Weak Right, Strong Court - The Freedom to Conduct Business and the
EU Charter of Fundamental Rights
By Xavier Groussot, Gunnar Thor Pétursson and Justin Pierce
Published in S Douglas-Scott and N Hatzis, Research Handbooks in European Law (Edward
Elgar, 2017), p. 326.
A commonality exists throughout the EU Member States in that they operate within the
framework of a market economy.1 In this respect, effective competition between businesses is
a key principle for economic growth and stability.2 Therefore, the freedom to operate a
business or engage in enterprise without unnecessary state intervention is an almost
universally acknowledged requirement. To some Member States, its importance has been
elevated to a higher legal status by finding its way into their constitutional apparatus,3
Unsurprisingly, the same concepts are found at an EU level, with the Union courts mentioning
the principles of freedom to conduct a business early on,4 and recognizing inter alia the right
to exercise an economic or commercial activity5 and the freedom of trade6 at Union
level. These rights and freedoms are only different in name.7 They have in common that they
do not constitute unfettered prerogatives and must thus be viewed in the light of their social
function. With the entry into force of the Lisbon Treaty, the EU Charter of Fundamental
Rights has finally become a legally binding document of primary law, a core element of the
Union’s legal order and the starting point for the ECJ judge for assessing the compatibility of
EU or Member States measures with EU fundamental rights.8 Notably, this Charter enshrines
an explicit provision (Article 16) on freedom to conduct business. The core question in this
Chapter is whether this explicit constitutional provision will bring a change of approach in
defining and relying on the freedom to conduct business in the EU. The Chapter is divided
into two main sections. The first section (1. A Weak Right with a Strong Potential?) analyses
the roots and text of Article 16 of the Charter. It is pointed out that, at first blush, the freedom
See A. Hatje, ‘The Economic Constitution’, in A. Von Bogdandy and J. Bast, ‘Principles of European
Constitutional Law’ (Hart, 2006), 587.
2
Article 119(1) and (3) of the TFEU, which recognises free competition as an objective of the Union.
3
See e.g. Article 41 of the Italian constitution and Article 38 of the Spanish Constitution or, more indirectly,
Article 45(3) [enshrines in the principles of social policy] of the Irish Constitution and Articles 12 (right to
choose an occupation) and 14 (right to property) of the German Constitution. In France, the Constitutional
Council recognizes the freedom of enterprise as closely connected to the right to property (see Décision no
2001/455 DC of 12 January 2002, loi de modernisation sociale, Rec. 49). Article 74 of the Danish Constitution
makes reference to ‘free and equal access to trade’. There is no specific provision on the freedom to conduct
business in the ECHR.
4
Case 4/73 Nold [1974] ECR 491. In Nold, the applicant argued that the new trading rules endangered the very
existence of the free development of its business activity. The Court did not examine the claim based explicitly
on the freedom to conduct business. In fact, it is often the situation that the ECJ prefers to address the claim on
other grounds such as the principle of equality, the protection of legitimate expectations or the economic
freedoms. See T. Tridimas, The General Principles of EU Law (OUP, 2005), p. 315.
5
Ibid., Nold and Case 44/79 Hauer [1979] ECR 3727.
6
Case C-240/83 Association de Défense des Brûleurs d’Huiles Usagées [1985] ECR 531.
7 See Opinion of A.G. Stix-Hackl in Cases C-184/02 and C-223/02 Spain and Finland v. Parliament and
Council [2004] ECR I-7789.
8
For a general overview on the impact of the Lisbon Treaty as regards fundamental rights protection in the EU,
see e.g. X. Groussot and L. Pech, “Fundamental Rights Protection in the EU post Lisbon Treaty”, Foundation
Robert Schuman Policy Paper, European Issue no. 173, 14 June 2010. Concerning the use of the Charter as a
starting point in EU adjudication, see e.g., Opinion of A.G. Bot in Case C-108/10 Ivana Scattolon [2011] ECR I7491.
1
1
to conduct business appears to be a ‘weak right’. However, this ‘weak right’ may be given a
strong meaning. In the second section (2. A Strong Court with a Weak Reasoning?), looking
at the recent case law of the ECJ, it seems that Article 16 of the Charter may strongly impact
at the EU level by offering not only a ground of challenging the policies of the Union but also
by clashing with the social policies of the Member States in horizontal situations. The
principle of proportionality is here often relied on by the ECJ in its reasoning. Is it done in an
appropriate way? The concluding section of the Chapter examines who is afraid of Article 16;
theorising that the strong interpretation of the Article may be troublesome for the institutions
of the Union, especially the EU Commission, and also for the application of social rights. We
find that contrary to previous thought the Article 16 is potentially both a powerful tool for
challenging Union acts, decisions and legislative interpretation in the future, and also
impacting Member States’ measures, even if originating in (purely) private conduct.
1. A Weak Right with a Strong Potential?
The Charter, Title II, has inserted Article 16 which states that ‘[t]he freedom to conduct a
business in accordance with Union law and national laws and practices is recognised’.
Although, the freedom to conduct business is not new to the EU, there is a history of the
Union giving effect to it prior to the Charter. This is reflected by the legal explanations which
consider Article 16 as being based on an amalgam of three distinct rights, i.e. the freedom to
exercise an economic or commercial activity; freedom of contract; and the right to free
competition.9 As it resorts from the legal explanations the first two rights find expression in
the ECJ case law and, by contrast, the third right is based on the wording of the Treaties (ex
4(1) EC) and Article 119 TFEU. Interestingly, the Advocate General in Mark Alemo-Herron
goes into the history of the freedom to conduct business and its close link with the right to
property and the need to protect economic activity:
“The freedom to conduct a business has a long history in European Union law. Originally seen as a corollary to
the fundamental right to property, it started to have a separate existence in the 1980s, ultimately achieving the
status of a general principle of European Union law. Today, explanations of the Charter point out that this article
is based on the case-law of the Court of Justice recognising not only the freedom to pursue an economic or
commercial activity, but also contractual freedom and the principle of free competition. However, despite the
fact that the freedom to conduct a business derives from these three sources, to date the case -law has not, in fact,
provided a full and useful definition of this freedom. The judgments in which the Court has had occasion to rule
in this area have gone no further than either referring to the right to property or simply citing the provisions of
Article 16 of the Charter. This does not mean that the basic elements of the right cannot be inferred and, in this,
the sources referred to in the explanations of Article 16 of the Charter are of considerable assistance. In effect,
the freedom to conduct a business, as stated in that article, acts to protect economic initiative and economic
activity, obviously within limits but nevertheless ensuring that there are certain minimum conditions for
economic activity in the internal market. Thus, the freedom to conduct a business acts as a limit on the actions of
the Union in its legislative and executive role as well as on the actions of the Member States in their application
of European Union law”.10
“This Article is based on Court of Justice case-law which has recognised freedom to exercise an economic or
commercial activity (see judgments of 14 May 1974, Case 4/73 Nold [1974] ECR 491, paragraph 14 of the
grounds, and of 27 September 1979, Case 230/78 SpA Eridiana and others [1979] ECR 2749, paragraphs 20 and
31 of the grounds) and freedom of contract (see inter alia Sukkerfabriken Nykøbing judgment, Case 151/78
[1979] ECR 1, paragraph 19 of the grounds, and judgment of 5 October 1999, C -240/97 Spain v Commission
[1999] ECR I-6571, paragraph 99 of the grounds) and Article 119(1) and (3) of the Treaty on the Functioning of
the European Union, which recognises free competition. Of course, this right is to be exercised with respect for
Union law and national legislation. It may be subject to the limitations provided for in Article 52(1) of the
Charter.”
