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Fundamental Freedoms, Fundamental Rights, and the Many Faces of Freedom of Contract in the EU

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The Reach of Free Movement

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Abstract

As a result of the growing involvement of the EU in regulating private conduct and private law relationships, EU law increasingly affects the scope of freedom of contract. In this way, it shapes the European model of freedom of contract based first and foremost on the internal market rationale, sparkling tensions with the concepts of freedom of contract that have evolved in the national contract laws of the Member States. Whilst EU secondary legislation plays a major role in this context, the understanding of freedom of contract can also be profoundly affected by EU primary law. This contribution seeks to determine the reach of EU free movement law in the contractual sphere, with a particular focus on (financial) services. It explores the conceptualisation of freedom of contract in free movement law in light of the concept of ‘formal’ freedom of contract and that of ‘substantive’ freedom of contract in national contract laws, as well as the notion of the freedom of contract regulated in the name of the internal market in EU secondary legislation. Particular attention in this context is given to the interplay between fundamental economic freedoms and fundamental rights.

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Notes

  1. 1.

    For the purposes of this contribution, the concept of European contract law is understood in a broad sense, namely as the law governing economic transactions in Europe. As such it comprises both the EU measures in the field of contract law, i.e. EU contract law, and the national contract laws of the Member States.

  2. 2.

    Weber 1992, p. 886. See also Kennedy 2006, p. 19.

  3. 3.

    On this development, see, for example, Cherednychenko 2007, pp. 4 et seq. and Grundmann 2011, pp. 504 et seq., both with further references.

  4. 4.

    Micklitz 2015a.

  5. 5.

    See, for example, Leczykiewicz and Weatherill 2013.

  6. 6.

    See, for example, Cherednychenko 2006; Rutgers 2009; Hartkamp 2010; Schepel 2012; Davies 2012, 2013; Weatherill 2013, pp. 10 et seq.; Schepel 2013; Mak 2016.

  7. 7.

    Case C-438/05, Viking, ECLI:EU:C:2007:772; Case C-341/05, Laval, ECLI:EU:C:2007:809.

  8. 8.

    On this development, see Cherednychenko and Reich 2015, with further references.

  9. 9.

    Case C-112/00, Schmidberger, ECLI:EU:C:2003:333; Case C-36/02, Omega, ECLI:EU:C:2004:614.

  10. 10.

    Micklitz 2015a, b.

  11. 11.

    Collins 1999, p. 49.

  12. 12.

    See Colombi Ciacchi 2010.

  13. 13.

    For example, the conduct of business rules for investment firms, such as the duty to act in the client’s best interest or the duty to know one’s customer, which now form part of the EU and national regulatory frameworks for investment services, have largely originated within the general private laws, in particular, contract laws, of the Member States. On this in more detail, see Cherednychenko 2009, pp. 929 et seq.

  14. 14.

    See, for example, Hondius 1999; Lurger 2011, pp. 376 et seq.; Lurger 2011.

  15. 15.

    Grundmann 2011, p. 506.

  16. 16.

    On this, see Bydlinki 1996, pp. 92 et seq.

  17. 17.

    On this development, see Collins 1999.

  18. 18.

    Cf. Schmid 2011, p. 21, who speaks in this context about the weak version of corrective justice which has remained present throughout the evolutionary path of private law. According to it, if one were to hypothetically ignore the regulatory dimension of a particular private law norm beyond the relationships between the two private parties, the application of the norm should lead to the outcome which respects the minimum requirements of justice between the parties. See also Cherednychenko 2007, pp. 49 et seq.

  19. 19.

    See, for example, Micklitz 2005, 2009; Schmid 2005; Collins 2009.

  20. 20.

    On this in more detail, see Micklitz 2015b. Cf. Hesselink 2007; Bartl 2015.

  21. 21.

    Cf. Micklitz 2011, who argues that EU contract law is governed by the model of ‘access justice’ (‘Zugangsgerechtigkeit’). The idea behind this model of justice is that EU law is supposed to provide for a legal framework which would ensure that consumers, including those particularly vulnerable, have a realistic chance of access to the market.

  22. 22.

    Directive 2009/72, OJEU 2009 L 211/65.

  23. 23.

    Directive 2009/72, Article 3(3).

  24. 24.

    Directive 2009/72, Article 3(7).

  25. 25.

    Directive 2014/92/EU, OJEU 2014 L257/214, Article 16.

  26. 26.

    Directive 2014/92/EU, Article 17(1).

  27. 27.

    Directive 2014/92/EU, Articles 16 and 18, respectively.

  28. 28.

    Directive 2014/92/EU, rec 35.

  29. 29.

    On this in more detail, see Cherednychenko 2014b.

  30. 30.

    Directive 2014/65/EU, OJEU 2014 L 173/349 (MiFID II) and Regulation (EU) No. 600/2014, OJEU 2014 L 173/84 (MiFIR).

  31. 31.

    MiFIR, Article 42 and MiFID II, Article 69(2)(s) in conjunction with MiFIR, Article 42.

