconditional, meaning that its application should not depend on any further action by the EU institutions or member states. It should be fully applicable as it stands.
Example: The principle of proportionality is unconditional as it directly requires that actions by EU institutions and member states do not exceed what is necessary to achieve the objectives of the EU.

3. Self-Executing:

The principle must be capable of being applied by national courts without the need for further legislative implementation. It should be self-executing.
Example: The principle of legal certainty, which ensures that laws are clear, precise, and predictable, can be directly applied by courts without additional legislative measures.

Question 41

What are some important case laws supporting direct effect of General principles of EU law?

Answer 41

1. Mangold v. Helm (2005):

The CJEU held that the general principle of non-discrimination on grounds of age had direct effect and could be invoked by individuals before national courts. The court emphasized that general principles of EU law, such as equality, could produce direct effect when they are clear, precise, and unconditional.

2. Kücükdeveci v. Swedex GmbH (2010):

The CJEU reinforced the direct effect of the general principle of non-discrimination on grounds of age, stating that national courts must set aside any national provision that conflicts with this principle, even in the absence of specific national implementing legislation.

Question 42

Under what conditions does international agreements Produce direct effect?

Answer 42

1. Clear and Precise Provisions:

The provision of the international agreement must be clear and precise. It should set out rights and obligations in unequivocal terms, leaving no significant room for interpretation or discretion.
Example: A provision stating specific tariff reductions with clear numerical targets would be considered clear and precise.

2. Unconditional Provisions:

The provision must be unconditional, meaning that its application should not depend on any further action by the EU institutions or the member states. It should be fully applicable as it stands.
Example: A provision that directly grants a right to individuals without requiring further legislative or administrative measures would be unconditional.

3. Nature and Purpose of the Agreement:

The nature and purpose of the agreement must allow for the possibility of direct effect. The intention of the parties to the agreement, as well as its overall objective, should be considered to determine whether it is meant to confer rights on individuals.
Example: Trade agreements or association agreements often have provisions intended to create specific rights for individuals or businesses, thus potentially allowing for direct effect.

Question 43

What are some important case laws supporting direct effect of International agreements?

Answer 43

1. Demirel Case (1987):

The CJEU held that a provision of an international agreement could produce direct effect if it was sufficiently clear, precise, and unconditional. The case involved the EU-Turkey Association Agreement, where the court determined that certain provisions did not meet these criteria and therefore could not be invoked directly by individuals.

2. International Fruit Company Case (1972):

The CJEU considered whether provisions of the General Agreement on Tariffs and Trade (GATT) could have direct effect. The court concluded that GATT’s provisions were not intended to confer rights on individuals and were not sufficiently precise, thus lacking direct effect.

3. Kupferberg Case (1982):

The CJEU ruled that certain provisions of the EU-Portugal Free Trade Agreement had direct effect because they were clear, precise, and unconditional. The case established that the specific nature and objective of the agreement could allow for direct effect.

Question 44

Do directives have horizontal direct effect?

Answer 44

NEVER

Question 45

Under what conditions does Secondary law, regulations Produce direct effect?

Answer 45

Given their nature, regulations inherently meet the general criteria for direct effect. However, for completeness, let’s examine these conditions:

Clarity and Precision:

The provisions of the regulation must be clear, precise, and unambiguous. They must define the rights and obligations they confer in a way that leaves no significant room for interpretation.
Example: A regulation stipulating that “Member States shall abolish all charges having equivalent effect to customs duties on imports and exports” is clear and precise.
Unconditional Nature:

The provisions must be unconditional, meaning their implementation is not dependent on any further action by the EU institutions or member states. They should apply without any additional conditions or requirements.
Example: A regulation that sets specific standards for product safety, stating “Products must meet the safety requirements set out in Annex I,” is unconditional.

Question 46

What are some important case laws supporting direct effect of secondary law, regulations?

Answer 46

Politi v. Italy (1971):

The CJEU confirmed that regulations have direct effect. In this case, an Italian company invoked an EU regulation directly against the Italian government, and the court upheld the regulation’s direct applicability and binding nature.

Leonesio v. Italian Ministry of Agriculture (1972):
The CJEU ruled that individuals could rely on the provisions of a regulation before national courts. This case reinforced the principle that regulations, by their nature, have direct effect.

Question 47

What is the difference between direct applicabilty and direct effect?

Answer 47

Direct Applicability: Refers to EU legal acts that automatically become part of member states’ national law without the need for national implementation measures. It ensures uniform application across the EU.

Direct Effect: Refers to the ability of individuals to invoke EU law provisions before national courts. It ensures that EU law can be enforced by individuals to protect their rights or challenge national measures.

Question 48

Under what conditions does Secondary law, Directives Produce direct effect?

Answer 48

Clarity and Precision:

• The provision of the directive must be clear, precise, and unambiguous. It must define rights and obligations in a way that leaves no significant room for interpretation.
• Example: A directive provision stating that “Member States shall ensure that employees have a right to at least four weeks of paid annual leave” is clear and precise.

Unconditional:

• The provision must be unconditional, meaning that its implementation should not depend on any further action by the EU institutions or member states. It should be fully applicable without additional conditions.
• Example: A directive provision that mandates equal treatment of workers, stating that “Member States shall prohibit any discrimination on grounds of gender,” is unconditional.

Implementation Deadline Has Passed:

• The directive can produce direct effect only if the implementation deadline set for the member states has passed and the member state has not implemented the directive correctly or at all.
• Example: If a directive requires member states to transpose its provisions into national law by January 1, 2022, it can produce direct effect from January 2, 2022, if the member state has not yet enacted the necessary laws.

NOTES:
- directives are always vertical.
- in the case of Van Duyne. Proportionality test was applied.

Question 49

What are some important case laws supporting direct effect of secondary law, Directives?

