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Session 6: Freedom of Establishment and Services

We are not all workers in the internal market.

We are not all workers in the internal market.

What other economic activities are we pursuing?


Outline

Outline

Freedom of establishment.

Freedom to provide services.

Freedom to receive services.

Indicative examples.


Freedom of Establishment

Freedom of Establishment

…restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited.

See full article in notespage

Notes

Article 49 TFEU

Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.

Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 54, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital.


What does establishment mean?

What does establishment mean?

No Treaty definition.

Court interpreted to mean that the EU national moves to another member state on a permanent or semi-permanent basis in order to work as a self-employed person exercising their trade or profession.


Establishment definition in practice The famous Factortame case

Establishment definition in practice The famous Factortame case

Factortame, a Spanish company, owned and operated from the UK fishing boats flying the British flag and thus entitled to UK fishing quota.

UK law changed to require a certain % of owners to be British nationals.

Factortame did not meet the requirement and was prevented from continuing its business.

Does EU law provide any assistance to Factortame?


Yes, through freedom of establishment

Yes, through freedom of establishment

Court ruled they were engaged in actual pursuit of an economic activity through a fixed establishment for an indefinite period.

Thus the nationality requirement was an obstacle to exercising this freedom.


What economic activities come under establishment?

What economic activities come under establishment?

The treaty mentions specifically…

Setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.

To take up and pursue activities as self-employed persons and to set up and manage undertakings.


Freedom to provide services Art 56 TFEU

Freedom to provide services Art 56 TFEU

Restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.


What are services?

What are services?

Services shall be considered to be ‘services’ within the meaning of this Treaty where they are normally provided for remuneration…

If money does not changer hands, then it may be a voluntary offer of a service.


Examples of services under the Treaty

Examples of services under the Treaty

‘Services’ shall in particular include:

(a) activities of an industrial character;

(b) activities of a commercial character;

(c) activities of craftsmen;

(d) activities of the professions.

Notes

Covers the self-employed and also professionals, such as lawyers, doctors, vets.

The Factortame case (Case C-213/89) was about the pursuit of an economic activity through a fixed establisment for an idefinite period; in ths case commercial fishing activities.


Establishment or providing a service: What is the difference?

Establishment or providing a service: What is the difference?

Establishment requires permanent physical movement in another country.

Providing a service: physical movement of the service provider may be temporary or none at all.

Example: selling insurance cross-border.

providing consultancy services.

providing professional services.


What about this situation? Does EU law apply?

What about this situation? Does EU law apply?

Mr Cowan, a British citizen, is attacked in the Paris metro.

French law entitles French victims of attacks to compensation by the state.

Mr. Cowan’s claim was rejected.


and what about this situation? Does EU law apply?

and what about this situation? Does EU law apply?

Luisi & Carbone were prosecuted in the 1980s for attempting to take abroad more than the legal maximum of Italian currency.

They argued that they wished to pay for services as tourists.


Court ruled

Court ruled

The freedom to provide services includes the freedom to go to another member state in order to receive services without being obstructed by restrictions.

Tourists, persons receiving medical treatment, persons travelling for the purpose of education, or business are to be regarded as recipients of services.


Does the freedom to receive services apply here? What do you think?

Does the freedom to receive services apply here? What do you think?

Can a patient have medical costs abroad reimbursed when the operation was available in a NHS hospital?

Case C-372/04 The Queen, on the application of Yvonne Watts v Bedford Primary Care Trust and Secretary of State for Health


Providers of services posting their workers abroad

Providers of services posting their workers abroad

Companies need not be owned or controlled by nationals of the host state.

Employees may or may not be EU nationals.

Once work permits obtained in one member state company may post its non-EU workers to provide a service to another member-state.

Consider the situation in the next slide.


Freedom to provide services: and conflict of interests

Freedom to provide services: and conflict of interests

Laval, a Latvian construction company, sent workers in Sweden to work on building sites.

Laval and the Swedish trade unions did not reach agreement on wages and other work conditions.

Laval signed an agreement with the Latvian trade union.

Swedish trade unions blockaded the building sites.

Laval went bust.

Laval sued the Swedisn trade unions.


Laval continued…what do you think?

Laval continued…what do you think?

Did the Swedish union collective action to safeguard wage agreements constitute a restriction on the freedom to provide services?

Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet and Others


Professionals, providers of services and workers: not same standing

Professionals, providers of services and workers: not same standing

Workers can claim social advantages as nationals, such as housing, scholarships…

NOT the self-employed, providers and recipients of services.

Non-discrimination principle may be relied upon to mitigate differences.


Conclusion

Conclusion

The internal market is the centrepiece of the Union.

Free market ideology dominates.

Rights based on European citizenship is a departure from the dominance of rights linked to economic activity.