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

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

ext. For instance if licences are required for a trade

activity by nationals, licences will also be required

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

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