A. The Charter of Fundamental Rights of the European Union

The Charter of Fundamental Rights of the European Union was drafted during the German presidency of the European Council. It remained non-binding for several years, and became legally enforceable only with the entry into force of the Lisbon Treaty in 2009. In 1999, the European Council in its ‘Cologne Mandate,’ agreed to commission a body to draft a Charter of Fundamental Rights ‘in order to make their overriding importance and relevance more visible to the Union’s citizens.’Footnote ⁹ The Convention tasked with drafting the Charter was comprised of sixty-two members, which included representatives from each national parliament, fifteen representatives of Heads of State and national governments, a representative from the European Commission President, and a host of MEPs.Footnote ¹⁰ Roman Herzog, a former president of the German Constitutional Court, was elected chairman.Footnote ¹¹

The Charter was drafted with the explicit intention of increasing the legitimacy of the European project, by codifying a ‘common set of values’ that would increase public awareness and support for the European project, rather than to introduce substantive policy change or to enhance the protection of fundamental rights per se. On the basis of the Cologne Mandate, the European Charter was designed to codify existing fundamental rights that had long received protection in other human rights documents, including national constitutions and the European Convention on Human Rights. In other words, the Charter was supposed to make rights that were already elsewhere protected more visible to the wider European public, although it was envisaged that this would include pre-existing rights that had been identified by the Court of Justice, but had not yet been formally recognised.Footnote ¹² The Convention was overseen by a drafting committee, known as the Praesidium, that would prove to be the most influential force on the shape of the Charter.Footnote ¹³ Herzog served as Chair of the Praesidium. There were three Vice Chair positions: two were elected by the representatives of the Member States and the European Parliament respectively, and the third position corresponded to the presidency of the European Council. Antónino Vitorino, the European Commissioner for Justice and Home Affairs, served as the fifth member of the Praesidium. The Praesidium were assisted by a General Secretariat who, in addition to secretariat services, also were responsible for drafting the early outlines and amendments for the Convention.Footnote ¹⁴

B. Drafting the freedom to conduct a business

An initial list of fundamental rights and their corresponding, pre-existing source was issued by the Praesidium of the Convention at the end of January 2000. It made no reference to the freedom to conduct a business. It did, however, include a right to work, encompassing the ‘freedom to choose and engage in an occupation.’Footnote ¹⁵ The Finnish representative Paavo Nikula was one of the first to mention the concept of the freedom to conduct a business, in a submission he made to the Praesidium in January 2000, by reference to the new Finnish Constitution.Footnote ¹⁶ It remains a rare example of a national constitution that explicitly protects such a right.Footnote ¹⁷ As Finland held the presidency of the European Council, Nikula was at that time serving as one of the Vice Chairs of the Praesidium. By the time a draft list of social rights circulated to the Convention at the end of March, the draft Article read:

Members of the Convention were then given the opportunity to make amendments. The French representative Guy Braibant argued that there was no reason for ‘freedom’ to be limited to commercial activities, and pointed out that, by reference to the Nold judgement, the freedom was never characterised in absolute terms.Footnote ¹⁹ The Greek representative, Georgios Papadimitriou, suggested that the removal of the term ‘business’ should be considered.Footnote ²⁰ By May, any mention of business freedom had vanished, and the revised wording read: ‘Everyone has the right to choose and engage in an occupation.’ The accompanying statement noted that the Court of Justice had recognised the freedom to pursue an occupation in its 1974 judgement in Nold.Footnote ²¹

There were extensive suggestions for amendment. One French MEP argued that the freedom to choose one’s occupation should be widened to encompass the freedom to make contracts and to set up businesses, both of which were ‘essential in a market economy.’Footnote ²² The UK representative, Lord Goldsmith QC, proposed an amendment including the addition of the freedom ‘to set up in business’ arguing that ‘the right of establishment (ie to set up in business) is a very important right, but it is not included.’Footnote ²³ The Swedish MEP Charlotte Cederschiöld echoed the link to freedom of establishment, arguing that business activity ‘including the freedom of establishment and entrepreneurship’ should fall within the scope of the provision.Footnote ²⁴ The representative of the Spanish Prime Minister argued for the inclusion of a ‘right of freedom of enterprise’ as a ‘logical correlative of the right to private property’ recognised,Footnote ²⁵ he stressed, by the Court of Justice in SpA Eridania.Footnote ²⁶ Based on these amendments, by 23 June this article had become:

1. 1. Everyone has the right to work, to choose his or her work and to enjoy job protection.

2. 2. Everyone has in particular the right to engage in an occupation or commercial activity, and to have access to a free job placement service.Footnote ²⁷

The summary of the amendments drawn up by the Secretariat of the Convention, however, made no reference to the suggestions for the addition of a freestanding right of freedom of enterprise.Footnote ²⁸ This situation highlights one of the difficulties with the drafting of the Charter. The Praesidium was an extremely powerful actor in the drafting process. The Chair and Vice Chairpersons had been given a broadly worded discretion to determine how drafting decisions would be made.Footnote ²⁹ The Praesidium had consolidated its power with a series of procedural motions that ensured that it had the final word on proposed changes.Footnote ³⁰ There were no criteria to determine what amendments should be accepted, or on what basis certain amendments were overlooked or accepted with modifications. When amendments were presented to the Convention, voting was largely avoided and the Convention sought to proceed ‘by consensus.’Footnote ³¹ As a result, it is challenging to determine solely on the basis of the documents available how certain decisions or modifications came to be made.

What is clear is that the appropriate place of social and economic rights soon began to cause increased tension between members of the Convention, who were predictably split along the lines of their political affiliations. Eventually, a proposal was advanced by Guy Braibant, a representative of the French Government, and Jürgen Meyer, a representative of the German Parliament. This proposal managed to break the gridlock that was threatening to envelop the Convention. The Braibant–Meyer proposal included Article 31, entitled Labour Rights, which protected the right to work, job protection, and the ‘right to choose and to engage in an occupation and the right of free access to job-placement services free of charge.’Footnote ³² The 15^th Convention meeting was held in late July. During the drafting of the Convention, many of the Convention members had arranged to meet in groupings by political affiliation to co-ordinate amendments. One such grouping was composed of the members of European People’s Party (EPP). The EPP is an affiliate political grouping in the European Parliament, composed of Christian Democratic, conservative and centre-right political parties. The grouping that met regularly to ‘agree on common positions’Footnote ³³ during the drafting of the Convention was composed of Ingo Friedrich (who served as Chair),Footnote ³⁴ Heinrich Neisser (A),Footnote ³⁵ Lord Bowness (UK),Footnote ³⁶ Peter Altmaier (DE),Footnote ³⁷ Ernst Hirsch Ballin (NL),Footnote ³⁸ Lars Tobisson (SW),Footnote ³⁹ Gabriel Cisneros Laborda (ES),Footnote ⁴⁰ Peter Mombaur (DE),Footnote ⁴¹ and Charlotte Cederschiöld (SW).Footnote ⁴² As the Convention gathered for its fifteenth meeting, the members of this political grouping met to draw up a position paper on the Braibant-Meyer proposal. A draft was proposed by Hirsch Ballin and Altmaier, which was subsequently signed by the nine members.Footnote ⁴³ The proposal praised the ‘attractive structure’ of the Braibant-Meyer proposal, but their draft included a new Article 30, entitled ‘Freedom of enterprise and right to set up a business.’ This read:

1. (1) Freedom of enterprise is recognised in the framework of the social market economy.

2. (2) Every citizen of the Union has the right to set up a business and provide services.

A subsequent right, Article 31 ‘Labour Rights’ stated that:

1. (1) In order to earn his living every citizen of the Union has the right to exercise an occupation freely entered upon.

2. (2) Everyone has the right to protection against unjustified or abusive termination of employment.

This was the first time that two distinct rights had been drafted: one clearly protecting the freedom of enterprise, and another to protect the freedom to pursue an occupation.

