Committee Reports > List of Committees > Joint > 1976 > Committee on the Secondary Legislation of the European Communities > Report No. 35 - Right of Establishment and Freedom to Provide Services

REPORT

A. GENERAL

1. Introduction

Two Chapters under Title III of the EEC Treaty deal respectively with the right of establishment and the freedom to provide services.

The right of establishment is the right of a national of one Member State to cross into another Member State and to establish himself there by undertaking activities as a self-employed person or by setting up and managing an undertaking such as a company or firm or by establishing an agency, branch or subsidiary under the conditions laid down for its own nationals by the receiving State.

The freedom to provide services enables a national of one Member State to provide from a base established in that State services for a person resident in another Member State under the conditions laid down for its own nationals by the latter State. Services include, in particular, activities of (a) an industrial character, (b) a commercial character, (c) craftsmen and (d) the professions.

Both of these rights apply to companies and firms as well as to natural persons.

The Treaty envisaged the adoption of general programmes by the Council before the end of the first transitional stage for the abolition of restrictions on the exercise of these rights and the implementation of these programmes by the issue of Council Directives. Two general programmes were adopted by the Council in December, 1961 and subsequently the Council issued a number of Directives covering various activities.

2. Effect of Decisions of the Court of Justice

Two decisions by the Court of Justice in 1974 had important implications for the application of the right of establishment and the freedom to provide services in the Member States. In Reyners v Belgium (Case 2/74; [1974] ECR 631) the Court ruled that, since the end of the transitional period, Article 52 of the EEC Treaty, dealing with the right of establishment, was directly applicable in all the Member States despite the absence of Council Directives for any particular activity. In Van Binsbergen v Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid (Case 33/74; [1974] ECR 1299) the Court decided that the first paragraph of Article 59 and the third paragraph of Article 60, which deal with freedom to provide services, were also directly applicable “at least in so far as they seek to abolish any discrimination against a person providing a service by reason of his nationality or of the fact that he resides in a Member State other than that in which the service is to be provided”.

Treaty provisions which are directly applicable can be enforced by individuals through the national courts without the interposition of either national legislation or secondary legislation of the Communities. One effect of the Court decisions, therefore, was to remove the necessity for adopting Directives to abolish legal restrictions imposed by Member States on the grounds of nationality. Furthermore, it was no longer possible, as had been done in the past, to lay down timetables in Directives for the removal of such restrictions or to link their removal with measures to co-ordinate national provisions and the mutual recognition of qualifications. The provisions of a number of existing Directives were, therefore, found to be without effect and the Commission was obliged to withdraw several proposals which it had made to the Council before the Court decision.

3. Effective Exercise of Rights

The abolition of discrimination on the grounds of nationality ensures that a national of one Member State can set himself up as a self-employed person or provide services in another Member State but only if he possesses the precise qualifications and satisfies the other conditions which that State requires of its own nationals. Accordingly, it is necessary in order to give these rights a practical effect to provide for the mutual recognition of formal qualifications, to set minimum standards for the attainment of those qualifications which are acceptable to all the Member States and to facilitate compliance with the municipal requirements generally of the host country by nationals of other Member States. Proposals made by the Commission designed to secure these objectives in relation to various professional and other activities have been examined by the Joint Committee and are dealt with in this report. They are listed in the Appendix to this report.

B. DOCTORS

4. Directives and Decisions

On 16 June, 1975 the Council adopted two Directives to facilitate the exercise of the right of establishment and freedom to provide services by medical practitioners including specialists. One Directive provided for mutual recognition of formal qualifications, compliance with other requirements of Member States and the transitional arrangements applicable until the second Directive becomes fully effective. The second Directive established uniform standards for the training of general and specialised practitioners. The Council also took two Decisions establishing two Community Committees which will be concerned with the administration of these Directives.

Member States are required to implement these Directives within eighteen months. A Committee appointed by the Minister for Health in July, 1975 has recommended that these Directives be implemented by statute amending the Medical Practitioners Acts and not by regulations made under the European Communities Act, 1972. The Joint Committee strongly supports this recommendation and points out that this legislation must be enacted by November, 1976. In its view it is essential that the changes required be discussed by both Houses so that the public can be fully informed on what is involved.

