ࡱ>  @ bjbj ؝؝>....vTD8'''(ll(l8n2(:)"@)@)@)= #= /=mmmmmmm$oRJrm=<^===m@)@)ynRRR=X &@)@)mR=mRRik@)( 0VB'JLuj%mn0nj8raPZr0k88rk`7=K=RY= e=X7=7=7=mm88$\$QF88\Scope of the Services Directive 123/2006 Draft Paper Sinia Rodin  1. Scope of the freedom to provide sevices A requirements within scope of the SD and Arts 43 and/or 49 EC B requirements outside scope of the SD, but within the scope of Arts 43 and/or 49 EC C requirements outside scope of the SD and of 43 and 49 EC, but within the scope of other provisions of the EC Treaty applicable to market freedoms C/B outside the scope of the SD, but within the scope of Arts 43 and/or 49 and within the scope of other provisions of the EC Treaty applicable to market freedoms. In such situation application of Arts. 43 and 49 is subsidiary C/A requirements are within the scope of the SD and within the scope of other provisions of the EC Treaty applicable to market freedoms. Application of the SD is subsidiary D entirely outside scope of EU law E/F requirements that can be both, within scope of EU law, and outside scope of EU law, depending on whether they restrict access of providers from other Member States to the services market. Such requirements are prima faciae outside scope of EU law and the Member States have jurisdiction to regulate certain area (e.g. social security , civil status ). If, however, suc a requirement falls within the scope of EU law, the Member State concerned has to justify it by one of the overriding reasons of public interest (mandatory requirements). Burden of proof is on the State concerned. If not justified, national requirements are inapplicable. In such situations EU law shields individual right to free movement of services as against national law. G/A Situations covered by Art. 3 of the SD where the SD is in conflict with certain specific rules of EU law regulating specific aspects of access to services, or exercise of the right to provide services in specific sectors or in respect of specific professions. In such situations, specific rules shall prevail. Image 1 Scope of EU law applicable to free movement of services  SHAPE \* MERGEFORMAT  Scope of the EC Treaty provisions on services For a national requirement to be within the scope of Community Law, three criteria have to be satisfied. there has to be a service within meaning of Communty Law; freedom to provide service has to be substantially impaired; at least 2 Member States have to be involved; First, the concept of services, as defined by Art. 50 of the EC Treaty is interpreted broadly by the ECJ. A service will be a service within the meaning of the Treaty if it is provided for remuneration or pay, i.e. if it is an economic activity. Service provider can be a State or a non-profit organisation.  For example, activites performed by the State in the context of social, educational or judicial activities, such as activities of the national education system are not services within meaning of Community Law.  It is possible that state-operated educational services are outside the scope of the Directive, while private fall within its scope.  Second, only situations that have certain substantial effect on the freedom to provide services fall within the scope of the EC Treaty provisions on services. The relevant ECJ's reasoning on services is to certain extent similar to its reasoning in respect of goods, notably to the reasoning in Keck.  The ECJ understands certain national requirements that are equally applicable to domestic services and services from other Member States, that are only marginally affecting free movement of services, as being outside the scope of Arts. 43 and 49. This will be the case if effects of national requirements are "too uncertain and indirect" to conclude that they restrict the relevant market freedom.  Such requirements which are non-discriminatory are outside scope of the EC Treaty, and therefore also outside the scope of the Directive. The third criterion for determining the scope of EU law applicable on services is the trans-border element. At least two Member States Have to be Involved. Several situations are possible. Situation ExampleService recepient travels to another Member State to receive a service from a provider established in that other Member State A tourist travels from Member State A to Member State BService provider travels to another Member State to provide a service on temporary basis to service recepients in that other Member StateA plumber from Member State B, repairs plumbing in Member State A Service provider establishes herself in another Member State in order to provide services in that Member State on permanent basis A hairdresser from Member State B opens a beauty parlour in Member State ABoth services provider and services recepient remain in their respective Member States. It is the service that travels across border. An attorney from Member State B provides legal advice in the Member State A by phone or internet  If the three above mentioned criteria are satisfied, a national requirement will bw within the scope of Arts. 43 or 49 of the EC Treaty. It should be remembered that EU law can affect also situations which are in regulatory competence of Member States and which, prima faciae, are not within scope of Community Law. However, the fact that certain subject matter falls within the sphere of competence of the Member States, does not imply that it is exempt from the judicial review of the ECJ and from requirements of EU law. This is well established by the case law of the ECJ according to which even areas as civil status  ili social security schemes.  