Ersan Şen Hukuk ve Danışmanlık - The Impact of the Preliminary Ruling to The Sources of The European Internal Market Law

Mehmet Vedat Ervan

The Impact of the Preliminary Ruling to The Sources of The European Internal Market Law
04.12.2021 / Av. Mehmet Vedat Ervan

The Treaty of Rome, which established the common market in 1958, was designed to remove trade barriers between Member States in order to increase economic prosperity and contribute to an ever-closer union among the peoples of Europe. The goal of building the internal market was included in the European Economic Community (EEC) Treaty by the Single European Act of 1986, which defined it as an area without internal barriers in which the free movement of commodities, persons, services, and capital is ensured[1].

The European internal/single market refers to a territory without any border or regulatory obstacles to the free movement of goods and services. This territory consists of all Member States of the European Union. By stimulating competition and trade, improving efficiency, raising quality and helping cut prices, the European internal market has enhanced economic growth and made European businesses' and consumers' daily lives easier[2].

There are three pillars of the European Internal Market Law, which can be categorised as primary sources, secondary sources and the case law of the Court of Justice of the European Union (ECJ). In this essay, after an introduction (I), the primary sources (II), then the secondary sources (III) and lastly the impact of the case law and preliminary ruling procedure (IV) on the development of the Internal Market law including its underlying principles (V) will be explained.

I. Introduction

Like all legal systems, European Union’s (EU) legal system also has a hierarchical nature. Apart from establishing a hierarchy of secondary sources by clearly distinguishing legislative, delegated, and implementing acts in Articles 289, 290, and 291 of Treaty on the Functioning of the European Union (TFEU), the Treaties do not establish any hierarchy of sources[3]. It was the ECJ, who has established the hierarchical connection between the sources of EU law. According to this relationship, the primary sources come at the top and the secondary sources come after that, however the secondary sources are accepted below the international agreements concluded between the EU and third countries or international organisations. Lastly, since it is not a formal source, the case law of the ECJ is placed at the last stage of this hierarchical relationship.

II. Primary Sources

Primary sources are contained in the founding Treaties as amended; Protocols and Annexes attached to them; Acts of accession of new Member States; and, acts adopted by the Council, or the Council and the European Parliament for the adoption of which approval by the Member States in accordance with their respective constitutional requirements is necessary. Furthermore, the Charter of Fundamental Rights of the European Union is recognised as a primary source of EU law under Article 6/1 of the TFEU[4].

III. Secondary Sources

Secondary sources are listed in Article 288 TFEU. It can be defined as the law enacted by Union institutions in the exercise of authorities conferred in them.

According to the Article 288 of the TFEU; To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions.

A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.

A decision shall be binding in its entirety. A decision which specifies those to whom it is addressed shall be binding only on them.

Recommendations and opinions shall have no binding force.

Secondary sources consist of legislative acts, delegated acts, implementing acts and other legal acts. Legislative acts are legal acts enacted through regular or exceptional legislative procedures (Article 289 TFEU). Delegated acts are general and enforceable non-legislative measures that supplement or change certain non-essential components of a legislative act (Article 290 TFEU). Implementing actions are an exception to the general rule that all measures required to implement binding EU legal acts are adopted by Member States in conformity with their own national laws. Where consistent conditions are required for the implementation of legally binding EU acts, appropriate implementing acts are enacted by the Commission and, in exceptional situations, by the Council. However, the European Parliament and Council establish in advance the rules and general principles governing the methods for Member States to exercise control over the Commission's exercise of implementing powers (Article 291 TFEU). Lastly, the Union institutions can utilize a variety of 'other legal actions' to issue non-binding measures and statements or to control the internal workings of the EU or its institutions, such as agreements or arrangements between the institutions or internal rules of procedure[5].

The Treaties conferred important legislative powers on the EU institutions, allowing them to carry out the provisions of the Treaties and thus give full effect to EU law and policies. The Treaty of Lisbon (ToL) is the first treaty to make reference to legislative acts enacted by EU institutions. The ToL rationalized, simplified, and established a secondary source hierarchy. It kept regulations, directives, and decisions as legally binding documents for both legislative and non-legislative acts. According to Article 288 TFEU, the EU institutions shall adopt regulations, directives, decisions, recommendations, and opinions. The same provision, however, expressly states that recommendations and opinions have no binding force and are thus neither legal acts nor sources of EU law[6].

