Free Movement of Establishment and Services

The principles in regard to free movement of establishment and services are fairly similar to those of Free movement of goods. It makes sense that all freedoms are applied in similar ways in order to make it fair and make sure that they remain a freedom.

Before starting, the cases of ‘Reyners v Belgium’ and ‘Van Binsburgen’ confirm that both article 49 (which governs establishment) and Article 56 (which governs Services) both have Direct Effect.


Establishment or services?

It is not always clear when looking at a scenario whether it is a case of establishment or services. The case of Gebhard looked at the differences and came to the conclusion that:

  1. For establishment, there must be continuous and stable work, which must have a degree of permeance.
  2. For services to be engaged, they must peruse an activity on a temporary basis.

Once identifying which article is likely to apply to the scenario, you can then consider them separately as they both have similar but different case law clarifying the law around it.


Is there a restriction?

Gebhard also looks at what is a restriction for Establishment. This is similar to Free Movement of goods in regard Dassonville. In Gebhard it said that a restriction was any provision, that directly or indirectly, actually or potentially, hindered or made less attractive, the exercise of fundamental freedoms. Any restriction placed on this must be non-discriminatory, in the general interest of its citizens, suitable for obtaining the objective and not go beyond what is necessary.

These are quite a lot of principles, which will be dealt with in turn. First looking at whether the restriction is distinctly applicable or indistinctly applicable, then looking at ways which the member states can restrict, then looking at whether those restrictions are proportionate.


Distinctly applicable

These are restrictions that are directly discriminatory on non-national EU citizens. For example, in the case of Reyners v Belgium, national law prohibited a person of any other nationality to practice law in their national courts. This was directly discriminate on all other countries, even neighboring ones which in some places overlapped considerably.

There matters will always be directly discriminate and will only be justifiable under the treaty article exceptions.


Indistinctly applicable

These are restrictions that on the face apply to all but make it less favorable to foreign nationals to establish in their country. For example, in Commission v Italy- contracts for data protection were only available to companies that had a majority of shareholders. This was said to be indirectly discriminate as it did not restrict any other companies getting a data protection contract, however Italian companies were more likely to have a majority of Italian Shareholders.

Indistinctly applicable measures can either be classed as Indirectly discriminate, or Non-discriminate. This distinction is not too important at the moment but will become more relevant when looking at the services directive.

Justifications for indirectly discriminate and non-discriminate restrictions can be found either under Treaty article exceptions or by Using the case of Gebhard.



Treaty article exceptions are those which are stated under Article 51 TFEU and 52 TFEU. Section 51 regards the exercise of official authority. Section 52 includes public policy, public security, and public health. These exceptions can all be found under the previous Blog post under Free Movement of Goods. They apply equally to all of the freedoms.

Justifications were also created under the Gebhard case where it adopted a Cassis style approach towards indistinctly applicable measures. These conditions have already been stated above but ca be broken down into 4 key areas:

  1. Non-discriminatory manner
  2. Imperative requirements of the state
  3. Suitable to the objective
  4. Not go beyond what is necessary.

This will apply to the facts of each scenario.



And then like everything within EU law, it must also be proportionate. This is hinted towards in the Gebhard test in relation to the ‘not go beyond what is necessary requirement’ Fir example, in the case of Sodamare, not being able to be represented by any foreign national was not proportionate. The more proportionate method would have been a requirement to have the same or similar standards of qualifications.




Now moving onto services which have a similar set of rules but are subject to different authority.



This can still be identified under Gebhard as and rules that make less attractive the use of fundamental freedoms.


Distinctly Applicable

The principle is the same, if there is a restriction of any foreign workers/companies providing a service, then this will be distinctly applicable and directly discriminate. The rule must only apply to foreign nationals. The authority for this is Van Binsburgen which was a case relating to qualifications, allowing them to be restricted if they are in the public interest and proportionate.


Indirectly applicable

Once again, this is the same principle as establishment. Where the rules apply to all but are more favorable to their own national citizens. The case of Sager identified that they must also take into account the additional rules that the state has imposed through the state legislature.


Treaty Justifications

In relation to services, the treaty exceptions are identified in Article 62 TFEU. These are once again the recurring treaty exceptions; public health, public policy and public security.

These exceptions can apply to distinctly or indistinctly applicable restrictions.


Justifications under Alpine investments

These are justifications taken as a cassis style approach and transferred into the free movement of services. These are mandatory requirements of the state, that must be suitable for their purpose and not go beyond what is necessary. Services will also have to apply the principle of proportionality and will not be justified if it isn’t proportionate. For example, in Van Binsburg, it was found to be proportionate to restrict certain jobs because they do not have the relevant qualifications.


However, this does it depends on the type of job. For example, it would be fair to say that in order to practice law in one country, they should have studied the law in that country. It would not be proportionate to restrict where there is no requirement to have certain qualifications for that job role, for example a job as a Secretary. They may need to have relevant experience, but it does not matter in which country they gained that experience.

These Justifications can only apply to indistinctly applicable measures.



The Services Directive 2006/123

The services directive applies in certain circumstances. First, we much look at whether the Directive will apply to the facts.

Article 2(1)-  are they established in the EU?

Article 4(1)- Are they a business service? A business service is one which operates for remuneration.

Article 2(2)- the directive will only apply to non-economic services of general interest, financial services, electronic communication, transport, temporary work agencies, health care, audio visual services, gambling, official authority,

Social services, private security, bailiff’s or taxation 2(3).

Then it must be questioned whether the free movement rights are engaged. These are article 49 and 56 TFEU. This means that the business must be operating another member state in order to engage their rights.

In order for a state to justify their restriction for establishment they must take into account the following articles of the service directive:

Article 14- a prohibited requirement can never be justified. What is included as a prohibited requirement is defined under the Article.

Article 9- authorised schemes and requirements to be evaluated allow restrictions that fall under these criteria; non-discriminatory, necessary and proportionate.

Services justifications:

In relation to services, they can never be justified if they are a prohibited requirement. This is defined under section 16(2) of the services directive.

It can be justified however under section 16(1) if it is non-discriminatory, necessary and proportionate.


Non-discriminatory defined

Non-discriminatory restrictions are ones that have no discriminate qualities. They apply to all, and there is an equal change for anyone to be able to be restricted. For example, restrictions on height can be seen as this. It is not discriminatory as all over the world there are short and tall people, but if there is a job which requires specifically tall people, e.g. in the UK, to become a spy you must be under 5ft11” so they are able to blend into the background more easily.


By Woodrow Cox

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