European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

“The provisions of this Chapter [relating to establishment] and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of public policy, public security or public health”.

Article 52 TFEU allows the Member States to justify national rules which are discriminatory against European nationals. The concepts of public policy, public security and public health are European concepts that are restrictively interpreted. They involve the existence of a genuine and serious threat affecting one of the fundamental interests of society . Conduct is of a sufficiently serious nature where it gives rise to repressive measures or other genuine and effective measures in the host Member State .

In order to prevent States from challenging the principle of free movement too often and resorting to those reserves, the drafters of the Treaty provided in Article 52(2) TFEU for the issue of a directive for coordination. Adopted in the last resort by the Council on 29 April 2004 , the directive tries to lay down European limits to reasons of public policy that the States may invoke and defines the procedural guarantees from which the European citizens benefit in the exercise of their freedom of movement.

According to the Court of Justice , the scope of the concept of public policy cannot be determined unilaterally by each Member State without being subject to control by the institutions of the Union, even though particular circumstances justifying recourse to the concept of public policy may vary from one country to another and from one period to another.

The directive gives three major details regarding the content of that European framework; the interpretation by the courts has significantly extended their scope. First, grounds relating to public policy and public security “shall not be invoked to serve economic ends” ; the following will not therefore justify a refusal to enter or reside in the territory of a Member State: the wish to secure all the revenue from advertising for a national public foundation , a restrictive policy set up for games of chance and bets which is aimed, as a principal and not ancillary matter, at financing social activities through a levy on the proceeds of authorized games , or a reduction of tax revenue . Likewise, the security of supply of energy cannot justify a system of prior authorization regarding the acquisition of shares in certain strategic public limited companies controlled by a Member State where it has the effect of preventing or restricting the exercise of voting rights attached to shares held, since these constitute one of the principal means for the shareholder to participate actively in the management of an undertaking or in its control .  On the other hand, an administrative authority may prohibit a national of that State from leaving it on the ground that a tax liability of a company of which he is one of the managers has not been settled, on condition that the measure at issue is intended to respond to a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society (in this case the nature and amount of the debt) and that it does not solely serve economic ends . Further, grounds relating to public policy or public security must be based exclusively on the “personal conduct” of the individual concerned; reasons of a general preventive nature  or grounds that are isolated from the particulars of the case  cannot be used as justification. Lastly, the fact of having previous criminal convictions does not in itself constitute a ground for taking such measures .

Measures of public policy or public security must also comply with the principle of proportionality. The measures adopted must be appropriate for ensuring the objective pursued is achieved and must not go beyond what is necessary . The review of the proportionality of restrictive national legislation must be based not only on the objective of that legislation at the time of its adoption, but also on the effects of the legislation, assessed after its adoption .  The principle of proportionality is satisfied by: the objective of maintaining a balanced medical and hospital service accessible to everyone thereby contributing to the attainment of a high level of health protection  , the maintenance of a universal mooring service essential for safety in port waters , or the prohibition of television retransmission in France of bi-national sporting events containing advertising for alcohol . By contrast, this is not the case for a national system which prohibits advertisements for medical and surgical treatments carried out in private health care establishments on the national television network when it authorizes them on local stations , for legislation which excludes reimbursement by a national social security institution of the costs incurred when a person insured with it is admitted to a private hospital in another Member State  or which makes the authorization to carry on private security activities subject to the requirement that the directors and managers of private undertakings reside in the national territory , insofar as the objective pursued could be achieved by less restrictive measures.

The directive not only defines the substantial rules but also coordinates national procedures in order to secure the defense rights of persons subject to public policy measures. According to the directive, persons concerned must be informed of public policy grounds, unless this is contrary to the interests of the security of the State. Such statements must be precise and comprehensive and made when notifying the restrictive measure . Save in case of urgency, the interested person must be granted a minimum of one month to leave the territory. The Court has stated that a decision ordering expulsion cannot be executed until the party concerned has been able to exhaust the national remedies guaranteed by Article 31 of the directive . Judicial and, where appropriate, administrative redress procedures accorded to nationals to appeal against or seek review of administrative acts must also be available to persons protected by the directive . Where the application for appeal or judicial review of the expulsion is accompanied by an application for an interim order to suspend enforcement of that decision, actual removal from the territory may not take place until such time as the decision on the interim order has been taken. Before the administrative authority, which is not necessarily a court  but which must not be the same as the authority which adopted the measure, the interested party has the right to a “fair trial”  during which the measure contemplated against him must be subject to “detailed examination” .

