Institutional Law of the EU

2023-24 FALL SEMESTER

DR. MERVE AĞZITEMİZ

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Integration of the EU
DEEPENING WIDENING
“Deepening” has been broadly
defined as a process of Widening is the process
“gradual and formal whereby states join the
vertical institutionalisation” European Union, after they
or, as a rise in the scope and have fulfilled a set of
the political and economic
level of European integration conditions. In substance,
in terms of ‘institution- this means an increase in
building, democratic the number of member
legitimacy and states of the EU.
European policies affecting
both the EU’s polity and
policies’.

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Integration of the EU
WHERE WE SEE THE DEEPENİNG?
• European Coal and Steel Community (ECSC) (1952 – 2002) (on one sector: coal and steel))
• European Atomic Energy Community (Euratom) (1958) (on one sector: atomic energy)
• European Economic Community (EEC) (1958) (Customs Union and Common Market)
• European Union (EU) (1993)
WITH WHICH INSTRUMENTS ?
• European Single Act(1987)
• Maastricht (EU) Treaty (1993)
• Amsterdam Treaty (1999)
• Nice Treaty (2003)
• Lisbon Treaty (2009)

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Integration of the EU
WIDENING STEPS:
Founding Members: France, Germany, Italy, Belgium, Netherlands, Luxembourg.
I. 1973- Britain, Ireland, Denmark
II. 1981- Greece
III. 1986- Spain Portugal
IV. 1995 – Austria, Finland, Sweden
V. 2004 - Hungary, Poland, Czech Republic, Slovakia, Slovenia, Latvia, Lithuania, Estonia, Malta, Greek
Cypriot Administration of Southern Cyprus
VI. 2007 - Romania, Bulgaria
VII. 2013 – Croatia
BREXIT – 2020 Britain
Today EU has 27 members.

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1- European Integration
1950- Schuman Declaration
French Minister of Foreign Affairs Robert Schuman
published the Schuman Declaration on May 9, 1950,
which determined the basic points of integration, the
goal to be achieved and the method to be used in this
process.

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1- European Integration

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1- European Integration
«…Europe will not be made all at once, or according to a single plan. It will be built through
concrete achievements which first create a de facto solidarity. The coming together of the
nations of Europe requires the elimination of the age-old opposition of France and
Germany. Any action taken must in the first place concern these two countries…
It proposes that Franco-German production of coal and steel as a whole be placed under a
common High Authority, within the framework of an organization open to the participation
of the other countries of Europe. The pooling of coal and steel production should
immediately provide for the setting up of common foundations for economic development
as a first step in the federation of Europe…
The solidarity in production thus established will make it plain that any war between
France and Germany becomes not merely unthinkable, but materially impossible…»

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1- European Integration
Schuman Declaration
oThe starting point is to establish a sphere of peace and prosperity by eliminating the conflict in the
continent (with the participation of other European countries) especially France and Germany. (+
Preserving the peace and making it permanent)
oThe desired goal is a form of integration referred to as the European Federation.
oMETHOD to achive this type of integration:
«...Europe will not be made all at once, or according to a single plan. …» (Gradual Integration)
«…will be built through concrete achievements …setting up of common foundations for economic
development as a first step …» (Economic Integration)
- First of all, coal and steel production (a single sector) will be combined, which will pave the way for
further economic integration.

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1- European Integration
«…production of coal and steel as a whole be placed under a common High Authority, within the
framework of an organization open to the participation of the other countries of Europe…»
«…By pooling basic production and by instituting a new High Authority, whose decisions will
bind France, Germany and other member countries….» (Supranational Integration)
- According to this statement, a common structure will be established among the member
states and these member states will transfer some of their sovereign powers (in the coal and
steel sector) to this structure.

«…ready to open negotiations … The essential principles and undertakings defined above will be
the subject of a treaty signed between the States and submitted for the ratification of their
parliaments…» (Legal Integration)
- This structure will be established based on the consent of the states and through law.

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1- European Integration
National System
o Based on the (absolute) sovereignty of the States.
International System
o This system has developed as States cooperated among themselves.
o Operates between independent states
oSupranational System
o This system emerged when states wanted to integrate (further) among themselves.
o This system is based on the idea of delegating the sovereignty to a structure and that structure
use the transferred powers through a common high authority.

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Institutional Law of European Union:
1-EU’s institutions
2-The Union Legal System
3-Hierarchy of norms in the EU

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1- EU’s Institutions (at a glance)
THE TREATY ON EUROPEAN UNION
TITLE III
PROVISIONS ON THE INSTITUTIONS
Article 13
1. The Union shall have an institutional framework which shall aim to promote its values, advance its objectives, serve its
interests, those of its citizens and those of the Member States, and ensure the consistency, effectiveness and continuity
of its policies and actions.
The Union's institutions shall be:
— the European Parliament,
— the European Council,
— the Council,
— the European Commission (hereinafter referred to as ‘the Commission’),
— the Court of Justice of the European Union,
— the European Central Bank,
— the Court of Auditors.
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2-The Union Legal System
EU LAW
Written Sources Unwritten Sources
Acts of the member states
The European Union is based on
The General Principles of EU
-Founding Treaties the rule of law. So every action
taken by the EU is founded on Law - General Principles of
-Amending Treaties treaties that have been signed International Law
-Accession Treaties and ratified by its members.

Union acts
Binding- Regulation, Directive, Decision
Non-Binding – Reccomendations and Opinions
On further note: Accession Treaties are signed by the member
Derived Normative Acts: Delegated and Implementing acts states and the acceding country. Accession is not automatic.
The Treaty has to be ratified by the Member States and the
International Agreements acceding country. These Treaties set out the conditions and
arrangements regarding accession, including the rights and
obligations of the new Member State as well as adaptations to
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the EU institutions.
2-The Union Legal System

Treaties currently in force:

[Link]

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2-The Union Legal System
Legislative acts are adopted following one of the legislative procedures set out in the EU
treaties (ordinary or special). Non-legislative acts do not follow these procedures and can be
adopted by EU institutions according to specific rules.
TFEU distinguishes between legislative and non-legislative acts. This is a reference to the
procedure used for the adoption of an act, rather than whether an act is legally binding or not.
Legislative acts are defined in Article 289(3) TFEU as those adopted by legislative procedure,
that is the ordinary legislative procedure or the special legislative procedure. They may take the
form of regulations, directives or decisions. Non-legislative acts are adopted other than by the
ordinary or special legislative procedures and may also take the form of regulations, directives or
decisions.

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2-The Union Legal System
Treaty on the Functioning of the European Union
PART SIX - INSTITUTIONAL AND FINANCIAL PROVISIONS
TITLE I - INSTITUTIONAL PROVISIONS
CHAPTER 2 - LEGAL ACTS OF THE UNION, ADOPTION PROCEDURES AND OTHER PROVISIONS
SECTION 1 - THE LEGAL ACTS OF THE UNION
Article 288
To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and
opinions.
A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.
A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall
leave to the national authorities the choice of form and methods.
A decision shall be binding in its entirety. A decision which specifies those to whom it is addressed shall be binding only
on them.
Recommendations and opinions shall have no binding force.

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2-The Union Legal System
Treaty on the Functioning of the European Union PART SIX - INSTITUTIONAL AND FINANCIAL
PROVISIONS
TITLE I - INSTITUTIONAL PROVISIONS
CHAPTER 2 - LEGAL ACTS OF THE UNION, ADOPTION PROCEDURES AND OTHER PROVISIONS
SECTION 1 - THE LEGAL ACTS OF THE UNION
Article 289
1. The ordinary legislative procedure shall consist in the joint adoption by the European Parliament and the
Council of a regulation, directive or decision on a proposal from the Commission. This procedure is defined in
Article 294.
2. In the specific cases provided for by the Treaties, the adoption of a regulation, directive or decision by the
European Parliament with the participation of the Council, or by the latter with the participation of the European
Parliament, shall constitute a special legislative procedure.
3. Legal acts adopted by legislative procedure shall constitute legislative acts.
4. In the specific cases provided for by the Treaties, legislative acts may be adopted on the initiative of a group of
Member States or of the European Parliament, on a recommendation from the European Central Bank or at the
request of the Court of Justice or the European Investment Bank.

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2-The Union Legal System
REGULATIONS:
o Regulations are legal acts that apply automatically and uniformly to all EU countries as
soon as they enter into force,
o No need to be transposed into national law,
o Regulations are binding in their entirety on all EU countries.

[Link]

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2-The Union Legal System
DIRECTIVES:
o Directives require EU countries to achieve a certain result, but leave them free to
choose how to do so.
o EU countries must adopt measures to incorporate them into national law (transpose) in
order to achieve the objectives set by the directive.
o National authorities must communicate these measures to the European Commission.

◦ [Link]

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2-The Union Legal System
DECISIONS:
o A decision shall be binding in its entirety.
o A decision which specifies those to whom it is addressed shall be binding only on them.

[Link]

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2-The Union Legal System
RECOMMENDATIONS AND OPINIONS:
o They have no binding force,
o They may offer guidance on the interpretation or content of EU law.
o Recommendations allow the EU institutions to make their views known and to suggest a line of
action without imposing any legal obligation on those to whom it is addressed.
o An 'opinion' is an instrument that allows the EU institutions to make a statement, without
imposing any legal obligation on the subject of the opinion.

[Link]

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2-The Union Legal System
Delegated acts
Delegated acts are legally binding non-legislative acts that enable the Commission to
supplement or amend non-essential parts of EU legislative acts, for example, in order to define
detailed measures.
The Commission adopts the delegated act and if Parliament and Council have no objections, it
enters into force.
Implementing acts
Implementing acts are legally binding non-legislative acts that enable the Commission – under
the supervision of committees consisting of EU countries’ representatives – to set conditions
that ensure that EU laws are applied uniformly.

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 List of main legal acts based on the Treaties:

Type of act Binding force Adopted by

Regulation Legally binding Council and Parliament

Council
Parliament
European Central Bank

Delegated Regulation Legally binding Commission

Implementing Regulation Legally binding Commission

Council

Directive Legally binding Council and Parliament

Council

Delegated Directive Legally binding Commission

Implementing Directive Legally binding Commission

Council

Decision Legally binding Council and Parliament

Council
Parliament
Commission
European Council
European Central Bank

Delegated Decision Legally binding Commission

Implementing Decision Legally binding Commission

Council

Recommendation Non-binding Council

Commission
European Central Bank

Guideline Legally binding European Central Bank

Opinion* Non-binding Commission

Parliament
Council
Court of Auditors
European Central Bank

[Link] 22
2-The Union Legal System
To reach the directory of EU legal acts:
[Link]
[Link]/browse/directories/[Link]

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3- Hierarchy of norms in the EU

The hierarchy of norms refers to the idea that, in a

legal system, there is a vertical order of legal acts, with
those in the lower levels of the hierarchy being subject
to those at a higher level.

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3- Hierarchy of norms in the EU
Primary Law of EU
-the EU’s constituent treaties
-the Charter of Fundamental Rights
-the general principles of EU Law

International agreements with non-

EU countries/organisations

Secondary Law
All legislative and non-legislative
acts adopted by the EU Legislative acts are at a higher
institutions level than non-legislative acts
which include, in particular,
delegated and implementing
acts
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For further reading on the institutional law of the EU:
- Marios Costa, Steve Peers, Steiner & Woods EU Law, Oxford University Press; 14th edition, 2020
- Catharine Barnard, Steve Peers (Eds.), European Union Law, 3 rd Edition Oxford University Press,
Oxford, 2020.
- Trevor C. Hartley, The Foundations of European Union Law, Oxford University Press, 2014.
- Paul Craig ve Grainne de Burca, EU Law: Texts, Cases and Materials, 7 th Edition, Oxford University
Press, Oxford, 2020.
- (In Turkish) - İlke Göçmen, Avrupa Birliği Hukukunun Temelleri, Seçkin Yayıncılık, Ankara, 2021.
For the European Integration, ideas and history:
- Jean Monnet, Memoirs, Doubleday and Co. 1978.
- Gerard Delanty, Inventing Europe, 1995th Edition, Palgrave Macmillan, 1995.
- Desmond Dinan (Ed.) Origins and Evolution of the European Union, Second Edition, Oxford University
Press, 2014.
- J.H.H. Weiler, The Constitution of Europe: ‘Do the New Clothes Have an Emperor?’, and Other Essays
on European Integration, Cambridge University Press, 1999.

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EUROPEAN COMMISSION (Regarding
Internal Market of EU)
Article 17 (TEU)
1. The Commission shall promote the general interest of the Union and
take appropriate initiatives to that end. It shall ensure the application of the
Treaties, and of measures adopted by the institutions pursuant to them. It
shall oversee the application of Union law under the control of the Court of
Justice of the European Union. It shall execute the budget and manage
programmes. It shall exercise coordinating, executive and management
functions, as laid down in the Treaties….
2. Union legislative acts may only be adopted on the basis of a
Commission proposal, except where the Treaties provide otherwise……

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EUROPEAN COMMISSION
Structure:
The Commission is fromed of a group of 27 Commissioners. (One commissioner
from each member state)
This formation is called as ‘the college’

New commissioners are appointed every 5 years.

Appointment of the commission: through a procedure in which the European
Council, the Council, and the European Parliament plays a leading role.
- Commission functions on the principle of collegiality. Decisions are taken
collectively by the College of Commissioners.

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EUROPEAN COMMISSION
 The members of the Commission shall be chosen on the ground of
their general competence and European commitment from persons
whose independence is beyond doubt.

 In carrying out its responsibilities, the Commission shall be

completely independent. Without prejudice to Article 18(2), the
members of the Commission shall neither seek nor take instructions
from any Government or other institution, body, office or entity.
They shall refrain from any action incompatible with their duties or
the performance of their tasks

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EUROPEAN COMMISSION
Role in the Institutional Framework: (related to internal market)
Commission ensures that EU law is applied properly in all EU countries.
 If the Commission concludes that a member state has not acted in
accordance with EU law, it can bring the matter before the CJEU within
the framework of the infringement procedure to ascertain the violation of
EU law.

 The Commission particularly stands out regarding its supervisory authority

related to the internal market.
• Some issues related to EU internal market law have been clarified through
infringement proceedings initiated by the Commission.
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Substantive Law of the EU
2023-24 SPRING SEMESTER
DR. MERVE AĞZITEMİZ

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 Institutional Law
Court Of Justice of the European Union
 Actions for failure to fulfil obligations
 Preliminary ruling proceedings
The effects of EU Law in the
national legal systems:
 Primacy of EU Law
 Direct effect

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Court of Justice of the European Union
CJEU constitutes the judicial authority of the European Union and it ensures the
uniform application and interpretation of the EU law.
CJEU consists of two courts: Member States
shall provide
The Court Of remedies sufficient
to ensure effective
Justice legal protection in
the fields covered
by Union law.

The General
Court

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Court of Justice of the European Union
The Court of Justice is composed of 27 Judges (one from each
member state) and 11 Advocates General. (The Advocates General
assist the Court with their ‘opinions’)
The General Court consists of two judges from each Member State.
Judges perform their duties in a totally impartial and independent
manner!
Court of Justice and General Court may sit as a grand chamber or as
other formations but the decisions are called ‘Decision of the Court of
Justice’ and ‘Decision of the General Court’ in the end.
Appeals may be brought before the Court of Justice against
judgments and orders of the General Court.
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Court of Justice of the European Union
Both courts have jurisdiction in various categories of
proceedings. (preliminary rulings and actions for failure to
fulfil obligations are in the Court of Justice’s jurisdiction)
CJEU’s Impact on the Internal Market Law: CJEU ensures
the uniform application and interpretation of the EU law. A
significant portion of EU internal market law has been
shaped through the decisions rendered by the CJEU,
particularly through its preliminary rulings and rulings on
actions for failure to fulfil obligations.
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Court of Justice of the European Union
Actions for failure to fulfil obligations:
In general terms: If it is considered that a Member State has failed to fulfil an obligation
under the Treaties, the Commission or a member state may bring the matter before the
Court of Justice of the European Union.
 If the Commission considers that a Member State has failed to fulfil an obligation
under the Treaties, it shall deliver a reasoned opinion on the matter after giving the State
concerned the opportunity to submit its observations.
 Before a Member State brings an action against another Member State for an alleged
infringement of an obligation under the Treaties, it shall bring the matter before the
Commission.

….So before bringing the matter before the CJEU there is a a preliminary procedure in
which the Member State concerned is given the opportunity to reply to the complaints
addressed to it.

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Court of Justice of the European Union
 If the Court of Justice of the European Union finds that a Member State
has failed to fulfil an obligation under the Treaties, the State shall be
required to take the necessary measures to comply with the judgment of the
Court. (binding force)
 If the Commission considers that the Member State concerned has not
taken the necessary measures to comply with the judgment of the Court, it
may bring the case before the Court after giving that State the opportunity
to submit its observations. It shall specify the amount of the lump sum or
penalty payment to be paid by the Member State concerned which it
considers appropriate in the circumstances.
Could the court rule in a way requiring a member state to take specific
measures??
If the Court finds national legislation to be incompatible with Union law,
can it invalidate it??
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Court of Justice of the European Union
……The judgement is declaratory only, it cannot of itself set aside an
offending national law. CJEU may not order a specific action to
achieve to cure the breach……

All binding sources of EU law can be subject to actions for failure

to fulfil obligations.
- Therefore, the four freedoms (within the TFEU) can also be
subject to this infringement procedure.
 Infringement can be carried out by a member state through it’s
legislative, executive, or judicial levels.

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Court of Justice of the European Union
Internal Market and Infringement Proceedings
1- A member state may be acting in contravention of any of the four freedoms.
2- The Commission (or another member state) may therefore initiate
infringement proceedings against that state and subsequently bring an action
before the court.
3- CJEU can determine whether the relevant fundamental freedom has been
violated in terms of the specific dispute.
4- This decision will help to clarify EU internal market law.

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Court of Justice of the European Union
Preliminary ruling proceedings:
CJEU is working to ensure the effective and uniform application of
European Union law.
Article 267 TFEU: The Court of Justice of the European Union shall
have jurisdiction to give preliminary rulings concerning:
(a) the interpretation of the Treaties;
(b) the validity and interpretation of acts of the institutions, bodies,
offices or agencies of the Union; This not an appeal!!!
Cooperation between
member state courts and
CJEU
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Court of Justice of the European Union
 The national courts may (or must) refer to the Court of Justice and ask it to
clarify a point concerning the interpretation of EU law. A reference for a
preliminary ruling may also seek the review of the validity of an act of EU law.
«The Court of Justice's reply is not merely an opinion, but takes the form of a
judgment or reasoned order. The national court to which it is addressed is, in
deciding the dispute before it, bound by the interpretation given. The Court's
judgment likewise binds other national courts before which the same problem is
raised.» [Link]
All sources of EU law can be subject to this procedure.
- Therefore, the four freedoms (within the TFEU) can also be subject to this
procedure.

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Court of Justice of the European Union
….a question is raised before any court or tribunal of a Member
State….
Court: EU law term
The quality of the court or tribunal is to be determined by
reference to Union law alone and turns upon variously whether; it is
established by law, it is permanent, its jurisdiction is compulsory, it
applies the rules of law…etc.
A reference from.a body which is not a court or tribunal is
inadmissable.

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Court of Justice of the European Union
Where such a question is raised before any court or tribunal
of a Member State, that court or tribunal may, if it considers
that a decision on the question is necessary to enable it to
give judgment, request the Court to give a ruling thereon.
Where any such question is raised in a case pending before a
court or tribunal of a Member State against whose decisions
there is no judicial remedy under national law, that court or
tribunal shall bring the matter before the Court.

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Court of Justice of the European Union
Internal Market and Preliminary Ruling Procedure:
1- A national court may encounter with an issue related to the interpretation of any of the
internal market freedoms and may need a (preliminary) ruling on this issue to give its
decision.
2- If this court is a lower court, it has the right to refer to the preliminary ruling
procedure, while court of final instance is generally obliged to refer to the preliminary
ruling procedure.
3- The CJEU interprets the relevant fundamental freedom within the framework of the
preliminary ruling procedure.
4- As a matter of case law, this ruling (interpretation) binds all national courts until the
CJEU revisits it with a subsequent ruling.
5- In other words, these rulings (interpretations) can be described as shaping EU’s
internal market law.
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EU Law and National Legal Systems
The EU has established a separate legal order that is
independent from national and international law.
Sui generis nature of the EU Law.
But where do we apply this sui generis law
(geographically) Within the member states’
territories
So in a member state we see both national law and the EU
Law. (coexistence)

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EU Law and National Legal Systems
How can we define the normative
interaction between these two legal
systems?
Who will answer this question?