Answer 49

1. Van Duyn v. Home Office (1974):

The CJEU held that a directive could produce vertical direct effect if its provisions are clear, precise, and unconditional, and the implementation deadline has passed. The case involved a Dutch national who invoked an EU directive on the freedom of movement of workers against the UK government.

2. Ratti (1979):

The CJEU ruled that member states cannot rely on their failure to implement a directive to prevent individuals from invoking it, provided the directive’s provisions are clear, precise, and unconditional, and the deadline for implementation has expired.

3. Faccini Dori v. Recreb (1994):

The CJEU reaffirmed that directives do not have horizontal direct effect. In this case, an individual could not invoke a directive against a private company, but the court emphasized the importance of indirect effect and state liability.

Question 50

What is the proportionality test?

Answer 50

The proportionality test is a key principle in EU law used to evaluate whether measures taken by EU institutions or member states are suitable, necessary, and balanced in relation to the objectives they aim to achieve. By ensuring that measures do not exceed what is necessary to attain legitimate aims, the proportionality test helps protect individuals’ rights and maintain fairness in the application of EU law.
It is particularly relevant in cases involving fundamental rights, free movement, and competition law.

Elements of the Proportionality Test
The proportionality test typically involves three main elements:

1. Suitability (or Appropriateness):

The measure taken must be suitable to achieve the desired objective. It must genuinely contribute to the aim pursued.
Example: If the objective is to reduce pollution, a measure that directly targets emissions would be considered suitable.

2. Necessity:

The measure must be necessary to achieve the objective, meaning that there should be no less restrictive alternative that would achieve the same result.
Example: If there are multiple ways to achieve a pollution reduction, the chosen measure must be the least restrictive option available that still effectively addresses the problem.

3. Proportionality Stricto Sensu (or Balancing):

The measure must not impose an excessive burden on individuals or entities compared to the benefits it aims to achieve. There should be a reasonable balance between the interests of the individual and the needs of the community.
Example: The benefits of reducing pollution must be weighed against the costs imposed on businesses and individuals, ensuring that the measure is not excessively burdensome.

Question 51

Under what conditions does Secondary law, Decisions, Recommendations,
Opinions, Guidelines, and Communications Produce direct effect?

Answer 51

Recommendations, opinions, guidelines, and communications:
* they are not provided with direct.
* They Generally Non-Binding: Guidelines and communications do not have direct effect because they are intended to provide guidance rather than impose binding obligations.
* They can influence the behavior of member states and the interpretation of binding EU law by providing clarity and consistency.

Decisions
* Decisions are binding legal acts that are directly applicable to those to whom they are addressed.
* They can be addressed to member states, companies, or individuals.
* Are vertical when addressed to MS, could be horizontal if addressed to private entity

Conditions for Direct Effect of decisions:

1.Clear and Precise:
The provisions of the decision must be clear, precise, and unambiguous.

2.Unconditional:
The provisions must be unconditional and not dependent on any further action by the EU or member states.

3.Addressed to Individuals or Entities:
If a decision is addressed to an individual or entity, it can produce direct effect and be invoked by that addressee before national courts.
Example: A decision addressed to a specific company imposing a fine for violating competition law can be directly invoked by the company to challenge the fine or by individuals to claim compensation.

Question 52

What are the two main approaches for applying directives in horizontal relationships?

Answer 52

Broad Concept of the State:
This approach involves interpreting the term “state” broadly to include entities that, while not part of the traditional governmental structure, perform public functions or are under state control. This expansive interpretation allows directives to be applied in more situations where individuals or entities can be seen as acting on behalf of the state.

Indirect Direct Effect:
Indirect Direct Effect: Also known as the doctrine of indirect effect, this concept requires national courts to interpret national law in a way that is consistent with the purpose and objectives of EU directives. Even if a directive does not have direct horizontal effect, national courts can use this interpretative method to ensure that the results intended by the directive are achieved in disputes between private parties.

Question 53

What is primacy?

Answer 53

Primacy, also known as supremacy, is a fundamental principle of European Union (EU) law. It asserts that EU law takes precedence over national laws of member states in cases of conflict. This principle ensures the uniform and effective application of EU law across all member states.

Question 54

What are some important case laws related to Primacy?

Answer 54

Costa v. ENEL (1964):
This landmark case firmly established the principle of primacy. The CJEU ruled that EU law cannot be overridden by domestic legal provisions, highlighting that member states have transferred sovereign rights to the EU, and thus, EU law must prevail in case of conflict.

Simmenthal II (1978):
The CJEU confirmed that national courts must apply EU law in its entirety and protect rights conferred by it, regardless of any conflicting national legislation, even if adopted subsequently.

Factortame (1990):
This case reinforced the supremacy of EU law, with the CJEU ruling that national courts must set aside national legislation that conflicts with EU law, even if it means granting interim relief against the application of national law.

Question 55

What is the trigger model?

Answer 55

For EU law to take precedence over national law (primacy), it must first be capable of being invoked before national courts (direct effect). If a provision of EU law has direct effect, individuals can directly rely on it in their national courts.

Question 56

What is the framework for solving cases in the exam?

Answer 56

• What provision can be applied? is there a right or an obligation?
• Is it direct effect?
• Horizontal or vertical direct?
• Does it meet criteria for it to be direct effect?
• Cite case law that relates to this.

Question 57

What is legal uncertainty? (could come up when applying indirect direct effect)

Question 58

What is the Spaak report?

Answer 58

The Spaak Report was a seminal document that set the stage for the formation of the European Economic Community and EURATOM. By advocating for a common market, sectoral integration, and robust institutions, the report laid the groundwork for the economic and political integration that eventually led to the establishment of the European Union.
Notes
* This report suggested the merger of separated national markets into a common market.

