RENFORCE Working Paper Elmar Schmidt. Mutual Recognition in the Single Market and the Area of Freedom, Security and Justice: what are the limits?

Transcription

1 RENFORCE Working Paper Elmar Schmidt Mutual Recognition in the Single Market and the Area of Freedom, Security and Justice: what are the limits?

2 Table of Contents MUTUAL RECOGNITION IN THE SINGLE MARKET AND THE AREA OF FREEDOM, SECURITY AND JUSTICE: WHAT ARE THE LIMITS? INTRODUCTION HISTORY & DEFINITION THE LIMITS OF MUTUAL RECOGNITION... 6 LIMIT 1: EQUIVALENCE... 7 LIMIT 2: MUTUAL TRUST... 8 LIMIT 3: FUNDAMENTAL RIGHTS...10 LIMIT 4: PROPORTIONALITY & SUBSIDIARITY...11 LIMIT 5: ARTICLE 36 TFEU AND THE MANDATORY REQUIREMENTS EXPLORING MUTUAL RECOGNITION: CASE STUDIES IN DIFFERENT POLICY AREAS...15 I. THE SINGLE MARKET...15 A. INTRODUCTION B. EQUIVALENCE AS A PREREQUISITE FOR MUTUAL TRUST: TWO NECESSARY INGREDIENTS FOR MUTUAL RECOGNITION IN THE SINGLE MARKET? C. ACCESS TO SOCIAL SECURITY OVERVIEW LIMITS D. PROFESSIONAL QUALIFICATIONS OVERVIEW LIMITS E. DRIVER S LICENSES OVERVIEW LIMITS F. FOOD LAW OVERVIEW LIMITS G. MEDICINES OVERVIEW LIMITS II. THE AREA OF FREEDOM, SECURITY AND JUSTICE...24 A. INTRODUCTION B. FUNDAMENTAL RIGHTS PROTECTION AND MUTUAL TRUST: TWO INGREDIENTS FOR MUTUAL RECOGNITION IN THE ENTIRE AFSJ? C. JUDICIAL COOPERATION IN CRIMINAL MATTERS OVERVIEW LIMITS D. JUDICIAL COOPERATION IN CIVIL MATTERS: JURISDICTION, RECOGNITION AND ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS (BRUSSELS I)

3 OVERVIEW LIMITS E. JUDICIAL COOPERATION IN CIVIL MATTERS: FAMILY LAW (BRUSSELS II) OVERVIEW LIMITS F. ASYLUM OVERVIEW LIMITS THE POTENTIALS FOR MUTUAL RECOGNITION...32 I. THE AFSJ: THE RECOGNITION OF CIVIL STATUS DOCUMENTS...32 II. THE SINGLE MARKET: TAX LAW CONCLUSION: MACRO AND MICRO COMPARISON OF MUTUAL RECOGNITION IN THE SINGLE MARKET AND AFSJ

4 Mutual Recognition in the Single Market and the Area of Freedom, Security and Justice: what are the limits? 1. Introduction The important role of the principle in the European Union makes it an interesting topic for research, and has indeed become an object of interest in European legal parlance. Since its inception as a judicial principle, it has established itself as a fixture in the Single Market and the Area of Freedom, Security and Justice (AFSJ). Since the Treaty of Lisbon, it has gained constitutional status. While much has been written on the manner in which the principle operates in different areas, such contributions have typically limited themselves to isolated policy areas. This contribution will provide the reader with an overview of the principle and the manner in which it operates in various policy areas, while attempting to shed light on the limits of the principle in each of these, and will conclude with a comparison. The paper begins with an overview of the principle s history and a definition. After this presentation of its background, Chapter 3 will discuss five limits to mutual recognition as they appear to apply to the principle in the Single Market and the Area of Freedom, Security and Justice. After this preliminary study a more in-depth review will follow discussing a number of separate policy areas in the Single Market and the AFSJ in Chapter 4. Finally, Chapter 5 will discuss two policy fields the mutual recognition of civil status documents and tax law where mutual recognition has not yet been implemented. Chapter 6 will then compare the principle of mutual recognition in the Single Market and the AFSJ at a macro level, and the separate policy areas at micro level. 2. History & Definition 2.1 History There is no valid reason why, provided that they have been lawfully produced and marketed in one of the Member States, alcoholic beverages should not be introduced to any other Member State; the sale of such products may not be subject to a legal prohibition on the marketing of beverages with an alcohol content lower than the limit set by the national rules. 1 The European Court of Justice (ECJ), Luxembourg, 20 February 1979: the place of birth of the principle of mutual recognition. It is in this judgment Cassis de Dijon that the ECJ developed the seminal formula that has dictated intra-state trade between the European Member States since: what can be legally sold in one member state should also be granted market access in other states. This excerpt from the Cassis de Dijon case is part of a 1 Case 120/78 of 20 February 1979, Cassis de Dijon, para