C. First draft of Charter

The first completed draft was issued on 28 July 2000. The draft Charter included a new Article 16, the freedom to conduct a business, stating without any qualification that: ‘The freedom to conduct a business is recognised’.Footnote ⁴⁴ The preceding provision, Article 15, protected the right to ‘engage in a freely chosen occupation.’ The draft Explanation outlined that Article 16 was ‘based on Court of Justice case law which has recognised freedom to exercise an economic or commercial activity.’ The Explanation made reference to Nold, as well as Case 230-78 SpA Eridania Footnote ⁴⁵ and Case 151/78 Sukkerfabriken Footnote ⁴⁶ and Case C-240/97 Spain v Commission.Footnote ⁴⁷ The latter cases, the Explanation outlined, protected freedom of contract and free competition respectively. Nold had, of course, originally been cited in the draft Explanations six months previously as a case recognising the right to freely pursue an occupation. It was now cited as a case which recognised the freedom to conduct a business.

With the first full draft of the Charter released, the Convention broke for the summer, giving the representatives an opportunity to return with further criticism and proposed amendments to the Praesidium. Several objections to the provisions of Article 16 were raised.Footnote ⁴⁸ The Italian representative noted that the proposed wording actually deviated from domestic constitutional provisions,Footnote ⁴⁹ as he pointed out that in ‘none of the European Constitutions is the law of business affirmed in an absolute and unconditional manner.’Footnote ⁵⁰ He suggested that the provision be qualified by reference to sustainable development and in conformance with other fundamental rights in the Charter. By contrast, one of the UK representatives, Lord Goldsmith, suggested that the provision encompass the other economic rights, the four freedoms and freedom of establishment, and suggested strengthening the wording.Footnote ⁵¹ Ernst Hirsch Ballin, one of the most enthusiastic supporters of Article 16, argued for ‘more substance’ to the wording, echoing the position paper of which he was an author. His proposed reformulation recognised the ‘freedom of enterprise…in the framework of the social market economy,’ and guaranteeing that ‘every citizen of the Union has the right to set up a business and to provide services.’Footnote ⁵²

The Fifth Heads of State and Government (HOSG) Meeting took place on 11 and 12 September which included, amongst other matters, a debate on the provisions of Article 16.Footnote ⁵³ Jürgen Meyer, the representative from the German Bundestag, voiced his objection to the provisions of Article 16. He argued that the provision created an imbalance as entrepreneurs were singled out from other occupations. Article 16, he argued, did not bring anything new, but its potential political impact should not be underestimated. He suggested that the article be deleted, or alternatively, that the right to strike should be included as a counterbalance.Footnote ⁵⁴ Andrea Manzella, the Italian representative, argued that Article 16 on entrepreneurial freedom should not be unqualified. Caspar Einem, a representative from Austria, endorsed the inclusion of a right to work, and argued that the freedom to conduct a business was covered by the freedom to provide services, which was already protected in draft Article 15. Lord Bowness, however, argued that Article 16 should be retained as its own distinct provision, and argued that economic rights should be granted the same status as social rights.Footnote ⁵⁵

The second full draft was issued on 14 September. Article 16 remained identical to the earlier, first draft, stating that: ‘The freedom to conduct a business is recognised’.Footnote ⁵⁶ The 17^th Meeting of the Convention was held on 25-26 September. At the session on 25 September, Meyer once again addressed the question of Article 16. He stated that he had no objection to Article 16 recognising freedom of enterprise in principle, but queried why entrepreneurs should be singled out for protection. He suggested that Article 16 be subsumed into Article 15, or at the very least, that the same limits as exist for other employees – such as in Article 26 – should apply.Footnote ⁵⁷ He noted that the provision should be drafted to ensure that the right correlated with national and EU law. Gunnar Jansson, who spoke next, pointed out that there was no majority in the Praesidium to subsume Article 16 into Article 15. Hirsch Ballin also defended the provisions of Article 16: the text of the Charter was now balanced, he argued, and it was included in its present form as the social democratic representatives had insisted on the inclusion of the right to strike.Footnote ⁵⁸

D. EPP insists on freedom of enterprise

The representatives of the European People’s Party met on the evening of 25 September, with German MEP Ingo Friedrich serving as chair. The record of the meeting states that: ‘…the impression prevailed that the pendulum had “swung to the left” again with the second overall draft’.Footnote ⁵⁹ The group agreed that it was essential that economic rights, namely the freedom to conduct a business, be included in the Charter. The document drawn up by the meeting resolved that:

The proposal was submitted to the 20^th Praesidium Meeting, which was also taking place on the evening of 25 September to evaluate the conclusions of those meetings of the various groups that had taken place that day.Footnote ⁶¹ The following morning, the Convention reconvened for a plenary session to debate the final approval of the draft Charter. The Praesidium distributed an updated draft, and the revised wording of Article 16 now read:

Guy Brabaint, Vice Chair of the Praesidium, explained that the additional text of ‘in accordance with national and Community law’ had been inserted to ensure that the provision was not unconditional.’Footnote ⁶² Meyer welcomed the additional caveat on Article 16. However, another member of the Convention, Voggenhuber, voiced his objection to lack of balance between social and economic rights, arguing that unlike social rights, economic rights were clearly and robustly protected, and Article 16 represented the creation of an entirely new right.Footnote ⁶³ But these criticisms made little impact. The draft finalised on 26 September effectively became the final text of the Charter, and the Praesidium concluded that the draft was ready to be sent to the European Council.Footnote ⁶⁴ The finalised draft Charter was approved in October at Biarritz EUCO, and the solemn proclamation of the Charter took place on 7 December.

A. Why did the Convention agree to Article 16?

One of the most striking features that emerges from the Convention process is the role played by the representatives of the European People’s Party, who were instrumental in ensuring that the freedom to conduct a business was included in the Charter. When the mention of ‘business’ was dropped from the freedom to pursue an occupation in May, the members of the Convention associated with the EPP made a series of amendment proposals to have the term re-included. The position paper submitted to the Praesidium after their meeting in July was the first time that the freedom to conduct a business was separated from the freedom to pursue an occupation into a separate, stand-alone right. This ultimately became the model that was adopted in the Charter itself. The group made a critical intervention at the end of September on the very eve of the deadline, grouping together to insist upon the inclusion of Article 16. This particular grouping included the UK representative, Lord Bowness. Both Lord Goldsmith and Lord Bowness were amongst the most vocal supporters of the inclusion of the freedom to conduct a business, and the most critical of the Charter’s provisions relating to social rights. The Praesidium were particularly keen to have the support of the UK, who it was felt were one of the more sceptical Member States and with enough geopolitical capital to sink the project entirely, if they chose to.Footnote ⁶⁵ There appears to have been considerable relief when Lord Goldsmith announced to the Convention that he would be recommending the adoption of the Charter to the UK government.Footnote ⁶⁶ Previous analyses of the drafting of the Charter have noted that while individual Government representatives at the Convention may have threatened to exercise a ‘veto’ (although it was not clear at all that they did, in fact, possess such a power) there was no evidence to suggest that ‘members from either the national or the European Parliament having tried to influence the Praesidium in its drafting in a similar way.’Footnote ⁶⁷ However, it is difficult to see how the actions of this group, particularly the intervention on 25 September, could be characterised as anything other than an implied threat to withdraw their support for the Charter if their demands were not met.

Second, it is important to take note of a contradiction running throughout the discussion around Article 16. At times throughout the drafting process, and most notably in the Explanations, it is characterised as a codification of pre-existing rights. Yet Article 16 was plainly novel: at the very least, it was the first time that the concept and the specific wording of ‘the freedom to conduct a business’ would be codified as a standalone right in an international human rights instrument. Its supporters successfully argued that the various elements of the entitlement already existed, albeit in piecemeal fashion; in the case law of the Court of Justice and in some select national constitutions. Despite the various elements that were used in support of the inclusion of Article 16, it is not clear that they add up to a coherent whole. For rights that were, according to its supporters, firmly entrenched in the EU legal order, one might wonder why there was such insistence that the provision be included in the Charter. Yet proponents of the provision managed to introduce enough ambiguity into the discussion of Article 16 to convince the sceptical elements of the Convention that it was little more than an acknowledgment of rights that – albeit in a dispersed fashion – already existed. This experience suggests that it matters whether a proposed right is characterised as a new departure or a continuation of a pre-existing entitlement. For supporters of a proposed provision, drawing attention to its novelty risks attracting further resistance. It can be an advantage to frame a provision as simply the codification of what already exists.

