The European Union (EU) has an institutional framework aimed at promoting and defending its values, objectives and interests, the interests of its citizens and those of its Member States. This framework also contributes to ensuring the coherence, effectiveness and continuity of EU policies and actions. Four main decision-making bodies run the EU. The EU Council (Brussels) and the Council of the European Union (Brussels/Luxembourg) represent national governments and should promote the interests of the Member States. The European Parliament (Brussels/Strasbourg/Luxembourg) is directly elected by the people and should promote the interests of the EU citizens. The European Commission (Brussels/Luxembourg/Representations across the EU) is the EU staff. They make sure that all members act consistently in regional, agricultural, and social policies. By doing so, the European Commission promote the interest of the EU as a whole.
The 4 main EU institutions, with their distinct functions, work together closely to set the EU’s agenda and initiate and coordinate EU law-making. The European Commission proposes new legislation. In most cases, the European Parliament, the Council of the European pronounce about the adoption of the law proposal. Thus, these three institutions produce the policies and laws that apply throughout the EU. The European Parliament gets the first read of all laws proposed by the Commission. Its members are elected every five years.The European Council gets the second read on all laws. It can accept the Parliament’s position, thus adopting the law. The council is made up of the Union’s 27 heads of state, plus a president. In general, the European Council does not make laws. However, it can agree on changes in the Treaty on the Functioning of the EU. Its main role is to determine the EU’s political direction.
The work of four main bodies is complemented by other institutions and bodies, which include:
the Court of Justice of the European Union (Luxembourg), the European Central Bank (Frankfurt) and the European Court of Auditors (Luxembourg).The EU institutions and bodies cooperate extensively with the network of EU agencies and organisations across the European Union. The primary function of these bodies and agencies is to translate policies into realities on the ground
1. 2.1 Legal Framework of the European Union
To launch and grow successful businesses in a dynamic and ever-changing European business environment, it is important to be familiar with the main features of the European legal environment.
The system of European law has evolved from public international law, but it is a separate, autonomous legal order. Already in one of its first rulings, The Court of Justice stated that „the European Economic Community constitutes a new legal order of international law” (case 26/62, van Gend & Loos). Although the system of European law exists simultaneously with the national legal systems of individual EU member states, it is independent from them. The independence of European law from the national legal systems of the member states is manifested in the autonomous interpretation of European law (case C-236/01, Monsanto Agricoltura Italia et al.[2]). It is therefore necessary to distinguish the system of European law from the systems of national law of the EU member states, as well as from the system of public international law. The EU legal system is sui generis. It is a special system of law of its own kind which has a supranational character. It has its own sources of law, as well as a law-making process. In addition, it has an independent system of legal protection.
1.2.2 Sources of EU law and their hierarchy
The term source of law is most often used in a formal sense, i.e. as a formal source of law. The sources of law are therefore the forms of law in which the law is contained and from which it formally originates, where it can be found and identified as a law established by the state, and thanks to this, its application or fulfilment can be sought (Prusák, 2001). In the EU legal system, there are several sources of law and there is a hierarchy among them. Those in the lower levels of the hierarchy are subject to those at a higher level, i.e. subordinate rules must respect rules at a higher level. Principal sources of EU law include:
- primary law,
- general principles established by the Court of Justice of the EU,
- international agreements with non-EU countries or with international organisations,
- secondary law,
- treaties made between the Member States,
- decisions of the Court of Justice of the European Union.
The supreme source of the EU law is a primary law. It consists of founding treaties, including annexes and protocols, as well as treaties and acts that amend and supplement the founding treaties, the Charter of Fundamental Rights of the European Union, and accession treaties. Although these treaties were signed by the member states they differ from ordinary international treaties. They are considered to be the „constitutional charter“ of the EU.
At the very beginning, three founding treaties were signed, namely:
- Treaty establishing the European Coal and Steel Community[3] (signed in 1951, entered into force in 1952), which expired in 2002,
- Treaty establishing the European Economic Community[4] (signed in 1957, entered into force in 1958), the name of which was changed in 1993 to the Treaty establishing the European Community, and in 2009 it was renamed to the Treaty on the Functioning of the European Union[5] (TFEU),
- Treaty establishing the European Atomic Energy Community[6] (signed in 1957, entered into force in 1958).
In addition, the Treaty on the European Union[7] was signed in 1992, which entered into force in 1993. The founding treaties have been amended several times in the past. They lay down the values on which the EU is based, the objectives and powers of the EU, its institutional structure, relations between the Union and its member states, Union policies and internal actions, i.e. the foundations of the functioning of the EU.
The Charter of Fundamental Rights of the European Union[8], as part of primary EU law, protects rights and freedoms such as:
- human dignity, the right to life, the right to the integrity of the person etc.,
- the right to liberty and security, respect for private and family life, protection of personal data, the right to marry and found a family, freedom of thought, conscience and religion, freedom of expression and information etc.,
- equality before the law, non-discrimination, cultural, religious and linguistic diversity, equality between men and women, the rights of the child, the rights of the elderly, integration of persons with disabilities,
- workers’ right to information and consultation within the undertaking, the right of collective bargaining and action, fair and just working conditions, prohibition of child labour and protection of young people at work, environmental protection, consumer protection etc.,
- citizens’ rights such as the right to vote and stand as a candidate at elections to the European Parliament and at municipal elections, the right to good administration, the right of access to documents, European Ombudsman, the right to petition, freedom of movement and residence, diplomatic and consular protection,
- the right to an effective remedy and a fair trial, presumption of innocence and the right of defence etc.
