EU Shipping Law

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European Union law relating to the freedom of establishment of shipping businesses and the registration of ships

A. Right of establishment


6.001 This chapter examines the twin but related issues of: (a) right of establishment of shipping companies and operations; and (b) registration of ships under European Union (“EU”) law.1 Articles 49–55 of the Treaty on the Functioning of the European Union (“TFEU”) deal with the right of establishment generally. It is clear, in the light of the Court of Justice of the European Union’s (“CJEU”) judgment in Commission v France (French Seafarers),2 that the rules on freedom of establishment contained in Articles 49 to 55 of the TFEU are applicable in the context of maritime transport and hence shipping. Thus, national rules of Member States restricting the right of establishment of shipping companies in a Member State to nationals/citizens or companies of that Member State are inapplicable vis-à-vis nationals or companies from other Member States; in other words, nationals in any one Member State are entitled to establish operations and register ships elsewhere in the EU on the same basis as nationals of the host Member State in question. Nationals of Member States are also able to vindicate their rights in regard to establishment in other Member State courts.3

Concept of the right of establishment

6.002 The right of establishment involves the entitlement of a person who is a national of a Member State to enter another Member State and “establish” there for the purpose of

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carrying on an economic activity other than under a contract of employment or for the provision of services on a temporary basis.4 The right of establishment, as understood in EU law, includes the right to take up and pursue activities as a self-employed person or company as well as to set up and manage undertakings5 in a Member State. Freedom of establishment is closely linked to the freedom to provide services.6 However, establishment involves a more permanent presence in the host State than merely providing services to undertakings in that second or host State7 on a non-permanent basis.8 For most purposes and most economic sectors, it does not matter whether an activity involves the right of establishment or the right to provide services (as the rules relating to establishment and services are so similar) so long as the entity may operate in the other Member State. On the other hand, in the context of transport, the matter may be material because Article 58(1) of the TFEU provides that freedom to provide services in the field of transport is governed by the provision of the Title in the Treaty relating to transport rather than the general provisions of the Treaty on freedom of establishment – the chapter in the TFEU on freedom of establishment does not have a similar provision and therefore the Treaty’s general provisions on establishment apply to the transport sector in that context.

General rule on freedom of establishment

6.003 Article 49 of the TFEU provides:

“Within the framework of the provisions set out below,9 restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.

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