Third, it is notable that only a handful of representatives seemed to appreciate the novelty and potentially far-reaching scope of Article 16. Perhaps most of the members of the Convention were prepared to accept that the entitlement could be derived from the case law of the Court of Justice, or in any event, that the impact of the provision would be minimal. Nor was the novelty of the freedom to conduct a business objected to by any other body.Footnote ⁶⁸ Moreover, the last-minute addition of the qualifying phrase ‘in accordance with Community law and national law and practices’ seems to have won over some of the more sceptical elements of the Convention, such as Guy Braibant.Footnote ⁶⁹ Yet, as we will see, the suggestion that the freedom to conduct to business could be constrained by the caveat that it should be subject to Union and national law and practices has proved to be less effective that it may initially have appeared. For one thing, as Bercusson has pointed out, how could a provision of EU law be limited by reference to national laws and practices? If the Charter was subject to national laws and practices, and thus the national standard were to become the height of fundamental rights protection, the Charter’s additional value would be negligible.Footnote ⁷⁰ The supposed limitation on Article 16 is out of kilter with the traditional understanding of fundamental rights as trumps. Fundamental rights, to be effective, must shape the scope and application of existing and future laws. There would be little point in possessing a fundamental right if it could be overridden by any law.

Members of the Convention may also have been reassured by the fact that the freedom to conduct a business was merely ‘recognised’ rather than some of the more robust language – ‘guaranteed’ – that was used elsewhere in the Charter. Much the same approach was taken by members of the academy. Several scholars accepted Article 16 as a codification of the Court of Justice’s pre-existing case law,Footnote ⁷¹ and while a few scholars noted the novelty of Article 16 in the immediate aftermath of the Charter’s publication, there is little evidence of any concern.Footnote ⁷² Later, scholars largely concluded that Article 16 was drafted in weak enough terms that it was unlikely to undermine the rights of workers or otherwise have a particularly dramatic impact.Footnote ⁷³ Even the scholarship that broadly welcomed the protection of economic liberty in Article 16 as normatively desirable anticipated that the impact of Article 16 would be limited by its qualified wording.Footnote ⁷⁴ In any event, the inclusion of the freedom to conduct a business seems to have been accepted as an inevitable compromise to pacify the right-leaning faction within the Convention, and most of the members of the Convention seemed to have accepted that the Charter, overall, struck a reasonable balance between the protection of social rights and economic interests.

B. The Explanations to Article 16 and Nold

The Explanations cite the case law of the Court of Justice as the origins of Article 16, suggesting that its components had already been recognised: namely the freedom to exercise an economic activity in Nold and SpA Eridiana, the freedom of contract in Sukkerfabriken and Commission v Spain, and the recognition of free competition in the Treaties. Article 119 TFEU does, of course, protect free competition. The Explanations were not debated before the Convention and were simply added by the Praesidium.Footnote ⁷⁵ The Explanations sit as addendums to the text of the Charter itself, and are often used by the Court of Justice as aids to interpretation. Yet on closer examination, it is not evident that the protection of the freedom to conduct a business in Article 16 represented a straightforward codification of this line of case law.

In Nold, the applicant unsuccessfully argued that the imposition of new trading rules by the European Commission had damaged its coal business, and by reducing sales had threatened the profitability of the business, violating its proprietary rights over the business, and ‘the free development of its business activity.’Footnote ⁷⁶ The applicant argued that these rights were protected by the Grundegesetz in Germany, other (unspecified) national constitutions and the European Convention on Human Rights. In a passage for which the judgement is most often remembered, the Court of Justice accepted that in safeguarding fundamental rights, it could not uphold measures that were incompatible with rights protected by the constitutions of Member States, and accepted that international human rights law should inform the interpretation of EC law. While rights of ownership and the freedom to freely choose and practice one’s trade or profession may receive protection in national constitutions, the CJEU noted, ‘far from constituting unfettered prerogatives’ they must, in fact, be considered ‘in light of the social function of their property and activities protected thereunder.’ Within EC law, these rights could always be subject to appropriate limitations in the public interest, provided the substance of the right was protected. Moreover, these protections could not be afforded to ‘mere commercial interests or opportunities, the uncertainties of which are part of the very essence of economic activity.’Footnote ⁷⁷

Thus, Nold does not make any reference to a free-standing freedom to conduct a business, and certainly does not outline any normative basis for that entitlement. In fact, the Court of Justice stressed that measures that negatively impacted profit-making opportunities could not be considered to be a breach of fundamental freedoms. Given the inherent uncertainty of market activity, profit-making could not amount to a protected right. It is, to say the least, a stretch to say that the Court recognised the exercise of commercial activity as fundamental right., although that appears to have been what the litigant in question was hoping to achieve. The efforts of a number German litigants to compel the Court of Justice to recognise the importance of national fundamental rights – in particular, economic rights - was in an attempt to challenge the Community’s regulation of the common market.Footnote ⁷⁸ Nonetheless, that was not the prevailing understanding of the case at the time.Footnote ⁷⁹ Even when the Charter was drafted, the common understanding of Nold as expressed in the travaux préparatoires was that the Court had recognised the right to freely pursue an occupation, and even that finding has been subject to criticism.Footnote ⁸⁰ It was only sometime during the drafting of the Charter that it was asserted that the freedom to conduct a business had already been recognised as a fundamental freedom in Nold, which should be reflected in the body of the Charter. Nold continues to be cited as the definitive example of the recognition of the freedom to conduct a business as a fundamental right, in clear defiance of the text of the judgement.Footnote ⁸¹

C. Spa Eridania and Sukkerfabriken

A further case cited in the Explanations to the Charter is SpA Eridania which concerned a challenge to a Regulation that had altered sugar quotas. One of the grounds of challenge was that the sugar producers were carrying out economic activities that ought to be guaranteed as part of the fundamental rights protected by Community law.^{Footnote 82} The Court of Justice held that the alteration of the quotas simply changed the quantities of sugar which could be marketed in line with the arrangements established by the common organisation of the market. Economic factors that would determine the direction of the overall common agricultural policy would inevitably vary, and as a result the reduction in the quota was not an infringement of a fundamental right. Much like Nold, the decision in SpA Eridania does not explicitly state that economic activity is, or even should be, a fundamental right. It does not say the very thing for which it most cited. It is true that the judgement later on did refer to the ‘interests of beet and cane producers’ but stressed that these interests must be reconciled with wider objectives of the common agricultural policy, not least the interests of consumers and increasing agricultural supply.Footnote ⁸³ Acknowledging ‘interests’ is, of course, very different from acknowledging ‘fundamental rights’ – although it seems as though later interpretations of SpA Eridania have blurred that distinction.Footnote ⁸⁴

The Explanations state that the freedom of contract is encompassed within Article 16, and cite Sukkerfabriken and Spain v Commission as instances where such a right was recognised by the Court of Justice. In Sukkerfabriken, the Court of Justice was asked to determine the correct interpretation of Regulation (EEC) No 741/75 which laid down particular rules for the purchase of sugar beet.Footnote ⁸⁵ When Denmark joined the EEC, the new Community quotas exceeded the quantities that could be produced at guaranteed prices under Danish legislation.Footnote ⁸⁶ Sukkerfabriken and its contractual producers fell into dispute over how the increased quota should affect their existing contractual arrangements, and the Danish authorities intervened to resolve the situation by ministerial order, which Sukkerfabriken challenged. The Court considered that the Regulation made it clear that existing agreements continued to be governed ‘by the domestic law of contract under which they were concluded’, and that Member States were entitled under EU law to intervene in accordance with their own national legal procedures.Footnote ⁸⁷ The preamble to the Regulation provided that Member States could lay down special rules, and the Regulation was based solely on Article 43 of the Treaty. This suggested that the Regulation was intended to ensure that the common organisation of the market did not prevent action on the part of the Member States. Moreover, this interpretation was bolstered by the fact that no rules or information had been provided on the procedure in Regulation No 741/75, ‘such as would be expected if a restriction were to be placed upon the freedom to contract.’Footnote ⁸⁸

