The aim of the European Community (European Union) Procurement Directive to achieve open, fair and taxpayer-friendly procedures in the internal market can collide with governments’ concerns for secrecy, special security measures or other essential state interests.
We look at how the Procurement Directive caters for governments’ security concerns. This leads us to the treaty rules governing the internal market and the scope for derogations. Finally, we point to proposed legislation concerning defence and security procurement.
***
Procurement Directive Article 14
Article 14 of the Procurement Directive 2004/18/EC sets out exceptions to the application of the Directive on grounds of secrecy, security and other essential interests of an EU member state:
Article 14
Secret contracts and contracts requiring special security measures
This Directive shall not apply to public contracts when they are declared to be secret, when their performance must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in the Member State concerned, or when the protection of the essential interests of that Member State so requires.
***
Three grounds for exceptions
Article 14 set out three grounds for exempting public contracts from the scope of the Directive:
1) Declared secret
2) Special security measures in accordance with the laws, regulations or administrative provisions in force in the member state
3) Protection of essential interests of the member state
As always, exceptions are interpreted narrowly. If challenged, the exception has to be justified.
***
Defence procurement
Given the grounds above, we naturally think about military procurement, but we are reminded of special rules pertaining to procurement of weapons and the like.
In an earlier post, we looked at the application of the Procurement Directive to defence procurement, but subject to the exceptions made under Article 296 of the Treaty establishing the European Community (TEC). We also discussed ongoing efforts to create a legal regime for defence procurement in the internal market. As a reminder, here is the basic provision of the Procurement Directive:
Article 10
Defence procurement
This Directive shall apply to public contracts awarded by contracting authorities in the field of defence, subject to Article 296 of the Treaty.
***
More than defence procurement
We saw that the Procurement Directive applies to defence procurement, unless a justified exception is made under Article 296 TEC.
The existence of Article 10 leads us to conclude that Article 14 of the Procurement Directive 2004/18/EC is meant to have reasons of its own.
Cf. ECJ C-252/01 Commission v. Belgium.
***
Public security exemption explained
Recital 6 of the Procurement Directive mentions public security among grounds for exceptions to the application of the Directive, if the measures are necessary and taken in conformity with the treaty:
(6) Nothing in this Directive should prevent the imposition or enforcement of measures necessary to protect public policy, public morality, public security, health, human and animal life or the preservation of plant life, in particular with a view to sustainable development, provided that these measures are in conformity with the Treaty.
***
State security or secrecy
Recital 22 of the Procurement Directive explains the intention to exempt procurement procedures from the application of the Directive on grounds relating to state security or secrecy:
(22) Provision should be made for cases in which it is possible to refrain from applying the measures for coordinating procedures on grounds relating to State security or secrecy, or because specific rules on the awarding of contracts which derive from international agreements, relating to the stationing of troops, or which are specific to international organisations are applicable.
***
Commission Guide: Derogations
The Commission’s Guide to the Community Rules on public supply contracts presented the secrecy and security exceptions according to the old Directive 93/36/EEC and added its interpretation of the scope of these exceptions (page 20). Note that the TEC Articles mentioned have been renumbered:
Lastly, the Directive excludes public supply contracts from its scope:
· where the supplies are declared secret; or
· where their performance must be accompanied by special security measures in accordance with the provisions laid down by law, regulation or administrative action in force in the Member State concerned; or
· where the protection of the basic interests of that State’s security so requires.
These last three exclusions from the Directive give concrete expression, in the public procurement field, to the powers already reserved for the Member States by Article 36 of the EC Treaty, which allows them in certain cases to derogate from the prohibitions on import and export restrictions enshrined in Articles 30 and 34 respectively. These three exclusions from the Directive must be interpreted as strictly and according to the same criteria as exceptions under Article 36.
