The Concept of Freedom Of Establishment in Relation with Turkey and European Economic Community

activities throughout the Community, and find the line of demarcation between the two difficult to discern. There is a great deal of truth to this observation. Implementing legislation and interpretative case law often apply to the exercise of both rights, without any distinction drawn between them. However, in some instances, a particular aspect of the exercise of a right, or a particular limit on a right, is specific either to the provision of services or to establishment. Accordingly, one should try to keep the two Treaty rights distinct.12
Articles 43 and 49 of the EU treaty may appear to overlap, but in separating their application a rule of thumb may be employed; art 43 relates to the freedom to establishment. This entails the ‘actual pursuit of an economic activity through a fixed establishment in another Members State
10 Dr. Markku Kiikeri,’The Freedom of Establishment in the European Union’,(2002),Report to the Finish Ministry of Trade and Industry, p.29 http://www.helsinki.fi/publaw/opiskelu/Eurooppaoikeus/Sijoittautumistutkimus.englanti.Kiikeri.pdf accessed 01 February 2009 11 Anita Bocker & Elspeth Guild, Implementation of the Europe Agreements in France, Germany, The Netherlands and the UK: movement of Persons (Platinium Publishing, London 2002) p.67 12 George A. Bermann, Roger J. Goebel, William J. Davey and Eleanor M. Fox, Cases and Materials On European Union Law, (2nd edition, West Group Publishing Company, St. Paul 2002), P.654
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for an indefinite period’: R v Secretary of State for Transport, ex parte Factortame Ltd and Others Case13. According to the case of Gebhard v Consiglio dell’ Ordine degli Avvocati e Procuratori di Milano14, establishment requires the activity to be carried out on a ‘stable and continuous basis’.
Article 49 applies where a person simply conducts professional forays into another Member State without establishing a business presence there, or, as we shall see, wishes to receive services for a Temporary period in another Members State. A community national will therefore rely on this provision when their activities are temporary will be decided by reference to ‘not only the duration of the service, but also of its regularity, periodicity or continuity’. 15 2.3 Restrictions on Freedom of Movement and Residence in EC Directive 73/148 applies to both the right of establishment and the provision of services. The Directive abolished restrictions on the movement and residence of:
(a) Nationals of member states who are established in one member state and wish to establish in another member state or to provide services.
(b) Nationals who wish to go to another member state as the recipients of services (e.g. as tourists)
(c) Spouses and children under 21 years of nationals
(d) Relatives (both ascendant and descendant) of nationals and of spouses where dependent. 16
Under the Directive (similar in scope to Directive 68/360 for workers), those who benefit may leave and re-enter the territory on production of the necessary identity card. Those entering for the purpose of establishment have permanent right of residence and are entitled to a five-year, automatically renewable residence permit. Directive 75/34 also applies to both establishment and the provision of services. It provides for the self-employed and their families to remain after retirement.17 3. Association Agreements Concluded with Non-Member States in Relation To Freedom Of Establishment
The Association Agreements concluded with non-member states must be considered when speaking about the freedom of establishment – especially those with countries in the process of accessing to the European Union. Therefore, it is worthy to give a place in this study in order to
13 Case C-213/89 R v Secretary of State for Transport, ex parte Factortame Ltd and Others Case (ECJ 19 June 1990) 14 Case C-55/94 Gebhard v Consiglio dell’ Ordine degli Avvocati e Procuratori di Milano (ECJ 30 November 1995) 15 Joanne Coles, Law of the European Union, (3rd Edition, Old Bailey Press, London, 2001) p. 190 16 Penelope Kent, Law of the European Union,(3rd Edition, Pearson Education Limited, Edinburgh, 2001) p. 175, 176 17 Ibid
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comprehend the freedom of establishment in the context of Association Agreements concluded with non-member states-EC.