This is a rather thin basis for asserting a long-standing recognition of the freedom of contract as a general principle of EU law. The cited paragraph in the Explanations, paragraph 19 of the judgement, makes no reference whatsoever to the freedom to contract.Footnote ⁸⁹ As Prassl has pointed out, the subsequent paragraph 20 ‘merely speaks of freedom to contract.’Footnote ⁹⁰ With respect to Commission v Spain, the final case mentioned in the Explanations, the cited paragraph simply states that parties are entitled to amend contracts they have concluded ‘based on the principle of contractual freedom’ and that this cannot be limited without EU law imposing clear limitations on that entitlement.Footnote ⁹¹ Taken at its height, this case simply states that any restrictions on the freedom of contract must be clearly laid out.Footnote ⁹²

D. General principles case law

In a series of cases throughout the 1970s, the Court of Justice identified and developed the ‘general principles of EU law’ which incorporated fundamental rights into the EU legal order.^{Footnote 93} The freedom to pursue an economic activity was occasionally described as one of these general principles. Despite the Court’s actual conclusions in Nold, the case soon came to be described as one in which the Court of Justice had recognised the freedom to pursue an occupation or business, including by the Court itself.Footnote ⁹⁴ There are, however, subtle and important differences between this line of cases and those that followed under Article 16. First, the freedom to pursue an economic activity was usually described as a facet of the freedom to pursue a trade or occupation.Footnote ⁹⁵ The Court did occasionally reference ‘the freedom to pursue an economic activity’ or the ‘right to carry on an economic activity.’Footnote ⁹⁶ Only on a handful of occasions did the Court refer to the ‘freedom to conduct a business.’Footnote ⁹⁷

The justification provided in the Explanation to Article 16 – that the Charter is simply a seamless codification of this prior case law – has been largely accepted.Footnote ⁹⁸ Several scholars have, however, pointed out that this is difficult to square with some of the Court’s more far-reaching interpretations of Article 16.Footnote ⁹⁹ While the ‘general principles’ case law used a variety of shifting terms to describe a variation of the same principle,Footnote ¹⁰⁰ it was consistent in one crucial respect: it described a far more limited entitlement than that which was to follow in the Charter.Footnote ¹⁰¹ The general principle to pursue an economic activity was not, in other words, considered to be the freedom to act autonomously in every facet of business activities. Instead, the general principles case law describes an entitlement that is much closer to the protection of the freedom of occupation for sole traders. In other words, references to the freedom to conduct a business or the freedom to pursue an economic activity were understood in far more narrow terms than their contemporary successor in Article 16. But finally – and most significantly – there are scarcely any cases where the Court of Justice held that any EU or national measure constituted a breach of this principle, either the freedom to pursue a trade or business or the freedom to pursue economic activity.Footnote ¹⁰² It proved impossible for economic actors to overturn inconvenient legislative measures purely on the basis that they constituted an interference with the general principles.

E. The interest shielded by Article 16

Why does it matter whether the freedom to conduct a business had been established by the Court of Justice prior to the introduction of the Charter? It matters because this is a justification that has been consistently relied on for the existence of Article 16 in the first place. It is important to challenge such a longstanding assertion because it helps us to understand how such a far-reaching entitlement such as Article 16 became part of the Charter of Fundamental Rights of the European Union. It arose, in part, from a premise that was simply not accurate. The members of the Convention had been able to neatly sidestep the question of why the freedom to conduct a business deserved the status of a fundamental right by presenting Article 16 as a codification of pre-existing law.

One of the presumptions underpinning the theoretical justification for the existence of a freedom to conduct business is that it represents an exercise of human autonomy that is vital for individual self-actualisation. More than a socially desirable good, it is described in the same terms as an act that is crucial to human development: the same justifications that are often given for the right to free speech, for example, or the freedom of religion. In its extended report on the provisions of Article 16, the EU Agency for Fundamental Rights wrote that: ‘The essence of the freedom to conduct a business is to enable individual aspirations and expression to flourish, and to promote entrepreneurship and innovation.’Footnote ¹⁰³ Its primary aim, the EU Agency wrote, is ‘to safeguard the right of each person in the EU to pursue a business without being subject to either discrimination or disproportionate restrictions.’Footnote ¹⁰⁴ Ordoliberalism is usually rightly credited as a major influence on the economic outlook of the European Union, particularly in the wake of the Maastricht Treaty.Footnote ¹⁰⁵ While sympathetic to the Anglo-American economic liberalism that re-emerged in the 1980s, there are important distinctions between ordoliberalism and classic economic liberalism; not least that ordoliberalism envisages a prominent role for the state through the creation of competitive markets through its institutions, including the legal system.Footnote ¹⁰⁶ The protection of the freedom to conduct a business does not, however, sit entirely easily with ordoliberal thought. Article 16 is a prima facie right to conduct a business as the right-holder sees fit, ensuring that any incursions on the right must be proportionately justified. The provision is designed to empower and promote private enterprise by rendering its regulation more challenging.Footnote ¹⁰⁷ Ordoliberalism accepts the premise of economic liberalism; namely that ‘economic freedom is an essential concomitant of political freedom.’Footnote ¹⁰⁸ Yet ordoliberalism is less sceptical of state regulation, considering that in an unhampered capitalist system, monopolies and other concentrations of private power would inevitably emerge and undermine competitive conditions.Footnote ¹⁰⁹ In fact, the freedom to conduct a business is far closer to the concepts of economic liberty theorised by Hayek, and later Tomasi and Nickel.Footnote ¹¹⁰ Article 16 may have quietly made its way into the Charter, but the normative values it espouses have deep and contestable roots. It stems from assumptions underpinning capitalist systems and aspects of classic liberal thought: that human beings are driven by profit and achieve fulfilment by acting in their own self-interest. But even more significantly, the vision of ‘economic liberty’ advanced is divorced from the realities of the capitalist system, where, as Piketty has pointed out, those who depend on assets for their wealth will always be wealthier than wage earners.Footnote ¹¹¹ Conceptualising ‘liberty’ as minimal restrictions on market activity does not take account of immense inequality of bargaining power between market actors. As O’Shea has pointed out, advocates for economic liberty fail to explain why there is less economic freedom in a system where, for example, minimum standards are stipulated in a contract of employment than one in which workers do not receive any basic standards of protection. Such a vision of economic liberty is perfectly compatible with precarious work, poverty, and domination by the economic might of others. In effect, it means greater economic freedom for one, more powerful set of actors and not for the larger, and comparatively weaker group.^{Footnote 112}

A. The CJEU and Article 16

Initially, Article 16 made barely a ripple on the surface of EU law. The Charter itself did not become binding until nearly a decade after it had first been drafted, when the Lisbon Treaty came into effect in 2009. The Court’s early interpretations of Article 16 reflected the constrained language of the provision: the Court usually repeated that the freedom to conduct a business in accordance with EU and national law and practices was recognised in the Charter. In what should have, perhaps, presaged what was to come, the Court was often prepared to accept that various legislative measures constituted a prima facie infringement of the freedom to conduct a business. However, the Court usually went on to hold that the freedom to conduct a business was not absolute, and that the freedom had to be considered in light of its social function, and that the measures adopted were proportionate restrictions on the exercise of the freedom to conduct a business. One early successful use of Article 16 arose in Scarlet Extended, where the Court of Justice held that the imposition of an injunction on an internet service provider to filter all electronic communications passing through its services constituted a violation of Article 16. Any such injunction would amount to a ‘serious infringement’ of the internet service provider’s ability to conduct its business because it would compel them to ‘install a complicated, costly, permanent computer system at its own expense.’Footnote ¹¹³ Much the same reasoning was employed later in SABAM v Netlog.Footnote ¹¹⁴ In recent years, Article 16 has become one of the most commonly cited substantive rights by the Court of Justice.Footnote ¹¹⁵

