ID 8849
Ihle-Masip, Maria Inmaculada:
The relationship of the Free Movement of Capital to the other Fundamental Freedoms
Hamburg: Diplomica GmbH, 2005
Zugl.: Wirtschaftsuniversität Wien, Diplomarbeit, 2005
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INFORMATION ON THE AUTHOR
Maria
Inmaculada
Ihle-Masip
inma_ihle@yahoo.de
Date and Place of birth: January 19, 1980, Barcelona
EDUCATION
VIENNA UNIVERSITY OF BUSINESS ADMINISTRATION AND ECONOMICS,
Austria
Master in International Business Administration - Majors in: Management,
Managerial Accounting and Consulting as well as International
Management and Marketing
UNIVERSITY OF VIENNA, Austria
Master in Law - special emphasis on European Law
UNIVERSITY OF TECHNOLOGY SYDNEY, Australia
Exchange semester - courses in international management and marketing
HÖHERE INTERNATSSCHULE DES BUNDES SAALFELDEN, Austria
(grammar school with special focus on languages)
Degree received with an average grad of A
+
10/2000 - 04/2005
10/1999 - 03/2005
07/2003 - 12/2003
09/1990 - 06/1998
LANGUAGES AND SOFTWARE SKILLS
Catalan
Spanish
German
English
French
Portuguese
Software skills
native language
native language
native language
excellent in written and spoken - business and legal language
very good - business language
basic knowledge
Advanced skills in the application of PowerPoint, Word, Excel and other MS-
Office Programs. Statistic software packages: SPSS, R. RDB & RIS training
(legal data bases).
WORKING EXPERIENCE
Office of the Austrian Federal Trade Commission in Helsinki, Finland
Coordination and processing of inquires on behalf of Finish, Baltic and
Austrian companies; production of market reviews updates on the Finish
industry; usage of the CRM-data base.
Mondi Business Paper (former Neusiedler AG) - Managerial Accounting
Department - Vienna, Austria
Preparation and clarification of legal and tax issues; support with the
monthly reporting; account managing of the company's subsidiaries in
Western Europe; financial appraisal for computing equipment,
management of receivables, reduction of bank charges with final
consumers at Neusiedler España S.A.
07/2004
07/2002 - 10/2002
ADDITIONAL INFORMATION
Diploma thesis within the EUCOTAX-Program - Topic: The relationship of
the Free Movement of Capital to the other Fundamental Freedoms - presented
in Tilburg, Holland at a meeting of renowned international tax law experts
UNIVERSIDAD AUTÓNOMA DE MADRID, Spain
unregistered student attending various Spanish and French courses
08/2005 - 04/2005
10/1998 - 06/1999
To Diego.
3
1 Introduction ...5
2 General Principles and Function of the Fundamental Freedoms...6
2.1
Aim and Purpose of the Fundamental Freedoms... 6
2.2
Beneficiaries and Addressees of the Fundamental Freedoms ... 7
2.3
Substantive scope of the Fundamental Freedoms ... 9
2.4
Discrimination and restriction test... 11
2.5
Grounds of justification... 12
2.6
Principle of Proportionality... 14
3 The Fundamental Freedoms Description and Scope ...17
3.1
Free Movement of Goods... 17
3.1.1 Definition of the term `goods' ... 19
3.1.2 Quantitative restrictions and measures having equivalent effect ... 20
3.1.3 Limitation of the scope of protection on the basis of the Keck judgment ... 22
3.1.4 Justifications on the grounds of mandatory requirements... 24
3.1.5 Justifications on the grounds of Art. 30 EC... 25
3.2
Free Movement of Persons ... 28
3.2.1 Free Movement of Workers ... 28
3.2.1.1
Definition and scope of the term `worker'... 29
3.2.1.2
Prohibition of discrimination and restriction ... 30
3.2.1.3
Limitation of the scope of protection on the basis of the Keck
judgment... 32
3.2.1.4
Justifications on the grounds of general interest... 33
3.2.1.5
Justifications on the grounds of Art. 39(3) EC ... 33
3.2.2 Freedom of Establishment... 35
3.2.2.1
Definition and scope of the term `establishment' ... 36
3.2.2.2
Prohibition of discrimination and restriction ... 37
3.2.2.3
Limitation of the scope of protection on the basis of the Keck
judgment... 40
3.2.2.4
Justifications on the grounds of general interest... 41
3.2.2.5
Justifications on the grounds of Art. 46(1) EC ... 41
3.3
Free Movement of Services ... 43
3.3.1 Definition and scope of the term `services' ... 44
3.3.2 Prohibition of discrimination and restriction ... 44
3.3.3 Limitation of the scope of protection on the basis of the Keck judgment ... 47
3.3.4 Justifications on the grounds of general interest... 47
3.3.5 Justifications on the grounds of Art. 55 in connection with Art. 46(1) EC... 48
3.4
Free Movement of Capital and Payments ... 49
3.4.1 A historical overview - Development in comparison to the other Fundamental
Freedoms ... 49
3.4.1.1
The Treaty on the European Economic Community and the implications
of Capital Directive 88/361... 49
3.4.1.2
The Treaty of Maastricht... 52
3.4.1.3
The Treaty of Amsterdam ... 54
3.4.2 Definition and scope of the terms `capital' and `payments' ... 54
3.4.3 Prohibition of restriction ... 57
3.4.4 Limitation of the extent of protection on the basis of the Keck judgment ... 61
3.4.5 Justifications on the grounds of mandatory requirements... 63
3.4.6 Justifications on the grounds of Art. 58(1)(a) EC ... 68
4
3.4.7 Justifications on the grounds of Art. 58(1)(b) and Art. 58(2) EC ... 72
3.4.8 Third Countries implications of Arts. 57, 59 and 60 EC ... 74
3.5
Convergence of the Fundamental Freedoms ... 76
4 The Relationship of the Free Movement of Capital to the other Fundamental
Freedoms... ..........................................................................................................78
4.1
General considerations on the issue of delimitation ... 79
4.2
Free Movement of Capital and the Free Movement of Goods... 81
4.3
Free Movement of Capital and the Free Movement of Workers... 83
4.4
Free Movement of Capital and the Freedom of Establishment ... 86
4.4.1 Relationship of the scopes of the Free Movement of Capital to the Freedom
of Establishment ... 89
4.4.2 Relationship of the various grounds of justification of the Free Movement of
Capital to the Freedom of Establishment... 94
4.4.3 Third Countries ... 97
4.5
Free Movement of Capital and the Free Movement of Services... 100
4.5.1 Relationship of the scopes of the Free Movement of Capital to the Free
Movement of Services ... 107
4.5.2 Relationship of the various grounds of justification of the Free Movement of
Capital to the Free Movement of Services... 112
4.5.3 Third Countries ... 114
4.6
Chapter summary... 117
5 Bibliography...118
5.1
Table of Books ... 118
5.2
Table of Commentaries ... 120
5.3
Table of Articles and Contributions in Books... 120
5.4
Table of EC Cases in the Court of Justice and the Court of First Instance... 126
6 Appendix ...137
5
1 Introduction
The aim of this diploma thesis is to analyze in great detail the relationship between the
Free Movement of Capital and the other Fundamental Freedoms, that is to say, to
answer the question whether there is a single theory characterizing the relationship or
whether different criteria apply to the question of delimitation according to the Freedoms
at issue. Provided that an analysis of literature, relevant law and case-law does not rule
out the possibility of simultaneous application of various Treaty Freedoms, the question
of relationship will be considered at the level of the substantive scope and justifications
with respect to transactions that combine aspects relevant under several Fundamental
Freedoms. However, before proceeding to this core question it is necessary to elaborate
on the basis of discussion. Therefore, the first chapter will be dedicated to the structural
approach to be used to discuss the four Freedoms in the following chapter. Thereby, the
ongoing convergence of shape and structure of the Fundamental Freedoms will become
evident.
6
2 General Principles and Function of the Fundamental
Freedoms
This introductory chapter will lay down the prerequisites for the understanding and actual
discussion of the Fundamental Freedoms and their delimitation from the Free Movement
of Capital. The ultimate aim of the Treaty Freedoms will be addressed before the
personal scope of the Fundamental Freedoms and the structural approach under which
they will be discussed in the coming chapters is elaborated.
2.1 Aim and Purpose of the Fundamental Freedoms
One of the paramount aims of the European Community has always been, and still is,
the economic integration of Member States with a focus on high employment, steady
growth and the increase of the standard of living. The means of achieving this is the
establishment of the Common Market,
1
which comprises an Internal Market, that is to
say an area without internal frontiers "characterized by the abolition, as between
Member States, of obstacles to the free movement of goods, persons, services and
capital."
2
Thus, the Fundamental Freedoms aim at enabling the market to operate
efficiently by ensuring optimal allocation of resources within the Community. They are
not only a condition precedent to the implementation of the Internal Market, but also lay
down its ultimate goal.
3
In essence, the Treaty Freedoms are intended to eliminate
obstructions and obstacles that are specifically tied to the moment of border crossing
and therefore include both discriminatory and merely restrictive measures.
4
1
Art. 2 EC.
2
Art. 3(1)(c) EC; Art. 14(2) EC; For a detailed discussion on the relationship between the Common Market and Internal Market see:
Ohler, Europäische Kapital- und Zahlungsverkehrsfreiheit: Kommentar zu den Artikeln 56 bis 60 EGV, der Geldwäscherichtlinie und
Überweisungsrichtlinie (2002), p.382 et seq.; Or Fischer/Köck/Karollus, Europarecht, 4th ed. (2002), p.13 et seq.
3
Fischer/Köck/Karollus, Europarecht, 4th ed. (2002), p.12. However, the Fundamental Freedoms and the Internal Market are not
interchangeable terms. The former represent mainly the basis for the implementation of the Internal Market, which is also pursued by
means of Art. 95 EC.
