An Italian law requiring companies providing certification services to have their registered office in Italy does not comply with EU rules. The activity of technical inspections and certification in the construction sector falls within the scope of the Directive 2006/123/EC 21 , and therefore it cannot be subject to national requirements.
Freedom to provide services in the Treaty
Article 56 TFEU sets out the fundamental principles governing freedom to provide services in the EU:
[…] Restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a State of the Union other than that of the person for whom the services are intended.
Article 57(3) TFEU specifies that:
Without prejudice to the provisions of the Chapter relating to the right of establishment, the person providing a service may, in order to do so, temporarily pursue its activity in the State where the service is provided, under the same conditions as are imposed by that State on its national.
The Treaty limits the freedom to provide services in the public sector. Article 51 TFUE, read in conjunction with Article 62 TFEU, provides that:
The provisions on [the right of establishment and freedom to provide services] shall not apply, so far as any given Member State is concerned, to activities which in that State are connected, even occasionally, with the exercise of official authority.
Directive 2006/123/EC (‘Services Directive’)
Services may be provided in more than one Member State at the same time. This raises the question as to which Member State should have the right or responsibility to regulate the provider of that service, as well as the possible abuse of EU law in order to avoid the application of less favourable national rules. These important questions have been addressed by Directive 2006/123/EC, the so-‐called ‘Services Directive’.
Directive 2006/123/EC applies to all services which are not explicitly excluded from its scope. The services covered by this Directive concern a wide variety of ever-‐changing activities, including business services such as – inter alia – certification.22 In principle, services provided by the state may also fall within the scope of this Directive.23
Article 14 provides a list of criteria or requirements that Member States are not permitted require on non national service providers when carrying out a service in another Member State. This list includes nationality (or local registration) requirements.
As regards cross-‐border provision of services, the cornerstone of the system is Article 16, which applies the country of origin principle.24 Except in exceptional cases, Member States are not allowed to impose host country requirements on cross-‐ border service providers. National requirements can only be justified if they are necessary for the protection of public policy, public security, public health or the protection of the environment.25 It is a well-‐established principle that these exceptions have to be interpreted narrowly.
The ‘Rina’ case
On 16 June 2015 the Court of Justice of the European Union (‘the Court’) handed down a judgment in Case C-‐593/13 ‘Presidenza del Consiglio dei Ministri and Others v Rina Services SpA and Others’ on the preliminary ruling made by the Italian Consiglio di Stato on the compatibility of Article 64(1) of Italian Decree No 207 of 5 October 2010 with the EU Rules on the internal market, and in particular with Directive 2006/123/EC.
The underlying facts leading to the rulings at issue are the following. SOA Rina Organismo di Attestazione is a limited company having its registered office in Genoa (Italy) whose activity consists in providing quality UNI CEI EN 45000 certification services. SOA Rina Organismo di Attestazione and its related companies (‘Rina’)26 brought an action to challenge Article 64(1) of Decree No 207 of 5 October 2010 providing that certification bodies operating in the construction sector must have their registered office in Italy. Before the Italian administrative courts, Rina claimed that the activity performed by SOAs is connected with the exercise of official authority within the meaning of Article 51 TFEU, and therefore it is excluded from the scope of Directive 2006/123/EC and Articles 49 and 56 TFEU. Called to decide on the dispute between Rina and the Italian authorities, the Consiglio di Stato decided to stay the proceeding and refer the case to the Court of Justice in Luxembourg.
The Court handed down its judgement on 16 June 2015. The Court first recalled its case-‐law27 and upheld that SOAs are commercial undertakings performing a lucrative activity in conditions of competition. These certification companies have no decision making rights connected with the exercise of powers of an official authority. Therefore, the derogation set out in Article 51 TFEU does not apply to certification activities performed by SOAs, and the latter are subject to Directive 2006/123/EC.
As to the question whether requirement concerning the location of the registered office of the SOAs in Italy is compatible with Articles 49 and 56 TFEU and Directive 2006/123/EC, the Court replied in the negative. Requiring the registered office to be located in the national territory restricts the freedom of certification services providers and obliges them to have their principal establishment in that territory.
The Court highlighted that Directive 2006/123/EC sets out a list of ‘prohibited’ requirements, including those concerning the location of the registered office in the national territory. For these ‘prohibited’ requirements no justification can be given. On this basis, the Court rejected other arguments put forward by Italy based on other Treaty provisions, superior in law to Directive 2006/123/EC which would justify an exception to the restriction to freedom of provide services. If a Member State could justify what is prohibited by Directive 2006/123/EC on the basic of principles set out in the TEU, Directive 2006/123/EC would be deprived by any practical effect and the harmonisation of the internal market would be ultimately undermined.
Finally, the Court found that Directive 2006/123/EC must be interpreted as precluding legislation of a Member State that provides that certification bodies must have their registered office in the national territory. As a result, Italy is now under the obligation to modify its legislation so as to allow SOAs to establish their registered office either in Italy or in the territory of another Member State.
This recent case confirms the fundamental principle regulating the internal market: provisions on freedom to provide services – as well as those concerning the other freedoms set out in the Treaty -‐ must be interpreted broadly, while Member State have a very limited space to invoke restrictions on fundamental principles governing the common market. Nothing new in this. However, despite the efforts of the Union legislator and the ECJ in developing a broad approach for the application of Article 56 and 57(3) TFEU and the existing harmonising provisions, barriers to entry for the cross-‐border provision of services still exist. It may be recommended for the Member States to align their law to the fundamental principles regulating the internal market, rather than waiting for ECJ rulings declaring their national law incompatible with EU law.