Are There Common Principles Underpinning The Case Law On Goods And Services?

Are there common principles underpinning the case law on goods and services? Give reasons for your answer.

There are a number of common principles that form the basis of the case law on goods and services. Ranging for severability as discussed in Laara[1999]; suitability and necessity, the two limbs of the proportionality test encountered in Article 28; and the prohibition on the infringement of fundamental rights as noted in Arkrich [2003] and Orfanopoulos [2004]. Some of the common principles remain undecided, but many have led to the culmination of a convergence thesis. The rationale for this being that because it can be difficult to distinguish between goods and services, there is a view that the rules should have the same scope and should apply to the same type of people (i.e. vertical/horizontal effect). This suggests that principles such as the market access approach, justifications and remedies, should be the same for both goods and persons. But can there be complete convergence on the case law on goods and services?

Prima facie, there is level of temptation in establishing a set of common principles that apply equally to all of the free movement provisions. As Barnard suggests, this would mean that there is a global test of 'prevention or direct and substantial hindrance of access to the market'. Primarily the simplicity of this proposal is attractive. Applying one single rule to Articles 28, 39, 43 and 49 would remove the two-stage test i.e. classifying the measure and then applying the appropriate test, although this could mean that it would be difficult to identify the measures concerned. The Court in Decker and Knoll has supported the notion of abolishing the distinction between express derogations and mandatory requirements. Oliver is in support of this, arguing that it would be more logical to treat mandatory requirements as additions to the head of derogations. However, the idea for common principles to apply to the free movement provisions, whilst attractive, may not be practical.

Direct Effect

The direct effect of the free movement provisions can be viewed as a common principle to an extent; the principle however, appears to be quite different for the goods provisions under Article 28. For the purposes of determining the scope of a provision and establishing whether there is direct effect, the question is 'who is under an obligation?' The issue of whether there is an obligation on regulatory bodies has also come in the scope of direct effect. The case law is plentiful under the area of sport and the leading case in Walrave & Koch [1974]. On a matter of discrimination the regulatory body in question denied that this could be claimed against them as they are not the state. The Court held that Articles 12, 39 and 49 all have in common the prohibition of discrimination on grounds of nationality. However, not only does the prohibition on discrimination apply to the state, it also applies to rules regulating in a collective manner for gainful employment and the provision of services.

The key question is then, whether there is an obligation on private parties i.e. can there be horizontal direct effect under the goods and movements provision. This is essentially where the discrepancy begins as following the recent case of Viking [2007] it cannot necessarily be said that there is a unified stance in all provisions. Angonese [2000] was the first to tackle this issue within the scope of Article 39. Not only did it note that the principle of non-discrimination was to be drafted in general terms and therefore not specifically addressed to member states (paragraph [30]), as a consequence of this the prohibition on the grounds of nationality laid down in Article 39 of the Treaty could be relied upon against private parties. The recent case of Viking [2007] looked into the possibility of horizontal direct effect more closely. Although Trade Unions are private legal persons, Viking's argument for horizontal direct effect was on the basis that the Trade Union is able to interfere with rights of free movement (Attorney General at paragraph [29]). On one hand, some commentators have continued to suggest that this cannot be the case, as support by the scope of the goods provisions in Article 28, and on the other hand there is an acknowledgment that private action can obstruct the proper functioning of the common market. The main and perhaps only advocator of the latter view in this case is Attorney General Maduro. The possibility of horizontal effect wasn't in fact approved by the other judges, let alone discussed. A-G Maduro wrongly used the examples of Commission v France (Spanish strawberries) and Schmidberger to support his proposal claiming that the severity of limitation on the autonomy of individuals is evident in these Article 28 cases, hence alleging that there was indirect horizontal effect. However in the former case, the issue at stake was to do with enforcing the state to take responsibility, referring to the stance that inaction can lead to a responsibility to act. It is suggested that private individuals should not be allowed to act without appropriate concern for the rights that other private individuals draw on freedom of movement, hence free movement provisions can be applied horizontally to private parties. However, in its sister case, Laval [2007] commentators argue that the Trade Union can be captured without extending the law to cover private parties. Establishing horizontal direct effect to the free movement provision would evidently mean that we are moving away from the convergence thesis, particularly as it seems very clear that application to private parties under Article 28 does not exist.

Quinn & McGowan reiterated that there is no horizontal direct effect for private parties in Article 28 in there entitled article, 'Could Article 30 impose obligations on individuals?' They argue that the sphere of application in Article 28 differs greatly from the free movement provisions, and that for the most part Article 28 is concerned with the legislative and administrative acts of the member state. A range of convincing examples are given to support this argument. In looking at whether obligations are conferred on the state the questions that have to be asked are, who it applies to and what the justifications are? If everyone is going to be confined to the same rules, then it must be applicable to all. For instance, exceptions of public morality, policy and security could not be used by private parties as these matters are of general and national interest, and therefore more likely to be the sole concern of member states. In addition if the market access approach is adopted then, what is the appropriate justification for private parties, particularly when economic policies are not sufficient justifications. In Van Binsbergen, it was held that where there has been a restriction is must be adopted in the pursuit of a legitimate public interest, and one which is incompatible with the Community aims. As an illustration, the aim of protecting a particular economic sector within the Member State is not legitimate, whereas the maintenance of the financial balance of the social security system with a view to protect the public health is legitimate. Furthermore there is a limitation in the number of mandatory requirements (Cassis de Dijon), that private parties are likely to suffice, namely fairness of commercial transaction and the defence of the consumer.

It is suggested then that, there is a common principle of vertical direct effect across the free movement and goods provision there is a great deal of discrepancies as to whether horizontal direct effect can exist in the scope of these provision and it remains to be seen whether the provisions of goods and persons will converge on this idea of move into separate directions, or whether in fact, that convergence should simply not apply to Article 28.

Market Access

Many authors believe that a key concept in the free movement of goods and services lies in market access. They support the notion established in Sager that the reason that we have free movement provisions in the first place is because economic operators should be given the opportunity to exercise their economic activity, which essentially removes any discrimination based on nationality. But there are many objections to market access in its application; it is far more difficult to apply the more economic test of direct and substantial hindrance of access to the market, as opposed to the more straightforward legal classifications e.g. distinctly/indistinctly applicable measures, non-discriminatory certain selling arrangements. There is also an argument that is against a unified approach which treats goods and persons in a similar manner particularly when they concern very different economic and social situations. Barnard does suggest however that the cross-border provisions of services have more in common with the cross-frontier provision of goods. This infers that the Article 28 and 49 are similar, sometimes to distinguish, which may be a reason for convergence. However, differences occur in the varying range of justifications for each provision. Barnard highlights that a major objection to the proposal rests in placing a significant amount of focus on 'access to market'. This therefore neglects those measures that prevent access to a particular occupation and interfere with the exercise of a profession. The universal application of market access does depend on how one views market access. If it is viewed as a form of limiting the community through conferred competence as established in Article 5, thus empowering the community to regulate in areas of market access then this is sufficient. However, if market access is merely going to be claim that arises under one if the free movement provisions as a directly applicable provision, then this is not a good rule as there is no law.

To rely fully on market access may be misleading, and the emergence of the new constitutional dimension that has arisen in relation to Article 18 may provide a more normative basis for the expansion of the scope of the free movement provision. The problem with Spaventa's claim however, it that Article 17 and the impact of citizenship is moving the law in the realm of natural persons. The Treaty does not specify between natural persons and legal persons and under Article 28, natural persons are not referred to. The conclusion of all of this may mean that it is not as feasible as first suggested for the Courts to adopt a common principle across goods and services.