4
Oliver/Roth, The internal market and the four freedoms, CMLRev 2004, p.415 et seq.
7
2.2 Beneficiaries and Addressees of the Fundamental Freedoms
With regard to the Freedoms related to persons the personal scope of protection is
already addressed in the respective provisions, Arts. 39, 43, and 49 EC, and extends to
nationals of a Member State.
5
In contrast, the `object-oriented' Freedoms are issue-
related and refer to the free movement of goods (Art. 23 EC et seq.) or capital (Art. 56
EC) within the Community, irrespective of the nationality of the persons involved.
6
Therefore, Third-Country nationals may also invoke the free movement rights, a fact,
which immediately gives rise to the question of how to handle transactions that not only
involve aspects subsumed under the `object-oriented' Freedoms, but also under the
Freedoms related to persons (in particular, the Free Movement of Services). This issue
will be addressed in detail in Chapter Four. Additionally, the Fundamental Freedoms do
not differentiate between natural and legal persons.
7
Furthermore, the personal scope of the Fundamental Freedoms, in principle, only
extends to situations with a transnational element. Therefore, in a case of reverse
discrimination nationals may not rely on, with respect to their less favorable treatment,
the free movement provisions against their own Member State.
8
However, in cases
where nationals of a Member State are considered to be, in fact, in a comparable
situation to nationals of other Member States, e.g. when claiming the recognition of a
diploma obtained abroad, they may refer to the respective Treaty provisions.
9
5
Kingreen, Die Struktur der Grundfreiheiten des Europäischen (1999), p 78 et seq.
6
Jarass, Elemente einer Dogmatik der Grundfreiheiten, EuR 1995, p.208.
7
Art 48 EC for the Freedom of Establishment explicitly mentions that "Companies or firms formed in accordance with the law of a
Member State and having their registered office, central administration or principal place of business within the Community shall, for
the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States." However, this
provision does not imply that legal persons do not fall under the scope of the other Treaty Freedoms. In practice, most transactions
in goods and services are carried out by companies rather than individuals.
Additionally, it needs to be noted that all organizational types of legal persons fall under the scope of the Fundamental Freedoms,
irrespective of the question of their legal capacity. Public companies are covered as long as they pursue activities aimed at a
pecuniary reward, but also legal constructions such as the Austrian and German Gesellschaft bürgerlichen Rechts.
Fischer/Köck/Karollus, Europarecht, 4th ed. (2002), p.96.
The Free Movement of Workers appears to be mainly tailored to natural persons; however, companies also fall under the scope of
Art. 39 EC, where they act as employers. ECJ, 7 May 1998, Case C-350/96, Clean Car [1998] ECR I- 2521.
8
Although, it might be possible to invoke the principle of equality as provided in national legislation. Fischer/Köck/Karollus,
Europarecht, 4th ed. (2002), p.103 et seq.
9
ECJ, 7 February 1979, Case C-115/78, Knoors [1997] ECR 399. ECJ, 27 June 1996, Case C-107/94, Asscher [1996] ECR I-3089;
Regarding the recognition of qualifications obtained in another Member State: ECJ, 31 March 1993, Case C-19/92, Kraus v Land
Baden-Württemberg [1993] ECR I-1663; With reference to rules that aim at hindering nationals to make use of their free movement
rights: ECJ, 15 December 1995, Case C-415/93, Bosman [1995] ECR I-4921.
8
The Fundamental Freedoms are explicitly addressed to Member States; however, not
only rules enacted by Member State governments, but all activities that are functionally
attributable to Member State authorities
10
are subsumed under the Treaty provisions. In
this context, the question of whether private parties could also be directly bound by the
provisions on the Fundamental Freedoms has been extensively discussed.
11
In this
regard, the Court's approach concerning horizontal applicability differs according to the
Treaty Freedom at issue: with respect to the Free Movement of Services and the Right
of Establishment the ECJ found that collective rules enacted by sports and professional
organizations are comparable to State regulations and therefore must have horizontal
direct effect.
12
As regards the Free Movement of Workers, the Court generally
adjudicates a direct obligation of private persons concerning employment conditions.
13
In
contrast, with respect to the Free Movement of Goods, decisions
14
reflect a general
refusal of a horizontal direct effect; private parties should be instead able to contract
freely.
15
In fact, there is not even a need for a horizontal direct effect to counteract for example
protests or manifestations leading to a substantial disruption of the rights provided under
the Free Movement of Goods.
16
The reasoning is that the Member States' responsibility
for respecting and enforcing the basic aims of the Fundamental Freedoms has to be
viewed in connection with the Principle of Cooperation established in Art. 10 EC.
Therefore, Member States are not only liable for measures that breach the provisions on
10
Also applying to `quasi-government bodies' meaning public enterprises or private companies insofar as state powers are
delegated: ECJ, 24 November 1982, Case C-249/81, Commission v. Ireland [1982] ECR I-4005; ECJ, 13 December 1983, Case C-
222/82, Apple and Pear Development Council [1983] ECR 4083; ECJ, 18 May 1989, Joined cases 266 and 267/87, Queen v Royal
Pharmaceutical Society [1989] ECR I-1295.
11
Horizontal applicability is beyond dispute with reference to national regulations that require an interpretation in the light of the
Fundamental Freedoms, in particular regarding national intellectual property law or unfair competition rules: Oliver/Roth, The internal
market and the four freedoms, CMLRev 2004, p. 421.
12
ECJ, 22 September 1983, Case C- 271/82, Auer v Ministère public [1983] ECR 2727; ECJ, 6 October 1981, Case C-246/80,
Broekmeulen v Huisarts Registratie Commissie [1981] ECR 2311; ECJ, 9 June 1977, Case C- 90/76, van Ameyde [1977] ECR 1091;
ECJ, 12 December 1974, Case C-36/74, Walrave and Koch [1990] ECR I-1405; ECJ, 11 April 2000, Case C-191/97, Deliège [2000]
ECR I- 2549.
13
ECJ, 6 June 2000, Case C-281/98, Angonese [2000] ECR I- 4139; Also see: ECJ, 13 April 2000, Case C-176/96, Lehtonen [2000]
ECR I-2681; ECJ, 15 December 1995, Case C-415/93, Bosman [1995] ECR I-4921.
14
ECJ, 1 October 1987, Case C-311/85, Vlaamse Resbureaus [1987] ECR 3801; ECJ, 22 January 1981, Case C-58/80, Dansk
Supermarked [1981] ECR 181; ECJ, 27 September 1988, Case C-65/86, Bayer AG v Süllhöfer [1988] ECR 5249.
15
With reference to a contractual obligation between individuals to affix the `Green dot logo' to packaging: ECJ, 6 June 2002, Case
C-159/00, Sapod Audic [2002] ECR I-5031; Oliver/Roth, The internal market and the four freedoms, CMLRev 2004, p.422 et seq.:
Roth/Oliver emphasize that a strong argument against a broadening of the personal scope is that the exceptions under Art. 30 are
not designed to justify private action. Private autonomy does not even figure as a ground of defense. As a consequence, it may be
deduced that Art. 28 EC is supposed to have no horizontal direct effect.
16
Oliver/Roth, The internal market and the four freedoms, CMLRev 2004, p. 427.
9
the Free Movement of Goods, but also for situations where they fail to take action
against interference from private persons.
17
Out of the duty of the Member States to protect the Fundamental Freedoms arises a
subjective right of individuals to claim State intervention where the Treaty Freedoms are
violated by private persons and where Member States do not have discretionary powers.
Individuals therefore have a right to claim damages where three conditions
18
are met:
firstly, the infringed rule has to be intended to confer rights on individuals, secondly, the
breach must have been sufficiently serious, and thirdly, there must have been a causal
link between the breach of a Member State's obligation and the damage that the
complainant suffered.
19
2.3 Substantive scope of the Fundamental Freedoms
In view of the ongoing convergence of the Fundamental Freedoms, the structural
approach and test pattern adopted by the ECJ today, is, in principle, the same in the
case of all four Freedoms.
20
However, owing to diverging opinions of leading scholars
and inconsistencies in earlier case-law,
21
in particular with regard to the application of
the grounds of justification, it is appropriate to devote the following subchapters to the
description and explanation of the approach chosen in this thesis.
17
Farmers' sabotage of imports: ECJ, 9 December 1997, Case C-265/95, Commission v. France [1997] ECR I-6965; Demonstrations
capable of restricting intra-Community trade: ECJ, 12 June 2003, Case C-112/00, Schmidberger [2003] ECR I-5659; See also
Council Regulation (EC) No. 2679/98.
Koenig emphasizes that Member States liability is limited to situations of manifest and persistent refraining from taking appropriate
and adequate measures to ensure the respect of the Fundamental Freedoms within their territory. Koenig/Haratsch, Europarecht, 4th
ed. (2003), p.208 et seq.
Furthermore, Frenz (Frenz, Handbuch Europarecht (2004) points to the fact that a significant practical distinction between a direct
horizontal effect and the obligation of Member States to protect the rights granted under the Fundamental Freedoms is that an
individual cannot directly claim his or her rights against other private persons, but only against the Member State itself, which
disposes of a wide margin of discretion to justify its in/action. Fischer/Köck/Karollus, Europarecht, 4th ed. (2002), p. 135.
18
ECJ, 5 March 1996, Joined cases C-46/93 and C-48/93, Brasserie du Pêcheur [1996] ECR I-1029; ECJ, 19 November 1991,
Joined cases C-6/90 and C-9/90, Francovich [1991] ECR I-5357.
19
Fischer/Köck/Karollus, Europarecht, 4th ed. (2002), pp.130 et seq.; 135 et seq.