10
Case C-426/11 Mark Alemo-Herron v. Parkwood Leisure [2013] nyr, paras 48-50 of A.G.’s Cruz-Villalón
opinion. See also A.G. Mazák in C-544/10 Deutsches Weintor [2012] nyr and A.G. Geelhoed in C-210/03
Swedish Match [2004] ECR I-11893.
9
2
Here, the Advocate General describes the (three main) tenets of the freedom to conduct
business, pointing out the right’s strong relation with the need to protect economic activity
within the internal market. However, he also stresses that the freedom to conduct a business –
comparing it this time with the right to property (Article 17 Charter) – protects economic
initiative and the ability to participate in a market, rather than the actual profit, seen in
financial terms, that is earned in that market.11 Lastly, the Advocate General views the
freedom to conduct business as a non-absolute right which is often used in contrast to other
fundamental rights, as demonstrated by the case law of the Court of Justice, which to date has
used the freedom to conduct a business as a counterweight to other fundamental rights, such
as the right to the protection of privacy, health, and intellectual property rights.12
Disentangling the simple wording of Article 16 uncovers that its applicability rests on any one
of a number of other rights that have been packed into the Articles wording. As affirmed by
the explanations relating to the Charter,13 it includes not only the freedom to operate a
business but also the freedom to conduct a business, the freedom to enterprise and the
freedom to contract. 14 Considered in this textual light, Article 16 of the Charter seems to be
nothing more than a codification of the pre-existing case law of the Court; meaning that the
enshrinement into the Charter of freedom to conduct business is more housekeeping rather
than the extension of an already existing right. Put in another way, if one were to evaluate the
post-Lisbon Article 16 cases and remove the references to Article 16 the likelihood is that
there would be no difference in the way the cases were approached or decided. However, if
we are to accept that freedom to conduct business is inextricably entangled with the concept
of freedom to contract the question that arises is to what extent, especially following the
Charter’s coming of age Article 16 provides a free standing right. Especially when one
considers the more prickly consideration that Article 16 is not only potentially a mechanism
for public control, meaning a ground against which to challenge an action or Union secondary
legislation, either by a directly affected person or as in Spain v Commission15 by a Member
State, but it also becomes a question of the application of the Charter into the private sphere
of contract law, through the review of Member States’ application of EU law (Wachauf type,
as further explained infra). Moreover, the codification of the ECJ case law on freedom to
conduct business and its inclusion into the Charter gives a constitutional flavor to economic
rights often affiliated, in the past, to the application of the economic freedoms of the EC
Treaty (the ERT type of cases, as further explained infra)- as exemplified by the Sunday
Trading saga in the Nineties.16
Ibid., Mark Alemo-Herron, para 51.
Ibid., para 52. In light of these elements, the A.G. concluded that Article 16 of the does not prevent national
legislation that requires the transferee of an undertaking to accept the existing and future terms and conditions
agreed upon by a collective bargaining body, provided that the requirement is not unconditional and irreversible.
The transfer of the dynamic clause is therefore viewed in the light of the freedom to conduct business, and it will
be the duty of the national court to assess pursuant to national law that the requirement is in fact not
unconditional and irreversible in nature.
13
2007/C 303/02.
14
The EU jurisprudence, as pointed out by the A.G. in Mark Alemo-Herron, has unfortunately not clarified the
differentiation, if any, between the three concepts. Although, there remains a more analyt ical method of reading
and interpreting the newly inserted Article 16 of the EU Charter, in doing so and moving away from the literal
interpretation of the text it supports the interpretation of a right capable of effect inter parties.
15
Case C-240/97 Spain v. Commission [1999] ECR I-6571.
16
See H.W. Micklitz, The Politics of Judicial Co-operation in the EU: Sunday Trading, Equal Treatment and
Good Faith (CUP, 2005), pp. 101-102. The grand finale of the Sunday Trading saga, was meant to be the Keck
case, which may be seen as a statement that Article 34 TFEU should not stand for general unlimited freedom of
trade (“the increasing tendency of traders to invoke Article 30 of the Treaty as a means of challenging any rules
whose effect is to limit their commercial freedom”. Joined Cases C-267 & 268/91 Criminal proceedings against
Keck and Mithouard [1993] ECR I-6097, para 14).
11
12
3
Does Article 16 of the Charter constitute a propeller to a transformation of the ECJ reasoning
in cases involving the freedom to conduct business post Lisbon Treaty? Some would argue
that Article 16 of the Charter should be interpreted restrictively in light of the ECJ case law
pre-binding the Charter based on general principles of EU law. This case law – closely related
to the right to property and the freedom to exercise an economic activity – is known to be
imbued with judicial pusillanimity. In a recent article written before Mark Alemo-Herron,
Peter Oliver argued that the right to freely conduct a business should (now) only be based on
the Charter and not (also) on the general principle, however, the pre-Lisbon case law should
now be relevant for the Charter right.17 He analyzes the relevant case law and argues that
claims based on what is now Article 16 were never successful, except in Scarlet Extended,
which, however, was mainly decided on the basis that the required injunction would be
disproportionate; he states that this was a perhaps unique case in which the Court expressly
held a measure to be in breach of Article 16, albeit not read in isolation, but with Union
legislation and later also submits that ABNA should also be regarded as a case in which an
argument based on freedom to conduct a business was successful, however also this case was
decided on the basis of proportionality. The reason for this low success rate is to be found in
the fact that the right is closely related to the right to property.18 Also claims based on that
right are almost always rejected by the Court, which is partly due to the broad exceptions that
the ECtHR accepts as justifications for its limitation under the ECHR. Furthermore, cases in
which the freedom to conduct a business are threatened are often solved on the basis of other
grounds, such as equality, legitimate expectations or fundamental freedoms. However, he
submits that Article 16 nevertheless has an important role to play, as it has to be taken into
account by all authorities, and especially also the Union legislature. Thus, the direct
application of Article 16 seems to be reserved for extreme cases, which he welcomes.19
A crucial judgment, to understand the scope of Article 16, is Sky Österreich.20 In this case,
where Advocate General Bot made an application of Article 16 of the Charter, the ECJ
referred once again to its jurisprudence related to the non-absoluteness of the freedom to
conduct business and stated more importantly in paragraph 47 that: “[o]n the basis of that
case-law and in the light of the wording of Article 16 of the Charter, which differs from the
wording of the other fundamental freedoms laid down in Title II thereof, yet is similar to that
of certain provisions of Title IV of the Charter, the freedom to conduct a business may be
subject to a broad range of interventions on the part of public authorities which may limit the
exercise of economic activity in the public interest.”21 It seems that the ECJ considers that the
words “in accordance with Union law and national laws and practices” mean that this affords
wider restriction to limit the freedom to conduct a business in the public interest than they
would otherwise have. As rightly stated by Oliver, “it also emerges from this passage that the
Court considers this language to have been inserted into Article 16 so as to reflect its own
case law which has always been ambiguous towards the freedom to conduct a business. This
is a statement of very considerable importance for the understanding of this provision”. 22 In
P. Oliver ‘What Purpose Does Article 16 of the Charter Serve?’ in U. Bernitz et al. (eds.), General Principles
of EU La and European Private Law (Kluwer, 2013), 281.
