Wednesday, 24 September 2014

Integration through Law - EU legal method

Lecture 1 - ‘EU 101’

EU law cannot simply be learned, it is flexible, it evolves, it is full of lacunae where the EU has
not acted. A new and inspiring type of law where ‘should be solved’ is as important as ‘is solved’.

The case law for this course is:

case 26/62, Van Gend en Loos;
case 41/74, Van Duyn;
case 148/78, Ratti;
case 152/84, Marshall;
case 14/83; Von Colson;
case C-106/109, Marleasing;
case 11/70, IHG;
case 6/64, Costa v. ENEL;
case C-6&9/90, Francovich;
case 120/78, Rewe « Cassis de Dijon »,
case C-267&268/91, Keck and Mithouard;
case 178/84, Cion v. Allemagne;
case C-368/95, Familiapress;
case C-340/89, Vlassopoulou.

The most useful book is Schütze, R., Introduction to European Union Law.

Once upon a time there were three communities, ECSC, EURATOM, and the EEC in 6 member
states. Now we have EURATOM and the EU (28 member states). The Single European Act in
1987 changed the treaties for the first time (other than enlargement) and gave the EC a legal
personality for the first time. This became the EU in 1992 with the Maastricht treaty which rested
on the three pillars (supranational-economic; intergovernmental-CFSP; intergovernmental-justice
and home affairs). Although the Lisbon treaty abolished the pillars, their shadows exist in
different procedures. 2001 saw the Treaty of Amsterdam integrated intergovernmental justice
and home affairs into the first pillar. Nice in 2004 prepared for the super-enlargement in 2005.
Eventuallyeverything

How is the EU different from states and its member states

The EU cannot choose its own powers, all its competence is granted by the legal framework of
the treaties (the TEU / TFEU / Charter of Fundamental Rights) and must justify all its actions by
reference to a treaty. This makes EU law key to the integration process. Treaties define
objectives, institutions, powers, procedures and timeframes.

There is no Kompetenz-Kompetenz, EU power comes from sovereignty delegated upwards.

Perhaps crucially the EU also has no power to tax. However almost no area is unaffected by the
EU, the treaties are traité-cadre rather than traité-loi; they give a framework rather than
proscribing how implementation should occur.

Supranationality remains difficult to define, but the crucial aspect is that member states
surrender individual and collective decision making - binding decisions are made by a separate
supranational body. The ECJ demonstrates this by issuing new law in its rulings, the power to
interpret the treaties teleologically rather than literally is supranational. The commission has
power to act independently, in the European interest, without reference to the nations and that its

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retains the monopoly on legislative initiative. QMV supports supranationality, decisions are taken
through institutions. Supranationality can be said to have diminished with the introduction of the
right to leave EU. The ECJ uses the term ‘special legal order’ rather than supranationality.

In addition to exclusive competence, the EU also has shared competence (energy, transport etc)
where members states can act if the EU has not and supporting competence (education, civil
protection, etc) where it supplements and cannot limit the actions of member states.

The treaties from which all these are derived are the Treaty of European Union, the Treaty on the
functioning of the EU and the EU charter of Fundamental Rights. Lisbon is a collection of
amendments to the first two and is therefore incomprehensible. They all have constitutional
value but are not constitutional. They have almost no direct application to individuals (natural or
non-natural).

The TEU (Title III) gives the EU clear objectives in a clear order. The order has been interpreted
as giving precedence and importance. The treaty fathers placed first that the EU is more than
the creation of fortress Europe but a project of global importance, the first objective is therefore
the fathering of global peace and the spread of European values. The treaties (Title V TFEU)
define the EU as being an area of freedom, security and justice.

From these objectives flow other objectives and policies. The freedom of movement within the
EU supports the single market for the older liberal sates but ensures the liberty of post
communist states and their citizens. The disappearance of borders creates a necessity for
coöperation in justice. Regulation for sustainable and balanced growth reassure citizens that
they are not to be exploited. EMU follows from the single market and the goal of political union.
Citizenship lives in the successful TFEU which the ECJ has used to give rights to individuals -
only an economic citizenship, only economic rights but ECJ rules to expand these into other
areas. Whatever the origin of the notion of European citizenship once the notion existed it was
inevitable to be expanded.

Who does what in the EU

There is s horizontal division of powers by competence between the EU and member sates.