20
Behrens, Die Konvergenz der wirtschaftlichen Freiheiten im europäischen Gemeinschaftsrecht, EuR 1992,, p.145; Roth,
Europäische Kapitalverkehrsfreiheit und nationales Steuerrecht, in Schön (ed) Gedächtnisschrift für Brigitte Knobbe-Keuk (1997),
p.740 et seq.; Eberhartinger, Konvergenz und Neustrukturierung der Grundfreiheiten, EWS 1997, p.43; Troberg, in
Groeben/Ehlermann/Thiesing, Kommentar zum EU-/EG-Vertrag, leafloose (2002), MN 53; Sedlaczek, Der Begriff der
Diskriminierung und der Beschränkung die Kapitalverkehrsfreiheit als konvergente Grundfreiheit des EG-Vertrags, in
Lechner/Staringer/Tumpel (eds) Kapitalverkehrsfreiheit und Steuerrecht (2000), p.38 et seq.
21
Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p.129.
10
The first question to be addressed is whether a particular behavior actually falls under
the substantive scope of one of the Fundamental Freedoms.
22
Limitations to the extent
of protection arise from explicit (Arts. 39(4), 45(1) and 55 in connection with Art. 45(1)
EC) and implicit exceptions,
23
whereby the latter constitute a creation of case-law. In
fact, the concept of implicit exceptions was a logical consequence of the broadening of
the scope of protection of the Fundamental Freedoms to include genuinely non-
discriminatory measures that have a potential effect on hindering market access.
24
The
focal point has, therefore, shifted from an exclusive emphasis on the prohibition of
discrimination to one on the removal of all rules liable of preventing or hindering market
access.
Initially, the principles of the Keck judgment were aimed at limiting the extent of
protection of the Free Movement of Goods (for details, see: 3.1.3), but as a
consequence of the subsequent application of the Dassonville criteria
25
to the other
Fundamental Freedoms, the need became evident for extending the implications of the
Keck judgment as well.
26
Removed from its specific context and considered in terms of
its purpose, the Keck formula means that measures that do not substantially affect intra-
Community trade fall outside the scope of the respective Fundamental Freedom.
27
A
detailed discussion of these aspects with respect to all four Treaty Freedoms is found in
Chapter Three; however, at this stage it should be noted that from a structural
perspective the Keck formula represents an implicit exceptions to the substantive scope
of protection of the Fundamental Freedoms.
22
Chapter 3 is dedicated to the detailed description of the substantive scope of the Freedoms, the delimitation issue will be
addressed in Chapter 4.
23
Frenz, Handbuch Europarecht (2004), MN 386 et seq. Frenz refers to the distinction between written (geschriebene
Schutzbereichsbegrenzungen) and unwritten (ungeschriebene Schutzbereichsbegrenzungen) exemptions.
24
With regard to the Free Movement of Goods: ECJ, 11 July 1974, Case: C-8/74, Procureur du Roi v. Dassonville [1974] ECR 837;
For the Free Movement of Services: ECJ, 3 December 1974, Case C-33/74, van Binsbergen [1974] ECR I-1299.
25
See subchapters; 3.1.2; 3.2.1.2; 3.2.2.2; 3.3.2.
26
For the Free Movement of Capital see: ECJ, 13 May 2003, Case C-463/00, Commission v. Spain [2003] ECR I-4581; ECJ, 13 May
2003, Case C-98/01, Commission v. UK and Northern Ireland [2003] ECR I-4641; For the Free Movement of Sevices: ECJ, 10 May
1995, Case C-384/93, Alpine Investments [1995] ECR I-1141; ECJ, 3 October 2000, Case C-58/98, Corsten [2000] ECR I-7919; For
the Freedom of Establishment: ECJ, 20 June 1996, Joined Cases: C-418/93, C-419/93, C-420/93, C-421/93, C-460/93, C-461/93, C-
462/93, C-464/93, C-9/94, C-10/94, C-11/94, C-14/94, C-15/94, C-23/94, C-24/94 and C-332/94, Semeraro Casa Uno Srl [1996]
ECR I-2975; Free Movement of Workers: ECJ, 15 December 1995, Case C-415/93, Bosman [1995] ECR I-4921.
27
Barnard, The substantive law of the EU: the four freedoms (2004), p.328 et seq.
11
2.4 Discrimination and restriction test
The next question, which is of particular relevance with regard to possible grounds of
justification, is the one of classifying the type of interference with the Freedoms itself.
Not in dispute is the fact that all four Fundamental Freedoms include
28
prohibitions of
discrimination covering not only direct/overt but also indirect/covert discriminatory
measures. The advantage of the principle of non-discrimination, a cornerstone
governing the Fundamental Freedoms, is that compared to harmonization initiatives, it
does not deprive Member States of their sovereignty, but only requires the removal of
discriminatory elements leaving the substance of the rule intact.
In general, discrimination means unequal treatment in the sense of applying either
different rules to at least comparable situations or the same rule to different situations.
29
Thereby, direct discrimination refers to any explicit, unequal treatment based on
nationality or in the case of the Free Movement of Goods, the origin of a product.
Concerning the Free Movement of Capital, direct discrimination implies a reference to
the residence or nationality of the investors not the capital itself.
30
In contrast, indirect
discrimination implies a linkage to other criteria than nationality or the origin of goods
leading to an equal burden in law, but not in fact.
31
Usually such indistinctly
discriminatory measures tend to mainly affect nationals of other Member States
(language requirements,
32
residence,
33
etc.).
Furthermore, as already mentioned, the case-law of the ECJ reflects a shift towards also
including non-discriminatory measures that prevent or substantially impede market
access. In other words, measures that impose the same burden, in law and in fact, on
28
Art. 67(1) EEC provided that: "During the transitional period and to the extent necessary to ensure the proper functioning of the
common market, Member States shall progressively abolish between themselves all restrictions on the movement of capital
belonging to persons resident in Member States and any discrimination based on the nationality or on the place of residence of the
parties or on the place where such capital is invested."
29
ECJ, 14 February 1995, Case C-279/93, Schumacker [1995] ECR I-225.
30
Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p.122: Consequently, although referring to the same
criterion, residence, measures within the Freedom of Establishment or Workers are classified as indirectly discriminatory and may be
justified by mandatory requirements, compared to the classification as directly discriminatory measures in the field of the Free
Movement of Capital, implying an exclusive reference to the express grounds of justification. See: ECJ, 13 May 2003, Case C-
463/00, Commission v. Spain [2003] ECR I-4581; ECJ, 13 May 2003, Case C-98/01, Commission v. UK and Northern Ireland [2003]
ECR I-4641.
31
ECJ, 3 February 1982, Joined cases 62 and 63/81, Seco [1982] ECR 223; ECJ, 3 June 1992, Case C- 360/89, Commission v. Italy
[1992] ECR I-3401; ECJ, 5 December 1989, Case C-3/88, Commission v. Italy [1989] ECR I-4035.
32
ECJ, 6 June 2000, Case C-281/98, Angonese [2000] ECR I- 4139.
33
ECJ, 18 January 2001, Case C-162/99, Commission v. Italy [2001] ECR I-541.
12
nationals/national products and foreigners/foreign products (such as a total ban of a
product), but which prevent, in the sense of making less attractive, or substantially
impede market access, are also prohibited.
34
2.5 Grounds of justification
Once the type of infringement of the Fundamental Freedoms has been clarified, the
question of possible grounds of justification either expressly provided in the Treaty or
based on mandatory requirements arises.
35
Concretely, Member States may invoke the
derogations mentioned in the Treaty with reference to any type of restriction compared
to the mandatory or public interest requirements, which traditionally exclusively justified
non-discriminatory rules.
36
Nevertheless, recent case-law
37
extends the scope to
indirectly discriminatory measures.
38
From a formal and systematic perspective, the derogations based on mandatory
requirements are sometimes considered implicit, negative constituent facts of the
substantive scope of the respective Fundamental Freedom.
39
Therefore, mandatory
requirements would, strictly speaking, not represent a ground of justification, but would
34
For the Free Movement of Goods see: ECJ, 11 July 1974, Case: C-8/74, Procureur du Roi v. Dassonville [1974] ECR 837; For the
Free Movement of Workers: ECJ, 15 December 1995, Case C-415/93, Bosman [1995] ECR I-4921; ECJ, 27 January 2000, Case C-
190/98, Graf v Filzmoser Maschinenbau [2000] ECR I-493; For the Freedom of Establishment: ECJ, 17 October 2002, Case C-
79/01, Payroll Data Services [2002] ECR I-8923; ECJ, 5 November 2002, Case C-208/00, Überseering [2002] ECR I-9919; For the
Free Movement of Services: ECJ, 3 October 2000, Case C-58/98, Corsten [2000] ECR I-7919; ECJ, 3 December 1974, Case C-
33/74, van Binsbergen [1974] ECR I-1299; For the Free Movement of Capital: ECJ, 13 May 2003, Case C-463/00, Commission v.
Spain [2003] ECR I-4581; ECJ, 13 May 2003, Case C-98/01, Commission v. UK and Northern Ireland [2003] ECR I-4641.
35
They were first mentioned in the well-known Cassis de Dijon judgment (ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG
v Bundesmonopolverwaltung für Branntwein (Cassis) [1979] ECR I-649) and since then have been continuously expanded. The
rationale behind the development of the concept of mandatory requirements can be seen in the ECJ's strict interpretation of the
express grounds of justification (Cordewerner, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p.59.) and the fact
that they date back to 1957, thus giving only very limited consideration to the current priorities of the Community.
36
Sedlaczek, Der Begriff der Diskriminierung und der Beschränkung die Kapitalverkehrsfreiheit als konvergente Grundfreiheit des
EG-Vertrags, in Lechner/Staringer/Tumpel (eds) Kapitalverkehrsfreiheit und Steuerrecht (2000), p.34 et seq.; Müller-Graff, in
Groeben/Schwarze, Art.28 MN 193 et seq.
