The Horizontal Effect of the Free Movement Provisions

Publication Date01 September 2011
AuthorMustafa T. Karayigit
18 MJ 3 (2011) 303
M T. K*
e article scrutinizes the i ssue of horizontal eect in the e ld of fundamental freedoms.
In that regard two main sub -issues are ex plored: First, the ratione mater iae and ratione
personae scope of horizontal direct eect of the Treaty provisions on freedom of movement
for workers, freedom to provide services and freedom of establishment is examined w ith
their main rationales. Second, in addition to indirect horizontal direct of the Treaty
provisions on free movement of goods, it is exa mined whether hori zontal direct eec t in
the eld of free movement of goods is p rovided by these provisions on the basis of the same
rationales, if not, by the general princ iple of non-discrimination on grounds of nationality
of EU law.
Keywords: competition; fundamental freedoms; the general principle of non-
discrimi nation of EU law; horizontal direct eect; ind irect horizontal eect
When the CJEU established the principle of direct eect in Van G end en Loos, the
potential legal implications of its manifestation were not discerned at that time. It uttered
in that case th at
Community law (…) not only imposes obligations on individuals but is also intended to confer
upon them rights wh ich become part of their legal her itage. ese rights aris e not only where
they are expressly granted by the Treaty, but a lso by reason of obligations which the Treaty
imposes in a clearly den ed way upon individuals as well as upon the Member S tates and upon
the institut ions of the Community.1
* Lecturer at t he European Union Inst itute of Marmara Universit y.
1 Case 26/62 NV Algemene Transport- en Expeditie Onde rneming van Gend en Loos v. Netherlands Inland
Revenue Admini stration [1963] ECR 1. Emphasis added.
Mustafa T. Karay igit
304 18 MJ 3 (2011)
Over t he course of time it has been ascerta ined that rights of individuals might ari se
by reason of obligations i mposed upon other individual s within the context of the legal
relationships governed not only by the Treaty provisions which are formally addressed to
private persons, but als o those which are deemed to be forma lly addressed to the public
authorities. To be precise, the CJEU has conrmed the applicability of the free movement
provisions to the legal relationships not com ing under public law, but under private law.
Fundamental f reedoms accordingly constitute subjec tive rights of private pers ons to be
enforced in t he national courts not only against the public authorities, but also against
other private persons. e process connotes ‘an evolution from a public private d ivide
between Treaty provisions to a public private divide within Treaty provisions’.2
e article scrutini zes the issue of hori zontal eect in the eld of f undamental
freedoms. In the second section the related principles will be exa mined in a comparative
way. In the t hird section, because of the incoherent nature of c ase law, the analysis will
separate the issue of horizontal eect of provisions on free movement of goods from
that on other fundamental freedoms. Case law regarding horizontal direct eect of
the provi sions on freedom of movement for workers, freedom to provide serv ices and
freedom of establishment will rst be analysed wit hin the context of the main rationales.
It will a lso be questioned whether any general theory emerges from that case law about
the hori zontal eect of the f ree movement provisions, that is also to apply to the eld
of free movement of goods. On the basis of implications that have been discovered, the
issue of horizontal eect in the eld of f ree movement of goods will then b e deliberated
e Rome Treaty set up public en forcement of t he free movement provisions based
on a system of supervision (the infri ngement procedure) carr ied out ver tically by the
Commission and horizonta lly by other Member States to ensure compliance of national
measures with the free movement rules. e CJEU then introduced the principle of direct
eect3 to foster Europea n integration from the bottom through t he private enforcement
system depending upon the v igilance of individuals. Di rect eect has vertical and
2 O. Odudu, ‘ e Public/Pr ivate Disti nction in EU Interna l Market Law’, Revue Trimestrielle de Droit
Européen 4 (2010), p. 826–842.
