FREE MOVEMENT OF
SERVICES AND THE
RIGHT OF
ESTABLISHMENT IN
THE EU
Prof. dr.sc. Iris Goldner Lang
Faculty of Law, University of Zagreb
igoldner@pravo.hr
ARTICLE 49 TFEU
(1)
… restrictions on the freedom of establishment
of nationals of a Member State in the territory
of another Member State shall be prohibited.
Such prohibition shall also apply to restrictions on the
setting-up of agencies, branches or subsidiaries by
nationals of any Member State established in the
territory of any Member State.
(2)
Freedom of establishment shall include the right to
take up and pursue activities as self-employed
persons and to set up and manage undertakings,
in particular companies or firms within the
meaning of the second paragraph of Article 54, under
the conditions laid down for its own nationals
by the law of the country where such establishment is
effected…
ARTICLES 56 AND 57 TFEU



Art. 56(1) … restrictions on freedom to provide
services within the Union shall be prohibited in
respect of nationals of Member States who are established
in a Member State other than that of the person for whom
the services are intended.
Art. 57(1) concept services: “where they are normally
provided for remuneration, in so far as they are not
governed by the provisions relating to freedom of
movement for goods, capital and persons”.
Art. 57(3) … the person providing a service may, in order
to do so, temporarily pursue his activity in the Member
State where the service is provided, under the same
conditions as are imposed by that State on its own
nationals.
NOTES
1) What
is prohibited? - Art. 49 & 56 talk about
“restrictions” and “same conditions”
2) Does Art. 49 give right only to EU citizens in a
MS other than the MS of their nationality?
3) Does free movement of services apply only to the
movement of service provider?
(cross-border element)
4) Direct effect
5) Subsidiary nature
“RESTRICTIONS”
INTERPRETATION OF ART. 49 & 56 TFEU
1)
 Originally interpreted as mainly prohibiting a MS from

discriminating individuals or companies from other MSs

More recently, the CJ has held that Art. 49 and 56
prohibit any national measures which hinder or make
less attractive the exercise of the right of establishment
and free movement of services.
→ discrimination approach

obstacle approach
market access test
“RESTRICTIONS” AND
JUSTIFIED LIMITATIONS

Gebhard (C-55/94)

Measures liable to hinder or make less attractive the
exercise of fundamental freedoms guaranteed by the
Treaty must fulfil four conditions :
 They must be applied in a non-discriminatory manner
 They must be justified by imperative requirements in
the general interest
 They must be suitable for securing the attainment of
the objective which they pursue
 They must not go beyond what is necessary in order to
attain it
ESTABLISHMENT V. SERVICES
Establishment
v services: permanent v temporary
Establishment – stable and continuous basis on which the
economic or professional activity is carried on
Service - performance of economic activities on a temporary
basis - duration,regularity,periodicity and continuity
Example: a bank with an office in another MS:
establishment, not services
A bank which sells a product in another MS over the
internet: services
The fact that the provision of services is temporary does
not mean that the provider of services may not equip
himself with some form of infrastructure in the host MS
(including an office, chambers or consulting rooms) in so
far as such infrastructure is necessary for the purposes of
performing the services in question.
“RESTRICTION”
Same principle as Cassis de Dijon: non-discriminatory
measures are caught
 “all measures liable to hinder or make less attractive
the exercise of fundamental freedoms” – “to prohibit,
impede, make less attractive”
 Again emphasis on “market access”
 Basic issue: to draw the line between what effectively
restricts market access and what does not

IMPERATIVE REQUIREMENTS
Examples:
• Protection of workers (Rush Portuguesa)
• Consumer protection (Schindler)
• Maintenance of order in society (Schindler)
• Good reputation of financial sector(Alpine Investment)
• Preservation of national historical and artistic heritage
(C-180/89 Commission v. Italy)
• Protection of recipients of services (Van Wesemael)
• Protection of intellectual property (Coditel)
• ...
3) FREE MOVEMENT OF SERVICES
WHO MOVES -CROSS-BORDER ELEMENT
(1) Service provider (MS 1) → Service recipient (MS 2)
(2) Service provider (MS 1) ← Service recipient (MS 2)
(186/87 Cowan)
service
(3) Service provider (MS 1) ↔ Service recipient (MS 2)
4) DIRECT EFFECT
Vertical direct effect of Art. 49 - 2/74 Reyners
 36/74 Walrave and Koch (para. 17):
“Prohibition of such discimination does not apply
to the action of public authorities, but extends
likewise to rules of any other nature aimed at
regulating in a collective manner gainful
employment and the provision of services”
 C-438/05 Viking (para. 65):
“There is no indication in that case-law that could
validly support the view that it applies only to
associations or to organisations exercising a
regulatory task or having quasi-legislative
powers.”

VIKING LINE - FACTS
Viking is a Finnish ferry
operator
 Suffers from Estonian
competition: Finnish wages
too high
 Seeks to ‘reflag’ the Rosella,
to conclude new collective
agreement with trade unions
 Finnish trade union and
International Transport
Federation take collective
action
 Viking relies on the right of
establishment

VIKING LINE - HELD
Trade union collective action not outside scope of
Treaty provisions on establishment
 Right to take collective action is a fundamental
right (see also Charter), but can be limited
 Balance must be struck: collective action justified
in so far as ‘jobs or conditions of employment are
jeopardised or under serious threat’

THANK YOU!
http://www.pravo.unizg.hr/EJP/nastavnici__faculty/iris_goldner_lang
igoldner@pravo.hr