C. ARCHITECTS

5. Proposals

The original proposal submitted to the Council on 16 May, 1967 (O.J. No. 234/19 of 4 October, 1967) included provisions dealing with surveyors and draughtsmen as well as architects. An amended proposal for a Council Directive dealing with architects only is now under consideration.

The draft Directive specifies minimum requirements which diplomas, certificates and other evidence of qualification must fulfil as regards length, nature and content of training and instruction. It provides, however, for the recognition of certain diplomas, certificates and other evidence of qualification even if they do not fulfil the minimum requirements provided that the training courses leading to them were commenced within two years of the notification of the Directive. It contains general provisions regarding personal fitness, right of establishment, provision of services, information centres etc. which are analogous to those adopted in respect of doctors. The Directive is to be implemented within eighteen months.

An Advisory Committee on training in the field of architecture is proposed in a draft Council Decision attached to the Directive. The Committee will consist of three experts from each Member State representing the practising profession, training bodies and the competent authorities of each Member State. It is to be advisory only and will communicate its opinions and recommendations to the Commission and may suggest amendments to the basic Directive relating to architects.

6. Views of Professional Bodies

The Joint Committee has received memoranda on the proposals from the Royal Institute of Architects of Ireland (RIAI) and the Irish Branch of the Incorporated Association of Architects and Surveyors (IAAS).

The views of the RIAI may be summarised as follows:—

(a) While the RIAI is opposed to the provision which would allow freedom of movement within the domain of architecture to persons other than architects, it is prepared to accept the provisions relating to German and Dutch engineers.

(b) The Institute would wish to have the title of architect effectively protected by Irish legislation before the Directive is adopted.

(c) The RIAI is of opinion that the minimum educational standard for architects should be at least equivalent to the normal entry standards presently required by the RIAI.

(d) Non-Irish Bodies or Chapters or branches of Bodies established abroad should not be given any rights which permit them to influence professional standards or registration in this country.

The IAAS have made the following proposals:—

(i) Associate Membership of the Association should be included among the Irish qualifications specified in the Directive. The present proposal is for the recognition of three qualifications viz. a University degree, a diploma from a Higher College of Technology and a Certificate of Associateship of the Royal Institute of Architects of Ireland (RIAI).

(ii) All full time architects who are either engaged in private practice or employed by local authorities and who might be considered qualified for registration as architects under any Irish legislation should be recognised as architects within the ambit of the proposed Directive irrespective of their precise professional qualifications.

7. Views of Joint Committee

There is at present no Irish legislation covering the registration of architects or their training and qualifications. Such legislation will have to be enacted as soon as a Council Directive is adopted and the Joint Committee understands that a Bill is being prepared by the Department of Industry and Commerce. In the Joint Committee’s opinion such a Bill should be introduced and considered by both Houses before a Council Directive is adopted so that members can have the opportunity of considering the implications of the Commission’s proposals and debating the views of interested professional bodies.

D. NURSES AND MIDWIVES

8. Nurses

Proposals dealing with activities in general nursing and designed to promote the right of establishment and freedom to provide services were submitted to the Council on 14 October, 1969 (O.J. C/56/17 of 8 December, 1969) and were subsequently revised to take into account the accession of the new Member States. The present proposals are embodied in two draft Directives and a draft Decision.

One draft Directive is directed towards the co-ordination of legal and administrative provisions relating to general nursing. It envisages the establishment of minimum standard qualifications viz.

(a) 10 years general education (primary and secondary) attested by an appropriate formal qualification, and

(b) vocational education of at least 3 years’ duration consisting of at least 3,800 hours of theoretical and practical instruction.

The main draft Directive provides for the mutual recognition of certain formal qualifications. To acquire these in future the training requirements set out above will have to be met but qualifications acquired before the implementation of that Directive must be accepted even if they do not comply with those requirements provided the person concerned was engaged in general nursing for 3 consecutive years within the previous 5 years. This draft also contains several ancillary provisions dealing with certificates of character, membership of professional bodies, information to be made available by Member States, use of professional titles, acquisition of linguistic knowledge etc.

