Analysis: “The Future of the ‘Purely Internal Rule’: Two Cases to Watch Closely” by Amedeo Arena
On 3 September 2020, Advocate General Bobek and Advocate General Szpunar delivered their Opinions, respectively, in J&S (C-620/19), and in Bonver Win (C-311/19). Their arguments might have a profound impact on the development of the doctrine introduced by the Court of Justice in 1979 known as the ‘purely internal rule’.
According to the ‘purely internal rule’, as recently codified in Ullens de Schooten, the fundamental freedoms in the TFEU ‘do not apply to a situation which is confined in all respects within a single Member State’ (the so-called ‘purely internal situations’). As a procedural corollary to that rule, preliminary questions concerning the interpretation of fundamental freedoms arising from domestic proceedings concerning purely internal situations are inadmissible or lie beyond the jurisdiction of the Court of Justice.
By way of derogation from that rule, the Court of Justice has been willing to provide preliminary references in cases where, ‘although the facts of the main proceedings are outside the direct scope of EU law, the provisions of EU law have been made applicable by national legislation, which, in dealing with situations confined in all respects within a single Member State, follows the same approach as that provided for by EU law’ (the ‘renvoi to EU law’ exception).
In addition, the Court of Justice has regarded preliminary references stemming from purely internal situations as admissible on the ground that ‘it was not inconceivable that nationals established in other Member States had been or were interested in making use of [fundamental] freedoms for carrying on activities in the territory of the Member State that had enacted the national legislation in question’ (the ‘certain cross-border interest’ exception).
|The Court of Justice applied the ‘renvoi to EU law’ exception for the first time in 1990 in its judgment in Dzodzi in 1990, a case concerning the Togolese widow of a Belgian national. On that occasion, the Court of Justice asserted its jurisdiction to rule on the interpretation of Community provisions governing the rights of spouses of Community citizens because, although those provisions were not applicable per se in the main proceedings, they had been ‘made applicable’ by virtue of a renvoi set out in Belgian law.|
Since the Kleinwort Benson judgment of 1995, however, the Court of Justice has progressively narrowed the scope of that exception, by requiring that the renvoi to EU law set out in domestic law be ‘direct and unconditional’. Thus, in cases such as Borsana, Club Náutico, and Tudoran, the Court of Justice refused to provide a preliminary ruling because the references set out in domestic law did not meet the above requirements.
In a similar vein, in his Opinion in J&S, Advocate General Bobek argued that the Court of Justice should assert its jurisdiction when EU provisions are made applicable by virtue of a reference set out in domestic law only if two substantive conditions are met: (i) if the renvoi to the EU provisions is ‘direct and unconditional’, that is, it is ‘specific and unambiguous’ and the ‘referring court cannot depart from the interpretation provided by the Court of Justice’; and (ii) if the EU provisions extended by the national law ‘operate within a functionally and legally comparable context’, namely ‘where there remains an interest in preserving conceptual uniformity’, so that ‘the interpretation of EU law provisions may still be of some practical assistance to the referring court’. In casu, Advocate General Bobek argued that the Court of Justice should declare that it lacks jurisdiction to provide a preliminary ruling on the interpretation of the GDPR, as requested by the German Federal Administrative Court.
The ‘certain cross-border’ exception, in turn, emerged in 2005 in the context of public procurement with cases such as Coname and Parking Brixen, where the Court of Justice has been willing to rule on preliminary references stemming from disputes involving companies of the same Member State as that of the contracting authority as long as companies located in other Member States had a ‘certain cross-border interest’ in providing the economic activity at issue in the relevant public contract.
In subsequent cases, the Court of Justice has made the burden of proof of the certain cross-border interest increasingly onerous. In Tecnoedi, for instance, the EU judges ruled that that the existence of such an interest ‘cannot be inferred hypothetically from certain factors which, considered in the abstract, could constitute evidence to that effect’, but ‘must be the positive outcome of a specific assessment of the circumstances of the contract at issue’. Similarly, in Banka Maribor, the Court of Justice called for ‘specific evidence’ of a certain cross-border interest.
However, in Trijber, the Court of Justice seemingly contradicted that trend, by taking into account not only the interest of entrepreneurs established in other Member States to provide boat tour services in Amsterdam, but also the interest of individuals from other Member States to receive that service, thereby extending the scope of the ‘certain cross-border interest’ exception.
Advocate General Szpunar’s Opinion in Bonver Win seems to confirm this hitherto isolated deviation, by arguing that the freedom to provide services applies to a situation where a Member State deprives a provider of betting services established in its territory of the authorisation to operate in a certain area ‘when some of its customers come from a Member State other than that in which that company is established’. Therefore, Advocate General Szpunar recommended that the EU judges should provide the interpretation of Article 56 TFEU requested by the Czech Supreme Administrative Court.
The upcoming Court of Justice judgments in J&S and Bonver Win thus deserve close attention, as they might shape the future of the purely internal rule. Whilst Advocate General Bobek’s Opinion in J&S confirms the purely internal rule by further narrowing the scope of the ‘renvoi to EU law’ exception, Advocate General Szpunar’s Opinion in Bonver Win might extend the ‘certain cross-border interest’ exception so much as to make the purely internal rule virtually meaningless. Indeed, as argued in a recent article, in an ‘area without internal frontiers’ in which the free movement of persons and services is ensured such as the EU internal market, for certain services it is almost always possible to assume a potential cross-border demand.
Dr Amedeo Arena is an Associate Professor of EU Law at the University of Naples “Federico II”.