3 e att ribution of direc t eect : Free movement of goods: Case 26/62 van Gen d & Loos (Article 30
TFEU); Ca se 74/76 Iannelli [1977] ECR 557 (Art icle 34 T FEU); Case 53/76 Bouhelier [1977] ECR 197
(Article 35 TFEU); Freedom of movement for workers: Ca se 167/73 Commission v. France [1974] ECR
359 (Article 45 TFEU); Freedom of establishment : Case 2/74 Reyners [1974] ECR 631 (Article 49 TFEU);
Freedom to provide serv ices: Case 33/74 Van Binsbergen [1974] ECR 129 9 (Article 56 and 57 TFEU);
Free movement of capita l and payments: Joi ned Cases C-163, 165 and 250/94 S anz de Lera [1995] ECR
I-4821 (Article 63 TF EU).
e Horizontal E ect of the Free Movement Provision s
18 MJ 3 (2011) 305
horizontal forms. In the case of vertica l direct eect, as a means of European integration
from the bot tom up, individuals may i nvoke their rights ari sing from the Treaty before
the national courts again st the Member States. is principle is later underpinned by the
creation of t he remedy of state lia bility to be cla imed in the national courts i n order to
provide enforcement of their EU rights and at the end compatibility of national law with
the Treaty under the procedure of prelimi nary ruling.4
e principle of horizontal eec t on the other hand has two forms: direc t horizontal
eect and indirect horizontal eect. As dened by Hartkamp, the horizontal direct eect
of the free movement provisions means that these provisions may be directly applied to the
legal relationships between private persons to create, modify or extinguish between them
subjective r ights and obligations . Correspondingly a private contract or its provision/s
or a private unilateral ac t which is/are contra ry to the fundamental free doms could be
deemed to const itute an illega l act against another private person and be declared null
and void.5 As a means of European integration from bottom to bottom, individuals, who
are the sources of discri mination or restrict ion prohibited by the f ree movement rules,
are t herefore deemed addressee s of the free movement prov isions and the compliance
of whose (private) measures with the free movement provisions is ensured. Unli ke the
remedy of state liabil ity underpinning either ver tical direct eect or indirect horizontal
eect of t he Treaty provisions, the principle of horizontal d irect eect has not however
been underpinned by the creat ion of the remedy of horizontal liability by the CJEU yet.
In the ca se of indirect horizontal eect, Member States may be held accountable
because of the private measures which constitute discrimination or restriction
prohibited by the f ree movement rules on the g rounds that they al lowed or enabled the
encroachment of the fu ndamental freedoms of private per sons by other private persons
or faile d to ensure in their t erritory compliance with the free movement provisions i n
the legal relationships between private persons. e Member States are under the duty to
take all neces sary, appropriate and proportionate measures to eliminate barriers created
by individuals to the fundamental freedom of free movement of goods and to ensure that
the fundamenta l freedom is respected on their territory.6
With regard to horizontal eect of the free movement provisions the following
two series of questions have been s crutinized: rst, c an the actions of private parties
constitute t he source of d iscrimination or restriction prohibited by the free movement
rules, and of what nature a re their actions? Second, are private persons addressed by the
free movement provisions and do they fall within t heir ratione personae scope? Could
4 Joined Cas es C-46/93 and C-48/93 Bra sserie du Pêcheur SA v. Bundesrep ublik Deuts chland and e
Queen v. Secretary of State for Transpo rt, ex parte: Factor tame Ltd and others [1996] ECR I-1029.
5 A. Hartkamp, ‘e E ect of the EC Treaty in Private Law: On Dire ct and Indirect Horiz ontal Eects of
Primar y Community Law’, 18 ERPL 3 (2010), p. 527–548.
6 Case C-265/95 Commission of the European Communities v. French Republic [1997] ECR I-6959, para. 32;
Case C-112/00 Eu gen Sc hmidberger, Internationale Transporte und Planzüge v. Re publik Österreich
[2003] ECR I-5659, para. 59.

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