The Draft Decision envisages the establishment of an Advisory Committee to promote a high standard of training by exchanging information, discussion and consultation and review of training methods. Each Member State will be represented by three experts being an expert from the practising profession, an expert from a training establishment and an expert from the national competent authority.

9. Views of An Bord Altranais

An Bord Altranais has made the following recommendations to the Joint Committee:—

(i) An Bord Altranais should be designated the “competent authority” in Ireland for the purpose of the Directives. As An Bord is the statutory registration body in this country the Joint Committee assumes that there will be no difficulty about meeting this recommendation;

(ii) The references in the proposals on the Advisory Committee on Nursing Training to establishments responsible for training should encompass approved nurse training hospitals;

(iii) Representatives on the Advisory Committee should be of Nurse Tutor or Matron status; and

(iv) Matrons or those in administrative positions should be eligible to represent the practising profession on the Advisory Committee.

These suggestions seem to the Joint Committee to be eminently reasonable and worthy of support.

10. Midwives

On 11 November, 1975 the Commission forwarded to the Council an amended proposal for a Directive on the mutual recognition of diplomas, certificates and other evidence of formal qualifications in midwifery. Following the Court of Justice’s judgments in the Reyners case, the draft Directive which the Commission had forwarded to the Council in 1969 on the attainment of right of establishment and freedom to supply services became superfluous and was withdrawn. However, there is still need for measures to facilitate the effective exercise of midwifery and these measures have been transferred to the draft Directive on recognition of diplomas etc. in midwifery. The amended proposal now before the Council contemplates further proposals being made on the adoption of uniform standards of training in the Member States.

11. Implementation in Ireland

Under existing legislation (Section 43 of the Nurses Act, 1950) An Bord Altranais may, in accordance with rules, register in the register of nurses a person who shows to the satisfaction of the Board that such person has outside the State undergone such courses of training and passed such examinations as are specified for the purposes of this Section in the rules. The Department of Health considers that if the Directive concerning mutual recognition of midwives’ qualifications is adopted by the Council, it may be necessary to amend this legislation to provide that the Board shall be obliged to register nationals of Member States who have the qualifications specified in such Directive. It may also be necessary to provide that the Board’s training programme will comply with minima criteria laid down in the Directives.

The Department does not anticipate that the introduction of reciprocity for midwives within the EEC will give rise to any difficulties or have any special implications for this country.

E. INSURANCE AGENTS AND BROKERS

12. Proposed Directive

In formulating rules to facilitate the effective exercise of freedom of establishment and freedom to provide services in the case of insurance agents and brokers the Commission was faced with the difficulty that whereas in some Member States access to these activities was conditional on the possession of formal qualifications, no such conditions were imposed in other Member States. It decided, therefore, that it would propose transitional arrangements which Member States would be required to implement pending the co-ordination of national measures governing the conditions for the taking up and pursuit of those activities and the mutual recognition of diplomas, certificates and other evidence of formal qualification.

The transitional arrangements provide that a Member State which requires agents to possess general, commercial or professional knowledge, shall accept as evidence of such knowledge and ability certain specified experience gained in another Member State. The experience specified varies in accordance with the degree of responsibility which the agent is required to assume. In addition to the experience requirements, the proposals provide for the recognition by host countries of certificates of personal fitness and financial standing issued by the country of origin. Implementation by Member States within 12 months of the adoption of the Directive by the Council will be required. The Directive will apply to those wishing to pursue these occupations as a paid employee as well as to self-employed persons and those providing services.

The original proposals were submitted to the Council on 4 December, 1970 and in an amended form are now being considered by COREPER. They are expected to be adopted shortly.

13. Views of Professional Bodies

The Federation of Insurance Brokers has intimated to the Joint Committee that it has the following objections to the proposed Directive:—

(a) Member States will be required to accept as evidence of general or professional knowledge the fact that the activity has been pursued in another Member State for a specific minimum number of years. The Federation states that “the time requirements, which appear to be the sole criteria of competence … are not in our view sufficient”. It also states that “the standards shown in the Directive are of such a minimum nature as to make (it) of little substance”.

