Europe and the European Union


A Mini-History of the EU. About 50 years ago, France and Germany (together with Italy, Belgium, Luxembourg and the Netherlands) entered into an agreement (Treaty of Paris, 18 April 1951, creating the European Coal & Steel Community) whereby their coal and steel resources would be jointly administered by a "higher authority" and operated as if within a "single market". That Treaty left open the possibility that other European countries might join the supra-national legal architecture created by the Franco-German treaty.


What is today the European Union ("EU") evolved from that one specific agreement and now comprises a considerable array of European treaties, legislation and case law affecting virtually every aspect of work, of life and of business within an entire continent.

The EU (formerly also known as the "Common Market" and the "European Economic Community") came into being on 25 March 1957, when the six original member countries signed the Treaty of Rome (France, Germany, Italy, Belgium, the Netherlands and Luxembourg). By the late 1990s, nine additional countries had signed up for membership, thereby accepting the fundamental treaty terms. There is no legal distinction, as such, between original members and later members (although members with larger populations have more weighted votes within the Council of the EU and more seats in the European Parliament).

By joining the EU and ratifying the treaty terms, every member country agrees to conform and apply its internal laws accordingly. As a famous British Judge wrote, in a case arising shortly after the UK joined the EU, "when we come to matters with a European element, the treaty is like an incoming tide." Bulmer v. Bollinger [1974] 2 All E. R. 1226, 1231 (Lord Denning, Master of the Rolls). That tide continues to rise and will soon extend much farther, as well, when the various New EU Accession Countries join the EU. Please see definition in the Chapter on "European Legal Terms".

There are today (June 2003) 15 member countries of the EU, a total population of about 375 million people, all with their different histories, cultures, languages, legal traditions and forms of government. There are, for example, eight republics, two of which (Austria and Germany) are federal republics and there are seven constitutional monarchies, of which one (Belgium) is a federal constitutional monarchy.

In addition to the EU, Europe also includes Norway and Switzerland, plus the Baltic republics, Poland, Hungary, the Czech Republic and the other smaller countries of central Europe and the Balkans. Several former Soviet bloc countries are soon to join the EU (by early 2004), thereby raising its population by about 70 million people (current "First Wave" of enlargement). As part of their accession to the EU, they are all bringing their internal laws into line with EU norms and requirements. Romania and Bulgaria are also in line for admission in a "Second Wave" (by circa 2007). Norway and Switzerland are not members of the EU and have no pending application to join it but their laws are very similar to EU norms.

The general legal and commercial trend within the vast EU geographic area, soon to be home to about 550 million people, is "harmonisation".

A pan-EU written Constitution is currently under discussion, as are more specific projects such as a uniform type of European corporation, a pan-EU civil code, a pan-EU taxation regime and a pan-EU patent code (nearing completion). Twelve of the current 15 EU members are already part of the EMU, meaning that they have a single monetary unit and monetary policy, formulated by the European Central Bank, in Frankfurt. The New EU Accession Countries are currently adapting their legal, banking, security and settlement systems with EU membership in mind.

The totality of the laws and institutions of the various EU countries (25 countries after the First Wave of enlargement) will, however, not become exactly the same, down to every detail, nor is that a goal being pursued or even seen as desirable. A basic premise of the EU, however, is that many basic rights and principles, for people and for businesses and for governments, must be substantially the same throughout the EU, as a condition for EU membership and for the proper functioning and stability of the union and for the Single Market.

The EU's Impact on Business. Meanwhile, any business person who is unfamiliar with the EU may be quite rightly puzzled by the many apparent mysteries of its organisation and operation, both internally and with respect to the individual member countries which make up the whole. What are the sources of law? How much local divergence is there, or can there be, and how will it affect business? How does somebody find out about and make appropriate assessments of the various commercial alternatives? In case of legal conflict or doubt, which law prevails, EU law or local law? Who decides that and how much precedent and certainty is there? What impact does this have in specific legal areas, such as employment, or construction or real estate or environmental law or litigation?

In addition to the challenge of sometimes having to deal with legal and business situations in more than twenty countries and in more than a dozen languages, as varied as Greek and Finnish, and Italian and Polish, the business person unfamiliar with Europe will encounter, even in English, many specialised (but essential) European legal terms, acronyms and institutions that may be very unfamiliar or may lead to misunderstanding or which seem to have no practical marketplace context for business (but actually do): "Acquis communautaire", "Directive", "Regulation", "Direct Effect", "Secondary Legislation", "QMV", "ECJ", "European Commission", "Council of Ministers", "European Parliament", "Subsidiarity", "Schengen Agreements", "Treaty of Maastricht", "Treaty of European Union", "Treaty of Amsterdam", "Treaty of Nice", and so forth. All such essential terms will be explained, either in the Chapter entitled "European Legal Terms" or in the specific legal Chapter to which they mainly relate. Please also see the Index.