Question 59

What actions were proposed by the Spaak report?

Answer 59

• National protections creating obstacles to trade had to be suppressed
• Deal with distortions of competition.
• Ensure conditions for common growth. e.g help weaker sectors grow

Question 60

What measures were adopted in the EEC treaty following the Spaak report?

Answer 60

• Goods: elimination of customs duties and quotas.
• Persons and services: establishment of tools and process for liberalization.
• Capital: a modest degree of liberalization was envisaged.
• Creation of a harmonization mechanism for eliminating distortions of competition.
• Coordination between economic policies

Question 61

What is the digital Single market?

Answer 61

The Digital Single Market (DSM) is an initiative by the European Union (EU) aimed at ensuring that businesses and consumers can seamlessly access and engage in online activities across the EU, regardless of their country of origin. The DSM seeks to remove regulatory barriers and create a unified digital marketplace, thus fostering innovation, competition, and economic growth. Launched as part of the broader Europe 2020 strategy, the DSM comprises various legislative and non-legislative measures designed to support the digital economy.

Question 62

What are the 3 pillars of the Digital Single market?

Answer 62

• Better access for consumers and businesses to digital goods and services across Europe, including removing barriers, ending unjustified geo-blocking, improving parcel delivery, and strengthening consumer protection
• Creating the right conditions and a level playing field for digital networks and innovative services to flourish, including telecommunications reform, data protection (GDPR), and cybersecurity measures.
• Maximizing the growth potential of the digital economy by promoting digital innovation, enhancing digital skills, supporting startups and SMEs, and facilitating the free flow of data within the EU.

Question 63

What are the Four Fundamental Freedoms in EU law?

Answer 63

the term “freedoms” refers to the Four Fundamental Freedoms that are the cornerstone of the EU’s internal market. These freedoms ensure the free movement of goods, services, capital, and people within the EU. They aim to create an integrated and efficient market by removing barriers to trade and movement across member states. Here is a brief explanation of each freedom:

Free Movement of Goods: Ensures that products can be traded freely across EU member states without customs duties, quotas, or other trade barriers.

Free Movement of Services: Allows individuals and companies to offer and receive services across EU member states without unjustified restrictions, including the mutual recognition of professional qualifications.

Free Movement of Capital: Allows for the free flow of investment funds between member states, including the ability to invest in real estate, buy shares, and transfer money across borders.

Free Movement of People: Allows EU citizens to live, work, study, and retire in any EU member state, with equal treatment in employment, social security, and access to public services.

Question 64

What is the customs Union?

Answer 64

The Customs Union is a crucial part of the European Union’s single market, characterized by:

• Elimination of Internal Borders: No customs duties or quotas on goods moving between member states.
• Common External Tariff: Uniform tariffs on goods imported from outside the EU.
• Common Trade Policy: Unified trade negotiations and agreements with non-EU countries.
• Harmonized Customs Procedures: Standardized customs regulations and procedures across the EU.

NOTES:
The customs union has an external and an internal dimension:
* Liberalization of trade between the parties (Art. 28 TFEU).
* Establishment of uniform rules for goods coming from third countries (Arts. 31 and 207 TFEU).

The establishment of the customs union is achieved by:
* The prohibition of customs duties and charges of equivalent effect (Art. 30 TFEU).
* The prohibition of quantitative restrictions and measures of equivalent effect (Arts. 34, 35 and 36 TFEU).
* The prohibition of discriminatory internal taxation (Art. 110 TFEU).

Question 65

To what kind of goods does free Movement provisions Apply to?

Answer 65

• Goods originating in any MS (Art. 28.2. TFEU).
• Products coming from third countries which are in free circulation in a Member State (Art. 29 TFEU).

Question 66

What is the definition of goods in relation to Free movement of goods? (according to court of Justice)

Answer 66

products which can be valued in money, and which are capable, as such, of forming the subject of commercial transactions.

Question 67

What are customs duties

Answer 67

charges levied on goods by reason of the fact that they cross a frontier between Member States.
NOTES:
covered in Art. 30 TFEU

Question 68

Explain the general provisions on customs duties and charges of equivalent effect

Answer 68

• They are generally prohibited.
• Charges that have similar effect are also probihited
• There are exceptions to the provisions

What happens if an MS breaches these
* MS needs to eliminate the measure
* Persons concerned have a right to repayment

What are exception under which charges with similar effect can be levied?
* When the payment is a consideration for a service rendered. e.g Fees for customs clearance services, port handling charges, or services such as warehousing or administrative processing provided to the trader.
* Where it relates to inspections required by EU law. E.g Veterinary and sanitary inspections for animal products, phytosanitary inspections for plants and plant products, and quality control inspections for food products.

Question 69

What are the exceptions under which charges similar to customs duties can be levied in the EU?

Answer 69

1.When the Payment is a Consideration for a Service Rendered:

Charges are allowed if they are payments for specific services provided to the importer or exporter, such as customs clearance or administrative processing fees, as long as they are proportionate to the cost of the service.
Where it Relates to Inspections Required by EU Law:

2.Charges may be levied for mandatory inspections or controls required under EU law, such as veterinary, phytosanitary, or quality control inspections. These charges must be proportional to the cost of performing the inspections.

Question 70

What is meant by Discriminatory internal taxation (Art. 110 TFEU)

Answer 70

Discriminatory internal taxation refers to the prohibition under Article 110 TFEU against member states imposing taxes on imported goods that are higher than those on similar domestic goods (direct discrimination) or creating tax structures that indirectly protect domestic products by disadvantaging imported goods (indirect discrimination). Article 110(1) addresses directly comparable products, ensuring equal treatment, while Article 110(2) addresses competing products, preventing indirect protectionism and ensuring fair competition.

Question 71

What is the difference between internal taxation and customs duties in EU law?

