The Gazette 1976

GAZETTE

March

1976

EUROPEAN SECTION The effect on Irish Law of recent developments in European Community Law affecting the Right of Establishment This is a summary of a lecture which Mr. Bryan McMahon, LL.M., Ph.D., Solicitor, delivered to the 21st Seminar of the Society of Young Solicitors in Galway on 15th November, 1975. Dr. McMahon emphasised that the essence of the theory upon which the Community was founded is that free competition between Member States will stimulate economic activity within the Community as a whole, and will therefore improve its economic position vis-a-vis the rest of the world. In order to achieve this ultimate state of free competition, all tarriffs and quotas between Member States must be eliminated, currency restrictions must be abolished, and restrictive prac- tices and economic policies must be co-ordinated. Equally important is the removal of restrictions on movement of persons within the Community, and on the right of nationals within the territory of other Member States, which are considered essential elements of the building of economic integration within the Community. Freedom of establishment comprises:— (a) Freedom to engage in non-wage earning activity, (b) Free movement of workers, and (c) Free supply of services. The Free Supply of Services comprises giving expert advice, providing entertainment, expanding tourism, and transmitting films. Obviously these are not con- tinuous activities. The Free Movement of Workers covers activities tor which a regular wage or salary is paid. The category of "non-wage earning persons" com- prises self-emplcyed persons, and proprietors of all sorts of business and their partners, and includes broadly all industrial, commercial and professional activities. The idea of "establishment" presupposes some permanence, but not necessarily of long dura- tion. Generally speaking, such persons are allowed to set themselves up, and to set up branches, agencies or subsidiaries in the territory of any other Member State; broadly speaking, no other formalities need be observed but agreements will have to be reached on the equivalence of professional and academic quali- fications. In other words, foreigners are to be assimi- lated to nationals in exercising non-wage earning activities. Depending on whether a liberal or a re- strictive trade participation policy predominates in a particular country, the requirement for entry into the J^tail trade need not be uniform throughout the Community, but may vary from one country to the n ext. For instance if licences are required for a trade activity by nationals, licences will also be required b y foreigners from other Member States. However, it would not be legal for the Irish Government for instance to impose such severe restrictions in regulat- ing entry to trades that their own nationals would be favoured, as it would conflict with Art. 54 (3) (a) of the Treaty.

Exceptions are provided whereby there are areas in the Member States in which integration is not yet desirable. Generally the exceptions only reserve for nationals those offices and trades which are funda- mental to the safety of the State. The first exception relates to Article 55—"Activities within a State which include, even incidentally, the exercise of public authority". This probably applies to public offices, governmental positions at central or local level and civil service posts, and clearly applies to judges. It follows that in due course a German would be permitted to become a solicitor in Ireland, but could not subsequently be appointed a Judge. The exception in Article 55 does not apply to State monopolies, or to semi-State bodies, like Aer Lingus, transport, or electricity. Most of these bodies are not exclusive, and do not discriminate against public enterprise. The second exception relates to Article 56—Special administrative or legislative provision for foreigners shall be allowed if justified by reasons of public order, public safety and public health. The Directive regulat- ing this has been issued to harmonise its meaning. In effect, it means that a Frenchman who wishes to establish himself in Ireland cannot be refused per- mission on temporary economic grounds such as high unemployment, but he could be excluded on the ground of being a spy or a dangerous criminal, or having a highly contagious disease. A Council Direc- tive of February, 1964, clearly stated that neither a criminal record nor the expiration of an entry permit were enough to entitle National Courts to deport foreigners of other Members States. The third exception relates to Article 223, which permits Member States to exclude foreigners from the production of, or trade in, arms, ammunition and war materials. These industries are considered essen- tial for the safety of the State. The Implementation of the Right of Establishment In Article 53, a wide prohibition against all new restrictions was proclaimed. The direct and forceful language of Art. 53, by which "Members States shall not, subject to the provisions of the Treaty, introduce any new restrictions on the establishment in their territories, of nationals of other Members States", was intended to be self-executory, and to apply directly to the individual Member States without further action by the Community. This is reinforced by various decision of the European Court of Justice, such as Van Gend (1963) and Da Costa v. EN EL (1964). It follows that a Belgian businessman who estab- lished himself in Ireland, can invoke the protection of the Irish Courts against discriminatory restrictions as a result of the passing of the requisite constitutional amendment, and of the European Communities Acts of 1972 and 1973. A General Programme of Implemen- tation under Articles 52-58 was prepared, which spells out these Articles in greater detail, and created inter- national obligations between the Member States. This General Programme promulgated a timetable for the progressive removal of restrictions in specific areas by the end of the transitional period; this has already been achieved to a certain extent. The General Pro- gramme was to be implemented, as regards its more detailed applications, by means of Directives These Directives bind the Member States as to the goal to be attained, while leaving the means by which they

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