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EU Law and National Legal Systems
Answer to the first question is: By using
principles like the primacy of EU Law and Direct
Effect of EU Law

Answer to the second question is: Court of

Justice of the EU

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Primacy of EU Law (Supremacy)
The principle of the primacy (supremacy) of EU law
is based on the idea that where a conflict arises
between an aspect of EU law and an aspect of law in
an EU Member State, EU law will prevail.
This principle is not enshrined in the EU treaties (But
there is a short declaration annexed to the Lisbon
Treaty) [Link]
content/EN/TXT/?uri=celex%3A12008E%2FAFI%2FD
CL%2F17
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Primacy of EU Law (Supremacy)
Costa v ENEL (Case 6/64)
As the Member States transferred certain powers to the EU, they limited their sovereign rights,
and thus in order for EU norms to be effective they must take precedence over any provision of
national law, including constitutions.
BY CONTRAST WITH ORDINARY INTERNATIONAL TREATIES, THE EEC TREATY HAS CREATED ITS
OWN LEGAL SYSTEM WHICH, ON THE ENTRY INTO FORCE OF THE TREATY, BECAME AN INTEGRAL
PART OF THE LEGAL SYSTEMS OF THE MEMBER STATES AND WHICH THEIR COURTS ARE BOUND
TO APPLY .
THE TRANSFER BY THE STATES FROM THEIR DOMESTIC LEGAL SYSTEM TO THE COMMUNITY
LEGAL SYSTEM OF THE RIGHTS AND OBLIGATIONS ARISING UNDER THE TREATY CARRIES WITH IT
A PERMANENT LIMITATION OF THEIR SOVEREIGN RIGHTS.
Member States HAVE THUS CREATED A BODY OF LAW WHICH BINDS BOTH THEIR NATIONALS
AND THEMSELVES .

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Primacy of EU Law (Supremacy)
CJEU clarified that the primacy of EU law must be applied
to all national acts, whether they were adopted before or
after the EU act in question. Where EU law takes
precedence over conflicting national law, the national
provisions are not automatically annulled or invalidated.
However, national authorities and courts must refuse to
apply those provisions as long as the overriding EU norms
are in force.

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Primacy of EU Law (Supremacy)
The Scope and Effect:
1- On which EU Law sources can we apply the principle of
primacy?
2- Can we define which national law that the EU law will
take precedence over?
3- Who should consider this principle?
4- How does this principle bear legal consequences?

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Primacy of EU Law (Supremacy)
1- With which EU Law sources can we apply the
principle of primacy?
The principle of primacy can be applied to all sources
of EU law.
…Primary law, EU Charter of Fundamental Rights,
General Prnciples of EU Law, secondary law…

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Primacy of EU Law (Supremacy)
2- Can we define the national law that the EU law will take precedence over?
EU law must be applied to all national acts, whether they were adopted before or after the EU
act in question.

Case 11/70 - Internationale Handelsgesellschaft

«RECOURSE TO THE LEGAL RULES OR CONCEPTS OF NATIONAL LAW IN ORDER TO JUDGE THE
VALIDITY OF MEASURES ADOPTED BY THE INSTITUTIONS OF THE COMMUNITY WOULD HAVE AN
ADVERSE EFFECT ON THE UNIFORMITY AND EFFICACY OF COMMUNITY LAW . THE VALIDITY OF
SUCH MEASURES CAN ONLY BE JUDGED IN THE LIGHT OF COMMUNITY LAW … THE VALIDITY OF
A COMMUNITY MEASURE OR ITS EFFECT WITHIN A MEMBER STATE CANNOT BE AFFECTED BY
ALLEGATIONS THAT IT RUNS COUNTER TO EITHER FUNDAMENTAL RIGHTS AS FORMULATED BY
THE CONSTITUTION OF THAT STATE OR THE PRINCIPLES OF A NATIONAL CONSTITUTIONAL
STRUCTURE…»

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Primacy of EU Law (Supremacy)
Case 106/77 - Simmenthal
«…IN ACCORDANCE WITH THE PRINCIPLE OF THE PRECEDENCE OF COMMUNITY LAW , THE
RELATIONSHIP BETWEEN PROVISIONS OF THE TREATY AND DIRECTLY APPLICABLE MEASURES OF
THE INSTITUTIONS ON THE ONE HAND AND THE NATIONAL LAW OF THE MEMBER STATES ON
THE OTHER IS SUCH THAT THOSE PROVISIONS AND MEASURES NOT ONLY BY THEIR ENTRY INTO
FORCE RENDER AUTOMATICALLY INAPPLICABLE ANY CONFLICTING PROVISION OF CURRENT
NATIONAL LAW BUT - IN SO FAR AS THEY ARE AN INTEGRAL PART OF , AND TAKE PRECEDENCE IN
, THE LEGAL ORDER APPLICABLE IN THE TERRITORY OF EACH OF THE MEMBER STATES - ALSO
PRECLUDE THE VALID ADOPTION OF NEW NATIONAL LEGISLATIVE MEASURES TO THE EXTENT TO
WHICH THEY WOULD BE INCOMPATIBLE WITH COMMUNITY PROVISIONS …»

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Primacy of EU Law (Supremacy)
3- Who should consider this principle?
EU Law empowers all national judges (from first to supreme courts)
to set aside incompatible national laws.

National administrators – All bodies of member states

In conclusion: The principle of primacy (of EU Law) seeks to ensure

that people are uniformly protected by EU law all across EU.

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Primacy of EU Law (Supremacy)
4- How does this principle bear legal consequences?
- inapplicability of national law
Where EU law takes precedence over conflicting national
law, the national provisions are not automatically annulled
or invalidated. national authorities and courts must refuse
to apply those provisions as long as the overriding EU norms
are in force.

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Direct Effect
With the primacy of EU Law, Direct Effect is also a
fundamental principle of EU law
EU law not only engenders obligations for EU
Member States, but also rights for individuals.
Individuals may therefore take advantage of these
rights and directly invoke EU law before national and
European courts, independently of whether the national
law exists.

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Direct Effect
Horizontal and vertical direct effect
There are two aspects to direct effect: a vertical aspect and a
horizontal aspect.
 Vertical direct effect is of consequence in relations between
individuals and the state. This means that individuals can invoke a
provision of EU law in relation to the state.
 Horizontal direct effect is of consequence in relations between
individuals. This means that an individual can invoke a provision of
EU law in relation to another individual.

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Direct Effect
In order to find out if the source has ‘direct
effect’:
Stage 1: Is the relevant source of EU law
capable of producing direct effect?
Stage 2: Is the relevant rule (of that source)
directly effective?

28
Vertical Direct Effect - Case 26/62 – van
Gend & Loos
THE OBJECTIVE OF THE EEC TREATY, WHICH IS TO ESTABLISH A COMMON MARKET, THE FUNCTIONING OF WHICH
IS OF DIRECT CONCERN TO INTERESTED PARTIES IN THE COMMUNITY, IMPLIES THAT THIS TREATY IS MORE THAN
AN AGREEMENT WHICH MERELY CREATES MUTUAL OBLIGATIONS BETWEEN THE CONTRACTING STATES . THIS
VIEW IS CONFIRMED BY THE PREAMBLE TO THE TREATY WHICH REFERS NOT ONLY TO GOVERNMENTS BUT TO
PEOPLES . IT IS ALSO CONFIRMED MORE SPECIFICALLY BY THE ESTABLISHMENT OF INSTITUTIONS ENDOWED WITH
SOVEREIGN RIGHTS, THE EXERCISE OF WHICH AFFECTS MEMBER STATES AND ALSO THEIR CITIZENS .
FURTHERMORE, IT MUST BE NOTED THAT THE NATIONALS OF THE STATES BROUGHT TOGETHER IN THE
COMMUNITY ARE CALLED UPON TO COOPERATE IN THE FUNCTIONING OF THIS COMMUNITY THROUGH THE
INTERMEDIARY OF THE EUROPEAN PARLIAMENT AND THE ECONOMIC AND SOCIAL COMMITTEE .
IN ADDITION THE TASK ASSIGNED TO THE COURT OF JUSTICE UNDER ARTICLE 177, THE OBJECT OF WHICH IS TO
SECURE UNIFORM INTERPRETATION OF THE TREATY BY NATIONAL COURTS AND TRIBUNALS, CONFIRMS THAT THE
STATES HAVE ACKNOWLEDGED THAT COMMUNITY LAW HAS AN AUTHORITY WHICH CAN BE INVOKED BY THEIR
NATIONALS BEFORE THOSE COURTS AND TRIBUNALS . THE CONCLUSION TO BE DRAWN FROM THIS IS THAT THE
COMMUNITY CONSTITUTES A NEW LEGAL ORDER OF INTERNATIONAL LAW FOR THE BENEFIT OF WHICH THE
STATES HAVE LIMITED THEIR SOVEREIGN RIGHTS, ALBEIT WITHIN LIMITED FIELDS, AND THE SUBJECTS OF WHICH
COMPRISE NOT ONLY MEMBER STATES BUT ALSO THEIR NATIONALS . INDEPENDENTLY OF THE LEGISLATION OF
MEMBER STATES, COMMUNITY LAW THEREFORE NOT ONLY IMPOSES OBLIGATIONS ON INDIVIDUALS BUT IS ALSO
INTENDED TO CONFER UPON THEM RIGHTS WHICH BECOME PART OF THEIR LEGAL HERITAGE . THESE RIGHTS
ARISE NOT ONLY WHERE THEY ARE EXPRESSLY GRANTED BY THE TREATY, BUT ALSO BY REASON OF OBLIGATIONS
WHICH THE TREATY IMPOSES IN A CLEARLY DEFINED WAY UPON INDIVIDUALS AS WELL AS UPON THE MEMBER
STATES AND UPON THE INSTITUTIONS OF THE COMMUNITY .
29
Direct Effect
Test for the Direct effect
The court stated that a Treaty Provision may produce direct effects in the
member states if it is:
1- Clear
2- Unconditional in the sense of not allowing for any reservations on the part of
the member states
3- Not dependent on any sunsequent further implementation measures to be
adopted by the member states or the Community

30
Direct Effect - Types of Legal Acts
Direct effect and primary law
•As far as primary law is concerned, the Court established
the principle of direct effect in the Van Gend en
Loos judgment. However, it laid down the condition that the
obligations must be precise, clear and unconditional and
that they must not call for additional measures, either
national or European.

31
Direct Effect - Types of Legal Acts
Direct effect and secondary law
The application of direct effect depends on the type of the act.
• Regulations are directly applicable in the Member States, as specified in Article 288 of the
Treaty on the Functioning of the European Union , and have therefore direct effect. However, in
line with the general principles, this applies only under the condition that the rules are
sufficiently clear, precise and relevant to the situation of the individual litigant
•Directives are acts addressed to Member States which must be transposed into national law.
However, in certain cases, the Court recognises the direct effect of directives in order to protect
the rights of individuals. Therefore, the Court laid down in its Van Duyn judgment that a
directive has direct effect when its provisions are unconditional and sufficiently clear and precise
and when the Member State has not transposed the directive by the deadline. However, it can
only have direct vertical effect – Member States are obliged to implement directives but
directives may not be cited by a Member State against an individual
• Decisions may have direct effect when they refer to a Member State as the addressee. The
Court therefore recognises only a direct vertical effect
32
Direct Effect
In conclusion:
The principle of direct effect may be applied (almost) to all sources
of EU law.
Like in the principle of primacy of EU Law, all bodies of Member
States (especially judiciary) must consider this principle.
National courts will, on one hand, fully apply the relevant EU law
to the issue at hand, while on the other hand, they will set aside any
provisions of national law that may conflict with EU law.

33
Direct Effect
Internal Market, Primacy of EU Law and Principle of Direct
Effect:
If a dispute before a national court falls within the scope of
application of any of the four freedoms...
In respect to that incident:
• the relevant freedom is applied in its entirety,
• any provisions of national law that may be in conflict with that
norm must set aside.
As a result, EU internal market law is applied to the case, and the
dispute is resolved on the basis of EU internal market law.
34
 EU Substantive Law
Week 3 – 6 March 2024:

Fundamentals of the EU Internal

Market-1
(Different Stages of Integration &
Methods to Accomplish Internal
Market)
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Fundamentals of the EU Internal Market

 To lay the foundations of the internal market, three topics need to be illuminated.

 The internal market is a stage of integration.

 • So, how is the internal market positioned among the stages of integration?

 The internal market is a goal.

 • So, how will this goal be achieved?

 The internal market is not static, it is a dynamic goal.

 • So, how has the historical development of the internal market in the European Union
been?
 • It will be discussed next week...
Plan

 Different Integration Stages» and the Internal Market

 Techniques for Accessing the Internal Market
 • Theoretical Approach
 • Perspective in the EU
 Different Integration Stages» and the
Internal Market
 Developed by economists.
 • Defines different levels of intensity of economic integration.
 Different Integration Stages» and the
Internal Market
 Characteristics of Different Integration Stages
• (1) Integration stages are ranked from the lowest intensity to the highest
intensity as follows:
 • Preferential Trade Agreements
 • Free Trade Agreements
 • Customs Union
 • Common Market
 • Monetary Union
 • Economic Union
 • (Political Union).
 Different Integration Stages» and the
Internal Market
(Political Union)
Economic Union
Monetary Union
Common Market ----- Internal Market
Customs Union
Free Trade Area
Preferential Trade Agreements
 Different Integration Stages» and the
Internal Market
 Characteristics of Different Integration Stages
 • (2) States party to integration may prefer the integration stage they desire
according to their will.
 • (3) However, each integration stage compels the transition to a more
advanced integration stage.
 • For example: The Common Market brings more benefits with Monetary
Union.
 • For example: Monetary Union is better managed with Economic Union.
Preferential Trade Agreements

 Goal
 To increase the volume of trade between the parties.
 Means
 Avoid adding new barriers to trade between the parties
 Reduce or eliminate existing barriers to trade between the parties
 Example
 The General Agreement on Tariffs and Trade (GATT) of 1947 and 1994.
Free Trade Area

 Goal
 To liberalize trade in goods between the parties.
 Means
 Removal of barriers to trade in goods between the parties (especially customs
duties and quantity restrictions).
 (thus, only in terms of goods)
 Parties remain free to determine their trade policy towards third countries.
 Example
 EFTA (European Free Trade Association)
Customs Union

 Goal
 To establish a common market among the parties.
 Means
 Removal of barriers to trade in goods between the parties (especially customs
duties and quantity restrictions, as well as equivalent measures).
 (thus, only in terms of goods)

 Implementation of a common external trade policy towards third countries.

 (Different from the FTA...)

 Example
 Customs union between Turkey and the EU
Common Market

 Goal
 To establish a single market among the parties where goods and production factors can
move freely.
 Means
 Removal of barriers to trade in goods between the parties.
 Implementation of a common external trade policy towards third countries.
 (Up to this point, customs union...)
 Facilitation of the free movement of production factors (individuals (workers and self-
employed), services, and capital) among the parties.
 (Different from a customs union...)

 Example
 EU (largely completed)
Monetary Union

 Goal
 To establish a single currency among the parties.
 Means
 The currencies of member states must be linked to each other with irrevocably
fixed exchange rates.
 or

 There should be a single currency in circulation among member states.

Economic Union

 Goal
 To harmonize economic policies among the parties.
 Means
 Requires a high level of alignment of economic policies.
 Macroeconomic, monetary, and redistributive policies...
Economic and Monetary Union

 Means
 Brings together elements of both economic and monetary union.
 Example
 EU (trial)
Political Union

 Goal
 To integrate politically among the parties.
 Means
 Parties include the following areas in integration: Foreign policy, Security policy,
Justice and home affairs policies...
 Common internal and external policies are adopted by common institutions.
 Implemented by all member states.

 Common institutions oversee implementation.

 Free Trade Area
Ensuring the free movement of goods between member states
(Autonomy in trade relations with third countries)
Customs Union
Free Trade Area + Common external trade policy towards third countries
Common Market
Customs Union + Free movement of persons, services, and capital
Monetary Union
Common Market + Single currency
Economic Union
Monetary Union + Common economic policies
Political Union
Economic Union + Common internal and external policies
Techniques for Accessing the Internal
Market
 Theoretical Approach
 Perspective in the EU
Techniques for Accessing the Internal
Market

 Theoretical Approach
Techniques for Accessing the Internal Market-
Theoretical Approach

 Internal Market
• An area where
• Goods,
• Persons,
• Services,
• Capital
can move freely, without internal borders.
Techniques for Accessing the Internal
Market- Theoretical Approach
 There are two models for accessing the internal market.
 • Decentralized Model and Centralized Model
 • (Negative Integration and Positive Integration)
 Perspective: Exercise of Power
 • Is power exercised by the member state or by the center (EU)?
 Implementation: Together
 • These two models complement each other.
Techniques for Accessing the Internal
Market- Theoretical Approach
 Centralized Model (Positive Integration)
 • The center exercises power and the center...
 • Harmonizes.
 Decentralized Model (Negative Integration)
 • The member state exercises power; however, while exercising this power, the
member state, as a rule, shall not...
 • Discriminate based on citizenship / origin,
 • Not impede market access.
 • Must adhere to the principle of mutual recognition.
 Techniques for Accessing the Internal
Market- Theoretical Approach
To access the internal market

Decentralized Model Centralized Model

Principle of non- Market access Harmonization

discrimination

Mutual
recognition
Centralized Model: Harmonization

 Harmonization: Essentially
 • Where multiple and disparate rules of member states in a specific subject matter
 • Are replaced by a single rule of the center.
Decentralized Model: Prohibition of
discrimination
 Prohibition of discrimination based on citizenship / origin:
 • Goods, persons, services, and capital going to another member state, benefiting
from free movement,
 • Must, as a rule (subject to exceptions),
 • Receive the same treatment as their counterparts in that member state.
Decentralized Model: Market access

 Prohibition of restricting market access:

 • Goods, persons, services, and capital wishing to enter another member state's
market, benefiting from free movement,
 • Shall not, as a rule (subject to exceptions),
 • Have their market access prevented or hindered.
Decentralized Model: Mutual recognition

 Principle of mutual recognition:

 • Goods produced lawfully in one member state, services provided, or professional
qualifications acquired,
 • Shall, as a rule (subject to exceptions),
 • Be recognized in another member state as equivalent to those in that state.
Negative Integration and Positive Integration

 Why do negative integration and positive integration complement

each other?
 Negative Integration
 • Removes unjustifiable barriers to trade; HOWEVER:
• Is case-by-case and lacks legal predictability.
Negative Integration and Positive Integration

 Positive Integration
 • Establishes a single set of rules for trade; THEREBY
 • Eliminates (most/all) barriers to trade,
 • Is comprehensive and legally predictable; HOWEVER in practice
• may not be achievable in all areas related to the internal
market.
• For example, it may not be desirable for various reasons,
such as preserving national diversity.
Methods to Accomplish Internal Market

Perspective in the EU
Methods to Accomplish Internal Market:
Perspective in the EU

 Harmonization and EU Law

 Harmonization can be carried out within
the framework of the four fundamental
freedoms
(free movement of goods, persons,
services, and capital).
Methods to Accomplish Internal Market:
Perspective in the EU

 Centralized Model: Harmonization (EU)

 Essentially, multiple and diverse national rules on a
particular subject are replaced by a single EU rule.
• Such an EU rule,
• On one hand, achieves market integration and
free trade,
• On the other hand, safeguards certain legitimate
interests such as consumer or environmental
protection.
Methods to Accomplish Internal Market:
Perspective in the EU

The types of harmonization

(essentially) can be specified as
follows:
• Full harmonization
• Minimum harmonization
Methods to Accomplish Internal Market:
Perspective in the EU

 Full Harmonization
 • National rules in a particular area are replaced by a single EU rule.
 Such a Union regulation includes the following two:
 • Free Movement Clause
 • Goods meeting the conditions in that regulation, for instance, can be freely
imported and sold.
 • Exclusivity Clause
 • Goods not meeting the conditions in that regulation, for instance, cannot be
produced and sold within a member state.
 Full harmonization regulations, generally:
 • Serve economies of scale (better).
Methods to Accomplish Internal Market:
Perspective in the EU

 Minimum Harmonization
 • The EU rule sets minimum standards in a given area but leaves open the
possibility of adopting higher standards (however, such a standard must be
compatible with the founding treaties).
 Such a Union regulation includes the following two:
 • Minimum Requirement Clause
 • Member states cannot fall below the standard set by this regulation.
 • More Stringent Measures Clause
 • Member states can exceed the standard set by this regulation.
 Minimum harmonization regulations, generally:
 • Ensure equal conditions for competition, allowing for national diversity.
Example: Directive 1999/44 on on certain
aspects of the sale of consumer goods and
associated guarantees
 Article 1(1): "The purpose of this Directive is the approximation of the laws,
regulations and administrative provisions of the Member States on certain
aspects of the sale of consumer goods and associated guarantees in order to
ensure a uniform minimum level of consumer protection in the context of the
internal market.."

 Article 8(2): "Member States may adopt or maintain in force more stringent
provisions, compatible with the Treaty in the field covered by this Directive,
to ensure a higher level of consumer protection."

 Is this Directive of the type of full harmonization or minimum harmonization?