There are, however, noticeable differences in how the Court dealt with incursions on Article 16 depending on the countervailing interests at stake. For example, Article 16 has regularly been referenced in cases involving challenges to economic sanctions and, more recently, in what might loosely be categorised as ‘rule of law’ cases.Footnote ¹¹⁶ Yet the cases where Article 16 has been relied on to mount challenges to sanctions levied by the European Union have been largely unsuccessful, as the Court tends to conclude that any interference with Article 16 is minimal, or proportionately justified in light of the objectives of EU foreign policy, such as the promotion of peace, territorial sovereignty or the rule of law.Footnote ¹¹⁷ The uneven impact of Article 16 can be illustrated by contrasting the Court’s approach to case law involving consumer protection, as against its case law involving worker protection. In cases involving challenges to EU laws that purport to protect consumers, the Court has nearly always been prepared to accept that any infringements to the freedom to conduct a business are proportionately justified.Footnote ¹¹⁸ By contrast, the Court has been increasingly sceptical of constraints on business activities when such measures are in pursuit of other interests, such as worker protection.Footnote ¹¹⁹

B. Consumer protection

The Court of Justice has shown little desire to jettison its famously robust case law on consumer protection. In a series of cases, the Court has been prepared to accept that regulations on businesses were proportionate infringements on Article 16, and justified in the interests of consumer protection.Footnote ¹²⁰ A typical example of this reasoning is evident from the case of Deutsches Weintor, where the German state authorities had objected to a wine producer labelling a bottle of wine as ‘easily digestible.’Footnote ¹²¹ The referral to the Court of Justice asked, inter alia, if an absolute prohibition on advertising health claims in alcoholic beverages was compatible with the freedom to conduct a business. The Court considered that the freedom to conduct a business was ‘assured in the essential respects.’Footnote ¹²² The legislation did not halt the production or marketing of alcohol: it simply controlled the labelling and advertising of alcoholic beverages. A similar approach was taken in Ryanair v McDonagh.Footnote ¹²³ Here, the question was whether a volcanic eruption which led to airline disruption exempted Ryanair from having to provide care in the form of meals and accommodation to a passenger who was left stranded in Portugal for a week. Regulation 261/2004 provided that, absent exceptional circumstances, compensation had to be provided to passengers who suffered travel disruption. Ryanair argued that an obligation to provide care to passengers in such circumstances would effectively deprive airlines of ‘part of the fruits of their labour and of their investments.’Footnote ¹²⁴ The Third Chamber considered that freedom to conduct a business was not absolute, but had to be considered in light of its social function.Footnote ¹²⁵ Even though the measure had major financial implications for airlines, this was not disproportionate to the aim of ensuring a high level of protection for passengers.^{Footnote 126} The importance of the objective of consumer protection, including protecting air passengers, could ‘justify even substantial negative economic consequences for certain economic operators.’^{Footnote 127} The Court of Justice has rejected similar challenges on the basis of the freedom to conduct a business to regulations introducing individual electronic identification of sheep and goats,Footnote ¹²⁸ the disclosure of business information on waste shipment,Footnote ¹²⁹ and the labelling of sparkling waterFootnote ¹³⁰ and fresh poultry.Footnote ¹³¹

C. Worker protection: Alemo-Herron

The widespread belief that the protection of the freedom to conduct a business did not pose a threat to regulatory measures was shaken with a series of cases on worker protection, beginning with the Grand Chamber’s decision in Alemo-Herron.Footnote ¹³² These cases demonstrate the provision’s stark deregulatory potential. In this case, a local authority in London had opted to contract out its leisure services to a private undertaking, CCL, which was subsequently sold to another private sector operator, Parkwood. Parkwood argued that it was not bound by a provision of the existing employment contracts which linked wage increases to collective bargaining agreements. The case eventually made its way to the UK Supreme Court, who made a reference to the Court of Justice on whether a Member State was precluded from extending ‘dynamic protection’ to employees. This is where an employer is bound, not just by worker collective agreements in force at the time of the transfer of the company, but also those made subsequent to the transfer. The Third Chamber of the Court of Justice accepted that the relevant Acquired Rights Directive 2001/23 did not preclude Member States from introducing measures that were more favourable to employees.Footnote ¹³³ Nonetheless, the Court considered that the interpretation of the Directive had to comply with the freedom to conduct a business.Footnote ¹³⁴ The problem, the Court concluded, was that the employer in such cases was constrained in its ability to determine the working conditions of its employees and could not effectively assert its interests, because it was not able to join in the collective bargaining process.Footnote ¹³⁵ Consequently, ‘the transferee’s contractual freedom is seriously reduced to the point that such a limitation is liable to adversely affect the very essence of its freedom to conduct a business.’Footnote ¹³⁶

The judgement in Alemo-Herron was widely criticised: Weatherill memorably wrote that the judgement is ‘so downright odd that it deserves to be locked into a secure container, plunged into the icy waters of a deep lake and forgotten about.’Footnote ¹³⁷ He pointed out that the Court of Justice largely ignored the wording of the Directive which left it open for Member States to provide additional protection to employees.^{Footnote 138} The characterisation of the freedom of contract was also subject to criticism, given that the emphasis was almost entirely on the potential negative financial repercussions for employers, with little consideration given to the interests of employees. It had effectively been cast as an absolute right that precluded any limitation.Footnote ¹³⁹ Could it seriously be said, as one set of commentators pointed out, that the company was prevented from re-negotiating the collective agreement?Footnote ¹⁴⁰ Moreover, the Directive in question had been introduced with the specific aim of protecting employees attached to a company that was subsequently purchased. Yet when it came to be interpreted by the Court of Justice, the Court noted that aim of the Directive was not simply to protect employees but to ensure a ‘fair balance’ between the employees and the transferee.Footnote ¹⁴¹ As Bartl and Leone put it, the Court locates the ‘fair balance’ to be struck not in the external labour market but rather ‘within the Directive itself.’Footnote ¹⁴²

Yet even in the wake of Alemo-Herron, commentators tended to blame the Court of Justice’s misapplication of the proportionality test, rather than the existence of Article 16 per se.Footnote ¹⁴³ The Court had used the Charter in an ‘asymmetrical way’ without citing any other relevant rights protected by the Charter, such as the right to fair working conditions in Article 31.Footnote ¹⁴⁴ The previous decisions involving Article 16 had been relatively innocuous, and it was simply the case that ‘something might have gone wrong with the decision in Alemo-Herron.’Footnote ¹⁴⁵ This perspective stops short of directly challenging the recognition of business activity as a fundamental right. It does not critique the shift Article 16 necessitates, by requiring public authorities to demonstrate that any measures that may affect the operation of a business meets the requirements of the proportionality test. Bartl and Leone do suggest that such an interest protected by Article 16 should ‘arguably not be open for constitutionalisation.’ But the justification they offer is not because of the nature of the interest it protects, or because it is likely to lead to economic domination by private market actors. They suggest, rather, that it is virtually impossible to have a universal definition of freedom of contract or the right to conduct a business, because the ‘essence’ of that right will be heavily shaped by local contextual factors.Footnote ¹⁴⁶

It might be tempting to characterise Alemo-Herron as an outlier from previous decisions on Article 16. After all, has the Court of Justice not steadfastly refused to consider a variety of restrictions on commercial activity as violations of Article 16? But, in fact, the previous decisions of the Court of Justice have laid the groundwork for decisions such as Alemo-Herron, and other future judgements on Article 16. The Court of Justice had been prepared to take the important first step of accepting that a series of restrictions – regulations on advertising, trading and so on – constitute prima facie infringements of the freedom to conduct a business. This understanding of the freedom to conduct a business draws from concepts of economic liberty that views the marketplace as the site of freedom and opportunity, where minimal regulation or intervention is the epitome of economic liberty. From this perspective, the marketplace is the ultimate guarantor of liberty.Footnote ¹⁴⁷ Little wonder, then, that the Court of Justice begins from a premise of viewing regulations as ‘restrictions’ and economic activity as ‘freedom’ in its judgements.