IV. Case Law and Preliminary Ruling

Since law, regulates both the relationship between people and companies with each other and the relationship between them and the state. An organisation is needed to resolve the disputes arise between these entities. Just like the domestic courts solve the disputes according to the regulations accepted in their jurisdiction, ECJ also solves the disputes, enlighten the interpretation and the application of the rules, when a national court seeks guidance on EU law. Domestic court may stay the proceedings and appeal to the ECJ for clarification as to the validity of the Union instrument at question, as well as the interpretation of the instrument and the Treaties. This procedure is called the preliminary ruling and it is regulated under Article 267 of TFEU.

According to the Article 267 TFEU; The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning:

(a) the interpretation of the Treaties;

(b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union;

Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon.

Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court.

If such a question is raised in a case pending before a court or tribunal of a Member State with regard to a person in custody, the Court of Justice of the European Union shall act with the minimum of delay.

The ECJ reply to the domestic court with a judgment rather than an advisory opinion, by this the ECJ underlines the binding nature of its decision. The preliminary ruling procedure is not a contested procedure, but rather one stage in a series of proceedings that begin and end in domestic courts.

The preliminary ruling procedure offers an opportunity to the EU citizens for challenging the actions of their own Member State which are in contravention of the UE law and ensure enforcement of Union law before the domestic courts. In this manner, both the individual rights are and the uniformity of the interpretation of the EU law is secured.

Even though the ECJ guide the implementation of the rules, case law is not regarded as a formal source of EU law. In practice, the ECJ relies on earlier cases to decide subsequent cases that raise the same or similar issues in order to ensure coherence and consistency of its case law. Furthermore, because the ECJ established the constitutional principles of EU law in its judgments, ensured respect for fundamental rights by EU institutions and Member States, and created EU administrative law, its case law is an important source of EU law. This is especially true given how frequently the ECJ's case law has been codified by the Member States, either as an amendment to Treaties or as secondary legislation[7].

V. Development of the Internal Market Law and its Principles Through the Preliminary Ruling

Due to the reason, that internal market law regulates certain freedoms and all fundamental freedoms possess the character of “direct effectiveness”, a small explanation has to be made regarding to that. The definition of direct effect consistently used by the ECJ is that a provision of EU law has direct effect when it has the capacity to confer rights on individuals which they may invoke and rely upon in proceedings before national courts. If a legislation of EU law is clear, unconditional, and intended to confer rights on an individual or firm, that individual may bring up that provision before a national court, which must then follow the requirements set out in Article 267 TFEU (preliminary ruling).

When we return to the internal market law and its principles, the European internal market law is governed by three significant principles; the principle of supremacy of EU law over Member States’ law (a), non-discrimination (b) and on the principle of the prohibition of restrictions (c). As it will be clearly seen from the explanations, all these principles have improved by the disputes faced by the individuals and/or companies, which results the domestic courts to seek guidance for the implementation of the certain principles and rules.

  1. a. Supremacy of EU Law Over Member States

The supremacy principle belongs to the acquis communautaire - the legal achievements developed by the rulings of the ECJ, according to the preliminary ruling. For instance, such ruling has begun with the case of Costa v. Enel in 1964[8].

In this case an Italian lawyer named Costa has challenged an Italian act of nationalization, which established the company called Ente Nationale per l’Energia Elettrica (ENEL). Costa has argued that this act violates – inter alia – the Article 37/2[9] of EEC Treaty which prohibits the establishment of State monopolies of a commercial character which would distort the conditions under which goods are procured and marketed between nationals of Member States.

Later, the Milan court brought this question to the ECJ for a preliminary ruling under Article 267 TFEU (formerly 177 EEC Treaty[10]), which established the doctrine of EU law primacy on this occasion.

