Seminar 1 European Law (2016/2017), Utrecht University. 

Geanonimiseerd. 

European Law Seminar Week 1 (2016/2017)

Freedom of establishment & freedom to provide services

Question 1

Jay Booth is a famous doctor who holds a medical biology PhD from Trinity College Dublin. Although he has several years of experience and has extensively published in the area of postmenopausal birth, he cannot find a job in the currently declining Irish job-market. Therefore, he starts to provide technical and medical advice to a Bosnian private clinic where it is possible for postmenopausal women to give birth. Jay goes to Bosnia quite often. There, he analyses specific cases and organises meetings with the staff on these cases. The clinic pays him a small fortune for every case he works on. The clinic also provides him with the necessary facilities and equipment. Jay is further completely independent to organise his activities.

Can you explain which Treaty freedom Jay exercises?

Answer to question 1:

You have to choose one of the freedoms:

• Freedom of workers (art. 45 TFEU)
• Freedom of establishment (art. 49 TFEU)
• Freedom of providing services (art. 56 TFEU).

Jay has no freedom of workers (art. 45 TFEU), because he is not in service of a company, there is no subordination and he is independent.

Jay has no freedom of establishment. You must pursue ‘’an economic activity, through a fixed establishment in another Member State for an indefinite period’’, according to the Viking-case, par. 70.

The concept of establishment is a Community national to participate, on a stable and continuous basis, in the economic life of a Member State other than his State of origin and to profit therefrom (Gebhard-case, par. 25). This is not the case here, because Jay is not working for an indefinite period.

Providing of services is temporary (par. 26): you look at the duration of the service, its regularity, periodicity or continuity.

Providing services (Art. 56 TFEU)

Jay is providing services to the Italian private clinic (Article 56 TFEU). Jay is providing a medical service advice, which could be seen as activities of the professions (sub d). Jay gets remuneration, he gets paid for his services. Medical services fall within the scope of Article 56 TFEU. It is temporary, because he’s not continuously working on cases. He goes to Bosnia quite often, so he travels a lot, but he returns to Ireland. It’s not on a regular basis, there is no contract between Jay and Bosnia. The case doesn’t say anything about regularity. It doesn’t matter that Bosnia does offer facilities and equipment. This does not mean that Jay may not equip himself (par. 27).

Question 2

Suppose an English bookmaker, Doris Reader UK, established in the United Kingdom, carries on business as a bookmaker under a licence granted pursuant to the Betting, Gaming and Lotteries Act, which authorises Doris to carry on its activities in the United Kingdom and abroad. Doris offers the European public an extensive range of fixed sports bets on national, European and world sporting events.

On behalf of Doris, Petroni offers on the Italian market users the possibility to register their intentions to bet, which are then forwarded to Doris.

Italian legislation stipulates that no licence is to be granted for the taking of bets, with the exception of bets on races, regatta, ball games or similar contests and then only under certain conditions. Authorisation to organise betting is granted exclusively to licence holders entitled to do so by the State. Any person who unlawfully participates in the organisation of lotteries reserved by law to the State shall be liable to a term of imprisonment of up to 3 years.

Criminal proceedings were brought against Petroni, who is being accused of having unlawfully organised clandestine bets.

Before the court Petroni argues that the Italian legislation violates Article 56 TFEU.

1. Argue why the Italian legislation possibly violates Article 56 TFEU?

Page 422. The public interest justification

Page 424: Gambling. 

Answer to question 2a:

Does it fall under the scope of art. 56 TFEU?  Petroni offers services across borders, it’s economic because he got money, and it’s temporary because it’s not on a regular basis that he offers bets. Look at Alpine investments, par. 22; ‘’Article 59 EEC Treaty covers services which the provider offers by telephone to potential recipients established in other Member States and provides without moving from the member State in which he is established’’.

Article 56 TFEU describes that: ‘’Within the framework of the provisions set out below, 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’’.

Article 56 describes that all people of Member States should be able to provide services in other states within the Union. Petroni wanted to provide services, such as organising clandestine bets. He is charged because he wanted to provide a service. Therefore, there is a violation of Article 56 TFEU, because Petroni should be able to provide any service within the Union. This is a discriminatory treatment, because Petroni is not able to provide services, while other people in the Union still can (Josemans-case). There is a block on the market, so the legislation affects the access to the market (Alpine investment-case, par. 38).

Will it be justified? That is the last question, but it’s not relevant in this question yet. We will come to that later.

2. Argue why Article 49 TFEU has possibly been violated?

Answer to question 2b:

The freedom of establishment is violated, because Petroni is not able to organise clandestine bets in Italy. This affects the freedom of establishment from the English Doris. Petroni is working on behalf of Doris, but he is established in Italy. If Petroni is not able to provide the service in Italy, there is a barrier. Doris is setting up an agency via Mr. Petroni and article 49 TFEU also applies on setting up agencies. There is a restriction of the freedom of establishment. See Gebhard case, par. 37: ‘’National 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’’.