An important feature of the judgement in Alemo-Herron was that it demonstrated how purported limitations on Article 16 could be whittled away with relative ease, which affected how the provision would be interpreted in the future. Initially, it was anticipated that the use of the term ‘freedom’ in Article 16 suggested that the exercise of the freedom to conduct a business would be curtailed in a manner that its neighbours in Article 15 and Article 17 would not be.Footnote ¹⁴⁸ Yet the weaker language used in Article 16 does not seem to have affected its interpretation: in Alemo-Herron and in other case law the Court of Justice has treated it in much the same way as any other fundamental right contained in the Charter.Footnote ¹⁴⁹ The decision in Alemo-Herron marked the beginning of a noticeable shift in the interpretation of the last-minute caveat that had been added by the drafters to Article 16. On the face of the text, Article 16 acknowledges the freedom to conduct a business in accordance with EU law and national law. In previous cases, the freedom to conduct a business had been acknowledged as a protected freedom under the Charter, but the Court had always stressed that the provisions of Article 16 itself recognised that the freedom had to be conducted according to and within the confines of with existing law. It was Article 16, in other words, that had to capitulate to pre-existing national or EU law.Footnote ¹⁵⁰ But in Alemo-Herron, the logic was rapidly inverted: national law has to be altered and adjusted to take account of Article 16. The national regulations at issue in Alemo-Herron were implementing a Directive which expressly permitted Member States to provide greater protection to employees. It should, then, have been considered to have been a lawful limit on the exercise of the freedom to conduct a business.Footnote ¹⁵¹ When Article 16 had been drafted, the caveat of ‘in accordance with Union law and national law’ had been added precisely to ensure that the remit of the provision was limited. As it turned out, it has proved to be a fairly ineffective limitation. This was a predictable development: laws are nearly always subject to being assessed by their compatibility with fundamental rights, rather than the other way around. By now, two of the drafting features intended to constrain the operation of Article 16 had vanished: the weaker ‘freedom’ had become a more robust-sounding ‘right’, and Union and national laws now had to be exercised in accordance with Article 16, rather than the other way around.

D. AGET Iraklis

Writing in 2015 in the wake of Alemo-Herron, Jeremias Prassl had considered whether Article 16 posed a threat to various aspects of EU labour law, including the Collective Redundancies Directive.Footnote ¹⁵² The Collective Redundancies Directive provides that employers should notify the relevant public authority of the details of any collective redundancies, which should also be communicated to the workers’ representatives. While some Member States had adopted legislation that allowed authorities to refuse to authorise mass redundancies, he concluded that it was ‘unlikely that a challenge under Article 16 CFR would succeed.’Footnote ¹⁵³ This prediction would be undermined by the decision of the Grand Chamber in AGET Iraklis.Footnote ¹⁵⁴ AGET Iraklis, a cement producer operating in Greece, sought to close a cement plant which would cause over 200 redundancies. The national legislation implementing the Collective Redundancies Directive compelled businesses to obtain permission from national authorities if they intended to introduce compulsive collective redundancies.Footnote ¹⁵⁵ The Minister for Labour could refuse to authorise some or all of the redundancies, on the basis of the interests of the national economy, labour market conditions or the state of the company. Workers’ representatives failed to attend consultations with the company to discuss the anticipated layoffs, and the company later unsuccessfully sought permission from the Minister to give effect to the redundancies. The question of whether the Greek law was compatible with the Collective Redundancies Directive was eventually referred to the Court of Justice.

In its judgement, the Grand Chamber noted a mechanism that created a framework to regulate collective redundancies did not, in and of itself, affect the core of the freedom to conduct a business.Footnote ¹⁵⁶ Any such framework, however, would have to ‘strike a fair balance’ between the interests of preserving employment as against freedom of establishment and the freedom to conduct a business.Footnote ¹⁵⁷ However, the power granted to the Minister to prohibit imposing collective redundancies were very broadly drafted objectives. This was particularly the case as the decisions at stake concerned were of a ‘fundamental nature’ to the life of the company.Footnote ¹⁵⁸ Given that the criteria that could be relied on to object to the redundancies were so general, and did not outline any specific occasion on when the powers could be validly used, it constituted a profound interference with both Article 49 TFEU and Article 16, as it would not be clear to the employer when the power to block the redundancies could be exercised by the national authorities.

Yet it is not self-evident that an outline of precise reasons and circumstances would have solved the problem as identified by the Court: a more detailed list of circumstances might leave an undertaking equally unable to anticipate whether the collective layoffs would be authorised or not. It is hard not to suspect that what the Court of Justice really meant was not only that criteria had to be more precise, but that it had to be more narrowly drawn: there could only be limited and specific circumstances where this mechanism could be triggered. Nonetheless, the judgement of the Court of Justice in AGET Iraklis was largely welcomed as a more sympathetic approach to social interests.Footnote ¹⁵⁹ Some seemed to view the judgement as having corrected the imbalance left by Alemo-Herron, or at the very least, indicated a change in direction that placed greater value on labour rights.Footnote ¹⁶⁰ Gerstenberg welcomed the ruling as paving the ground for an appropriate balancing between the relevant stakeholders: the Greek authorities, trade unions and economic operators.Footnote ¹⁶¹ But one might note in response that that balance had already been struck in the Greek national legislation: the interests of each party had already been considered, only to be overridden by the Court of Justice. As Davies has pointed out, one of the most concerning aspects of the decision in Alemo-Herron was that it set a precedent for Article 16 to be used by employers to trump the fundamental rights of workers.Footnote ¹⁶² EU labour law has long acknowledged that its purpose is to redress the inevitable imbalance in the relationship between employer and employee. The introduction of Article 16 upset that equilibrium, by establishing a paradigm of two conflicting rights in tension with one another that must be resolved by the Court. This presupposes that these interests began from an equal premise. As Davies wrote, AGET Iraklis suggested a continuation of a trend of ‘a supposed ‘clash of rights’ in every case.’Footnote ¹⁶³ She pointed out that while the Greek national law did significantly qualify the capacity of the employers to implement mass redundancies, the decision nonetheless demonstrated in acute terms the potential reach of Article 16. On the basis of the logic in AGET Iraklis, she concluded, ‘almost any national labour law is potentially open to the charge that it infringes the rights of employers.’Footnote ¹⁶⁴ The decision in AGET Iraklis is a prime example of a judicial ruling that undermines robust labour protection, all while stressing its importance.Footnote ¹⁶⁵ It is worth noting the Court of Justice’s reliance on well-established case law that economic objections cannot justify infringements on fundamental freedoms protected by the Treaties.Footnote ¹⁶⁶ This would be commendable but for the fact that both the freedom to conduct a business and the freedom of establishment are both purely economic interests that have been reformulated as fundamental rights. It is not that economic objectives are not considered valuable. Rather, it is a question of whose economic wellbeing is valued. The economic well-being of the workers, the Greek national economy and the wider Greek public cannot be privileged over that of an individual company. On this basis, AGET Iraklis is not a departure from Alemo-Herron, it is a continuation of the same legacy.Footnote ¹⁶⁷

E. Airhelp

In Airhelp Ltd v Scandinavian Airlines Systems, the Swedish District Court sought a preliminary ruling on whether a strike could come within the scope of ‘extraordinary circumstances’ in Regulation (EC) No 261/2004, which exempts an airline from the payment of compensation.Footnote ¹⁶⁸ The Opinion of the Advocate General noted that the right to take industrial action protected by Article 28 of the Charter was subject to compliance with EU law, including other rights contained in the Charter. Advocate General Pikamäe concluded that ‘the right to strike could be limited so as protect the freedom to conduct a business.’Footnote ¹⁶⁹ The Advocate General wrote that this ‘balancing exercise’ successfully ‘reconciles the respective interests.’^{Footnote 170} But, of course, Article 16 also states that the freedom to conduct a business must be ‘in accordance with Union law and national law and practices.’ Why, then, is it Article 28 that has to be limited to take account of the freedom to conduct a business and consumer protection? It could just as easily have been said that the freedom to conduct a business ought to be limited in order to protect the right to negotiate and take industrial action.