Power is also vertically divided. Subsidiarity is the principle about when the EU should use its
power, rather than what powers the EU has. Currently it only therefore applies to shared and
supporting powers. Although people and institutions try to invoke it in court, the principle is
principally a political one. To measure against this principle, the EU must always express the
objectives it actions are trying to achieve.

Power is also vertically divided in practical matters. The EU has no police or army, no customs
officials and no full court system - differences in systems continue to exist. The EU puts none of
its own measures into practice, they are implemented by member states. The law is a
mechanism for enforcing this, via the duty of cooperation.

The duty of corporation has be greatly extended by ECJ rulings, obliging states and states courts
to act in certain ways. Much of the ECJ’s legislation rests and refers to the duty of cooperation.

The European Council is the Top Institution. It sets the agenda for the EU as a whole but does
not legislate.

Legislation is initiated almost exclusively by the commission (also citizens initiatives) and made
in concordance with the Parliament and Council of Ministers - the institutional triangle. Normally

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this takes place by co-decision between the Council of Ministers and the European Parliament,
under this system disagreements end up in a conciliation committee. The ECJ ensures that
policies are made under the proper procedure (tax snuck into QMV areas).

The Cion is the ‘executive’ of the EU - initiating legislation and acting as the guardian of the
treaty. The college of commissioners (28) and also the ~ 24 000 civil servants who work for
them.

The Council of Ministers legislates and delivers the Budget. It coordinates economic policy /
judicial and police cooperation in criminal areas. Is also charged with concluding international
agreements. It is composed of the 28 relevant ministers and, other than in relation to foreign
affairs has a 6 month ratting presidency. Assisted by a permanent general secretariat in Brussels
and normally preceded by COREPER I and COREPER II agreements.

The European Parliament is a co-legislator for most legislation and scrutinises delegated acts. at
751 members its extraordinarily large and is the only directly elected multinational legislature in
the world. Exercises the democratic oversight of Cion - it approves and censures Cioners. Has
equality with the Council over the Budget and budgetary planification.

Who renders justice

Most of EU law is decided by national courts, generally giving preliminary rulings; they can also
however refer issues to the ECJ. Although the ECJ is enormously powerful and important in
integration, it is primarily for litigation between institutions and states - especially infractions.

Lecture 2 - ‘EU legal method’

National courts play a strong role int he EU judicial system. EU justice is highly decentralised,
the CJEU gives them guidance by the preliminary rules procedure. These indirect actions are by
far the most common form of action by the CJEU. Direct actions, including infraction are rare.
Direct action by individuals to the CJEU are hugely rare, the drafters of the treaties had a
deliberately restrictive view of this, most matters can be dealt with on the national level (similar to
subsidiarity).

The origin of the right to judicial protection in the European Union lies (in Nuewahl’s view) is now
based in the charter of fundamental rights of the European Union. For rights we generally look to
EU primary law - the treaties. The Lisbon treaty in Article 47 of the EU Charter on fundamental
rights didn’t create this right however. The right to a fair trial is based in the European
Convention on Human Rights but this only applies in relation to Human Rights rather than all
legal situations (also the Union is not a party to the Convention yet). Article 6 TFEU only
recognises protection of human rights and doesn’t add anything new. Article 19 TEU ensures
that the law is observed and that there is legal protection in the fields covered by EU law but was
only inserted by the treaty of Lisbon. Before Lisbon the role of the court was created by he CJEU
relying on the flimsier mandate of ensuring that the law in observed in the interpretation and
application of the treaties.

The Johnston 222/84 case refers to the common constitutional traditions of the member states,
this is a classic example of national law influencing Union law. There is a difference between
arguing that judicial protection is a national constitutional traditions and that that therefore means
that there is a right at the union level for judicial redress.

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The CJEU has been hugely courageous in creating European Unoin law, building the legal
principles from scratch. They have gone as far as inserting words into the treaty which do not
actually appear. In the case of Les Verts vs EP the CJEU allowed them to challenge a measure
of the EP when there was no treaty right to challenge European Union acts - the court reasoned
that there should be universal applicability of the law.

Infractions

Direct action to the CJEU arguing the infringement of the TFEU or secondary legislation
(regulations, directive, decisions, international agreements). This right lies in article 258/259 of
the Treaty. The Cion and member states have the right to do this, although it is normally the
commission. Individuals have no right to launch an infraction.