Certainly from a European Court of Human Rights jurisprudence on right to property under Article 1 of
Protocol 1 to the ECHR broad justifications for interference with property rights have been accepted.
19
Ibid.
20
Case C-283/11 Sky Österreich GmbH v Österreichischer Rundfunk [2013] nyr. See W. Hins, The Freedom to
Conduct Business and the Right to Receive Information for Free: Sky Österreich”, 51 CMLREV. 2014, 665.
21
Ibid. Sky Österreich para. 47.
22
P. Oliver, op. cit., p. 293. According to this author, “this statement also has major repercussions for the
interpretation of Title IV of the Charter (“Solidarity”). A number of the provisions in this Title also contain the
17
18
4
addition, it may be said that the reference to Title IV (Social Chapter) of the Charter came as
no surprise since the objective of the Praesidium in drafting Article 16 of the Charter had
been to search for establishing that the freedom to conduct a business would be treated on an
identical status with social rights.23
Does this last point mean that Article 16, by analogy to Article 27 of the Charter (Title IV)
has no direct effect? Indeed, in the recent Association Médiation Sociale case, the ECJ
considered that the right to information and consultation within the undertaking, in the
absence of national law implementing it, was not specific enough.24 It appears clear to us that
the text of Article 16 is weak. The same can be said if one looks back at its diluted roots based
on a cluster of rights but also the restrictive interpretation of this rights in the case law on
general principles of EU law pre-binding Charter. This lack of clarity, due to the weakness of
the text of the Charter, as to the nature of Article 16, is also reflected in doctrinal comments
which view the freedom to conduct business either as a principle or a right.25 It is submitted
here that even of Article 16 Charter bears the ‘prodromical signs’ of a ‘principle’ in the sense
of Article 52(5) of the Charter (by making references to national laws and practices); this
provision is more akin to a right. This interpretation is backed up in our view by the close
relationship of the freedom to conduct business with the right to property, the freedom to
contact and the freedom to exercise an economic activity. If the ECJ considers Article 16 to
be a ‘principle’ in the sense of Article 52(5) of the Charter; then it is considered that it should
be viewed as a ‘principle’ having justiciability, even a limited one.26
However, as already pointed out, it is also true that the freedom to conduct business which is
now constitutionalized within the text of the Charter may strongly impact on the ECJ case
law, depending of course on the attitude of the Court towards Article 16 of the Charter. An
area which is in our view fertile to the rise of Article 16 can be found in the context of the
horizontal application of EU law, i.e. the relationship between private parties in EU law. What
is the impact of this Charter, and particularly Article 16, in legal relationship between private
parties within the field of EU law? Many have argued using a textual interpretation of Article
51 EUCFR that the Charter does not apply in relation to private parties. Yet, ‘the need to
protect the rights and freedoms of others’ is explicitly mentioned in Article 52(1) EUCFR,
which concerns limitations on Charter’s rights. This provision reflects, in our view, the
position that the Charter (and in particular its economic fundamental rights such as Articles
15, 16, 17 EUCFR) may be applied in horizontal situations and can be used as the
fundamental cause of a civil proceedings brought by a private party against another one.27
These economic fundamental rights are also closely connected to the fundamental freedoms
enshrined within the TFEU. Similarly to the fundamental/economic freedoms, they may be
relied on by individuals in horizontal situations.
words “in accordance with Union law and national laws and practices” or similar language: e.g. Articles 27
(workers’ rights to information and consultation within the undertaking), 28 (right to collective bargaining and to
strike) and 30 (protection against unjustified dismissal”.
23
Ibid.
24
The ECJ compares Article 21 of the Charter with Article 27 of the Charter. Article 21 is found to be specific
enough in contrast to Article 37.
25
See P. Oliver, op. cit., 295
26
K. Lenaerts, ‘Exploring the Limits of the EU Charter of Fundamental Rights’, (2012) 8 EuConst 375.
27
It follows from the case law analysis in Scarlet Extended, Interseroh and Parkwood Leisure that the horizontal
application of EU law between private parties is closely related to the so-called economic fundamental rights
enshrined in the Section 2 of the Charter. It is perhaps not so strange to observe this type of application in this
specific area, as the horizontal direct effect pre-Lisbon has often been associated (in non-harmonised areas) with
the economic freedoms enshrined in the Treaties.
5
This point is exemplified by the recent case law of the ECJ on Article 16 of the Charter which
involve private parties and deal with the interpretation of EU secondary legislation (having
horizontal effect) in light of the Charter or/and the conflict of fundamental rights (two conflict
economic rights or/and one economic rights used as a derogation to a fundamental right). For
instance in Scarlet Extended (2011), Netlog (2012), TV2 Denmark (2012), Denise McDonagh
v. Ryanair (2013) and Mark Alemo-Herron (2013)28 the horizontal application of EU law
between private parties is closely related to the so-called economic fundamental rights
enshrine in the Section 2 of the Charter. These cases concern the balancing of fundamental
rights in the context of interpretation of EU secondary legislation (the so-called Wachauf type
of case law).
In Scarlet Extended,29 the ECJ had to decide the scope of application of Article 52(1) Charter,
particularly whether an injunction could fall under the first condition defined in Article 52(1)
of the Charter, that of being ‘provided for by law’. 30 This condition is necessary to accept a
limitation on the exercise of a right defined by the Charter.31 In the present circumstances, the
injunction restricted the freedom to conduct business (Article 16 Charter) of the ISP by
requiring the installation of the contested filtering system involves monitoring all the
electronic communications made through the network of the ISP concerned in the interests of
those right holders. The Court considered that a balance must be struck between the protection
of the intellectual property right enjoyed by copyright holders and that of the freedom to
conduct a business enjoyed by operators such as ISPs, pursuant to Article 16 of the Charter. 32
It concluded that the injunction was incompatible with the Directives concerned, read in the
light of the requirements stemming from the applicable fundamental rights.33 The freedom to
conduct a business under Article 16 was the fundamental right principally in issue, whereas
Articles 8 and 11 of the Charter played only a back-up function.34 This ruling was,
subsequently, confirmed in Netlog.35
In the Denise McDonagh case,36 Ryanair claims that the obligation to provide care to
passengers imposed on air carriers in circumstances such as those at issue in the main
proceedings has the effect of depriving air carriers of part of the fruits of their labour and of
their investments. Referring to the doctrine of the reconciliation of rights and the need to
28
Case C-70/10 Scarlet Extended SA v. Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM)
[2011] ECR I-11959; Case C-360/10 Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA
(SABAM) v. Netlog [2012] nyr); Case C-510/10 DR and TV2 Danmark A/S v. NCB - Nordisk Copyright Bureau;
and Case C-12/11 Denise McDonagh v. Rynair Ltd [2013] nyr.