Case 41/74 Van Duyn v Home Office [1974] ECR 1337, LawLex200900001963JBJ; Case 30/77 Regina v Bouchereau [1977] ECR 1999, LawLex200900002005JBJ; Case C-355/98 Commission v Belgium [2000] ECR I-1221, LawLex200700001630JBJ. The mere failure by a national of a Member State to comply with the legal formalities concerning access, movement and residence of aliens does not constitute in itself conduct endangering public policy or public security: Case 48/75 Royer [1976] ECR 497, LawLex200900001985JBJ.

Case 115/81 Adoui and Cornuaille v Belgian State [1982] ECR 1665, LawLex200900001494JBJ.

Case 67/74 Bonsignore v Oberstadtdirektor der Stadt Köln [1975] ECR 297, LawLex200900001966JBJ. 

Case 30/77 Regina v Bouchereau [1977] ECR 1999, LawLex200900002005JBJ; Case 131/79 Regina v Secretary of State for Home Affairs, ex parte Santillo [1980] ECR 1585, LawLex200900001534JBJ; Directive No 2004/38, Article 27.

Case C-76/90 Säger v Dennemeyer [1991] ECR I-4221, LawLex200900001170JBJ; such is the case for the national legislation which requires a licensee to transfer, free of charge, of equipment for receiving and transmitting bets which, although it may be justified in terms of imposing a penalty where the cessation of business results from a decision revoking or terminating the licence, it is not where the cessation of business occurs solely as a result of the expiry of the licence period: Case C-375/14 Laezza, Judgment of 28 January 2016, LawLex201600000214JBJ.

Case C-464/15 Admiral Casinos & Entertainment AG, Judgment of  30 June 2016, LawLex201600001191JBJ.

Case C-158/96 Kohll v Union des caisses de maladie [1998] ECR I-1931, LawLex200900000625JBJ; Case C-444/05 Stamatelaki [2007] ECR I-3185, LawLex200900000858JBJ.

Case C-266/96 Corsica Ferries France v Gruppo Antichi Ormeggiatori del porto di Genova and others [1998] ECR I-3949, LawLex200400002937JBJ.

Case C-429/02 Bacardi France [2004] ECR I-6613, LawLex200900000742JBJ.

Case C-500/06 Corporación Dermoestética [2008] ECR I-5785, LawLex200900000991JBJ.

Case C-444/05 Stamatelaki [2007] ECR I-3185, LawLex200900000858JBJ.

Directive No 2004/38 repealing Directive No 64/221 of 25 February 1964 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States - See, inter alia, Chapter VI entitled "Restrictions on the right of entry and the right of residence on grounds of public policy, public security or public health".

Case C-114/97 Commission v Spain [1998] ECR I-6717, LawLex200900000396JBJ.

Case 36/75 Rutili v Ministre de l'intérieur [1975] ECR 1219, LawLex200900001973JBJ; Case 115/81 Adoui and Cornuaille v Belgian State [1982] ECR 1665, LawLex200900001494JBJ.

Under the authority of the former Directive, Case 48/75 Royer [1976] ECR 497, LawLex200900001985JBJ.

See Case C-297/88 Dzodzi v Belgian State [1990] ECR I-3763, LawLex200900002362JBJ.

Case 98/79 Pecastaing v Belgian State [1980] ECR 691, LawLex200500007231JBJ; Case 131/79 Regina v Secretary of State for Home Affairs, ex parte Santillo [1980] ECR 1585, LawLex200900001534JBJ.

Case 98/79 Pecastaing v Belgian State [1980] ECR 691, LawLex200500007231JBJ.

Case 41/74 Van Duyn v Home Office [1974] ECR 1337, LawLex200900001963JBJ.

See, recalling the principle: Case C-288/89 Stichting Collectieve Antennevoorziening Gouda v Commissariaat voor de Media [1991] ECR I-4007, LawLex200900002067JBJ.

Case 352/85 Commission v France [1988] ECR 2243, LawLex200500006886JBJ; Case C-288/89 Stichting Collectieve Antennevoorziening Gouda v Commissariaat voor de Media [1991] ECR I-4007, LawLex200900002067JBJ.

Case C-243/01 Gambelli and others [2003] ECR I-13031, LawLex200900000896JBJ; this same decision indicates that a reduction of tax revenue is not one of the grounds listed in Article 52 TFEU.

Case C-243/01 Gambelli and others [2003] ECR I-13031, LawLex200900000896JBJ.

Case C-244/11 Commission v Greece, Judgment of 8 November 2012, LawLex201200002314JBJ.

Case C-434/10 Aladzhov [2011] ECR I-11659, LawLex201200000654JBJ.

101. Public policy, public safety and public health