Member state national laws, the practice of applying the law, pure administrative action, failure to
act and, especially common, a failure to transpose can all constitute grounds for an infringement.

The first outcome by the court is declaratory. Although not directly negative This encourages
action and can form a basis for claims of damages.

The commission is not obliged to pursue a case however, and it can refuse to act on the grounds
of circumstance. Most often 90% of situations are resolved by administrative diplomacy. If not
resolved Cion writes formally to the member state in an ‘Infraction Letter’ explaining why the
state has gone wrong and what will be needed to correct it. After this the commission may go to
the court of justice.

Annulment

An annulment is an argument that an act of the EU is illegal. This annuls it completely and is a
means to guarantee the balance of power between the institutions.

The CJEU has given a very wide interpretation of the ‘acts’ which can be the object of an
annulment action - any act intended to create legal effects (ie not recommendations and
opinons). In AETR 22/70 it was an internal decision about competence to negotiate international
treaties. There is no jurisdiction over the CFSP except the division of power (ie not really CSFP
actually Single Market) and restrictive measures against individuals or companies.

Annulments may be launched on the gourds of Article 263 TFEU:

+ Lack of competence; -
+ infringement of an essential procedural requirement; - act within the rules
+ infringement of the treaties or of any rule relating to their application; - important on
constitutional traditions point
+ misuse of powers - very hard to prove, example of giving out posts in the EU.
and a fifth in 277 TFEU:
+ illegality of an underlying act - act not in itself illegal but based on an act which was not
challenged within the 2 month time limit.

Annulment actions have the consequence of declaring the act to be ex tunc as if the act never
had existed. This is clearly almost impossible and incredibly expensive.

Before the Court different actors have different standings.

Privileged applicants | Member states, Council, EP, Cion

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Semi-privileged | ECB, Court of Auditors, Committee of the Regions - can only ask where their
institutional procedures are threatened.

Private individuals | Natural or legal persons - Private individuals can challenge, under Article
263 TFEU acts where:

1 - they are the addressee of an act, e.g. anti-trust actions

2 - an act is of direct and individual concern to the them and against a regulatory act which is of
direct concern to them and does not entail implementing measures.
a - direct concern means that the EU action rather than member state action or
transposition must be in contention (see Piraiki)
b - individual concern was defined (see Plaumann 25/62) as being “by reason of certain
attributes which are peculiar to them or by reason of circumstances in which they are
differentiated from all other persons and by virtue of these factors distinguish them individually
just as in the case of the person addressed.” This implies an obligation of the community to
make your particular situation into account and that it differs from the general situation.

LIsbon made this easier by adding that individuals could appeal “against a regulatory act which
is of direct concern to them and does not entail implementing measures”. Whilst this means that
it is easier for individuals to appeal it is not clear what a regulatory act is. Based on case law
(T-262/10, Microban v. Commission) it appears that this may mean where the Commission has
been delegated acts outside of the OLP. The Microban case was one where the commission
authorises products for sale within the legislative framework of larger law.

Given this the Court of Justice seems to think that ‘Regulatory acts’ means “acts of general
application other than legislative acts” - notably delegated acts, implementing acts (regulation or
other general act). Acts where there is no parliamentary involvement. It could be possible to
argue that the notion of a regulatory act also encompasses acts which have to pass through
parliament but we await case law.

Preliminary rulings

Preliminary rulings are indirect actions where national courts seek an opinion from the CJEU to
clarify an aspect of a case related to EU law so as to ensure consistent application. Preliminary
rulings can be on the interpretation of treaties and acts of institutions or on the validity of EU
measures (indirect check on the legality)

Lower national courts have the discretionary right to seek opinons whilst courts of last resort
have an obligation to seek preliminary rulings. This obligation is passed over if there is clear
jurisprudence or if the answer is evident (see Cilfit). The CJEU has only very very rarely refused
to do so (fictitious litigation) but there are arguments that the court should have no right to say
no.

CJEU preliminary rulings apply, since the Lisbon treaty, to all areas of EU law except a couple of
areas (previously JHA was exempt). Under article 276 two things remain exempt:
+ the validity or proportionality of operations carried out by the police or other law-enforcement
services of a Member State; and,
+ the exercise of the responsibilities incumbent upon Member States with regard to the
maintenance of law and order and the safeguarding of internal security.’