29
Case C-70/10 Scarlet Extended v. SABAM [2011] nyr.
30
It is worth noting that Article 52(1) Charter is identically worded as Articles 8(2) and 10(2) of the ECHR.
31
The Charter states, in well-known terms, the conditions to which any limitation on the exercise of the rights
and freedoms which it recognises are subject, just as the ECHR defines the circumstances in which, int er alia,
any interference in the right to a private life or any restriction on freedom of expression may be considered
lawful.
32
paras 47-49.
33
Compare Case C-275/05 Promusicae [2008] ECR I-271 (Grand Chamber) which also concerned the illegal
file-sharing of music and which also arose out of an action brought by a copyright society against an ISP. In that
case, the right of intellectual property was at odds with the right to data protection under Article 8 of the Charter.
As to the difference between the two cases, see para. 4 of the Opinion of A.G. Cruz Villalón in Scarlet Extended;
but these differences do not fully explain the Court’s significantly less indulgent approach to the protection of
intellectual property in the latter case.
34
The A.G. in Scarlet Extended also considered that such an injunction was contrary to the Directives concerned
read together with the Charter; but he mentioned Articles 7, 8 and 11 of the Charter and did not refer to Article
16.
35
Case C-360/10 SABAM v. Netlog [2012] nyr.
36
Case C-12/11 Denise McDonagh v. Ryanair [2013] nyr.
6
strike a fair balance between fundamental rights, the ECJ balanced Article 16 and 17 of the
Charter with Article 38 of the Charter which seeks to ensure a high level of protection for
consumers, including air passengers, in European Union policies. The ECJ held that
Regulation No 261/2004 must be considered to comply with the requirement intended to
reconcile the various fundamental rights involved and strike a fair balance between them and
therefore, the provisions of the regulation did not breach Articles 16 and 17 of the Charter.37
More recently, in Mark Alemo-Herron,38 concerning another horizontal situation
(employer/employee) arising at the national level, the UK Supreme Court asks in essence
whether a finding that dynamic clauses referring to collective agreements are compatible with
Directive 2001/23 might, in any event, be in breach of EU fundamental rights.39 For the
Advocate General the matter should be consider in light of Article 16 of the Charter since,
after the transfer of undertaking, Parkwood (the transferee) has no means of being represented
at all on the NJC. The restriction of rights suffered by Parkwood derives not from being
obliged to join an organization (that would be a matter to be dealt with by Article 12 Charter)
but from the fact that it is required to take on obligations that were undertaken pursuant to
agreements over which it is not capable to exercise any influence. Interestingly the Advocate
General goes into the history of the freedom to conduct business and its close link with the
right to property, as discussed above. 40 The Advocate General concluded that Article 16 of
the Charter does not prevent national legislation that requires the transferee of an undertaking
to accept the existing and future terms and conditions agreed by a collective bargaining body,
provided that the requirement is not unconditional and irreversible. The transfer of dynamic
clause is therefore viewed in light of Article 16 of the Charter and it will be for the national
court to assess pursuant to national law that the requirement is in fact not unconditional and
irreversible in nature.41 The Court did not follow the Advocate General and considered that
the dynamic clause [‘adversely affect the very essence’ is the wording used by ECJ]
encroached the very essence of the freedom to conduct business.
Another line of cases concerns the validity of EU secondary legislation brought in
proceedings between private parties. This jurisprudential line is illustrated by cases such
Interseroh42, Association Kokopelli 43 and, and more importantly to us as it deals in length
with Article 16, Sky Österreich.44 In fact, Sky Österreich was a case where the validity of a
Directive had a direct consequence for a private dispute. Sky had acquired exclusive rights to
broadcast Europa League matches. Under the Broadcasting Directive, Sky was required to
allow broadcasters, for the purpose of short news reports, to use short extracts from the
matches to which it had exclusive rights at a compensation not exceeding the additional costs
in providing access. Interestingly, in this judgment case delivered in 2013 by the Grand
37
Ibid., paras 63-64.
Case C-426/11 Mark Alemo-Herron v. Parkwood Leisure, A.G. Cruz-Villalón Opinion delivered on 19
February 2013, supra n. 10.
39
These dynamic clauses require the transferee of an undertaking to accept the existing and future terms and
conditions agreed by a collective bargaining body. The transfer of the clause means that the transferee, in this
case Parkwood, is bound by such terms and conditions as are agreed, now and in the future, by the NJC.
40
Case C-426/11 Mark Alemo-Herron v. Parkwood Leisure,., paras 48-50.
41
Ibid., para 58.
42
Case C-1/11 Interseroh v. SAM [2012] nyr.
43
Case C-59/11 Association Kokopelli v Graines Baumaux SAS, Opinion of 19 January 2012. Association
Kokopelli concerned a dispute between two competitors. The claimant sought compensation for loss it had
suffered due to the defendant’s marketing of vegetable seeds which were excluded from circulation by a
Directive. In its defence the defendant argued that the relevant provision of the Directive was invalid because it
violated Articles 34 TFEU and the principle of proportionality and also its freedom to conduct a business.
44
Sky Österreich, supra n. 20.
38
7
Chamber, the Court adopted a wide interpretation of freedom to conduct business as including
the freedom to contract.45 However, and quite notably, it did not consider here that the
freedom to conduct business coincided with the right to property as defined under Article 17
of the Charter. This interpretation is at odds with the broad definition of the right to property
taken by the ECtHR and is, in our view, contrary to the spirit of Article 52(3) of the Charter
which imposes an obligation to respect the ECHR case law when the rights are corresponding
between the ECHR and the Charter – which is the case in relation to Article 17 of the Charter
and Article 1 of the Protocol 1 of the ECHR.46
In addition, Article 16 of the Charter can be relied on in situation to derogation to one of the
economic freedoms (the so-called ERT situation).47 In this area, it is worth noting that the
horizontal application of free movement of goods through the use of the doctrine of regulatory
bodies as developed in Bosman and Laval has been recognized by the Court in Fra.bo.48 This
means that in the future, the Charter (and why not Article 16) may be relied on private
proceedings in that context. In Fra.bo, the Court confirms its line of reasoning in Viking Line
and Laval in relation to Article 34 TFEU (ex Article 28 EC). More precisely, it considered
that free movement of good applies to standardisation and certification activities of a privatelaw body in Germany (the DVGW).49 However, as it resorts from the recent Gardella
(2013)50 and Sokoll (2014),51 it appears doubtful that a party can rely on Article 16 of the
Charter instead of relying on an economic freedom based on the TFEU. The Court does
seemingly not wish the economic Treaty provisions to become obsolete when they are
overlapping with the text of the Charter. This position is in line with Article 52(2) of the
Charter.
In the end, looking at the recent case law of the Court, it appears that Article 16 of the Charter
is often relied on horizontal situations falling within the scope of EU law. This can be, for
instance, in situation of interpretation of EU Secondary legislation involving balancing of
rights at the national level (Scarlet and Mark Alemo-Herron situations) and the situation of
validity of EU secondary legislation arising at the national level in a proceeding involving
private parties (Association Kokopelli and Sky Österreich situations). This state of affairs
confirms the view that the concept of private autonomy may have gained in weight and
importance due the entry into force of the Charter which incorporates provisions clearly
anchored to it, for instance Article 16 of the Charter. If this is true, it means that private
45
Ibid., para 44.