Answer 71

Internal Taxation: Applies to goods and services within a member state, aiming to generate revenue and regulate domestic activities. Governed by national law but must not discriminate against imported goods (Article 110 TFEU).

Customs Duties: Applies to goods entering a country, aiming to regulate international trade or protect domestic industries. Governed by EU law under the Customs Union provisions, with a common external tariff (Articles 28-30 TFEU).

Question 72

What are the kinds of discriminatory internal taxation possible under Article 110 TFEU?

Answer 72

Direct Discrimination:

• Characteristics: Explicitly different tax rates or amounts for imported and domestic goods.
• Examples: Higher excise duties on imported spirits compared to domestic spirits.
• Case Law Example: Commission v. Italy (1968), where Italy imposed higher taxes on imported bananas.

Indirect Discrimination:

• Characteristics: Neutral wording but a disparate impact on imported goods, resulting in a practical disadvantage.
• Examples: Higher taxes on cars with larger engines predominantly imported, while domestic cars with smaller engines have lower taxes.
• Case Law Example: Humblot v. Directeur des Services Fiscaux (1985), where France’s tax policy on cars was found to be indirectly discriminatory.

Question 73

: Can indirect discrimination through internal taxation be justified under EU law

Answer 73

• Legitimate Objectives: The measure must serve a recognized legitimate objective, such as public health, environmental protection, or consumer protection.
• Proportionality: The measure must be appropriate and necessary to achieve the objective, and it must be the least restrictive means available.
• Non-Protectionist Intent: The measure must not aim to provide indirect protection to domestic products and should genuinely pursue the stated objective.

Question 74

What conditions must be met to apply Art 110.1?

Answer 74

• Similarity: a comparison must be made between products which, at the same stage of production, have similar
  characteristics and satisfy the same consumer needs.
• Discrimination must be there. either Direct or Indirect.

NOTES:
Indirect means it is a justified charge but creates the same effect as a tax. e.g levying some charge in light tobacco and not on dark tobacco, but then it turns out, most of the light tobacco is imported

Question 75

What conditions must be met to apply Art 110.2?

Answer 75

• The imported product and the domestic product must be in competition with one another.
• The tax must protect the domestic product.

Question 76

What are Quantitative restrictions and measures of
equivalent effect ((Arts. 34, 35, and 36 TFEU)

Answer 76

Art. 34 TFEU prohibits quantitative restrictions on imports and all measures having equivalent effect.
* Art. 35 TFEU prohibits quantitative restrictions on exports, and all measures having equivalent effect.

Quantitative Restrictions on Imports:

Definition: Quantitative restrictions on imports are measures that limit the quantity or value of goods that can be imported into a member state.
Example: Import quotas that restrict the number of certain goods that can be imported.

Measures of Equivalent Effect:

Definition: Measures of equivalent effect are national rules or regulations that, while not directly limiting the quantity of imports, have the same restrictive impact on trade as quantitative restrictions.
Example: National technical standards or requirements that disproportionately affect imported goods compared to domestic goods.

Question 77

When Quantitative restrictions and measures of
equivalent effect are possible (Article 36 TFEU), what are the Proportionality Requirements?

Answer 77

While Articles 34 and 35 TFEU generally prohibit quantitative restrictions on imports and exports and measures of equivalent effect, Article 36 TFEU outlines specific conditions under which such restrictions can be justified. These conditions ensure that any restrictive measures serve legitimate public interests and are proportionate to the objectives they aim to achieve.

• Does the measure pursue a legitimate purpose?
• Is the measure appropriate? Is the measure suitable for achieving this purpose? Can it be achieved in a different way?
• Is the measure necessary? Does it go beyond what is necessary in order to attain it?

Question 78

A: Quantitative restrictions and measures of equivalent effect can be justified under Article 36 TFEU if they serve the following legitimate objectives

Answer 78

• Public Morality: Protecting societal values.
• Public Policy: Maintaining public order and security.
• Public Security: Safeguarding national security.
• Protection of Health and Life: Protecting human, animal, and plant health.
• Protection of National Treasures: Preserving cultural heritage.
• Protection of Industrial and Commercial Property: Protecting intellectual property rights.

Question 79

What is direct and indirect descrimination?

Answer 79

Direct Discrimination:Occurs when a measure explicitly treats imported/exported goods less favorably than domestic goods. Example: Higher taxes on imported goods.

Indirect Discrimination: Occurs when a measure, though neutral on its face, disproportionately disadvantages imported/exported goods. Example: Standards easier for domestic goods to meet.

Question 80

What is the difference between measures hindering market access and indirect descrimination?

Answer 80

Indirect Discrimination:

• Focus: Neutral measures with a disproportionate impact on imported/exported goods.
• Impact: Disadvantages imported/exported goods compared to domestic goods.
• Justification: Can be justified if proportionate and serving a legitimate objective.
• Example: Tax structures or standards disadvantaging imports.

Measures Hindering Market Access:

• Focus: Barriers to the entry of goods or services into the market.
• Impact: Directly restricts the ability of goods or services to enter and compete in the market.
• Justification: Scrutinized to ensure they do not unjustifiably restrict market access.
• Example: Licensing requirements or marketing restrictions limiting market entry.

Question 81

EXAM TIP: What is the difference when justifying between Direct and indirect discrimination?

Answer 81

For direct, we go straight to art 36. there isn’t much wiggle room
For indirect we can claim other things that are not mentioned in Art 36 like environmental protections, or prevention of unfair competiotion.

Question 82

What is the Principle of mutual recognition?

Answer 82

The principle of mutual recognition ensures that products and services legally produced or provided in one EU member state can be sold or offered in any other member state without additional restrictions, provided they meet equivalent standards. This principle is crucial for non-harmonized sectors and relies on mutual trust among member states. Exceptions are allowed for overriding public interest reasons, provided the measures are proportionate. Key cases like Cassis de Dijon (1979) have established and clarified this principle.