In this case, ECJ has stated the reason of necessity of the supremacy principle. According to the ECJ, the incorporation of provisions derived from the Community into the laws of each Member State, as well as the terms and spirit of the Treaty in general, make it impossible for the states, as a corollary, to give precedence to a unilateral and subsequent measure over a legal system accepted by them on the basis of reciprocity. As a result, such a measure cannot be incompatible with that legal system. The executive force of Community law cannot differ from one State to the next in deference to subsequent domestic laws without jeopardizing the achievement of the Treaty's objectives outlined in Article 4 TEU para 320. If the obligations imposed by the Treaty establishing the Community could be called into question by subsequent legislative acts of the signatories, they would not be unconditional, but only contingent. Article 288 TFEU confirms the precedence of Community law, stating that a regulation shall be binding and directly applicable in all Member States. This provision, which is not subject to reservation, would be rendered meaningless if a State could unilaterally nullify its effects through a legislative measure that could supersede Community law.

  1. b. Non-Discrimination

This principle has a residual character. This means that it only applies in instances where the Treaties provide no particular provision. According to the Article 18/1 TFEU; “Within the scope of application of the Treaties, and without prejudice to any special provision contained therein, any discrimination on grounds of nationality shall be prohibited”.

Even though this principle applies to all freedoms, the scope of its enforcement can be disputable. In these kinds of situations, by the opportunity provided in Article 267 TFEU to the people and companies, individuals could demand from the domestic court to request the ECJ to give a ruling/judgement, for determining the exact scope of the principle, it is possible to say that through the decisions of the ECJ, the scope of this principle became more clear and improved through time.

For example, in the case of Bidar v. London Borough of Ealing, the French student Bidar, who was studying in the United Kingdom, where students are given government grants or loans to help them pay for their studies. Bidar also requested for a student maintenance loan which, however, was rejected by the relevant authorities.

In this dispute the ECJ had to decide whether such maintenance aid was within the scope of the Treaty for the purposes of discrimination under Article 18 TFEU or not. The Court has answered positively by citing the introduction of EU citizenship and decided that maintenance grants for students now came under the scope of Article 18 TFEU. This Article was used because neither the Treaties nor secondary EU law contained any special provision regarding students' rights to maintenance grants.

To provide another example, where the ECJ has the interpreted the non-discrimination principle and in this manner developed the internal market law is the case of Reduced Transport Fares for Students. (European Commission v. Republic of Austria). As facts, some Länder of Republic of Austria granted reduced transport fares only to students in respect of whom family allowances are granted in Austria. The Commission had the opinion that this condition discriminates citizens from other Member States whose families did not receive such allowances.

The ECJ, by applying, inter alia, Article 18 TFEU and Article 24 of Directive 2004/3823, entitled ‘equal treatment’, has stated that; it should be recalled that the principle of non-discrimination on the basis of nationality, enshrined as a general principle in Article 18 TFEU and specifically laid down in respect of EU citizens falling within the scope of Directive 2004/38 in Article 24 thereof, prohibits not only direct discrimination on the basis of nationality but also all indirect forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result.

In the European Commission v. Republic of Austria case, making reduced transport fares subject to the grant of Austrian family allowances, as provided for by certain Länder, creates unequal treatment between Austrian students pursuing their studies in Austria and students from other Member States pursuing their studies there as well, because such a condition is more easily met by Austrian students because their parents acquire those allowances as a rule.

The ECJ reached a conclusion that, the Republic of Austria has failed to fulfil its obligations under Articles 18 TFEU, 20 TFEU, and 21 TFEU (citizenship of the Union: free movement and residence), as well as Article 24 of Directive 2004/38, by granting reduced fares on public transportation in principle only to students whose parents receive Austrian family allowances.

  1. c. The Principle of Prohibition of Restrictions

It is possible to state that many national rules of the EU Member States are non-discriminatory. These rules are applied indistinctly to national goods and services but nonetheless obstruct intra-Union trade. Citizens of other Member States have less opportunities to sell their goods or supply their services in that Member State. In this manner, through the cases, which the individuals and/or companies trigger, the ECJ ruled continuously that national measures violate the right to exercise the fundamental freedoms if they are capable to prevent or make intra-Union trade less appealing[11]. This constant ruling can be demonstrated by the case of German Beer[12].