Damages

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There must be damage done and a direct link between the faulty act of the EU institution and
and the damage. Legislation is rarely eligible for damages as it is directly intended to change the
situation of individuals. The standard is instead set at a manifest beach of a higher norm for the
protection of individuals (such as human rights).

There is no provision in the treaty for damages where member states have caused them in the
implementation of EU law (although obviously one can seek damages in national courts).
However damages can be sought where member states are in breach of EU law, Article 3 TUE
forces member states to make good.

Lecture 3 - Direct effect

Direct effect has not always been precisely defined, the ECJ is not always consistent and is not
in the treaties. It is distinct from direct applicability (defined in 288 TFEU) and which refers to
regulations being directly applicable without a need for transposition. Direct effect relates to
whether an EU law creates rights or obligations which an individual can invoke seeking legal
redress. Direct effect creates a second valid source of law in a country - and the question as to
whether EU law can be invoked in national courts is itself a matter of EU law.

Van Gend en Loos

Van Gend en Loos was the first case to establish direct effect by determining that the effect of
EU law was self-determined rather than by national constitutions; it is defined as being distinct
from public international law. Also in Van Gend en Loos the Court determines that requests for
preliminary rulings are admissible in this situation.

The Netherlands in Van Gend en Loos argues that the treaty provision is only binding on
member states and gives no rights to individuals; the court however found that the article didn’t
need to say that it was invokable to be so. They also argues that the treaty only speaks of the
direct applicability for regulations and not for the treaty. Further Governments cannot always
defends themselves before the courts and so Article 12 shouldn’t have been invokable. Even if it
was invokable the Netherlands also said the article wasn’t clear whether the reclassification was
a raise in customs duties.

The Belgian intervention argued that invokability was a question fo national constitutional law,
anything else would have changed the nature of the intergovernmental treaty. Belgium also
argues that this is a question of application not interpretation.

The Commission argued that member states couldn’t be left to determine the application of the
law, that would defeat the point of the EC treaty as there would be differential application. The
Commission argues that there is no systematic access to a supranational court and therefore
there must be a means to enforce the rights the treaties aim to give to them. The Commission
argues that Article 12 is is precise, complete and clear.

The Court itself looks to the whole system rather than the treaty to find that individuals can
invoke EU law. The Treaty preamble mentions governments and people and these are both
represented in the institutions the EC has. The court somewhat dubiously that this all means that
the EC had created a new legal order with limited sovereignty. The court concludes that the right
of individuals to invoke the treaty increases its effectiveness as a check on the actions of states.

The Court’s judgement in Van Gend en Loos greatly increases the efficacy of the treaty.

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- Private parties can invoke the Treaty.
- Decentralisation of judicial control becomes a reality.
- A. 267 TFEU (ex- A. 177 EEC) allows a uniform interpretation of EU law.
- Reciprocity facilitates acceptance of DE.

The case has a huge lasting legacy in that Direct effect can be found in articles where it is not
stated, which one are known by the classical Van Gend test:
– Clear (sufficiently precise for a court to rule).
– Unconditional (of outside events).
– Complete (not in need of complementary action by institutions).

Van Duyn

Van Duyn, having been refused entry to the UK to work for the Church of Scientology, argued in
the Uk national court that there was a) a directly affecting article of the treaty; b) a directly
affecting directive based on that article; c) that the public policy grounds (personal conduct) for
refusal of entry didn't apply to membership of the Church of Scientology and, d) the practice of
the UK was discriminatory against foreign nationals of any other state..

In Van Duyn case Ms Van Duyn argued that the Free Movement article complied with the Van
Gend test and that the directive also passed the test.

The Court rules that the Articles was subject to judicial control to check proportionality; but more
radically that directives could be directly invoked, despite the need for transposition. That the
relevant article says that regulations have direct effect, doesn't means that directives cannot -
the purpose of the directive in this case is to narrow the discretion of the directive in this case.
Again the real reason for finding direct effect is to make EU law work - the teleological reasoning.
This reduced the distinction between regulations and directives by limiting the scope for
implementation (although different articles only provide for implementation via regulation or
directive so the distinction remained).

On the question of discrimination the Court let that stand on the grounds of public international
law; they also didn’t give a clear understanding of the real question which mades Van Duyn even
more controversial.

Ratti

In Ratti the Court gave a reasoning for the direct effect of directives which made it seem
‘pathological’, much narrower than was previously thought.

