How Member States can derogate from the trading conditions governed by European Community (EC) rules

• National security

Article 297 allows derogation in circumstances that threaten the preservation of law and order due to serious internal disturbances; of war or the threat of war and such consequential tensions internationally; or to comply with responsibilities to preserve peace and international security.

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Imperative requirements

Derogations are also to be found outside of those declared explicitly by Treaty. In a period known as 'judicial activism' the ECJ was able to take the principle for the free movement of goods onwards from what had been its resting-place. In the seminal case of Cassis the ECJ ruled that a Member State retained their right to regulate matters that had not yet been subjected to community rules on harmonisation. However;

“State regulation of such areas must be accepted together with any obstacles to trade which may follow from disparities in national laws, but only in so far as these trade rules can be justified by one of the mandatory requirements.”

The Cassis judgment had now expanded Article 28s reach. Previously it had only been considered as relating to situations in which a Member State discriminated in the way it treated domestic products compared to those imported. Now it was possible to breach Article 28 where the same regulation applied to both domestic and imported goods, where that regulation was found to adversely effect the free flow of goods across borders, known as 'indistinctly applicable' rules. More succinctly, “[S]ince the Cassis de Dijon case, the presence of discrimination has been established to be a sufficient though not always necessary factor in invoking Article 30 [now Art. 28]”

Derogation from Article 28 in these circumstances is possible if the Member State can justify the rule under one of the ‘mandatory requirements’. Article 30 provides an exhaustive list of justifications for derogation, whilst the list of mandatory requirements is not exhaustive. Some of the mandatory requirements are;

• Consumer protection

• Fairness of commercial transactions
• Public health
• Fiscal supervision
• Protecting the environment
• Protection of cultural art forms.

The cases of Cinéthèque, Torfaen and Familiapress provide some examples of the possibilities of expanding the list of justifications put forward in defence of derogations available via ‘mandatory requirements’.

The case of Torafen concerned the issues of Sunday trading legislation in the UK. Although the legislation in question was considered to fall within the ambit of Art 30 (now Art 28) the ECJ determined that it would be allowable if the measure was proportionate to its aims. The ECJ said that ‘[s]uch rules reflect certain political and economic choices … to accord with national or regional socio-cultural characteristics, and that, in the present state of Community law, is a matter for the Member States’.

The ECJ in the Cinéthèque case accepted that, “the protection of the cinema as a means of cultural expression … was necessary in order to ensure the continued creation of cinematographic works … for the continued production of films”. The Commission also provided some positive support stating that, “cultural aims may justify certain restrictions on the free movement of goods provided that those restrictions apply to national and imported products without distinction”.

In the Familiapress case the ECJ stated that, “press diversity may constitute an overriding requirement justifying a restriction on free movement of goods”. The court highlighted that it found support of its reasoning in the European Convention on Human Rights as well as Community law. Generally it would seem that any ‘mandatory requirement’ currently accepted and those yet to be established, must also exist within the realms of Community law, or at the very least be a public interest requirement.

It is worth clarifying that should an apparently indistinctly applicable measure clearly have a protectionist intention by a Member State, they will only have recourse to justifications available under Article 30.

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Proportionality

The majority of the justifications submitted for the purpose of derogation will be subject to the principle of proportionality. In the Safety Hi-Tech case the ECJ decided that the regulation concerning the marketing of HCFCs was proportional under the mandatory requirement of ‘protecting the environment’.

In another case Germany subjected only imported plants to a phyto-sanitary process to reduce the risk of spreading San José Scale disease. The measure was in principle justified under Article 30 but was ruled disproportionate and so breached Article 28. There are numerous examples of the judicial determination that measures adopted by Member States to achieve their objectives are disproportionate.

Of course there are also many examples of the ECJ referring cases back to national courts, instructing them to make the determination concerning the issue as to whether or not the principal of proportionality has been adhered to. The ECJ considering national courts to be better placed to make, “an analysis of the circumstances of law and of fact which characterises the situation in the Member State concerned”.

