Web-Companion Essential EU Law in Text: Suggested solutions to the exercises

Please find hereinafter the suggested solutions to the 64 exercises contained in the book "Tobler/Beglinger, Essential EU Law in Text, 5th edition, HVG-ORAC 2020, ISBN 978-963-258-490-4".  To give you an idea how the exercises in the book are phrased, they have been added for the first three instances. Any comments or feedback are welcome.

Showing only entries concerning chapter Part 2, B. III. 7. 4.. View all entries

Free movement of persons and services – Exercise 4

Page: 81 Chapter: Part 2, B. III. 7. 4.

Suggested solution:

Art. 49 TFEU explicitly mentions the setting up of branches as part of the freedom of establishment. However, the Treaty rules on free movement apply only insofar as there is no applicable secondary law. In this context, it must be remembered that the so-called Services Directive (Directive 2006/123/EC) applies not only to services provided in a short-term context (i.e. services within the meaning of Arts. 56 and 57 TFEU), but also to services provided in a long-term context (i.e. establishment). However, according to its Art. 2(2)(b), this Directive does not cover insurance services. In fact, there is specific EU secondary law about the insurance business. This legislation is not dealt with in “Essential EU Law in Text”. For exercise purposes, the question should therefore be answered in the framework of Art. 49 TFEU (of course keeping in mind that it is the specific secondary law that applies insofar as it covers a certain issue).

The rule that in order to be allowed to set up a branch, an insurance company must have been doing business in the host country for at least twenty years obviously limits the company’s access to the market of the host Member State. Given that it will be mostly national companies who are able to meet this criterion and mostly foreign companies who will not be able to do so, the criterion in question amounts to indirect discrimination on grounds of nationality, unless there is objective justification and the measure is proportionate. Consumer protection is undoubtedly a legitimate aim, but it is more than doubtful that the requirement of 20 years of residence is suitable and appropriate in this context. Accordingly, it would seem that the measure is not acceptable.

Regarding the rule that the setting up of branches is possible only for insurance companies of the host country, it is a clear case of direct discrimination on grounds of nationality. This type of infringement can only be justified on the basis of the derogation grounds listed in the Treaty, i.e. public policy, public security and public health. These grounds cannot be extended and must be interpreted restrictively. Therefore, the host Member State cannot rely on consumer protection.

[Relevant Charts: Chapter 8, in particular Charts 8/56 and 8/44-46]



Published: 13 July 2020