Ratti is normally quoted in relation to the time limited for the transposition of directives. The
Court also said that a Member State could not punish an individual for its own failure to comply
with an obligation.

The Court found that member states could not adopt standards more stringent than those found
in the directive but also that a directive could not be relied upon before the implementation
deadline was up (although in some later circumstances Inter-Environnement Wallonie)

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The reasoning in Ratti seems to show that directives only apply to member states.

Lecture 5 - Supremacy

Supremacy of EU law has three forms:

- Primacy
- Autonomy
- Duty

Primacy

Primacy argues that where EU and national law conflict national judges must rule from the
european norm. The national norm remains valid however.

Autonomy

Its is important that EU law is not dependent on other legal orders for its redress, procedures, or
amendment. This applies both to public international law and to national law. The EU legal
system has its own institutions, proceedures, constitutional character and methods.

Distinct from public international law, EU law can have direct effect on citizens and apply in the
face of the opposition of governments. The European Union legal order also cannot be amended
by a new treaty, but requires the full IGC procedure.

In the Kadi case the EU claimed power to interpret binding UN SC resolutions according to its
own legal structures.

All autonomy is relative however; the EU legal system depends on actors in other legal systems
(national institutions particularly) for application, legislation, and judicial control. To be effective
the EU needs to control these other institutions however. Treaty provisions, Secondary Law and
Judicial interpretation (particularly equivalence of EU and national claims and effectiveness of
EU legislation) are all used to do this.

Duties

Article 4(3) TEU restricts the autonomy of the MS who cannot simple reject EU law but who have
a duty to provide access to justice (damages, access to a court).

Costa v ENEL

Primacy was first codified in Costa v ENEL where an Italian lawyer (Costa) contested his very
small bill on the grounds that the nationalisation of the Italian electricity company violated the
articles on freedom of establishment; preferential treatment for government companies. When
Costa v ENEL was litigated there was only Van Gend & Loos, this case seemed to go even
further.

The CJEU has a scope technically limited to interpretation of primary law and validity and
interpretation of secondary law. Interveners said that whilst the Italian law may well breach the
treaties that the Court was not competent to decide this but that the Commission must launch an

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infringement procedure, . This is one of the arguments that EEC treaties were like ordinary
public international law.

The CJEU responded that it did have jurisdiction because the purpose of preliminary references
is to gives lower national courts real power and privilege to ask questions to the CJEU and that
this is just as important as the higher courts’ duty to do so given that most cases are decided at
a lower level. The CJEU therefore argues it must have an open, inviting jurisdiction,
reformulating the question to give a useful answer within its scope. The decentralized nature of
the EU legal order means the CJEU must help national courts where possible.

The judgment created a clear view that EU limited the effectiveness of national law. «The
transfer by the states from their domestic legal system to the community legal system of the
rights and obligations arising under the treaty carries with it a permanent limitation of their
sovereign rights, against which a subsequent unilateral act incompatible with the concept of the
community cannot prevail ». This view was restated in the (second) Simmental case which
clearly stated that national procedural law is suppressed by EU law.

Costa v ENEL is also important in defying supremacy by reference to autonomy: «The transfer
by the states from their domestic legal system to the community legal system of the rights and
obligations arising under the treaty carries with it a permanent limitation of their sovereign rights,
against which a subsequent unilateral act incompatible with the concept of the community
cannot prevail ». This limitation of sovereignty lies not in an individual article of the treaty but
more in the whole body of them (like in Van Gend & Loos) and MS have created a elgal system
which governs itself.

IHG and Solange

IHG was based in a conflict between a Regulation and the German Grundgesetz (Basic Law).
The European regulation prescribes import licences to enhance transparency in commercial
flows (see third part, Title III TFEU on the common agricultural policy). Import licences are
granted by MS, and the importer who wants to obtain them has to deposit a sum of money as a
guarantee. If the licence is not used, one looses the money (except if one can argue force
majeure). In the case, IHG maintained that:
a) the system was disproportionate to the aim; and,
b) forfeiture is a disproportional infringement of the right to property granted by Grundgesetz
(Basic Law).

The German court agreed but asked for a ruling on whether in the case of conflict between a
Regulation and the Grundgesetz, which has precedence?