***
Free movement of goods and derogations
In the case of supply contracts, we have now reconnected with the treaty framework for the free movement of goods. The current Articles 28 and 29 set out the basic prohibitions against restrictions on imports/exports and all measures having equivalent effect:
Article 28 TEC (ex Article 30)
Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.
Article 29 TEC (ex Article 34)
Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.
The current Article 30 TEC lays down the grounds for derogations and their limits. These restrictions shall not constitute a means of arbitrary discrimination or a disguised restriction on trade between member states.
Article 30 as published in the latest consolidated version of the treaties, OJEU 29.12.2006 C321 E/53:
Article 30 TEC (ex Article 36)
The provisions of Articles 28 and 29 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.
***
Conclusion
Since secrecy, security and essential state interests apply to all types of contracts covered by the Procurement Directive, we may infer that parallel reasoning applies to derogations from all four internal market freedoms.
***
De lege ferenda
For more information on and discussion about security issues related to procurement as well as proposed legislation, you can turn to the Commission’s Defence package, which includes both military and other security issues. The Communication and the preparatory acts are available here:
http://ec.europa.eu/enterprise/defence/eu_defence_policy.htm
The main three documents are:
The Communication: A Strategy for a Stronger and more Competitive European Defence Industry
The proposed Directive on intra-EU transfers of Defence Products
The proposed Directive on Defence Procurement
Some comments on the proposals are included in the earlier blog post on defence procurement.
Ralf Grahn
Showing posts with label public security. Show all posts
Showing posts with label public security. Show all posts
Tuesday, 13 January 2009
Sunday, 20 April 2008
EU TFEU: Exceptions to free movement of capital
Article 58 of the Treaty establishing the European Community (TEC) provides for exceptions to the free movement of capital and payments, and these are taken over by the Treaty of Lisbon in Article 65 of the Treaty on the Functioning of the European Union (TFEU). The Lisbon Treaty provision adds a new possibility to take restrictive measures as regards third countries.
***
Article 65 of the Treaty on the Functioning of the European Union (TFEU) is presented as it stands after 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 94-95), 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 (ex Title III) ‘Free movement of persons, services and capital’
Chapter 4 ‘Capital and payments’
Article 65 TFEU
(ex Article 58 TEC)
1. The provisions of Article 63 shall be without prejudice to the right of Member States:
(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;
(b) to take 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, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.
2. The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with the Treaties.
3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 63.
4. In the absence of measures pursuant to Article 64(3), the Commission or, in the absence of a Commission decision within three months from the request of the Member State concerned, the Council, may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties in so far as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.
***
The intergovernmental conference (IGC 2007) mentions Article 58 of the Treaty establishing the European Community (TEC) in Article 2, point 61, of the Treaty of Lisbon (ToL). See OJ 17.12.2007 C 306/56:
61) In Article 58, the following new paragraph 4 shall be added:
‘4. In the absence of measures pursuant to Article 57(3), the Commission or, in the absence of a Commission decision within three months from the request of the Member State concerned, the Council, may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties insofar as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.’.
***
The latest consolidated version of the current Article 58 TEC looks like this (OJ 29.12.2006 C 321 E/64):
Article 58 TEC
1. The provisions of Article 56 shall be without prejudice to the right of Member States:
(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;
(b) to take 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, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.
2. The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with this Treaty.
3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 56.
***
The European Convention made only cosmetic amendments to Article 58 TEC in Article III-47 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/35).
***
Article III-158 of the Treaty establishing a Constitution for Europe replaced the word ‘steps’ of the draft Constitution with ‘measures’ as in the current Article 58 TEC, so only the added words in the phrase ‘provisions laid down by law or regulation’ in subparagraph 1(b) remained of the cosmetic changes proposed by the draft.
But the IGC 2004 made one substantial change by adding a fourth paragraph to Article III-158, reproduced below (OJ 16.12.2004 C 310/67):
Article III-158 Constitution
1. Article III-156 shall be without prejudice to the right of Member States:
(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;
(b) to take all requisite measures to prevent infringements of national provisions laid down by law or regulation, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.
