Part III
Substantive Law
Introduction
In the first half of the twenty-first century, services (and capital) have moved to the heart of the European economy. Yet the Treaty freedoms dealing with the liberalisation of services and capital long suffered from a ‘shadow existence’. The nocturnal status of the third and the fourth freedoms thereby stemmed from different constitutional causes. For services, it lay in the ambivalent status of the services provisions. The Treaties appeared to treat them as a ‘subordinate’ freedom – the services chapter only applies ‘in so far as [services] are not governed by the provisions relating to the freedom of movement for goods, capital and persons’. The nocturnal existence of the capital chapter originated from a different constitutional cause. Its ‘backwardness’ stemmed from the fact that the original capital provisions had left the liberalisation effort entirely in the hands of the Union legislator. This predominance of positive integration only changed with the 1992 Treaty on European Union. The latter radically redrafted the capital chapter; and its provisions would henceforth be directly effective – belatedly giving rise to the forces of negative integration.
This fourth and final chapter on the Union’s internal market explores the third and the fourth freedom of movement: the freedom of services and the freedom of capital (Table 16.1). Section 1 analyses the general aspects of the free movement of services. We shall see there that the Court has significantly pushed negative integration through a restriction rationale; yet the Union has also followed a positive integration path in the form of the ‘Services Directive’. Section 2 moves to two special – and very controversial – services regimes, namely that for posted workers and that for public services. By contrast, sections 3 and 4 deal with the free movement of capital – with the former section analysing the scope of the (negative) freedom, whereas the latter surveys the various grounds on which restrictions to the free movement of capital may be justified.
Cases
Legislation
EU Regulations
Regulation (EEC) No. 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community, [1971] OJ English Special Edition 416
Regulation (EC) No. 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community, [2005] OJ L 309/9
EU Directives
First Council Directive of 11 May 1960 for the implementation of Article 67 of the Treaty, [1959–1962] OJ English Special Edition 49
Second Council 63/21/EEC Directive of 18 December 1962 adding to and amending the First Directive for the implementation of Article 67 of the Treaty, [1963– 1964] OJ English Special Edition 5
Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums, [1977] OJ L 336/15
Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty, [1988] OJ L 178/5
Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, [1989] OJ L 298/ 23
Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, [1997] OJ L 18/1 (Posted Workers Directive)
Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, [2003] OJ L 157/38
Directive 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications, [2005] OJ L 255/22
Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, [2005] OJ L 309/15
Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, [2006] OJ L 376/36 (Services Directive)
Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital, [2008] OJ L 46/11
Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services, [2010] OJ L 95/1 (Audiovisual Media Services Directive)
Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC, [2011] OJ L 64/ 1
Directive 2011/24/EU of the European Parliament and of the Council of 9 March 2011 on the application of patients’ rights in cross-border healthcare, [2011] OJ L 88/45
Figures
No figures available for this chapter.