Example: Regulation (EC) No 1223/2009
on cosmetic products
 Article 1: «This Regulation establishes rules to be complied with by any
cosmetic product made available on the market, in order to ensure the
functioning of the internal market and a high level of protection of human
health.»
 Article 9: «Member States shall not, for reasons related to the requirements
laid down in this Regulation, refuse, prohibit or restrict the making available
on the market of cosmetic products which comply with the requirements of
this Regulation.»
 Is this Regulation of the type of full harmonization or minimum
harmonization?
Methods to Accomplish Internal Market:
Perspective in the EU

 Prohibition of discrimination based on

citizenship / origin and EU law:
• Under the four fundamental freedoms
(free movement of goods, persons,
services, and capital)
• Discrimination based on citizenship
(/origin) is generally prohibited.
Methods to Accomplish Internal Market:
Perspective in the EU

 Regarding the prohibition of discrimination based on

citizenship (/origin):
 Direct discrimination is prohibited.
 • If the distinguishing criterion is citizenship (/origin)...
 Indirect discrimination is prohibited.
 • If the distinguishing criterion is not citizenship
(/origin), but if it results in similar effects as if it were...
Example

 France has introduced a law in the

maritime sector requiring a certain
proportion of the crew of a ship to be
French citizens.
 • Is there direct discrimination based on citizenship here, and why?
Example

 Germany imposes mandatory plant

health controls on imported plant
products such as apples while not
applying such inspections for the
distribution of similar domestic
products like domestic apples.
 • Is there direct discrimination based on citizenship (/origin) here, and why?
Example

 Some municipalities in Italy offer advantageous

rates for museum entry to individuals aged 60 or
65 and older who reside in the region under the
authority of the museum. However, Union citizen
tourists of the same age who do not reside in the
region cannot benefit from these advantages.
 • Is there direct discrimination based on citizenship here, and why?
 • Is there indirect discrimination based on citizenship here, and why?
Methods to Accomplish Internal Market:
Perspective in the EU

 Prohibition of restricting market access and EU law:

 • Under the framework of the four fundamental freedoms
(free movement of goods, persons, services, and capital)
 • Regardless of whether there is discrimination based on
citizenship (/origin),
 • Hindering market access,
 • (in other words, national measures that make it difficult to
use or less attractive to use the fundamental freedoms)
 • is, as a rule, prohibited.
Methods to Accomplish Internal Market:
Perspective in the EU

 Principle of mutual recognition:

• Goods produced lawfully in one
member state, services provided, or
professional qualifications obtained,
• As a rule (subject to exceptions),
• Are recognized in another member state
as equivalent to those in that state.
Example

 A merchant wants to import "Cassis de Dijon" liqueur produced in

France to Germany. This individual has applied to the German
competent authority for the necessary permit. However, according to
the German authority, this product does not possess the required
characteristics to be sold in Germany under the name "Cassis" because
its alcohol content is low. According to German regulations, a fruit
liqueur like "Cassis de Dijon" can be marketed in Germany if it has a
minimum alcohol content of 25%. However, this liqueur, with an
alcohol content between 15% and 20%, can be freely produced and
marketed in France.
 • How will the principle of mutual recognition affect this situation?
Methods to Accomplish Internal Market:
Perspective in the EU

 Exceptions to Free Movement:

 • Member states, depending on the circumstances,
 • On the basis of "legitimate reason",
 • Provided they comply with the principle of "proportionality",
 • May take measures that could conflict with free movement.
 • These exceptions are reviewed by the CJEU (and national courts) to determine
whether the conditions are met.
 Examples of Justifications:
 • Public order, public health and public safety (Four fundamental freedoms)
 • Protection of human, animal, and plant health and life or protection of
intellectual and industrial property (free movement of goods).
 EU Substantive Law
Week 4 – 3 March 2024:

Fundamentals of the EU
Internal Market-2
(Historical development of the
EU Internal Market law)
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Historical development of the EU
Internal Market
 General Observations
 Historical Development Periods
General Observations

Political Union

Economic and Monetary Union

INTERNAL MARKET

Customs Union
General Observations

 Establishing the internal market lies at the heart of the EC/EU project.
 • The internal market is the instrument chosen for fulfilling the tasks of the
EEC (1958).
 The EEC Treaty (1958) contains the necessary techniques to access the
internal market.
General Observations: Common Market /
Single Market / Internal Market

 Negative integration (Decentralized Model)

 • According to each provision of free movement in the founding treaties:
 • barriers to free movement will be removed.
 • Prohibition of discrimination based on citizenship (/origin) + prohibition of
restricting access to the market (+ principle of mutual recognition)
 Positive integration (Centralized Model)
 • In accordance with specific and general provisions in the founding treaties:
 • Member state laws will be harmonized to the extent necessary for the
establishment and functioning of the internal market.
General Observations

 The development of the internal market from a historical perspective can be

analyzed in two dimensions:
 • Institutional Dimension
 • Material Dimension
General Observations: Historical Perspective
on the Internal Market: Institutional Aspect

 The internal market has evolved through a nuanced mixture of legislative,

executive, and judicial initiatives. Essentially:
 • Over time, legislative procedures necessary for harmonization have been
simplified to gain access to the internal market.
 • The focus of legislative actions has shifted.
 • Access to the internal market has been facilitated through judicial doctrines.
General Observations: Historical Perspective
on the Internal Market: Material Aspect

 The internal market is essentially an economic project.

 • So, what will be the mutual relationship between the economic and social
dimensions of EU policy?
General Observations: Historical Perspective
on the Internal Market: Material Aspect

 Essentially:
 • Social objectives,
 • initially considered as a "passive" consequence of establishing the internal
market,
 • over time have been transformed into an "active" goal.
Historical Development Periods

 1958–1986: Incomplete Common Market

 1986–1993: From Incomplete Common Market to Internal Market Completion
(Progress Focused on Free Movement of Goods)
 1993–2007: Completion of the Internal Market (Progress Focused on Free
Movement of Production Factors) and Balancing
 2007–: From Completing the Internal Market to Managing the Internal Market
and Establishing New Balance
1958–1986: Incomplete Common Market

 EEC Treaty (1958) → Customs Union is established within 12 years.

 Customs union
 • trade in goods
 • between member states
 • customs duties on imports and exports

 • and equivalent charges are prohibited.

 to third countries.
 • Common customs tariff is applied

 Completion
 • July 1, 1968 (18 months ahead of schedule according to the target...)
1958–1986: Incomplete Common Market

 EEC Treaty (1958) → The common market is established within 12 years.

 Under the common market, Community activities include the removal of
barriers between member states concerning the free movement of
 • goods
 • persons
 • services
 • capital.
1958–1986: Incomplete Common Market

 1960s and 1970s

 The Community decision-making process is slow because:
 • The Commission delves into detailed proposals.
 • The Council must act unanimously for harmonization.
 • (Therefore, positive integration did not proceed as desired.)
1958-1986

 1960s and 1970s

 The Court of Justice has advanced the integration of the common market:
 • By interpreting the provisions of free movement in the founding treaties, the
Court has given life to negative integration.
 • The initial progress has been in the area of free movement of goods.
 • The issue is: What qualifies as an "obstacle" to the free movement of goods,
which is generally prohibited?
1958-1986

 1960s and 1970s

 According to the Court of Justice of the EU, in the area of free movement of
goods:
 • The term "obstacle" has been broadly defined:
 • Measures that create discrimination (based on origin) as well as
 • All measures that are capable of directly or indirectly impeding [Union] internal
trade, whether in actuality or potentiality, are
 as a rule contrary to [Union] law.

 • Additionally, the principle of mutual recognition has been introduced:

 • A product lawfully produced in one Member State should generally be marketable
in other Member States as well.
1958-1986

1980s
 • EU measures
 •+
 • CJEU decisions
 •≠
 • Common Market
1986–1993: From Incomplete Common Market
to Completing the Internal Market (Progress
Focused on Free Movement of Goods)
 1980s
 Founding Treaties: The Road to Amendment
 1985 Brussels Summit
 • Commission to identify necessary measures for accessing the internal market by
1992.
1986-1993

 Commission (1985): "White Paper on Completing the Internal Market"

 • Physical*, technical**, and fiscal*** barriers to trade be removed.
 • Examples:
 • * Border and customs controls
 • ** Differences in standards (for instance, in the production of goods)
 • *** Differences in indirect taxes (VAT, excise duty) ...
1986-1993

Single European Act (from 1986 to 1987)

 • Founding treaties were substantially amended for the first time.
 • Definition and objective of the internal market were introduced.
 • The internal market:
 • "is an area without internal borders where goods, persons, services, and capital
move freely within the framework of the founding treaties."
 • It shall be established by the end of 1992.
1986-1993

 Single European Act (from 1986 to 1987)

 The Community decision-making process has accelerated because:
 • Instead of delving into detailed proposals, the Commission has developed a "new
approach" based on the principle of mutual recognition.
 • The Council will act with a "qualified majority" for harmonization.
 • (Therefore, positive integration has started to proceed better than before.)
1986-1993

 End of 1992
 • The internal market has been largely completed. (According to official EU
documents...)
 Accessing the internal market
 • It is not a static goal but a dynamic process!
 After 1992
 • Particularly noteworthy developments have occurred regarding the free
movement of persons, services, and capital.
1993–2007: Completing the Internal Market
(Progress Focused on Free Movement of
Production Factors) and Balancing
 After 1992
 Free movement of capital
 • Maastricht Treaty (1993): The relevant provision, like other provisions on free
movement, has envisaged the removal of restrictions on this freedom.
 • In other words, it has become directly effective.
1993–2007: Completing the Internal Market
(Progress Focused on Free Movement of
Production Factors) and Balancing

 The Court of Justice has continued to advance the integration of the internal
market:
 • By interpreting the provisions of free movement in the founding treaties, the
Court has continued to give life to negative integration.
 • The Court has begun to transfer its case law on the free movement of goods to other
freedoms.

 • The issue is: What qualifies as an "obstacle" to the free movement of persons,
services, and capital, which is generally prohibited?
1993–2007: Completing the Internal Market
(Progress Focused on Free Movement of
Production Factors) and Balancing
 According to the Court of Justice, in the area of free movement of persons,
services, and capital, just like in the area of free movement of goods:
 • The term "obstacle" has been broadly defined:
 • Measures that create discrimination (based on citizenship / origin) as well as
 • National measures that are "likely to make the use of these freedoms more difficult or
less attractive" are as a rule
contrary to [Union] law.

 • Additionally, the principle of mutual recognition has been introduced:

 • A service lawfully provided in one Member State should generally be provided in other
Member States as well.
 • Professional qualifications acquired lawfully in one Member State should generally be
duly taken into account in other Member States.
1993-2007

 Schengen Regime
 • Schengen Agreement (1985) and Implementation Convention (1990)
 • Free movement of persons --- abolishment of internal border controls
 • The Schengen Regime was incorporated into the founding treaties with the
Amsterdam Treaty (1999).
1993-2007

 The tasks and objectives of the EU have expanded, taking into account both
complementary and inhibitory broader policies towards free trade.
 For example, the following issues have been added to the founding treaties:
 • Social policy
 • Social dialogue between employers and workers
 • Economic and social cohesion
 • Consumer policy
 • Employment policy
 • Union citizenship
 • Area of freedom, security, and justice
 • Fundamental rights
2007– Managing the Internal Market and
Establishing New Balance Without Completing
the Internal Market
 The idea of managing what is considered to be completed internal market has
come to the forefront.
 For example, the Commission renewed its vision of the internal market in
2007:
 "Although traditionally the single market policy has aimed primarily at removing
cross-border barriers, mostly through regulatory means, [now]
 - taking into account the development of a business environment that is respectful
of consumer choice, socially and environmentally sensible, and competitive –
 ensuring better functioning of markets to the benefit of citizens, consumers, and
businesspeople will be ensured.«
 • COM (2007) 60 final, "A Single Market for Citizens", 2007, pt. 3.
2007– Managing the Internal Market and
Establishing New Balance Without Completing
the Internal Market
 In recent history, for instance, on May 6, 2015, the Commission established a
digital single market strategy for Europe based on three pillars:
 • Providing better access for consumers and businesses to online goods and services
across Europe,
 • Creating the right conditions for the development of digital networks and
services,
 • Maximizing the growth potential of the European Digital Economy.
 • COM(2015)192 final.
2007

 New equilibrium-seeking tendencies have emerged between the economic

and social dimensions of the internal market.
 • CJEU case law
 • Founding treaties
 An example of CJEU case law for the internal market can be the Viking
judgment (2007):
 "Due to the Community's aim not only being economic but also social, the rights
recognized under the provisions of the founding treaties regarding the free
movement of goods, persons, services, and capital must be balanced with the
objectives pursued by social policy."
2007

 Lisbon Treaty (2009): It provides for a different balance between economic

and social objectives (TFEU Art. 3(3)):
 while establishing the internal market is reiterated,
 the internal market is completed with the following objectives:
 • a highly competitive social market economy,
 • environmental protection,
 • enhancing scientific and technological progress,
 • combating social exclusion and discrimination,
 • enhancing social justice,
 • protecting children's rights.
In conclusion... The EU Internal Market

 An internal market for the EU has been evolving for over sixty years.
 The internal market and the free movements associated with it continue to
remain central.
TEU art. 3/3

The Union shall establish an internal market. It shall work for the sustainable development of
Europe based on balanced economic growth and price stability, a highly competitive social market
economy, aiming at full employment and social progress, and a high level of protection and
improvement of the quality of the environment. It shall promote scientific and technological advance.

It shall combat social exclusion and discrimination, and shall promote social justice and protection,
equality between women and men, solidarity between generations and protection of the rights of the
child.

It shall promote economic, social and territorial cohesion, and solidarity among Member States.

It shall respect its rich cultural and linguistic diversity, and shall ensure that Europe's cultural heritage
is safeguarded and enhanced.
 EU Substantive Law
Week 5– 20 March 2024:

Common Framework for the

Implementation of
Fundamental Freedoms
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
 How law applies?

Actual
Dispute + Abstract
legal rule
Legal
Outcome
Common Framework for the
Implementation of Fundamental
 The CJEU
 in actual disputes
 applies rules on fundamental freedoms
 operates within a specific common framework
 implements fundamental freedoms
 Common Framework
This common framework requires answering the following questions sequentially based on any specific concrete dispute

(1) Does the EU have

• If such a rule exists,
special ruless (positive
it is applied;
integration) that deal
otherwise..
with that situation?"

(2) Can one of the • If not, that situation falls

provisions of the free outside the scope of EU law; if
movement apply? yes..

(3) Is there any • If not, EU law has

restriction in terms of not been violated; if
that freedom of yes...
movement?

(4) Can this restriction • If yes, EU law has not

be justified? been violated; if no, a
breach of EU law has
occurred
Common Framework

 (1) In the absence of the spesific EU rules,

 (2) "Scope of Application" of the Free Movement Provision,
 (3) "Restriction" in Terms of Free Movement,
 (4) "Justification" in Terms of Free Movement
(1) … In the absence of the spesific EU
rules…
Is there any specific EU rule that
resolves the concrete dispute?

Yes No

It is checked
That specific EU rule whether the
is applied provisions of free
movement can be
applied.
(2) Scope of Application
Does the actual dispute fall
within the scope of
application of a freedom of
movement provision?

Yes No

The actual dispute is The actual dispute is

within the scope of outside the scope of
application of EU application of EU
(internal market) law. (internal market) law
(2) Scope of Application

 A dispute must occur "simultaneously":

 It must fall within the scope of a freedom of movement provision concerning the
person,
 It must fall within the scope of that freedom of movement provision concerning
the subject matter,
 The person to whom the disputed measure is attributed in the actual dispute must
be considered as the addressee of that freedom of movement provision.
Scope Concerning Person

 Question: Who can benefit from the freedom of movement provision?

 "Everyone" can benefit regarding Goods and Capital.

 "Certain individuals" can benefit regarding Persons and Services.
 "Union citizen" or "Union legal entity" (citizenship)
 "Employee", "self-employed/business owner", "self-employed/service provider", or
"service recipient" (status)
Scope Regarding Subject Matter

 Question: Under what circumstances can the freedom of movement provision

be applied?

 Actual dispute,
 Must be associated with "economic activity",
 Must involve a "cross-border element".
Economic Activity

 For example - Sports-

 are the rules related to combating doping in sports (doping ban) associated
with economic activity?
 Is the employment of professional athletes (e.g., football players) associated
with economic activity?
Economic Activity

 According to the CJEU:

 "...the doping ban is based on purely sporting considerations and has no
connection to any economic consideration. Therefore, rules concerning the
fight against doping do not fall within the scope of the provisions of the
founding treaties regarding economic freedoms. Anti-doping rules are closely
related solely to sport."
Economic Activity

 According to the CJEU:

 Sport is subject to Union law "as long as it constitutes economic activity."
 For example, the freedom of movement provision for workers applies to rules
that "establish conditions related to the gainful employment of professional
athletes."
Cross-Border Element

 Forms the binding factor linking the situation in the actual dispute to EU law,
 In other words, it establishes the condition that triggers the application of EU
law.
 If there is no cross-border element in the concrete dispute, in other words, if
there is a "purely domestic situation":
 The law of the relevant Member State applies.
Cross-Border Element

 Moser Case (1983-1984):

 Mr. Moser is a German citizen and has always lived in Germany. When Mr.
Moser applied for postgraduate education required to become a primary and
secondary school teacher, the German authorities rejected this application.

 According to Mr. Moser,

 The impossibility of completing his education as a teacher under German
rules prevents him from applying for teaching positions in schools in other
member states, thus establishing sufficient connection with EU law.
Cross-Border Element

 According to the CJEU:

 This argument is not acceptable because "a mere hypothetical possibility of

employment in another member state does not establish a sufficient
connection with EU law."
Addressee

 Question: Is the person to whom the disputed measure is attributed

considered as the addressee of the relevant freedom of movement provision?

 All fundamental freedoms address the "member state".

 Some fundamental freedoms also address the "authorities competent to
regulate a sector collectively" and "other natural and legal persons".
 *Freedom of movement for workers, the right to establish a business, and the
freedom of services.
(2) Scope of Application
Does the dispute fall within the scope of application of a freedom
of movement provision? Are the scope concerning «persons»,
«subject matter» and «addressee» all simultaneously met?

Yes No

The dispute is within The dispute is outside

the scope of the scope of
application of EU application of EU
(internal market) law (internal market) law
(3) Restriction in Terms of Free
Movement
 Preliminary finding: Free Movement of Goods (1)

 Dominant aspects in terms of customs union: prohibitions related to fiscal

charges
 &
 Dominant aspect in terms of internal market: prohibitions related to non-
fiscal charges
 The dominant aspects in terms of customs union are outside the scope of the
general approach – related to the internal market – to be discussed here.
(3) Restriction in Terms of Free
Movement
 Preliminary finding: Free Movement of Goods (2)

 The dominant aspect in terms of the internal market remains within the
scope of the general approach related to the internal market.
 However, unlike all other remaining freedoms, the CJEU approaches the issue
of "restriction" not based on the nature of the disputed measure but based on
its type.
 This difference in approach is more about methodology than substance.
 (3) Restriction in Terms of Free Movement

Does the disputed If the answer is no

measure create direct
discrimination based on
citizenship (/origin)?

Does the disputed measure If the answer is no

create indirect
discrimination based on
citizenship (/origin)?

If the answer is no,

freedom of movement
is not restricted,
Does the disputed therefore EU law is
measure restrict not violated.
freedom? • If the answer is yes,
freedom of movement
is restricted,
therefore EU law is
generally violated.
(3) Restriction in Terms of Free Movement

The prohibition of restricting freedom

Prohibition of indirect
discrimination based on
citizenship

Prohibition of direct
discrimination based
on citizenship
Prohibition of direct discrimination based on
citizenship (/origin)

 Direct discrimination based on citizenship (/origin) is, as a rule, prohibited by

law.
 So, when does it occur?
 It occurs when the disputed measure legally establishes "citizenship" (/
"origin") as a criterion for distinction, indicating direct discrimination based
on citizenship (/origin).
Prohibition of direct discrimination based on
citizenship (/origin)

 Rewe-Zentralfinanz Case (1975)

 Germany applies mandatory plant health control for the distribution of

imported fruits, such as apples, but does not impose such mandatory
inspection for the distribution of similar domestic plant products like local
apples.
Prohibition of direct discrimination based on
citizenship (/origin)

 According to the CJEU,

 The disputed measure, namely plant health control, is only required for
imported products, thus creating direct discrimination based on origin.
Prohibition of direct discrimination based on
citizenship (/origin)

 Reyners Case (1974)

 Mr. Reyners is a Dutch citizen and holds a law degree that allows him to
practice as a lawyer in Belgium. According to Belgian law, only Belgian
citizens can become lawyers. Therefore, Mr. Reyners was not admitted to
practice as a lawyer in Belgium.
Prohibition of direct discrimination based on
citizenship (/origin)

 According to the CJEU,

 The disputed measure, namely the rule that being a Belgian citizen is
necessary to become a lawyer, involves direct discrimination based on
citizenship; because migrant self-employed workers cannot become lawyers
solely because they are not Belgian citizens.
Prohibition of indirect discrimination based
on citizenship (/origin)

 Indirect discrimination based on citizenship (/origin) is, as a rule, prohibited

by law.
 So, when does it occur?
 It occurs when, even though the disputed measure does not explicitly
establish "citizenship" (/ "origin") as a criterion for distinction, it results in
effects as if the "citizenship" (/ "origin") criterion had been introduced.
 In other words, if in the majority of cases, the measure works to the
disadvantage of imports rather than local goods or migrants rather than
citizens,
 it means that there is indirect discrimination based on citizenship (/origin).
Prohibition of indirect discrimination based
on citizenship (/origin)

 Allué and Coonan Case (1991-1993)

 According to Italian law, contracts for foreign language assistants at

universities can only be made for a period of 1 year. Contracts for other
academic staff can be made indefinitely.
 Only 25% of foreign language assistants are Italian citizens.
Prohibition of indirect discrimination based
on citizenship (/origin)

 According to the CJEU,

 The disputed national measure, namely the rule allowing only 1-year
contracts for foreign language assistants, creates indirect discrimination
based on citizenship; because in the majority of cases, it operates to the
disadvantage of migrants rather than citizens.
The prohibition of restricting freedom

 The restriction of freedom is, as a rule, prohibited. So, when does it occur?