English workmen will not be able to provide the services in Italy and this is a violation of the freedom of establishment. There is no longer access to the market, Alpine case par. 38.  So, there is a violation.

3. The Italian government submits that the legislation is compatible with Union law for the following two reasons:

- Petroni is an Italian national and the activities which he has been accused of have all taken placed in Italy;

- Suppose Article 56 TFEU is violated, the legislation will still be justifiable for reasons of general interest, namely limiting and strictly controlling the supply of gaming and betting.

Give your opinion on these two arguments.

Anwswer to question 2c:

Italy states that it’s an internal matter, p. 365 EU Union Law. It’s about the interstate element. If there is no interstate element, only the national law applies. This is not the case, because Doris wants to enter the Italian market, so that would be a cross-border element. It’s not entirely an interstate-element at all. If there would be no cross-border element, than the Italian law would not violate the Treaty.

Justification is possible on the exception grounds of the Treaty. If there is a discriminatory ground, only the grounds of the Treaty can justify the legislation. If there is an non-discriminatory rule, justification will have to be examined as followed (rule of reason):

Gebhard, par 37.:

• They must be applied in a non-discriminatory manner;
• They must be justified by imperative requirements in the general interest (p. 422 Book);
• They must be suitable for securing the attainment of the objective which they pursue;
• And they must not go beyond what is necessary in order to attain it (proportionality).

In this case, the rule of reason should be used, because there is no discriminatory infringement. You must check whether the measure is proportionate.

Preventing gambling to protect the people from their own desire to gamble, could be justified whether it’s a necessary and proportionate measure (Alpine investments, par. 40 in combination with par. 37 of the Gebhard case).

Applied in this case the measure applies without distinction. Italy tries to prevent gambling, relating to the general interest. Is the measure suitable? > The link between the measure and the pursued aim. This is okay.

Is it proportionate? No, it’s not proportionate: Look into the Gambelli case.

Question 3

The lighthouse guard of the lighthouse ‘Vuurlicht’ on the Dutch island Terschelling will soon retire. The Ministry of Transport and Public Works, which is responsible for lighthouses, has recently placed an advertisement for the appointment of a new light-house guard. The Sardinian Lampi is the only applicant and hired as the new lighthouse guard. As a civil servant he concludes an agreement with the health insurance company AZ. He generally likes his job, but due to the regular walking up and down the stairs, his weak right hip causes him increasing pain and discomfort. After a visit to the general practitioner on the island of Texel he is referred to the Academic Hospital in Groningen. Here he learns that his hip is seriously damaged. He is nevertheless put on a waiting list, since his situation is considered urgent but not ‘very urgent’.

The pains Mr. Lampi suffers from are becoming more and more unbearable. Therefore, he decides to go to Italy to ask for a second opinion from a doctor who works in a private hospital in Verona and is specialised in hip operations. The Italian doctor regards his situation as very urgent and is of the opinion that an immediate operation is necessary. After a successful operation Mr. Lampi returns to the Netherlands and asks the health insurance company AZ for the reimbursement of the costs of the treatment incurred in Italy. The insurance company AZ refuses to pay Mr. Lampi, since, according to AZ, it is not legally possible to have the costs of a treatment in a private hospital in another Member State reimbursed, unless it concerns the treatment of children under 12 years of age.

Mr. Lampi disagrees with this explanation and starts a procedure before the national court stating that Article 56 TFEU has been violated. The court decides to stay the proceedings and ask for a preliminary ruling from the European Court of Justice. The following question is put forward to the ECJ:

Suppose that Article 56 TFEU can be relied upon against a private insurance company, is a national law prohibiting the reimbursement of the costs of a medical treatment in  a private hospital in another Member State, unless it concerns the treatment of children under 12 years of age, compatible with Union law, in particular Article 56 TFEU?

What would be the answer of the Court?

Answer to question 3:

According to the Watts-case, medical services provided for consideration fall within the scope of the provisions on the freedom to provide services (par. 86). It also concludes the freedom for the recipients of services (par. 87), including persons in need of medical treatment, to go to another Member State in order to receive those services there. Article 56 TFEU is applicable, because the Sardinian is working/providing services in the Netherlands (another Member State), he earns money with it. He gets a medical operation, which is temporary and the operation is in another State (cross-border element). In this case, Mr. Lampi falls within the scope of Article 56. There is no justification for the fact that he has to pay for the treatment himself. The Netherlands should pay for the treatment, because this is the Host Member State, and Mr. Lampi is entitled to receive the money of the treatment back from that Host Member State. Therefore, there is a breach of the Treaty. It’s not proportionate, because there’s only a reimbursement for children under 12. Why that distinction? This is not proportionate.

Look into par. 98, 101, 103 and 106 of the Watts- case.