Extra Materials
Useful websites
BBC Q&A: Services Directive
European Commission: Freedom to provide services / Freedom of establishment
European Commission: Free movement of capital
European Commission: Posted Workers
European Commission: Services Directive
European Commission: Single Market for Services
European Parliament Fact Sheet: Freedom of establishment and freedom to provide services
European Parliament Fact Sheet: Free Movement of Capital
Gov.uk: Government Guidance – EU Services Directive
Further Reading
Books
M. Andenas and W.-H. Roth, Services and Free Movement in EU Law (Oxford University Press, 2003)
I. Antonaki, Capital, Market and the State: Reconciling Free Movement of Capital with Public Interest Objectives (Brill, 2021)
C. Barnard, The Substantive Law of the EU: The Four Freedoms (Oxford University Press, 2013)
V. Hatzopoulos, Regulating Services in the European Union (Oxford University Press, 2012)
S. Hindelang, The Free Movement of Capital and Foreign Direct Investment: The Scope of Protection in EU Law (Oxford University Press, 2009)
S. Mohamed, European Community Law on the Free Movement of Capital and EMU (Brill, 1999)
J. Snell, Goods and Services in EC Law: A Study of the Relationship between the Freedoms (Oxford University Press, 2002)
F. Weiss and C. Kaupa, European Union Internal Market Law (Cambridge University Press, 2014)
Articles
C. Barnard, ‘Unravelling the Services Directive’ (2008) 45 CML Rev 323
A. Cordewener, ‘Free Movement of Capital between EU Member States and Third Countries: How Far Has the Door Been Closed?’ (2009) 18 EC Tay Review 260
G. Davies, ‘Welfare as a Service’ (2002) 29 Legal Issues of Economic Integration 27
P. Delimatsis, ‘From Sacchi to Uber: 60 Years of Services Liberalization, Ten Years of the Services Directive in the EU’ (2018) 37 YEL 188
S. Garben, ‘Posted Workers are Persons Too! Posting and the Constitutional Democratic Question of Fair Mobility in the European Union’, in N. Nic Shuibhne (ed.), Revisiting the Fundamentals of the Free Movement of Persons in EU Law (Oxford University Press, 2023), 39
S. Kingston, ‘The Boundaries of Sovereignty: The ECJ’s Controversial Role Applying Internal Market Law to Direct Tax Measures’ (2006–7) 9 Cambridge Yearbook of European Legal Studies 287
S. O’Leary and J. Fernandez-Martin, ‘Judicially Created Exceptions to Free Provisions of Services’ in M. Andenas and W.-H. Roth (eds.), Services and Free Movement in EU Law (Oxford University Press, 2002), 163
S. Peers, ‘Free Movement of Capital: Learning Lessons or Slipping on Spilt Milk’, in C. Barnard and J. Scott (eds.), The Law of the Single European Market: Unpacking the Premises (Hart, 2002), 333
J. Snell, ‘Free Movement of Capital: Evolution as a Non-linear Process’ in P. Craig and G. de Búrca (eds.), The Evolution of EU Law (Oxford University Press, 2011) 547
B. van Leeuwen, ‘The Patient in Free Movement Law: Medical History, Diagnosis and Prognosis’ (2019) 21 CYELS 162
K. Vriesendorp, ‘Article 16 of the Services Directive: The Potential and Future of a Dormant Provision’, (2023) 48 EL Rev. 62
How to Find (and Read) the EU Treaties
The EU Treaties constitute the primary law of the Union. The formula the ‘EU Treaties’ or simply ‘the Treaties’ commonly refers to two Treaties: the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU).
The ‘Treaties’ are the result of a long ‘chain novel’ of consecutive treaties (see Table 20.1). They started out from three ‘Founding Treaties’ that created the European Coal and Steel Community (1951), the European Atomic Energy Community (1957) and the European (Economic) Community (1957). A myriad of subsequent ‘Amendment Treaties’ and ‘Accession Treaties’ gradually changed the textual basis of the three Communities significantly; and this first treaty base would be complemented by a second treaty base in 1992, when the Maastricht Treaty created the (old) European Union.
To simplify the – very complex – textual foundations of the old European Union and European Communities Treaties, the Member States tried to create a single treaty in the early 2000s. The 2004 Constitutional Treaty was indeed intended to repeal all previous treaties; and it was to merge the European Union with the European Communities. Yet the attempt to ‘recreate’ one Union, with one legal personality, on the basis of one treaty failed; and the Member States thereafter resorted to yet another ‘Amendment Treaty’: the 2007 Reform Treaty – also called the Lisbon Treaty.
Despite its modest name, the Lisbon Treaty constitutes a radical new ‘chapter’ in the Union’s constitutional chain novel. For while it formally builds on the original ‘Founding Treaties’, it has nonetheless ‘merged’ the old ‘Community’ legal order with the old ‘Union’ legal order into a new ‘Union’ legal order.