2. This Section shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with the Constitution.
3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article III-156.
4. In the absence of a European law or framework law provided for in Article III-157(3), the Commission or, in the absence of a European decision of the Commission within three months from the request of the Member State concerned, the Council, may adopt a European decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Constitution insofar as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.
***
We see that the fourth paragraph added by the Treaty of Lisbon to what becomes Article 65 TFEU is in essence the corresponding Article III-158(4) of the Constitutional Treaty. The changes in wording relate to general terminological differences between the two treaties.
This ‘parentage’ is mentioned in the German and Finnish ratification bills and in the consultation paper of the Swedish government.
Thus, the amendment fell under the general provision of the IGC 2007 Mandate regarding amendments to the EC Treaty (Council document 11218/07, page 7, point 18): The innovations agreed in the 2004 IGC will be inserted into the Treaty by way of specific modifications in the usual manner.
Ralf Grahn
***
Article 65 of the Treaty on the Functioning of the European Union (TFEU) is presented as it stands after 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 94-95), 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 (ex Title III) ‘Free movement of persons, services and capital’
Chapter 4 ‘Capital and payments’
Article 65 TFEU
(ex Article 58 TEC)
1. The provisions of Article 63 shall be without prejudice to the right of Member States:
(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;
(b) to take 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, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.
2. The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with the Treaties.
3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 63.
4. In the absence of measures pursuant to Article 64(3), the Commission or, in the absence of a Commission decision within three months from the request of the Member State concerned, the Council, may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties in so far as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.
***
The intergovernmental conference (IGC 2007) mentions Article 58 of the Treaty establishing the European Community (TEC) in Article 2, point 61, of the Treaty of Lisbon (ToL). See OJ 17.12.2007 C 306/56:
61) In Article 58, the following new paragraph 4 shall be added:
‘4. In the absence of measures pursuant to Article 57(3), the Commission or, in the absence of a Commission decision within three months from the request of the Member State concerned, the Council, may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties insofar as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.’.
***
The latest consolidated version of the current Article 58 TEC looks like this (OJ 29.12.2006 C 321 E/64):
Article 58 TEC
1. The provisions of Article 56 shall be without prejudice to the right of Member States:
(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;
(b) to take 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, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.
2. The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with this Treaty.
3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 56.
***
The European Convention made only cosmetic amendments to Article 58 TEC in Article III-47 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/35).
***
Article III-158 of the Treaty establishing a Constitution for Europe replaced the word ‘steps’ of the draft Constitution with ‘measures’ as in the current Article 58 TEC, so only the added words in the phrase ‘provisions laid down by law or regulation’ in subparagraph 1(b) remained of the cosmetic changes proposed by the draft.
But the IGC 2004 made one substantial change by adding a fourth paragraph to Article III-158, reproduced below (OJ 16.12.2004 C 310/67):
Article III-158 Constitution
1. Article III-156 shall be without prejudice to the right of Member States:
(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;
(b) to take all requisite measures to prevent infringements of national provisions laid down by law or regulation, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.
2. This Section shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with the Constitution.
3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article III-156.
4. In the absence of a European law or framework law provided for in Article III-157(3), the Commission or, in the absence of a European decision of the Commission within three months from the request of the Member State concerned, the Council, may adopt a European decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Constitution insofar as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.
***
We see that the fourth paragraph added by the Treaty of Lisbon to what becomes Article 65 TFEU is in essence the corresponding Article III-158(4) of the Constitutional Treaty. The changes in wording relate to general terminological differences between the two treaties.
This ‘parentage’ is mentioned in the German and Finnish ratification bills and in the consultation paper of the Swedish government.
Thus, the amendment fell under the general provision of the IGC 2007 Mandate regarding amendments to the EC Treaty (Council document 11218/07, page 7, point 18): The innovations agreed in the 2004 IGC will be inserted into the Treaty by way of specific modifications in the usual manner.