37
ECJ, 16 January 2003, Case C-388/01, Commission v. Italy [2003] ECR I-721; ECJ, 28 October 1999, Case C-55/98, Vestergaard
[1999] ECR I-7641; ECJ, 1 December 1998, Case C-410/96, Ambry [1998] ECR I- 7875; ECJ, 28 April 1998, Case C-158/96, Kohll
[1998] ECR I-1931; ECJ, 28 April 1998, Case C-120/95, Decker [1998] ECR I-1831; ECJ, 5 December 1989, Case C-3/88,
Commission v. Italy [1989] ECR I-4035; ECJ, 7 May 1998, Case C-350/96, Clean Car [1998] ECR I- 2521.
38
Cordewerner, Europäische Grundfreiheiten und nationales Steuerrecht (2002), pp.122, 146 et seq. He even states (p.163) that the
application of the rule of reason in cases of discriminatory/indistinctly applicable measures is under no dispute. ECJ, 23 May 1996,
Case C-237/94, O'Flynn [1996] ECR I-2617;
39
E.g.: ECJ, 17 June 1981, Case C-113/80, Irish Souvenirs [1981] ECR 1625; ECJ, 3 March 1988, Case C-434/85, Allen and
Hanburys Ltd v Generics, [1988] ECR I-1245; 216/84; ECJ, 14 July 1988, Case C-90/86, Zoni [1988] ECR I-4285; ECJ, 2 February
1989, Case C-274/87, Commission v. Germany [1989] ECR I-229. Becker, Von ,Dassonville' über ,Cassis' zu ,Keck' - Der Begriff der
Maßnahme gleicher Wirkung in Art. 30 EGV; EuR 1994, p.165 with a list of leading scholars in Ref. 27.
13
rule out the substantive applicability of the respective Freedom.
40
However, in practice
the ECJ examines justifications on the grounds of mandatory requirements in the same
way as those expressly mentioned in the Treaty. Cordewener
41
further points out that a
systematic classification of the rule of reason
42
should be oriented towards its ultimate
purpose; namely providing a counterbalance in favor of the Member States' interest the
extensive interpretation of the substantive scope of the Fundamental Freedoms.
Consequently, after satisfying substantive requirements, the question of justification and
the test of proportionality, allowing a balance of antagonistic, but legally protected
values, should be examined;
43
an approach that is followed by an increasing number of
leading scholars
44
and which therefore also sets the structure for this diploma thesis.
Also much discussed in the literature is the question of whether directly discriminatory
measures could also be justified on the grounds of mandatory requirements. This is a
discussion which is backed by recent decisions,
45
in which the Court merely analyzed
46
whether measures generally impede inter-state trade compared to addressing the
question of discrimination and differentiating between directly and indirectly
discriminatory rules.
47
In the literature this new approach has been generally welcomed
for two reasons:
48
the fact that, in practice, the distinction between discriminatory and
merely restrictive measures turns out to be quite challenging and, on the other hand, the
often unsatisfying different consequences at the level of justification. This sort of
40
Sedlaczek, Der Begriff der Diskriminierung und der Beschränkung die Kapitalverkehrsfreiheit als konvergente Grundfreiheit des
EG-Vertrags, in Lechner/Staringer/Tumpel (eds) Kapitalverkehrsfreiheit und Steuerrecht (2000), p.31.
41
Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), pp. 69, 131 et seq.
42
The concept of the rule of reason is to be understood as equivalent to the unwritten mandatory or public interest requirements
developed in the Cassis judgment: Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p. 131 et seq.
43
Schilling, Rechtsfragen zu Art. 30 EGV, EuR 1994, p.52.
44
Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p.63ff, 68. Highlighting the fact that the rule of
reason pursues the same objective as expressly mentioned grounds of justification.; Fischer/Köck/Karollus, Europarecht, 4th ed.
(2002), MN 399 et seq.; Schilling, Rechtsfragen zu Art. 30 EGV, EuR 1994, p. 52f; 57; Barnard, The substantive law of the EU: the
four freedoms (2004), pp. 65, 145, 235.; Koenig/Haratsch, Europarecht, 4th ed. (2003), pp. 210, 227, 241, 256, 264.
45
Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p.153: He states that in fact the case of Irish
Souvenirs (ECJ, 17 June 1981, Case C-113/80, Irish Souvenirs [1981] ECR 1625) dealt with a discriminatory rule; however the Court
found the measure at stake being non-discriminatory.
Concerning the negation of the Free Movement of Services: ECJ, 10 July 1986, Case C-79/85, Segers [1986] ECR 2375; ECJ, 14
November 1995, Case C-484/93, Svensson and Gustavsson [1995] ECR I-3955; 67/97; ECJ, 28 April 1998, Case C-120/95, Decker
[1998] ECR I-1831; Accepting a justification on the grounds of environmental protection: ECJ, 9 July 1992, Case C-2/90,
Commission v. Belgium [1992] ECR I-04431; 104/94. Concerning the Freedom of Establishment: ECJ, 6 June 1996, Case C-101/94,
Commission v. Italy [1996] ECR I-26 (`avoir fiscal'); Free Movement of Workers: ECJ, 28 January 1986, Case C- 270/83,
Commission v. France [1986] ECR I-273; ECJ, 14 July 1998, Case C-389/96, Aher-Waggon [1998] ECR I-4473; ECJ, 3 October
2002, Case C-136/00, Rolf Dieter Danner [2002] ECR I-8147.
46
Weiß, Nationales Steuerrecht und Niederlassungsfreiheit, EuR 1999, p.496.
47
Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p.128 et seq.; 158 et seq.
48
Weiß, Nationales Steuerrecht und Niederlassungsfreiheit, EuR 1999, p.498. See also: Frenz, Handbuch Europarecht (2004), MN
492 et seq.
14
convergence of grounds of justification
49
is further seen by the fact that the ECJ
sometimes refers to the derogations expressly mentioned in the Treaty as mandatory
requirements of the general interest.
50
Nevertheless, case-law is inconsistent and so far
the ECJ has not made a general statement on whether the concept of mandatory
requirements is also applicable to directly discriminatory measures.
51
2.6 Principle of Proportionality
Lastly, a possible ground of justification must be addressed in the light of the principle of
proportionality,
52
one of the most important general principles of EC law. It operates as a
constraint on public authorities, requiring that national measures must both pursue a
legitimate purpose and be suitable, appropriate and necessary to achieve the objective
at issue.
53
Purely economic reasons, for example, do not constitute a legitimate objective
according to the Court.
54
According to Tridimas
55
the test of proportionality essentially consists of two
components: suitability, which refers to the relationship between the means and the
ends
56
and necessity, which asks whether the prejudicial effects of a national rule are
justified with view to the importance of the objective pursued, thus, carrying out a
balancing act between competing interests.
57
Restrictive measures are considered to be
effective or suitable as far as they serve their objective, in other words that they are at
least capable of fostering the goal for which they have been enacted. In contrast,
necessity implies, on the one hand, that no less encroaching measure would render the
same results and that, on the other hand, the restrictive effect does not go beyond what
49
Koenig/Haratsch, Europarecht, 4th ed. (2003), p.210-211.
50
With reference to the Right of Establishment: ECJ, 16 July 1998, Case C-264/96, Imperial Chemical Industries plc (ICI) [1998]
ECR I-4695.
51
Frenz, Handbuch Europarecht (2004), MN 492 et seq.
52
Cordewener, Europäische Grundfreiheiten und nationales Steuerrecht (2002), p.103; Referring to the principle of proportionality as
a `Schranken-Schranke'. ECJ, 10 November 1982, Case C-261/81, Rau Lebensmittelwerke [1982] ECR 3961; ECJ, 26 June 1997,
Case C-368/95, Familiapress [1997] ECR I-3689.
53
Kent, Law of the European Union, 3rd ed. (2001), p.44 et seq.
54
ECJ, 19 December 1961, Case C-7/61, Commission v. Italy [1961] ECR 635; ECJ, 26 April 1988, Case C-352/85, Bond van
Adverteerders [1988] ECR I-20.
55
Tridimas, Proportionality in Community Law: Searching for Appropriate Standard of Scrutiny, in Ellis (ed.), The Principle of
Proportionality in the Laws of Europe (1999), p.68.
56
ECJ, 7 April 1981, Case C-132/80, United Foods [1981] ECR I-995.
57
Tridimas, The Proportionality in Community Law: Searching fort he Appropriate Standard of Scrutiny in Ellis, The Principle of
Proportionality in the Laws of Europe, 1999, p.68; See: ECJ, 10 July 1984, Case C-72/83, Campus Oil [1984] ECR 2727;
15
is necessary to achieve the objective.
58
In this way, the Court engages in a very stringent
control of the aspect of necessity on an individual case basis.
59
The last element to be
addressed within the test of proportionality is the appropriateness of a measure, which
requires the weighing of the interests pursued by the national justification and the
purpose of implementing the Fundamental Freedoms.
In the literature the principle of proportionality is often perceived as a far-reaching
ground of review,
60
in particular owing to the fact that the suitability and necessity tests
not only examine the legality of national rules, but also to a certain extent the merit of
legislative and administrative measures. Thus, the ECJ considerably affects national
legislation by means of the proportionality test. This is especially true when taking into
account the principle of Member States' liability for the breach of Treaty provisions.
61
The burden of proof that a measure fulfils proportionality requirements falls on the
national authorities.
62
Moreover, from a procedural perspective it is, in general, national
courts which decide on the proportionality of a particular measure. However, the ECJ
often intervenes by pointing to less restrictive measures that protect the national interest
at stake.
63
In the end the principle of proportionality is the most important ground for
limiting the number of possible derogations.
