Friday, 18 April 2008

EU TFEU: Free movement of capital

The current Treaty establishing the European Community as well as the Treaty on the Functioning of the European Union (following from the Treaty of Lisbon) prohibit restrictions on the movement of capital and on payments between member states as well as between member states and third countries.



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We move to a Chapter 4 ‘Capital and payments’. Article 63 of the Treaty on the Functioning of the European Union (TFEU), is presented as amended by the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL) and provisionally consolidated by the Council of the European Union (document 6655/08; page 93), with the location of the provision added from the table of equivalences (page 460 to 462):

Part Three ‘Policies and internal actions of the Union’

Title IV TFEU ‘Free movement of persons, services and capital’

Chapter 4 ‘Capital and payments’

Article 63 TFEU
(ex Article 56 TEC)

1. Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.

2. Within the framework of the provisions set out in this Chapter, all restrictions on payments between Member States and between Member States and third countries shall be prohibited.

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The IGC 2007 made no specific amendment to Article 56 TEC. Cf. OJ 17.12.2007 C 306/55. The provision is only renumbered.

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The current key provision on capital and payments, Article 56 TEC, is found in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/63.

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The European Convention preferred a shorter version of the opening provision of Section 4 ‘Capital and payments’ in the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/34):

SECTION 4
Capital and payments

Article III-45 Draft Constitution

Within the framework of this Section, restrictions both on the movement of capital and on payments between Member States and between Member States and third countries shall be prohibited.

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The IGC 2004 adopted the wording of the draft in Article III-156 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/66).

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We see that no substantial change has been adopted during the various stages of the treaty reform process after the Treaty of Nice, but the wording proposed by the European Convention and agreed by the IGC 2004 would arguably have been more elegant.

In this, as in many other cases, the IGC 2007 decided to save ink by preserving the current wording when the reasons for change would have been purely aesthetic.

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Some suggestions for further reading, first two standard books:

Josephine Steiner, Lorna Woods and Christian Twigg-Flesner: EU Law (Oxford University Press, Ninth Edition, 2006), Chapter 16 Free movement of payments and capital (pages 344-354)

Paul Craig and Gráinne de Búrca: EU Law, Text, Cases, and Materials (Oxford University Press, Fourth Edition, 2007), page 723 to 727 in Chapter 20 Free movement of capital and economic and monetary union

Then a few web resources:

The Commission’s introductory web page ‘Free movement of capital’ offers a quick overview and additional links (last updated 30 May 2007):

http://ec.europa.eu/internal_market/capital/index_en.htm

The web page ‘Treaty provisions’ presents the basic rules and further links (last update 27 August 2007):

http://ec.europa.eu/internal_market/capital/framework/treaty_en.htm

The European Parliament fact sheet 3.2.4 ‘Free movement of capital’ is an alternative presentation of the basics (last updated 25 October 2006):

http://www.europarl.europa.eu/facts/3_2_4_en.htm

The Commission’s Scadplus pages offer summaries or links to introductory pages on European Community legislation. In this case the starting point could be the web page ‘Single market for capital’ with more than thirty links on different aspects (no date):

http://europa.eu/scadplus/leg/en/s70001.htm

EU Law Blog has three posts on recent ECJ cases archived under ‘Capital: Free movement’:

http://eulaw.typepad.com/eulawblog/free_movement_of_capital/index.html

An example of the Court of Justice’s reasoning about the relationship between the provision of services and free movement of capital is Case C-452/04:

http://curia.europa.eu/jurisp/cgi-bin/gettext.pl?where=&lang=en&num=79938996C19040452&doc=T&ouvert=T&seance=ARRET


Ralf Grahn