By contrast to the Grundgesetz, the EECT did not contain a catalogue of fundamental rights.
(Now though there is the Charter) There was at the time no directly elected EP to ensure
democratic accountability of authority. However, A. 164 EEC (now A. 19 TEU) requires the Court
to ensure observance of the law in the application and the interpretation of the Treaty. A. 173
EEC (now A. 263 TFEU) provides for an annulment action on grounds of breach of the Treaty or
« any rule relating to its application. »Would the Court patrol conformity with the constitution of a
Member State?

In its judgement the CJEU found that the validity of Community law or its effects cannot be
affected by arguments that it is contrary to domestic human rights. By contrast, the CJEU argued
that one needs to see if Community law contains analogous rights. Respect for fundamental
rights is an integral part of the general principles of law the respect of which is guaranteed by the

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ECJ. On the details of the licensing system the CJEU found them not to be excessive.

The sequel came when the issue was referred to the German Constitutional Court, who gives its
famous case law called « Solange ». As long as (Solange) the EC does not have a catalogue of
fundamental rights and no directly elected parliament, the constitutional court reserves a right of
control.... (« Solange- I »). This was supplemented by two later cases.

Lecture 7 - Free Movement of Goods

Free movement of goods is a substantive law (all the actual legal rules of EU law, comparable
with a national code. The CJEU has played a huge role in building the internal market normal by
teleological rulings working from the desired outcome for the EU and the market and then ruling
how to get there. The CJEU is particularly interested int he free circulation of goods as a guiding
principle of Justice. The CJEU almost looks as if its changing the treaty sometimes by inserting
words into the treaty.

Single Market

The single market is an economic expression making the european market analogous to a
national market; this has distinct economic advantages. The market is based around the
protection of the european market rather than national markets though several policies:

- Prohibition of customs duties and charges having equivalent effect*

- Common external tariff
- Prohibition of quantitative restrictions and measures having equivalent effect*
- Prohibition of discriminatory or protectionist taxation*
- Adaptation of national monopolies
- Competition policy / rules on state aids
- Link with the other fundamental freedoms: persons, services, capital (common market).

The common market is distinct from the internal market, initially a more restrictive conception the
internal market was only mentioned in the Single European Act in 1987 as an area without
frontiers. The common market before the SEA was mostly decided by unanimity, but under the
SEA the internal market lay in a different part of the treaty with more QMV decision making.

The CJEU gives very wide definitons to goods, workers and movement and very narrow
definitions to the exceptions to freedom of movement provided for by the treaty.

Elimination of borders

The elimination of physical borders was controversial, as a measure with clearly more than
economic implications. Borders entail administration and make it possible to hinder imports from
member states which stands in opposition to the common market.

The elimination of customs formalities, queues, waiting time is all good for trade but requires
cooperation of member states and the strengthening of external borders of the common market,
for example harmonising health checks at external frontiers,

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Before the beginning of the internal market or its symbolic completion on 1 January 1993 some
MS went further with the beginning of Schengen cooperation outside the structures or the EU,
although it was later integrated in the EU construction.

Mutual recognition

In the beginning of the work on the common market everything was based on harmonisation but
eventually, thanks to the CJEU we ended up with the country of origin principle or mutual
recognition.

Mutual recognition ensure that the sale of a good (or service) that is produced/offered legally in
a MS may not be prohibited in another MS – even if in national law the technical requirements
may differ in those states.

Mutual recognition has only one derogation: public policy (health, consumers, environment….)
but this derogation is subject to strict judicial control.

Mutual recognition is sometimes called negative integration, it is opposed to harmonisation and

the uniformity of law whilst mutual recognition is the removal of barriers to difference. Mutual
recognition has advantages:

- Conservation of the rules of the MS of origin and the host MS.

- Respect of the principle of subsidiarity, local traditions and national diversity (now directly
referenced in the post-Lisbon treaties).
- Market in regulatory options.

but mutual recognition also can be seen to have drawbacks:

- Case-by-case progress; lack of visibility.

- Harmonisation is still necessary to avoid that companies escape to countries with the lowest
standards. Race to the bottom in regulation.

At the time of the entry into force of the SEA in 1987, the proceedural tools were handed to the
institutions to create a real single market on 1 January 193 removing non tariff barriers
particularly. The Cockfield report proposed >270 measures to remove barriers to trade such as
Physical obstacles like borders; Technical obstacles like inspections certifications, and technical
norms and Fiscal obstacles.