(b) Beneficiaries may be required to produce certificates of good repute, non-bankruptcy and financial standing. The Federation is of opinion that there should also be “requirements of an annual solvency certificate and a professional indemnity policy”.

(c) Due to the lack of formal registration in this country, applicants from abroad, who cannot qualify in their own country because of higher standards, can engage in business here. The Federation feels that the Directive should include a provision “that a person must at least be able to qualify within the category concerned in his own country before he can operate in that capacity in one of the other eight countries”.

The Joint Committee understands that the Corporation of Insurance Brokers of Ireland also considers that there should be requirements as to solvency certificates and professional indemnity policies. They are of the opinion that the present format of the proposals would oblige them to accredit brokers who would not be acceptable to them otherwise.

In the Joint Committee’s view it is important that there should be no diminution of the standards required for brokers’ solvency and it recommends that this aspect be further examined.

The Joint Committee understands that the Federation may be correct in thinking that the Directive would allow a person to engage in business here who would not be qualified to engage in the same business in his own country. This peculiar position arises apparently from the need to agree on a common standard which will be acceptable to all Member States. However, the Joint Committee understands that there are at present no legal restrictions in this country on the entry of non-nationals to the profession. If the Directive is adopted, this country will for the first time have to impose minimum requirements for nationals of other Member States. Presumably in the further proposals which are contemplated on the co-ordination of national measures and the mutual recognition of qualifications steps will be taken to set a minimum standard which all the States must attain.

F. ACTIVITIES IN TRANSPORT, TRAVEL AGENCY, STORAGE AND WAREHOUSING SERVICES

14. Proposed Directive

This proposal is concerned with the activities of natural persons or companies who provide the type of services which in Ireland are performed by forwarding agents, shipping and forwarding agents, ship-brokers, freight agents, shipping agents, travel agents, bonders, ware-housemen and motor vehicle examiners. It covers both the freedom of establishment and the freedom to provide services and will also apply to persons wishing to pursue the activities in question as employed persons.

The proposal would oblige a Member State which makes the pursuit of these activities conditional on the possession of general, commercial or professional knowledge and ability, to accept as evidence of that knowledge and ability certain specified experience obtained in another Member State. If implementation causes serious difficulty in a new Member State in which particular qualifications are not at present required, the Commission may authorise that Member State to require for a limited period proof of the qualifications required in the country of provenance if the person concerned comes from a country which requires such. The proposal also contains provisions relating to certificates of personal fitness and financial standing.

As in the case of Insurance Agents and Brokers, these proposals are intended to be for a transitional period pending the co-ordination of national measures and the introduction of mutual recognition of qualifications.

The original proposal was submitted to the Council on 21 December, 1965. In an amended form it is still being considered by a Council working party.

15. Views of Joint Committee

The Joint Committee is informed that there are no provisions in Irish legislation or administrative practices which discriminate against non-nationals in the taking up and pursuit of these activities. Consequently, it does not consider that there can be any objection to the proposal’s implementation as far as Ireland is concerned.

The Irish Travel Agents Association has expressed some misapprehension about the position of part-time travel agents, who, apparently, are not common in other Member States. The Joint Committee is informed by the Department of Transport and Power that the proposals are not expected to affect the position of part-time travel agents, who, by the nature of their business, are not likely to move from one Member State to another.

G. LAWYERS

16. Proposed Directive

A revised draft Directive dealing with lawyers was submitted to the Council on 25 July, 1975 replacing an earlier draft submitted in 1969. The revised draft was subsequently amended by the Commission in March last.

The proposal, as amended, deals only with the freedom of lawyers practising in one Member State to provide services for their clients in other Member States. Broadly speaking the lawyers of the continental States entitled to benefit under the proposal are avocats and those qualified under equivalent titles in other languages. In Ireland the beneficiaries would be a “barrister practising at the bar” or a “solicitor in private practice”. With the addition of Scottish advocates the position in the United Kingdom is similar.