Question 83

EXAM TIP: What is the schema for solving Free movement of goods cases?

Answer 83

• Determine Direct effect of Art. 34 TFEU? (Unit I).
• Does it have Cross-border reference? (anything internal is covered by national laws). i.e can/is trade btwn MS affected?
• Is Art. 34 applicable? i.e Are we dealing with goods originated in a MS or in free circulation?
• is there Breach of Art.34?
• if yes, Quantitative restriction?
• or is it Measure having equivalent effect to a quantitative restriction?
• if yes, is it Product-bound measures or measures relating to selling arrangements?

if Product bound measures:
* is it Distinctly applicable? ie is it direct decriminination or something else?
* is it iIndistinctly applicable? i.e is it indirect?
* Any other measure which hinders market access?

if Measures relating to selling agreements:
* is it Applicable to all relevant traders operating within the national territory?
* It affects in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States?

is there Justification under Art. 36 TFEU or mandatory requirements?
* Legitimate purpose?
* Appropriate?
* Necessary

Question 84

What article applies when dealing with FMG within EU?

Answer 84

Art 28 TFEU

Question 85

What article applies when dealing with FMG with 3rd countries

Answer 85

Art 29 TFEU

Question 86

EXAM TIP: When dealing with FMG

Answer 86

It could be infrigment/hinderance in form on one of the following:
- Customs duties and charges of equivalent effect (Art 30 TEU)
- Discriminatory internal taxaxtion (Art 110 TFEU)
- Quantitative restrcitions and measures of equivalent effect (Art 34, 35 and 36)

Question 87

EXAM TIP: Check lecture 4 - 30 - 34 Minutes in

Answer 87

Talks about how to solve FMG

Question 88

What is reverse discrimination?

Answer 88

Reverse discrimination occurs when a member state of the European Union (EU) treats its own nationals less favorably than nationals of other member states. This situation typically arises because EU law prohibits discrimination between member states but does not regulate how a member state treats its own nationals in purely internal situations.

Question 89

What is the free movement of persons in the EU?

Question 90

What do Articles 45, 49, 56, and 57 TFEU cover in the context of the free movement in the EU?

Answer 90

Article 45 TFEU: Ensures the free movement of workers, prohibiting discrimination based on nationality in employment matters and guaranteeing equal treatment.

Article 49 TFEU: Grants the right to establish a business in another member state, covering self-employed persons and companies and ensuring non-discrimination.

Article 56 TFEU: Guarantees the free movement of services, allowing EU citizens and companies to provide and receive services across borders without unjustified restrictions.

Article 57 TFEU: Defines services broadly as those normally provided for remuneration, including a wide range of economic activities.

NOTES:
Personal scope:
* The rights of free movement apply only to those holding the nationality of one of the MS.
* Individuals and companies may be engaged in an economic activity.

Cross-border reference: individuals must move from one MS to another (home to host MS).

Question 91

What actions are prohibited in free movement of individuals?

Answer 91

• Refusal of entry/deportation.
• Discrimination. (direct or indirect)
• Non-discriminatory measures that hinder market access.

Question 92

What justifications are available for breaking the provisions of free movement of people

Answer 92

In case of direct discrimination, the measure can only be justified by one of the three express derogations of the Treaty
(Arts. 45.3, 52 and 61 TFEU):
* Public policy.
* Public security.
* Public health.

The Treaty also provides for a specific exception for employment in the public service for workers (Art. 45.4 TFEU), and
the exercise of official authority for establishment and services (Arts. 51 and 62 TFEU).

In case of indirect discrimination or hinder market access, public interest requirements can be alleged.

The exception or justification must be subjected to the principles of fundamental rights and the proportionality test.

Question 93

What does Article 45 TFEU entail regarding the free movement of workers?

Answer 93

• Rights Granted: EU nationals can move, reside, and work in another member state.
• Workers = Dependent Labour: Applies to those in an employment relationship performing genuine and effective economic activity.
• Work-Seekers: Includes individuals seeking employment, who retain the status of a worker for a reasonable period.
• Non-Discrimination: Prohibits discrimination based on nationality in employment and working conditions.
• Exceptions: Restrictions can be justified on grounds of public policy, security, and health, provided they are proportionate.

Question 94

What do Articles 49, 56, and 57 TFEU cover regarding the freedom of establishment and free movement of services?

Answer 94

Article 49 TFEU (Freedom of Establishment):

• Allows EU nationals to work in another member state in a self-employed capacity.
• Covers both primary and secondary establishment.
• Example: Gebhard (1995) - Establishment involves stable and continuous economic participation.

Article 56 TFEU (Free Movement of Services):

• Allows EU nationals to provide or receive services in another member state.
• Applies to temporary service provision, determined by duration, regularity, periodicity, and continuity.
• Example: Säger (1991) - Restrictions on services must be justified by imperative public interest and proportionate.

Article 57 TFEU (Definition of Services):

• Defines services as those normally provided for remuneration, covering industrial, commercial, craftsmen, and professional activities.
• Includes cross-border services where the service itself moves, not necessarily the provider or recipient.
• Example: Cowan v. Tresor Public (1989) - Tourists receiving services are entitled to protection under free movement of services.