 If the disputed measure limits freedom, even though it does not create direct
or indirect discrimination based on citizenship (/origin),
 In other words, if it hinders access to another member state's goods,
employment, services, or capital market,
 Then there is a restriction of freedom.
 Note: The CJEU uses multiple formulas regarding "restriction of freedom."
The prohibition of restricting freedom

 CaixaBank Case (2002-2004)

 Caixa Holding is a company based in Spain and subject to Spanish law. Caixa-
Bank France, on the other hand, is a subsidiary located in France, subject to
French law, and affiliated with Caixa Holding.
 Since February 18, 2002, Caixa-Bank France has been charging an annual
interest rate of 2% on current accounts with at least 1500 Euros in France.
 French law prohibited the charging of interest on current accounts as of April
16, 2002.
The prohibition of restricting freedom

 According to the CJEU,

 The disputed measure, namely the prohibition of interest on current

accounts, restricts the freedom of establishment; because it hinders access to
the French market for companies from other member states.
 (3) Restriction in Terms of Free Movement

Does the disputed If the answer is no

measure create direct
discrimination based on
citizenship (/origin)?

Does the disputed measure If the answer is no

create indirect
discrimination based on
citizenship (/origin)?

If the answer is no,

freedom of movement
is not restricted,
Does the disputed therefore EU law is
measure restrict not violated.
freedom? • If the answer is yes,
freedom of movement
is restricted,
therefore EU law is
generally violated.
(4) Justification in Terms of Free
Movement
 Preliminary finding: Free Movement of Goods

 Dominant aspects in terms of customs union: prohibitions related to fiscal

charges
 &
 Dominant aspect in terms of the internal market: prohibitions related to non-
fiscal charges
 The dominant aspects in terms of customs union are outside the scope of the
general approach to be discussed here, which is related to the internal
market.
 (4) Justification in Terms of Free
Movement
The disputed measure

If it constitutes direct If it constitutes indirect

discrimination based on discrimination based on
citizenship (/origin) citizenship (/origin)

It can be justified based on both the

It can only be justified based on the
exceptions in the founding treaties and
exceptions in the founding treaties
compelling reasons related to the public
and provided that it complies with
interest, provided that it complies with
the principle of proportionality
the principle of proportionality.
Legitimate Reasons

 Reasons in the Founding Treaties

 They are limited in number and include, for example, public order and public
security.
 Compelling Reasons Related to the Public Interest
 They are unlimited in number and include, for example, consumer protection or
environmental protection.
 CJEU's Approach
 The CJEU often acknowledges that the disputed measure is based on the alleged
legitimate reason.
 Therefore, the key resolver is the principle of proportionality.
Principle of Proportionality

 The principle of proportionality has two sub-elements:

 Suitability Element
 Is there a cause-effect relationship or a nexus between the desired objective and the
means used to achieve that objective?

 Necessity Element
 Is the means used to achieve the desired objective truly necessary?

 Is it possible to achieve the desired objective of free movement with less restrictive
alternative means?
(4) Justification in Terms of Free
Movement
 Commission v Austria (Case C-28/09)
 According to Austrian law, trucks weighing over 7.5 tons and carrying certain goods
are prohibited from using a section of the A 12 motorway in the Austrian Inn Valley.
 Questions:
 (1) Which freedom of movement does this dispute concern?
 (2) Does the disputed measure (sectoral traffic ban) constitute an obstacle to the
relevant freedom of movement?
 (3) If the disputed measure (sectoral traffic ban) constitutes an obstacle, can it be
justified?
(4) Justification in Terms of Free
Movement
 According to the CJEU

 Scope: Free Movement of Goods

 Restriction: The disputed measure, namely the sectoral traffic ban, restricts
the free movement of goods.
 Justification / Legitimate Reason: "Ensuring the quality of ambient air in the
relevant area," thus "protecting the environment."
(4) Justification in Terms of Free
Movement
 Suitability:
 The sectoral traffic ban contributes to improving air quality by reducing emissions
of pollutants into the air.
 Necessity:
 Commission: Austria could have implemented a speed limit of 100 km/h instead of
introducing the sectoral traffic ban.
 Austria: It's true that the same objective could be achieved with a speed limit of
100 km/h, but in practice, the average speed exceeds this limit.
 CJEU: It is the responsibility of the member state to ensure compliance with
the speed limit "by adopting compelling measures, including sanctions if
necessary."
 (As a result, EU law has been violated.)
 (4) Justification in Terms of Free
Movement The disputed
measure creating
the restriction
If it is in line with the If it is not in line with the
principle of proportionality principle of proportionality
based on a legitimate based on a legitimate reason.
reason.

It means that EU law is It means that EU law is not

not being violated. being violated.

The disputed It sets aside the disputed

measure continues measure of EU law and
to be applied. replaces it with itself.
 Common Framework
This common framework requires answering the following questions sequentially based on any specific concrete dispute

(1) Does the EU have

• If such a rule exists,
special ruless (positive
it is applied;
integration) that deal
otherwise..
with that situation?"

(2) Can one of the • If not, that situation falls

provisions of the free outside the scope of EU law; if
movement apply? yes..

(3) Is there any • If not, EU law has

restriction in terms of not been violated; if
that freedom of yes...
movement?

(4) Can this restriction • If yes, EU law has not

be justified? been violated; if no, a
breach of EU law has
occurred
 EU Substantive Law
Week 6– 27 March 2024:
Application Field of Free Movement of Goods
Provisions
Dominant Elements with the Customs Union:
Prohibitions on Financial Burdens: Prohibition
on Customs Tax and Equivalent Tax Prohibition
& Discriminatory or Protective Domestic Tax
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Plan

 Common Denominator: Scope of Application of the Free Movement of Goods

Provisions
 Dominant Aspects of the Customs Union Direction: Prohibitions Related to
Fiscal Burdens
 • Prohibition of Customs Duties and Equivalent Taxes
 • Prohibition of Discriminatory or Protective Internal Taxes
Common Ground: Scope of Application of the
Free Movement of Goods Provisions

For the provisions on the free movement of goods to be "applicable" in a specific

dispute, that specific dispute must simultaneously meet the following criteria:
 • 1. It must fall within the scope of these provisions concerning individuals.
 • 2. It must fall within the scope of these provisions concerning the subject
matter.
 • *3. The individual to whom the disputed measure is attributed must be
considered the addressee of these provisions.
 • *This will not be further discussed within the scope of this course.
Scope of the Free Movement of Goods in
Terms of Persons
Question: Who can benefit from the provisions of the free movement of goods?
 • "everyone" can benefit as long as they are relevant.
 • No specific "nationality" or "status" is required.
Scope of the Free Movement of Goods in
Terms of Subject Matter
Question: Under what circumstances can the provisions of the free movement of
goods be utilized?
 • Actual dispute,
 • must be linked to "trade in goods" as an "economic activity,"
 • must involve a "cross-border element."
Scope of the Free Movement of Goods in
Terms of Subject Matter
 Economic Activity: Trade in Goods
 So what does "goods" refer to?
 • According to CJEU, "goods" refers to "products that can be valued monetarily and
are subject to commercial transactions."
 Which of the following is considered "goods"?
 • petroleum,
 • animals,
 • withdrawn currencies,
 • electricity.
Scope of the Free Movement of Goods in
Terms of Subject Matter
The free movement of goods within the EU applies to which "goods"?
 • Products originating from Member States,
 • Products originating from third countries and in free circulation within
Member States*.
 • *(i) products from third countries for which import procedures have been
completed in a Member State,
 • (ii) customs duties and equivalent taxes due have been paid,
 • (iii) products from third countries that have not benefited from full or partial
refund of these taxes are considered to be in free circulation in that Member
State.
Scope of the Free Movement of Goods in
Terms of Subject Matter
Cross-Border Element
 • The free movement of goods applies when it comes to "interstate trade in
goods" among Member States.
Cross-Border Element Issue
 • It is incorporated into the "definition" concerning the prohibition of customs
duties and equivalent taxes as well as discriminatory or protective internal
tax prohibitions.
 • It can also constitute a separate "element" addressed specifically in terms of
quantity restrictions and equivalent measures prohibitions.
Prohibitions Related to Fiscal Burdens

 Prohibitions Related to Customs Duties and Equivalent Tax

 Prohibition of Discriminatory or Protective Internal Tax

Customs Duty and Equivalent Tax
Prohibition
TFEU Article 30:
 • "Customs duties on imports and exports and charges having equivalent
effect shall be prohibited between Member States. This prohibition shall also
apply to customs duties of a fiscal nature"

Therefore, which concepts should be defined?

 • Customs duty
 • Charges equivalent tax to customs duty
Customs Duty

 Customs Duty
 • It can be defined as a financial burden determined based on a tariff,
 • Demanded from the exporter to the country of origin or from the importer to the
host country,
 • Requested at a specific rate or amount,
 • If there is a customs duty involved, it is considered absolutely prohibited.
Customs Duty

van Gend & Loos Case (1962-1963) (By Analogy)

 van Gend & Loos is a Dutch import-export company.

 This company imports chemicals from Germany to the Netherlands.
 The import duty according to the national customs tariff was 3% until 1960,
but it was increased to 8% in 1960.
 According to Article 12 of the EEC Treaty, member states are supposed to
avoid increasing import duties between themselves.
 van Gend & Loos argued in court based on this article that they should pay a
3% duty instead of 8%.
Equivalent Tax to Customs Duty

Equivalent Tax to Customs Duty

 It encompasses any kind of monetary burden,

 Not a customs duty in the strict sense,
 Unilaterally imposed on domestic or foreign goods,
 Due to crossing an internal border within the EU,
 Regardless of its amount, form, or implementation method.

If there is an equivalent tax to customs duty involved, it is considered absolutely

prohibited.
Equivalent Tax to Customs Duty

Commission v Italy Case (1968-1969)

 Italy imposed a specific monetary burden on the export of artistic, historical,

and archaeological items.
 The Commission filed an infringement case against Italy based on [TFEU
Article 30].
 According to Italy:
 (1) The relevant items cannot be classified as "goods" in terms of customs union
rules.
 (2) The purpose of the disputed tax is not to generate income but to protect the
country's artistic, historical, and archaeological heritage.
Equivalent Tax to Customs Duty

According to CJEU:

 (1) Artistic, historical, and archaeological items constitute "goods" (in terms
of EU internal market law).
 (2) Regarding customs duties and equivalent taxes, the "effect" is more
important than the "purpose.«

 Conclusion: If a monetary burden is considered as a customs duty or

equivalent tax, it is deemed ipso facto (automatically) contrary to the law.
Equivalent Tax to Customs Duty

According to Belgian law:

 0.33% of the value of imported diamonds is paid into a social fund for workers
employed in a specific industry.
 According to a diamond importer, this condition is contrary to [TFEU Article
30].
 According to Belgium:
 (1) The relevant fund is not aimed at generating revenue for the state treasury.
 (2) Belgium does not aim to protect the domestic industry as it does not produce
diamonds.
Equivalent Tax to Customs Duty

According to the ECJ:

 The disputed national measure, i.e., the condition of paying 0.33% of the
value of imported diamonds into a social fund, constitutes an equivalent tax
to customs duty.
 In this regard:
 Whether this monetary burden benefits the state,
 Whether this monetary burden has a discriminatory or protective effect,
 Whether there is competition between the imported product subject to the tax
and domestic products, is irrelevant.
Prohibition of Discriminatory or
Protective Internal Tax
TFEU Article 110:
"No Member State shall impose, directly or indirectly, on the products of other
Member States any internal taxation of any kind in excess of that imposed
directly or indirectly on similar domestic products.
Furthermore, no Member State shall impose on the products of other Member
States any internal taxation of such a nature as to afford indirect protection to
other products.."
 Therefore, which concepts should be defined?
 "Similar products": "Direct discrimination" and "indirect discrimination"
 "Other products": "Protective measure"
Relationship Between TFEU Articles 30
and 110
Initial Determination

 Prohibition of customs duties and equivalent taxes

(TFEU Article 30)
 and
 Prohibition of discriminatory or protective internal taxes
(TFEU Article 110)
 exhibit certain similarities and differences.
Relationship Between TFEU Articles 30
and 110
 Similarity - Creation of Fiscal Burdens:
 Both the prohibition of customs duties and equivalent taxes (TFEU Article 30)
 and the prohibition of discriminatory or protective internal taxes (TFEU Article
110)
 are related to fiscal burdens.
 In this respect,
 they differ from the prohibition of quantity restrictions and equivalent measures
(TFEU Articles 34-36), which are related to non-fiscal burdens.
Relationship Between TFEU Articles 30
and 110
 Difference - (In Terms of Definition) Before Crossing the Border & After
Crossing the Border:

 The prohibition of customs duties and equivalent taxes is related to fiscal burdens
incurred when crossing an internal EU border.
 On the other hand, the prohibition of discriminatory or protective internal taxes is
related to fiscal burdens incurred within a member state after crossing an internal
EU border.
Relationship Between TFEU Articles 30
and 110
Conclusion: "Mutual Exclusion"

 The prohibition of customs duties and equivalent taxes

 and
 The prohibition of discriminatory or protective internal taxes
 have a "mutual exclusion" nature,
 in other words, they cannot be simultaneously applied to a single disputed
measure.
Relationship Between TFEU Articles 30
and 110
Difference - (In Terms of Conclusion) Elimination of Fiscal Burden & Non-
Application of Discriminatory or Protective Element:

 The prohibition of customs duties and equivalent taxes (TFEU Article 30)
Aims to absolutely eliminate any kind of monetary burden unilaterally
imposed on domestic or foreign goods due to crossing an internal EU border.
 On the other hand, the prohibition of discriminatory or protective internal
taxes (TFEU Article 110)
Aims to prevent discriminatory or protective taxation after goods have
entered a member state once, meaning it aims to avoid applying the
discriminatory or protective element.
Similar Product / Discrimination
Prohibition
Each member state,

 In the absence of harmonization within the EU, may adopt its own internal
taxation regime,
 However, this regime should not discriminate directly or indirectly against
imported products compared to similar domestic products.
 Direct discrimination cannot be justified.
 Indirect discrimination can be objectively justified.
Similar Product / Discrimination
Prohibition
"Similar Product"

 Refers to products that have similar characteristics and fulfill similar needs
from the perspective of consumers.
 Commission v France Case (2000-2002)
 According to French law, cigarettes containing at least 60% of certain types of
tobacco are classified as strong tobacco cigarettes, while the rest are classified as
light tobacco cigarettes.
 So, are strong and light tobacco cigarettes considered "similar products"?
Similar Product / Discrimination
Prohibition
"Prohibition of Direct Discrimination"

 If a member state engages in "direct discrimination" between imported

products and similar domestic products using its internal taxation regime, this
is absolutely prohibited.
 "Direct discrimination" occurs when a national measure clearly makes a
distinction between local and cross-border situations.
Similar Product / Discrimination
Prohibition
Commission v Italy Case (1979-1980)

 According to Italian law, reprocessed oil is subject to lower taxes compared to

regular oil. This tax policy is based on ecological considerations.
 However, under Italian law, imported reprocessed oil cannot benefit from the
same tax advantage.
 According to Italy:
 It is almost impossible to determine whether imported oil is reprocessed or
regular oil.
Similar Product / Discrimination
Prohibition
According to the CJEU:

 Importers will demonstrate that the imported goods (oil) fall into the relevant
category (reprocessed oil).
 This will be subject to a reasonable standard of proof.
 For example, a certificate obtained from the exporting state can be used to
determine the nature of the relevant oil.
 Direct discrimination is present here.
 Direct discrimination cannot be justified.
Similar Product / Discrimination
Prohibition
Commission v Ireland (1979-1980)

 According to Irish law, the same tax rate applies to beer or wine, whether
imported or domestic.
 However, local beer and wine producers can receive a tax deferral of four to
six weeks (depending on the product), while importers of the same products
are obligated to pay this tax either on the day of importation or during
distribution from the customs warehouse.
 The Commission filed an infringement case against Ireland based on [TFEU
Article 110].
Similar Product / Discrimination
Prohibition
According to the CJEU:

 In terms of the prohibition in TFEU Article 110/1, "the provisions related to

the basis of assessment and the detailed rules established for collecting
various taxes, in addition to the tax rate, should also be considered."
 Differentiation in the tax payment procedure creates direct discrimination for
similar (or even identical) products.
 Conclusion: Ireland did not fulfill its obligations under TFEU Article 110/1.
Similar Product / Discrimination
Prohibition
"Prohibition of Indirect Discrimination"

 If a member state engages in "indirect discrimination" between imported

products and similar domestic products using its internal taxation regime, this
is generally prohibited, but it can be objectively justified.
 "Indirect discrimination" occurs when a national measure, even if it does not
explicitly differentiate between domestic and cross-border situations (legally
neutral effect), puts products from other member states at a greater
disadvantage compared to the products of the state implementing that
measure (practically different effect).
Similar Product / Discrimination
Prohibition
Humblot Case (1984-1985)

 According to French law, cars with 16 horsepower (CV) or less are subject to a
graduated tax to be paid annually, while cars with more than 16 horsepower
are subject to a special tax.
 The maximum amount for the graduated tax is set at 1100 French Francs,
while the special tax is set at 5000 French Francs.
 Note: No French car exceeds 16 horsepower.
 Mr. Humblot acquired a car with 36 horsepower in 1981 and was required to
pay the special tax of 5000 French Francs, but later challenged this tax based
on [TFEU Article 110].
Similar Product / Discrimination
Prohibition
According to the ECJ:

 The French tax system does not make any distinction based on the origin of
goods.
 However, this system engages in "indirect discrimination."
 This is because, for cars with more than 16 horsepower (CV), approximately 5
times more tax is imposed compared to cars with 16 horsepower or less.
 However, there are no French cars with more than 16 horsepower (CV).
 Therefore, imported cars, mostly (certain ones), may face a higher tax
burden compared to French cars - and this happens annually.
Other Product / Prohibition of
Protectionism
Each member state

 In the absence of harmonization within the EU, may adopt its own internal
taxation regime,
 However, this regime should not be protectionist towards domestic products
against imported products.
 If protectionism is present, the protective effect should be eliminated.
Other Product / Prohibition of
Protectionism
"Other Product"

 Refers to products that are not considered similar and are specific to the
importing country, as well as products that are in partial or potential
competition with each other.
 Economically, "other products" are identified by looking at cross-demand
elasticity:
 When the price of one product increases, do consumers shift towards the
lower-priced one?
Other Product / Prohibition of
Protectionism
Commission v Italy Case (1985-1987)

 Italy imposed a tax on bananas equivalent to half of their price.

 Italy did not subject other fruits such as apples, pears, peaches, plums, and
oranges to any tax.
 Note 1: Italy produces very few bananas, and bananas are imported from
France.
 Note 2: Italy is a major producer of fruits like apples, pears, peaches, plums,
and oranges.
 The Commission filed a violation case against Italy based on [TFEU Article
110].
Other Product / Prohibition of
Protectionism
According to the ECJ:

 Bananas and other fruits are not considered "similar products."