More precisely, in areas where regulatory powers of the Member States are not preempted, Member States have an obligation to interpret and apply national law in accordance with EU law.  In other words, provisions on fundamental freedoms, including the free movement of services act as a shield that protects individual rights based in EU law and grants them immunity from application of national law, even in situations where relevant national law is in exclusive competence of the Member States. For example, in Stamatelaki, the ECJ held that Art. 49 of the EC Treaty prevents application of a Member State regulating social security, the effect of which is that a recepient of medical services in another Member State can not exercise her right to reimbursement of costs.  From the perspective of an individual, there is an individual right to be reimbursed, while national law that would make exercise of that right excessively difficult has to be disapplied. As the ECJ had put it: Whilst it is settled case-law that Community law does not detract from the power of the Member States to organise their social security systems and that, in the absence of harmonisation at Community level, it is for the legislation of each Member State to determine the conditions in which social security benefits are granted, when exercising that power Member States must comply with Community law, in particular the provisions on the freedom to provide services. Those provisions prohibit the Member States from introducing or maintaining unjustified restrictions on the exercise of that freedom in the healthcare sector (see, in particular, Case C-157/99 Smits and Peerbooms [2001] ECRI5473, paragraphs 44 to 46, and Watts , paragraph 92).  The described situation is marked by letter (E) in the Image 1 above. Scope of the Services Directive Where certain situation falls within the scope of Community Law as described above, all services that are not excluded by the Services Directive itself will be within its scope. At the same time, they will remain within the scope of Arts. 43 and 49 what follows from general relationship of primary and secondary Community Law, but also from Art. 3(3) of the Services Directive which specifies that Member States have an obligation to apply the Directive in accordance with Treaty provisions on the free movement of services and the freedom of establishment. In other words, if certain service is provided by service providers established in a Member State, it will fall within the scope of the Directive, save where specifically exempted by the Directive. Such services will be subject either to the general provisions of the EC Treaty, or to specific sectoral directives. According to Art. 4(1) of the Directive, ) ""service" means any self-employed economic activity, normally provided for remuneration, as referred to in Article 50 of the Treaty". The basic criterion is "remuneration or pay", in accordance with the case law of the ECJ, what will have to be assessed on the case-by-case basis. Against this backdrop, the scope of the Services Directive is restricted by the subsidiary character of the Services Directive, and by explicit restrictions contained in the Directive itself. Subsidiary application of the Services Directive There are the two elements of subsidiarity of freedom to provide services under the Services Directive. First, certain national requirements that are within the scope of EU law, due to the subsidiary nature of freedom to provide services, as set forth by Art 50 of the EC Treaty, may also fall within the scope of application of provisions applicable to other fundamental market freedoms. In such cases, freedom to provide services shall be applicable only to extent necessary to complement the protection of other fundamental freedoms (Image 1, situation C/B).  