58
Barnard, The substantive law of the EU: the four freedoms (2004), p.80.
59
ECJ, 14 December 1995, Joined Cases: C-163/94, C-165/94, C-250/94, Sanz de Lera, [1995] ECR I-4821; ECJ, 20 February
2001, Case C-205/99, Analir [2001] ECR I-1271; ECJ, 7 May 1991, Case C-340/89, Vlassopoulou [1991] ECR I-2357; ECJ, 9 March
1999, Case C-212/97, Centros [1999] ECR I-1459; ECJ, 13 May 2003, Case C-463/00, Commission v. Spain [2003] ECR I-4581;
ECJ, 4 June 2002, Case C-483/99, Commission v. France [2002] ECR I-4781; ECJ, 4 June 2002, Case C-503/99, Golden shares I
[2002] ECR I-4809.
60
Tridimas, The Proportionality in Community Law: Searching fort he Appropriate Standard of Scrutiny in Ellis, The Principle of
Proportionality in the Laws of Europe, 1999, p.42; See also: ECJ, 26 June 1997, Case C-368/95, Familiapress [1997] ECR I-3689.
61
ECJ, 5 March 1996, Joined cases C-46/93 and C-48/93, Brasserie du Pêcheur [1996] ECR I-1029; 19 November 1991, Joined
cases C-6/90 and C-9/90, Francovich [1991] ECR I-5357.
62
Barnard, The substantive law of the EU: the four freedoms (2004), p. 243.
63
ECJ, 23 October 1997, Case C-189/95, Franzén [1997] ECR I-5909; ECJ, 22 March 1983, Case C-42/82, Commission v. France
[1983] ECR 1013; ECJ, 19 June 2003, Case C-420/01, Commission v. Italy [2003] ECR I-6445; ECJ, 8 February 1983, Case C-
124/81, Commission v. UK and Northern Ireland [1983] ECR 203.
16
The ECJ's `new' test pattern
17
3 The Fundamental Freedoms Description and Scope
This chapter gives a detailed view on all four Fundamental Freedoms and emphasizes,
in particular, the fact that the ECJ interprets and applies the Treaty Freedoms in the
same way. The Court appears to have adopted a uniform approach in determining a
violation of one of the four Freedoms or possible grounds of justification. The relevant
criteria, on which the various Fundamental Freedoms are assessed, have become less
distinct and seem to be interchangeable and transferable. From a reader's point of view,
the subchapters also follow the ECJ's analytical structure.
3.1 Free Movement of Goods
The first Fundamental Freedom to be described in detail is the Free Movement of
Goods, which aims at an unimpeded movement of goods within the whole Community
and "constitutes the point of departure of all the other freedoms and of most, if not all, of
the common policies and activities."
64
For this reason the Free Movement of Goods will
be discussed more extensively than the following Freedoms related to persons and will
be often referred to when discussing the other Fundamental Freedoms. Firstly, the
various groups of provisions that constitute the legal framework of rules concerned with
the Free Movement of Goods will be highlighted; thereafter, the provisions relevant with
respect to the topic of this thesis, the delimitation of the Fundamental Freedoms, will be
analyzed in greater detail.
The Free Movement of Goods is shaped by roughly three sets of provisions, whereby
the rules on competition (Arts. 81 - 86 EC), which attempt to regulate and prevent
arrangements with a distorting effect on the Internal Market at a company level, will not
be discussed since this would go beyond the scope of this paper:
65
1. Arts. 23 and 24 EC represent the cornerstone of the European Community and
provide that the Community is based on a Customs Union in which the Member
64
Mathijsen, A guide to European Union law, 8th ed. (2004), p.173.
65
Based on: Hanlon, European Community law, 3rd ed. (2003), p.222.
18
States are prohibited to charge customs duties on imports and exports and all
charges having equivalent effect (CEE). Furthermore, the Community must adopt
a Common Customs Tariff in their relations to Third Countries, whereby products
originating in a Third Country are entitled to freely circulate within the Community
only after the Common Customs Tariff has been paid (if one is due). Art. 25 EC,
addressing tariff or fiscal barriers to trade, refers more specifically to customs
duties on imports and exports as well as to charges having equivalent effect,
66
which are prohibited between Member States. A characteristic and distinguishing
element from Art. 90 EC is the reference to charges levied at the frontier of the
State. Furthermore, the ECJ's case-law on Art. 25 EC reveals a focus on the
effect
67
of the charge and the additional costs that consequently arise on imported
goods, which lead to a reduced competitiveness. Art. 25 EC was held to be
vertically directly effective in Van Gend en Loos.
68
2. In contrast, Art. 90 EC imposes a prohibition on Member States with reference to
discriminatory or protectionist taxation levied internally within the State on
imported, exported, and domestic products (indirect taxation). Concretely, Art.
90(1) EC concerns direct
69
and indirect
70
discriminatory taxation with regard to
similar
71
products, compared to subsection (2), which prohibits protectionism with
respect to different goods but which are in direct competition.
72
As the ECJ ruled
in the Co-frutta case these provisions are intended to guarantee "the complete
neutrality of internal taxation as regards competition between domestic products
66
For a definition on CEEs, see: concerning statistical levies: ECJ, 1 July 1969, Case C-24/68, Commission v. Italy [1969] ECR 193;
charges for health inspections: ECJ, 11 October 1973, Case C-39/73, Rewe-Zentralfinanz [1973] ECR 1039; or a tax on the export of
a work of art to another Member State: ECJ, 10 December 1968, Case C-7/68, Commission v. Italy [1968] ECR 617.
67
Fischer/Köck/Karollus, Europarecht, 4th ed. (2002). ECJ, 1 July 1969, Joined cases 2 and 3/69, Sociaal Fonds [1969] ECR 211;
ECJ, 21 September 2000, Joined cases C-441/98 and C-442/98, Kapniki Michaïlidis [2000] ECR I- 7141.
68
ECJ, 5 February 1963, Case C-26/62, Van Gend and Loos v Netherlands [1963] ECR 1; ECJ, 1 July 1969, Joined cases 2 and
3/69, Sociaal Fonds [1969] ECR 211; ECJ, 21 September 2000.
69
ECJ, 16 June 1966, Case C-57/65, Alfons Lütticke [1966] ECR 293; ECJ, 17 July 1997, Case C-90/94, Haahr Petroleum Ltd
[1997] ECR I-4085; Recently confirmed that any discriminatory tax breaches Art. 90 EC: ECJ, 27 February 2002, Case C-302/00,
Commission v. France [2002] ECR I-2055.
70
ECJ, 27 February 2002, Case C-302/00, Commission v. France [2002] ECR I-2055; In contrast to directly discriminatory, indirectly
discriminatory, tax rules under Art. 90 EC can be justified on the grounds of national interest recognized by the EU as legitimate as
long as taxation is applied in a proportionate manner. In this case the respective Member State does not breach Art. 90 EC, and
therefore, there is no need for express grounds of justification in the Treaty.
71
ECJ, 4 March 1986, Case C-106/84, Commission v. Denmark [1968] ECR 833; ECJ, 27 February 2002, Case C-302/00,
Commission v. France [2002] ECR I-2055.
72
With respect to Art. 90(2) EC, the ECJ firstly examines whether the goods in question are at least partially, indirectly or potentially
in competition. The Court thereby applies various tests based on substitutability and cross-elasticity of demand. Next, the question
whether the good in question receives some kind of indirect fiscal protectionism is raised. See: ECJ, 12 July 1983, Case C-170/78,
Commission v. UK and Northern Ireland [1983] ECR 226; Barnard, The substantive law of the EU: the four freedoms (2004), p.45 et
seq.
19
and products imported from other Member States"
73
with the aim to allow the Free
Movement of Goods between Member States in normal conditions of
competition.
74
Member States are, thus, not deprived from raising revenue by
taxation provided that their taxation policy and system is neither discriminatory
nor protectionist, but is based on objective criteria.
75
3. Arts. 28 - 30 EC concern non-tariff trade barriers and aim at the elimination of
quantitative restrictions (quotas) and all measures having equivalent effect
(product design, packaging, etc.) on imports and exports between Member
States. In contrast, Art. 30 EC provides an exhaustive list of grounds on which
restrictive measures under Arts. 28 and 29 EC are justified. As the case-law
developed with regard to these provisions is of particular interest for the
discussion of the other Fundamental Freedoms, the following sections will be
devoted to a description of Arts. 28 30 EC.
3.1.1 Definition of the term `goods'
In view of the fact that the substantive scope of the Free Movement of Goods is
determined by the term `goods', it is appropriate to elaborate on this aspect first, before
proceeding with an in-depth analysis of Arts. 28 - 30 EC. Thereby, an analysis of the
respective case-law appears essential since the Treaty does not provide for a definition.
In Commission v. Italy, the ECJ ruled that goods are products that "can be valued in
money and [which] are capable, as such, of forming the subject of commercial
transactions."
76
In contrast, Everling
77
refers to a series of other cases
78
and concludes
that goods are corporeal objects irrespective of their commercial value or an underlying
cross-border commercial transaction.
73
ECJ, 7 May 1987, Case C-193/85, Cooperativa Co-Frutta Srl [1987] ECR 2085.
74
Barnard, The substantive law of the EU: the four freedoms (2004), p.48.
75
ECJ, 4 March 1986, Case C-243/84, John Walker [1986] ECR 875; ECJ, 7 April 1987, Case C-196/85, Commission v. France
[1987] ECR I-1597.
76
ECJ, 10 December 1968, Case C-7/68, Commission v. Italy [1968] ECR 617 (the treasures case); Koenig/Haratsch, Europarecht,
4th ed. (2003), p.546.
77
Everling, Zum Begriff der Ware im Binnenmarkt der EG und sein Verhältnis zu den Dienstleistungen, in Weber, Währung und
Wirtschaft: Festschrift für Hugo J. Hahn (1997), p.366 et seq.
