Free Movement of Services and Related Legal Cases

ECJ case law surrounding the articles 56-62 TFEU (49-55TEC)

Case 33-74 Johannes Henricus Maria van Binsbergen v Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid [1974] ECR 1299 became the backbone of the direct applicability principle¹. In Article 56 of the TFEU, it is stated that nationals from member states shall not be prohibited from the provision of services in other states. In this case, the court held that members could not be discriminated against based on the fact that they are service providers².

Case C-288/289 Stichting Collectieve Antennevoorziening Gouda and others v Commissariaat voor de Media [1991] ECR 1-4007 specifically lays out the rules that are related to Article 59, which requires member states to create directives designed to liberalise service provision³. In this case, it was decided that sellers firmly rooted in their home countries have the right to deliver their services to other member states and cannot be prevented from doing so on the basis of differential service environments between the two member states concerned⁴.

ECJ case rulings on the scope of Article 56 TFEU (49TEC)

Case C-70/95 Sodemare SA, Anni Azzurri Holding SpA and Anni REzzato Srl v Regione Lombardia [1997] ECR 1-3395⁵ was crucial in the process of determining the kind of issues that are covered in Article 56. It was decided that legal or natural persons were covered by this rule and that they had the freedom of establishment in other member states. It, therefore, allowed for a differentiation between freedom of services and freedom of establishment. The latter referred to permanent scenarios, while the former referred to short term activities⁶.

Development of the ECJ of a test for justification in relation to restrictions

The ECJ has handled a number of cases concerning the scope of the article. In the Case 2-74 Jean Reyners v Belgian State [1974] ECR -631⁷, the ECJ held that the restrictions on the right of establishment of services had to be applied in a literal manner⁸. The scope of exemptions of the freedom of movement of services through a right of establishment, as laid out in Article 54, cannot be done in a manner that would supersede the main objective of the exemption clause. In essence, the method of formation of the service and nationality cannot be compromised when applying the restrictions. This was further backed by Directive 2004/38.

Directive 2006/124 clarifies the handling of infringement of procedures by providing for a case by case basis. This means that immense coordination of national systems needs to be done amongst member states⁹.

The extent to which the free movement of services in the EU has been achieved

To a small extent, some degree of freedom of movement of services has been achieved because greater competition in the region has been reported. Also, increments in the wealth of countries are testimony that the rationale behind the creation of a single market through freedom of movement of services has contributed towards better services. Several Court cases have also empowered future service providers because they form the basis of case law¹⁰.

One of the most pressing issues surrounding the freedom of movement of services is the barriers faced by small and medium sized enterprises. SMEs represent a large percentage of most internal service industries, but less than ten per cent of them engage in regional trade because they are wary of the legal and set up barriers prevalent in other EU countries. Member states still need to change their opinion about other service providers from different parts of the EU as lack of trust impedes this freedom. Countries are yet to ease up on administrative barriers, and service providers themselves are also apprehensive about taking their business to other members.

References

Case 2-74 Jean Reyners v Belgian State [1974] ECR -631.

Case C-70/95 Sodemare SA, Anni Azzurri Holding SpA and Anni REzzato Srl v Regione Lombardia [1997] ECR 1-3395.

Case C-288/89 Stichting Collectieve Antennevoorziening Gouda and others v Commissariaat voor de Media [1991] ECR 1-4007.

Case 33-74 Johannes Henricus Maria van Binsbergen v Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid [1974] ECR 1299.

Craig, P., de Búrca, C. (2007). EU Law: Text, Cases and Materials (4th ed.). Oxford, New York: Oxford University Press.

Article 56-62 Treaty on the Functioning of the EU. Web.

Barnard, C. (2007). The substantive law of the EU: the four freedoms. Oxford: OUP.

Chalmers, D., et al. (2006). European Union Law: Text and Materials (1st ed.). New York: Cambridge University Press.

Footnotes

1. Case 33-74 Johannes Henricus Maria van Binsbergen v Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid [1974] ECR 1299.
2. Barnard, C. (2007). The substantive law of the EU: the four freedoms. Oxford: OUP, 56.
3. Case C-288/89 Stichting Collectieve Antennevoorziening Gouda and others v Commissariaat voor de Media [1991] ECR 1-4007.
4. Article 56-62 Treaty on the Functioning of the EU. Web.
5. Case C-70/95 Sodemare SA, Anni Azzurri Holding SpA and Anni REzzato Srl v Regione Lombardia [1997] ECR 1-3395.
6. Article 56-62 Treaty on the Functioning of the EU. Web.
7. Case 2-74 Jean Reyners v Belgian State [1974] ECR -631.
8. 2/74 Reyners v. Belgium [1974] ECR 631 para. 21 [2].
9. Council Directive 2006/123/EC of 12 December 2006 on services in the internal market.
10. Chalmers, D., et al. (2006). European Union Law: Text and Materials (1st ed.). New York: Cambridge University Press, 145.