  32. 32.

    MiFIR, Article 40. This power of ESMA relates to the general clause in ESMA’s founding Regulation, which empowers ESMA to temporarily prohibit or restrict certain financial activities in the cases specified in relevant EU legislation or in the case of an emergency situation (Regulation (EU) No. 1095/2010, OJEU 2010 L 331/84, Article 9(5)).

  33. 33.

    MiFIR, Article 43.

  34. 34.

    Cf. Micklitz 2015a, b, p. 30.

  35. 35.

    On this development in more detail, see Cherednychenko 2014a.

  36. 36.

    Directive 2008/48/EC, OJEU 2008 L 133/66.

  37. 37.

    For an overview, see, for example, Davies 2012, 2013; Schepel 2012.

  38. 38.

    See, for example, Case C-36/02, Omega, ECLI:EU:C:2004:614.

  39. 39.

    Case C-171/11, Fra.bo, ECLI:EU:C:2012:453. On the free movement of persons, see for example, Case C-415/93, Bosman, ECLI:EU:C:1995:463; Case C-281/98, Angonese, ECLI:EU:C:2000:296; on the freedom to provide services, see for example, Case 36/74, Walrave, ECLI:EU:C:1974:140; Case C 341/05, Laval, ECLI:EU:C:2007:809; on the freedom of establishment see for example Case C-309/99, Wouters, ECLI:EU:C:2002:98; Case C-438/05, Viking, ECLI:EU:C:2007:772.

  40. 40.

    See Davies 2013, p. 55.

  41. 41.

    Cf. Davies 2012, p. 810.

  42. 42.

    On this in more detail, see Cherednychenko 2014b, pp. 416 et seq.

  43. 43.

    Financial Services Authority, Mortgage Market Review: Responsible Lending, Chapter 3, para 3.3; Chapter 2.

  44. 44.

    See European Banking Authority, Guidelines on product oversight and governance arrangements for retail banking products, Final Report, EBA/GL/2015/18, p. 11.

  45. 45.

    Case C 341/05, Laval, ECLI:EU:C:2007:809, paras 98–99. See also Case 36/74, Walrave, ECLI:EU:C:1974:140, paras 17 and 18; Case C-415/93, Bosman, ECLI:EU:C:1995:463, paras 83 and 84; Case C-309/99, Wouters, ECLI:EU:C:2001:390, para 120.

  46. 46.

    Case C-281/98, Angonese, ECLI:EU:C:2000:296.

  47. 47.

    Case C-281/98, Angonese, ECLI:EU:C:2000:296, para 46.

  48. 48.

    Opinion of Advocate General Maduro in Case C-438/05, Viking, ECLI:EU:C:2007:292, para 43.

  49. 49.

    Schepel 2013, pp. 1213–1214.

  50. 50.

    Case C-415/93, Bosman, ECLI:EU:C:1995:463, para 85.

  51. 51.

    See, for example, Cherednychenko 2006; Morijn 2006; De Vries 2013; Schepel 2013.

  52. 52.

    Case 283/11, Sky Österreich, ECLI:EU:C:2013:28, paras 42–43. See also Case 426/11, Alemo-Herron, ECLI:EU:C:2013:521, para 32.

  53. 53.

    Opinion of Advocate General Trstenjak in Case C-271/08, Commission v. Germany, ECLI:EU:C:2010:183.

  54. 54.

    Cf. Opinion of Advocate General Trstenjak, in Case C-171/11, Fra.bo, ECLI:EU:C:2012:176, where she suggests extending the application of the ‘double’ proportionality test to horizontal situations.

  55. 55.

    Opinion of Advocate General Trstenjak in C-271/08, Commission v. Germany, ECLI:EU:C:2010:183, para 190.

  56. 56.

    Cf. Case 426/11, Alemo-Herron, ECLI:EU:C:2013:521.

  57. 57.

    Cf. Schwintowski 2015.

  58. 58.

    See, for example, Case C-36/02, Omega, ECLI:EU:C:2004:614, para 36.

  59. 59.

    Cf. Morijn 2006.

  60. 60.

    On this, see, for example, Moloney 2010, pp. 142 et seq.

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  1. University of Groningen, Groningen, The Netherlands

    Olha O. Cherednychenko

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  1. Olha O. Cherednychenko
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Correspondence to Olha O. Cherednychenko .

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  1. Faculty of Law, University of Oslo, Oslo, Norway

    Mads Andenas

  2. Faculty of Law, University of Oslo, Oslo, Norway

    Tarjei Bekkedal

  3. Faculty of Public Management, Law and Safety, The Hague University of Applied Sciences, The Hague, The Netherlands

    Luca Pantaleo

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Cherednychenko, O.O. (2017). Fundamental Freedoms, Fundamental Rights, and the Many Faces of Freedom of Contract in the EU. In: Andenas, M., Bekkedal, T., Pantaleo, L. (eds) The Reach of Free Movement. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-195-1_12

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