5 legendary judgment that has brought to life one of the most versatile instruments of European integration. Its flexibility can be observed in the manner in which it traced its way across various EU policy areas. First conceived in connection with the single market with respect to the cross-border trade in goods, mutual recognition has been devised by the Court in order to guarantee the unhindered flow of trade from one Member State to the next. As time progressed and European integration advanced, so did the perceived need to remove obstacles to unification. After striking root in the field of the free movement of goods, mutual recognition has been accepted as a cornerstone for some European policy areas and has evolved to become an important regulatory tool in many EU policy areas, transcending the free movement of services, people and capital soon after its inception. 2 During its development, it has allowed progress on European integration where agreement on harmonization could not be reached, leaving national rules and regulations largely intact; Stemming from an innovative interpretation of the freedom to trade goods in the Cassis judgment, it allowed the Community in the late 1980s to push the realization of the single market despite its incapability of agreeing on the harmonization of rules. 3 In 1999 during the Tampere European Council, the decision was made to extend the scope of the principle of mutual recognition from the Single Market to the Area of Freedom, Security and Justice. 4 Practical settlement of the principle in this area was brought about by a ne bis in idem case, Gözütok and Brügge. 5 In this case, the ECJ held that the Member States trust each others criminal justice systems and that each is to recognize the criminal law that is in force in another, even if the outcome under its own law would be different. 6 The principle has since become a fixture in the mutual recognition of arrest and evidence warrants and asylum decisions, among other things. 2.2 Definition Despite, or perhaps because of its extensive use, it is not easy to formulate one definition of the principle of mutual recognition. No legally binding definition has ever been given. 7 Janssens explains that [i]n both the internal market context and the criminal justice context, the EU institutions have been very reluctant to provide a clear and concise definition of mutual recognition, but that some documents do provide a definition that allow for a grasp 2 P. Craig & G. De Burca, EU Law: Texts Cases, and Materials, Oxford: Oxford University Press 2011, p S. Schmidt, Mutual Recognition as a new mode of governance, Journal of European Public Policy 2007, vol. 14, issue 7, pp S. Peers, Mutual Recognition and Criminal Law in the European Union: Has the Council got it wrong?, Common Market Law Review 2004 (41), p Joined Cases C-187/01 and C-385/01 of 11 February 2003, Gözütok and Brügge. 6 E. Herlin-Karnell, Constitutional Principles in the Area of Freedom, Security and Justice, in: D. Acosta & C. Murphy, EU Security and Justice Law: After Lisbon and Stockholm, Oxford: Hart Publishing Ltd 2014, p E. Herlin-Karnell, The Constitutional Dimension of European Criminal Law, Oxford: Hart Publishing 2012, p. 24; W. de Bondt & G. Vermeulen, First things first: Characterising mutual recognition in criminal matters, in: M. Cools e.a., EU Criminal Justice, Financial & Economic Crime: New Perspectives, p

6 on this sometimes nebulous principle. 8 The Commission has accepted with respect to mutual recognition in the field of the internal market that the principle in the non-harmonised area consists of a rule (notwithstanding differences in national legislations, products lawfully produced or marketed in a Member State enjoy a basic right to free movement) and an exception (Treaty-based exceptions or mandatory requirements developed in the ECJ s jurisprudence, subject to compliance with the principle of proportionality). According to Janssens, this definition can, mutatis mutandis, be applied to the other free movement provisions. 9 In the context of the Area of Freedom, Security and Justice, mutual recognition could entail an obligation to accept a decision by Member State A taken by the authorities in Member State B, even though a comparable authority may not even exist in that state, or could make such decisions, or would have taken an entirely different decision in a comparable case Mutual recognition is recognized by the Treaty on the Functioning of the European Union (TFEU) as a principle of the functioning of the AFSJ. 12 After having studied the definitions of mutual recognition in the single market and the criminal justice area, Janssens presents the following definition of mutual recognition: the principle of mutual recognition requires that, notwithstanding differences between the various national rules that apply throughout the EU, objects, activities or decisions that are lawful in accordance with a Member State s legal framework must be accepted as equivalent to objects, activities or decisions carried out by one s own state, and must be allowed to take effect on one s own sphere of legal influence (either by granting them access to the national territory, or by taking them into account in any subsequent decisions, or by executing them), unless one of the available grounds for non-recognition applies The Limits of Mutual Recognition Is it possible to infer a general idea on the limits of mutual recognition? Or is the principle more protean than that, changing its appearance and donning different costumes and features as it is being applied to different policy areas? This chapter will discuss the limits to mutual recognition as one encounters them at first glance when studying literature on the subject, focusing in a general fashion on the Single Market and the Area of Freedom, Security and Justice (AFSJ). The limits discussed here will be equivalence (applies to both the Single Market as well as the AFSJ), mutual trust (which applies also to both fields), fundamental rights (applies only to the AFSJ), proportionality and subsidiarity (apply to both fields) and Article 36 TFEU and the mandatory requirements (these limits apply only to the Single 8 C. Janssens, The Principle of Mutual Recognition in EU Law, Oxford: Oxford University Press 2013, p Ibid. 10 Communication from the Commission to the Council and the European Parliament on mutual recognition of final decisions in criminal matters, (n 19) p. 4, as quoted by C. Janssens, The Principle of Mutual Recognition in EU Law, Oxford: Oxford University Press 2013, p Joined Cases C-187/01 and C-385/01 of 11 February 2003, Gözütok and Brügge, para See Articles 67, 81 and 82 TFEU. 13 Ibid. 6