Customs duties and CEEs

Customs duties have been eliminated by the treaty but there is an entire legal body of work on
Charges having Equivalent Effect (CEE). CEEs are levies having effect as duty payable on a
cross-border transfer of goods. The legal regime of the European Union in attempting to
establish a customs union prohibits not only customs duties but those charges that, if they were
allowed, might seriously distort the market. A charge will be treated as subject to these rules if it
is a levy imposed by a member state on goods when they cross a border, even if the charge is
not formally called a customs duty but which does actually have the same blocking effect on the
goods in question: see United Foods and Van den Abeele v. Belgium [1981] ECR 995.

The CJEU often accepts measures like inspections based on consumer protection or health but
the CJEU does not allow CEEs to be attached to these. The host country taxpayer must bear the
burden of this. There are exceptions however, for example payment for service rendered to the
trader may be charged for; such as storage, although this is only when the trader asks for it

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rather than when it is a compulsory requirement. There are also exceptions where the levies for
inspections are required under EU secondary law although the amount of the frees must be
proportional to the expense incurred.

Discriminatory internal taxation

Article 110 TFEU (not the area prohibiting Customs duties and CEEs) prohibits discriminatory or
protectionist taxation both directly and indirectly. It does not of course prohibit internal taxation.

Internal taxation is defined as being any “ financial charges within a general system of internal
taxation applying systematically to domestic and imported products according to the same
criteria. » These are not to be considered as charges having equivalent effect. (Case 77/72,
Capolongo v. Maya.)

These charges are illegal when they hit importation harder than the domestic product
(discrimination or protectionism). They are also illegal if their purpose is to finance advantages
from which only domestic products can benefit. For CEEs the available compensation is 100
percent.

Non-tarif barriers and Dassonville, Cassis de Dijon and Keck and Mithouard

Non tariff barriers are at the heart of the Free Movement of Goods. Article 34 TFEU seems to
have an absolute prohibition but Article 36 rather undermines this with a number of justifications
for restrictions or prohibitions such as public morality, policy or security or the protection of
national treasures and archaeological patrimony, which shall not constitute means of arbitrary
discrimination or disguised restriction on trade between MS.

Article 34 does not apply where there is a harmonising piece of EU legislation.

Health and public policy are as important as free movement of goods but the proportionality test
is hard to meet. The rules of importing states to meet the Article 36 hurdle must be:

- Necessary to satisfy mandatory requirements;

- proportionate to the objective; and,
- Appropriate and an unintrusive to trade as possible

Quantiative restrictions have been defined by case law to include absolute bans, quotas
provided for by national legislation and others. Most are rather old fashioned nowadays, and we
face Measures having Equivalent Effect (MEEs). The definition of these is rather darker; there
was a transitional directive in 1969 giving a definition but it has lapsed and we must look to the
case law for a definition.

The directive in 1969 gave a broad definition:

« laws, regulations, administrative provisions, administrative practices, and all instruments

issuing from a public authority, including recommendations; that can hinder import »; or which,

« make access of imported products to the domestic market, at any marketing stage, subject to a
condition which is not laid down for domestic products or to a condition differing from that laid
down for domestic products, and more difficult to satisfy »

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It crucially unclear if the existence of differences between member state legislation (eg colour
and quality of car headlights) constitutes a MEEQR. This question was not covered by the treaty
which looked only at legislation targeting imports or exports.

The CJEU gave a very wide definition of MEEQR, which was so large that it has since retreated.
This original definition came in the Dassonville case: « all trade measures or trading rules
enacted by the Member States which are capable of hindering, directly or indirectly, actually or
potentially, intra community trade…. ». In the facts of the Dassonville case the facts of the matter
made a relatively simple distinction between importers and domestic production by requiring
importers of whiskey certifying the origin of the product. Dassonville was an alcohol exporter who
argued that the requirement was a MEEQR and the court responded with its general statement
in auditing to arguing that there was a clear impact on imports.

