Unity and Diversity in the European Union's Internal Market Case Law: Towards Unity in 'Good Governance'?

• Author: Jotte Mulder
• Position: Assistant Professor at the Europa Institute, Utrecht University School of Law, NL
• Pages: 4-23

Jotte Mulder, ‘Unity and Diversity in the European Union’s Internal

Market Case Law: Towards Unity in ‘Good Governance’?’ (2018)

34(1) Utrecht Journal of International and European Law pp. 4-23,

DOI: https://doi.org/10.5334/ujiel.454

UTRECHT JOURNAL OF

INTERN

ATIONAL AND EUROPEAN LA

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RESEARCH ARTICLE

Unity and Diversity in the European Union’s

Internal Market Case Law: Towards Unity in

‘Good Governance’?

Jotte Mulder*

This article deals with an enduring challenge for the European Court of Justice: striking a

balance between the EU market integration requirements and respecting the ‘fundamental

structures’ that exist in the Member States through the recognition and accommodation of

a range of regulatory options that may restrict trade. The challenge is finding unity in social

diversity and many commentators consider that the Court has interpreted the constitutional

foundation of the European Union as having turned market access rights into fundamental

rights and social policy into an obstructive power that has to be limited. This article reflects

on the adjudicative methods of the Court and revisits this debate. It argues that the Court

has developed a proportionality assessment that is able to accommodate a plethora of Member

State policy choices. Member States’ systems of protection need to be transparent, systematic

and internally coherent. However, if these conditions are taken into account, then the level of

protection and the means through which this level of protection is sought remain largely at

the discretion of the Member States.

Keywords: European Court of Justice; internal market case law; free movement; social

legitimacy; unity in diversity; proportionality; market access

I. Introduction

The challenging balance between unity and diversity manifests clearly in the area of (economic) free

movement law on the basis of which economic actors have a right to access markets while Member States’

policy choices may often restrict that access to some extent on the basis of their own nationally embedded

socio-economic regulations. In varietate concordia (united in diversity) is and has been the official motto of

the European Union since 2000. Moving away from the persistent idea that Europe is in need of one iden-

tity, the motto gives credence to the enduring compromise that underlies European integration. However,

maintaining a dual commitment to unity and diversity poses many challenges to the European project. In

particular, increasing asymmetric economic burdens, challenges and interests amongst the Member States

of the European Union threaten its unity and pose profound challenges to the stability of the integration

project. Nevertheless, the European Commission now claims social-economic diversity to be a strength:

Europeans are united in working together for peace and prosperity and the many different cultures

traditions and languages in Europe are a positive asset for the continent.

Diversity is an asset and a strength, yet ‘united we stand, divided we fall’.

The Treaty on the Functioning of the European Union (TFEU) incorporates an explicit concern for recon-

ciling freedom of (economic) movement with the social structures of Member States. It does so, specifically,

by integrating a dual commitment within its legal infrastructure: that is, although there is a commitment

to intra-European free trade within open markets that accommodate the free movement of goods, capital,

* Assistant Professor at the Europa Institute, Utrecht University School of Law, NL. Contact: j.mulder1@uu.nl.

Mulder 5

services and workers, Member States retain control over domestic social interests that are able to override

these market integration objectives. Most restrictions on market access, however, must be justified and

here the European Court of Justice (hereafter ECJ or the Court) is confronted with an important question:

which restrictive Member States policy choices should be allowed and on what basis? Closely connected

to this is the question of how, in the face of Member State diversity, the ECJ is able to maintain a form of

unity within European law. In maintaining unity in the face of diversity, the Court is constantly performing

a balancing act. The challenge is that demanding too much unity may leave Member States too little mar-

gin for socio-economic policy choices that are embedded within their own cultural, historical and political

backgrounds. Indeed, this is a pertinent issue and one that political opportunists across Europe may prey

on when advancing an anti-EU agenda. On the other hand, allowing too many restrictions on trade based

on social diversity may allow too much divergence and cause legal fragmentation across the Union. Where

exactly the balance should fall and how it should be achieved remains salient, therefore, and represents a

continuing challenge that lies at the core of European market integration. The President of the Court of

Justice of the European Union, Koen Lenearts, describes this challenge as follows:

…beyond a core nucleus of shared values where the ECJ must ensure uniformity, EU law cannot

disregard the cultural, historical and social heritage that is part and parcel of national constitutional

traditions. Beyond that core nucleus, the ECJ welcomes ‘value diversity’.1

However, where exactly this dividing line is, remains the subject of much contentious case law and debate.

How can the diversity of Member States’ ‘social-economic systems’ be unified within one internal market?

This question can be considered from many angles and areas of European law. One could for example

consider the use of different types of legal instruments to achieve different levels of harmonisation in

market regulation or how the debt crisis has given the European Commission new means to pursue a

one size fits all strategy on the basis of the European Semester and other legislative instruments, which

challenges the social diversit y of the Member States.

In this contribution, however, I revisit the intricate balance between unity and diversity in the case law of

the Court and ask whether we can unveil any consistent adjudicative methods with respect to the balancing

act that is performed by the Court. To do so, I will revisit some long-standing adjudicative techniques of the

Court as a means to achieve unity of European integration. I will analyse strands of case law developed in

the area of economic free movement to distill ideal type forms of reason by the Court.2 First, in section III, I

will discuss how the Court developed the principle of market access, essentially, as a tool to maintain unity

in the internal market and as a prima facie means to initiate a dialogue with the Member States on their

policy choices. It is an exceedingly controversial method of the Court because it has essentially subjected

all Member State policy that can be qualified as imposing cross-border trade burdens to judicial approval.

Concomitantly, the Court has developed a proportionality assessment that is able to accommodate, in

the second stage of the legal assessment, a plethora of Member State policy choices that can justify the

restrictions on cross-border trade. It is through this approach, which captures most restrictive rules within

the Member States in the ‘market access net’ but then allows many forms of restrictions as potential justi-

fications that the Court is maintaining unity in diversity within the internal market. The unity is eventu -

ally achieved by prescribing how Member States pursue objectives that are restrictive of inter-state trade.

In particular, by introducing requirements of transparency, coherence and consistency for the local

governance contexts in which these restrictive objectives are pursued.

The Court has developed this model in a seemingly incoherent fashion. I will discuss in section IV that

the proportionality rationales that the Court employs to adjudicate in the area of economic free movement

law can be categorised in three ideal types. Trade restrictive Member State rules are assessed on the basis of

the principles of substantive efficiency, a margin of appreciation or procedural good governance standards.

The Court has not provided an immediately visible operational rationale as to when a certain principle will

be adopted to evaluate a restrictive Member State scheme. However, recent case law suggests that in fields

1 Koen Lenaerts, ‘The Court’s Outer and Inner Selves: Exploring the External and Internal Legitimacy of the European Court of

Justice’ In: Maurice Adams, Henri de Waele, Johan Meeusen, and Gert Straetmans (eds.), Judging Europe’s Judges: The Legitimacy

of the Case Law of the European Court of Justice (Hart Publishing 2013) 15.

2 The scope of the article is limited to ‘market origin rights’ versus regulatory choices of Member States. That excludes individual

based rights, such as citizenship and some free movement of persons and workers lines of case law from the scope of this article.