Ralf Grahn
Thursday, 17 April 2008
EU TFEU: Common rules for services and establishment
The free movement of services shares many rules concerning the right of establishment in the Treaty on the Functioning of the European Union, as it does in the current Treaty establishing the European Community.
The pattern of this post is modified to take into account the publication of the consolidated Treaty of Lisbon, published 16 April 2008 by the Council of the European Union in the 23 treaty languages.
***
This is Article 62 of the Treaty on the Functioning of the European Union (TFEU), as amended by the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL) and 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:
Part Three ‘Policies and internal actions of the Union’
Title IV TFEU ‘Free movement of persons, services and capital’
Chapter 3 ‘Services’
Article 62 TFEU
(ex Article 55 TEC)
The provisions of Articles 51 to 54 shall apply to the matters covered by this Chapter.
***
The IGC 2007 made no specific amendments to Article 55 TEC, but the provision and its referrals are renumbered. Cf. OJ 17.12.2007 C 306/55.
***
For the convenience of those who want to use the current TEC, we present the provision with the ones it refers to (from the latest consolidated version of the existing treaties, OJ 29.12.2006 C 321 E/63):
Article 55 TEC
The provisions of Articles 45 to 48 shall apply to the matters covered by this Chapter.
***
Article III-35 of the draft Treaty establishing a Constitution for Europe was essentially the same (OJ 18.7.2003 C 169/33):
Article III-35 Draft Constitution
Articles III-24 to III-27 shall apply to the matters covered by this Subsection.
***
Article III-150 of the Treaty establishing a Constitution for Europe followed the draft in style (OJ 16.12.2004 C 310/64):
Article III-150
Articles III-139 to III-142 shall apply to the matters covered by this Subsection.
***
No material change has been proposed during the reform cycle from the European Convention to the Treaty of Lisbon.
We have reached the last provision of Chapter 3 ‘Services’ in order to find out that we are told to go back to Articles 51 to 54 TFEU in Chapter 2 ‘Right of establishment’ to get things right.
With those readers in mind, who do not have the amended provisions at hand, we present the texts here (TFEU consolidation, pages 89 and 90):
Article 51 TFEU
(ex 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 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.
Article 52 TFEU
(ex Article 46 TEC)
1. 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.
2. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the coordination of the abovementioned provisions.
Article 53 TFEU
(ex Article 47 TEC)
1. In order to make it easier for persons to take up and pursue activities as self-employed persons, the European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the mutual recognition of diplomas, certificates and other evidence of formal qualifications and for the coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons.
2. In the case of the medical and allied and pharmaceutical professions, the progressive abolition of restrictions shall be dependent upon coordination of the conditions for their exercise in the various Member States.
Article 54 TFEU
(ex Article 48 TEC)
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.
***
We see that some of the derogations (exceptions) from the right of establishment apply to the free movement of services: the exercise of public authority and the grounds of public policy, public security or public health.
There are legal bases for legislation and there is the principle of equal treatment of companies.
For a closer look, se for instance Chapter 22 ‘Freedom of establishment and to provide services’ in Paul Craig and Gráinne de Búrca: EU Law, Text, Cases, and Materials (Oxford University Press, 4th Edition, 2007).
Ralf Grahn
The pattern of this post is modified to take into account the publication of the consolidated Treaty of Lisbon, published 16 April 2008 by the Council of the European Union in the 23 treaty languages.
***
This is Article 62 of the Treaty on the Functioning of the European Union (TFEU), as amended by the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL) and 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:
Part Three ‘Policies and internal actions of the Union’
Title IV TFEU ‘Free movement of persons, services and capital’
Chapter 3 ‘Services’
Article 62 TFEU
(ex Article 55 TEC)
The provisions of Articles 51 to 54 shall apply to the matters covered by this Chapter.