Question 95

Some important things to remember about Arts. 49, 56 and 57 TFEU

Answer 95

• • Art. 49 TFEU, on freedom of establishment, allows EU nationals to work in another MS in a self-employed capacity.
• The concept of establishment within the meaning of the Treaty is a very broad one, allowing a Community national to
  participate, on a stable and continuous basis, in the economic life of a Member State other than his State of origin.
• • Art. 49 TFEU applies to both primary and secondary establishment.
• If the service provision is on a stable on continuous basis, Art. 49 TFEU applies. If the service provision is temporary,
  then Art. 56 TFEU applies:
  —–The temporary measure of the provision of services is to be determined in light of its duration, regularity,
  periodicity and continuity.
  —-Providers of services may also equip themselves in the host MS with the infrastructure necessary for the purpose of
  performing the service in question.
• Arts. 56 and 57 TFEU, on the free movement of services, allow EU nationals to provide or receive services in another
  MS. It also covers situations in which neither the provider nor the receiver move, but the service itself does.

Question 96

What is the scheme for answering questions on free movement of workers and services

Answer 96

Direct Effect:

Determine if the relevant treaty provisions (Articles 45, 49, or 56 TFEU) have direct effect.

• Direct Effect: Provisions of EU law that can be directly invoked by individuals before national courts.
• Example: “Article 45 TFEU has direct effect, allowing individuals to rely on it directly in national courts (Van Duyn v. Home Office, 1974).”

Cross-Border Reference:

Identify if there is a cross-border element involved.
* Cross-Border Element: The issue must involve more than one member state.
* Example: “John, a UK national, wishes to establish a business in France, involving a cross-border element.”

Applicability of Articles 45, 49, or 56 TFEU:

Determine which article applies:
* Article 45 TFEU: Free movement of workers (employed capacity).
* Article 49 TFEU: Freedom of establishment (self-employed capacity, stable and continuous economic activity).
* Article 56 TFEU: Free movement of services (temporary service provision).
* Example: “John’s intention to establish a business in France falls under Article 49 TFEU.”

Breach of Articles 45, 49, or 56 TFEU:

Analyze if there has been a breach of the relevant article.
* Breach: A national measure that restricts the free movement of workers, establishment, or services.
* Example: “A French regulation requiring additional permits for non-French nationals to establish businesses may breach Article 49 TFEU.”

Discrimination:

Determine if the measure involves discrimination.
* Direct Discrimination: Explicitly treats nationals and non-nationals differently.
* Indirect Discrimination: Neutral on its face but disproportionately affects non-nationals.
* Example: “Requiring additional permits for non-French nationals is direct discrimination under Article 49 TFEU.”

Non-Discriminatory Measures that Hinder Market Access:

Identify non-discriminatory measures that may still hinder market access.
* Hindering Market Access: Measures that do not discriminate based on nationality but still restrict access to the market.
* Example: “Complex regulatory requirements that apply equally to all but create significant barriers for market entry.”

Justification:

Examine if the measure can be justified.
* Public Interest Requirement or Express Derogation: Measures justified by public policy, public security, or public health (Articles 45(3) and 52 TFEU).
* Example: “France might justify additional permits for non-nationals on grounds of public policy.”

Proportionality:

Assess if the measure is proportionate.
* Proportionality: The measure must be suitable, necessary, and the least restrictive means to achieve the objective.
* Example: “The additional permits must be necessary to achieve the public policy objective and not go beyond what is required.”

Question 97

What is the difference between primary and secondary establishemnt?

Answer 97

Primary Establishment: Refers to the initial establishment or setting up of the principal place of business in a member state other than the individual’s or company’s home state.

Secondary Establishment: Involves setting up additional places of business, such as branches, agencies, or subsidiaries, in a member state while maintaining the principal place of business in the home state.

Question 98

Q: How do you differentiate between the application of Article 49 and Article 56 TFEU?

Answer 98

Article 49 TFEU (Freedom of Establishment):
* Stable and Continuous Presence: Applies to long-term or permanent economic activities.
* Physical Infrastructure: Requires setting up physical infrastructure like offices or branches.
* Example: Opening a permanent business in another member state.

Article 56 TFEU (Free Movement of Services):
* Temporary Services: Applies to short-term or temporary service provision.
* No Permanent Infrastructure: Does not require setting up permanent infrastructure.
* Example: Providing consulting services on a project basis across multiple member states.

Question 99

How does the availability or absence of remuneration affect the application of Articles 49 and 56 TFEU?

Answer 99

Article 49 TFEU (Freedom of Establishment):

• Presence of Remuneration: Involves economic activities with the expectation of earning income.
• Absence of Remuneration: Generally falls outside the scope of Article 49.
• Example: Setting up a business or professional practice to generate income.

Article 56 TFEU (Free Movement of Services):

• Presence of Remuneration: Covers services provided for payment or compensation.
• Absence of Remuneration: Not covered by Article 56, as services must involve remuneration.
• Example: Providing temporary consulting or professional services for a fee.

Question 100

What are the differences between an agency, branch, and subsidiary in business expansion?

Answer 100

Agency:
* Legal Status: Not a separate legal entity; represents the parent company.
* Liability: Parent company is fully liable.
* Activities: Limited to representation and marketing.

Branch:
* Legal Status: Not a separate legal entity; permanent establishment.
* Liability: Parent company is fully liable.
* Activities: Can perform a wide range of business activities.

Subsidiary:
* Legal Status: Separate legal entity; incorporated under host country’s laws.
* Liability: Parent company’s liability is limited to its investment.
* Activities: Can engage in all business activities allowed by incorporation laws.

Question 101

*

Question 102

What is the Freedom of Establishment under Articles 49, 54, and 55 TFEU?

Answer 102

Article 49 TFEU:

• Right to Establish: Allows EU nationals to establish and manage businesses in any member state under the same conditions as nationals.
• Primary and Secondary Establishment: Covers both setting up the main business and establishing branches or subsidiaries.
• Case Law: Gebhard (1995) - Restrictions must be non-discriminatory, justified, suitable, and proportionate.

Article 54 TFEU:

• Companies’ Right of Establishment: Extends the freedom of establishment to companies and firms.
• Equal Treatment: Companies are treated the same as individuals concerning establishment.
• Case Law: Centros Ltd (1999) - Companies can set up branches in other member states without restrictive measures.