Second, apart of the general subsidiarity under Art. 50 of the EC Treaty, the Services Directive in Art. 3 brings an additional list of sources in respect of which the Directive has subsidiary application (see Image 1, situation G/A). This applies particularly to specific sectors of services and to specific professions. To se posebice odnosi na posebne sektore usluga i na odreene profesije koje In such cases, specific rules of Community law will be applicable. Art. 3 specifies the following sources in respect of which the Services Directive has subsidiary application: Directive 96/71/EC; Regulation (EEC) No 1408/71; Directive of the Council No. 89/552/EEC ; Directive 2005/36/EC. The list is not closed and can be extended by the ECJ. Interestingly, Art. 3(2) specifies that the Directive does not concern rules of private international law, in particular "rules governing the law applicable to contractual and non contractual obligations, including those which guarantee that consumers benefit from the protection granted to them by the consumer protection rules laid down in the consumer legislation in force in their Member State." This wording opens a question of scope of this restriction, that is, the question whether the Directive can affect national consumer protection law in sense that the Member States could invoke a high standard of consumer protection in order to restrict application of the Services Directive. This can seemingly not be the case, especially not in respect of Art. 16 of the Services Directive. Also, the wording "which guarantee that consumers benefit from the protection granted to them" assumes that restrictions of the freedom to provide services can not possibly be a benefit for the consumers. In other words, this provision has to be given a narrow meaning so that it can not affect rules of private international law only, but can affect substantive national consumer protection rules. In other words, national standards of consumer protection can not justify a restriction of freedom to provide services under the Services Directive. Restrictions of the Scope of the Services Directive under the Directive In addition to the subsidiary applciation of the Services Directive, the Directive prescribes a number of restrictions itself. Such restrictions can be found scattered at different places in the Directive. It is possible to identify: general restrictions contained in the Preabmle; general restrictions contained in the body of the Directive; specific restrictions of individual provisions of the Directive DoU; Ad hoc restrictions. (a.) Preambular restrictions. The Preamble contains two types of restrictions. One tye is characterised by wording "the Directive does not concern" and "the Directive does not apply to."  Such wording can be found, for example, in recitals 9 and 10, but, in essence, the entire Preamble is permeated by such restrictions. The main meaning of the described restrictions seems to be the narrowing of the scope of the Directive in dimension of its implementation and application on national level. For example, Recital 9 specifies that the Directive applies only to national requirements that regulate access to services or provision of services, but not to national rules such as traffic regulations, land use regulations, and similar. Let us take an example. Let us take a national rule that sets, for example, a maximum driving speed for trucks at 70 km/h. That rule is a traffic regulation to which the Services Directive does not apply, subject to Recital 9 of its Preamble. However, if a national requirement would prescribe that delivery of goods to retailers may be arranged only between 6 and 8 AM, such a provision would be within the scope of the freedom to provide services, since it restricts the access to market of transport services to service providers from other Member States. Such national rule would be within the scope of the relevant provisions of the EC Treaty, regardless of Recital 21 of the Preamble of the Services Directive that is exempting transport services from its scope. Second type of restrictions contained in the Preamble concerns the case law of the ECJ. Such restrictions, in essence, are based in relationship of primary and secondary EU law, and in understanding of case law of the ECJ as an interpretation of primary EU law to which directives are subordinate. In brief, case law of the ECJ that interprets relevant provisions of the EC Treaty, especially Arts. 43, 46 and 49, can not be set aside by virtue of a directive which is a source of secondary law. It is only natural that the Services Directive, when defining certain fundamental concepts, carefully states that certain expression has to be interpreted in accordance with the case law of the ECJ.  In other words, case law of the ECJ interpreting primary law, has the same significance as primary law itself, and it is only natural that the Directive can not set it aside. This will show important for interpretation of justifications under Art. 16 of the Services Directive, in light of Art. 46 of the EC Treaty.  (b.) General restrictions apply to the entire Services Directive. By their nature and wording they are similar to the restrictions contained in the Preamble. Art. 2 of the Directive sets forth services that are explicitly excluded from its scope, by wording "shall not apply".  