Unlike Advocate General Pikamäe, the Grand Chamber was not prepared to classify a lawful strike as independent of the airline’s actions. Nor did the Court endorse the Advocate General’s rather dire warnings that consumer compensation would be the means by which disgruntled employees would exert their revenge.Footnote ¹⁷¹An ‘extraordinary circumstance’, for the purposes of the Regulation, referred to events which were both not inherent in the normal activity of the air carrier, and are beyond the airline’s actual control.Footnote ¹⁷² The Grand Chamber concluded that a strike was a key manifestation of collective bargaining and had to be regarded as an intrinsic occurrence in the normal course of events for an employer.^{Footnote 173} The strike in this case could not constitute an ‘extraordinary circumstance’ within the meaning of Article 5(3) of the Regulation and that SAS was liable to pay compensation to consumers. This does not mean, however, that Airhelp represents a rollback from the Court’s previous jurisprudence in Alemo-Herron or AGET Iraklis. The critical difference in Airhelp is that the Court of Justice considered that the conflict was between the freedom to conduct a business and consumer protection, rather than worker protection. This is not simply a case where workers are pitted against an employer: rather, there are three interests at stake identified by the Court – the rights of workers, the rights of employers, and critically, the rights of consumers. The Grand Chamber noted that the freedom to conduct a business was not an absolute right, and, in this context, it had to be reconciled with the high level of protection afforded to consumers in Article 38 of the Charter and Article 169 TFEU.Footnote ¹⁷⁴ The priority afforded to consumer protection, the Court noted, could justify ‘even substantial negative economic consequences for certain economic operators.’Footnote ¹⁷⁵ Thus, when the Court ultimately came to perform a balancing exercise between the conflicting rights at stake, there is no reference to worker protection.Footnote ¹⁷⁶ It is the freedom to conduct a business that is proportionally limited solely in light of the interests of consumer protection. The driving force in the Court’s reasoning is the importance of consumer protection, rather than any greater inclination to safeguard the right to strike.Footnote ¹⁷⁷ In the absence of a clear consumer protection interest, it is doubtful whether the same conclusion would have been reached.

F. Indirect discrimination and Article 16

The reach of Article 16 is evident from a series of cases involving employees who had been dismissed or sanctioned by their employer for wearing Islamic headscarves in the workplace. The employees have sought to rely on the provisions of Directive 2000/78 (‘the Employment Equality Directive’) which prohibits discrimination, inter alia, on the basis of religious belief in employment settings.Footnote ¹⁷⁸ However, under the Directive, a difference of treatment that would normally constitute indirect discrimination can be justified if it is in pursuit of a legitimate aim.Footnote ¹⁷⁹ Samira Achbita, a receptionist for G4S, a large multi-national security company, was dismissed after she informed her line managers that she would be wearing a headscarf to work.Footnote ¹⁸⁰ A preliminary reference was made to Court of Justice as to whether the company’s neutral dress code policy amounted to a breach of the Employment Equality Directive. In its relatively brief, eight-page judgement, the Court of Justice was prepared to accept that an employer’s desire for neutral dress policy constituted a legitimate aim that justified indirect discrimination under the Directive, given that it stemmed from the freedom to conduct a business protected by Article 16. This was legitimate in principle, particularly in a situation where the employer’s policy is only targeted at workers who ‘are required to come into contact with the employer’s customers.’Footnote ¹⁸¹ The Court noted that the policy had to be applied consistently, and only insofar as it was ‘strictly necessary.’Footnote ¹⁸²

The judgement in Achbita demonstrates how the freedom to conduct a business can shape the interpretation of secondary EU law; in this case, the Employment Equality Directive. The Court identified two competing rights at stake: the right to freedom of religion, and the freedom to conduct a business.Footnote ¹⁸³ The company’s decision to portray a ‘neutral image’ to its clients by requiring its employees not to wear religious dress is considered to derive from Article 16. Thus, Article 16 helped to legitimise an action that would otherwise constitute indirect discrimination. On one interpretation, this is the implicit prioritisation of one fundamental right over another, as the Court opted to prioritise the integrity of the freedom to conduct a business over the right to protection against discrimination on the grounds of religion. Karayigit, for example, concluded that the right to conduct a business was elevated to ‘previously unforeseen heights’ to the detriment of the right to religious freedom, as the latter is subordinated ‘both to the economic interests of employers and the prejudices of customers.’Footnote ¹⁸⁴ But this does not fully capture the process at hand. If the Court was simply prioritising one right over another, there would, at least, be some attempt to balance the rights against one another, to assess which should come first and conclude that the freedom to conduct a business should triumph. There should be analysis that explains why the freedom to conduct a business should carry greater weight before the right to freedom of religion. Instead, this is automatically what occurs, as the freedom to conduct a business is accepted as the predominant default interest that must be shielded. The Court did not scrutinise why a company might want to introduce such a policy, or if it genuinely needed to.Footnote ¹⁸⁵ Was there any real risk that a company’s neutrality as a legal entity would be undermined by its employees’ religious dress, or in other words, is there any serious risk that this would be mistaken as company position? It is difficult to see how wearing an Islamic headscarf could be mistaken for anything other than an expression of Ms Achbita’s own, intensely personal, beliefs.

Moreover, the Court did not consider whether, in light of Article 2(2)(b) of Directive 2000/78, the ‘legitimate aim’ of adopting a neutral corporate dress code was ‘objectively justified’, nor did the Court consider whether the policy went further than necessary in achieving that aim. The Court’s logic envisages that there may be customers who are alienated from the company simply by encountering a woman at reception wearing an Islamic headscarf, and it implicitly accepts that the company is entitled to cater to those customers.Footnote ¹⁸⁶

Finally, it is worth drawing attention to the fact that G4S did not even have a clear written corporate policy on neutral dress when Ms Achbita was made redundant. When Ms Achbita informed her employer that she planned to wear the headscarf, G4S then claimed that it had an unwritten rule against any religious or political dress or symbols. Many companies may operate informally without a clear written code of conduct or policies for their staff. But G4S clearly had a written code of conduct already in place, with no mention of this specific rule, because it then took steps to amend the code of conduct shortly after Ms Achbita’s announcement. The amendment to the code of conduct was made on 29 May, but the amendment did not come into effect until 13 June.Footnote ¹⁸⁷ Ms Achbita was dismissed for breaching the company’s code on 12 June – a day before the amendment came into force.Footnote ¹⁸⁸ The significance that the Court attached to the freedom to conduct a business is demonstrated by the fact that the Court of Justice took no issue with the fact that Ms Achbita was dismissed from her position before GS4 had implemented a valid amendment on neutral workplace dress to its code of conduct. Even if one was to accept the policy constituted a legitimate aim, it is nothing short of remarkable that the Court placed so much weight on the existence of a corporate neutral dress policy when the company in question did not even possess one.

Much as in the wake of Alemo-Herron and AGET Iraklis, it might plausibly have been argued that the headscarf cases were outliers in the Court’s jurisprudence that would, in time, be corrected.Footnote ¹⁸⁹ This impression would be disproved in a case that followed a few years later, in IX v WABE; MH Müller Handels v MJ.Footnote ¹⁹⁰ Both the applicants had been sanctioned by their employers after they had started wearing the headscarf to work. IX was a childcare worker, employed by WABE, a German childcare provider with a non-denominational ethos. MJ was employed as a sales assistant for MH Müller Handels, a large chemist chain. The Grand Chamber considered, inter alia, whether indirect discrimination could be justified by an employer’s desire to pursue a policy of neutrality with its customers ‘in order to take account of their legitimate wishes.’Footnote ¹⁹¹ Once again, the Court accepted that an employer’s desire to display ‘an image of neutrality towards its customers’ stemmed from Article 16 of the Charter, and was, ‘in principle, legitimate’ particularly for customer-facing employees.Footnote ¹⁹² Unlike in Achbita, the Court attempted to provide some justification as to why such policies were legitimate for businesses to adopt. Plausibly, displaying a neutral image could correspond to ‘a genuine need on the part of the employer’ which the employer was required to demonstrate.Footnote ¹⁹³ The mere wish to pursue a policy of neutrality was insufficient to objectively justify a difference in treatment based on religion. The employer should be able to demonstrate that it would suffer ‘adverse consequences’ in light of the nature of its business.Footnote ¹⁹⁴

At first glance, this suggests that employers may have to meet a higher standard than that set out in Achbita. The Court’s application of the new test of ‘real need’ to the facts placed before it then suggest that this is not a particularly strenuous standard to satisfy. The Court noted that WABE was entitled to take account of the ‘rights and legitimate wishes of customers or users’. This was, namely, the rights of parents to ensure the education of their children in accordance with their beliefs, or their desire to ensure their children were cared for by persons who did not manifest their religion whilst caring for the children with the aim of ensuring the free development of the child’s religion and beliefs.Footnote ¹⁹⁵ Yet is difficult to see how having one’s child cared for in a creche by a special needs assistant wearing an Islamic headscarf compromises any such parental right, unless one is to make the distinctly questionable assumption that mere exposure to a woman in an Islamic headscarf has a proselytising effect on a child.Footnote ¹⁹⁶ As Mulder pointed out, this was a private childcare facility, which was by no means compulsory for any child to attend.Footnote ¹⁹⁷ One set of commentators suggested that the Court of Justice was drawing a distinction between the legitimate expectations of customers as against the prejudices of customers.Footnote ¹⁹⁸ But prejudiced consumers and parents are not necessarily separate categories: parents are not immune from the prejudices that may influence the wider public.

