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Promotion of the right of establishment in EU: focusing on the Imperative Requirement Doctrine

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Abstract

Consolidation of the “Common European Market” is a key feature of the European Union, which is made possible by the freedom in movement of goods, capital, services, and people. The freedom of movement for businesses manifests itself as the right of establishment. The aim of this paper is to examine various issues surrounding the right of establishment and to analyze the position of the European Court of Justice (ECJ) in each case. The analysis of cases illustrates a consistent opinion of the ECJ: The right of establishment is highly protected, but it must be exercised in the context of national legislation. Government regulation in market access, on the other hand, must meet the imperative requirement doctrine: it must be non-discriminatory, there must be general public interest at stake, the regulation must be an effective means of promoting public interest, and the regulation must be necessary and proportional to the general interest at stake. In sum, the ECJ upholds the right of establishment but nonetheless respects the states’ specific regulatory authority as long as they conform to the imperative requirement doctrine.

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Notes

  1. Firstly, as an objective, market access serves to develop and unify the various approaches to identifying a restriction on the fundamental freedoms, and secondly, as a residual legal test, it delineates the outer limits of the Treaty (Khan 2015). ECJ, Case C-434/04 Ahokainen and Leppik [2006] ECR I-9171, para. 21.

  2. ECJ, C-19/92 Kraus v Land Baden-Württemberg [1993] ECR I-1663, para. 32.

  3. ECJ, C-55/94 Gebhard v Consiglio dell’Ordine degli Avvocati e Procuratori di Milano [1995] ECR I-4165, para. 37.

  4. In Korea-EU FTA Chapter 7 Section C (Establishment), “establishment” is defined in Article 7.9 as follows: (i) the constitution, acquisition or maintenance of a juridical person; or (ii) the creation or maintenance of a branch or representative office within the territory of a Party for the purpose of performing an economic activity. Accordingly, Articles of Market Access (Article 7.11), National Treatment (Article 7.12), and MFN Treatment (Article 7.14) provide no less favorable treatments in establishments and investors of the other Party.

  5. Refer to the General Agreement on Trade and Tariff (GATT), Part I, Article I (General Most-Favoured-Nation Treatment) and Part II, Article III (National Treatment on Internal Taxation and Regulation). WTO (2016). https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm

  6. The Four Freedoms in the Treaty are set out in Part Three Title II “Free Movement of Goods” and Part Three Title IV “Free Movement of Persons, Services and Capital.”

  7. For example, ECJ, C-19/92 Kraus v Land Baden-Württemberg [1993] ECR I-1663.

  8. ECJ, Case C-81/87 Daily Mail and General Trust vs H.M. Treasury, [1988] ECR 5483 (hereinafter, Daily Mail).

  9. ECJ, Case C-210/06 Cartesio Oktató és Szolgáltató Betti Társaság, [2008] ECR-9641 (hereinafter, Cartesio). See Cartesio, para. 104, and Daily Mail, para. 19.

  10. See Daily Mail, para. 20. and Cartesio, para. 105.

  11. ECJ, Case C-212/97 Centros Ltd v. Erhvervs-og Selskabsstyrelsen [1999] ECR I-1459 (hereinafter, Centros).

  12. ECJ, Case C-208/00 (2002). Überseering BV v Nordic Construction Company Baumanagement GmbH (NCC) [2002] ECR I9199 (hereinafter, Überseering).

  13. ECJ, Case C-167/01 Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd [2003] ECR I-10155 (hereinafter, Inspire Art).

  14. Refer to the opinion of Advocate General Darmon in The Queen v H.M. Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust plc, C81/87, para. 4.

  15. ECJ, Case C-81/87 Daily Mail and General Trust vs H.M. Treasury, [1988] ECR 5483.

  16. See Daily Mail, para. 16.

  17. ECJ, Case C-212/97 Centros Ltd v. Erhvervs- og Selskabsstyrelsen [1999] ECR I-1459.

  18. ECJ, Case C-208/00 Überseering BV v. Nordic Construction Company Baumanagement GmbH (NCC) [2002] ECR I-9919.

  19. ECJ, Case C-167/01 Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd [2003] ECR I-10155.

  20. See Centros, para. 27.

  21. See Überseering, para, 81 and para, 93.

  22. ECJ, Case C-9/02 Hughes de Lasteyrie du Saillant v. Ministère de l’Économie, des Finances et de l’Industrie [2004] ECR I-2409 (hereinafter, Lasteyrie).

  23. ECJ, Case C-446/03 Marks & Spencer plc v. David Halsey (Her Majesty’s Inspector of Taxes) [2005] ECR I-10837 (hereinafter, Marks & Spencer).

  24. ECJ, Case C-411/03 SEVIC Systems AG v Amtsgericht Neuwied [2005] ECR I-10805 (hereinafter, SEVIC Systems).

  25. ECJ, C-470/04 N v Inspecteur van de Belastingdienst Oost/kantoor Almelo [2006] ECR I-7409 (hereinafter, N).

  26. See Lasteyrie, para. 47.

  27. See Lasteyrie, para. 51.

  28. ECJ, C-478/98 Commission v Belgium [2000] ECR I-7587.

  29. See Lasteyrie, para. 54.

  30. ECJ, Case C-210/06 Cartesio Oktató és Szolgáltató Betti Társaság [2008] ECR-9641

  31. ECJ, Case C-371/10 National Grid Indus BV v Inspecteur van de Belastingdienst Rijnmond [2012] ECR I-12273 (hereinafter, National Grid Indus).

  32. ECJ, Case C-378/10 VALE Epitesi kft [2013] 1WLR 294 (hereinafter, VALE).

  33. See SEVIC Systems, para. 18.

  34. See VALE, para. 36. Biermeyer (2013).

  35. See SEVIC Systems, para. 18.

  36. As mentioned in Footnote 5, Korea-EU FTA Chapter 7 Section C (Establishment) defines “establishment” in Article 7.9. Accordingly, Articles of Market Access (Article 7.11), National Treatment (Article 7.12), and MFN Treatment (Article 7.14) provide no less favorable treatments in establishments and investors of the other Party.

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Authors and Affiliations

  1. Meister Law Office, Seoul, Korea

    Junghwan Jeon

  2. Dongguk Business School, Dongguk University-Seoul, Seoul, Korea

    Gyoung-Gyu Choi

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Jeon, J., Choi, GG. Promotion of the right of establishment in EU: focusing on the Imperative Requirement Doctrine . Asia Eur J 14, 297–318 (2016). https://doi.org/10.1007/s10308-016-0448-z

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