See W. Hins, The Freedom to Conduct Business and the Right to Receive Information for Free: Sky
Österreich”, 51 CMLREV. 2014, 665. To what extent Articles 16 and 17 overlap will depend on the scope of
interpretation afforded to the concepts of “possessions” and “property” in the latter provision.
47
Case C-390/12 Pfleger and Others, not yet decided.
48
Case C-171/11 Fra.bo [2012] nyr.
49
Ibid., paras 27-31.
50
Case C-233/12 Gardella v. Istituto nazionale della previdenza sociale (INPS), [2013] Judgment of 4 July
2013, n.y.r.. para 39-41. in Gardella stating that since, in that case, Article 15 (2) of the Charter, ‘reiterates’
rights laid down in Article 45 TFEU (free movement of workers), in the light of Article 52(2), the case was to be
analysed on the basis of Article 45 TFEU and 48 TFEU. Therefore, a dual framework exists, at least prima facie,
but at this stage it is not clear how the Article 52(1) framework will develop, and to which extent it will be of a
real distinct character from the limitation methodology applied by the Court hitherto. However, it is difficult to
see how the operation of two methodologically distinct frameworks will be helpful in terms of consistency and
coherence.
51
Case C-367/12 Sokoll [2014] nyr. In this case – contrary to Gardella, there is no explicit reference to Article
52(2) of the Charter, since the Court chooses to not to solve the case on the basis of the national court´s reference
to Article 16 of the Charter, but, instead, solely on the basis of Article 49 TFEU, since the reference to European
Union law, in the provisions of Article 16, is to be “understood as meaning that Article 16 of the Charter refers,
inter alia, to Article 49 TFEU”, para 22.
46
8
autonomy can be used to counter-balanced EU policies or the so-called ‘regulated autonomy’
in horizontal situations and may thus help to shift the balance towards the individual in certain
circumstances. The Charter appears thus here as a perfect tool to challenge the ‘Marketization
of private autonomy’ (a term coined by Comparato and Micklitz)52 and perhaps opens the
path of a new test that could be employed by the Court to restore the balance between specific
general interests (e.g. economic freedoms) and individual autonomy.53 In this respect, Dorota
Leczykiewicz argues that until recently fundamental rights were in horizontal situations
mainly used to achieve greater social justice rather than to enhance private autonomy, yet in
more recent case law parties increasingly rely on Article 16 of the Charter as a (limited)
guarantee of private autonomy, the protection of which can be a legitimate aim to limit the
full effectiveness of Directives and public (and EU) as well as private regulation in general. 54
With regard to the relationship between the fundamental freedoms and private autonomy, she
states that these situations are rather to be seen as triangular (public regulation as a
restriction). She analyzes the question in how far and how Articles 15 and 16 of the Charter
can be relied upon in horizontal situations in order to protect private autonomy, mainly by
discussing Scarlet Extended (also Promusicae), Netlog and TV2 Danmark, and concludes that
mainly thanks to Article 16 of the Charter private actors can enjoy more explicitly the
protection of their autonomy.
The question now is whether Article 16 may lead to a transformation of the private law
paradigm in EU law which is dominated by the goals of the European Union.55 The role and
application of freedoms in relation to private law adjudication remains an area of uncertainty
within the EU and is more often than not attached to the peculiarity of the national jurisdiction
in question. To put it another way, individual freedoms such as the freedom to operate a
business is open textured in respect of limitations attached to it. On a literal reading of Article
16 it is clear that it is not only limited by the Charter provisions but also by the national laws
of Member States. Such a wide interpretation of the limitations imposed by the drafters raises
the principle question of investigation in this chapter, namely whether Article 16 is a weak
right in principle but in practice through judicial willingness to give maximum effect to it
strong courts may turn the weak right on its head.
2. A Strong Court with a Weak Reasoning?
In applying the freedom to conduct business to the review of EU measures and Member States
measures falling within the scope of EU law, the Court often relies on the principle of
proportionality. Two issues are particularly important in relation to the case law post Charter
on freedom to conduct business and proportionality: First, the issue of the ‘manifest test’ of
See G. Comparato and H.W. Micklitz ‘Regulated Autonomy between Market Freedoms and Fundamental
Rights in the Case-Law of the CJEU’ in U. Bernitz et al. (eds.), General Principles of EU La and European
Private Law (Kluwer, 2013).
53
Article 52(2) of the Charter, since in cases where Charter rights, are reiterating rights laid down in the TFEU,
they ‘shall be exercised under the conditions and within the limits defined by those Treaties’ as stated in Article
52(2) of the Charter.
54
D. Leczykiewicz ‘Fundamental Rights: In Search of Social Justice or Private Autonomy in EU Law?’ in U.
Bernitz et al. (eds.), General Principles of EU La and European Private Law (Kluwer, 2013).
55
See M. Safjan, ‘European Law versus Private Law: Transformation or Deformation of the Paradigm?’ in U.
Bernitz et al. (eds.), General Principles of EU La and European Private Law (Kluwer, 2013). For Safjan, even if
the change of the private law paradigm should be inevitable, he strongly believes that it should consi st in a
transformation and not deformation of its fundamental mission of expressing individual interests, in order to
satisfy the goals related to the construction of the common legal area.
52
9
proportionality and, secondly, the issue of the framework for proportionality reasoning in
light of Article 52(1) of the Charter.
Concerning the first issue, the ‘manifest review’ appears as the Court’s standard approach
when it comes to review of EU measures in light, inter alia, of Article 16 of the Charter
should be discussed. The Court approach may be summaries as follows: In reviewing the
exercise of [EU’s legislative] power the Court must confine itself to examining whether it
contains a manifest error or constitutes a misuse of power or whether the authority in question
did not clearly exceed the bounds of its discretion.56 Advocate General Kokott has given an
outstanding summary of the manifest test in her opinion in the S.P.C.M. case,57 where she
refers to this test, as the ‘principle a presumption of the lawfulness of Community law’, and
the EU legislature ‘enjoys a wide margin of assessment and action (‘discretion’) when it
makes complex technical and/or political choices’.58 She states that ‘the Court may not
substitute its own assessment for that of the Community legislature, and must confine itself to
examining whether the legislature’s assessment contains a manifest error or constitutes a
misuse of powers or whether the legislature clearly exceeded the bounds of its discretion. 59
However, she warns that the proportionality principles is not entirely without a purpose or
meaning and states that ‘[i]f there are clearly less oppressive measures available which are
equally effective, or if the measures adopted are obviously out of proportion to the aims
pursued, the persons affected must be given judicial protection. Otherwise the principle of
proportionality, which is part of primary law, would be deprived of its practical effect.’60
It is a valid point, that the Union institutions are subject to Article 5 TEU, as a ‘part of
primary law’, which should not be overlooked. The message of Advocate General Kokott
seems to be, that even if a manifest test is warranted in certain situations, it may never become
the rule. Interestingly, in recent cases such as Volker, Test Achats, Sky Österreich and
Deutches Weintor,61 where EU secondary norms are reviewed (and even annulled) in the light
of EU Charter rights, there is no mentioning of a ‘manifest test’. In Digital Rights Ireland, the
Court even signifies that the review of the EU legislature’s discretion should be ‘strict’ –
which must be the real opposite to a ‘manifest test’. 62 If that approach is to signify a lasting
change in approach, at least in certain type of cases, is too early to say, but certainly it is an
indication that a review in light of certain Charter rights, may make a ‘manifest test’,
inappropriate.63 It should however, be highlighted that in the very recent case, Schaible, of 17
October 2013, the Court refers to the ‘manifest test’ again, even if the EU Charter rights
(Article 16) are involved, and states:“In the area of agriculture, the European Union
Case 138/79 SA Roquette Frères v Council of the European Communities (Fifth Roquette Case) [1980] ECR
3333, para. 25. Even more extreme version seems to be suggested by A.G. Jääskinen in the Novo Nordisk case,
C-249/09, who refuses to engage in a balancing exercise in the case, and awards wide and unrestricted margin of
discretion to the Union legislature, that in fact will not be reviewed, see e.g para 49 - 50 of his opinion.
