Monthly Nutshell: What is Freedom of Establishment? (EU Law)

1 comment, posted on November 28, 2012

This month in our series of monthly bitesize extracts from Nutshells revision guides,  we have an outline of the Freedom of Establishment in EU law.

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Background information

The right of establishment, necessary to exercise a profession or to render a service, is not confined to individuals. It is available to companies and bodies corporate which are treated like individuals. The immigration rules are broadly like those that apply to “workers”, but the full enjoyment of “the right of establishment” depends upon the recognition of professional qualifications and this, in turn, depends upon the progress of harmonisation of national laws in this field.

There is no definition of the group of persons entitled to the right of establishment. In distinction from “workers” (who are salaried) art.49 TFEU contemplates a group of people who, in principle, pursue activities as self- employed persons or set up and manage undertakings within the meaning of art.54 TFEU.

Such persons belong, as a rule, to recognised professions whose status and membership is regulated by law. Hence the need of harmonising the national rules and regulations to facilitate their mobility within the Community and, in the first place, to remove restrictions on the ground of nationality and other peculiar national grounds (see Case 213/89 R. v Secretary of State for Transport, Ex p. Factortame).

To carry out its mandate the Council adopted in 1962 two General Programmes for the:

(i) Abolition of Restrictions on Freedom to provide Services; and

(ii) on Freedom of Establishments;

and in subsequent years has embarked on extensive legislation in these fields. However, as the Commission recorded in its White Paper on completing the internal market, the results as of 1987 were still unsatisfactory. Therefore the Commission recommended action in specific areas including a more efficient policing and enforcement system, resulting in measures to suspend the enforcement of any national legislation which manifestly infringes Community law.

Examples and cases

Independently of this harmonisation policy, the ECJ was able to remove some of the restrictions in accordance with the principle of non-discrimination. Thus it has held that a Dutch national resident in Belgium with the appropriate qualifications to practice law could not be debarred from his professional activity on the ground that, according to Belgian law, a lawyer must be a Belgian national (Case 2/74 Reyners v Belgian State). Similarly the Court ruled in the case of a Belgian lawyer (Case 71/76 Thieffry v Conseil de l’Ordre des Avocats á la Cour de Paris) and a British architect qualified to practise in France (Case 11/77 Patrick v Ministère des Affaires Culturelles), a Dutch motor insurance claims investigator in Italy (Case 90/76 Van Ameyde v UCI).

The principle of non-discrimination on the ground of nationality was further extended when the Court held that residential qualification of a properly qualified person was not a legitimate condition of his exercising the profession.

However, conviction for the illegal exercise of the veterinary profession was upheld in the case of a person qualified in Italy who, having become naturalised in France, attempted to practise on his own without first obtaining the requisite French qualifications. Such a bar was considered justified pending the implementation of the harmonising directives (Case 136/78 Ministère Public v Auer) but no longer after. In the recent Case 55/94 Reinhard Gebhard v Consiglio dell’Ordine degli Avvocati e Procuratori di Milano, the ECJ brought the rules relating to establishment into line with those relating to services.

In the absence of a Treaty, definition of the class of persons entitled to the right of establishment was, and is likely to be, confronted with fringe “professions” including sports activities (Case 36/74 Walgrave and Koch v Association Union Cycliste Internationale). So far the Court has held that such activities may come under the non-discrimination principle if they entail “economic activities”. Amateur activities seem unaffected by Community rules. In Case 415/93 Bosman the ECJ held that arts 45 and 56 TFEU can, in certain circumstances, impose obligations on individual football clubs and associations not to impose restrictions on the free movement of footballers.

This is an extract from Nutshells European Union Law by Mike Cuthbert, available from bookstores and Amazon.co.uk.

Nutshells and Nutcases are the original revision and starter guides with content from Sweet & Maxwell and Westlaw UK. Nutshells are an ideal starter guide to the subject, giving a full overview, while Nutcases give an in-depth case analysis of the facts, principles and decisions of the most important cases.

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