78
ECJ, 9 July 1992, Case C-2/90, Commission v. Belgium [1992] ECR I-04431; ECJ, 5 May 1982, Case C-15/81, Gaston Schul
Douane Expediteur BV [1982] ECR 1409; ECJ, 24 March 1994, Case C-275/92, Schindler [1994] ECR I-1039.
20
Goods can be, thus, as diverse as pharmaceutical products or eyeglasses,
79
paintings
and other work of art,
80
petroleum products,
81
or even waste.
82
But, where goods are only
subordinate to the main transaction, the provisions of the other Fundamental Freedoms
apply.
83
3.1.2 Quantitative restrictions and measures having equivalent effect
The term and scope of quantitative restrictions was first defined in Geddo as "measures
which amount to a total or partial restraint of, according to the circumstances, imports,
exports or goods in transit."
84
Therefore, any type of ban
85
or quotas limiting quantities of
imports fall under the prohibition of Art. 28 EC.
86
Nowadays, measures having equivalent effect (MEE) are the focal point in applying the
Free Movement of Goods. The term `measure' generally includes not only abstract-
general but also concrete-individual rules enacted by Member State governments or
quasi-governmental bodies.
87
A general definition is found in the Dassonville case,
where the ECJ ruled that "all trading rules enacted by Member States which are capable
of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be
considered as measures having an effect equivalent to quantitative restrictions."
88
Regarding the elements of the Dassonville formula, the differentiation between direct
and indirect discrimination is especially with a view to the later discussion of mandatory
requirements.
79
ECJ, 28 April 1998, Case C-120/95, Decker [1998] ECR I-1831.
80
ECJ, 10 December 1968, Case C-7/68, Commission v. Italy [1968] ECR 617.
81
ECJ, 10 July 1984, Case C-72/83, Campus Oil [1984] ECR 2727.
82
ECJ, 9 July 1992, Case C-2/90, Commission v. Belgium [1992] ECR I-04431.
83
ECJ, 24 March 1994, Case C-275/92, Schindler [1994] ECR I-1039; ECJ, 21 October 1999, Case C-97/98, Jägerskiöld [1999]
ECR I-7319.
84
ECJ, 12 July 1973, Case C-2/73, Geddo [1973] ECR I-865.
85
ECJ, 14 December 1979. Case C-34/79, Henn and Darby [1979] ECR I-3795.
86
Koenig/Haratsch, Europarecht, 4th ed. (2003), p.202.
87
Also applying to public enterprises or private companies insofar as state powers are delegated: ECJ, 24 November 1982, Case C-
249/81, Commission v. Ireland [1982] ECR I-4005; ECJ, 18 May 1989, Joined cases 266 and 267/87, Queen v Royal
Pharmaceutical Society [1989] ECR I-1295.
88
ECJ, 11 July 1974, Case: C-8/74, Procureur du Roi v. Dassonville [1974] ECR 837 MN 5.
21
In Directive 70/50 the Commission already differentiated between distinctly applicable
measures that expressly treat imported goods less favorably than domestic ones
89
and
indistinctly applicable measures that appear, at first, to treat domestic and imported
goods alike, but in fact put imported goods at a disadvantage due to a dual regulatory
burden causing additional costs.
90
Barnard further clarifies the difference by stating that
distinctly applicable measures are characterized by "a different burden in law and in fact
on the domestic and imported goods," whereas indistinctly applicable measures "apply
in law to both, national and domestic products, but in fact have a particular burden on
the imported goods."
91
Owing to the broad scope of the Dassonville formula an increasing number of cases,
exclusively concerned with foreign products, were brought before the ECJ and
subsumed under Art. 28 EC. This trend continued until the decision in the Cassis de
Dijon
92
case, where the Court ruled for the first time on indistinctly applicable measures.
The ECJ thereby concluded that "obstacles to movement within the Community resulting
from disparities between the national laws relating to the marketing of the products in
question must be accepted in so far as those provisions may be recognized as being
necessary in order to satisfy mandatory requirements relating in particular to the
effectiveness of fiscal supervision, the protection of public health, the fairness of
commercial transactions and the defense of the consumer."
93
This decision had two
major implications: on the one hand, it established the principle of mutual recognition
94
89
With reference to inspections on imported goods: ECJ, 8 November 1979, Case C-251/78, Denkavit Futtermittel GmbH [1979]
ECR I-3369; ECJ, 20 April 1983, Case C-59/82, Schutzverband gegen Unwesen in der Wirtschaft v Weinvertriebs-GmbH [1983]
ECR 1217; Addressing rules limiting channels of distribution: ECJ, 20 May 1976, Case C-104/75, Peijper [1976] ECR 613; `Buy
national' campaigns: ECJ, 24 November 1982, Case C-249/81, Commission v. Ireland [1982] ECR I-4005; With respect to
indications of provenance and designations of origin: e.g.: ECJ, 20 February 1975, Case C-12/74, Commission v. Germany [1975]
ECR 181.
90
E.g.: Packaging and presentation requirements: ECJ, 10 November 1982, Case C-261/81, Rau Lebensmittelwerke [1982] ECR
3961; With reference to the adoption of a Europe-wide marketing strategy: ECJ, 6 July 1995, Case C-470/93, Mars [1995] ECR I-
1923; Generally speaking: all product requirements relating to design, form, size, weight, composition, presentation, labeling and
packaging: ECJ, 24 November 1993, Joined cases C-267/91 and C-268/91, Keck and Mithouard [1993] ECR I-6097. See also: ECJ,
18 May 1993, Case C-126/91, Yves Rocher [1993] ECR I-2361; ECJ, 25 July 1991, Joined cases C-1/90 and C-176/90, Aragonesa
de Publicidad [1991] ECR I-4151; ECJ, 25 May 1993, Case C-271/92, Laboratoire de Prothèses and Groupement d'Opticiens
Lunetiers Détaillants [1993] ECR I-2899.
91
Barnard, The substantive law of the EU: the four freedoms (2004), p.93 et seq.
92
ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis) [1979]
ECR I-649.
93
ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis) [1979]
ECR I-649 MN 8.
94
Behrens describes in detail the development from a focus on the country of origin principle to one on the country of destination,
which includes the concept of mutual recognition: Behrens, Die Konvergenz der wirtschaftlichen Freiheiten im europäischen
Gemeinschaftsrecht, EuR 1992, p.156 et seq.
22
under which goods that have been lawfully produced and marketed in one Member
State may be sold without further restriction in another Member State, and, on the other
hand, it implemented the concept of mandatory requirements according to which
Member States may invoke grounds of justification not considered in Art. 30 EC. Thus,
the Cassis judgment led to a narrowing of the substantive scope of Art. 28 EC.
95
However, a reference to mandatory requirements is only feasible where distinctly
applicable national rules breach Art. 28 EC.
96
3.1.3 Limitation of the scope of protection on the basis of the Keck
judgment
Taking into account that the Dassonville formula also covers measures which indirectly
and/or potentially hinder inter-state trade, the question arises whether national rules on
market circumstances
97
also fall under the prohibition of Art. 28 EC. A question, which is
closely linked to the ultimate purpose of Art. 28 EC: is it rather intended to liberalize
inter-state trade or the unhindered pursuit of trade within the Member States?
98
The
following case-law discussion should allow an answer to this question:
In Keck and Mithouard
99
the Court re-examined its earlier case-law and concretized
fundamental assumptions with regard to the Dassonville formula.
100
In its decision the
ECJ drew a distinction between product requirements,
101
which are to be assessed on
95
Kingreen, Die Struktur der Grundfreiheiten des Europäischen (1999), p.44: Emphasizing that the Dassonville judgment already
addressed non-discriminatory measures.
96
Sedlaczek, Der Begriff der Diskriminierung und der Beschränkung die Kapitalverkehrsfreiheit als konvergente Grundfreiheit des
EG-Vertrags, in Lechner/Staringer/Tumpel (eds) Kapitalverkehrsfreiheit und Steuerrecht (2000), p.32.
97
Rules concerning time, place, and manner of marketing products: Mortelmann, Article 30 of the EEC Treaty and Legislation
relating to Market Circumstances: Time to consider a New Definition, CMLRev 1991, p. 115; White, In Search of the Limits to Article
30 of the EEC Treaty, CMLRev 1998, p.235.
98
Advocate General Tesauro: ECJ, 27 October 1993, Case C-292/92, Hünermund [1993] ECR I-6787. The ECJ's way of addressing
these issues was for long ambiguous, incoherent and uncertain; the same was true for the literature: See: Barnard, The substantive
law of the EU: the four freedoms (2004), p.131 for a detailed outline on differing views of academics. ECJ, 15 December 1982, Case
C-286/81, Oosthoek [1982] ECR 4575; ECJ, 16 May 1989, Case C-382/8, Buet [1989] ECR 1235; ECJ, 25 July 1991, Joined cases
C-1/90 and C-176/90, Aragonesa de Publicidad [1991] ECR I-4151; cf.: ECJ, 14 July 1981, Case C-155/80, Oebel [1981] ECR 1993;
ECJ, 31 March 1982, Case C-75/81, Blesgen [1982] ECR 1211; ECJ, 7 March 1990, Case C-69/88, Krantz [1990] ECR I-583.
99
ECJ, 24 November 1993, Joined cases C-267/91 and C-268/91, Keck and Mithouard [1993] ECR I-6097.
100
Becker, Von ,Dassonville' über ,Cassis' zu ,Keck' - Der Begriff der Maßnahme gleicher Wirkung in Art. 30 EGV; EuR 1994, p.164.
101
Including rules concerning manufacturing, packaging, labeling and admission of products: Koenig/Haratsch, Europarecht, 4th ed.
(2003), p.205.