 In terms of similar characteristics:
 They differ in sensory characteristics and water content.
 From the consumer's perspective in meeting similar needs:
 High-energy content vs. (abundantly) juicy...
Other Product / Prohibition of
Protectionism
According to the ECJ:

 Regarding "Other Product":

 Bananas and other fruits are considered "other products" because bananas serve as
an alternative for fruit consumers.
 Regarding "Protectionism":
 Italy, while not imposing taxes on domestically produced fruits (most of which are
imported), engages in protectionism by imposing a tax on bananas, nearly half of
their price.
 Conclusion: The Italian tax system is in violation of Article 110 and the
protective effect should be eliminated.
Other Product / Prohibition of
Protectionism
Commission v United Kingdom Case (1978-1983)

 The United Kingdom imposed approximately five times more excise duty (a
fixed amount) on certain wines compared to beer.
 This tax constitutes about 38% of the retail price of the relevant wine.
 In contrast, this tax constitutes about 25% of the retail price of beer.
 Note 1: The United Kingdom produces very little wine but a considerable amount of
beer.
 The Commission filed a violation case against the United Kingdom based on
[TFEU Article 110].
 Note 2: According to the United Kingdom, its consumers never consume wine
instead of beer under any circumstances!
Other Product / Prohibition of
Protectionism
According to the ECJ:

 Regarding "Other Product":

 Wine and beer constitute "other products" because there is at least some
degree of partial or potential competition between them.
 In terms of the degree of partial or potential competition:
 Consumer habits in a certain member state should not be taken into account,
as these habits can change over time and place.
Other Product / Prohibition of
Protectionism
According to the ECJ:

 In terms of "Protection":
 The tax system of the United Kingdom creates a protective effect for domestic
beer production by imposing an additional burden on imported wines.
 This is because wines are subjected to a significantly higher tax burden.
 Conclusion: The tax system of the United Kingdom is in violation of Article 110
and the protective effect should be eliminated.
 EU Substantive Law
Week 7– 3 April 2024:
Application Field of Free Movement of
Goods Provisions
Dominant Elements with Internal Market:
Prohibition Regarding Non-Financial
Burdens (Quantity Restriction and
Equivalent Measures Prohibition: Rule)
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Plan

1. Prohibitions on free movement of goods part 2

Sub-elements of Free Movement of Goods
Scope of Application of the Free Movement of Goods
Quantity Restriction and Equivalent Measures Prohibition: Rule
Quantity Restriction
Equivalent Measures to Quantity Restriction
2. Justification
Sub-elements of Free Movement of
Goods
 Free movement of goods,
 • customs duties and equivalent taxes (TFEU art. 30)
 • along with

 • discriminatory or protective internal taxes (TFEU art. 110)

 • as well as
 require prohibition of

 • quantity restrictions and equivalent measures (TFEU art. 34-36)

Free Movement of Goods and Scope of
Application
 When can the free movement of goods (TFEU art. 34) be applied?
 Scope from an individual perspective: By whom can this provision be invoked?
 • Everyone
 Scope from a subject perspective: In what situations can this provision be
invoked?
 • Trade in goods

 • Cross-border elements
Prohibition on Quantity Restrictions and
Equivalent Measures : TFEU art. 34
 TFEU art. 34:
 • "Among Member States, quantity restrictions and all equivalent measures
related to imports are prohibited."
 Which concepts should be defined?
 • (1) What is a "quantity restriction"?
 • (2) What is an "equivalent measure to quantity restriction"?
TFEU art. 34 and Geddo Decision

 Quantity Restriction
 Geddo Decision (1973)
 • The prohibition on quantity restrictions
 • includes "measures that may result in the complete or partial limitation of
imports, exports, or transit goods, depending on the circumstances."
TFEU art. 34 and Equivalent Measure
Concept
 The concept of equivalent measure to quantity restriction is divided into three
chronological periods according to CJEU/ECJ case law:
 • (i) The period when the definition of the concept was based on the nature of the
national measure (between the Dassonville and Cassis de Dijon decisions – up to
the Keck decision)
 • Before 1993
 • (ii) The period when the definition of the concept was based on the type of
national measure, divided into two categories (between the Keck decision and the
Commission v Italy decision)
 • Between 1993 and 2009
 • (iii) The period after the Commission v Italy decision when the definition of the
concept continued to be based on the type of national measure, but with the
addition of a general category to the two specific categories
 • After 2009
TFEU art. 34 and Equivalent Measure
Concept: Overview
 Regarding the concept of equivalent measure to quantity restriction, four
decisions are primarily highlighted:
 Dassonville Decision (1974)
 • Definition of the concept of equivalent measure to quantity restriction was
provided.
 Cassis de Dijon Decision (1979)
 • Relationship between positive integration and negative integration was
determined, and the principles of reasonableness and mutual recognition were
introduced.
TFEU art. 34 and Equivalent Measure
Concept: Overview
 Keck Decision (1993)
 • National measures were classified according to type:
 • Product requirements*
 • Specific sales arrangements**

 Commission v Italy Decision (2009)

 • A general category was added to the classification by type:
 • (*, **) + Measures (all other) hindering market access
TFEU art. 34 and Dassonville Decision

Dassonville Decision (1974)

 • Goods bearing a protected origin name under Belgian law can be imported
only if supported by a certificate issued by the relevant authorities of the
exporting country, confirming their entitlement to that name.
 • Mr. Dassonville imported Scotch whisky from France to Belgium without
having the relevant certificate from the United Kingdom authorities.
 • Obtaining this certificate seems quite difficult for goods already in free
circulation in a third country.
 • Mr. Dassonville argued that the quantity restriction under Belgian rules was
an equivalent measure to quantity restriction as a defense when prosecuted
in Belgium.
TFEU art. 34 and Dassonville Decision

According to CJEU (1):

 • "All commercial rules enacted by Member States that are capable, directly
or indirectly, actually or potentially, of hindering intra-Union trade are
considered equivalent measures to quantity restriction."
TFEU art. 34 and Dassonville Decision

(2):
 • The evidentiary tool here (requirement for a certificate of origin) plays a
role as an obstacle to intra-Union trade.
 • Because only direct importers will be able to obtain such a document
without facing serious difficulties.
 • However, this product is already in legal circulation in another Member
State.
 • The relevant Belgian rule constitutes an equivalent measure to quantity
restriction prohibited under the founding treaty.
TFEU art. 34 and Dassonville Decision

The consequences of the Dassonville Decision

 • (1) When determining if a national measure qualifies as an "equivalent
measure," is the intention of discrimination examined, or is the focus on its
effect?
 • ... the focus is on its effect ...
 • (2) Is the formulation here written in discriminatory language, or does it
have the breadth to encompass non-discriminatory measures as well?
 • ... it has the breadth to encompass non-discriminatory measures ...
TFEU art.34 and Cassis de Dijon Decision

Cassis de Dijon Decision (1979)

 • A trader wants to import Cassis de Dijon liqueur produced in France into
Germany. This individual applied to the German authorities for the necessary
permit.
 • The German authorities refused to grant this permit with the following
justification:
 • The French liqueur, under that name, does not have a sufficient alcohol
content to be sold in Germany.
 • Note 1: According to German law, fruit liqueurs must contain a minimum of
25% alcohol content.
 • Note 2: Cassis de Dijon liqueur, however, has an alcohol content ranging
from 15% to 20%.
TFEU art.34 and Cassis de Dijon Decision

According to the CJEU (1):

 • "In the absence of common rules governing the production and marketing of
alcohol... it is up to the Member States to regulate issues related to the
production and marketing of alcohol and alcoholic beverages in their own
countries."
 • Therefore, in accordance with the relationship between positive integration
and negative integration:
 • If the "EU" has not harmonized an area with common rules, the "Member
States" have regulatory authority; however...
TFEU art.34 and Cassis de Dijon Decision

(2):
 • "There is no valid reason for alcoholic beverages produced and marketed
lawfully in one Member State not to be placed on the market of another
Member State."
 • "Principle of mutual recognition" (principle)
 • Goods lawfully produced and marketed in one Member State should be able
to be marketed in other Member States as well.
TFEU art.34 and Cassis de Dijon Decision

(3):
 • "National provisions that are deemed necessary to meet mandatory
requirements, especially concerning the effectiveness of fiscal supervision,
the protection of public health, the fairness of commercial transactions, and
consumer protection, may be accepted despite the disparities between
national rules regarding the marketing of disputed products that create
barriers to intra-Union circulation."
 • "Rule of reasonableness"
 • Barriers to intra-Union circulation are prohibited as equivalent measures to
quantity restriction unless justified by mandatory requirements.
TFEU art.34 and Cassis de Dijon Decision

The significance and outcome of the Cassis de Dijon Decision

 • The relationship between positive integration and negative integration has
been clarified.
 • Negative integration has become self-contained.
 • The rule of reasonableness and the principle of mutual recognition have
been introduced.
 • The focal point of the equivalent measure concept has shifted from
discrimination to whether market access is hindered.
 • The outer boundaries of TFEU art. 34 have started to be debated.
Following the Dassonville and Cassis de Dijon
Decisions, TFEU art. 34
Directly Discriminatory National Measures
Additionally, a distinction has been made between directly discriminatory and
non-discriminatory equivalent measures based on origin:
 Directly discriminatory national measures
 • Only those justified by exceptions in the founding treaty + principle of
proportionality can be considered valid.
 Non-discriminatory (applied in the same manner) national measures
 • Those justified by exceptions in the founding treaty or mandatory requirements +
principle of proportionality can be considered valid without being directly
discriminatory.
After the Dassonville and Cassis de Dijon
Decisions, TFEU art. 34
Directly Discriminatory National Measures
 Commission v Italy (Case 154/85) (1985-1987)
 • Italy follows different procedures and requests different data for the registration
of imported vehicles compared to domestic vehicles.
 • These procedures and data requirements make the registration of imported
vehicles longer, more complex, and expensive than domestic vehicles.
 • The Commission has initiated infringement proceedings against Italy based on
[TFEU art. 34].
 • How will this dispute be resolved under Union law?
After the Dassonville and Cassis de Dijon
Decisions, TFEU art. 34
Non-Discriminatory National Measures
 Rau Case (1981–1982)
 • According to Belgian law, all types of margarine must be sold in cube-shaped
packages, regardless of where they are produced.
 • A trader attempted to import German margarine packaged in rectangular
containers into Belgium.
 • The relevant Belgian authorities rejected this request citing consumer
protection.
 • How will this incident be resolved under Union law?
After the Dassonville and Cassis de Dijon
Decisions, TFEU art. 34
Non-Discriminatory National Measures
 According to CJEU:
 • (1) Is it an "equivalent measure," in summary, that is conducive to hindering
intra-Union trade?
 • (2) How does the principle of mutual recognition affect?
 • (3) How does the rule of reasonableness affect?
 • = Exceptions in the founding treaty + Mandatory requirements + principle of
proportionality
 • -> Consumer protection + principle of proportionality (not found to be proportionate)

 • (4) Conclusion
 • = It is prohibited!
After the Dassonville and Cassis de Dijon
Decisions, TFEU art. 34
Non-Discriminatory National Measures
Cinéthèque Case (1984-1985)
 • According to French law, it is prohibited to rent or sell videos of a film for
one year after it has been released.
 • The purpose of this regulation is to encourage people to go to the cinema
and increase the profitability of filmmaking products. This will thereby
encourage the production of new cinema films.
 • A trader, in accordance with Belgian law, wants to import and sell videos of
a film that has been released in Belgium for more than three months in
France.
 • How will this incident be resolved under Union law?
After the Dassonville and Cassis de Dijon
Decisions, TFEU art. 34
Non-Discriminatory National Measures
According to CJEU :
 • (1) Is it an "equivalent measure," in summary, that is conducive to hindering
intra-Union trade?
 • (2) How does the principle of mutual recognition affect?
 • (3) How does the rule of reasonableness affect?
 • = Exceptions in the founding treaty + Mandatory requirements + principle of
proportionality
 • -> Encouraging the creation of artistic works + principle of proportionality =
Found to be justified.
 • (4) Conclusion
 • = It is compatible with Union law!
TFEU art. 34 and Keck Decision

Keck Decision (1991-1993)

 According to French law, selling a product at a price below the wholesale
purchase price is prohibited.
 Mr. Keck (and Mithouard) were prosecuted for selling Product X at a price
below the wholesale purchase price.
 According to Mr. Keck's (and Mithouard's) defense, this rule is contrary to
ABİHA art. 34.
TFEU art. 34 and Keck Decision

According to CJEU (1):

 • In accordance with the Cassis de Dijon decision
 • In the absence of harmonization measures
 • Obstacles arising from the application of rules that impose requirements
(such as name, form, size, weight, composition, presentation, labeling, and
packaging) on goods coming from Member States where they were lawfully
produced and marketed
 • Such obstacles are prohibited under article 34.
TFEU art. 34 and Keck Decision

(2):
 • Contrary to the previously decided,
 • National provisions that restrict or prohibit certain sales arrangements for
imported products;
 • These rules apply to all relevant traders operating within the national territory
 • and
 • as long as they affect the marketing of domestic and imported products in a
legally and effectively equivalent manner,
 • are not considered "equivalent measures."
TFEU art. 34 and Keck Decision

 ...
 Because such rules do not hinder market access or have a "neutral" nature in terms
of market access for domestic and imported goods.
 (4)
 Conclusion: TFEU art. 34 does not apply to rules related to selling a product
at a price below the wholesale purchase price.
TFEU art. 34 and Keck Decision

 The significance of the Keck judgment

 New classification  Certain sales arrangements
 • Product requirements  • Sales location and time
 • Requirements to be met by a product
 • Advertising
 • Name
 • Form  • Certain marketing methods
 • Size
 • Weight
 • Composition
 • Presentation
 • Labeling
 • Packaging
 • Requirements related to them
TFEU art. 34 and Keck Decision

The significance of the Keck judgment

 • In terms of presumption and burden of proof
 • Are product requirements compliant with EU law as a presumption, or are
they contrary?
 • Contrary to EU law as a presumption (burden of proof: the relevant state)
 • Are certain sales arrangements compliant with EU law as a presumption, or
are they contrary?
 • Compliant with EU law as a presumption (burden of proof: the relevant person)
 • Conclusion
 • Subsequent case law is based on the distinction between product requirements
and certain sales arrangements.
After the Keck case, TFEU art. 34

DocMorris Case (2001-2003)

 • DocMorris company (Netherlands) operates a health center and sells medical
products via email.
 • Internet sales for prescription-only and non-prescription approved
medications, including the German language, began targeting consumers in
Germany as of June 8, 2000.
 • According to German law, selling products over the internet is prohibited.
 • How will this incident be resolved under Union law?
After the Keck case, TFEU art. 34

 (1) Is it a product requirement or a specific sales arrangement?

 (2) Since it is determined to be a specific sales arrangement;
 (i) Is it applied to all relevant traders?
 Yes...
 (ii) Does it affect the marketing of domestic and imported products in a legally and effectively equivalent
manner?
 Legally Yes...
 Effectively No... (because it hinders or complicates market access)
 Therefore "equivalent measure"
 (3) How does the rule of reasonableness affect?
 = Exceptions in the founding treaty + Mandatory requirements + principle of proportionality
 Protection of human health and life + proportionality (...)
 For prescription-only drugs proportional
 For non-prescription drugs disproportional
TFEU art. 34 and Commission v Italy
Judgment
Commission v Italy Case (2005-2009)
 • According to Italian law, attaching a trailer to motorcycles is prohibited.
 • The Commission, considering this rule to be contrary to ABİHA art. 34, has
initiated infringement proceedings against Italy.
 • How will this incident be resolved under Union law?
TFEU art. 34 and Commission v Italy
Judgment
 (1) Is it a product requirement or a specific sales arrangement?
 • Product usage...
 (2) Is it an equivalent measure?
 • Cassis de Dijon judgment (product requirement)
 • Keck judgment (specific sales arrangement)
 •+
 • Any other measure that makes access to a member state's market difficult for
products originating from another member state
TFEU art. 34 and Commission v Italy
Judgment
 (3) How does the rule of reasonableness affect?
 • = Exceptions in the founding treaty + Mandatory requirements + principle of
proportionality
 • Road safety + proportionality = Deemed justified.

 (4) Conclusion
 • There is no violation of ABİHA art. 34, Italy has not violated EU law.
Quantity Restrictions and Equivalent
Measures: Case Law - Current Situation
 Equivalent Measure to Quantity Restriction
 Three types of categories:
 • Product requirement (Cassis de Dijon judgment)
 • Specific sales arrangement (Keck judgment)
 • Other types of measures (Commission v Italy judgment)

 Main motif:
 • National measures that prevent or substantially hinder market access = "Equivalent Measure"

 Note:
 • A national measure that constitutes an "equivalent measure" can be justified depending on
the circumstances.
TFEU art. 34

Quantitative restrictions on imports and all measures having equivalent effect

shall be prohibited between Member States
TFEU art. 35

Quantitative restrictions on exports, and all measures having equivalent effect,

shall be prohibited between Member States.
TFEU art. 36

The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions

on imports, exports or goods in transit justified on 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.
Such prohibitions or restrictions shall not, however, constitute a means of
arbitrary discrimination or a disguised restriction on trade between Member
States.
 EU Substantive Law
Week 7– 3 April 2024:
Application Field of Free Movement of
Goods Provisions
Dominant Elements with Internal Market:
Justification
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Plan

 Common Findings Regarding "Justification" Legitimate Reasons

 Exceptions in the Founding Treaty
• Mandatory Requirements / Overriding Reasons of Public Interest
• Principle of Proportionality
Common Findings Regarding
"Justification"
 Quantity restrictions and equivalent measures are, as a rule, prohibited,
 but can be justified under certain conditions.
 The national measure must be in line with the principle of proportionality based on
legitimate reasons.
Common Findings Regarding
"Justification"
 Quantity restrictions or equivalent measures that directly discriminate based
on origin
 can only be justified based on exceptions in the founding treaty.
 Equivalent measures that do not directly discriminate based on origin
 can be justified based on exceptions in the founding treaty or the "compelling
requirements" recognized by the CJEU / ECJ.
Common Findings Regarding
"Justification"
 Exceptions in the founding treaty are
 limited in number.
 The "compelling requirements" recognized by the CJEU are
 unlimited in number.
 Exceptions are interpreted narrowly.
Legitimate reasons

 Exceptions in the founding treaty

 Compelling requirements / Reasons of overriding public interest
Exceptions in the founding treaty

 Treaty on the Functioning of the European Union (TFEU) Article 36:

 Public morality,
 Public policy,
 Public security,
 Protection of human, animal, or plant life and health,
 Conservation of artistic, historical, or archaeological heritage,
 Protection of industrial and commercial property.
Public morality

Henn and Darby Case (1979)

 • Mr. Henn and Darby attempted to bring into the United Kingdom from
Rotterdam a truck containing films and magazines of Danish origin that were
deemed indecent and contrary to morality.
 • There is an import ban under UK law regarding indecent and obscene items.
 • How will this case be resolved under Union law?
Public morality

 (1) Dispute subject

 (2) Which article / concept
 • TFEU Article 34: Quantitative restrictions
 (3) Can it be justified?
 • Public Morality
 •+
 • Principle of Proportionality
Public morality

 According to the CJEU

 • Each member state determines the requirements of public morality within
its own values and chosen form.
 Regarding the specific case
 • The United Kingdom may impose a ban on the importation of indecent and
obscene goods.
 • Because such goods cannot be sold within the United Kingdom either.
Public policy

Thompson and Others Case (1978)

 • Three British individuals wanted to export silver alloy coins from 1947 to be
minted in another member state.
 • According to UK law, the export of such coins is prohibited if they exceed
ten in number and are less than a hundred years old at the time of export.
Public policy

 (1) Subject of the dispute

 (2) Which article/concept
 TFEU Article 35: Quantitative restrictions
 (3) Can it be justified?
 Public policy
 Principle of proportionality
Public policy

 According to the CJEU:

 Each member state is authorized to mint coins and protect them from
destruction.
 In the specific case:
 The United Kingdom may prohibit the melting or destruction of national
currency, even if it is not in circulation.
Public security

Richardt Case (1989-1991)

 • Mr. R is importing certain substances used in the production of bubble
memory circuits, which are lawfully circulating within the Union, to the
Soviet Union.
 • Mr. R has fulfilled the necessary formalities for this import in France.
 • Accordingly, the goods will be transported directly from France to Moscow
by plane.
 • However, when the plane experienced a malfunction, these goods were
transported to Luxembourg by trucks.
 • During customs controls in Luxembourg, the authorities seized these goods.
 • According to Luxembourg law, a special transit license is required for such
goods (suitable for strategic purposes).
Public security

 (1) Subject of the dispute

 (2) Which article / concept
 • Transit goods / principle of free transit passage of goods
 (3) Can it be justified?
 • Public security
 •+
 • Principle of proportionality
Public security

According to the CJEU:

 Public security encompasses both internal security and external security.