***
The IGC 2007 made no specific amendments to Article 55 TEC, but the provision and its referrals are renumbered. Cf. OJ 17.12.2007 C 306/55.
***
For the convenience of those who want to use the current TEC, we present the provision with the ones it refers to (from the latest consolidated version of the existing treaties, OJ 29.12.2006 C 321 E/63):
Article 55 TEC
The provisions of Articles 45 to 48 shall apply to the matters covered by this Chapter.
***
Article III-35 of the draft Treaty establishing a Constitution for Europe was essentially the same (OJ 18.7.2003 C 169/33):
Article III-35 Draft Constitution
Articles III-24 to III-27 shall apply to the matters covered by this Subsection.
***
Article III-150 of the Treaty establishing a Constitution for Europe followed the draft in style (OJ 16.12.2004 C 310/64):
Article III-150
Articles III-139 to III-142 shall apply to the matters covered by this Subsection.
***
No material change has been proposed during the reform cycle from the European Convention to the Treaty of Lisbon.
We have reached the last provision of Chapter 3 ‘Services’ in order to find out that we are told to go back to Articles 51 to 54 TFEU in Chapter 2 ‘Right of establishment’ to get things right.
With those readers in mind, who do not have the amended provisions at hand, we present the texts here (TFEU consolidation, pages 89 and 90):
Article 51 TFEU
(ex 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 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.
Article 52 TFEU
(ex Article 46 TEC)
1. 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.
2. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the coordination of the abovementioned provisions.
Article 53 TFEU
(ex Article 47 TEC)
1. In order to make it easier for persons to take up and pursue activities as self-employed persons, the European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the mutual recognition of diplomas, certificates and other evidence of formal qualifications and for the coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons.
2. In the case of the medical and allied and pharmaceutical professions, the progressive abolition of restrictions shall be dependent upon coordination of the conditions for their exercise in the various Member States.
Article 54 TFEU
(ex Article 48 TEC)
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.
***
We see that some of the derogations (exceptions) from the right of establishment apply to the free movement of services: the exercise of public authority and the grounds of public policy, public security or public health.
There are legal bases for legislation and there is the principle of equal treatment of companies.
For a closer look, se for instance Chapter 22 ‘Freedom of establishment and to provide services’ in Paul Craig and Gráinne de Búrca: EU Law, Text, Cases, and Materials (Oxford University Press, 4th Edition, 2007).
Ralf Grahn
Monday, 7 April 2008
EU TFEU: Public policy, public security and public health exceptions
‘Public policy, public security or public health’ form a potent formula for exceptions concerning the fundamental principles of free movement, citizenship rights, freedom to provide services and freedom of establishment within the European Community (European Union).
Here we look at the exemptions in the light of the present Treaty establishing the European Community and the coming Treaty on the Functioning of the European Union (Treaty of Lisbon), with a glance towards the draft Constitution and the Constitutional Treaty along the route.
The concrete provision we deal with concerns these exceptions in the context of the freedom of establishment, but often more than one of the rights and freedoms occur in the same case.
A few hints on further reading follow, meant to facilitate understanding of the system and strict interpretation of derogations.
***
In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) made no specific amendments to Article 46 of the Treaty establishing the European Community (TEC). Cf. Official Journal, OJ, 17.12.2007 C 306/54-55.
***
The latest consolidated version of the existing treaties, TEU and TEC, presents Article 46 TEC as it now stands (OJ 29.12.2006 C 321 E/61):
Article 46 TEC
1. 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.
2. The Council shall, acting in accordance with the procedure referred to in Article 251, issue directives for the coordination of the abovementioned provisions.
***
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 (here none), horizontal amendments (here one), renumbering of the provision (yes) and renumbering of possible referrals (here none).
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 46 TFEU (ToL), renumbered Article 52 TFEU
1. 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.
2. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the coordination of the abovementioned provisions.