7 Market). The case studies that will follow in chapter 4 will feature a more in-depth study of the policy areas of both the Single Market and the AFSJ in which mutual recognition is implemented and its limits. This chapter will introduce briefly the limits as they are found in the separate policy areas, as they have emerged from a general study of the literature on the topic. Limit 1: Equivalence In the Single Market As a matter of logic, for mutual recognition to work properly, there must be some degree of equivalence between the laws of the Member States. In other words, the standards must be comparable. It is (mostly) true that the European Member States have largely the same regulatory objectives when it comes to safety, consumers, the environment and health. 14 One approach to mutual recognition contends that the formula adopted in the Cassis de Dijon judgment adopts a conditional mutual recognition based on substantive equivalence. Substantive equivalence is premised on the notion that the host state must, when applying its own law as it is free to do where it finds that there is no, or lacking, equivalence take into account the regulatory history of the product concerned when deciding what legitimate regulatory controls may be applied. 15 This means that a host state is free under the application of the mandatory requirements of public health, protection of the environment and consumer protection to deny the acceptance of the home state s standards. 16 Another approach to the Cassis de Dijon formula is that it imposes conditional mutual recognition on the condition of functional equivalence. This entails that goods complying with the standards of the home State can be marketed in the host State provided that the standards of the first State are functionally parallel to those of the second. 17 Equivalence is also conducive to mutual trust; once a Member State has ascertained itself of the quality of legal standards of another member state, it will be more likely to assume equivalence and will as a result be more inclined to trust the standards of the home state. In the Area of Freedom, Security and Justice In the field of the AFSJ, equivalence is argued to be necessary, but is often foregone by the use of mutual recognition. Even more so in the context of criminal law [than in the Single Market], the presumption of mutual trust is not a self-sufficient condition for mutual recognition. If the Union wants to make real progress on mutual recognition, it must be ready to face the burdensome path of providing for sufficient approximation. Without approximation, the Union can either install only very weak forms of mutual recognition with many exceptions, or it will force the Member States as is already starting to be the case into claiming unilateral rights to make mutual recognition dependent on tests of functional 14 J. Pelkmans, Mutual Recognition in Goods and Services: An Economic Perspective, Working Paper No. 16 of March 2003, European Network of Economic Policy Research Institutes. Link 15 Alexandre Saydé, Abuse of EU Law and Regulation of the Internal Market, Portland, OR: Hart Publishing 2014, p Ibid. 17 Ibid. 7

8 equivalence, which may not have been intended by the EU legislation. 18 A more in-depth discussion on equivalence in the AFSJ will follow in the next chapter. Limit 2: Mutual trust In its recent opinion on the EU s accession to the European Convention of Human Rights, the European Court of Justice pointed out that the principle of mutual trust is of fundamental importance in EU law, given that it allows an area without internal borders to be created and maintained. That principle requires, particularly with regard to the area of freedom, security and justice, each of those States, save in exceptional circumstances, to consider all the other Member States to be complying with EU law and particularly with the fundamental rights recognised by EU law. 19 The intricate connection between the principle of mutual trust and mutual recognition was pointed out by the ECJ in a series of cases on the ne bis in idem principle enshrined in Article 54 of the Convention implementing the Schengen Agreement (CISA). The Court held that the ne bis in idem principle implies that Member States have mutual trust in their criminal justice systems and that each of them recognises the criminal law in force in the other Member State, even when the outcome would be different if its own national law was applied. 20 Möstl accuses the ECJ of being too quick to take mutual trust for granted, when he explains that the ECJ [ ] has claimed that nothing in the treaties makes mutual recognition dependent on harmonization, but that mutual recognition is built on a system of mutual trust instead, and that if the EU truly wants to make progress on mutual recognition, it must provide for at least some level of approximation. 21 Mutual trust is a more important prerequisite to mutual recognition with respect to the AFSJ than it is in the in the Single Market. Even so, Möstl contends that mutual trust is not something that can be taken for granted in either field, but requires a modicum of approximation. The Court has been willing to accept limitations on such trust, explaining in the case N.S. and Others that, although the Common European Asylum System is based on a system of mutual confidence, it is not inconceivable that there are fundamental flaws in the manner in which this system is applied in a given Member State. A failure to comply with fundamental rights standards, therefore, can be a reason to consider mutual trust to be breached; the risk of inhuman and degrading treatment caused by systemic deficiencies is a reason for the principle of mutual trust to be set aside. Under circumstances in which a risk is present, an asylum seeker may not be transferred to the Member State that was in principle responsible for the asylum application. 22 The latter circumstance leads to the EU asylum system s structure of negative mutual recognition to be set aside, as the Dublin Regulation recognizes the refusal of the Member States that are not responsible to examine the application for asylum. 23 The ECJ 18 M. Möstl, Preconditions and Limits of Mutual Recognition, Common Market Law Review 2010 (47), p Opinion 2/13 of 18 December 2014, para M. Möstl, Preconditions and Limits of Mutual Recognition, Common Market Law Review 2010 (47), p Joined Cases C-411/10 and C-493/10 of 21 December 2011, N.S. and Others, paras K. Lenaerts, The Principle of Mutual Recognition in the Area of Freedom, Security and Justice, The Fourth Annual Sir Jeremy Lever Lecture at All Souls College, University of Oxford, 30 January 2015, p