57
Case C-558/07 S.P.C.M. and Others [2009] ECR I-5783.
58
Ibid. para 70-71.
59
Ibid. para 72.
60
Ibid. para 74. emphasis added.
61
C-92/09 Volker und Markus Schecke and Eifert [2010] ECR I-11063; C-236/09 Association Belge des
ConsommateursTest-Achats and Others [2011] ECR I-773; and Case C-544/10 Deutsches Weintor [2012] of 6
September 2012, n.y.r.
62
Joined Cases C-293/12 and C-594/12 Digital Rights Ireland [2014] of 8 April 2014, n.y.r.
63
In that context it is relevant to refer to the case of the EFTA Court in E-15/10 Posten Norge [2012] Report of
the EFTA Court, p. 248, where the Court argues that it is not bound by ‘manifest’ review only, in competition
law cases entailing ‘complex economic assessment’. Seemingly this is based on the fact that the Court regards
Article 6 ECHR to be applicable as a standard to be complied with in the case, arguably resulting in ‘manifest
test’ not being sufficient, see e.g. paras 10 and 102, and paras 285 and 286.
56
10
legislature enjoys, inter alia, such a broad discretion, corresponding to the political
responsibilities given to it by Articles 40 TFEU to 43 TFEU. Consequently, review by the
Court is limited to verifying whether that legislature has manifestly exceeded the limits of its
discretion.”64 Therefore, the manifest test is still present, but it remains an open question
exactly what weight is to be attached to the Court´s wording ‘In the area of agriculture’? 65
Concerning the second issue, Article 52(1) of the EU Charter is a specific limitation clause, to
be applied ‘horizontally’ throughout the EU Charter.66 It can be viewed as the ‘analytical
framework’ to be used by the Court in the assessment proportionality within the Charter.
Article 52(1) of the Charter was relied on, for the first time, by the Court in the Volker case.
This ruling concerned the validity of EU secondary law, reviewed in the light of the EU
Charter, and where the Court went through the ‘analytical stages’, much as the Advocate
General Sharpston had suggested.67 But what does this entail? Is the Article 52(1) framework
materially different from the analytical framework otherwise applied by the Court of Justice,
i.e. when reviewing national measures? The ‘analytical stages’ laid down in Article 52(1)
include, that limitations ‘must be provided for by law’; ‘subject to the principle of
proportionality’; and ‘must be made only if they are necessary and genuinely meet objectives
of general interest recognised by the Union or the need to protect the rights and freedoms of
others’. In fact, the Article 52(1) framework bears resemblance of the Strasbourg framework
of limitation of ECHR rights. The first condition, ‘provided for by law’ is commonly a part of
the ECtHR’s approach, related to the margin of appreciation doctrine. In fact, this condition
has been held to be one of the steps of the proportionality assessment, the first out of four. 68 In
the case Scarlet Extended,69 the Advocate General Cruz Villalón, discussed this condition in
detail, linking it to ‘rule of law’ requirements. In his opinion, the national legal provisions at
issue, did not meet ‘these requirements’. 70 In her opinion in the Dominguez case, Advocate
General Trstenjak, relied on the condition in order to argue for a limitation of horizontal
application of fundamental rights. In her opinion, individuals failed at fulfilling the
‘legislative proviso contained in Article 52(1) of the Charter’, since this ‘rule of law’ could
‘naturally be directed only at the European Union and its Member States as agencies of the
State’.71
In the Volker case, ‘provided by law’ was the first analytical stage, which the Court went
through, and verified, that the measures at stake, were in fact laid down by the EU secondary
Case C-101/12 Schaible of 17 October 2013, para 48. It should however, be pointed out that the Court follows
largely the Article 52(1) of the Charter framework, in this case, and does also seem to ‘review’ to an extent the
balancing that the EU institutions needed to make in adopting the EU legislation at stake.
65
In the opinion of Advocate General Trstenjak in the Case C-365/08 Agrana Zucker [2010] ECR, the A.G.
argues for a ‘manifest test’ being applied at each of the levels of the proportionality assessment, including the
stricto sensu level in cases dealing with EU’s Common Agricultural Policy, see paras 63, and 70.
66
Article 52(1) of the Charter states that: ‘Any limitation on the exercise of the rights and freedoms recognised
by this Charter must be provided for by law and respect the essence of those rights and freedoms. Sub ject to the
principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of
general interest recognised by the Union or the need to protect the rights and freedoms of others.’
67
The term ‘analytical stages’ comes from the A.G.’s opinion.
68
See A. Sweet and J. Mathews, ‘Proportionality Balancing and Global Constitutionalism’ (2008) 47 Columbia
Journal of Transnational Laws 72., 76. The authors refer to the ‘four step approach’ as the ‘fully developed’
form of proportionality analysis, where the judge confirms that the government is ‘constitutionally’ authorised to
take the restrictive measure.
69
Case C-70/10 Scarlet Extended SA, Judgment of 24 November 2011.
70
Ibid. para 67 of the A.G.’s opinion. The Court, however, did not make any reference to Article 52(1) of the
Charter in its decision.
71
Case C-282/10, Dominguez, judgment of 24 January 2012, para. 83 of AG’s opinion. emphasis added. The
Court did not rely on the Charter in the case.
64
11
norm (EU Regulation) at issue.72 Subsequently, the Court assessed if the interference ‘meets
an objective of general interest recognised by the European Union’, which the Court also
found to be the case.73 The next ‘analytical stage’, was to assess if the limitation was
‘proportionate to the legitimate aim pursued’74 In that respect the Court stated that ‘the
principle of proportionality, which is one of the general principles of European Union law,
requires that measures implemented by acts of the European Union are appropriate for
attaining the objective pursued and do not go beyond what is necessary to achieve it’. 75
Interestingly, and as stated above, when evaluating if the limitation was ‘necessary’ the Court
held that the limitation at issue ‘may not be pursued without having regard to the fact that that
objective must be reconciled with the fundamental rights set forth in Articles 7 and 8 of the
Charter’ and therefore necessary to ‘balance’ the EU interests at stake with the ‘the right of
the beneficiaries concerned to respect for their private life in general and to the protection of
their personal data in particular’.76 This approach leads, in this case, to a stricto sensu
balancing, even if here ‘operating’ at the necessity level. Clearly, Article 52(1) of the Charter,
lays down a new framework, in a way more clearer, in terms of the analytical stages, than the
current Article 5 TEU, and the proportionality principle, as a general principle of EU law,
applied by the Court when reviewing national measures compatibility with the fundamental
freedoms. However, the Court did not rely on Article 52(1) of the EU Charter in the Test
Achats case, nor in the Deutsches Weintor case, referred to above.
