Services and Establishment
Articles 49 and 50 lay down the principle of freedom to provide services on a temporary
basis by a person established in one Member State to a recipient established in another.
Scope of Articles 49 and 50
Article 49(1) provides that:
“Restrictions on freedom to provide services within the Community shall be prohibited in
respect of nationals of Member States who are established in a State of the Community
other than that of the person for whom the services are intended”.
Therefore, this is the situations where the service provider established in State A holding
the nationality of one of the M/Ss provides services in State B and then returns to State a
once the activity is completed.
• Article 49 can be used to challenge rules laid down by both host states (State B) and the
home state (State A) which obstruct the provision of services.
• Most cases concern barriers raised by the host state (State B).
o Van Binsenbergen
▪ A Dutch national challenged a Dutch rule requiring legal representatives
to be established in the Netherlands before they could represent a person
in the Dutch courts.
▪ The lawyer, who was representing Mr B’s case before a Dutch social
security court, moved from the Netherlands to Belgium during the
proceedings.
▪ He was then told that he could no longer argue his client’s case.
▪ The Court found that the Dutch rule breached Article 49.
o Another example of a barrier raised by the host state can be seen in the case of
Commission v France.
• An increasingly number of cases concern obstacles to the provision of services created
by the home state (State A)
o Ciola
▪ The Court said that an Austrian company which provided moorings for
boats on Lake Constance to boat owners resident in other M/Ss could rely
on Article 49 against the Austrian authorities when they limited the
number of moorings available for boat owners resident abroad.
o Carpenter
▪ A Filipino national married to a British husband successfully challenged
British immigration rules which were going to result in her deportation on
the grounds that this would be detrimental to Mr and Mrs Carpenters’
family life and, therefore, to the conditions under which Mr Carpenter
exercised the freedom to provide services.
The freedom to move and receive a service
• If a service provider can move to the state of the recipient, then can the recipient move to
the state of the provider?
o Luisi and Carbone
, o Two Italians were fined for taking more money out of Italy than the currency
regulations permitted in order to go to another M/S as tourists and to receive
medical treatment.
o The Court said that the freedom to receive services from a provider established
in another MS was the ‘necessary corollary’ (means consequence) of the
freedom to provide services.
• This decision paved the way for various attempts at medical tourism with a view to
gaining access to treatment not available in the home state. Or, at least, gaining access
more quickly than otherwise.
Neither provider nor recipient travels:
• The Court has also said that Articles 49 and 50 apply where neither the provider nor the
recipient of the service travels but the service itself moves (e.g. by telephone, fax, email,
the internet etc) – De Agostini
• Alphine Investments
o The Dutch Ministry of Finance prohibited a Dutch company from telephoning
individuals in the Netherlands or in other M/Ss to offer them various financial
services (cold callings) unless they had the prior written consent of the clients.
o The Court ruled that Article 49 covered services which the provider offered by
telephone to potential recipients established in other M/Ss without moving from
the M.S in which the service provider was established.
• Bond
o Dutch law prohibited the distribution by cable of radio and television programmes
transmitted from other M.Ss which contained advertising aimed at the Dutch
public.
o The Court noted that the transmission of programmes across frontiers involved
two distinct, cross-frontier services:
1. The service provided by the cable companies in the receiving state (the
Netherlands) to the broadcasting companies in the transmitting state (e.g.
Luxembourg) by retransmitting programmes to their subscribers; and
2. The service provided by the broadcasting companies in the transmitting
state to the advertisers in the receiving state (the Netherlands) in
broadcasting adverts aimed at potential customers in the Netherlands.
o The Court also noted that both the services were provided for remuneration.
▪ First, the cable operators were paid in the form of fees which they
charged their subscribers for the service they provided to the
broadcasters. The Court said that it was irrelevant that the broadcasters
did not generally pay the cable network operators for relaying their
programmes because Article 50 did not require the service to be paid for
by those for whom it was performed.
▪ Secondly, the broadcasters were paid by the advertisers for the service of
broadcasting the adverts.
, Performance of a service for remuneration
What is a service?
Article 50
Services shall be considered to be ‘services’ within the meaning of this Treaty where they
are normally provided for remuneration insofar as they are not governed by the
provisions relating to free movement for goods, capital and persons.
• Article 50(1) provides that services shall be considered “services” within the meaning of
the Treaty where they are “normally provided for remuneration” and provided on a
temporary basis.
• Article 50 therefore has three elements.
1. Services
2. Remuneration
3. Temporary.
1) Services.
• Article 50(1) gives examples of what constitutes a service including:
o Activities of craftsmen
o The professions
o Activities of an industrial character.
o Activities of a commercial character
• Case law has significantly expanded on this, ruling that the following constitutes
‘services’
o An employment agency – Criminal Proceedings against Alfred John Webb
o Lotteries – Schindler
o Insurance – Safir
o Sporting activities – Deliege
2) Services are ‘normally provided for remuneration’.
• The need for an economic link
o Article 50(1) introduced the requirement that services are “normally provided for
remuneration”.
o The Court has used this rule to exclude services without a direct economic link
between the provider and the recipient from the scope of the Treaty.
o This can be seen in SPUC v Grogan.
▪ Handbooks prepared and distributed by various Irish students’ unions
included information about the availability of legal abortion in the UK.
▪ The SPUC, an anti-abortion group, argued that the distribution of such
information contravened the Irish ban on abortion and so sought an
injunction against Grogan, seeking to restrain the distribution of the
handbooks.
▪ Grogan argued that just because he was providing information about the
availability of a service the injunction constituted a breach of Article 49.
▪ The Court agreed that abortion did constitute a service within Article 50.