9 ruled in N.S. that the presumption that Member States comply with fundamental rights is rebuttable. 24 Again, the standard is high, and the notion of systemic deficiencies is to be distinguished from a mere infringement of a fundamental right of a Member State responsible 25 In other cases, the Court has been less than generous and sacrificed a higher standard of protection of fundamental rights for the smooth operation of the European criminal law system. In Melloni, the Court ruled that the fact that Spain made the surrender of a person who had been convicted in absentia conditional upon the possibility of review by casting doubt on the uniformity of the standard of protection of fundamental rights as defined in that framework decision, would undermine the principles of mutual trust and recognition which that decision purports to uphold and would, therefore, compromise the efficacy of that framework decision. 26 In the cases Hedley Lomas and Bouchara, the ECJ discussed the principle of mutual trust also with respect to the internal market and the free movement provisions. In the case of Bouchara, the Court abolished double controls and dual burdens as an expression of the more general principle of mutual trust between the authorities of the Member States. 27 Janssens explains that the legal basis of this principle could be the principle of sincere cooperation enshrined in Article 4(3) TEU. Janssens would agree with Möstl and disagree with the ECJ that mutual trust requires at least some form of approximation of standards; Trust is said to arise whenever a community shares a set of values in such a way as to create expectations of regular and honest behaviour 28. She, too questions whether, first, the ECJ simply took for granted the assumption of an equivalence of standards and, second, whether there are sufficient similarities between the member states to make mutual recognition work effectively. In a very crisp and succinct criticism of the opinion of Advocate-General Bot in the case Wolzenburg on mutual trust in the Area of Freedom, Security and Justice, Möstl chastises the A-G when he states that it is wrong to leave in place fundamental differences between legal systems and to simply proclaim mutual trust and recognition as the foundations of the AFSJ in which granting special treatment to one s own citizens no longer acceptable. Again, he contends that we have to remember that mutual recognition which deprives citizens of rights they formerly had (here: the special protection as a national) cannot be boldly decreed by primary law but must be carefully provided for, step by step, by responsible legislation which guarantees a sufficient level of protection to the individual. 29 He praises the Court for acknowledging in Wolzenburg that the different treatment of nationals is permissible under certain circumstances. The Court concludes that the different treatment was objectively justified, and proportionate and legitimate in the sense that it does not go beyond what is necessary to attain the objective of ensuring that requested persons who are nationals of 24 Joined Cases C-411/10 and C-493/10 of 21 December 2011, N.S. and Others, para K. Lenaerts, The Principle of Mutual Recognition in the Area of Freedom, Security and Justice, The Fourth Annual Sir Jeremy Lever Lecture at All Souls College, University of Oxford, 30 January 2015, p Case C-399/11 of 26 February 2013, para C. Janssens, The Principle of Mutual Recognition in EU Law, Oxford: Oxford University Press 2013, p Ibid., p M. Möstl, Preconditions and Limits of Mutual Recognition, Common Market Law Review 2010 (47), p

10 another member states [sic.] achieve a degree of actual integration in the member state of execution. 30 The expansions of the EU have put trust among European nations under pressure. Delhey explains that there are three variables that influence cohesion and trust: level of modernization (mechanisms: prestige), cultural characteristics (mechanisms: similarity) and power in the international system (mechanisms: perceived threat). 31 The recent enlargements of the EU have brought more diversity, especially with modernization levels and culture as well as regulatory standards. Gaps in economic welfare and cultural differences strain the EU s cohesion. Limit 3: Fundamental Rights This limit to mutual recognition is of particular importance to the Area of Freedom, Security and Justice and is closely connected to the principle of mutual trust. The AFSJ is an area in which fundamental rights are at stake, and this is a traditionally sensitive subject. As will be explained in the discussion below on the AFSJ and its policy areas, the circumstances under which Member States can bar mutual recognition on account of a violation of fundamental rights are exceptional. On the one hand, in accordance with the principle of mutual trust, Member States are expected to comply with EU fundamental rights standards. On the other, they may not check whether this is in fact the case. In jurisprudence where fundamental rights have been able to block mutual recognition, the most absolute rights have been at stake (the right to protection against torture, inhuman and degrading treatment). Fundamental rights have been recognized by the ECJ as forming part of the general principles of EU law. These fundamental rights have been inspired by the constitutional traditions common to the Member States and must be ensured within the framework of the structure and objectives of the European Union. 32 The fact that the European Charter of Fundamental Rights and Freedoms was elevated to the same legal value as the founding Treaties of the European Union itself further bolstered their status; [b]y giving the Charter s provisions binding legal force, the Lisbon Treaty formalises the principle that fundamental human rights are part of EU law. 33 Adherence to fundamental rights is conducive to mutual trust, which in turn enables mutual recognition. Where such sensitive aspects such as an individual s fundamental rights are at stake or the sovereignty of a Member State, it is not difficult to imagine that friction could easily occur. The ECJ has taken the reins firmly in hand, decreeing that trust is the standard that can be rebutted only under exceptional circumstances; the ECJ explains that the level of fundamental rights protection in the EU s Member States is sufficiently high that they can each be 30 L. Martin, A Spectre is Haunting Europe : The Constitutionality of the EAW vs. the principle of non-discrimination based on nationality, European Public Law 2011, Issue 4, p J. Delhey, Do Enlargements Make the European Union Less Cohesive? An Analysis of Trust between EU Nationalities, Journal of Common Market Studies 2007, Issue 2, pp p Ibid. 10