 Goods suitable for strategic purposes may affect a Member State's public
security in terms of import, export, and transit.
 In the specific case:
 Luxembourg can require special approval for the transit of such goods to
verify the characteristics of strategic goods.
Protection of health and life of humans,
animals or plants
 Especially, it constitutes the most commonly used exception in terms of
protecting human health and life.
 In this regard, common findings are:

1. This reason stands out as the foremost among those listed in Article 36 of the
TFEU.
2. Member States may decide on the degree of protection they aim to achieve.
3. Member States must provide evidence of genuine health concerns and actively
implement a serious health policy.
Protection of health and life of humans,
animals or plants
 In this regard, common findings are:
4. Whether there is a risk to human health and life should be determined based
on relevant scientific research rather than general assumptions.

5. If there are uncertainties in the current scientific research regarding this risk,
 member states may decide on the degree of protection.
 "Precautionary principle"
Protection of health and life of humans,
animals or plants
 Association of Pharmaceutical Importers Case (1987-1989)
 According to UK law, a pharmacist is prohibited from substituting a product
specifically named on the prescription – except in emergency situations – with
any other product, even if they believe that the therapeutic effect and
nature of the other product are identical.
Protection of health and life of humans,
animals or plants
 (1) The subject of dispute
 (2) Which article / concept
 Equivalent measure
 (3) Can it be justified?
 Protection of human health and life
 Principle of proportionality
Protection of health and life of humans,
animals or plants
 According to the CJEU:

 Rules regarding the relationship between doctors and pharmacists are part of
the national public health system.
 Member states can decide on the level of protection they aim to achieve in
terms of preserving human health and life.
 This measure is proportional because it aims to place the entire responsibility
for a patient's treatment in the hands of the treating doctor.
Protection of health and life of humans,
animals or plants
 Commission v Germany (Case 178/84) (1984-1987)

 According to German law,

 the marketing of beers containing additives is absolutely prohibited.
 According to Germany,
 there is a general risk associated with the digestion of additives.
 According to German law,
 certain additives can be used for certain food products
Protection of health and life of humans,
animals or plants
 (1) Subject of dispute
 (2) Which article/concept
 Equivalent measure
 (3) Can it be justified?
 Preservation of human health and life
 Principle of proportionality
Protection of health and life of humans,
animals or plants
 According to the CJEU
 If there are uncertainties in the current state of scientific research, member states
may decide on the degree of protection they aim to achieve for the preservation of
human health and life.
 Is there such an uncertainty?
 Germany allows the use of certain additives in other food products. Therefore, it
cannot be argued that there is a potential general risk solely concerning beer.
Protection of national treasures possessing
artistic, historic or archaeological value

 It has never been used before

Protection of industrial and commercial
property
 If the general framework of this exception is outlined:

1. "Industrial and commercial property" particularly includes the following

subtopics:
 (i) Patent,
 (ii) Trademark,
 (iii) Geographical indication,
 (iv) Design right,
 (v) Copyright...
Protection of industrial and commercial
property
2. In essence, the existence of industrial and commercial property rights
constitutes the subject matter of national law, while the exercise of the relevant
right forms the subject matter of EU law.
 The doctrine of "specific subject matter of the right": Only the rights forming
the specific subject matter of the relevant right should be protected. For
example:

 The essence of patent rights essentially grants the inventor the exclusive right to
introduce their product to the market for the first time.
Protection of industrial and commercial
property
3. The doctrine of "Exhaustion of Rights":

The exclusive right protected by a member state's legislation in terms of

industrial and commercial property is exhausted when a product is lawfully
placed on the market in that member state with the consent of the right holder
or rights holder.
Protection of industrial and commercial
property
Let's say:

➢ Company X obtained a patent for a drug named Wonderdrug in Germany.

➢ The same company also obtained a patent for this Wonderdrug in the
Netherlands.
➢ Company X launched Wonderdrug in the Netherlands but has not done so in
Germany yet.
➢ Company C also wants to sell the Wonderdrug imported from the Netherlands
in Germany.
➢ Company X wants to prevent this sale based on the patent rights in Germany.
➢ According to EU law, how will this issue be resolved?
Mandatory Requirements

 The effectiveness of financial auditing

 Protection of public health
 Fairness of commercial transactions
 Consumer protection
 Improvement of working conditions
 Encouragement of new works in cinema
 Protection of the environment
 Protection of children
 Preservation of national or regional socio-cultural characteristics
 Maintenance of order in society
 Preservation of press diversity
Example: Consumer Protection

 Commission v Germany (Case 178/84) (1984-1987)

 According to German law, the marketing of beers produced in another

member state is only permissible if they comply with the relevant provisions
of the Beer Liability Law dated 1952.
 Accordingly, a beverage can only be sold under the name "beer" if it consists
of barley, hops, yeast, and water.
 According to the German Government, this regulation aims to protect
consumers.
 This is because consumers have identified the term "beer" with this content.
Example: Consumer Protection

 (1) Dispute subject

 (2) Which article / concept
 Equivalent measure
 (3) Can it be justified?
 Protection of consumers
 Principle of proportionality
Example: Consumer Protection

 According to the CJEU:

 Consumer protection can be achieved against deceptive practices.

 However, this measure is not compatible with the principle of proportionality
because consumer protection can also be ensured by another means that
restricts free movement less:
 It may be mandatory to add appropriate labels indicating the quality of the
product to the product.
Proportionality Principle

 It has two elements:

 Suitability element
 Suitability requires a causal connection between the means (contentious measure)
and the objective pursued (legitimate reason).
 Necessity element
 Necessity pertains to the question of whether the means (contentious measure) are
necessary to achieve the objective (legitimate reason).
 Is it possible to achieve the same objective with another means that restricts
free movement less?
Proportionality Principle

Dynamic Medien Case (2006-2008)

 Company A, based in the United Kingdom, sells visual and audio files through
mail orders via its website and electronic shopping platform.
 This company sells "anime" Japanese cartoons in DVD or VCD format from the
United Kingdom to Germany.
 These films were classified by the British Film Classification Board before sale
as "suitable for ages 15 and above."
 According to German law, visual storage devices that have not been reviewed
by competent German authorities and have not been classified by age cannot
be sold through mail orders.
Proportionality Principle

 (1) The subject of dispute

 (2) Which article/concept
 Equivalent measure
 (3) Can it be justified?
 Protection of children
 Principle of proportionality
Proportionality Principle

According to the CJEU

 Protection of children constitutes a legitimate reason for safeguarding
children against information and materials that could harm their health.
 Principle of proportionality
 Adequacy
 Is the measure appropriate to achieve the purpose? --- Is the national
measure suitable for serving the purpose of protecting children?
 Necessity
 Is it possible to achieve the same objective with a less restrictive alternative?
 No... (margin of appreciation)
 EU Substantive Law
Week 9– 17 April 2024:
Free Movement of Persons and Services
Common Denominator: Union Citizenship
and Rights
Free Movement of Workers: Scope and
Limitations
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Plan

 Free Movement of Persons and Services*

 • Common Ground: Union Citizenship and Rights Therein
 • Free Movement of Workers: Scope and Limitations
 • *Free movement of workers, right of establishment, free movement of services
Common Ground: Union Citizenship and the
Rights

 To benefit from the free movement of persons and services, as a rule, one
must be a Union citizen.
 So, how will being a "Union citizen" be determined?
 • Period before the Maastricht Treaty (1993)
 • Period after the Maastricht Treaty (1993)
Union Citizenship / Pre-Maastricht
Treaty Period
Micheletti Case (1990-1992)
 • Mr. M. is a citizen of both Argentina and Italy.
 • Mr. M. obtained a six-month residence permit in Spain to establish his own dental
practice.
 • After some time, Mr. M. applied to the competent authorities to extend this
permit and settle in Spain based on Union law.
 • According to the competent authorities, Union law cannot be applied to this
case.
 • This is because, under the Spanish Civil Code, in the case of dual citizenship, a
person's primary citizenship is determined based on their habitual residence, and
Mr. M. is considered an Argentine citizen according to this test.
 • According to Mr. M., his Italian citizenship should be taken into account, and
Union law should be applied to him.
Union Citizenship / Pre-Maastricht
Treaty Period

 According to the CJEU:

 • Only "citizens of a member state" benefit from the right of establishment.
 • Member states determine the conditions for acquiring and losing citizenship.
 • A member state cannot impose additional conditions to recognize
citizenship granted by another member state.
 • Conclusion: Mr. M. should be treated as an Italian citizen.
Union Citizenship / Post-Maastricht
Treaty Period
 Treaty on the Functioning of the European Union (TFEU) Article 20(1)*:
 • "Union citizenship is hereby established. Every person holding the nationality of a
Member State shall be a citizen of the Union. …"
 CJEU has continued its previous case law.
 • *Originally Article 8 of the Treaty establishing the European Community.
Rights Based on Union Citizenship

 Preliminary Observation:
 • Some issues have been approached with a new perspective through the concept
of "Union citizenship," which may not be economically rational.
 • From Homo Economicus to Homo Civitatis…
 The most striking indication:
 • Rights related to "migration," under Directive 2004/38, have been uniformly
regulated for all Union citizens, regardless of whether they are economic migrants
or not.
Rights Based on Union Citizenship

Every Union citizen

 has the right to leave the territory of a Member State to go to another
Member State
 has the right to enter another Member State
 has the right to reside in another Member State for up to three months
 • with a valid identity card
 • or
 • passport.
Rights Based on Union Citizenship

Every Union citizen

 • If they are employed
 • If they are self-employed
 • If they are not economically active but have sufficient resources and
comprehensive health insurance

 • has the right to reside in another Member State for more than three
months.
Rights Based on Union Citizenship

Every Union citizen

 • If they have resided in another Member State for five years
 • becomes entitled to "permanent residence".
 • It is no longer necessary to be economically active or
 to meet conditions such as having sufficient resources or comprehensive
health insurance.
Family Members

Individuals benefiting from the free movement of persons and services have
certain rights for their "family members".
 • Who is considered a "family member"?
 • What rights do "family members" have?
Family Members

They can be citizens of any state.

Includes certain degrees of relationship:
 • Spouse of a Union citizen (marital relationship)
 • Partner to whom a Union citizen has entered into a registered partnership
(if the host Member State's regulations equate registered partnership with
marriage and if they comply with the conditions laid down in the relevant
regulations of the host Member State)
 • Descendants under the age of 21 or dependent descendants of a Union
citizen and their spouse (or partner)
 • Dependent ascendants of a Union citizen and their spouse (or partner)
Family Members

Family members --- Rights (in essence):

 • The right to enter a Member State to join the Union citizen benefiting from
the right of free movement
 • The right to engage in economic activity in the host Member State
 • The right not to be discriminated against on any grounds - including social
benefits - on the basis of citizenship in the host Member State
Family Members

Diatta Case (1983-1985)

 • Senegalese Ms. D. settled in Germany by marrying French Mr. H. in 1978.
 • Due to disagreements they had together since August 1978, this couple
started living separately.
 • Ms. M.'s residence permit expired in July 1980.
 • When Ms. M. applied to the competent authority to extend her residence
permit based on Union law, the competent authorities refused this renewal.
 • Because Ms. M. is no longer considered the spouse of a Union citizen.
 • Will Union law be applied to this case?
Free Movement of Workers: Scope and
Restrictions

 Free Movement of Workers: Scope

 Free Movement of Workers: Restrictions
Free Movement of Workers: Scope

For the provision of the free movement of workers (TFEU Article 45) to be
"applicable" in a specific dispute, that specific dispute must meet the following
conditions simultaneously:
 • 1. It must not involve public service,
 • 2. It must fall within the scope of this provision in terms of the person
involved,
 • 3. It must fall within the scope of this provision in terms of the subject
matter,
 • *4. The person to whom the disputed measure is attributed must be
considered as the addressee of this provision.
 • *This aspect will not be addressed in this course.
Free Movement of Workers: Scope in
Terms of Person
To fall within the scope of the provision for the free movement of workers in
terms of individuals, one must be:
 • A "Union citizen"
 • and
 • An «worker".
Free Movement of Workers: Scope in
Terms of Person
 The concept of «worker"
 • is a concept of EU law.
 Definition of the «worker concept
 • Formal aspect
 • Economic aspect
Free Movement of Workers: Scope in
Terms of Person
Definition of the «worker" concept / Formal aspect
 • A person;
 • for a certain period
 • must provide services
 • for another person and under their direction
 • in return for a wage.
Free Movement of Workers: Scope in
Terms of Person
Definition of the «worker" concept / Economic aspect
 • A person,
 • except for small-scale activities that would be considered entirely marginal
and ancillary,
 • must be engaged in or wish to engage only in effective and genuine
(economic) activities.
Free Movement of Workers: Scope in
Terms of Person
Levin Case (1981-1982)
 • Ms. L, a British citizen, lives in the Netherlands.
 • When Ms. L applied for a residence permit, the competent authorities
rejected it.
 • According to Ms. L, she works part-time as a cleaner and has sufficient
income to support herself.
 • According to the competent authorities, Ms. L is not considered a "worker"
under Union law because the employment relationship does not provide her
with sufficient income - at least equivalent to the minimum wage in the
Netherlands.
 • Is Ms. L considered a "worker" under Union law?
Free Movement of Workers: Scope in
Terms of Person
According to the CJEU:
 • The concept of "worker" is a concept of EU law.
 • Definition of "worker": Formal aspect / Economic aspect
 • In terms of the specific case:
 • Part-time employment
 • Receiving wages less than the minimum wage in the Member State
 • Supporting livelihood with private income (e.g., rent)
 • These factors do not prevent being considered a "worker" under Union law.
 • Whether there is "effective and genuine activity" -> national court
Free Movement of Workers: Scope in
Terms of Person
Kempf Case (1985-1986)
 • Mr. K, a German citizen, lives in the Netherlands and works part-time as a
music teacher (teaching twelve hours per week).
 • Mr. K has applied for a residence permit based on Union law.
 • The competent authorities have rejected this request because
 • Mr. K works for a wage below the minimum subsistence level
 • Mr. K is requesting social assistance from public funds.
 • Is Mr. K considered a "worker" under Union law?
Free Movement of Workers: Scope in
Terms of Person
According to the CJEU:
 • The concept of "worker" is a concept of EU law.
 • Definition of "worker": Formal aspect / Economic aspect
 • In terms of the specific case:
 • Part-time employment
 • Earning wages below the minimum wage in the Member State
 • Desiring to support livelihood with public funds
 • These factors do not prevent being considered a "worker" under Union law.
 • Whether there is "effective and genuine activity" -> national court
Free Movement of Workers: Scope in
Terms of Person
Bettray Case (1987-1989)
 • German citizen Mr. B. entered the Netherlands on July 15, 1980.
 • Due to substance dependence, Mr. B. began working under a system
established by the Netherlands Social Employment Law from April 18, 1983.
 • This system is designed to provide employment to individuals who, due to
their special circumstances, cannot work under normal conditions in order to
preserve, renew, or improve their work capacity.
 • When Mr. B. applied for a residence permit as a "worker" under Union law,
the competent authorities rejected it.
Free Movement of Workers: Scope in
Terms of Person
According to the CJEU:
 • The concept of "worker" is a concept of EU law.
 • Definition of "worker": Formal aspect / Economic aspect
 • In terms of the specific case:
 • Even if the formal aspect is fulfilled,
 • The economic aspect is not fulfilled;
 • because it is not genuine (economic) activity.
Free Movement of Workers: Scope in
Terms of Subject Matter
 Economic Activity
 Cross-border Element
Free Movement of Workers: Scope in
Terms of Subject Matter
Economic Activity
 • Existence of an employment relationship
 • Intention to establish an employment relationship
The ECJ mostly does not separately consider the economic activity element;
 • because this element overlaps with the definition of "worker".
Free Movement of Workers: Scope in Terms of
Subject Matter / Transnational Element

The provision for the free movement of workers

 • applies when the specific case involves a cross-border element,
 • in other words, it cannot be applied to activities confined entirely within
one Member State.
Free Movement of Workers: Scope in Terms of
Subject Matter / Transnational Element

Moser Case (1983-1984):

 • Mr. Moser, a German citizen, has always lived in Germany. When Mr. Moser
applied for postgraduate education to become a primary and secondary school
teacher, the German authorities rejected this application.
According to Mr. Moser,
 • The impossibility of completing his education as a teacher under German
rules prevents him from applying for teaching positions in schools in other
Member States, thus establishing a sufficient connection with EU law.
Free Movement of Workers: Scope in Terms of
Subject Matter / Transnational Element

According to the CJEU,

 • a purely hypothetical possibility of employment in another Member State
 does not establish a sufficient connection with EU law.
Free Movement of Workers: Scope in Terms of
Subject Matter / Transnational Element

Singh Case (1990-1992)

 • British Ms. P. married Indian Mr. S. in 1982.
 • This couple worked in Germany between 1983 and 1985 and returned to
England in 1986 to open a business.
 • Mr. S. could not obtain a residence permit in England.
Free Movement of Workers: Scope in Terms of
Subject Matter / Transnational Element

According to the CJEU,

 • When a Union citizen who has exercised the right of free movement wishes
to return to their home Member State, a «cross-border element" arises.
Free Movement of Workers: Restrictions

Determining whether there is a "restriction" under the provision for the free
movement of workers (TFEU Article 45) requires addressing the following
questions regarding the disputed measure:
 • 1. Does the disputed measure directly discriminate on the basis of
citizenship?
 • 2. Does the disputed measure indirectly discriminate on the basis of
citizenship?
 • 3. Does the disputed measure restrict freedom of movement?
Prohibition of Direct Discrimination on
the Basis of Citizenship
 Direct discrimination on the basis of citizenship is, as a rule, prohibited.
 If a measure discriminates between a worker who is a citizen and a worker
who is a migrant based on citizenship, direct discrimination on the basis of
citizenship occurs.
Prohibition of Direct Discrimination on
the Basis of Citizenship
Commission v. France (1973-1974)
 • France has established a requirement through a maritime law that a certain
proportion of a ship's crew must be French citizens.
 • The Commission has filed a lawsuit against France, alleging that this rule is
contrary to EU law (free movement of workers).
 • How will this case conclude?
Prohibition of Direct Discrimination on
the Basis of Citizenship
According to the CJEU:
 • TFEU Article 45: Scope of Application
 • Scope in Terms of Individuals: Workers...
 • Scope in Terms of Subject Matter: Access to employment / cross-border element
 • TFEU Article 45: Restrictions
 • Prohibition of Direct Discrimination on the Basis of Citizenship
 • TFEU Article 45: Justification
 • Only exceptions in the founding treaties + Compliance with the principle of
proportionality
 • (No justification has been provided in the specific dispute...)
 • Conclusion
 • France has violated EU law.
Prohibition of Direct Discrimination on
the Basis of Citizenship
Bosman Case (1993-1995)
 • National Football Federations have introduced citizenship clauses for
football teams regarding league matches.
 • According to this, each team can field a maximum of three foreign players
for league matches.
 • A Belgian citizen, who has contracted to play for a French team, has filed a
lawsuit before a national court, claiming that this rule is contrary to EU law
(free movement of workers).
 • The national court has made a preliminary reference to the ECJ.
 • How will Union law be applied to this case?
Prohibition of Direct Discrimination on
the Basis of Citizenship
According to the CJEU:
 • TFEU Article 45: Scope of Application
 • Scope in Terms of Person: Workers...
 • Scope in Terms of Subject Matter: Access to employment / cross-border element
 • TFEU Article 45: Restrictions
 • Prohibition of Direct Discrimination on the Basis of Citizenship
 • TFEU Article 45: Justification
 • Only exceptions in the founding treaties + Compliance with the principle of
proportionality
 • (The reasons put forward in the specific dispute are not considered valid...)
 • Conclusion
 • The relevant rule becomes inapplicable as it violates EU law.
Prohibition of Indirect Discrimination on
the Basis of Citizenship
 Indirect discrimination on the basis of citizenship is,as a rule, prohibited.
 If a measure does not discriminate based on citizenship between a worker
who is a citizen and a worker who is a migrant, but in the majority of cases, it
operates to the disadvantage of migrants rather than citizens, indirect
discrimination on the basis of citizenship occurs.
Prohibition of Indirect Discrimination on
the Basis of Citizenship
Scholz Case (1992-1994)
 • Mr. S., a German citizen, has applied for a job in Italy.
 • The "Worker Selection Committee" did not take into account Mr. S.'s
previous employment period in Germany; because according to Italian law,
only the employment period in Italy can be considered when calculating a
person's previous employment period.
 • Mr. S. has filed a lawsuit against this decision before the national court, and
the national court has made a preliminary reference to the ECJ.
 • How will Union law be applied to this case?
Prohibition of Indirect Discrimination on
the Basis of Citizenship
According to the CJEU:
 • TFEU Article 45: Scope of Application
 • Scope in Terms of Persons: Workers...
 • Scope in Terms of Subject Matter: Access to employment / Transnational element
 • TFEU Article 45: Restrictions
 • Prohibition of Indirect Discrimination on the Basis of Citizenship
 • TFEU Article 45: Justification
 • Exceptions in the founding treaties + Overriding reasons of public interest +
Compliance with the principle of proportionality
 • (No justification has been provided in the specific dispute...)
 • Conclusion
 • The Italian rule becomes inapplicable as it violates EU law.
Prohibition of Restrictions on Free
Movement
 Restrictions on free movement are generally prohibited.
 Essentially, if a measure does not directly or indirectly discriminate on the
basis of citizenship but restricts freedom of movement, in other words, if it
makes access to the labor market of a Member State more difficult, it
constitutes a restriction on freedom of movement.
 The prohibition of restrictions on free movement appears to have two
separate formulations in terms of its application to the destination and origin
states.
Prohibition of Restrictions on Free
Movement
Against the destination (host) state...
 • Measures that make it difficult or less attractive for a citizen of a Member
State worker to exercise their freedom of movement

Against the origin (home) state...