***
The European Convention changed just enough of the wording in Article III-25 of the draft Treaty establishing a Constitution for Europe to merit repeating, but without changing anything of substance (OJ 18.7.2003 C 169/32):
Article III-25 Draft Constitution
1. This Subsection and measures adopted in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action in Member States providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. European framework laws shall coordinate the national provisions referred to in paragraph 1.
***
The IGC 2004 adopted the draft text unchanged in Article III-140 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/62).
***
The IGC 2007 followed the adage ‘If it ain’t broke, don’t fix it’, thus preserving the current wording (with the one technical or horizontal amendment concerning the ordinary legislative procedure).
***
The Commission’s internal market web pages on services offer an introductory page ‘General principles: Freedom to provide services / Freedom of establishment’ (last update 28 January 2008):
http://ec.europa.eu/internal_market/services/principles_en.htm
There is a link to a 112 page ‘Guide to the Case Law of the European Court of Justice on Articles 43 et seq. EC Treaty: Freedom of Establishment’, from 1 January 2001, but with an update promised shortly:
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
Available on the web you can find the following:
J.H.H. Weiler and Martina Kocjan: The Law of the European Union, Teaching Material, The Internal Market: Freedom to Provide Services, Freedom of Establishment (NYU School of Law 2004/2005; 72 pages):
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
A detailed study is:
Markku Kiikeri: The Freedom of Establishment in the European Union, Report to the Finnish Ministry of Trade and Industry, 2002 (133 pages + Annexes XIX pages):
http://www.helsinki.fi/publaw/opiskelu/Eurooppaoikeus/Sijoittautumistutkimus.englanti.Kiikeri.pdf
These materials offer a fair grounding in the fundamental questions regarding the freedom of establishment, leaving only the latest developments of secondary legislation and case law to be unearthed by the reader.
Ralf Grahn
P.S. Both the draft Constitution and the Constitutional Treaty were published quickly, and they were already 'consolidated versions'. We have to go back to the ill-fated Treaty of Nice to find a treaty published in a consolidated version only after entering into force.
Some would argue that a few things have happened in net publishing since 2001.
Anyway, a long wait seems to draw to a close, when the consolidated Lisbon Treaty is published 15 April 2008, and in book form 9 May 2008 (Europe day).
Here we look at the exemptions in the light of the present Treaty establishing the European Community and the coming Treaty on the Functioning of the European Union (Treaty of Lisbon), with a glance towards the draft Constitution and the Constitutional Treaty along the route.
The concrete provision we deal with concerns these exceptions in the context of the freedom of establishment, but often more than one of the rights and freedoms occur in the same case.
A few hints on further reading follow, meant to facilitate understanding of the system and strict interpretation of derogations.
***
In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) made no specific amendments to Article 46 of the Treaty establishing the European Community (TEC). Cf. Official Journal, OJ, 17.12.2007 C 306/54-55.
***
The latest consolidated version of the existing treaties, TEU and TEC, presents Article 46 TEC as it now stands (OJ 29.12.2006 C 321 E/61):
Article 46 TEC
1. 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.
2. The Council shall, acting in accordance with the procedure referred to in Article 251, issue directives for the coordination of the abovementioned provisions.
***
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 (here none), horizontal amendments (here one), renumbering of the provision (yes) and renumbering of possible referrals (here none).
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 46 TFEU (ToL), renumbered Article 52 TFEU
1. 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.
2. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the coordination of the abovementioned provisions.
***
The European Convention changed just enough of the wording in Article III-25 of the draft Treaty establishing a Constitution for Europe to merit repeating, but without changing anything of substance (OJ 18.7.2003 C 169/32):
Article III-25 Draft Constitution
1. This Subsection and measures adopted in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action in Member States providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. European framework laws shall coordinate the national provisions referred to in paragraph 1.
***
The IGC 2004 adopted the draft text unchanged in Article III-140 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/62).
