EU Services Directive and national claims

According to Advocate General Maciej Szpunar, a national court hearing a dispute between a national provision which lays down minimum tariffs on service providers contrary to the Services Directive must waive the application of such a national provision This obligation derives from the specific nature of the provisions of the Services Directive as specific to the Treaty freedom of establishment and the need to respect the fundamental rights guaranteed by the Charter in the form of freedom of contract.

Services Directive [1] provides, in particular, that Member States verify that, under their legal system, the taking-up or pursuit of service activities is subject to compliance by the service provider with certain minimum or maximum tariffs. In addition, Member States shall verify that these tariffs are non-discriminatory, necessary and proportionate.

In 2016 MN, head of the engineering office, and Thelen Technopark Berlin GmbH, concluded an engineering service contract under which MN committed itself to Thelen Technopark Berlin to provide construction services in Berlin. The Parties have determined that MN will receive a flat-rate remuneration of 55,025 EUR. On the basis of the intermediate invoices issued by MN, Thelen Technopark Berlin paid him a total amount 55,395.92 EUR gross.

In 2017, After the termination of the contract for engineering services, the MN issued a final invoice for its services in excess of the amount stipulated by the parties in the contract, on the basis of the minimum rates resulting from the Verordnung über die Honorare für Architekten- und Ingenieurleistungen (the Architects and Engineers' Remuneration Regulation) (hereinafter referred to as ‘HOAI’). Taking into account the transfers already made and the amount retained as a guarantee, he subsequently brought an action against Thelen Technopark Berlin to pay the rest of the remuneration due in the amount of 102,934.59 EUR gross, including interest and costs of judicial legal service.

The action was mostly taken into account by the courts first and second instances.

Judgment of 4 July 2019 [2] The Court found that by maintaining compulsory tariffs for planning services provided by architects and engineers provided by HOAI Germany has failed to fulfil its obligations under the Services Directive.

Moreover, the Court ruled [3] , that the provisions of that Directive preclude national legislation that prohibits agreement in agreements with architects or wage engineers which are below the minimum rates laid down in HOAI.

In this context, the Bundesgerichtshof (Federal Court of Justice, Germany), examining the review complaint, in which Thelen Technopark Berlin requested that the action be dismissed, asked the Court of Justice questions about the interpretation of Union law.

That court seeks to determine, in fact, whether Union law requires the national court examining a dispute between individuals to withdraw from the application of a provision of national law from which it derives its claim where that provision is contrary to the Services Directive.

Obligation to make a consistent interpretation

In his Opinion delivered today, Advocate General Maciej Szpunar pointed out at the outset that national courts are required to interpret national law in accordance with directives (so-called compatible interpretation).

In its implementation, they are required to interpret as far as possible the provisions of national law in the light of the content and objectives of the Directive in order to achieve its intended effect.

It is only in the event of a failure to interpret a compatible national court examining a dispute between individuals that it is obliged to depart from the application of a national provision contrary to the Directive in certain situations, inter alia, where it is necessary to respect the general principle of Union law, including as set out in the Charter of Fundamental Rights of the European Union (‘the Charter’).

In view of the exclusion by the referring court of the possibility of interpreting a national provision in accordance with the Directive, the Advocate General examined whether there were grounds in the present case for the referring court to depart from the application of a national provision contrary to the Directive in a dispute between individuals.

Services Directive to safeguard the freedom of establishment

In particular, the Advocate General noted that the Union legislature, when adopting the Services Directive, sought to implement or to concreteise two fundamental freedoms of the internal market, including freedom of establishment.

According to the Advocate General, unlike other acts of derivative law which harmonise selected – and usually narrow – aspects of freedom of establishment in a given sector, the Services Directive is not intended to harmonise selected aspects of service activities, but to clarify the Treaty itself.

Chapter III of the Services Directive [4] specify the Article 49 TFEU Freedom of establishment. Therefore, recourse to the provisions of this Chapter in the dispute against another entity should be allowed, as it is possible to rely directly on the Treaty freedom of establishment in similar situations.

At the same time, according to the Court’s judgment in Cases X and Visser [5] , Chapter III of the Services Directive also applies where all relevant elements occur within only one Member State.

Chapter III of the Services Directive therefore not only clarifies the Treaty freedom of establishment, but also extends the limits of its application to purely internal relations.

Consequently, in the event of a failure to interpret in accordance with Union law, the national court examining a dispute between a claim entity derived from a national provision which lays down minimum tariffs to service providers in a way contrary to the Services Directive must waive the application of such a national provision.

Subsequently, the Advocate General examined the possibility of waiving the application of the national provision at issue because of its contradiction with the freedom to conclude contracts guaranteed by the Charter.

From explanations on the Charter of Fundamental Rights [6] it follows that this freedom forms part of the freedom to conduct business, which is devoted to Article 16 cards. According to the Advocate General, the freedom to conclude contracts is a right recognised both in the legal order of the Member States and in Union law.

It results from certain rights for individuals, including the right for the parties to form a legal relationship by setting the price for the service.

According to the Advocate General, in so far as it guarantees the freedom of the parties to fix the price for the service, the provision Article 16 is a provision of ‘self-consumption’, i.e. sufficient to grant individuals themselves the right they may invoke in disputes with other entities.

In the opinion of the Advocate General, the freedom to enter into contracts derives from the right of the individual to freedom from interference in the autonomy of the parties to the legal relationship, whether potential or already existing.

The basic way of interfering with the freedom to enter into contracts is to impose restrictions on it by the State. Therefore, the defence against such interference in a dispute with a party to a contract which derives its power from such a restriction can only be made by raising the plea of illegality of the restriction of freedom.

Its legality depends on whether it meets the conditions which must be met by the restrictions on rights and freedoms set out in Article 52(1) cards [7] .

According to the Advocate General, found by the Court in its judgment of 4 July 2019 [8] The contradiction of the contested provision of national law laying down a restriction on the right to set a price with the delimiting limit for the adoption of such provisions by a provision of Union law prejudges the need to depart from the application of the provision of national law.

In the event of such a contradiction, there is no doubt that the restriction of the right to set the price freely laid down in national law does not fulfil the conditions laid down in Article 52(1) cards.

Therefore, according to the Advocate General, the national court should waive the application of the contested provision of national law contrary to the Services Directive because it is necessary to respect the fundamental right in the form of freedom to enter into contracts concerning the right of the parties to fix a price.