 • Measures that deter or prevent a person from leaving their country of origin
 • Measures that disadvantage a person due to exercising their right to
freedom of movement
Freedom of Movement Restriction
Prohibition / Host State
According to French law, an individual must pass a specific exam to become a
hospital manager. After passing this exam, the individual undergoes an internship
before officially starting the profession.
 • Mr. A has been working as a hospital manager in Belgium for a long time.
 • When Mr. A was about to start working as a manager at the French X
Hospital, he was not allowed to start the job solely because he had not taken
this exam, without considering his previous experience.
 • Mr. A filed a lawsuit against this decision in the national court, and the
national court referred the case to the ECJ for a preliminary ruling.
 • How will EU law be applied to this case?
Freedom of Movement Restriction
Prohibition / Host State
According to the CJEU
 • Scope of application of Article 45 of the TFEU
 • Scope concerning person: Workers…
 • Scope concerning the subject matter: Access to employment / cross-border element
 • Limitation according to Article 45 of the TFEU
 • Restriction of freedom of movement: Measures that make it difficult for a national of a
Member State to exercise their freedom of movement or render it less attractive
 • Justification according to Article 45 of the TFEU
 • Exceptions in the founding treaties + Reasons overriding public interest + Compliance with
the principle of proportionality
 • (Selecting the best candidates under the most objective conditions / not found to be
proportional.)
 • Conclusion
 • The French rule becomes unenforceable as it contradicts EU law.
Freedom of Movement Restriction
Prohibition / Home State
Bosman Case (1993-1995)
 • According to national and international football regulations, when a player's
contract with a club expires and they want to transfer to another team, the
subsequent club must pay a certain amount of money to the previous club.
 • Belgian Mr. Bosman, after his contract with the 'RC Liège' team in the Belgian
first league ended, reached an agreement with the 'US Dunkerque' team in the
French second league.
 • However, the US Dunkerque club failed to pay the transfer fee to the RC Liège
club, and as a result, the transfer did not occur.
 • Mr. Bosman was forced to remain with the RC Liège club and challenged this
situation in court.
 • The national court has made a preliminary reference to the CJEU.
 • How will EU law be applied to this case?
Freedom of Movement Restriction
Prohibition / Home State
According to the CJEU:
 • Article 45 of the TFEU: Scope of Application
 • Scope in terms of person: Workers...
 • Scope in terms of subject matter: Access to employment / Cross-border element
 • Article 45 of the TFEU: Limitations
 • Restriction of freedom: Measures that deter or prevent a person from leaving their country of
origin
 • Article 45 of the TFEU: Justification
 • Exceptions in the founding treaties + Reasons overriding public interest + Compliance with
the principle of proportionality
 • (Not found to be proportional: Maintaining balance between clubs and promoting the
recruitment and training of young players)
 • Conclusion
 • Transfer rules become incompatible with EU law and cannot be applied.
Freedom of Movement Restriction
Prohibition / Home State
Commission v. Germany (2007-2009)
 According to German legislation, German nationals who reside outside of
Germany are required to repay retirement savings benefits they receive
Germany.
 • The Commission has filed a complaint against Germany, alleging that this
rule violates EU law (the free movement of workers).
 • How will this case be resolved?
Freedom of Movement Restriction
Prohibition / Home State
According to the CJEU:
 • Article 45 of the TFEU (Treaty on the Functioning of the European Union): Scope of
Application
 • Scope in terms of person: Workers...
 • Scope in terms of the subject matter: Access to employment / Cross-border element
 • Article 45 of the TFEU: Restriction
 • Restriction of freedom: Measures that disadvantage individuals due to exercising their
freedom of movement
 • Article 45 of the TFEU: Justification
 • Exceptions in the founding treaties + Reasons of overriding public interest + Compliance with
the principle of proportionality
 • (Maintaining the integrity of the tax system / has not been considered valid.)
 • Conclusion
 • Germany has violated EU law.
TFEU art. 45

1. Freedom of movement for workers shall be secured within the Union.

2. Such freedom of movement shall entail the abolition of any discrimination based on nationality
between workers of the Member States as regards employment, remuneration and other
conditions of work and employment.
3. It shall entail the right, subject to limitations justified on grounds of public policy, public
security or public health:
(a) to accept offers of employment actually made;
(b) to move freely within the territory of Member States for this purpose;
(c) to stay in a Member State for the purpose of employment in accordance with the provisions
governing the employment of nationals of that State laid down by law, regulation or
administrative action;
(d) to remain in the territory of a Member State after having been employed in that State,
subject to conditions which shall be embodied in regulations to be drawn up by the Commission.
4. The provisions of this Article shall not apply to employment in the public service.
 EU Substantive Law
Week 12– 8 May 2024:
Free Movement of Persons and Services:
Justification
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Plan

 Free Movement of Persons and Services

 • Exceptions to Scope
 • Justification
Exceptions to Application

Public service
 Excluded from the free movement of workers.
 TFEU Article 45(4)
Exercise of public authority
 Excluded from the right of establishment and the free movement of
services.
 TFEU Article 51 (and 62)
Public Service

Free movement of workers

 Not applicable to "employment in the public service".
The concept of "public service"
 Is a concept of EU law.
 Is narrowly interpreted.
Public Service

«Public service» requires answering the following two questions regarding a duty:

 Are the powers conferred by public law being utilized?

 Is there a responsibility to safeguard the general interest of the state?
Public Service

 (1)
 • Municipal technical bureau chief inspector
 • Principal auditor
 • Inventory control officer
 • Night watchman ...

 (2)
 • Nurse in a public hospital
 • Teacher intern
 • Lawyer intern
 • Foreign language assistant at a university
 • Researchers at a national research center
 • Plumbers, carpenters, electricians, and gardeners in local government ...
Public Authority

 • The provisions in the section on the right of establishment and the free
movement of services
 • are not applicable to activities that are even remotely associated with the
"exercise of public authority" in a Member State.
Public Authority

 The exercise of public authority requires answering the following question

regarding an activity:
 • Is the activity directly and specifically linked to the exercise of public
authority?
Public Authority

Example 1:
 • If the reports of traffic accident experts regarding traffic accidents do not
bind the courts and leave discretion to judicial authorities, is there the
exercise of public authority here?

Example 2:
 • If security initiatives and the activities of security personnel are related to
the execution of surveillance and protection duties based on private law-
managed relations and do not entail restrictive (coercive) powers, is there
the exercise of public authority here?
Justification

 Common Findings Regarding "Justification"

 Legitimate Reasons
 • Exceptions in the Founding Treaties
 • Overriding Reasons of Public Interest
 Principle of Proportionality
Common Findings Regarding "Justification"

 Restrictions on the free movement of persons and services are, as a rule,

prohibited,
 but can be justified under certain conditions.
 • National measures must be proportionate based on legitimate reasons.
Common Findings Regarding "Justification"

Measures that directly discriminate on the basis of citizenship (/center) in

relation to the free movement of persons and services
 • can only be justified based on exceptions in the founding treaties.
Measures that indirectly discriminate on the basis of citizenship (/center) or
restrict freedom of movement in relation to the free movement of persons and
services
 • can be justified based on exceptions in the founding treaties or on
"overriding reasons of public interest" recognized by the CJEU.
Common Findings Regarding "Justification"

Exceptions in the founding treaties

 • are limited in number.

"Overriding reasons of public interest" recognized by the CJEU

 • are unlimited in number.

Exceptions are narrowly interpreted.

Legitimate Reasons

 • Exceptions in the Founding Treaties

 • Overriding Reasons of Public Interest
•Exceptions in the Founding Treaties

Material Aspect
 • Public order
 • Public security
 • Public health
 • (Common regulations regarding deportation)

Procedural Aspect
Public Health

Public health - as regulated in Directive 2004/38:

 • Member States may only restrict the freedom of movement for specific
diseases.
 • Diseases identified by the relevant organs of the World Health Organization
and with epidemic potential
 • other infectious or parasitic diseases subject to protection measures
applied to nationals of the host Member State
Public Health

Public health - as regulated in Directive 2004/38:

 Member States,
 • if there are serious signs indicating necessity
 • within three months from the date of entry
 • may require individuals concerned to undergo medical checks free of charge
 • to verify that they do not carry the diseases specified here.
 • These medical checks cannot be carried out routinely
Public Health

Public health - within the framework of CJEU case law

 Member States,
 • may decide on the level of protection they aim to ensure concerning the
preservation of public health.
 • can take protective measures if there are uncertainties about the presence
or degree of risk to human health.
 • "precautionary principle"
Public Security

Public security
 • although it constitutes a separate exception,
 • it is often considered together with public order.
Public Order

Regarding public order, there is a main test:

 • Does the individual's behaviour pose a real, current, and sufficiently serious
threat to one of the fundamental interests of society?
Public Order

Regarding public order, there are certain criteria:

 • Justifications based on isolated characteristics of a situation, or general
preventive considerations are not acceptable.
 • Previous criminal convictions, by themselves, do not constitute a basis for
taking measures on grounds of public order.
Public Order

Within the framework of the main test and criteria related to public order:
 • Member states' discretion,
 • A real, current, and sufficiently serious threat to one of the fundamental
interests of society,
 • Legal entities,
 • Various determinations can be made.
Public Order

Discretionary power
 • Member states,
 • in light of national needs,
 • have a certain discretion in determining what constitutes public order.
 • Special circumstances justifying recourse to the concept of public order
 • may vary
 • from one country to another,
 • from one period to another.
Public Order

Adoui and Cornuaille Case (1981-1982)

 • French citizens Ms. Adoui and Cornuaille requested permission to reside in
Belgium, but the authorities rejected this request.
 • According to the competent authorities, their behaviour, working as
waitresses in a bar deemed morally suspicious, is seen as contrary to public
order.
 • Under Belgian law,
 • certain activities, particularly those socially considered harmful, such as
the exploitation of prostitution by third parties, are prohibited,
 • although prostitution itself is not prohibited per se.
Public Order

TFEU art. 45: Scope of Application

TFEU art. 45: Limitation
TFEU art. 45: Justification
 Compliance with Public Order + Principle of Proportionality
 Public order cannot be successfully utilized.
Conclusion
 National measure is incompatible with EU law.
Common Regulations Regarding Deportation

When a Union citizen has resided... in the host Member

State deportation reasons are..

3 months 10 years+
0-3 months 5-10 years
– 5 years or children

Public Public order Public Imperative

security, Or, order reasons of
Or, Public Or, public
Public health security Serious security
order, reasons of
public
security
Common Regulations Regarding Deportation

Before making a decision to deport an individual on grounds of public order or

security, a Member State must consider factors such as:
 The length of time the individual has stayed in the country,
 Their age,
 Health status,
 Family situation,
 Economic status,
 Social and cultural integration with the host Member State,
 The degree of connection with the home country.
Procedural Aspect

In terms of procedural aspects:

 Notification of decisions
 Measures taken on the grounds of public order, public security, and public
health
 Must be comprehensible
 Should be communicated in writing
 Must be reasoned
 Should include information on the place and time of appeal (if applicable, the
time limit for leaving the country)
Procedural Aspect

Legal Remedies

 Individuals affected by such a decision should have access to judicial and, if

appropriate, administrative remedies in the host Member State.
 Within this framework, the legality of the decision and the underlying factual
circumstances should be subject to examination.
Overriding Reasons of Public Interest

 The need to maintain the integrity of the tax system

 Prevention of tax evasion
 Effectiveness of financial oversight
 Serious risk of weakening the financial balance of the social security system
 (in football) Recruiting and training young players for the team
 Protection of consumers (service recipients)
 Environmental protection
 Protection of intellectual property
 Protection of workers
 Ensuring fair trade...
Principle of Proportionality

It consists of two elements:

 Suitability element
 Appropriateness requires a causal link between the means (contentious measure)
and the pursued aim (legitimate reason).
 Necessity element
 Necessity pertains to the question of whether the means (contentious measure) are
necessary to achieve the pursued aim (legitimate reason).
 Is it possible to achieve the same aim with another measure that restricts free
movement less?
TFEU art. 45

1. Freedom of movement for workers shall be secured within the Union.

2. Such freedom of movement shall entail the abolition of any discrimination based on nationality
between workers of the Member States as regards employment, remuneration and other
conditions of work and employment.
3. It shall entail the right, subject to limitations justified on grounds of public policy, public
security or public health:
(a) to accept offers of employment actually made;
(b) to move freely within the territory of Member States for this purpose;
(c) to stay in a Member State for the purpose of employment in accordance with the provisions
governing the employment of nationals of that State laid down by law, regulation or
administrative action;
(d) to remain in the territory of a Member State after having been employed in that State,
subject to conditions which shall be embodied in regulations to be drawn up by the Commission.
4. The provisions of this Article shall not apply to employment in the public service.
TFEU art. 49

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.
TFEU art. 51

The provisions of this Chapter shall not apply, so far as any given Member State is
concerned, to activities which in that State are connected, even occasionally,
with the exercise of official authority.
TFEU art. 52

The provisions of this Chapter and measures taken in pursuance thereof shall not
prejudice the applicability of provisions laid down by law, regulation or
administrative action providing for special treatment for foreign nationals on
grounds of public policy, public security or public health.
TFEU art. 54

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 Union shall, for the purposes of this Chapter, be treated in
the same way as natural persons who are nationals of Member States.

‘Companies or firms’ means companies or firms constituted under civil or

commercial law, including cooperative societies, and other legal persons
governed by public or private law, save for those which are non-profit-making.
TFEU art. 56

Within the framework of the provisions set out below, 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.
TFEU art. 62

The provisions of Articles 51 to 54 shall apply to the matters covered by this

Chapter.
 EU Substantive Law
Week 12– 8 May 2024:
Free Movement of Persons and Services-
Right of Establishment and Free
Movement of Services: Scope and
Restrictions
Asst. Prof. Dr. Emriye Özlem ŞEKER
* Lectures will follow the course plan and presentations of Prof. İlke GÖÇMEN’s course found in
[Link]
Plan

 Right of Establishment
 •Scope and Limitations
 Free Movement of Services
 •Scope and Limitations
Right of Establishment: Scope

 In order for the provision of the right of establishment (Article 49 of the

TFEU) to be "applicable" in a specific dispute, that specific dispute must,
simultaneously;
 • 1. Not fall within public authority,
 • 2. Remain within the scope of this provision in terms of persons,
 • 3. Remain within the scope of this provision in terms of subject matter,
 • 4. The individual to whom the disputed measure is attributed must be
considered the addressee of this provision.
Right of Establishment: Scope in
Terms of Person

 In order to fall within the scope of the right of establishment provision in

terms of individuals;
 • One must be either a "Union citizen" and "self-employed"
 or
 • a "Union legal person."
Right of Establishment: Scope in
Terms of Person

 The term «self-employed»

 • is a concept in EU law.
 The definition of the term «self-employed»
 • Formal aspect
 • Economic aspect
Right of Establishment: Scope in
Terms of Person

 The definition of the term «self-employed» / Formal aspect

 • A person;
 • who, in terms of selecting the relevant activity, working conditions, and
remuneration,
 • is outside any kind of dependency relationship,
 • providing services solely
 • under his/her own responsibility
 • in return for a directly and fully paid wage.
Right of Establishment: Scope in
Terms of Person

 The definition of the term «self-employed» / Economic aspect

 • A person,
 • except for activities that are considered completely marginal and ancillary,
 • should only be engaged in or wish to engage in effective and genuine
(economic) activities.
Right of Establishment: Scope in
Terms of Person

The concept of «Union legal person»

 • A legal person;
 (i) established in accordance with the law of a Member State
 (ii) having its registered office, central administration, or principal place of
business within the Union
 is considered a "Union legal person."
Right of Establishment: Scope in
Terms of Person

"Union legal person"

 as long as it engages in genuine economic activity,
 may fall within the scope of the internal market freedoms (right of
establishment & free movement of services).
Right of Establishment: Scope in
Terms of Person

The scope of the right of establishment, in terms of person, is based on the

concept of "establishment,"
 • especially distinguished from the free movement of services.
The free movement of services, like the right of establishment,
 • grants rights to individuals such as "Union citizens" who are "self-employed"
 • as well as Union legal persons.
Right of Establishment: Scope in
Terms of Person

Right of establishment
 • If a Union citizen is self-employed or if a Union legal person is consistently
and permanently present in another Member State…
 • * "establishing a business"

Free movement of services

 • If a Union citizen is self-employed or if a Union legal person is irregularly
and temporarily present in another Member State…
 • * "providing services"
Right of Establishment: Scope in
Terms of Person

Within the framework of the right of establishment, both "primary" establishment

and "secondary" establishment may be considered.
 Example:
 • Dutch lawyer Mr. H., having decided to close his office in the Netherlands,
has opted to open an office in Belgium.
 • Dutch lawyer Mr. H., while keeping his office open in the Netherlands, has
decided to open an office in Belgium due to increased business potential.
Right of Establishment: Scope in
Terms of Subject Matter

 Economic Activity
 Cross-border Element
Right of Establishment: Scope in
Terms of Subject Matter

Economic Activity
 • The existence of establishment
 • The intention to establish
The CJEU mostly, does not deal separately with the element of economic
activity;
 • because this element overlaps with the definition of "self-employed."
Right of Establishment: Scope in
Terms of Subject Matter

The provision of the right of establishment,

 • applies when the specific case involves a cross-border element,
 • in other words, it cannot be applied to activities that are exclusively
confined to a single Member State in all aspects.
Right of Establishment: Restrictions

Whether there is a "restriction" concerning the provision of the right of

establishment (Article 49 of the TFEU) requires seeking answers to the following
questions regarding the disputed measure:
 • 1. Does the disputed measure constitute direct discrimination on the basis
of citizenship/place of establishment?
 • 2. Does the disputed measure constitute indirect discrimination on the
basis of citizenship/place of establishment?
 • 3. Does the disputed measure restrict the freedom?
Prohibition of Direct Discrimination on the
Basis of Citizenship

 • Discrimination directly based on citizenship/place of establishment is

prohibited, as a rule.
 • If the criterion of differentiation is "citizenship" or "place of establishment"
Prohibition of Direct Discrimination on the
Basis of Citizenship

Reyners Case (1974)

 • Mr. R, a Dutch national, has completed his legal education in Belgium.
 • According to Belgian law, only Belgian citizens can become lawyers.
 • When Mr. R sought to register with the Belgian Bar, his request was denied
based on this rule.
• How will Union law be applied to this case?
Prohibition of Indirect Discrimination on the
Basis of Citizenship

Indirect discrimination based on citizenship is prohibited, as a rule.