11 regarded as safe countries for all legal and practical purposes. 34 The Commission agrees with the European Court, stating that, although refusal to execute a European Arrest Warrant under the Framework Decision, it states that such grounds should be invoked only in exceptional circumstances within the Union. 35 But [r]egardless of whether these human rights are stated as explicit grounds for refusal in the implementing legislation, limiting mutual recognition on these should always be possible. 36 Indeed, both the ECJ as well as the European Court of Human Rights haven both taken due account of fundamental rights in their case law. In the N.S. judgment, also an asylum case, the ECJ has accepted that the trust of Member States in each other s adherence to fundamental rights cannot be absolute, and is rebuttable. For this judgment, the Court takes inspiration from the ECtHR s M.S.S. case. In the latter case, the Strasbourg court ruled that Belgium s decision to send an asylum applicant to Greece in spite of a multitude of reports documenting fundamental rights violations in the Hellenic nation was contrary to its obligations under the Charter. In particular, the ECtHR ruled that Belgium knew or should have known that the asylum applicant s application would not be considered seriously, and that the Belgian authorities knowingly exposed the asylum applicant to conditions of detention and living conditions that amounted to degrading treatment. 37 The proper functioning of mutual recognition in the AFSJ requires that all Member States maintain the required minimum standard so as to allow for mutual trust. As a matter of logic, this entails the necessity to avoid large chasms between the Member States. Failure to adhere to human rights standards is not just a ground for refusal under European law, but also under international law; Respect for fundamental rights defines the limit to the obligation of mutual recognition. This, which already follows from Article 6(3) EU, is confirmed by the various instruments that are based on the mechanism of mutual recognition of judicial decisions in criminal matters. For the national court, this entails not only a right, namely to refuse mutual recognition where this would result in an infringement of fundamental rights, but also an obligation under international law, namely to comply with the State s international obligations in the area of human rights. 38 Limit 4: Proportionality & Subsidiarity 34 A. Suominen, Limits of mutual recognition in cooperation in criminal matters with the EUespecially in light of recent judgments of both European Courts, European Criminal Law Review, Vol. 4, No. 3, p O. de Schutter, Mutual Recognition and Mutual Trust in the Establishment of the Area of Freedom, Security and Justice, in: Human Rights and in the Web of Governance: Towards a learning-based Fundamental Rights Policy for the European Union, Brussels: Etablissements Emile Bruylant, S.A. 2010, p A. Suominen, Limits of mutual recognition in cooperation in criminal matters with the EUespecially in light of recent judgments of both European Courts, European Criminal Law Review 2014, Vol. 4, No. 3, p Ibid., p O. de Schutter, Mutual Recognition and Mutual Trust in the Establishment of the Area of Freedom, Security and Justice, in: Human Rights and in the Web of Governance: Towards a learning-based Fundamental Rights Policy for the European Union, Brussels: Etablissements Emile Bruylant, S.A. 2010, p

12 While mutual recognition is a less intrusive instrument than harmonization of laws, there are still some considerations with respect to the proportionality and subsidiarity of the use of mutual recognition. In situations in which it is important to preserve Member State diversity and autonomy, mutual recognition has been used as a practical tool by Member States concerned about ceding sovereignty in certain areas. An example of this has been the mutual recognition of judicial decisions in criminal matters, where Member States could escape having to harmonizing their criminal laws by applying mutual recognition instead. Nonetheless, in spite of its more benign nature, there can still be concerns stemming from the principles of subsidiarity and proportionality that could stand in the way of mutual recognition. As defined in Article 5(1) TEU, the European Union s competences are governed by the principles of subsidiarity and proportionality. The third paragraph of the same article defines the principle of subsidiarity. The principle of subsidiarity implies that the Union shall act only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at the central level or at regional or local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level. Under the principle of proportionality, Union action may not exceed what is necessary to achieve the objectives of the Treaties. This is the legislative side of the principles of subsidiarity and proportionality. In the field of cooperation in criminal matters, the principles of subsidiarity and proportionality apply mainly to the EU legislator. 39 The aforementioned boundaries are activated where it would be considered disproportionate or unnecessary to address cooperation matters through the principle of mutual recognition. 40 Mutual recognition in this field should therefore only be used in the event that it is proportional with respect to the legal measure sought and is beneficial from a cost-benefit perspective, and should furthermore not be used where there is no added value to regulation at EU level. On the enforcement side, the side that affects the Member States, the principle of proportionality in the case of the European Arrest Warrant has been used as a limiting factor on a number of occasions in order to set aside the principle of mutual recognition in cases they considered minor and in which they deemed it unlikely that a (severe) sentence would follow in the issuing Member State. 41 In the field of the internal market as in the field of the AFSJ, the principles of subsidiarity and proportionality are not just limiting factors on mutual recognition, but can also set limitations on limitations; where Member States invoke grounds for refusal of mutual recognition, they, too, are forced to reflect on the proportionality of their measures. In this respect, the principles can be an effective safeguard against protectionist measures cloaked as legitimate grounds for refusal. The principles of subsidiarity and mutual recognition are closely related, as both are concerned with respecting the differences of the legal and judicial traditions of the Member States. But there is also a fundamental difference between the two. The principle of 39 A. Suominen, Limits of mutual recognition in cooperation in criminal matters with the EUespecially in light of recent judgments of both European Courts, European Criminal Law Review 2014, Vol. 4, No. 3, p Ibid. 41 C. Janssens, The Principle of Mutual Recognition in EU Law, Oxford: Oxford University Press 2013, p