Secondary law comprises legal acts adopted by EU institutions based on the competences granted to them by primary law. It provides a more detailed regulation compared to primary law. The TFEU sets out five basic types of secondary legislation, namely regulations, directives, decisions, opinions and recommendations. They differ in terms of the addressee as well as the effect they have in the Member States. Depending on the specific type of secondary legislation, the addressees may be EU institutions, member states, natural or legal person. Regarding the effect of secondary legislation, the direct applicability and binding nature are relevant. While regulations, directives and decisions are binding, opinions and recommendations are non-binding. The definition of five typical legal acts is provided by Article 288 of the TFEU. As they are adopted through the ordinary or a special legislative procedure, they are called legislative acts. In addition, EU institutions adopt other types of secondary legislation including delegated and implementing acts, communications, opinions, recommendations, white and green papers etc. Delegated acts as non-legislative acts supplement or amend certain non-essential parts of legislative acts. Implementing acts are adopted if uniform implementation of legislative acts is required.
The regulation[9] is generally applicable which means that its addressees are not specified. It can be compared to a national law. Its entire text, including the annexes, is binding. It is directly applicable in each member state without the need to be implemented into national legislation. As a result, the regulation simultaneously and uniformly throughout the EU establishes rights and obligations for legal entities of national law and they may invoke it directly before national courts or public authorities.
The directive[10] is a specific type of EU legislation that has no parallel in the structure of sources of national law. Unlike the regulation, it is not generally applicable, but it is addressed to the member states. It is binding on the Member States with respect to the objective to be achieved. Member States have the obligation to transpose the directive into national legislation. They are, however, given discretion with respect to the form of a transposing act to be adopted as well as with respect to the methods, e.g. through which sanctions the result of the directive should be achieved. Unlike the regulation, the directive does not directly establish the rights and obligations of individuals. The rights and obligations of individuals only result from the national legislation adopted to implement the directive. Directives, unlike regulations, serve to gradually harmonize the national legislation of the member states, mainly in the area of the internal market.
1.2.3 EU internal market law
The internal market serves as the basis of the economic integration within the EU. For entrepreneurs, it brings benefits in the form of access to a market with more than 450 mil. customers with high purchasing power. The legal regulation of the internal market is enshrined in the founding treaties. TFEU defines the internal market[11] as an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured (Art. 26 TFEU). Free movements presuppose the „opening“ of borders between member states, so that both entrepreneurs and EU citizens can carry out economic activity that crosses these borders without obstacles. However, it must be said that the obstacles to free movements have been largely removed so far, and not completely. The basic principle, thanks to which the freedoms of the internal market are ensured, is the principal of non-discrimination, or national treatment. It means that member states have an obligation to treat the goods, services, persons, capital and payments of other member states in the same way as their own. The free movement of goods is also ensured thanks to the prohibition of all customs duties on imports and exports and of all charges having equivalent effect. Similarly, quantitative restrictions on imports and exports as well as measures having equivalent effect are prohibited. However, the EU law allows for several exceptions from this prohibition, e.g. „on grounds of public morality, public policy or public security, the protection of health and life of humans, animals and plants, the protection of national treasures possessing artistic, historic or archaeological value, or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States “(Art. 36 TFEU). Moreover, member states may restrict trade to satisfy mandatory requirements relating to e.g. the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions or the defence of the consumer (see the judgement of the Court in the famous case 120/78 known as the Cassis de Dijon case).
The CoJ either rules on direct actions or it gives preliminary rulings. In fulfilling its tasks, it closely cooperates with national courts. National courts are also obliged to ensure effective legal protection in the EU. Direct actions of the CoJ include e.g. actions brought against a Member State that has failed to fulfil an obligation under the EU law (Articles 258 to 260 of the TFEU). An example of such a failure would be non-implementation or incorrect implementation of the directive into national law. The action can be brought before the CoJ by the Commission or another member state, but not by individuals or businesses. They can, however, send complains to the Commission, on the basis of which the Commission can start an investigation. Citizens also can turn to national courts in the event of a violation by other citizens or businesses of their rights arising from EU law. If their rights under EU law have been violated by public authorities in an EU country other than their own, they can turn to the SOLVIT. It is a free online mediation network established by the Commission to help citizens and businesses to solve administrative problems related to their rights as EU citizens.
Preliminary rulings of the CoJ are important from the point of view of uniform interpretation and application of European law. The preliminary ruling procedure presupposes the existence of a procedure before a national court. In case of ambiguities in the interpretation or validity of EU legal acts, the national court may stay the proceedings and submit a preliminary question to the CoJ. The CoJ does not decide on a specific case before the national court, it focuses exclusively on the interpretation of a provision of European law that should be applied by the national court. The national court consequently applies European law in the dispute and decides the matter. The rulings of the CoJ are binding on a referring national court and all courts hearing the same case, and, as already mentioned, they are important for the interpretation of European law in other, similar subsequent cases as well.
[1] Link the words „case 26/62, van Gend & Loos” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61962CJ0026
[2] Link the words „case C-236/01, Monsanto Agricoltura Italia et al” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62001CJ0236
[3] Link the words „Treaty establishing the European Coal and Steel Community ” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:xy0022
[4] Link the words „Treaty establishing the European Economic Community ” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=legissum:xy0023
[5] Link the words „Treaty on the Functioning of the European Union ” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12012M%2FTXT
[6] Link the words „Treaty establishing the European Atomic Energy Community ” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:4301853
[7] Link the words „Treaty on the European Union” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:xy0026
[8] Link the words „The Charter of Fundamental Rights of the European Union” to the external source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:l33501
[9] Link the word „regulation“ to the same word listed in the glossary of the chapter 1.1
[10] Link the word „directive“ to the same word listed in the glossary of the chapter 1.1
[11] Link the words „internal market“ to the same words listed in the glossary of the chapter 1.1