Article 55 TFEU:

• Mutual Recognition: Allows for directives facilitating mutual recognition of companies’ legal status to eliminate establishment obstacles.
• Harmonization Measures: Directives help harmonize laws and ensure mutual recognition.
• Case Law: Daily Mail (1988) - Importance of mutual recognition and harmonization in company law.

Question 103

What are the “race to the top” and “race to the bottom” in the context of EU law?

Answer 103

Race to the Top:

• Definition: Competition where jurisdictions adopt higher regulatory standards to attract businesses and investments.
• Characteristics: Higher environmental, labor, and governance standards; positive competition; long-term benefits.
• Examples in the EU: High environmental standards in Scandinavian countries.

Race to the Bottom:

• Definition: Competition where jurisdictions lower regulatory standards and taxes to attract businesses and investments.
• Characteristics: Reduced environmental, labor, and governance standards; negative competition; short-term gains.
• Examples in the EU: Lower corporate tax rates to attract multinational companies

Question 104

What are “Connecting Factors”?

Answer 104

The connecting factor is the criterion used to establish which jurisdiction’s law applies to a company. This is important because different jurisdictions have different regulations regarding the formation, operation, and dissolution of companies.
The three main doctrines are the
* Real Seat Doctrine,
* the Incorporation Doctrine, and the
* Statutory Seat Doctrine.

Question 105

What are the Real Seat Doctrine, Incorporation Doctrine, and Statutory Seat Doctrine?

Answer 105

Real Seat Doctrine:

• Governed by: Laws of the country where the company’s central administration or real activities are conducted.
• Example: A company incorporated in Country A but managed in Country B is governed by Country B’s laws.

Incorporation Doctrine:

• Governed by: Laws of the country where the company is incorporated.
• Example: A company incorporated in Country A but operating in Country B is governed by Country A’s laws.

Statutory Seat Doctrine:

• Governed by: Laws of the jurisdiction indicated in the company’s bylaws.
• Example: A company with its statutory seat in Country A, incorporated in Country B, and operating in Country C is governed by Country A’s laws.

Question 106

Explain the Real Seat Doctrine

Answer 106

Definition:

The Real Seat Doctrine (also known as the “siège réel” or “siège social réel”) dictates that a company is governed by the laws of the country where it conducts its central administration or its real business activities.

Key Points:

• Central Administration: This refers to the location where the company’s central management and control are actually exercised, typically the headquarters.
• Real Activities: It focuses on where the primary business activities and decisions are made.

Implications:

• A company incorporated in one country but having its headquarters or central administration in another will be governed by the laws of the country where its real seat is located.
• Example: If a company is incorporated in Country A but its main business operations and management are in Country B, it will be governed by the laws of Country B.

Advantages:

• Alignment with Operations: Ensures that the company is regulated by the jurisdiction where it actually operates, which may facilitate compliance with local laws and regulations.
• Local Accountability: Enhances accountability to local authorities and stakeholders, fostering better integration with the local business environment.

Disadvantages:

• Relocation Challenges: If the company needs to move its central administration, it may have to re-incorporate under the laws of the new country, which can be complex and costly.
• Legal Uncertainty: Companies operating in multiple countries may face legal uncertainty regarding which jurisdiction’s laws apply, especially if they have significant operations in multiple locations.

Question 107

Explain the Incorporation Doctrine

Answer 107

Definition:

The Incorporation Doctrine states that a company is governed by the laws of the country in which it is incorporated, regardless of where it conducts its business activities.

Key Points:

• Place of Incorporation: This refers to the jurisdiction in which the company is legally registered or incorporated.
• Legal Existence: The laws of the incorporation country determine the company’s formation, legal status, and dissolution.

Implications:

• A company will always be subject to the laws of the country in which it was incorporated, even if it operates predominantly in another country.
• Example: If a company is incorporated in Country A but conducts most of its business in Country B, it will still be governed by the laws of Country A.

Advantages:

• Legal Certainty: Provides clear and stable legal governance based on the country of incorporation, reducing uncertainty for the company.
• Flexibility in Operations: Allows the company to operate internationally without the need to comply with multiple legal systems based on where it conducts its activities.

Disadvantages:

• Regulatory Arbitrage: Companies may choose jurisdictions with lenient regulations, potentially leading to regulatory arbitrage and inconsistent application of standards.
• Disconnection from Operations: There may be a disconnect between the legal governance and the actual operational environment, which could complicate compliance and enforcement.

Question 108

Explain the Statutory Seat Doctrine

Answer 108

Definition:

The Statutory Seat Doctrine means that a company is governed by the laws of the jurisdiction indicated in its bylaws (statutes) as the official seat of the company.

Key Points:

• Bylaws (Statutes): The company’s internal governing document specifies the official seat.
• Designated Seat: This seat may not necessarily coincide with the place of incorporation or the real seat.

Implications:

• The company’s governance is based on the location specified in its bylaws, which may be chosen for strategic reasons such as favorable legal conditions.
• Example: If a company’s bylaws indicate that its official seat is in Country A, but it is incorporated in Country B and operates in Country C, the laws of Country A will govern it.

Advantages:

• Strategic Choice: Allows companies to strategically choose a favorable legal environment for governance based on their needs.
• Flexibility in Structuring: Offers flexibility in corporate structuring and planning, as the statutory seat can be selected independently of operational or incorporation considerations.

Disadvantages:

• Complexity in Governance: Can create complexity and potential conflicts if the statutory seat, incorporation, and operational locations are all different.
• Potential for Abuse: Similar to the incorporation doctrine, it may lead to regulatory arbitrage, where companies choose jurisdictions with less stringent regulations.