23
the grounds of the Cassis doctrine and certain selling arrangements,
102
which fall outside
the scope of the Dassonville formula, provided that (a) the respective rules apply to all
traders within the national territory and (b) are non-discriminatory in terms of affecting
domestic traders and importers in the same way, in law and in fact. Such provisions are
considered, by nature, to not prevent access to the market or to impede the access of
foreign goods more than domestic products.
103
In its subsequent case-law the ECJ further clarified its approach with regard to the
assessment of certain selling arrangements, which are discriminatory in fact. In this
repect Advocate General Jacobs in Leclerc-Siplec
104
and Advocate General Lenz in
Commission v. Greece
105
had already emphasized that the crucial aspect, is the effect
that certain selling arrangements have.
106
And recently, the Court concluded that a
measure is to be subsumed under Art. 28, where the burden turns out to be unequal in
law or in fact,
107
thus, requiring a justification on the grounds of mandatory requirements
or Art. 30 EC. Therefore, certain (discriminatory) selling arrangements that do not
actually prevent market access, but do hinder or impede it, are treated in the same way
as indistinctly applicable measures having equivalent effect.
Similar problems arise with respect to certain selling arrangements that are genuinely
non-discriminatory (the same burden in law and in fact), but do prevent or substantially
impede market access, e.g. a total ban on the sale of a particular product.
108
From
Advocate General Jacob's comments
109
on the Free Movement of Services
110
it can be
deduced that any non-discriminatory measure which has a substantial impact on market
access in terms of denying or hindering access represents a breach of Art. 28 EC,
102
Sunday trading rules: ECJ, 2 June 1994, Joined cases C-401/92 and C-402/92, Tankstation 't Heukske vof and J. B. E. Boermans
[1994] ECR I-2199; restrictions in advertising: ECJ, 27 October 1993, Case C-292/92, Hünermund [1993] ECR I-6787; restrictions on
sales outlets: ECJ, 29 June 1995, Case C-391/92, Commission v. Greece [1995] ECR I-1621.
103
MN 16 & 17 of ECJ, 24 November 1993, Joined cases C-267/91 and C-268/91, Keck and Mithouard [1993] ECR I-6097.
104
ECJ, 9 February 1995, Case C-412/93, Leclerc-Siplec [1995] ECR I-179.
105
ECJ, 29 June 1995, Case C-391/92, Commission v. Greece [1995] ECR I-1621.
106
See also: Oliver/Roth, The internal market and the four freedoms, CMLRev 2004,, p.414.
107
ECJ, 9 July 1997, Joined cases C-34/95, C-35/95 and C-36/95, De Agostini [1997] ECR I-3843; ECJ, 13 January 2000, Case C-
254/98, TK-Heimdienst [2000] ECR I-151; ECJ, 11 December 2003, Case C-322/01, Doc Morris [2003].
108
Oliver/Roth, The internal market and the four freedoms, CMLRev 2004,, p.415 et seq. See also Barnard, The substantive law of
the EU: the four freedoms (2004), p.144.
109
ECJ, 9 February 1995, Case C-412/93, Leclerc-Siplec [1995] ECR I-179.
110
ECJ, 10 May 1995, Case C-384/93, Alpine Investments [1995] ECR I-1141; ECJ, 24 March 1994, Case C-275/92, Schindler
[1994] ECR I-1039; ECJ, 27 January 2000, Case C-190/98, Graf v Filzmoser Maschinenbau [2000] ECR I-493.
24
unless justified. Consequently, Sunday trading rules
111
fall outside the scope of Art. 28
EC as they do not substantially hinder market access, but only the commercial operating
range. The same is true for rules providing a monopoly for pharmacies to sell baby
nutrition
112
or a sales monopoly on tobacco.
113
To summarize, in the Keck judgment the Court brought the scope of Art. 28 EC back
within its proper limits and redefined the Free Movement of Goods with respect to
product-bound measures and selling arrangements as a right of market access;
however, only "when and where access to the market is not hampered, the
discrimination standard suffices to guarantee undistorted competition."
114
Its purpose is
to allow unrestricted access to the market of a Member State, and thus, not to grant
certain advantages to foreign products after market access.
115
3.1.4 Justifications on the grounds of mandatory requirements
As has been mentioned in Cassis de Dijon,
116
the ECJ developed the concept of
mandatory requirements, which offer further grounds of defense to Member States. In
essence, this decision established the basis upon which Member States may impose
national product requirements with which importers need to comply as far as the aspect
at issue is not harmonized, but justified on the grounds of mandatory requirements
117
and proportionality.
111
ECJ, 2 June 1994, Case C-258/93, Punto Casa SpA [1994] ECR I-2355.
112
ECJ, 29 June 1995, Case C-391/92, Commission v. Greece [1995] ECR I-1621.
113
ECJ, 14 December 1995, Case C-387/93 Banchero [1995] ECR I-4663.
With reference to the future it will be interesting to see whether the `substantial' hindrance test provides a proper basis for the
assessment of national restrictions regarding planning or building in the green belt, which according to Barnard should be considered
as not breaching Art. 28 because of only limited hindrance of market access. (Barnard, The substantive law of the EU: the four
freedoms (2004), p.148).
114
Oliver/Roth, The internal market and the four freedoms, CMLRev 2004, p.413 et seq.
115
Becker, Von ,Dassonville' über ,Cassis' zu ,Keck' - Der Begriff der Maßnahme gleicher Wirkung in Art. 30 EGV; EuR 1994, p.172
et seq. Oliver/Roth, The internal market and the four freedoms, CMLRev 2004, p. 415.
116
ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis) [1979]
ECR I-649.
117
Also referred to as imperative requirements in: ECJ, 12 March 1987, Case C-178/84, Beer Purity Laws [1987] ECR 1227; ECJ, 30
April 1991, Case C-239/90, Boscher [1991] ECR I-2023. Or, overriding requirements in the public interest in: Keck; ECJ, 26 June
1997, Case C-368/95, Familiapress [1997] ECR I-3689; ECJ, 12 October 2000, Case C-3/99, Cidrerie Ruwet SA v Cidre Stassen
[2000] ECR I-8749.
25
The list of grounds of justification provided in Cassis is considered illustrative and has
since been continuously expanded. It includes the following: the effectiveness of fiscal
supervision,
118
protection of public health,
119
fairness of commercial transactions,
120
consumer
121
and environmental protection,
122
maintenance of press diversity,
123
etc.
124
In
contrast, purely economic interests are not justified.
125
However, mandatory
requirements only represent a feasible ground of justification where they are applied in a
proportionate manner and constitute the least restrictive form of intervention in securing
the interest at stake.
126
3.1.5 Justifications on the grounds of Art. 30 EC
Art. 30 EC provides an exhaustive list of derogations to Art. 28 EC, which are intended
to consider important interests recognized by the Community as valuable.
127
However,
any deviation from the Free Movement of Goods must be proportionate and not
constitute a means of arbitrary discrimination or a disguised restriction on trade between
Member States. Further constraints arise from the fact that justifications under Art. 30
EC are interpreted strictly
128
by the ECJ and that purely economic interests
129
are not
118
ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis) [1979]
ECR I-649; ECJ, 9 October 1980, Case C-823/79, Giovanni Carciati [1980] ECR I-2733.
119
ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis) [1979]
ECR I-649. So far the Court has invariably referred to Art. 30 EC, where a justification on the grounds of public health was raised.
120
ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis) [1979]
ECR I-649; ECJ, 22 January 1981, Case C-58/80, Dansk Supermarked [1981] ECR 181.
121
ECJ, 20 February 1979, Case C-120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis) [1979]
ECR I-649; ECJ, 5 December 2000, Case C-448/98, Jean-Pierre Guimont [2000] ECR I-663. With regard to consumer protection the
Court has repeatedly referred to "the presumed expectations of an average consumer who is reasonably well-informed and
reasonably observant and circumspect." (ECJ, 16 July 1998, Case C-210/96, Tusky [1998] ECR I-4657; See also: ECJ, 2 February
1994, Case C-315/92, Clinique [1994] ECR I-317; ECJ, 6 July 1995, Case C-470/93, Mars [1995] ECR I-1923) Therefore, adequate
labelling is deemed in most cases (ECJ, 12 March 1987, Case C-178/84, Beer Purity Laws [1987] ECR 1227; ECJ, 5 December
2000, Case C-448/98, Jean-Pierre Guimont [2000] ECR I-663) more appropriate than other more restrictive measures as it enables
consumers to make an informed choice rather than one limited by government intervention.
122
ECJ, 20 September 1988, Case C-302/86, Commission v. Denmark [1988] ECR 4607; ECJ, 5 May 1998, Case C-386/96, Dreyfus
& Cie [1998] ECR I-2309.
123
ECJ, 26 June 1997, Case C-368/95, Familiapress [1997] ECR I-3689.
124
Protection of working conditions: ECJ, 14 July 1981, Case C-155/80, Oebel [1981] ECR 1993; Protection of cinema as a form of
cultural expression: ECJ, 11 July 1985, Joined cases 60 and 61/84, Cinéthèque [1985] ECR I-2605; protection of national or regional
socio-cultural characteristics: ECJ, 23 November 1989, Case C-145/88, Torfaen [1989] ECR I-3851; preventing the risk of seriously
undermining the financial balance of the social security system: ECJ, 28 April 1998, Case C-120/95, Decker [1998] ECR I-1831;
protection of fundament rights: ECJ, 12 June 2003, Case C-112/00, Schmidberger [2003] ECR I-5659.
125
ECJ, 13 January 2000, Case C-254/98, TK-Heimdienst [2000] ECR I-151.
126
For more details on the proportionality test see: 2.6.
127
Barnard, The substantive law of the EU: the four freedoms (2004), p.64.