Classic proportionality concerns not the level of protection being sought but rather, the measures employed to achieve that protection. It has been suggested that the burden of proof placed upon Member States is very high, placing a Member State’s attempts at banning imports into the category of ‘extremely difficult’, when trying to pass the test of proportionality. 

One criticism of the ECJ is that in its analysis of the proportionality of Member States actions, there is a tendency to bring into negative focus, the economic character of the justification.

However in the case of Aher-Waggon a Member State succeeded on various levels to overcome such difficulties. The court found that not only were the measures enacted by the Member State defined as “the most effective and convenient means of combating noise pollution”, but that they also considered them to be “extremely” cost effective. 

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Conclusion

• Terminology

Member States are quite rightly subject to the burden of proof, generally, when seeking to rely on derogations. But the task should not be made artificially difficult. It is apparent that a lack of clarity exists in regard to some of the terminology used by most people in this area of European law.

Christopher Hilson promotes the need for uniformity in the definitions used by the courts, and especially by academics, for terms such as discrimination, indistinctly applicable and non-discrimination. Their bearing and meaning are important in regard to how the court will deal with the issues raised. Measures that discriminate directly can only be justified under Article 30 whilst, where necessary, indistinctly applicable and non-discrimination measures are able to seek justification on the expanding grounds of ‘mandatory requirements’.

• Necessity

The causal link between the Member State’s measure and their objective aims are defined in terms of necessity, “whilst the least trade restrictive character of the measure is called proportionality”

Notaro points out that, in fact, the ‘concept of necessity’ has the causal link and least trade-restrictive elements built in because, ‘a measure for which a less restrictive alternative exists is not, strictly speaking, needed’. The Crayfish case highlights the sometimes-difficult process of isolating the proportionality of national regulation out from that of their health or environmental aims.

Moving toward a definition and use of a necessity test, as opposed to one of proportionality, could bring benefits to judicial rulings. Reducing the need for the courts to analyse and balance the proportionality of the objective aims for national measures against that of other measures could positively affect, in particular, the area of environmental protection, and consumer protection.

In the Danish Bottles case the court declared their preference for the lower level of environmental protection coupled with a less restrictive effect on trade; rather than the more restrictive effect on trade, but offering greater environmental protection. Would this decision have been different had a test of necessity been employed instead?

• Food safety

According to the courts economic grounds can never serve as justification for barriers to trade. Indeed derogations are considered to be non-economical in nature. It is expected that derogations will assist in balancing ‘the needs of a single market against that of the public security interests of the Member States’. It should be noted then that a Member State cannot nullify a breach by another Member State by adopting unilaterally protective measures.

An understandably common justification for derogation in relation to food products, is that of consumer protection. On such issues the ECJ has often determined that the actions of the Member State have been disproportionate to their aims. A common outcome by the ECJ is to instruct that additional information should be added to a product’s information label to better inform consumers. This is seen as providing consumer protection with the least restrictive impact on the free flow of goods.

Some commentators have declared their anxiety “that the Court of justice emphasises free trade too much and the local needs of consumer protection too little”, particularly in light of the Cassis formula of ‘mutual recognition’. The concern being that the system that is developing is one that, “permits the lowest quality variant of a foodstuff to be legitimately marketable in any Member State”.

Food-safety is an area of community life that affects all its citizens. The argument that labelling sufficiently eliminates risks that have been highlighted as real under the current arrangements is unconvincing. The reality of life for the ordinary citizen is very diverse and so their consumer safety needs can not be met by any one measure applied in a general fashion.

Perhaps the formation of the new European Food Authority (EFA) will address what is seen as a badly weighted agenda. Unfortunately the talks, at the recent EU summit, as to where the EFA should be sited came to a childish halt recently as representatives hurled verbal abuse at each other. The signs are not yet very encouraging.

• Harmonisation

Of course the journey upon which we currently travel is toward the integrated market place in which either harmonisation or the single indistinguishable market place exists. Member Sates will not find derogation as easy, comparatively, to achieve as the justifications will increasingly be harder to achieve. It would seem that we continue to travel the route of negative harmonisation.

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