Question 109

What are the 3 conditions necesaary for For Arts. 56 and 57 TFEU to apply

Answer 109

• There must be a service.
• Normally provided for remuneration.
• Must be temporary.

Question 110

In what 3 situations do Arts. 56 and 57 TFEU apply?

Answer 110

• Freedom to travel to provide services.
• Freedom to travel to receive services.
• Neither provider nor recipient travels.

Question 111

What measures are prohibited When it comes to Freedom to provide services?

Answer 111

Discrimination:
* Direct.
* Indirect.

Non-discriminatory measures that hinder market access.

Question 112

What are the fundamental freedoms provided by EU law?

Answer 112

Free Movement of Goods (Articles 28-37 TFEU):
* Abolition of customs duties and quantitative restrictions.
* Example: Commission v. Italy (1968).

Free Movement of People (Articles 45-55 TFEU):

• Right for workers to move, reside, and work across the EU without discrimination.
• Right to establish businesses and reside anywhere in the EU.
• Example: Lawrie-Blum (1986).

Free Movement of Services (Articles 56-62 TFEU):

• Right to provide and receive services across borders.
• Temporary provision of services.
• Example: Säger (1991).

Free Movement of Capital (Articles 63-66 TFEU):

• Prohibition of restrictions on cross-border capital movements and payments.
• Example: Commission v. Portugal (2000).

Question 113

*

What justifications are posible When it comes to measures against Freedom to provide services?

Answer 113

In case of direct discrimination, the measure can only be justified by one of the three express derogations of
the Treaty (Arts. 52 and 61 TFEU):
* Public policy.
* Public security.
* Public health.

In case of indirect discrimination or hinder market access, public interest requirements can be alleged.

The exception or justification must be subjected to the proportionality test.

Question 114

What is the difference between the freedom to provide services and the freedom of establishment?

Answer 114

Freedom to Provide Services (Articles 56-62 TFEU):

• Temporary Nature: Services provided on a temporary basis.
• No Permanent Infrastructure: Does not require a permanent presence in the host member state.
• Examples: Consultant working on a project abroad.
• Case Law: Säger (1991) - Justification by public interest must be proportionate

Freedom of Establishment (Articles 49-55 TFEU):

• Permanent Nature: Involves setting up a stable and continuous presence.
• Requires Legal and Physical Presence: Establishes a legal entity or office in the host member state.
• Examples: Company setting up a branch or subsidiary.
• Case Law: Gebhard (1995) - Measures must be non-discriminatory and proportionate.

Question 115

Recap

Answer 115

1. Free Movement of Goods (Arts- 28-37 TFEU)

Key Points:

• Customs Union: Abolishes customs duties and quantitative restrictions (quotas) between member states.
• Prohibition of Measures: Bans measures having equivalent effect to customs duties and quotas.
• Example: A German company can export its products to France without paying customs duties.

2. Free Movement of People
A. Free Movement of Workers - Articles 45-48 TFEU

Key Points:
* Right to Work: EU nationals can seek employment, work, and reside in any member state.
* Non-Discrimination: Prohibits discrimination based on nationality in employment, remuneration, and other working conditions.
* Example: A Spanish engineer can move to Italy to work and enjoy the same rights as Italian workers.

B. Right of Establishment - Articles 49-55 TFEU.
Key Points:
* Permanent Business Presence: Allows individuals and companies to establish and manage undertakings in any member state under the same conditions as nationals.
* Primary and Secondary Establishment: Includes setting up a main business (primary) or branches, agencies, and subsidiaries (secondary).
* Example: A French lawyer can open a law firm in Germany, and a Dutch company can set up a branch in Spain.

3. Free Movement of Services - Articles 56-62 TFEU
Key Points:

• Temporary Services: Allows individuals and companies to provide and receive services across borders temporarily.
• No Permanent Presence Needed: Service providers do not need a permanent establishment in the host member state.
  Practical Application:
• Example: An Italian IT consultant can offer consulting services to clients in Austria without setting up an office there.

Question 116

What are problems of recognition?

Answer 116

Recognition issues in the EU arise when there are difficulties in ensuring that qualifications, legal statuses, or regulatory standards from one member state are accepted and upheld in another. These problems can hinder the free movement of people, services, and goods, and may involve several key areas:
* Professional Qualifications
* Legal Entity Recognition
* Academic Qualifications
* Product Standards and Certifications
* Judicial and Administrative Decisions

Potential Solutions and Legal Frameworks
* Mutual Recognition Principle: The EU employs the principle of mutual recognition to address many of these issues, where the acceptance of each member state’s standards and qualifications is encouraged
* Harmonization of laws through EU regulations and directives
* European Qualifications Framework (EQF): The EQF helps relate different countries’ national qualifications systems to a common European reference framework, making it easier to understand and recognize qualifications across borders
* Judicial Cooperation:

Question 117

What are Distinctions between non-limited liability and
limited liability companies

Answer 117

• Limited liability companies have a separate legal personality and are responsible with its assets for its liabilities.
• Non-limited liability companies are those where the shareholders are liable with the company for the
  liabilities of the company.
• European company law focuses more on limited liability companies.

Question 118

What are distinctions Distinction between public and private companies

Answer 118

• Public companies´ shares are freely tradable and transferrable. They can (but must not compulsory) be
  listed, and therefore their legal structure is more rigid.
• Private companies´ shares are not freely tradable/transferable, so they have a closed character, and their legal
  structure is more flexible.
• European company law is more focused on public companies.

Question 119

What is cross-border conversion?

Answer 119

Cross-border conversion refers to the process by which a company registered in one EU member state changes its legal form and re-registers in another member state without dissolving or liquidating the original entity. This process allows companies to move their registered office, headquarters, or principal place of business across EU borders while maintaining their legal identity and continuity of operations.