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					    HARA 32 European Business Law in
       Cross Border Transactions

                    Free movement of
                       services and
                      establishment



1
    Objectives – Free movement of services

       Resource Guide
       Basic theory and concepts
       Sources of law
       Scope of Article 56 (ex 49 TEC)
       Derogations and imperative requirements
       Current issues on services: The service
        directive and implications
       Mini case exercise
2
    Resource Guide

       http://ec.europa.eu/youreurope/business/inde
        x_en.htm
       http://eur-lex.europa.eu/en/index.htm
       TFEU
       The substantive law of the EU
        –   Freedom to provide and receive service
        –   Justifications pg 491-498


3
    Basic theory and concepts

       From a legal viewpoint -distinction between
        –   Services, establishment?
        –   Employed, self employed
        –   Workers, temporary service provider
       Nationality versus residence
       Nationality – individuals versus companies
        –   Theory of incorporation
        –   Real seat theory


4
    What is Corporate Mobility?

    Moving primary or secondary establishment
     Moving secondary establishment: provided in
      the treaty, much guarded by the ECJ
     Moving primary establishment:
      –   moving HQ (real seat)
      –   moving registered office.



5
    Two conflicting theories
    arising from differing deeply held convictions


         Place of Incorporation      Real Seat (Siège réel)
                  Theory                      Theory
              Netherland                    Germany
                  UK                         France
                                              Italy
                Ireland
                                             Austria
                Sweden
                                            Belgium
               Denmark                       Spain
                Finland                      Greece
                                            Portugal
                                          Luxembourg

6
            Implications of moving real seat
Move from




            Incorp
            theory



              Real
              Seat


                      Incorp   Move to   Real
7                     theory             Seat
    Sources of law
    - Free movement of services

       TFEU Articles 56-62

       Citizens Rights Directive 2004/38

       Service directive 2006/123/EC




8
    Article 56-57

       Restriction to provide services prohibited
        –   Direct Effect through 33/74 Van Binsbergen
       Cross border element
       Article 57
        –   Provided for remuneration
        –   Not governed by goods, K, persons
        –   Include: activities of industrial, commercial,
            craftsman, profession
        –   Temporary pursue his activity in the state where
            the service is to be provided
9       –   No discrimination provision
     Articles 58-62

        Article 58 – special provisions wrt transport, banking
         and insurance sectors
        Article 59 & 60 – provides legal basis for institutions
         to issue directives and make recommendations
        Article 61 – Measures applied without distinction on
         grounds of nationality and residence
        Article 62 – refers to Articles 51-54 on establishment
         applicable to services including justifications (Art. 52)


10
     ECJ case law on FMS



       1995                   1999                   2005

              Deciding over          Deciding over
              40 cases               140 cases




11
     Why? Effect of case law

        Expansion of scope of 56
         –   What constitutes a service
         –   Discriminatory to double burden to market access
             (non discriminatory provisions caught)
         –   Human rights as a sword for free movement of
             services




12
     Scope of Article 56-57

         Cross border element
         Remuneration?
           – Economic link
           – Does the payer or payment matter?
         Freedom to provide and receive services
           – Travel of producer, consumer & service itself




13
     Continued...

        Can illegal activities constitute services?
         –   If lawful in some ms, a remunerated activity = service
         –   ms remain free to regulate and restrict (proportionate , non
             discriminatory on grounds of nationality and place of est)
        Restriction on social benefits?
         –   Compensation financed by treasury cannot alter rules
             regarding protection of rights guaranteed by the treaty
         –   Directive 2004/38 --equal treatment of EU citizens that live
             in host state



14
     Does it matter if the consumer is
     not the payer or only payer?

      263/86 Humbel case (not overruled but applicability of
       reasoning restricted
      C-109/92 Wirth case (fall under Art 56)
      C-157/99 Garaets-Smits and Peerbooms
      C372-04 Watts case
     Once there is a cross border dimension, patient can act
       as a consumer of healthcare service in another state
       and seek payment from own system, Art 56 applies


15
     Derogations and imperative
     requirements

        Discriminatory measures
         –   Distinctly applicable measures
         –   Indistinctly applicable measures
         –   Non discriminatory measures
      Measures that are liable to prohibit or impede
       market access
     Figure 14.2 and 14.3


16
     Justifying restrictions

        Public policy , health and security
        Imperative requirements (gebhard)
          – Test:
              pursuit of legitimate public interest;
                     (economic aim not legitimate aim)
              non discriminatory
              Suitable for securing attainment of the objective
              Should not go beyond what is necessary to
               obtain the objective
17
     Justifications cont’d