***
The IGC 2007 followed the adage ‘If it ain’t broke, don’t fix it’, thus preserving the current wording (with the one technical or horizontal amendment concerning the ordinary legislative procedure).
***
The Commission’s internal market web pages on services offer an introductory page ‘General principles: Freedom to provide services / Freedom of establishment’ (last update 28 January 2008):
http://ec.europa.eu/internal_market/services/principles_en.htm
There is a link to a 112 page ‘Guide to the Case Law of the European Court of Justice on Articles 43 et seq. EC Treaty: Freedom of Establishment’, from 1 January 2001, but with an update promised shortly:
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
Available on the web you can find the following:
J.H.H. Weiler and Martina Kocjan: The Law of the European Union, Teaching Material, The Internal Market: Freedom to Provide Services, Freedom of Establishment (NYU School of Law 2004/2005; 72 pages):
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
A detailed study is:
Markku Kiikeri: The Freedom of Establishment in the European Union, Report to the Finnish Ministry of Trade and Industry, 2002 (133 pages + Annexes XIX pages):
http://www.helsinki.fi/publaw/opiskelu/Eurooppaoikeus/Sijoittautumistutkimus.englanti.Kiikeri.pdf
These materials offer a fair grounding in the fundamental questions regarding the freedom of establishment, leaving only the latest developments of secondary legislation and case law to be unearthed by the reader.
Ralf Grahn
P.S. Both the draft Constitution and the Constitutional Treaty were published quickly, and they were already 'consolidated versions'. We have to go back to the ill-fated Treaty of Nice to find a treaty published in a consolidated version only after entering into force.
Some would argue that a few things have happened in net publishing since 2001.
Anyway, a long wait seems to draw to a close, when the consolidated Lisbon Treaty is published 15 April 2008, and in book form 9 May 2008 (Europe day).
Monday, 31 March 2008
EU TFEU: Freedom of movement for workers
Not only goods, services and capital, but humans looking for work are meant to be able to move freely within the European Community (European Union).
We take a brief look at what the freedom of movement of workers looks like at treaty level, when the Treaty of Lisbon has entered into force.
***
We continue our study of Part Three ‘Policies and internal actions of the Union’ in the light of the Lisbon Treaty.
Title III ‘Free movement of persons, services and capital’ of the Treaty establishing the European Community (TEC), first becomes Title III with the same name of the Treaty of Lisbon (ToL) version of the Treaty on the Functioning of the European Union (TFEU), later to be renumbered Title IV.
Chapter 1 ‘Workers’ retains its name and number throughout. (See OJ 17.12.2007 C 306/207-208.)
***
Arriving at Article 39 TEC the intergovernmental conference (IGC 2007) was far from loquacious (OJ 17.12.2007 C 306/54):
FREE MOVEMENT OF WORKERS
50) In Article 39(3)(d), the word ‘implementing’ shall be deleted.
***
With one word to delete, we have a certain need to find the precious rest of the provision. The latest consolidated version of the current TEU and TEC is found in OJ 29.12.2006 C 321 E/57-58:
TITLE III
FREE MOVEMENT OF PERSONS, SERVICES AND CAPITAL
CHAPTER 1
WORKERS
Article 39 TEC
1. Freedom of movement for workers shall be secured within the Community.
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 implementing regulations to be drawn up by the Commission.
4. The provisions of this Article shall not apply to employment in the public service.
***
A consolidated Lisbon Treaty version of an Article builds upon the express amendments (here only one), possible horizontal amendments and the future renumbering. Indicating the setting of the provision, we should end up with the following result:
Part Three ‘Policies and internal actions of the Union’
Title III (renumbered Title IV) ‘Free movement of persons, services and capital’
Chapter 1 ‘Workers’
Article 39 TFEU (ToL), renumbered Article 45 TFEU
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.