128
ECJ, 17 June 1981, Case C-113/80, Irish Souvenirs [1981] ECR 1625.
129
ECJ, 9 June 1982, Case C-95/81, Commission v. Italy [1982] ECR 2187; ECJ, 19 December 1961, Case C-7/61, Commission v.
Italy [1961] ECR 635; ECJ, 24 October 1996, Case C-329/93, Hanseastische Industrie-Beteiligungen [1996] ECR I-5151.
26
justified. The burden of proof that the respective national rules are necessary to
effectively protect interests under Art. 30 EC, rests on Member States.
Concretely, Art. 30 EC allows deviations on the grounds of public morality, public policy
or public security, the protection of health and life of humans, animals or plants, the
protection of national treasures possessing artistic, historic or archaeological value, or
the protection of industrial and commercial property. With respect to the subsequent
discussion of the other Fundamental Freedoms
130
justifications based on public policy,
public security and health are particularly relevant as they also provide grounds of
justification under the other Fundamental Freedoms and, thus, require further
consideration.
In the context of the Free Movement of Goods the derogation on the grounds of public
policy is very narrowly construed and has been successfully invoked only once before
the ECJ.
131
In general, public policy and security refer to the totality of mandatory, basic
rules and fundamental interests in a Member State,
132
such as the integrity and efficiency
of its institutions
133
or the prosecution of offences.
134
Generally, the most frequently
raised defense is based on the protection of health,
135
under which the Court requires
Member States to prove that they pursued genuine health concerns and have a
130
See: Arts. 39(3), 46(1), 58(1)(b).
131
Successfully invoked in: ECJ, 23 November 1978, Case C-7/78, Thomppon [1978] ECR 2247; See also: ECJ, 9 June 1982, Case
C-95/81, Commission v. Italy [1982] ECR 2187; ECJ, 29 January 1985, Case C-231/83, Cullet v. Cetner Leclerc [1985] ECR 305;
Barnard, The substantive law of the EU: the four freedoms (2004), p.67.
But, recently, public policy has (ECJ, 9 December 1997, Case C-265/95, Commission v. France [1997] ECR I-6965; ECJ, 12 June
2003, Case C-112/00, Schmidberger [2003] ECR I-5659) been raised as a defense more and more often where the Free Movement
of Goods is hindered as a result of a demonstration; In Schmidberger Austrian authorities invoked the protection of Fundamental
Rights, concretely the Freedom of Expression and the Freedom of Assembly guaranteed by the ECHR and the national constitution,
as a ground of justification for their (in)action concerning the blockage of the Brenner Motorway during thirty hours by an
environmental association. Although the Court found that the protection of Fundamental Rights represents a legitimate ground for
derogation from the Free Movement of Goods, it did not refer to public policy, but "sees fundamental rights as a free-standing
justification or public interest requirement, functioning like objective justifications considered in respect of Article 90 [EC]." (Barnard,
The substantive law of the EU: the four freedoms (2004), p.70. See also: Regulation 2679/98 (1998) OJ L337/8). Thus, suggesting a
justification on the grounds of mandatory requirements. However, a justification is only feasible, where Member States can
demonstrate that the enforcement of Community law would have considerable consequences for public policy. The mere fear of
possible internal difficulties is not sufficient for the justification of derogation from Art. 28 EC (Bauernproteste).
132
As stated in ECJ, 27 October 1977, Case C-30/77, R. v. Pierre Bouchereau [1977] ECR 1999.
133
With regard to the exceptional importance of petroleum products as an energy source: ECJ, 10 July 1984, Case C-72/83,
Campus Oil [1984] ECR 2727.
134
ECJ, 30 April 1991, Case C-239/90, Boscher [1991] ECR I-2023; See also: Golden Shares Cases: ECJ, 4 June 2002, Case C-
503/99, Golden shares I [2002] ECR I-4809; ECJ, 4 June 2002, Case C-483/99, Commission v. France [2002] ECR I-4781; ECJ, 13
May 2003, Case C-463/00, Commission v. Spain [2003] ECR I-4581.
135
ECJ, 14 July 1988, Case C-90/86, Zoni [1988] ECR I-4285; ECJ, 2 February 1989, Case C-274/87, Commission v. Germany
[1989] ECR I-229; ECJ, 12 March 1987, Case C-178/84, Beer Purity Laws [1987] ECR 1227.
27
"seriously considered health policy"
136
in order to escape the accusation of a disguised
restriction on trade. Only where health risks of a particular product are scientifically
proven or where scientific evidence is still missing, are Member States allowed to
maintain protective rules.
137
Moreover, the Court also found that justifications on the
grounds of the functioning of the national health system
138
are valid under Art. 30 EC.
With respect to the requirement that derogations under Art. 30 EC may not be a means
of arbitrary discrimination or a disguised restriction on trade between Member States,
the Court noted in Henn and Darby that the function of "the second sentence of Article
36 of the EEC Treaty [now Art. 30 EC] is designed to prevent restrictions on trade based
on the grounds mentioned in the first sentence of that Article from being diverted from
their proper purpose and used in such a way as either to create discrimination in respect
of goods originating in other Member States or indirectly to protect certain national
products."
139
In this regard, Sedlaczek
140
suggests that the question of arbitrary
discrimination and disguised restriction should be examined when addressing the
concrete grounds of justification in the first sentence of Art. 30 EC
141
or when referring to
the substance of distinctly applicable measures under the Cassis judgment.
142
However,
from a systematic perspective Art. 30(2) EC should instead be viewed as a constraint
with the same effect as the proportionality test. Therefore, the test of arbitrary
discrimination or disguised restriction should be the last examination in the assessment
of a restrictive rule.
136
Barnard, The substantive law of the EU: the four freedoms (2004), p.74.
137
ECJ, 14 July 1983, Case C-174/82, Sandoz [1983] ECR 2445; With reference to the ,precautionary principle': ECJ, 23
September 2003, Case C-192/01, Commission v. Denmark [2003 ] ECR I-9693.
138
ECJ, 28 March 1995, Case C-324/93, Evans Medical [1995] ECR I-563; ECJ, 28 April 1998, Case C-120/95, Decker [1998] ECR
I-1831.
139
ECJ, 14 December 1979. Case C-34/79, Henn and Darby [1979] ECR I-3795 MN 3.
140
Sedlaczek, Der Begriff der Diskriminierung und der Beschränkung die Kapitalverkehrsfreiheit als konvergente Grundfreiheit des
EG-Vertrags, in Lechner/Staringer/Tumpel (eds) Kapitalverkehrsfreiheit und Steuerrecht (2000), p.32.
141
To the extent there can be said to be a discriminatory restriction if there is no serious threat for one of the interests mentioned in
Art. 30 EC or where the measures taken are not appropriate, necessary or the least restrictive means to achieve the objective at
issue: Sedlaczek, Der Begriff der Diskriminierung und der Beschränkung die Kapitalverkehrsfreiheit als konvergente Grundfreiheit
des EG-Vertrags, in Lechner/Staringer/Tumpel (eds) Kapitalverkehrsfreiheit und Steuerrecht (2000), p.33.
142
A disguised restriction on trade was found where, in fact, the real aim pursued by a Member State turned out to be different from
the one specified. Thus, to be able to successfully invoke a justification based on Art. 30 EC, Member States must prove that they
have taken equivalent action with respect to domestic producers: ECJ, 31 January 1984, Case C-40/82, Commission v. United
Kingdom [1984] ECR 283 (This obviously implies that generally a reference to health concerns is not accepted when commercial and
economic interests are the real aim of the prohibition on imports).
28
3.2 Free Movement of Persons
As provided in Art. 3(1)(c) EC, the functioning of the Common Market requires the
abolition of all obstacles to the Free Movement of Persons which comprises the Free
Movement of Workers
143
and the Freedom of Establishment of self-employed persons
and undertakings.
144
The fundamental principle governing these provisions is, without
doubt, the principle of non-discrimination on the grounds of nationality, generally
addressed in Art. 12 EC. It requires equality of treatment between migrants and
nationals of the host Member State
145
and is further specified in Arts. 39 and 43 EC.
Hence, the Free Movement of Persons was traditionally
146
aimed at prohibiting any form
of discrimination, but as the following outline of the case-law will show, the ECJ
expanded the Freedom to a general prohibition of restriction.
147
The following subsections will deal with the second Fundamental Freedom, the Free
Movement of Persons, which is addressed under the headings of Free Movement of
Workers and the Freedom of Establishment. Due to numerous similarities, cross-
references will be made also with respect to the Free Movement of Services, the third
Treaty Freedom, which is closely linked to the Freedom of Establishment.
3.2.1 Free Movement of Workers
Concretely, the Free Movement of Workers enables workers to move freely throughout
the territory of the Community in order to seek and/or take up employment in another
Member State under the same conditions as nationals, and, thus fosters mobility of the
production factor `work' within the EU. In addition to Arts. 39-42 EC, numerous
regulations provide for the integration of workers and their families; rights that are
143
Arts. 39-42 EC.
144
Arts. 43-48 EC.
145
ECJ, 26 September 1996, Case C-43/95, Data Delecta [1996] ECR I-4661.
146
For details on the development in case-law from a prohibition of discrimination to one of restriction see: Steindorff, Reichweite der
Niederlassungsfreiheit, EuR 1988, p.19 et seq.
147
Roth, Europäische Kapitalverkehrsfreiheit und nationales Steuerrecht, in Schön (ed) Gedächtnisschrift für Brigitte Knobbe-Keuk
(1997), p. 730 et seq. Sedlaczek, Der Begriff der Diskriminierung und der Beschränkung die Kapitalverkehrsfreiheit als
konvergente Grundfreiheit des EG-Vertrags, in Lechner/Staringer/Tumpel (eds) Kapitalverkehrsfreiheit und Steuerrecht (2000), p.35.
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