In this case, the German Foodstuffs Act of 1974 banned the marketing of a product called “Bier” in Germany which contained additives. The term “Bier” could only be applied to products brewed solely from malted barley, hops, yeast, and water. The use of other ingredients such as maize and rice did not prevent the completed product from being marketed in Germany, but it could not be sold as beer (Bier). According to Article 36 TFEU, Germany justified the restriction by citing the need to protect consumers' health.

According to the ECJ, this ban, although indistinctly applied to national products, violates the principle of proportionality.

Contrary to the Germany’s argue, by using findings of the WHO and of other international organizations and authorities, the ECJ find out that, the additive does not cause a risk to public health and supply a reel need. In the case of a product imported from another Member State, a specific addition used in that Member State must be allowed. Therefore, the German Foodstuffs Act is regarded by the ECJ as a disguised restriction on commerce between Member States, and accordingly it is not protected by the exceptions set forth in Article 36 TFEU.

As a result, beverages from other EU Member States can be sold in Germany under the term “Bier” without having to meet with German purity criteria, but German beer manufacturers must adhere to severe purity rules. As a result of this decision, German breweries face incidental reverse discrimination. It essentially means that Union law does not apply to “wholly internal situations” It could be avoided if a Union nexus is established, such as when a German brewery establishes a subsidiary in Austria.

Throughout the cases ECJ has examined and came to a conclusion, certain rules are also adopted like the Gebhard-formula, which the ECJ has mentioned at the case of Gebhard[13]. This formula enumerates four criteria which justify restrictions to the practice of the fundamental freedoms. According to this, national measures that have the potential to impede or make less appealing the practice of fundamental freedoms granted by the Treaty must meet four criteria: they must be applied in a non-discriminatory manner; they must be justified by imperative requirements in the general interest; they must be suitable for securing the attainment of the objective which they pursue; and they must not go beyond what is necessary in order to attain it.

VI. Conclusion

Since EU tries to adopt a unity in every aspect including the law, which regulates the everyday relations between individuals and companies themselves and the governments, legislating some regulations are not solely enough. Those rules must be interpreted and applied in the same ways. In this respect, an establishment is also required to ensure and secure this. Therefore, the decisions of the ECJ have a crucial importance in the development of the internal market law.

As it has been clearly demonstrated above, by the decisions of the ECJ, both the unity and a protection to the fundamental rights are ensured. Since the time passes and disputes continues, individuals and companies will continue to trigger the case law with new questions and a guide will be needed for the domestic courts. For example, in the near future, there could be many questions raising because of the e-commerce. And due to the opportunity which preliminary ruling provide to the individuals and companies, these questions will be taken to the ECJ and by its decisions the European Internal Market Law will continue its development.


[1] Official website of the European Parliament, accessed 18.10.2021, <https://www.europarl.europa.eu/factsheets/en/sheet/33/the-internal-market-general-principles>

[2] Official website of the European Union, accessed 23.10.2021, <https://ec.europa.eu/growth/single-market_en>

[3] Kaczorowska, Alina. European Union Law, Third Edition, Routledge, USA, 2013, p. 110.

[4] Kaczorowska, ibid, p.110.

[5] Borchardt, Klaus-Dieter, The ABC of European Union law, Publications Office of the European Union, 2010, pp.81-82

[6] Kaczorowska, ibid, pp.122-123.

[7] Kaczorowska, ibid, p.110.

[8] Fischer, Peter, European Internal Market Law, LLM Program European and International Business Law Vienna University, 2021, p.26.

[9] Article 37/2 of EEC; Member States shall refrain from introducing any new measure which is contrary to the principles laid down in paragraph 1 or which restricts the scope of the Articles dealing with the abolition of customs duties and quantitative restrictions between Member States.

[10] Article 177 of EEC; “The Court of Justice shall have jurisdiction to give preliminary rulings concerning:

(a) the interpretation of this Treaty;

(b) the validity and interpretation of acts of the institutions of the Community and of the ECB;

(c) the interpretation of the statutes of bodies established by an act of the Council, where those statutes so provide.

Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling there on.

Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice”.

[11] Fischer, ibid, p.32.

[12] Commission v. Germany 1987. Case 178/84 [1987] ECR 1227.

[13] Case C-55/94 Gebhard v Consiglio dell’ ordine degli avvocati e procuratori di Milano [1995] ECR-4165.