13 subsidiarity focuses on the distribution of powers between Member States and the EU, it plays a crucial role whenever measures for approximation are planned. The principle of mutual recognition, on the other hand, is not dependent on approximation of the Member States criminal laws; its raison d être and validity is reinforced precisely because no such approximation is required. 42 The principles of subsidiarity and proportionality play a less significant role in the internal market 43 on the legislative side. In this area, the EU legislator enjoys a high degree of discretion in its choice for automatic recognition or some weaker form, without being hindered significantly by the two principles. This is because [o]ne has to bear in mind that, compared to its theoretical counterpart of full harmonization, the mutual recognition on the basis of (more or less demanding) minimum approximation is a fairly Member-State-friendly legislative technique of achieving the internal market anyway. 44 However, on the enforcement side, the Member States must always be aware of the principles when invoking a ground for refusal of mutual recognition. Limit 5: Article 36 TFEU and the Mandatory Requirements The so-called rule of reason has been introduced in the Dassonville ruling, where the Court decided that [a]ll trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade are to be seen as measures having an effect equivalent to quantitative restrictions. 45 Article 34 TFEU makes such quantitative restrictions illegal. Article 34 TFEU applies to both discriminatory as well as non-discriminatory measures. 46 The Court also said, and these words spawned the rule of reason, that [i]n the absence of a Community system guaranteeing for consumers the authenticity of a product s designation of origin, if a Member States takes measures to prevent unfair practices in this connection, it is however subject to the condition that these measures should be reasonable and that the means of proof required should not act as a hindrance to trade between Member States and should, in consequence, be accessible to all Community nationals. 47 According to the Dassonville-formula, all measures that are capable potentially hindering trade are prohibited, except where they constitute reasonable objections. 48 The seminal Cassis de Dijon case was a further development of the reasoning in Dassonville. Paragraphs 5 and 6 of the Dassonville judgment cited above were developed further in Cassis. 49 As explained earlier, the Court developed the so-called origin principle, the foundation of mutual recognition, in Cassis; as stated in paragraph 14 of Cassis, what is lawfully produced and marketed in one Member State may in principle not be denied access to other Member States. This was explained in paragraph 8 and is a further development of 42 Ibid., p Ibid. 44 Ibid., p Case 8/74 of 11 July 1974, Dassonville, para P. Craig & G. de Búrca, EU Law: Text Cases and Materials, Fourth Edition, Oxford: Oxford University Press 2008, p Case 8/74 of 11 July 1974, Dassonville, para P. Craig & G. de Búrca, EU Law: Text Cases and Materials, Fourth Edition, Oxford: Oxford University Press 2008, p Ibid., p

14 paragraph 5 of Dassonville. In addition, the rule of reason of paragraph 6 of Dassonville was elaborated on in paragraph 8. In this paragraph, the Court mentioned four reasons that could be invoked by a Member State to keep goods from other EU members off its market; the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defense of the consumer. These grounds for justification developed in Cassis are called the mandatory requirements (although the Court has also used the terms objectives of general interest, overriding interests, overriding requirements and the like 50 ), and apply in principle only to nondiscriminatory measures. 51 This list is not exhaustive, and has been further developed in subsequent case-law such as the fairness of commercial transactions, defense of the consumer, the improvement of working conditions, the protection of the environment and the protection of culture have all been recognized as mandatory grounds in the years following Cassis de Dijon. 52 Justification for discriminatory measures can be found in Article 36 TFEU, and include grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. 53 Due to the fact that the Cassis mandatory grounds are not exhaustive, Article 36 TFEU logically applies also to non-discriminatory measures alongside the mandatory grounds. The reasoning for maintaining an open list of justification grounds for non-discriminatory measures appears logical: discrimination in the internal market goes against EU principles. But there are several arguments that argue against this distinction, not in the least because there can be reasons other than those mentioned in Article 36 TFEU. 54 The Commission contends in a 2010 guide to the application of Treaty provisions governing the free movement of goods that the mandatory requirements developed in Cassis de Dijon could be invoked only to justify the indistinctly applicable rules and that [t]herefore, grounds other than those covered by Article 36 may theoretically not be used to justify discriminatory rules. 55 Indeed, over the years the lines between the two have become blurred by ECJ case-law. 56 In Mickelsson and Roos, the Court held that the mandatory requirement of environmental protection and the Article 36 ground of the protection of the health and life of humans, animals and plants are closely related, and must be examined together. In PreussenElektra, the protection of the environment was accepted alongside the protection of the life of humans, animals and plants as a ground to accept discriminatory German legislation; Jacobs AG questioned whether this was a case for relaxation of the rule that the list of exceptions in Article M. Horspool & M. Humphreys, European Union Law, Oxford: Oxford University Press 2012, p P. Craig & G. de Búrca, EU Law: Text Cases and Materials, Fourth Edition, Oxford: Oxford University Press 2008, p M. Horspool & M. Humphreys, European Union Law, Oxford: Oxford University Press 2012, p Article 36 TFEU. 54 P. Craig & G. de Búrca, EU Law: Text Cases and Materials, Fourth Edition, Oxford: Oxford University Press 2008, p European Commission (DG Enterprise and Industry), Free movement of goods: Guide to the application of Treaty provisions governing the free movement of goods, Luxembourg: Publications Office of the European Union 2010, p M. Horspool & M. Humphreys, European Union Law, Oxford: Oxford University Press 2012, p