In the Sky Österreich case, the Court did not follow the ‘analytical stages’ as thoroughly as
seen in Volker. However, the Court acknowledged that Article 16 of the Charter, that was
being used to review the EU Directive at stake, could be limited and was subject to ‘broad
range of interventions on the part of public authorities which may limit the exercise of
economic activity in the public interest’.77 Thereafter, the Court made a direct reference to
Article 52(1) of the Charter. Before conducting a detailed proportionality assessment, the
Court noted that the EU Directive at stake did not ‘affect the core content of the freedom to
conduct business’. In the Mark Alemo-Herron case, similarly, the Court is discussing the core
of the right to conduct business and maintains that Directive 2001/23/EC, concerning
safeguards of employees rights in the case of transfer of undertakings, may not be interpreted
in such a way that it entitles the Member States ‘to take measures which, while being more
favourable to employees, are liable to adversely affect the very essence of the transferee´s
freedom to conduct a business’.78 In the view of the Court, the Directive could not be
interpreted in such a way that it would reduce transferee´s contractual freedom to the point
that the limitation would be liable to adversely affect ‘the very essence of its freedom to
conduct business’.
In fact, Article 52(1) of the Charter states that the limitation of the Charter’s rights must
‘respect the essence of those rights and freedoms’. Therefore, and in the light of the above
mentioned cases, it is understandable if the question is raised if there is an ‘essence test’,
separate from the proportionality requirements to be required by Article 52(1) of the
Volker, supra n. 61, para 66.
Ibid. para 67-71.
74
Ibid. para 72.
75
Ibid. para 74.
76
Ibid. para 76-77.
77
Sky Österreich, supra n. 20, para 46.
78
Mark Alemo-Herron, supra n. 10., para 36. No reference was made by the Court to Article 52(1) of the
Charter.
72
73
12
Charter.79 Even if the Mark Alemo-Herron case, above, might indicate this, we are not
convinced that that is the case. The ‘respect for the essence’ part of Article 52(1) of the
Charter, has to be looked upon in the context of the non-absolute nature those fundamental
rights in the Charter, that are subject to limitations based on Article 52(1) of the Charter. 80
The explanations of the Charter cite, in the context of Article 52(1) of the Charter, the
Karlsson case. 81 However, the Karlsson case, is in fact citing paragraph 18 of the Wachauf
case, which may be looked upon as the more appropriate founding for Article 52(1) of the
Charter. The paragraph goes as follows:
The fundamental rights recognized by the Court are not absolute, however, but must be considered in
relation to their social function. Consequently, restrictions may be imposed on the exercise of those
rights, in particular in the context of a common organization of a market, provided that th ose
restrictions in fact correspond to objectives of general interest pursued by the Community and do not
constitute, with regard to the aim pursued, a disproportionate and intolerable interference, impairing the
very substance of those rights.82
As seen from this, the focus here is on the non-absolute nature of the fundamental rights, and
that the limitation to the rights is not disproportionate and intolerable interference, to the very
substance (or the essence) of the right at stake.83 Similar reference are found in other
important cases, that concern limitation to fundamental rights, in the Court’s case law,
perhaps most importantly in the Schmidberger case,84 which demonstrates the relevance of a
method of limitation of fundamental rights, which might, in particular circumstances lead to
stricto sensu balancing. In this light, we would like to maintain that the ‘essence of the right’
requirement is not a condition per se, and the Mark Alemo-Herron approach, is applying a
limitation methodology, outside its proper context, the approach of the Court appears as a
manipulation of the ‘essence of the right’ condition, since the Court is seemingly playing
Article 16 of the Charter out as an absolute fundamental right, which it is not.85 Thereby,
failing seriously, in this case, to view the fundamental right ‘in relation to their social
function’.86 This absence of balancing amounts to a hierarchical approach, where social rights
are being subsumed or forgotten. That also defeats the very nature and purpose of Article 16
of the Charter, as so well explained in Sky Österreich, emphasizing the strong links between
Article 16 of the Charter and the social rights, found in Title IV of the EU Charter.87
79
See C. Barnard, ‘The Charter, the Court -and the Crisis’, paper No 18/2013, August 2013 (Legal Studies
Research paper Series, University of Cambridge); and of the same author, ‘A Proportionate Response to
Proportionality in the field of collective action’ (2012) 37 ELRev. 117-135.
80
For a more theoretical discussion on the absolute and non-absolute nature of fundamental rights, and their
limitations, despite ‘protection of the essence’ requirements, see Alexy discussion in TCR (R. Alexy, A Theory
of Constitutional Rights, OUP, 2002) based on such requirement in Article 19(2) of the Basic law. In Alexy’s
view requirements of guaranteeing ‘the essential core’ laid down in Article 19(2) of the Basic law do not lay
down any additional requirements on the limitability of constitutional rights, beyond what is already contained in
the principle of proportionality (p. 196).
81
C-292/97 Karlsson and Others [2000] ECRI-02737.
82
Case 5/88 Wachauf [1989] ECR-2609, para 18, emphasis added.
83
In the French language version of Wachauf the term ‘à la substance même’ is used. In other cases such as Case
C-400/10 McB [2010] ECR I-8965, para 55, the term ‘l’essence même’ is used, but in Mark Alemo-Herron, , the
term ‘à la substance même’ is used (para 35). In the French language version of the EU Charter, the term ‘le
contenu essentiel’ is used in Article 52(1) of the Charter.
84
Case C-112/00 Schmidberger [2003] ECR I-5659, para 80. See also Case C-184/02 Finland and Spain v
Parliament and Council [2004] ECR I-7789, para 60.
85
In fact the AG said it was ‘worth mentioning that the freedom to conduct a business is a fundamental right that
is very much open to being used as a counterweight’
86
See also in contrast, Case C-418/11 TEXDATA Software, [2013] decided 26 September 2013 n.y.r, para, 84,
where the Court emphasised the non-absolute nature of fundamental rights, including Article 47 of the Charter.
87
Sky Österreich, supra note 20, para 46.
