Sunday, 6 April 2008

EU TFEU: Freedom of establishment derogation: Exercise of official authority

The freedom of establishment within the European Community (European Union) is not limitless. There are legitimate derogations or exemptions, of which the exercise of official authority is one.

We look at what, if anything, the EU’s Treaty of Lisbon changes compared to the current Treaty establishing the European Community, and if the draft Constitution and the Constitutional Treaty would have made any difference.

A case note offers an example of practical considerations.



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In the Treaty of Lisbon (ToL) the intergovernmental conference briefly mentions Article 45 of the Treaty establishing the European Community (TEC), renamed the Treaty on the Functioning of the European Union (TFEU). See Official Journal, OJ, 17.12.2007 C 306/54:

53) In Article 45, second paragraph, the words ‘The Council may, acting by a qualified majority on a proposal from the Commission,’ shall be replaced by ‘The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may’.

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For contents and meaning we turn to the latest consolidated version of the current treaties, the TEU and the TEC, in OJ 29.12.2006 C 321 E/60:

Article 45 TEC

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.

The Council may, acting by a qualified majority on a proposal from the Commission, rule that the provisions of this Chapter shall not apply to certain activities.

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To arrive at a consolidated Lisbon Treaty version of an Article requires that we check if one or more of the following apply: express amendments, horizontal amendments, renumbering of the provision and renumbering of possible referrals.

The location of the Article is thrown in as a matter of reading convenience in a post read in isolation.

Thus, we should end up with the following Article, consolidated according to the Treaty of Lisbon:

Part Three ‘Policies and internal actions of the Union’

Title III (renumbered Title IV) ‘Free movement of persons, services and capital’

Chapter 2 ‘Right of establishment’

Article 45 TFEU (ToL), renumbered Article 51 TFEU

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.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may rule that the provisions of this Chapter shall not apply to certain activities.

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Article III-24 of the draft Treaty establishing a Constitution for Europe introduced ‘European laws or framework laws’ (co-decision, ordinary legislative procedure) into the second paragraph, arguably in plainer language (OJ 18.7.2003 C 169/32):

Article III-24 Draft Treaty

This Subsection 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.

European laws or framework laws may exempt certain activities from application of this Subsection.

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Article III-139 of the Treaty establishing a Constitution for Europe replaced the word ‘exempt’ by ‘exclude’, but made no other changes (OJ 16.12.2004 C 310/62).

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We see that the IGC 2007, by-passing such ‘cosmetic’ changes in such cases, manages to keep the number and volume of Lisbon Treaty amendments down, by reverting to the TEC text.

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Suitable further reading is offered by Peer Zumbansen in a note on the case C-283/99 ‘No Need To Be Italian: ECJ Hands Down Third Case Related To Nationality Requirements For Private Security Guards’, published in the German Law Journal Vol. 2 No. 10 – 15 June 2001, and available on the web:

http://www.germanlawjournal.com/print.php?id=29

Freedom of movement of workers, freedom of establishment and the limits of derogations are discussed.


Ralf Grahn


P.S. Finally the consolidated Lisbon Treaties are due to arrive, 15 April 2008. On Europe day, 9 May 2008 they are published in book form.