Cassis de Dijon (Rene Zentrale vs Bundesmonopolverwaltung für Branntwein) demonstrated

that this broad rule applied to differences in legislation where there was no direct distinction
between imported and domestic goods. Rene Zentrale argued that the
Bundesmonopolverwaltung für Branntwein could not apply a national rule as a MEEQR to the
import of Cassis de Dijon legally produced in another MS. Germany argued that Article 34 did
not apply o national provision that regulated the situation of all traders int eh same way with
making a distinction between importers and local producers. Germany also argued that even if
Article 34 applied this restriction was justified under Article 36 on the grounds of public health.
The commission argued that this was rubbish and that it was disproportionate when one could
for example put an alcohol percentage label on the bottle. The CJEU ruled that Article 34 did
apple and its applied across the board even where national law did not directly address imports
and also that, although MS can regulate in the public interest in general. The CJEU did (and
does) not rule on the justification of individual measures but lays out the headings and grounds
on which a MS may do so. Despite adding new headings to Article 36 the CJEU has maintained
it has not changed the treaty.

The CJEU has moved to a more limited definition of MEEQR by introducing a distinction
between rule regarding production and rules regarding selling arrangements. In the Keck and
Mithouard case a French law restricting resale in at a loss (without any alteration of the product)
was found to be a MEEQR. The French argued that this preserved competition and could be
justified. The Court didn’t even examine that question however and clearly made a u-turn
(« contrary to what was previously established ») and argued that these measures were not
even subject to Article 34 and therefore subject to justification under Article 36. Instead the CJEU
argued that the rules but be tested to see if they applied to all operators equally and could affect
in the same way (in law and in fact) the commercialisation of domestic and imported products. If
there was equal effect (in Keck and Mithouard there was) that the Treaty did not apply.

These judgements have been controversial as they have opened the door to private companies
arguing direct effect against almost anything on the grounds that it is a potential barrier to trade.
Often businesses ask judges for provisional protection. An example are the famous Sunday
Trading cases in which national courts were required to examine and determine the purpose of
the Sunday trading rules which were decided to be selling arrangements applying equally to
imported and domestic goods beyond the scope of Article 34.

How to solve a Freedom of Movement of Goods case

Imagine one has a national measure which is an obstacle to trade…

1 - Harmonisation | Is it regulated by the EU? If so just apply the regulation/directive.

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2 - Is it a good? | Rather fundamental but often overlooked in exams. Under Article 28 the
Freedom of Movement of Article 34 applies to:

- goods originating in the MS; and,

- goods originating in third countries that are «free circulation», i.e., after completing the
customs formalities and payment of customs duties at the external border (cf. A. 29 TFEU).
- Commission v. Italy, 10 December 1968: « products that can be appreciated in money and be
the object of commercial transactions ».
- Works of art are goods. Electricity is goods. Waste is goods. Coins that are not any more in
use are goods.

If not a good the Free Movement of Services might apply and the definition of obstacles to the
free movement of services is different and there is less case law (no Keck derogation yet).

3 - Is it about import/export/transit | Imports are in Article 34, exports and goods in transit in
Article 35. In Rioglass and Transremar the CJEU established that goods intended for non-MS
were subject to EU law

4 - Intra-community trade | Measures having a negative effect on non-MS can still be illegal as
can those which which only affect one MS. Sunday trading is an example.

5 - Could it be a MEEQR? | Dassonville give the definition although Keck provides a distinction
between product related and marketing related measures. Product related measures are always
MEEQRs whilst the Selling Arrangement cases are not subject to Article 34 if they are equally
applicable to all goods.

Distinctly applicable (Measures that do not apply equally to domestic and imported goods... such
measures discriminate against imports because they make importation more difficult and costly
relative to the domestic product (e.g. demanding higher safety checks on imported goods).

Indistinctly applicable (Measures which appear on their face to be equally applicable to domestic
and imported goods, but the effect of the measures disadvantages imported goods by requiring
them to satisfy the state's domestic set of rules for similar products. These measures cover the
marketing of products in the widest sense (e.g. butter packaging))

6 - Are there any Derogations? | Does anything come under Article 36’s derogations

7 - Is the measure proportional? | Article 36 requires that restrictions, even justified ones should
not form a arbitrary discrimination or disguised restriction on trade. The ECJ controls the
application of the derogations.

- A national provision should not be extended beyond what is necessary for the protection of the
interests which it is aiming to protect.
- There must not exist any other means by which the same can be achieved which is less of a
hindrance to intra-community trade.
- Even if the objective is legitimate, any measure that is manifestly disproportionate to the
objective is contrary to Community law.

8 - Give advice! | consider also types of motions, chances of success and the opportunity or
damages under Francovich.

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