However, other provisions of the Directive, such as Art. 1, also have exclusionary effects, and the Directive uses the wording "does not affect". (c.) Specific restrictions are those set forth by individual provisions of the Services Directive. They restrict the scope of its individual provisions, but do not affect the application of the Directive as a whole. An example can be found in Art. 17 of the Directive which restricts the scope of Art. 16 which is the general rule on freedom to provide services under the Directive. Accordingly, Art. 16 does not apply to a number of services of general economic interest, and to a number of other situations or legal sources. (d.) Ad hoc restrictions are set forth in Art. 18 of the Directive, calling them case-by-case derogations. Those apply also to Art. 16, i.e. restrict its application, but have to be assessed on case-by-case basis in exceptional circumstances only, and only in respect of safety of services. Such restrictions apply to Art. 16 only, and not to the entire Directive. Image 2 Limits of the Services Directive  SHAPE \* MERGEFORMAT  Image 3 Scope of the SD, as limited by the SD  SHAPE \* MERGEFORMAT   Jean Monnet Chair, Pravni fakultet Sveu iliata u Zagrebu  Case C-444/05 Stamatelaki [2007] ECR I-3185,  Case C-267/06, Maruko, [2008] ECR, decision of the ECJ of April 1, 2008, not yet reported  Case 36/74 Walrave and Koch v Union Cycliste Internationale [1974] ECR 1405, 4 and 5.  Joined cases C-51/96 and C-191/97, Delige  See the Services Directive, Preamble, Recital 34. Lectures organized by an institution financed by public funds are not services within the meaning of the Treaty. See C-109/92, Wirth v. Landeshauptstadt Hannover, [1993] ECR I-6447  Barnard, Catherine, Unravelling the Services Directive, 48 Common Market Law Review (2008) 323, 333  Keck  In respect of free movement of workers see case C-190/98, Graf v. Filzmozer Maschinenbau GmbH, [2000] ECR I-493, paragraph 25. See also case C-69/88 Krantz v Ontvanger der Directe Belastingen [1990] ECR I-583, paragraph 11 and case C-44/98 BASF v Prsident des Deutschen Patentamts [1999] ECR I-0000, paragraphs 16 i 21.  See case C-267/06, Maruko, [2008] ECR 0000, 59: "Admittedly, civil status and the benefits flowing therefrom are matters which fall within the competence of the Member States and Community law does not detract from that competence. However, it must be recalled that in the exercise of that competence the Member States must comply with Community law and, in particular, with the provisions relating to the principle of non-discrimination.  In respect of free movement of services see case C-444/05 Stamatelaki [2007] ECR I-3185, 23. Vidi i predmete C-372/04 Watts [2006] ECR I-4325, 92, i C157/99 Smits and Peebooms [2001] ECR I-5437, 44 do 46  Von Colson  Stamatelaki, supra, biljeka 39, operative part  Id. 23  See e.g. joined cases C-286/82 & 26/83 Luisi & Carbone [1984] ECR 377 10  Ovi se izri aji mogu nai i u pojedinim lancima DoU  Sli ne se formulacije viaekratno javljaju i u preambuli, ali i u pojedinim lancima DoU. Vidi npr. l. 4 "overriding reasons relating to the public interest" means reasons recognised as such in the case law of the Court of Justice...  I would concurr with Derrick Wyatt in saying that directly discriminatory measures can still be justified under Art. 46 of the EC Treaty.  Those are non-economic services of general interest, financial services, such as banking, credit, insurance and re-insurance, occupational or personal pensions, securities, investment funds, payment and investment advice, including the services listed in Annex I to Directive 2006/48/EC, electronic communications services and networks, and associated facilities and services, with respect to matters covered by Directives 2002/19/EC, 2002/20/EC, 2002/21/EC, 2002/22/EC and 2002/58/EC, services in the field of transport, including port services, falling within the scope of Title V of the Treaty, services of temporary work agencies, healthcare services whether or not they are provided via healthcare facilities, and regardless of the ways in which they are organized and financed at national level or whether they are public or private, audiovisual services, including cinematographic services, whatever their mode of production, distribution and transmission, and radio broadcasting, gambling activities which involve wagering a stake with pecuniary value in games of chance, including lotteries, gambling in casinos and betting transactions, activities which are connected with the exercise of official authority as set out in Article 45 of the Treaty, social services relating to social housing, childcare and support of families and persons permanently or temporarily in need which are provided by the State, by providers mandated by the State or by charities recognized as such by the State, private security services, and services provided by notaries and bailiffs, who are appointed by an official act of government. 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