15 TFEU was exhaustive, and that environmental protection should be a justification of a rule even if it was discriminatory. However, the Court allowed the justification of a rule even if it were discriminatory. 57 Most derogations invoked are so-called SHEC regulations. These are regulations that aim to protect Safety, Health, Environment or Consumer protection, and apply to both goods as well as services. 58 Pelkmans calls such regulation risk regulation, and explains that if the objective pursued by such regulations is similar between two or more Member States, the objective meets the requirement of equivalence and consequently, a good or service may be freely. If equivalent, CJEU case law says that the derogation cannot be invoked. 59 Now that the limits have been examined generally, the time has come to look at specific policy areas where mutual recognition is used to see what limits are present in each of them. 4. Exploring Mutual Recognition: Case Studies in Different Policy Areas I. The Single Market A. Introduction The single market is undoubtedly the centerpiece of the European Union. It has enabled the free flow of goods, services, persons and capital by removing the barriers between the Member States. It has cleared the pipes that were clogged with tariffs and other restrictions that constricted the flow of trade between the European countries; mutual recognition in the field of the free movement of goods was, in part, a response to the difficulties faced by the Commission in securing acceptance by the Member States of harmonization measures Overcoming Member State reluctance to the harmonization of national rules, the principle of mutual recognition was instrumental in doing away with these barriers. For mutual recognition to work effectively, the principle of mutual trust was established in the internal market in the Bouchara case, in which the ECJ held that the Member States were to refrain from holding on to national control procedures that were in effect a double burden to trade. 60 As the principle of mutual recognition made its journey across the several policy areas in the Single Market, venturing the free movement of goods to the remaining three freedoms, the principle saw more developments and refinements with each passing decade. Cassis de Dijon, the judicial supernova that initially catapulted the principle across the European legal spectrum, paved the way for the Säger ruling to develop the principle as the star around which the free movement of services regulations now orbit. Similarly, in the system of the 57 Ibid. 58 J. Pelkmans, Mutual Recognition: Economic and regulatory logic in goods and services Bruges European Economic Research Papers 24/2012, College of Europe, p. 9. Link 59 Ibid. 60 C. Janssens, The Principle of Mutual Recognition in EU Law, Oxford: Oxford University Press 2013, p

16 free movement of persons, the Vlassopoulou judgment unequivocally introduced a duty of mutual recognition in the field of diploma recognition, with the Gebhard, Bosman and Sayn- Wittgenstein judgments establishing the principle in the area of the free movement of persons. 61 The principle s trek to the free movement of capital took much longer, but since the Treaty of Maastricht it has become the shining center of the free movement of capital here, too. In order to study the principle of mutual recognition and the manner in which it works in the Single Market, two policy areas will be studied; the free movement of persons (more specifically access to social security, the mutual recognition of driving licenses and of professional qualifications) and the free movement of goods (in particular food safety standards as an example that mutual recognition even in its most primordial goods form is far from automatic, and the mutual recognition of medicines). This study aims to be comprehensive in its coverage, though it is not always easy to find exactly where mutual recognition is being used. Regarding the free movement of goods, there are product standards in place at EU level for several categories of goods and must be complied with. Where such EU-wide standards do not exist, the standards of the home country are to be complied with. Before we proceed with the case studies, the principles of equivalence and mutual trust will be discussed as principles that apply to mutual recognition in its application to the Single Market. B. Equivalence as a Prerequisite for Mutual Trust: Two necessary ingredients for mutual recognition in the Single Market? The approach taken in Cassis de Dijon is premised on several assumptions. At the very minimum, a Member State must trust another in its ability to formulate and enforce adequate standards so as to ensure the safety of the public. Such mutual trust should be recognized as a precondition for mutual recognition. The notion of mutual trust also ties in with the aforementioned exceptions, as the lack of such trust can be a reason to invoke these. The Commission has defined immediate and full mutual recognition of differing quality standards as the rule, 62 unless there are mandatory requirements developed by case law or incompatible legislation on fundamental rights. 63 Therefore, mutual trust is indeed an element of reasoning that underlies the mutual recognition and the origin principle in the context of the fundamental freedoms. 64 By extension, and as a facilitator for trust, the argument that there must be some form of approximation or equivalence between the laws of member states seems reasonable. Logically, large schisms between the standards of the Member States will hardly facilitate trust between them, and will hamper the principle s operation in practice. One assumption is that the European Member States have attained such high standards with respect to their regulation that mutual recognition can function without any obstacles. However, the 61 Ibid., p Commission of the European Communities, Completing the Internal Market, COM(85) 310 final, p. 22 para. 77, as quoted by M. Weller, Mutual Trust: In Search of the Future of European Private International Law, Journal of Private International Law 2015, Issue 1, p M. Weller, Mutual Trust: In Search of the Future of European Private International Law, Journal of Private International Law 2015, Issue 1, p Ibid. 16

