THE HORIZONTAL EFFECT OF EU FUNDAMENTAL FREEDOMS

BALANCE OF INTERESTS AND REMEDIAL OPTIONS

Prof.ssa Emanuela Navarrettanavarretta@gmail.com

The Drittwirkung of EU Fundamental Freedoms

What does the Drittwirkung theory mean? Constitutional Fundamental Rights must be directly protected both by the

States and by individuals (Horizontal Effect) The ECJ applies the Drittwirkung theory to EU Freedoms

thanks to their fundamental nature and thanks to the effectiveness principle

What the correct meaning of the “fundamental” character attribuited to EU freedoms is? The answer is not univocal

In general E.U. freedoms are fundamental only in the sense that they build the EU and the Common Market and not in the sense that they influence the democratic nature of such system: therefore they haven’t the same value of fundamental rights

Only a few freedoms can be considered fundamental rights in an axiological way as human rights Freedom of movement and establishment and freedom to provide services refered

to workers Freedom to move and live in Europe, sustained by the claim for non discrimination

The Drittwirkung of EU Fundamental FreedomsThe qualification of freedoms as fundamental and the changing meaning of such qualification influence

The reasons on which the Drittwirkung lays

The balance between fundamental freedoms and fundamental rights

REMEDIAL OPTIONS

Behind the veil of the Effectiveness PrincipleThree reasons are hidden behind the veil of the effectiveness principle A first reason depends on the different position of the public-private

boundary in every Member State: the Drittwirkung of fundamental freedoms avoid that the exercise of legal autonomy by associations or organizations, which do not come under public law, could obstacle the protection of such freedoms

Walrave case, Deliége case

A second reason can be applied only to those fundamental freedoms which assume a personalistic shadow: such reason consists in the need of strengthening the safeguard of personalistic values

Walrave, Donà and Bosman cases and Raccanelli, Ferlini and Angonese cases

The need to create a broader extension of EU competences and ECJ supremacy, in order to supervise how Member States protect fundamental freedoms against strike and collective labour agreement, which are matters formally out from the EU competence.

Therefore Drittwirkung of fundamental freedoms has offered to ECJ – in the cases Viking, Laval, Rüffert and Commission v. Germany - an occasion to evaluate the balance between fundamental freedoms and social rights

The movable borders of the Drittwirkung European scholar have been observing a dichotomy arising by some statements

of ECJ The ECJ seems to admit the horizontal effect of the freedom to provide services, denying any horizontal effect of the free movement of goods

Some Authors tried to justify the different treatment Because the overlapping between the horizontal effect of free movement of goods and

competition law may give rise to some problematic issues Because they argue in general the personalistic nature of freedom to provide services and

justify with such nature the Drittwirkung Some others propose an equalization of the two freedoms

Because of their practical interferences Both the views are based on partially good and partially controversial arguments.

A more fertile key of lecture is given by the different reasons animating the principle of effectiveness

The Drittwirkung of free movement of goods is justified when it is useful to avoid a gap of protection caused by the private regulating power

Royal Pharmaceutical Association of Great Britain, Commission v. Ireland and Fra.bo. case

Drittwirkung and remedies: taxonomies of DrittwirkungFrom the point of view of private law

Direct effect: the immediate application of a remedy to protect a fundamental right

Indirect effect: the protection of a fundamental right is mediated by interpretation of rules or general clauses

From the point of view of international human rightsDirect effect is constituted by the liability of the State

for having violated a certain human rightIndirect effect occurs when a positive obligation is

imposed on a State to make its law comply with treaty rights

Reasons behind the veil of effectiveness and remediesShall remedies connected with the horizontal effect of

fundamental freedoms be claimed against the State or against individuals?

It depends on the reasons behind the veil of effectiveness:If the reason of the horizontal effect is to avoid the lack of

protection – in case of mere vertical effect - due to the normative power of private entities, those entities shall be liable for the infringement of fundamental freedoms applied in the horizontal projection.

If the reason is to strengthen fundamental freedoms connected with personalistic issues, individuals may be responsible for the breach of fundamental rights.

If the reason is to contribute to the expansion of the EU competence in order to supervise the sovereign States’ behavior, as in the area of social rights, only the State’s liability is justified.

Private parties and the right to use exemptionsIf individuals must comply with fundamental freedoms in their behaviour, can they also invoke, as sovereign States do, some exemptions, justifying a restriction of fundamental freedoms?Exception of public policy, public security or public health (Bosman)

Rare applicationMandatory requirements or rule of reason exceptions concerning

general interests of non-economic nature the Fundamental Rights exception

Once private parties get the chance to oppose horizontal effects of fundamental freedoms with the same exceptions Member States use, a relevant question arises. What kind of conflict does exist between fundamental freedoms and fundamental rights in the outline made by the ECJ? And what is the solution of this conflict?