***
In Article III-18 of the draft Treaty establishing a Constitution for Europe nothing changed the substance of the provision, but some readers may prefer the plain language of the European Convention in a few details while others may miss the formula ‘freedom of movement for workers’ (OJ 18.7.2003 C 169/31):
SECTION 2
Free movement of persons and services
Subsection 1
Workers
Article III-18 Draft Constitution
1. Workers shall have the right to move freely within the Union.
2. Any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment shall be prohibited.
3. Workers shall have 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 European regulations adopted by the Commission.
4. This Article shall not apply to employment in the public service.
***
The corresponding Article III-133 of the Treaty establishing a Constitution for Europe repeated the text of the draft word for word, so the Lisbon Treaty can be said to have reverted to the TEC text, as far as there are any differences, and none of them material.
***
The reader who wants to begin exploring the right to move freely can start from the Commission’s pages on Employment and Social Affairs, Free Movement of Workers ‘Free Movement of Workers and the Principle of Equal Treatment’ and the links offered:
http://ec.europa.eu/employment_social/free_movement/index_en.htm
Ralf Grahn
We take a brief look at what the freedom of movement of workers looks like at treaty level, when the Treaty of Lisbon has entered into force.
***
We continue our study of Part Three ‘Policies and internal actions of the Union’ in the light of the Lisbon Treaty.
Title III ‘Free movement of persons, services and capital’ of the Treaty establishing the European Community (TEC), first becomes Title III with the same name of the Treaty of Lisbon (ToL) version of the Treaty on the Functioning of the European Union (TFEU), later to be renumbered Title IV.
Chapter 1 ‘Workers’ retains its name and number throughout. (See OJ 17.12.2007 C 306/207-208.)
***
Arriving at Article 39 TEC the intergovernmental conference (IGC 2007) was far from loquacious (OJ 17.12.2007 C 306/54):
FREE MOVEMENT OF WORKERS
50) In Article 39(3)(d), the word ‘implementing’ shall be deleted.
***
With one word to delete, we have a certain need to find the precious rest of the provision. The latest consolidated version of the current TEU and TEC is found in OJ 29.12.2006 C 321 E/57-58:
TITLE III
FREE MOVEMENT OF PERSONS, SERVICES AND CAPITAL
CHAPTER 1
WORKERS
Article 39 TEC
1. Freedom of movement for workers shall be secured within the Community.
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 implementing regulations to be drawn up by the Commission.
4. The provisions of this Article shall not apply to employment in the public service.
***
A consolidated Lisbon Treaty version of an Article builds upon the express amendments (here only one), possible horizontal amendments and the future renumbering. Indicating the setting of the provision, we should end up with the following result:
Part Three ‘Policies and internal actions of the Union’
Title III (renumbered Title IV) ‘Free movement of persons, services and capital’
Chapter 1 ‘Workers’
Article 39 TFEU (ToL), renumbered Article 45 TFEU
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.
***
In Article III-18 of the draft Treaty establishing a Constitution for Europe nothing changed the substance of the provision, but some readers may prefer the plain language of the European Convention in a few details while others may miss the formula ‘freedom of movement for workers’ (OJ 18.7.2003 C 169/31):
SECTION 2
Free movement of persons and services
Subsection 1
Workers
Article III-18 Draft Constitution
1. Workers shall have the right to move freely within the Union.
2. Any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment shall be prohibited.
3. Workers shall have 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 European regulations adopted by the Commission.
4. This Article shall not apply to employment in the public service.
***
The corresponding Article III-133 of the Treaty establishing a Constitution for Europe repeated the text of the draft word for word, so the Lisbon Treaty can be said to have reverted to the TEC text, as far as there are any differences, and none of them material.
***
The reader who wants to begin exploring the right to move freely can start from the Commission’s pages on Employment and Social Affairs, Free Movement of Workers ‘Free Movement of Workers and the Principle of Equal Treatment’ and the links offered:
http://ec.europa.eu/employment_social/free_movement/index_en.htm
Ralf Grahn
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