Nevertheless, unlike the 2004 Constitutional Treaty, the 2007 Lisbon Treaty has not created a single treaty base for the European Union. Instead, it recognises the existence of two (main) treaties: the Treaty on European Union and the Treaty on the Functioning of the European Union. The division into two EU Treaties thereby follows a functional criterion: the Treaty on European Union (TEU) contains the general provisions defining the Union, while the Treaty on the Functioning of the European Union (TFEU) contains the specific provisions with regard to the Union institutions and policies. One of the new features of the post-Lisbon era is the possibility of minor treaty amendments instigated by European Council Decisions.
In addition to ‘Amendment Treaties’ there are now also ‘Amendment Decisions’ adopted by the European Council (see Table 21.4). The EU Treaties can today be found on the European Union’s
EUR-Lex website: http://eur-lex.europa.eu/collection/eu-law/treaties.html, but there are also a number of solid paper copies such as Blackstone’s EU Treaties & Legislation or my own EU Treaties and Legislation collection. What is the structure of today’s EU Treaties? The structure of the TEU and TFEU is shown in Table 20.4. The (longer) TFEU is divided into ‘Parts’ – ‘Titles’ – ‘Chapters’ – ‘Sections’ –‘Articles’, while the (shorter) TEU only starts with a division into ‘Titles’. The EU Treaties are joined by numerous Protocols and the ‘Charter of Fundamental Rights’. According to Article 51 TEU, Protocols to the Treaties ‘shall form an integral part thereof’; and the best way to make sense of them is to see them as legally binding ‘footnotes’ to a particular article or section of the Treaties.
By contrast, the Charter is ‘external’ to the Treaties; yet it also has ‘the same legal value as the Treaties’.
How to Find (and Read) EU Secondary Law
The Union publishes all of its acts in the Official Journal of the European Union. Paper versions can be found in every library that houses a ‘European Documentation Centre’, but electronic versions are also openly available on the Union’s EUR-Lex website: http://eur-lex.europa.eu/oj/direct-access.html. The Union distinguishes between two Official Journal series: the L-series and the C-series. The former contains all legally binding acts adopted by the Union (including its international agreements), while the latter publishes all other information and notices. Originally, only the paper version of the Official Journal was ‘authentic’; but since 1 July 2013, electronic versions of the Official Journal (e-OJ) are equally authentic and therefore endowed with formal legal force.
Union secondary law will first mention the instrument in which it is adopted. It will typically have the form of a ‘Regulation’, a ‘Directive’ or a ‘Decision’. This will be followed by two figures. In the past, where the Union act was a regulation, the figure was: number/year; while for directives and decisions this was inversed: year/number. However, since 2015, this has changed and all main Union instruments are now arranged by year/number.treaty base would be complemented by a second treaty base in 1992, when the Maastricht Treaty created the (old) European Union.
Where the year and number are known for a given EU act, the easiest way to find it is to use the Union’s EU-lex search engine: http://eur-lex.europa.eu/homepage.html. Importantly, there may be two or more acts for a given number combination, especially where a ‘legislative’ act has been followed by a non-legislative act. For two types of non-legislative acts – namely: ‘delegated’ and ‘implementing’ acts – the EU Treaties require that they contain the word ‘delegated’ or ‘implementing’ in their title. This is to indicate – at first glance – that these executive acts have been adopted according to a particular decision-making procedure. States thereafter resorted to yet another ‘Amendment Treaty’: the 2007 Reform Treaty – also called the Lisbon Treaty.
What is the structure of a piece of Union legislation? After its ‘Title’ there follows a brief summary of the decision-making procedure that led to the adoption of the act – including a reference to the legal competence on which it was based. Thereafter comes the ‘Preamble’, which sets out the reasons for which the Union act has been adopted. The content of the act is subsequently set out in various ‘articles’, which may be grouped into ‘Sections’ and ‘Chapters’. For very technical Union legislation, there may also be an Annex – which, like a ‘Schedule’ in a UK statute, adds detailed provisions ‘outside’ the core content of the act. To illustrate this legislative structure, let us take a closer look at the Services Directive as it would be published in the Official Journal.