Balance between fundamental freedoms and fundamental rightsTwo observations are preliminaryFundamental freedoms act as an instrument to claim the

transition from a Member State’s legislation to a different Member State’s legislation all European States recognize fundamental rights, but in a different way that’s why, competition between European legal systems may produce social dumping.

Fundamental freedoms and their power to create an arena of the competitions between legal systemsare fundamental in a different sense compared to the

semantic value of the qualification fundamental, when related to human rights

it remains, of course, the exception of the restricted areas where freedoms have a personalistic connotation

Balance between fundamental freedoms and fundamental rights “Is there any order of rank between the fundamental rights

applicable as general legal principles and the fundamental freedoms enshrined in the Treaty?” [Adv. Stix Hackl] From a formal point of view

general legal principles are considered part of EU primary law therefore they have the same hierarchical level as other primary legislation and, in particular, fundamental freedoms

A substantial question immediately arises “in the light of the Community’s conception of itself as a community founded on the

observance of [human] rights and having regard to the need in today’s world to have recourse to commitment to the protection of human rights as a prerequisite for the legitimacy of all State orders, could fundamental and human rights in general be afforded a certain precedence over ‘general’ primary legislation?”

The answer: “fundamental freedoms and (most) fundamental rights both allow of certain restrictions. [...] The need ‘to reconcile’ the requirements of the protection of fundamental rights cannot therefore mean

weighing up fundamental freedoms against fundamental rights per se. [...] It is [...] necessary to examine the extent to which the fundamental rights concerned admit of restrictions. The provisions on the fundamental freedom concerned, and particularly the circumstances in which

exceptions are permissible, must then be construed as far as possible in such a way as to preclude measures that exceed allowable impingement on the fundamental rights concerned and hence to preclude those measures that are not reconcilable with fundamental rights”.

The asymmetrical balance in favour of EU f. freedoms The compromise solution of Adv. Stix Hackl seems stretched to a

balance particularly concerned with the protection of human rights Such solution was not applied by the ECJ jurisprudence [in particular

by the quartet Laval] that have come to an asymmetrical balance between fundamental freedoms and fundamental rights, particularly concerned with the protection of fundamental freedoms

The Court justified such asymmetrical balance in detriment of social rights:

By restricting purposes that social rights may pursue [Viking: the right to strike can be assumed as an exemption only “if it were established

that the jobs or conditions of employment at issue [were] jeopardised or under serious threat”]

By using the proportionality principle [Laval: “collective action cannot be justified in the light of the public interest objective

[…], where the negotiations on pay, which that action seeks to require an undertaking established in another Member State to enter into, form part of a national context characterised by a lack of provisions, which are sufficiently precise and accessible that they do not render it impossible or excessively difficult in practice for such an undertaking to determine the obligations with which it is required to comply as regards minimum pay”]

The need for an asymmetrical balance in favour of social rightsDifferent consistency of fundamental freedoms and social rights

doesn’t not imply a hierarchical and abstract rank of valuesBut involves

that EU law shall be interpreted in conformity with human fundamental rights

that the protection of social rights in the European framework need to be analysed in the light of national legislations and practices.

that in the balance between fundamental freedoms and fundamental rights, regulated by national legislations and practices, the balance of interests must favour social rights rather than fundamental freedoms: by restricting purposes that fundamental freedoms may pursue: the

protection of fundamental freedoms shall be limited to the essential aim of not obstructing the common market

by using the proportionality principle: social rights shall be restricted only in some marginal cases, when they would radically prevent economic freedoms to operate

The need for a better protection of social rightsDisapproval of the “Laval doctrine”

in national and European debate by the European Committee of Social Rights

The new European Union’s entities and sources have started to negate the Court’s opinion on social rightThe Advocate General Trstenjak, in his

conclusions in Commission v. Germany, tries to develop a better balanced comparison between fundamental rights and fundamental freedoms.

The new approach of the Lisbon Treaty

Lisbon Treaty and social rightsThe LT enshrines some social rights in the

Charter of Fundamental Rights of European Union

The LT promotes the Union accession to the ECHREnhancement of the Strasbourg court’s impact

on ECJ. ECHR in Demir and Baykara and Enerji Yapi-Yol Sen

v. Turkey has connected collective agreements and the right to strike to the liberty of association protected by art. 11 of the Convention.

Social rights do not admit any restrictions, except for the cases established by the law and absolutely “necessary in a democratic society” (Enerji case).

A better protection of social rights in other EU sources Monti II Proposal no developments followed

the Directive 67/2014: tries, in contrast with Laval, to combine the businesses’ need of certainty in the

quantification of the minimum rate pay with the role played by social parties. “respects the fundamental rights and observes the principles recognised in the

Charter of Fundamental Rights of the European Union, notably [...] the right to collective bargaining and action (Article 28), fair and just working conditions (Article 31) [...] and has to be implemented in accordance with those rights and principles”.

art. 1.2 “the Directive shall not affect in any way the exercise of fundamental rights as recognised in Member States and at Union level, including the right or freedom to strike or to take other action covered by the specific industrial relations systems in Member States, in accordance with national law and/or practice nor does it affect the right to negotiate, conclude and enforce collective agreements and to take collective action in accordance with national law and/or practice”.