13
This absence of taking into consideration the social dimension is blatant and problematic in
the Mark Alemo-Herron case. In this sense, this ruling can be viewed as ‘a radical break with
the existing regime’88 on safeguarding of employee´s’ rights in the event of transfers of
undertakings. And, the rupture point is dictated by the far-reaching interpretation of article 16
of the Charter by the ECJ. Are we truly in the situation which endangers the core content of
the freedom to conduct business? Will the undertaking be prevented to engage in a business
activity due to the increase of wages? Is there something that irremediably prevents the
undertaking from renegotiating the collective agreement? The Court of Justice, using rhetoric
of balancing, seems to consider here that the freedom to conduct business is seriously
endangered. But against which social rights the economic rights is balanced? Is there any
reference to Article 3(3) TEU which now mandates a social market economy? If the Court
had engaged in a true balancing it should have then considered that the new Article 16
framework also fitted a mandatory high level of social protection and the safeguarding of the
rights of the employees as previously interpreted in its previous case law and required by the
entry into force of the Lisbon Treaty.89 Unfortunately and as predicted by Brian Bercusson,
the Charter may be exploited in a total different agenda that of ensuring a high standard of
worker protection.90
Concluding Remarks: Who is Afraid of Article 16?
In a recent article, Daniel Sarmiento puts the pertinent question of who is afraid of the EU
Charter of Fundamental Rights.91 Looking at Article 16 of the Charter one could argue that
they are many that can be afraid of the legal implications of the freedom to conduct business
though its weak textual formulation. Indeed, as demonstrated in this Chapter, the potential of
Article 16 is simply huge. This assertion is true in relation to, for instance, the issue of
constitutionalization of private autonomy, the horizontal application of the freedom to
conduct business and also the use of Article 16 in the balancing test with social rights.
Therefore, it is not surprising to see the European Commission being afraid of the prospective
impact of the freedom to conduct business in relation to a claim of validity of EU secondary
legislation. Put differently, the constitionalization of the concept of private autonomy within
Article 16 may offer a strong platform for arguing against the objectives of EU integration
which form the basis for secondary legislation.92 This is also in line with the cautious
88
J. Prassl, Freedom of Contract as a General Principle of EU Law? Transfers of Undertakings and the
Protection Rights in EU Labour Law, Industrial Law Journal, Vol. 42, December 2013. 440.
89
Case C-515/08 Santos Palhota [2010] ECR I-9133, para. 53, ‘As a result of the entry into force of the Treaty
of Lisbon, when working conditions constitute an overriding reason relating to the public interest justifying a
derogation from the freedom to provide services, they must no longer be interpreted strictly. In so far as the
protection of workers is a matter which warrants protection under the Treaties themselves, it is not a simple
derogation from a freedom, still less an unwritten exception inferred from case-law. To the extent that the new
primary law framework provides for a mandatory high level of social protection, it authorises the Member
States, for the purpose of safeguarding a certain level of social protection, to restrict a freedom, and to do so
without European Union law’s regarding it as something exceptional and, therefore, as warranting a strict
interpretation. That view, which is founded on the new provisions of the Treaties cited above, is expressed in
practical terms by applying the principle of proportionality.
90
See B. Bercusson, European Labour Law (CUP, 2009), 215.
91
See D. Sarmiento, 'Who's afraid of the Charter? The Court of Justice, national courts and the new framework
of fundamental rights protection in Europe' (2013) 50 Common Market Law Review, 1267 -1304.
92
See Case 4/73 Nold v. Commission [1974]. It is not surprising that the first case making reference to the
freedom to conduct business was a case directed against the Commission. The applicant argued that new trading
rules authorized by the Commission have the effect, by depriving it of direct supplies, of jeopardizing both the
profitability of the undertaking and the free development of its business activity, to the point of endangering its
very existence.
14
approach adopted by the European Commission in relation to the scope of application of the
EU Charter of Fundamental Rights as clearly reflected in the Ladenburger report.93
Furthermore, many academics – particularly the ones dealing with labour law – seem to be
afraid of Article 16 of the Charter when this principle conflicts with social legislation of
Member States. In that sense, Dorssemont views inter alia the freedom to conduct business as
a constitutionalisation of capitalist principles and as a stealthy upgrading of the economic
principles to full-fledged fundamental rights.94 This constitutionalisation certainly has an
impact in the balancing, realised by the ECJ, with social rights. As seen in this Chapter,
Article 16 of the Charter is certainly a right but is also a principle in the Dworkinian sense of
the term. The principles of EU law are strange normative entities.95 And the functions and
personal scope of the principles remain a mystery.96 Yet, despite their vague contours, they
are essential to the EU legal and particularly its constitutionalisation due to its ‘vehiclefunction’ of transporting rights. Indeed, the principles of EU law are often associated to rights
and rights protection. These rights are capable of deterring injustice.97 But these rights
enshrined in principles are also not absolute. They are opened to weighing; they are opened to
value-judgment. In other words, they are perhaps not neutral pre-political tool.98 As put by
Douglas-Scott, “they are more like empty vessels, prone to be filled with all sorts of content
and, most likely of all, clogged up in the vast, arcane machinery of the law”.99 In that regard,
Bengoetxea considers – influenced here by the writings of Stanley Fish100 – that principles do
not seem to be ideologically neutral; in fact they are inspired by liberal values.101 In any case,
they are loaded with values and the debate might be as Stanley Fish has put, not so much
whether principles exist, it is purely rhetorical question, since they are constantly referred to
by the law at both language-object, surface level, and meta-language levels, but the question
is whether principles exist independently of any partisan agenda and what they are used for.
In Bengoetxea’s opinion in the case of the EU, the conclusions supposedly generated by the
logic of principia are the aims or ends or Teloi of European integration e.g. market access,
free movement, and social market, together with the criteria of rational acceptability of law
and legal discourse rule of law values and fundamental rights. This view is of significance for
understanding some recent cases of the Court of Justice dealing with the EU Charter of
Fundamental Rights and particularly with the freedom to conduct business under Article 16
such as Mark Alemo-Herron. The feeling after some of these new cases is that the Teloi of EU
law – as defined by the ECJ – is still strongly economically orientated.102 They also confirm
the view of Gearty that with human rights there is no certainty of happy ending. 103 This is
93
See C. Ladenburger, ‘European Union Institutional Report' in The Protection of Fundamental Rights PostLisbon (Tartu, 2012), 141. Available at http://www.fide2012.eu/General+and+EU+Reports/id/217/, last visited
21 April 2014.
94
F. Dorssemont, ‘Values and Objectives’, in N. Bruun et al. (eds), The Lisbon Treaty and Social Europe (Hart,
2012), at 54.
95
See K. Tuori, Ratio and Voluntas – The Tension Between Reason and Will in Law (Ashgate, 2011). The EU is
a strange normative entity.
96
C. Semmelmann, ‘The General Principles of European Union law in the Light of the Public-Private
Distinction’ in S. Besson and P. Pichonnaz (eds.) in collaboration with M.-L. Gächter-Alge, Principles in
European Law – Les principes en droit européen (L.G.D.J, 2011), at p.255.
97
S. Douglas-Scott, Law after Modernity (Hart, 2013), at p. 325.
98
Ibid.
99
Ibid.
100
S. Fish, The Trouble with Principle (Harvard, 2001).
101
J. Bengoetxea ‘Principia and Teloi’, in S. Besson and P. Pichonnaz (eds.) in collaboration with M.-L.
Gächter-Alge, Principles in European Law – Les principes en droit européen (L.G.D.J, 2011), at p.83.
102
S. Douglas-Scott, op. cit., at p. 128.
103
C. Gearty, Can Human Rights Survive? (CUP, 2006) at p.1.
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particularly so in horizontal situations where social rights conflict with economic
constitutional rights.
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