However, it said that Community law did not apply to the provision of
information about the indentity/location of clinics providing abortions
Articles 49 and 50 lay down the principle of freedom to provide services on a temporary
basis by a person established in one Member State to a recipient established in another.
Scope of Articles 49 and 50
Article 49(1) provides that:
“Restrictions on freedom to provide services within the Community shall be prohibited in
respect of nationals of Member States who are established in a State of the Community
other than that of the person for whom the services are intended”.
Therefore, this is the situations where the service provider established in State A holding
the nationality of one of the M/Ss provides services in State B and then returns to State a
once the activity is completed.
• Article 49 can be used to challenge rules laid down by both host states (State B) and the
home state (State A) which obstruct the provision of services.
• Most cases concern barriers raised by the host state (State B).
o Van Binsenbergen
▪ A Dutch national challenged a Dutch rule requiring legal representatives
to be established in the Netherlands before they could represent a person
in the Dutch courts.
▪ The lawyer, who was representing Mr B’s case before a Dutch social
security court, moved from the Netherlands to Belgium during the
proceedings.
▪ He was then told that he could no longer argue his client’s case.
▪ The Court found that the Dutch rule breached Article 49.
o Another example of a barrier raised by the host state can be seen in the case of
Commission v France.
• An increasingly number of cases concern obstacles to the provision of services created
by the home state (State A)
o Ciola
▪ The Court said that an Austrian company which provided moorings for
boats on Lake Constance to boat owners resident in other M/Ss could rely
on Article 49 against the Austrian authorities when they limited the
number of moorings available for boat owners resident abroad.
o Carpenter
▪ A Filipino national married to a British husband successfully challenged
British immigration rules which were going to result in her deportation on
the grounds that this would be detrimental to Mr and Mrs Carpenters’
family life and, therefore, to the conditions under which Mr Carpenter
exercised the freedom to provide services.
The freedom to move and receive a service
• If a service provider can move to the state of the recipient, then can the recipient move to
the state of the provider?
o Luisi and Carbone
, o Two Italians were fined for taking more money out of Italy than the currency
regulations permitted in order to go to another M/S as tourists and to receive
medical treatment.
o The Court said that the freedom to receive services from a provider established
in another MS was the ‘necessary corollary’ (means consequence) of the
freedom to provide services.
• This decision paved the way for various attempts at medical tourism with a view to
gaining access to treatment not available in the home state. Or, at least, gaining access
more quickly than otherwise.
Neither provider nor recipient travels:
• The Court has also said that Articles 49 and 50 apply where neither the provider nor the
recipient of the service travels but the service itself moves (e.g. by telephone, fax, email,
the internet etc) – De Agostini
• Alphine Investments
o The Dutch Ministry of Finance prohibited a Dutch company from telephoning
individuals in the Netherlands or in other M/Ss to offer them various financial
services (cold callings) unless they had the prior written consent of the clients.
o The Court ruled that Article 49 covered services which the provider offered by
telephone to potential recipients established in other M/Ss without moving from
the M.S in which the service provider was established.
• Bond
o Dutch law prohibited the distribution by cable of radio and television programmes
transmitted from other M.Ss which contained advertising aimed at the Dutch
public.
o The Court noted that the transmission of programmes across frontiers involved
two distinct, cross-frontier services:
1. The service provided by the cable companies in the receiving state (the
Netherlands) to the broadcasting companies in the transmitting state (e.g.
Luxembourg) by retransmitting programmes to their subscribers; and
2. The service provided by the broadcasting companies in the transmitting
state to the advertisers in the receiving state (the Netherlands) in
broadcasting adverts aimed at potential customers in the Netherlands.
o The Court also noted that both the services were provided for remuneration.
▪ First, the cable operators were paid in the form of fees which they
charged their subscribers for the service they provided to the
broadcasters. The Court said that it was irrelevant that the broadcasters
did not generally pay the cable network operators for relaying their
programmes because Article 50 did not require the service to be paid for
by those for whom it was performed.
▪ Secondly, the broadcasters were paid by the advertisers for the service of
broadcasting the adverts.
, Performance of a service for remuneration
What is a service?
Article 50
Services shall be considered to be ‘services’ within the meaning of this Treaty where they
are normally provided for remuneration insofar as they are not governed by the
provisions relating to free movement for goods, capital and persons.
• Article 50(1) provides that services shall be considered “services” within the meaning of
the Treaty where they are “normally provided for remuneration” and provided on a
temporary basis.
• Article 50 therefore has three elements.
1. Services
2. Remuneration
3. Temporary.
1) Services.
• Article 50(1) gives examples of what constitutes a service including:
o Activities of craftsmen
o The professions
o Activities of an industrial character.
o Activities of a commercial character
• Case law has significantly expanded on this, ruling that the following constitutes
‘services’
o An employment agency – Criminal Proceedings against Alfred John Webb
o Lotteries – Schindler
o Insurance – Safir
o Sporting activities – Deliege
2) Services are ‘normally provided for remuneration’.
• The need for an economic link
o Article 50(1) introduced the requirement that services are “normally provided for
remuneration”.
o The Court has used this rule to exclude services without a direct economic link
between the provider and the recipient from the scope of the Treaty.
o This can be seen in SPUC v Grogan.
▪ Handbooks prepared and distributed by various Irish students’ unions
included information about the availability of legal abortion in the UK.
▪ The SPUC, an anti-abortion group, argued that the distribution of such
information contravened the Irish ban on abortion and so sought an
injunction against Grogan, seeking to restrain the distribution of the
handbooks.
▪ Grogan argued that just because he was providing information about the
availability of a service the injunction constituted a breach of Article 49.
▪ The Court agreed that abortion did constitute a service within Article 50.
However, it said that Community law did not apply to the provision of
information about the indentity/location of clinics providing abortions