 • If the distinguishing criterion is not "citizenship" or "place of
establishment," but it results in effects as if these criteria were being used...
 • If the national measure disadvantages immigrants or foreign legal persons
rather than citizens or domestic legal persons in the majority of cases...
Prohibition of Indirect Discrimination on the
Basis of Citizenship

Talotta Case (2005-2007)

 • Mr. T resides in Luxembourg.
 • Mr. T operates a restaurant in Belgium.
 • Mr. T was late in submitting his tax return for the year 1992.
 • The competent authorities have imposed a certain tax debt on Mr. T based
on a minimum taxable amount.
 • The minimum taxable amount is only applied to non-resident taxpayers.
 • How will Union law be applied to this case?
Prohibition of Indirect Discrimination on the
Basis of Citizenship

Article 49 of the TFEU: Scope

 • Scope in terms of individuals: Union citizen + Self-employed
 • Scope in terms of subject matter: Right of establishment / Cross-border element
Article 49 of the TFEU: Restriction
 • Indirect discrimination on the basis of citizenship
Article 49 of the TFEU: Justification
 • Exceptions in the founding treaties + Primacy of overriding reasons relating to the public
interest + Compliance with the principle of proportionality
 • (In the specific dispute, the effectiveness of fiscal supervision has been utilized, but
compliance with the principle of proportionality has not been achieved...)
Conclusion
 • The relevant rule becomes inapplicable as it contravenes EU law.
Prohibition of Restrictions on Free
Movement
The restriction of freedom is prohibited, as a rule.
 • Specifically, if a measure, without directly or indirectly discriminating on
the basis of citizenship/place of establishment, limits freedom, in other
words, if it makes access to the market for establishment in a Member State
more difficult, it restricts freedom.
 The prohibition of restricting freedom appears to have two separate
formulations regarding its use against destination and origin states.
Prohibition of Restrictions on Free
Movement
Against the destination state…
 • Measures that make it difficult or less attractive for an individual to
exercise the freedom of establishment (prohibited)
Against the origin state…
 • Measures that deter or prevent an individual from leaving their country of
origin (prohibited)
 • Measures that disadvantage an individual for exercising their right to
freedom of movement (prohibited)
Prohibition of Restrictions on Free
Movement
Gebhard Case (1994-1995)
 • Mr. G, a German national, has been registered as a lawyer with the Stuttgart
Bar since 1977.
 • Mr. G settled in Italy in 1978.
 • Between 1978 and 1989, Mr. G continued his professional activity as a partner
or associate member in law firms.
 • Mr. G established his own law firm in Italy in 1989.
 • Since 1992, Mr. G has been using the title "avvocato," which means lawyer in
Italian.
 • The Milan Bar Council imposed a 6-month professional suspension on Mr. G for
practicing his profession permanently in Italy with this title without being
registered with the bar.
• How will Union law be applied to this case?
Prohibition of Restrictions on Free
Movement
Article 49 of the TFEU: Scope
 • Scope in terms of individuals: Union citizen + Self-employed
 • Scope in terms of subject matter: Right of establishment / Cross-border
element
Article 49 of the TFEU: Restriction
 • Restriction of freedom: national measures conducive to making the exercise of
fundamental freedoms more difficult or less attractive
Article 49 of the TFEU: Justification
 • Exceptions in the founding treaties + Primacy of overriding reasons relating to
the public interest + Compliance with the principle of proportionality
 • (No comment has been made regarding justification in the specific dispute.)
Prohibition of Restrictions on Free
Movement
Saillant Case (2002-2004)
 • According to French law, taxpayers wishing to move their residence outside
France are taxed on unrealized capital gains on company shares.
 • Taxpayers are taxed on capital gains if they do not move their residence
outside France when the capital gain occurs.
 • French national Mr. L was taxed on unrealized capital gains on shares of
company X when he moved his residence to Belgium to start a new business.
• How will Union law be applied to this case?
Prohibition of Restrictions on Free
Movement
Article 49 of the TFEU: Scope
 • Scope in terms of individuals: Union citizen + Self-employed
 • Scope in terms of subject matter: Right of establishment / Cross-border element
Article 49 of the TFEU: Restriction
 • Restriction of freedom: measures that deter or prevent an individual from leaving their
country of origin
Article 49 of the TFEU: Justification
 • Exceptions in the founding treaties + Primacy of overriding reasons relating to the public
interest + Compliance with the principle of proportionality
 • (In the specific dispute, prevention of tax evasion has been used, but compliance with the
principle of proportionality has not been achieved...)
Conclusion
 • The relevant rule becomes inapplicable as it contravenes EU law.
Free Movement of Services: Scope

• For the provision of the free movement of services (Article 56 of the TFEU) to
be "applicable" in a specific dispute, that specific dispute must, simultaneously;
 • 1. Not fall within public authority,
 • 2. Remain within the scope of this provision in terms of individuals,
 • 3. Remain within the scope of this provision in terms of subject matter,
 • 4. The individual to whom the disputed measure is attributed must be
considered the addressee of this provision.
Free Movement of Services: Scope in
Terms of Person
To fall within the scope of the provision of the free movement of services in
terms of individuals;
 • as a service provider, one must be either a "Union citizen" and "self-
employed" or a "Union legal person"
 • as a service recipient, one must be either a "Union citizen" or a "Union
legal person"
Free Movement of Services: Scope in
Terms of Person
Right of Establishment
 • If a Union citizen is self-employed or if a Union legal person is consistently
and permanently present in another Member State...
 • * "establishing a business"
Free Movement of Services
 • If a Union citizen is self-employed or if a Union legal person is irregularly
and temporarily present in another Member State...
 • * "providing services"
Free Movement of Services: Scope in
Terms of Subject Matter

 Economic Activity
 Cross-Border Element
Free Movement of Services: Scope in
Terms of Subject Matter
Economic Activity
 • Trade in services
 • "Service"
 • generally refers to activities performed for remuneration,
 • includes industrial and commercial activities as well as activities related
to trades and professions.
Free Movement of Services: Scope in
Terms of Subject Matter
The provision on the free movement of services,
 • applies when the specific case involves a cross-border element,
 • in other words, it cannot be applied to activities exclusively confined to a
single Member State in all aspects.
Free Movement of Services: Scope in
Terms of Subject Matter
Alpine Investments Case (1993-1995)
 • Ms. B, a German national, resides in Germany and operates her own
business.
 • Ms. B provides services to clients located in Austria via telephone from
Germany.
 • Can Article 56 of the TFEU be applied here? (Is there a cross-border
element?)
Free Movement of Services: Restrictions

Regarding the provision of the free movement of services (Article 56 of the

TFEU), determining whether there is a "restriction" involves answering the
following questions regarding the disputed measure in the specific dispute:
 • 1. Does the disputed measure create direct discrimination based on
citizenship/place of establishment?
 • 2. Does the disputed measure create indirect discrimination based on
citizenship/place of establishment?
 • 3. Does the disputed measure restrict freedom?
Prohibition of Direct Discrimination
Based on Citizenship
 • Direct discrimination based on citizenship/place of establishment is
generally prohibited.
 • If the criterion of distinction is "citizenship" or "place of establishment"...
Prohibition of Direct Discrimination
Based on Citizenship
Van Adverteerders Case (1985-1988)
 • According to Dutch law,
 • Broadcasting radio and television programs containing advertisements in
Dutch or with subtitles in this language to the local population via cable from
other Member States is prohibited.
 • However, national channels (companies) are allowed to broadcast such
advertisements.
 • Company X, based in Belgium, broadcasts radio programs containing Dutch
advertisements in the Netherlands.
• How will Union law be applied to this case?
Prohibition of Indirect Discrimination
Based on Citizenship
 • Indirect discrimination based on citizenship is generally prohibited.
 • If the criterion of distinction is not "citizenship" or "place of establishment"
but it results as if these criteria were in place...
 • If a national measure operates to the disadvantage of immigrants rather
than citizens in the vast majority of cases or to the disadvantage of foreign
legal persons rather than domestic legal persons...
Prohibition of Indirect Discrimination
Based on Citizenship
Case Commission v Italy (2001-2003)
 • According to certain rules of some municipalities in Italy,
 • Individuals aged over 60 and residing in the area of authority to which
these cultural areas belong benefit from a reduced fee for entry to museums,
monuments, galleries, archaeological excavations, and public monuments
classified as parks and gardens.
 • According to the Commission, this rule is incompatible with the free
movement of services.
 • Therefore, the Commission has brought infringement proceedings against
Italy.
• How will Union law be applied to this case?
Prohibition of Indirect Discrimination
Based on Citizenship
TFEU Article 56: Scope of Application
 Scope from person: Union citizen + Recipient of services
 Scope from subject: Service / Cross-border element
TFEU Article 56: Restriction
 Indirect discrimination based on citizenship
TFEU Article 56: Justification
 Exceptions in the founding treaties + Overriding requirements of public interest +
Compliance with the principle of proportionality
 (In the specific dispute, the preservation of the integrity of the tax system was
invoked but deemed irrelevant…)
Conclusion
 The relevant rule violates EU law, hence Italy has violated EU law.
Prohibition of Restrictions on Free
Movement
Restriction of Freedom, as a rule, is prohibited.
 • Specifically, if a measure does not directly or indirectly discriminate based
on citizenship/place of establishment but restricts freedom, in other words, if
it makes access to the service market of a Member State more difficult, it
constitutes a restriction of freedom.
 • The prohibition of restricting freedom appears to have two distinct
formulations in terms of its application to the destination and origin states.
Prohibition of Restrictions on Free
Movement
Against the destination/host state...
 Measures that make it difficult or less attractive for a citizen of a Member
State providing/receiving services to exercise their freedom of movement
(prohibition)
Against the home state...
 Measures that prevent or deter a person from leaving their home country
(prohibition)
 Measures that disadvantage a person due to the exercise of their right to
freedom of movement (prohibition)
Substantive Law of the EU
2023-24 SPRING SEMESTER

0
 Substantive Law-Free Movement of
Capital
Application Field of Free Movement
of Capital Provisions
 Scope and Limitations
 Justification

1
Application Field of Free Movement
of Capital Provisions
Preliminary Observations:
Capital and Payments
• Free Movement of Capital & Free Movement of Payments
Within the EU & Outside the EU
• Free Movement of Capital between Member States & Free
Movement of Capital between Member States and Third Countries
Direct Effect
• Direct Effect of the Free Movement of Capital Provision / Maastricht
Treaty (1993)

2
 Does the measure in question constitute a restriction on the relevant freedom in the dispute?
(Does the measure engage in direct or indirect discrimination based on citizenship/origin or
restrict freedom?)

Indirect
Direct Discrimination Restriction of Freedom NO
Discriminnation

It can only be justified It can be justified based on the

based on the exceptions exceptions in the founding
in the founding treaties treaties + Overriding Reasons
and if it complies with Relating to the Public Interest
the principle of + and if it complies with the
proportionality principle of proportionality
Free movement
of capital has
not been
If it can be justified+proportionate…
violated

3
Free Movement of Capital: Scope
For the provision of the free movement of capital to be "applicable"
in a specific dispute, that specific dispute must meet the following
conditions simultaneously:
• 1. It must fall within the scope of this provision in terms of the
person involved, (personal scope)
• 2. It must fall within the scope of this provision in terms of the
subject matter,
• *3. The person to whom the disputed measure is attributed must be
considered as the addressee of this provision.
*This aspect will not be addressed in this course.

4
Free Movement of Capital: Personal
Scope
Free Movement of Capital: Scope in Terms of
Person (Personal Scope)
Who can benefit from the provisions of the free
movement of capital?
• "everyone" can benefit as long as they are
relevant,
• No specific "nationality" or "status" is required.
5
Scope in Terms of Subject Matter
Free Movement of Capital: Scope in Terms
of Subject Matter
Economic Activity
Cross-border Element

6
Economic Activity
Economic Activity
• Movement of capital
• The CJEU has not defined it.
• According to doctrine, however, capital movements are
financial transactions aimed not at remuneration for goods or
services but primarily at making investments and earning
profits.
Capital movements consist of all types of unilateral financial
transactions.
7
Economic Activity
In determining the concept of "capital," the CJEU considers the list of what
constitutes capital in the Annex to Directive 88/361:
• direct investments,
• investments in real estate,
• transactions related to securities commonly traded on the capital markets,
• transactions in units of collective investment undertakings,
• transactions related to securities and other instruments commonly traded on the
money markets.

8
Economic Activity
+ • Transactions concerning current and savings accounts in financial institutions,
credit transactions related to commercial transactions or services provided by a
resident,
• Short-term loans and financial credits,
• Collateral, other guarantees, and liens,
• Transfers in forward sales and insurance contracts,
• Personal capital movements,
• Concrete export and import of financial assets,
• Other capital movements.

9
Economic Activity
Fidium Finanz Case (2004-2006)
• Company X, based in Switzerland, provides commercial loans to clients in
Germany.
• According to German law, non-EU companies must obtain prior permission to
provide commercial loans to residents in Germany.
• A company can obtain this permission only if its central administration or
branch is located in Germany.
• However, Company X does not have such an establishment in Germany.
• Therefore, German authorities imposed a ban on Company X's activities in
Germany immediately after becoming aware of its operations.
• How will the incident be classified under Union law?
10
Economic Activity
Which free movement will be applied?
• Free movement of capital?
• Free movement of services?
According to the CJEU:
• Free movement of services
• Because the (main) purpose of the disputed measure is to regulate
the services.
• Conclusion: A company not from a Member State will not be able to
rely on this freedom.

11
Cross Border Element
The provision for the free movement of capital:
• applies when the specific case involves a
cross-border element,
• in other words, it cannot be applied to
activities confined entirely within one Member
State.

12
Cross Border Element
Commission v Belgium (1998-2000)
• Belgium has prohibited residents in its country from
acquiring stocks and bonds issued outside the country.
• The Commission has brought infringement proceedings
against Belgium, alleging that this regulation violates the
free movement of capital.
• Can TFEU Art. 63 be applied here? (Is there a cross-border
element?

13
Free Movement of Capital:
Restrictions
Determining whether there is a "restriction" under the provision
for the free movement of capital (TFEU Article 63) requires
addressing the following questions regarding the disputed
measure:
• 1. Does the disputed measure directly discriminate on the basis
of citizenship?
• 2. Does the disputed measure indirectly discriminate on the
basis of citizenship?
• 3. Does the disputed measure restrict freedom of movement?
14
Prohibition of Direct Discrimination
Direct discrimination on the basis of citizenship is, as a rule, prohibited.
Albore Case (1998-2000)
• Mr. H, a German citizen, has purchased two plots of land from an area
designated as having military significance in Italy.
• According to Italian law, all foreigners, except Italian citizens, must apply
for permission before purchasing land from an area deemed to have
military significance.
• Mr. H was unable to register the two plots of land he purchased during an
auction held by Italian authorities in his name, citing lack of prior
permission.
• How will Union law be applied to this case?
15
Prohibition of Direct Discrimination
TFEU Article 63: Scope of Application
(Personal) scope: Everyone
(Subject matter) scope: Capital / Cross-border element
TFEU Article 63: Restriction
Direct discrimination based on nationality (origin)
TFEU Article 63: Justification
Only with the exemptions in the founding treaty + Compliance with
the principle of proportionality

16
Prohibition of Indirect Discrimination
 Indirect discrimination on the basis of citizenship
is, as a rule, prohibited.
If a measure does not discriminate based on
citizenship but in the majority of cases, if the national
measure primarily operates against imported capital
or immigrant investors over domestic capital or
citizen investors...

17
Prohibition of Indirect Discrimination
SEGRO Case (2016-2018)
• Mr. H is a citizen of Austria and resides in Austria.
• Mr. H acquired usufruct rights on two agricultural land parcels in Hungary
before April 30, 2014, and registered them.
• The Hungarian administrative authority removed these usufruct rights from the
registry on October 12, 2015.
• Because according to Hungarian law: "... any usufruct rights existing before
April 30, 2014, that do not rely on a contract between close members of the same
family, are terminated."
• How will Union law be applied to this case?

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Prohibition of Indirect Discrimination
Article 63: Scope of Application
Personal scope: Everyone
Subject-matter scope: Capital / Cross-border element
Article 63: Restriction
Restriction based on indirect discrimination on the basis of nationality (origin)
Article 63: Justification
Exemptions in the treaty + Overriding reasons relating to the public interest + Compliance with
the principle of proportionality
(In the specific case, farming on agricultural land was utilized, but it failed to comply with the
principle of proportionality...)
Conclusion: The relevant rule is inapplicable as it contravenes EU law.
19
Prohibition of Restrictions on Free
Movement
Restrictions on free movement are generally prohibited.
Essentially, if a measure does not directly or indirectly
discriminate on the basis of citizenship but restricts
freedom of movement, in other words, if it makes, access
to the capital market of a Member State more difficult, it
constitutes a restriction on freedom of movement.
These kind of measures are applied without distinction
but are liable to limit or deter investors or render
investment less attractive.
20
Prohibition of Restrictions on Free
Movement
Commission v Portugal Case (1998-2002)
• According to Portuguese law:
• If a shareholder of certain companies wishes to own more than a
certain percentage (for example: 20%) of shares, they must obtain
prior authorization from the relevant national authority.
• The Commission has brought infringement proceedings against
Portugal, alleging that this regulation is contrary to the free
movement of capital.
• How will Union law be applied to this case?
21
Prohibition of Restrictions on Free
Movement
Article 63: Scope of Application
• (Personal) scope: Everyone
• (Subject matter) scope: Capital / Cross-border element
Article 63: Restriction
• Restriction of freedom: Measures that discourage or deter a person from investing in another Member
State, or make such an investment less attractive
Article 63: Justification
• Exceptions in the founding treaty + overriding reasons of public interest + compliance with the
principle of proportionality
• (In the specific dispute, the need to protect the country's financial interests was used, however, such
an economic reason has not been accepted as a legitimate reason.)
Conclusion: Portugal is in breach of EU law.

22
Justification
Common Findings Regarding "Justification"
 Legitimate Reasons
• Exceptions in the Founding Treaties
• Overriding Reasons relating to the Public
Interest
 Principle of Proportionality

23
Justification
Restrictions on the free movement of capital are, as a rule, prohibited, but can be
justified under certain conditions.
• National measures must be proportionate based on these legitimate reasons.
Measures that directly discriminate on the basis of citizenship (/center) in relation
to the free movement of persons and services
• can only be justified based on exceptions in the founding treaties.
Measures that indirectly discriminate or restrict freedom of movement in relation
to the free movement of capital
• can be justified based on exceptions in the founding treaties or on "overriding
reasons relating to the public interest" recognized by the CJEU.

24
Justification
Exceptions in the founding treaties:
• are limited in number.
"Overriding reasons relating to the public
interest" recognized by the CJEU:
• are unlimited in number.
Exceptions are narrowly interpreted.
25
Justification: Exceptions in the
founding treaties
Exceptions in the founding treaties:
- Application of the relevant provisions of member states’ tax laws which
distinguish between taxpayers
- Taking all requisite measures to prevent infringements of national law and
regulations, in particular in the field of taxation and the prudential supervision of
financial institutions
- Laying down procedures for the declaration of capital movements for purposes
of administrative or statistical information
- Take measures which are justified on grounds of public policy or public
security.

26
1- Application of the relevant provisions of
member states’ tax laws which distinguish
between taxpayers
To be Successfully used, the Discrimination in
Treatment:
• Must relate to objectively incomparable situations,
• Example: in terms of residence or the location
where capital is invested
• Or must be justified by a compelling reason of
public interest, such as the preservation of the
integrity of the tax system.
27
2- Taking all requisite measures to
prevent infringements of national law
To be successfully used:
• Ensure the effectiveness of fiscal supervision
• Combat certain illegal activities such as tax
evasion
• ...
• Must be justified by a overriding reason
related to the public interest.
28
3- Laying down procedures for the
declaration of capital movements for purposes
of administrative or statistical information

It is an exception that has never been used before.

29
4- Public Policy or Public Security
Discretionary Power:
• Member States ‘in light of national needs’ have a certain
discretionary power to determine what constitutes public
order.
In Essence:
• Is there a real and sufficiently serious threat to one of the
fundamental interests of society?

30
Public Policy or Public Security
Albore Case (1998-2000)
• Mr. H, a German citizen, has purchased two plots of land in an area
designated as of military importance in Italy.
• According to Italian law: All foreigners, except Italian citizens, must
apply for permission before purchasing land in a militarily significant
area.
• Mr. H was unable to register the two plots of land he purchased
during an auction held by Italian authorities in his name, because he
did not obtain prior permission.
• How will Union law be applied to this case?

31
Public Policy or Public Security
Article 63: Restriction
• Direct discrimination based on citizenship (origin)
Article 63: Justification
• Compliance with public order and security + Compliance
with the principle of proportionality
• Is there a real and sufficiently serious threat to one of the
fundamental interests of society?

32
Justification: Overriding Reasons
Relating to the Public Interest
Overriding Reasons Relating to the Public Interest:
• Effectiveness of fiscal supervision
• Prevention of tax evasion
• Combatting tax avoidance
• Preservation of the integrity of the tax system
• Ensuring predictability and transparency of the mortgage system
• Requirements related to social housing policy and its financing in a member state
• Risk of serious weakening of the financial balance of social policies
• Resistance against pressure on land
• Environmental conservation
• Ensuring the provision of a service related to general interest, such as universal postal service….

33
Justification: Principle of
Proportionality
Principle of Proportionality
It consists of two elements:
1- Suitability element
Appropriateness requires a causal link between the means (contentious measure)
and the pursued aim (legitimate reason).
2- Necessity element
Necessity pertains to the question of whether the means (contentious measure)
are necessary to achieve the pursued aim (legitimate reason).
--- Is it possible to achieve the same aim with another measure that restricts free
movement less?
34
Justification: Principle of
Proportionality
Konle Case (1999)
• According to Austrian law, a piece of land can only be
purchased with the necessary administrative permission.
• According to Austria, this rule is based on rural planning
and urban planning principles.
• Mr. B, a German citizen, wants to buy a farm from Austria,
but -as a Union citizen- he does not want to obtain
administrative permission.
• How will Union law be applied to this case?
35
Justification: Principle of
Proportionality
Article 63: Scope of Application
Article 63: Limitation
• Restriction of freedom: Measures intended to dissuade or deter a person
from investing in another Member State or to make such investment less
attractive.
Article 63: Justification
• Compliance with rural and urban planning + Compliance with the
principle of proportionality --- Can (less) restrictive measures be taken?
• Procedures for notification may be introduced (instead of permission)…
• + In case of violation, it may be subject to a sanction such as a fine.
36