The agreements promote trade and harmonious economic relations so as to foster the development of prosperity in those States and facilitate their future accession. In 1998, the EU formally launched the process that should lead to its enlargement to Central and Eastern Europe. The process embraces ten central and Eastern European Countries (Herein after CEECS). Accession negotiations were opened with five of these countries (CEECs). Accession negotiations were opened with five of these countries (the Czech Republic, Estonia, Hungary, Poland and Slovenia) on 31 March 1998, and with five other countries (Romania, the Slovak Republic, Latvia, Lithuania and Bulgaria) on 15 February 2000. All these agreements have granted the right of establishment of CEEC companies, branches and agencies, including small-service companies, even sole proprietorships, and in nearly all cases also the establishment of self-employed persons.18
Again the provisions in the Agreements are very similar in particular as regards the Agreements with Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia. As regards the three Baltic States and Slovenia the Agreements are more different – in particular, the right to self employment is specifically aimed at companies from the parties, but then extended by a separate provision to natural persons at the end of the transitional periods. The Estonia Agreement provides for the extension of the right to the self-employed only where the individual is established although the definition of the right is “to take up economic activities as self-employed persons…”.This particularity has been considered significant by some commentators.19
The Europe Agreements define EC and CEEC companies as companies or firms that have been set up in accordance with the laws of one of the parties to the EA in question, and whose registered office, central administration or principle place of business is located in territory of within the EC or in the other Contracting Party. Partnerships are included in this definition, because the right of establishment grants individuals the right to set up and manage companies.20
In most of these association agreements there exist provisions prohibiting discrimination on grounds of nationality, i.e., discrimination against nationals of those States. Those can be self-employed workers or persons setting up and managing companies (right of establishment) (in the context of freedom of establishment). Such nationals are entitled to treatment that is no
18 Anita Bocker & Elspeth Guild, Implementation of the Europe Agreements in France, Germany, The Netherlands and the UK: movement of Persons (Platinium Publishing, London, 2002) p.1 19 ibid page 14 20 Andrea Ott, Kirstyn Inglis & Marescae, Handbook on European enlargement : a commentary on the enlargement process (T.M.C Asser instituut, The Hague 2002) p. 468
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less favourable than that accorded to companies and nationals of the Member States.21 This applies also to companies from those countries. The right to entry and residence is also included.22
In some recent decisions the Court has maintained (and confirmed) that the nationals from those countries having the association agreement with the Community may invoke the right to free establishment in national courts (direct applicability)23. In other words, those nationals are granted a right of establishment, i.e., a right to take up activities of an industrial or commercial character, activities of craftsmen, or activities of the professions, and to pursue them in a self-employed capacity, and they may enforce their right legally in the host country.
However – contrary to the “normal” establishments, the Member States may retain the right, under those agreements, to regulate rights of entry and residence of nationals of those countries, and apply certain rules of stay, work, and labour. Doing this, however, they must be sure that the domestic immigration rules must not nullify or impair the benefits granted to such nationals under the right of establishment provided for in the agreements. This right of the member States means, however, that even if the residence and entry cannot be refused on the basis of nationality, the nature and the possibilities for the business activity can be examined more closely in a preliminary procedure (unlike in the case of EU nationals). This concerns also the control of the purpose of the visit. Furthermore, the abuse and misuse of law can result consequences (just like for EU nationals).24
Hence, the right to establishment is not as unconditional as for the EU nationals. This means that the scope of the principle of proportionality and the meaning of the wording is different, and the interpretation of the rights and freedoms is different too. In the end, however, the measures taken by the national authorities must not affect the very substance of the rights of entry, stay and establishment. Furthermore, they are also protected by the fundamental rights (the right to respect for family life and the right to respect for property), which rules derive from the European Convention for the Protection of Human Rights and Fundamental Freedoms of Article 291, Article 294 and 295. As mentioned also in the Court’s case law, any restrictions relating to the control of capital by natural or legal persons are contrary to the Article 294 (ex 221). It explicitly maintains that no national discrimination may exist for owning capital in companies of a country.25
21 See further information, Europe Agreement