17 European Union has welcomed a significant number of new members since 1979 with different customs and traditions than those of the establishment. These expansions have put the trust between the Member States under strain. As stated before, one may wonder whether the commonality of the values that give rise to trust has been simply taken for granted by the European Court, and whether there is indeed sufficient common ground available to make the principle of mutual trust (and mutual recognition) work effectively. By extension, on might ask whether the abolition of double controls in Bouchara is warranted for this reason. There is also a danger that the absolute position that has been taken by the ECJ on mutual trust ( in abstracto ) may do more harm than good by foisting mutual trust upon the Member States and thereby eventually undermining the principle in practice. On the other hand, the principle could have the effect of enhancing integration by helping to overcome the prejudices, stereotypes, and lack of trust among them. She contends that the truth probably lies somewhere in between; while mutual trust can at first instance serve to overcome stereotypes and prejudice, its success hinges on an actual justification of trust. Pelkmans calls mutual trust indispensable for smooth MR. 65 Although in her discussion on the principle of mutual trust she wonders whether or not the ECJ took the legal equality for granted, Janssens explains that equivalence has not always been considered by the Court. In fact, many cases considered by the ECJ concerned unjustified restrictions to free movement by a given Member State without considering any sort of equivalence of standards between Member States. This is true for many areas; in fields such as services, professional qualifications etc., the absence of an equivalent level of protection does not necessarily preclude the ECJ from implementing the duty of mutual recognition. 66 Such a duty for mutual recognition without any equivalence is irksome to Möstl, who contends that [t]he imposition of mutual recognition duties, especially the more they are to be absolute and the more they go beyond what would follow already from primary law, is usually not permissible without at least some (more or less demanding) form of minimum approximation of substantive standards, providing for a sufficient degree of security and public well-being on the Union level. 67 Weller also accuses the European legislator of relying on mutual recognition as a means to bypass a lack in mutual trust. 68 C. Access to Social Security 65 J. Pelkmans, Mutual Recognition: Economic and regulatory logic in goods and services Bruges European Economic Research Papers 24/2012, College of Europe, p C. Janssens, The Principle of Mutual Recognition in EU Law, Oxford: Oxford University Press 2013, p M. Möstl, Preconditions and Limits of Mutual Recognition, Common Market Law Review 2010 (47), p M. Weller, Mutual Trust: In Search of the Future of European Private International Law, Journal of Private International Law 2015, Issue 1, p

18 Overview In order to facilitate the free movement of workers, the European Union has sought to coordinate the social security systems of the Member States. Starting in 1958, with Council Regulations 3/58 and 4/58 of 15 December , the Europe paved the way for worker mobility. These regulations were later replaced by Regulation 1408/71, 70 which itself was modernized in 2004 by Regulation 883/ The original goal of the coordination efforts was to remove social security hurdles that could hamper mobility of workers in the coal and steel industries. 72 The important consequence was that nationality and residence conditions of social welfare systems were overridden with an important impact on the outer limits of such systems. 73 According to Article 3 of the Regulation, it applies to all legislation concerning sickness benefits, maternity and equivalent paternity benefits, invalidity benefits, old-age benefits, suvivors benefits etc. Mutual recognition has played an important role in simplifying the old Regulation 1408/71. It is enshrined in Articles 5 and 6 of the new Regulation 883/2004. According to article 5, Member States must grant equal treatment to benefits, income, facts or events that have occurred in another Member State, as though they had taken place in its own territory. 74 Article 6 is a general provision on the aggregation of periods. 75 A Member State that makes the right to, for instance, invalidity and old-age pensions 76 dependent upon certain periods, must take into account the periods accrued in other Member States. The different chapters in section 3 complement these general provisions. Articles 5 and 6 do not apply to unemployment benefits. These are regulated separately in Chapter 6 of Title III of the Regulation. Limits Judgments by the ECJ have allowed access to social welfare systems even to people who are not economically active, letting free the free movement provisions prevail sometimes over legitimate policy concerns that Member States might have. 77 This has raised concerns over the sustainability of such systems under the dominion of the European Court of Justice. However, Member States can uphold nationality and residence conditions under certain circumstances. 78 In principle, even citizens from, for instance, Member State A who have moved to Member State B, are in principle entitled to such benefits even if the conditions upon which the entitlement are based, we already extant before moving due to Article 5(b) of 69 O.J. 1959, L 58/561, O.J. 1971, L 149/ O.J. 2004, L 166/ R. Cornelissen, 50 Years of European Social Security Coordination, European Journal of Social Security 2009 (11), p F. Pennings, EU Citizenship: Access to Social Benefits in other EU Member States, The International Journal of Comparative Labour Law and Industrial Relations 2012 (28), p R. Cornelissen, 50 Years of European Social Security Coordination, European Journal of Social Security 2009 (11), p F. Pennings, Coordination of Unemployment Benefits under Regulation 883/2004, European Journal of Social Security 2009 (11), p H. Verschueren, Regulation 883/2004 and Invalidity and Old-Age Pensions, European Journal of Social Security 2009 (11), p F. Pennings, EU Citizenship: Access to Social Benefits in other EU Member States, The International Journal of Comparative Labour Law and Industrial Relations 2012 (28), pp Ibid. 18