The Directive confirms that the regulation of social rights is committed to the Member States consequently, only these latter can be responsible for the breach of fundamental

freedoms in their interaction with social rights

State liability v. private parties liabilityRemedies conseguenses of the balance between

fundamental freedoms and social rightsMember States play a central role in regulating the

exercise of social rights; the Court of Justice shall only supervise the respect of fundamental freedomsPrivate parties can be responsible only on the basis of

national law interpreted with the aim of protecting fundamental rights: indirect Drittwirkung

When a private parties invoke a remedy beyond or against national legislation and seek supervision on a Member State’s action breaching fundamental freedoms only the State can be responsible for the breach

State liability in case of balance between f. freedoms and soc.rights Swedish Court (Arbetsdomstolen) applied private parties liability on the basis of:

transition from the State’s liability to the private parties’ liability for the breach of EU on the horizontal effects of fundamental freedoms on Courage, Manfredi and Raccanelli cases

Arguments against the Swedish solution and in favour of the mere State liability the Court does not pay any attention to the reason inspiring horizontal effects of the

freedoms in their balance with social rights, which is only to ensure supervision on national actions and not to deny a Member State’s power to regulate the issue of social rights

Courage and Manfredi concern only competition law Raccanelli deal with different grounds of horizontal effects and never generalized the

private parties’ direct liability In addition

In the Italian framework the direct liability of private parties would lie on workers and not on trade unions, so workers would pay for the State’s mistakes despite their nature of weaker parties, they would bear the “double strength” of fundamental

freedoms. The national judge who is called to operate the due balance between freedoms and social

rights, would rather deal with a State as a defendant and not with a single citizen.

Remedies against private parties When?

Outside the area of social rights, when the reasons of Drittwirkung are to protect fundamental freedoms that are fundamental

rights to avoid a gap of protection cause by the normative

competence of private bodies

Which kind of remediesAction for injuctionActions for compensation

The only feasible strategy in Angonese and RaccanelliContractual actions

Nullity of contract for breach of fundamental freedoms When?

When the its contect does not radically respect fundamental freedoms Why?

Because it infringes mandatory rules or, in alternative, because it is contrary to the public policy? Direct or indirect Drittwirkung? Similar the judicial activity

public policy clause shall be taken into account in both cases and the principle of effectiveness itself helps to find out if the content of contract really

infringes the fundamental freedoms

Which kind of nullity? A common voidness not a protective nullity

Efficiency of the remedy In Bosman the Court could declare void both the UEFA regulation discriminatory

provision and the contractual terms of Mr. Bosman’s agreements In Walrave the voidness of the UCI regulation could cause the applicability of

agreements between cyclists and coaches even in the world championships In Fra.bo., the suspension of the Frabopress certification made by the German

private entity DVGW could be considered void

Fundamental freedoms and party autonomy How EU fundamental freedoms influence party autonomy in general? In case of the vertical effect

Any restriction of fundamental freedoms is a restriction of party autonomy Fundamental freedoms reinforce party autonomy, without creating a general deregulation

In case of horizontal effect: when the party autonomy itself produce restrictions of fundamental freedoms “How can EC freedoms which are meant to advance private autonomy in the Community pone a threat thereto?”

The single clause that obstacles party autonomy with third parties can be considered void because of the breach of fundamental freedoms

But this kind of voidness indirectly advantages party autonomy with third parties, so the general power of party autonomy

Sometimes EU freedoms can be the expression of prevailing economic interests or of personalistic interests the single contract may succumb

Sometimes party autonomy itself can be surrounded by personalistic issues: for instance, in collective agreements or in all those agreements concerning social rights the proposed remedy of the State liability in every case of conflict between social rights and

fundamental freedoms contributes to eradicate the problem from the area of contract and private relations.

However the asymmetrical balance described above shall always take place

Free market and social justice The search of an equilibrium between free market and social justice is not

easy, as the quartet Laval showed Problems can derives even from strategies different from the Drittwirkung

of Fundamental Freedoms In Alemo-Herron and others v. Parkwood Leisure Ltd case ECJ considered

freedom of contract as a fundamental right, protected by art. 16 of the Charter of Fundamental Rights this qualification has led to an interpretation of EU law that significantly contrasted with social justice’s issues

The Drittwirkung and the use of principles are difficult and sophisticated techniques and they should aim to the enhancement of the protection of rights and freedoms. Court of Justice shall not manipulate them in order to intensify economic freedoms

“Quis custodiet ipsos custodes?”(Carl Schmitt) Of course, the Constitutional Court has this assignment; however, its voice is

not always loud and its rulings are not always blameless. The polyphonic voice of Scholars seems to be, nowadays and despite its limits,

the most reliable guardian of the values guardians