How to Find (and Read) EU Court Judgments
All EU cases are identified by a number/year figure. Cases before the Court of Justice are preceded by a C-, while cases decided before the General Court are preceded by a T-( for the French ‘Tribunal’).7 The Civil Service Tribunal prefixed its cases with an F-( for the French ‘Fonction publique’). Following this unique figure come the names of the parties to the case. A full case name would for example be: Case C-144/ 04, Werner Mangold v. Rüdiger Helm. However, since no one can remember all the numbers or all the parties, EU cases often get simply abbreviated by the main party; in our case Mangold.
In the past, judgments of all EU Courts were published in paper form in the purple-bound European Court Reports (ECR). Cases decided by the Court of Justice were published in the ECR-I series; cases decided by the General Court were published in the ECR-II series, while cases decided by the Civil Service Tribunal were published in the ECR-SC series. However, as of 2012, the entire Court of Justice of the European Union decided to go ‘paperless’ and it now publishes its judgments only electronically.8 The two principal websites here are the Court’s own curia website (http://curia.europa.eu/jcms/jcms/j_6), and the Union’s general EUR-Lex website (http://eur-lex.europa.eu/homepage.html). For the purposes of this book, the easiest way is however to go to www.schutze.eu, which contains all the judgments mentioned in the main text – including the ‘Lisbon’ version of all classic EU Court judgments.
Once upon a time, judgments issued by the European Court were – to paraphrase Hobbes –‘nasty, brutish and short’. Their shortness was partly due to a structural division the Court made between the ‘Issues of Fact and of Law’ (or later: ‘Report for the Hearing’), which set out the facts, procedure and the arguments of the parties, on the one hand, and the ‘Grounds of Judgment’ on the other. Only the latter constituted the judgment sensu stricto and was often very short indeed. For the Court originally followed the ‘French’ ideal of trying to put the entire judgment into a single ‘sentence’! A judgment like Van Gend en Loos contains about 2,000 words – not more than an undergraduate essay.
This world of short judgments is – sadly or not – gone. A typical judgment issued today will, on average, be four to five times as long as Van Gend. (And in the worst-case scenario, a judgment, especially in the area of EU competition law, may be as long as 100,000 words – a book of about 300 pages!) This new comprehensiveness is perhaps the product of a more refined textualist methodology, but it also results from a change in the organisation and style of judgments. Modern judgments have come to integrate much of the facts and the parties’ arguments into the main body of a ‘single’ judgment, and this has especially made many direct actions much longer and much more repetitive! The structure of a modern ECJ judgment given under the preliminary reference procedure may be studied by looking at Figure 20.2.
How to Find EU Academic Resources
The literature with regard to European Union law has exploded in the last 30 years. Today, there exists a forest of European law journals and generalist textbooks. Moreover, since the mid 1990s ‘European’ law has increasingly developed specialised branches that are sometimes even taught separately at university (as is the case at my own university). The three main branches here are: European constitutional law, European internal market law and European competition law. The first was explored in Parts I and II, while the second branch (and elements of the third branch) were covered in Part III. In addition to these three ‘bigger’ branches, the last two decades have also seen the emergence of many ‘smaller’ branches, such as European external relations law, European labour law and European environmental law. And there now also exist specialised LLM courses on EU consumer law and EU tax law.
The list of journals (Table 21.5) is by no means comprehensive. It is meant to point the interested reader to a first gateway for an in-depth study of a particular part of European Union law. My selection focuses primarily on English-language academic sources. But it goes without saying that European Union law is a ‘European’ subject with journals and textbooks in every language of the Union.
