The Court of Justice provides clarification as to the scope of application of the fundamental freedom to provide services

News type
Legal news

In the BONVER WIN case (C-311/19), the Court of Justice was called upon to provide clarification as to the scope of application of Article 56 TFEU, which establishes the fundamental freedom to provide services within the EU.

BONVER WIN is a company established in the Czech Republic which operates betting games. The Czech town of Děčín adopted a municipal decree prohibiting such betting games in its territory. BONVER WIN’s licence for an establishment situated in this town was thus withdrawn.

BONVER WIN filed proceedings before the Czech courts, arguing this legislation to be contrary to its freedom to provide services enshrined in Article 56 TFEU. In this respect, it should be noted that, pursuant to settled case law of the Court of Justice, this provision does not apply to a situation which is confined in all respects within a single Member State (a so-called “purely internal situation”). In this case, BONVER WIN submitted, in support of its view that Article 56 TFEU was applicable, that some of the customers of its establishment in Děčín were nationals of other Member States.

The Czech Supreme Administrative Court referred questions to the Court of Justice in order to obtain clarification as to whether Article 56 TFEU was actually applicable in such a situation.

In its judgment of 3 December 2020, the Court of Justice recalled, in particular, that a cross-border situation cannot be presumed to exist on the sole ground that EU citizens from other Member States may avail themselves of service opportunities. It underlined that a mere assertion by a service provider that some of its customers come from a Member State other than that in which it is established is not sufficient to establish the existence of a cross-border situation capable of falling within the scope of Article 56 TFEU. In order to make a reference to the Court of Justice for a preliminary ruling concerning the situation of that service provider, a national court must demonstrate in the order for reference that such an assertion is well founded.

In this respect, the Court of Justice observed that it was apparent from the request for a preliminary ruling that the town of Děčín, which is located approximately 25 km from the German border, is a place that is enjoyed by German nationals and that BONVER WIN has, in the context of the national proceedings, provided evidence which seeks to demonstrate that some of its customers were persons from other Member States. Based on this, the Court of Justice held that it cannot be argued that the existence of foreign customers is purely hypothetical, subject to verification by the Czech jurisdiction of the evidence submitted by BONVER WIN.

The Court of Justice also addressed specific concerns expressed by the Czech Supreme Administrative Court as regards, firstly, the possible relevance of the number of customers from another Member State. In this regard, the Court rejected the idea that a de minimis rule should be introduced in the field of the freedom to provide services. Circumstances such as the number of foreign customers who have used a service, the volume of services provided or the limited scope, in both geographical and substantive terms, of the potential restriction on the freedom to provide services have no bearing on the applicability of Article 56 TFEU. The Court of Justice stressed that the freedom covered by that article may be relied upon both in situations where there is a single recipient of services and in those where there is an uncertain number of recipients of services using an uncertain number of services performed by a provider established in another Member State.

Secondly, the Court of Justice rejected the Czech Supreme Administrative Court’s view that a measure of general application which affects all providers established in a Member State, in the same manner, in law or in fact, regardless of whether those services are provided to nationals of that Member State or to those of other Member States, falls outside the material scope of Article 56 TFEU.

Therefore, the Court of Justice ruled that Article 56 TFEU applies to the situation of a company established in a Member State which has lost its licence to operate games of chance following the entry into force, in that Member State, of legislation determining the places in which it is permitted to organise such games, which is applicable without distinction to all service providers operating in that Member State, regardless of whether those services are provided to nationals of that Member State or to those of other Member States, where some of its customers come from a Member State other than the Member State in which it is established.

Please contact Pierre de Bandt or Raluca Gherghinaru for further information regarding the above or for general information relating internal market legislation.

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