The services which may be provided are (a) giving of legal advice and preparation of legal documents and (b) conduct of civil and criminal litigation in courts. In regard to (a) Member States may reserve to prescribed categories of lawyers the drafting of legal documents relating to sale and purchase of real property and matters of probate. In regard to (b) Member States may oblige the foreign lawyer to “work in conjunction with a lawyer who practices before the Court in question and who would be, if necessary responsible to the court in question or with an ‘avoue’ or ‘procuratore’ practising at that court”.

17. Incorporated Law Society

The Joint Committee has consulted the Incorporated Law Society. The Society’s general view is that because of the fundamental differences which exist between the continental and common law systems “the public may well be put at considerable risk if this freedom is extended too quickly”.

The Society has also some criticisms to make of particular provisions as follows:—

(a) The services which may be provided should be specified precisely. For the protection of the public, conveyancing work and the preparation of documents in connection with the administration of estates should be restricted by national law to Irish solicitors;

(b) The designation of Irish solicitors should be amended to read “solicitors qualified to practise” because in Ireland solicitors whether in practice on their own account or employed at a salary have equal rights and duties and are subject to the same rules;

(c) Article 3 of the draft Directive provides that a person shall use the professional title used in the Member State “from which he comes” with an indication of the professional organisation to which he belongs or the court with which he is registered pursuant to laws of the Member State “from which he comes”. The Society suggests that “from which he comes” should be altered to “where he is currently entitled (or qualified) to practise”;

(d) Lawyers who intended to practise here whether on a once-off or regular basis should be obliged to register with the Society. Article 6.2. provides that the professional organisation in the host country shall decide on breaches of rules of professional conduct in the matter of representation in litigation and notify the professional organisation in the country from which the lawyer comes. The Society wants a similar procedure to be adopted in the case of misconduct involving other services. However, it feels that this may not of itself be adequate. It points out that a visiting lawyer may act improperly in this country causing loss to a client and then depart promptly. In its view it may be difficult to establish the identity of the visiting lawyer to the satisfaction of the disciplinary body if a query is raised “some months or possibly years later”. This difficulty could be met by registration.

18. Views of Joint Committee

The Joint Committee agrees that the broad approach of the proposed Directive is in line with the EEC Treaty and as such should be accepted. As between Ireland and the Continent, the Joint Committee doubts if implementation of the Directive can have much practical effect because of the wide differences between the legal systems. As far as the United Kingdom and Ireland are concerned, the proposed Directive would supplement the reciprocal arrangements which already exist between the Irish bar and the bars of England and Northern Ireland but it must be doubted if the facilities proposed will be availed of to any appreciable extent.

In regard to the matters raised by the Incorporated Law Society, the Joint Committee agrees that the Directive should apply to all Irish solicitors whether in private practice or employed at a salary. Moreover, it considers that the Society’s point about adequate protection of the public against possible misconduct by visiting lawyers is most important and merits serious consideration.

In regard to the right to draft legal instruments, the Joint Committee notes that the Commission, referring to documents relating to the sale and purchase of real property and matters of probate, comments as follows:-

“Although the proposal for a Directive does not affect national regulations concerning the form, the conditions and the procedure relating to the drafting of the documents in question, it is desirable to add this phrase in order to facilitate the interpretation of the provisions of this Directive in certain Member States”.

19. Other Proposals

The Joint Committee understands that the Commission is preparing proposals in regard to veterinary surgeons and dentists.

H. CONCLUSION

20. Acknowledgements

The Joint Committee wishes to record its appreciation of the assistance it received from the following bodies in considering these proposals:-

The Irish Medical Association

Royal Institute of Architects of Ireland

The Incorporated Association of Architects and Surveyors

An Bord Altranais

The Federation of Insurance Brokers

The Corporation of Insurance Brokers of Ireland

The Irish Travel Agents’ Association

The Incorporated Law Society of Ireland

(Signed) CHARLES J. HAUGHEY,

Chairman of the Joint Committee.

30th June, 1976.