European legal jargon aside, straightforward English is, and is likely to remain, the most widely accepted language in business situations throughout Europe, but French and German, to name just two, are also important international languages in Europe. Many legal situations (such as dealing with local governments and courts) of course require use of the local languages and various countries require that certain local contracts be written in their national language. The EU governing bodies and institutions publish most of their materials in all the main EU country languages. However, virtually everything of importance is available in English.

Sources Of EU Law. All the countries that have joined the EU already had laws of their own when they signed the EU Treaty, including laws in the form of other treaty obligations and national constitutions (all in written form except for the UK). While it was clear that EU law would become the "natural law" of each member country, upon joining, it was not at first clear what impact EU law would have upon individuals and businesses "directly" ("vertically"), let alone "horizontally", that is, as between the citizens themselves).

It gradually became more clear that the EU Treaty itself was not merely a compact among the member countries which affected only their own rights and obligations, but was also a new source of substantive law that would affect them and affect their citizens (people and businesses), by "direct effect" or by "indirect effect". The full scope of the EU Treaty (and other Primary Legislation) as a source of law was not evident at the outset and the extent of that scope has only emerged over a course of time, mainly through the numerous adjudications of the European Court of Justice ("ECJ"), acting under its powers pursuant to Article 234 of the Treaty and with jurisdiction to decide cases upon direct referral from national courts.

The original format for the enactment of EU legislation (still largely true today) was that the EU (acting mainly through the Council of the EU and/or the European Commission ("EC")), (i) would make "Recommendations" and propose "Guidelines" (not binding upon any member countries), (ii) would make "Regulations" and "Decisions" (immediately and universally binding upon all member countries) and (iii) would issue "Directives" (required to be adopted by member countries, but with some latitude as to timing and as to precise wording, in local national legislation). To date, the EU has issued more than 20,000 Recommendations, Guidelines, Decisions, Regulations and Directives, on subjects as varied as product safety, telecommunications technology convergence, regulation of genetically modified life forms and unfair terms in consumer contracts. Please see Chart on pages 90-97, which collects 288 significant Regulations and Directives and matches them with each main topic in this book.

The EU Treaty provides that Regulations are to be "directly applicable" in member countries but makes no such specific provision for Directives which were, therefore, assumed to be applicable only when taken up into national legislation. This has not been the way in which matters have


in fact evolved, mainly due to intervention by the ECJ, acting under that provision of Article 234 of the EU Treaty entitling it to render "preliminary opinions" on matters based upon EU law. The Court (starting in 1963, in the Van Gend en Loos case, referred to the ECJ from the Netherlands) seized upon that language to decide a series of landmark cases, extending the "direct effect" of EU law to EU Directives, to EU Decisions, to the EU Treaty itself and even to provisions of international agreements to which the EU is a party. Van Gend en Loos v. Nederlandse Administratie der Belastingen [Dutch tax authority] (Case 26/62, decided 5 February 1963) [19631 ECR 1.

The result is that there has been a steady and very substantial movement toward greater pan-European uniformity and a more level and predictable legal playing field. EU countries are obliged to go along with this trend, as are the New EU Accession Countries. Others, such as Norway and Switzerland generally do so by choice, for various economic, social and political reasons (specific representative examples will be cited throughout the book). EU countries that do not comply with EU law are subject to administrative and other measures, including formal legal proceedings initiated by the EC. For some examples, please see page 25, in the Chapter on "Environmental Law".

This overall trend towards pan-European uniformity and convergence started (when the EU was much smaller), about 40 years ago, pursuant to some "landmark" ECJ decisions, mainly in the area of customs duties, taxation and the free movement of goods across national borders. Van Gend en Loos (as above) and the 1970 German case of Grad v. Finanzamt Traunstein [German tax office] (Case 9/70), decided 6 October 1970) [1970] ECR 825.

The key operative language is in Van Gend en Loos: "Community law [EU law] therefore not only imposes obligations on individuals but is also intended to confer upon them rights which are part of their legal heritage... [which] must be interpreted as producing direct effects and creating individual rights which national courts must protect." [1963] ECR 1, 12-13, and national law that is in conflict with EU law must not be enforced by national governments (national law must be "suspended"). R. v. Secretary of State for Transport, ex parte Factortame (Case C-213/89, decided 19 June 1990) ECR 1-2433. In other words, EU law already has Primacy in EU countries, it will have Primacy in the New EU Accession Countries and the main laws in the two non-EU European countries (Norway, Switzerland) are substantially similar anyway.

Interesting Europe-fact: + More than 150 years ago, in a poem dated 1843, the French poet Alfred de Vigny (1797-1863) foresaw the legal developments we are experiencing today:

"La Loi d'Europe est lourde, impassible et robuste, Mais son cercle est divin, car au centre est le juste."

("The Law of Europe is weighty, solid and robust, Its scope is sacred because its heart is just.")


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