        C-288/89 Gouda
         –   ECJ list public interest grounds already recognised
         –   MS show link between national measures and justification they
             invoke
        List not exhaustive: built on e.g. in Alpine & Schindler.....
        Chalmers classification 4 groups:
         –   Market externalities
         –   Civil liberties
         –   Socio-cultural practices
         –   Preservation of public order

18
     Service Directive

        Where did it all start?
        Why service directive?
         –   Economic assessment of the barriers to the internal market
             (Copenhagen economics), CPB (Netherlands)
         –   Services almost 70% GNP and jobs in EU, full economic
             potential hampered by barriers imposed by home and host
             state, only 20% of services have a cross border dimension
         –   Narrow the productivity gap between Euro area and the US
         –   CE: 600 000 jobs, effect on economic welfare in EU amount to
             37 billion Euros
         –   Effect of removing barriers
                 Reduced price
                 Rise in output
                 Generate employment
19               Intensify trade
     Article 5 (Simplification of procedures)


                              Provides for administrative
      Long delays and         simplification. Member
      considerable cost to    States will be required in
      obtain authorisations   particular to accept any
      and fulfilling          document from another
      administrative          Member State which
      formalities             serves an equivalent
                              purpose or from which it is
                              clear that a particular
                              requirement has been
                              satisfied
20
         Article 6 (Single point of contact)
         Article 7 (Right to information)


        complex process in              One stop shop at a
         order to establish               single contact point
         themselves in other
         Member States. It is
         difficult to get the
         relevant information.
        Relevant information            Relevant information to
         difficult and costly to          be made accessible
         obtain


21
     Article 8,9 (Procedures by electronic means and
     authorization schemes)


        Time and cost having to      Electronic means
         carry out procedures to       available
         set up establishment in
         person
        Burdensome                   Member states review
         authorisations and            authorisation process.
         licenses required             Consider public
                                       interest, suitable and
                                       proportionate


22
        Article 10 (Conditions        Authorization
         for the granting of an         procedures and
         authorisation)                 formalities shall be clear
        Article 11 (Duration of       made public in advance
         authorization)                 and be such as to
        Article 12 (selection          provide the applicants
         among several                  with a guarantee that
         candidates)                    their application will be
        Article 13(Authorization       dealt with objectively
         procedures)                    and impartially

23
24
     Freedom to provide services

    Multitude of          Article 16 Member States shall respect the right of
     national               providers to temporarily provide services in or
     restrictions           toward a Member State other than that in which
    Costly, time           they are established.
     consuming, legal      For areas not covered by derogations a service
     uncertainty in         provider will be subject to the rules and
     entering country       regulations of the Member State of establishment,
     to provide             whereas the host Member State may impose
     services               requirements in its territory that are justified for
                            reasons of public policy, public security, public
                            health or the protection of the environment, are
                            non-discriminatory and proportionate.


25
     Freedom to receive services


        Restrictions      Article 19 MS will be prohibited from
         on service         imposing discriminatory req on service
                            recipients which restrict their use of a service
         recipients         provided in another ms.
                           Article 20 Recipients of services shall not be
                            made subject to discriminatory reqs based
                            on either nationality or place of residence
                            without objective reasons
                           Article 21 right of recipients to obtain, in
                            their home ms, general information and
                            assistance on the legal requirements, in
                            particular consumer protection rules, and on
                            redress procedures applicable in other ms
26
     Improving service quality

        Difficult to make      Article 22 Service providers will
         informed choices        have to make key information to
                                 recipients easily available about
                                 themselves and their services
                                Article 25, 29 removal of the
                                 total bans on commercial
                                 communications by the
                                 regulated professions,
                                 multidisciplinary activity
                                Article 37 stimulate professional
                                 associations to draw up codes
                                 of conduct at European level
27
28
29
     Dispute settlement

     Article 32
      Member States to require service providers to
       supply a postal address, fax number or email
       address to which all recipients, including those
       resident in another Member State, can send a
       complaint or a request for information on the service
       provided.
      They will also be required to take measures to
       ensure that service providers respond to
       complaints in the shortest possible time and make
       best efforts to find satisfactory solutions.
30
31
32
     Supervision, cooperation

     Articles 28-36
      Administrative cooperation between the
       competent authorities of different Member
       States should ensure effective supervision of
       service providers across the EU




33
34
     Four main objectives

        to ease freedom of establishment for providers and
         the freedom of provision of services in the EU;
        to strengthen rights of recipients of services as users
         of the latter;
        to promote the quality of services;
        to establish effective administrative cooperation
         among the Member States.



35
         Excluded from scope

        non-economic services of general interest;
        financial services
        electronic communications services
        transport services,
        services of temporary work agencies;
        healthcare services;
        audiovisual services;
        gambling;
        activities which are connected with the exercise of
         official authority; certain social services etc
36
     Relationship of directive with Treaty
     provisions on services and establishment




37

				
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