The Court did not consider whether the commitment to diversity expressed in WABE’s ethos would be enhanced by exposing the children to persons of different faiths, nor did the Court query whether the creche in this case had suffered adverse consequences in the many years it had operated without a neutral dress code for its employees, or whether Ms IX’s indication that she proposed to wear an Islamic headscarf had prompted the creation of the policy. It seems this requirement of ‘real need’ is satisfied if a company can show that they anticipate backlash or discomfort from their customer base as a result of an employee’s headscarf. As Mulder has pointed out, this continues to allow employers to prioritise their own financial interests at the expense of their religious employees.Footnote ¹⁹⁹ One might add that employers do not even need to demonstrate that they have actually suffered any actual economic hardship. The references to ‘seeking to avoid’ and the consequences that an employer ‘would suffer in the absence of that policy’ suggests that any adverse consequences do not need to have actually taken place; merely that the employer anticipates that adverse consequences could arise for the business.Footnote ²⁰⁰ The employer is presumably being invited to speculate on how a person wearing a headscarf in the workplace would damage his business. For all the Court’s discussion of the requirement to show a ‘genuine need’ on behalf of employers, crucially, it still remains the case that the preferences of customers – even discriminatory preferences – can be the sole reason that such a policy is formulated.Footnote ²⁰¹

The Court offered a further reason as to why displaying a neutral image to its customers could amount to a ‘legitimate aim’ that could justify indirect discrimination. This was to ‘avoid social conflicts within the undertaking’ in light of historical tensions over religious or political beliefs.Footnote ²⁰² This new justification suggests that the employer may impose a neutral dress policy to avoid infighting within workforce. Such policies do not prevent members of a particular group from entering a workplace, but they do ensure that they must abandon and conceal those identifiers that mark them out as different in the workplace.Footnote ²⁰³ In other words, such policies compel individuals to hide core aspects of their identity, and in doing so legitimises and facilitates the continuation of discriminatory beliefs by their colleagues. It problematises the individual, rather than prejudicial attitudes they may encounter. Moreover, it extends the scope of the previous case law: the Court has now accepted that it would be legitimate for a corporate neutral dress policy to be enforced when employees are in contact both with customers and with other workers. If a religious employee cannot wear religious apparel in front of customers or colleagues in the workplace, where exactly can they do so?

G. Consumer protection v worker protection

To many, the Court’s willingness to uphold various regulatory measures under challenge from Article 16 is evidence that its deregulatory potential is minimal. Weatherill has argued that decisions such as Deutsches Weintor demonstrate that the Charter of Fundamental Rights had not meaningfully altered the reasoning of the Court.Footnote ²⁰⁴ The protection of Article 16 was ‘neither subversive nor revolutionary.’ The Court of Justice, he argued, ‘does not aggressively defend commercial freedom from EU legislative intervention. It never has done.’Footnote ²⁰⁵ He argued that the introduction of the Lisbon Treaty has not led to any new shift in the Court’s direction; the balancing exercise it carries out is largely replicated with reliance on new provisions. The form may have altered, but the substance, he concluded, was much the same as before.

Yet the Court’s defence of areas such as consumer protection from challenges based on Article 16 does not mean its impact is negligible. For one thing, the objective of advancing and securing consumer protection has always been a core part of the European Union’s market order, and consequently, its legal system.Footnote ²⁰⁶ Comprehensive consumer protection law is designed to bolster the wider aim of a single European market. We need only look to how the Court’s scepticism of national measures aimed at ensuring high levels of consumer protection versus its robust defensive of European Union measures that aim to achieve the very same goal. The Court’s approach, as one set of commentators remarked, ‘could not be more different’.Footnote ²⁰⁷ Consumption is necessary for the EU single market: for the successful free movement of goods, services and capital, there must be demand. Consumer protection has long been prioritised to encourage public confidence in the internal market; it is valuable, therefore, only insofar as it ensures that ‘consumers are enabled to participate uninhibited in the market.’Footnote ²⁰⁸ The need for consumer protection is explained by Everson and Joerges, who describe the ‘counter-current’ for consumer health and protection as a necessary means of boosting consumer confidence.Footnote ²⁰⁹ Ensuring a high level of consumer protection is considered to be the necessary price to pay for a flourishing internal market, achieved through the free movement of goods, services, capital and people. As Davies wrote:

Unlike the free movement provisions, Article 16 operates without the necessity of the cross-border element. But much the same logic applies: the internal market is a project to maximise the ability of both consumers and businesses to transact; consumer protection is equally necessary in this equation. Consumer protection is one of the interests that will constrain the unbridled operation of the four freedoms, in the wider pursuit of establishing the liberalised single market. We should not be surprised to find the same pattern emerging in relation to Article 16.

Second, it should be noted that the Court’s willingness to accept that a variety of regulatory measures and laws constituted a prima facie infringement of the freedom to conduct a business paved the way for later findings. While the Court was often prepared to find that infringements that served the objective of consumer protection were justified restrictions on Article 16, this anticipated an occasion where the Court would find that other regulatory measures constituted unjustified infringements: the Court had already taken the important first step of labelling regulatory measures as ‘infringements’. It seems that the stringency of the proportionality test applied by the Court in this particular context often seems to depend on the objectives pursued by the offending measure. One need only look to how the Court of Justice has previously marked out the ‘core’ of the freedom to conduct a business, which has varied dramatically depending on the context. The ‘core’ or ‘essence’ of the right is what the Court considers to be the most important, fundamental manifestation of the right.Footnote ²¹¹ The greater the ‘core’ of the right, more activity is immune from regulation and oversight, and other interests – even fundamental rights – must buckle.Footnote ²¹² The answer the Court has given to what is the ‘core’ of the freedom to conduct a business has fluctuated. For example, in Sky Österreich GmbH, the Court of Justice concluded that allowing news broadcasters to access video clips without compensation did not affect the ‘core content’ of the freedom to conduct a business. It did not stop business activity from occurring, or from allowing the holder of the transmission rights to broadcast the event or by granting the right to broadcast the event to another economic operator.Footnote ²¹³ Yet much the same might be said about the restrictions on internet service providers in Scarlet Extended or Netlog, or the various employers in Alemo-Herron, AGET Iraklis and Achbita.

Similarly, Everson and Correia Gonçalves, surveying the case law, concluded that one of the two emerging principles on the application of Article 16 is that companies should not be subject to ‘undue or unfair business costs.’Footnote ²¹⁴ This principle is certainly visible in Netlog and Scarlet Extended. But the Court has elsewhere accepted that sufficiently important objectives can justify measures which result in ‘even substantial negative consequences for certain economic operators.’Footnote ²¹⁵ One might wonder what exactly is the difference between the ‘complicated, costly, permanent’ filtering system that was rejected in Scarlet Extended and Netlog, and the other regulatory measures at issue in the cases outlined above: packaging and labelling, electronic identification of animals, or compensation for customers due to airline disruption. Are these too not complicated, costly and permanent measures that the businesses have to abide by? To be clear, this is not a normative argument against this later case law. Rather, it is simply to point out that the doctrinal test the Court employs seems to vary radically depending on the subject matter. Once the Court is prepared to accept that a particular objective is valuable, it is prepared to impose wide-ranging regulations on those companies. The best means to anticipate whether an infringement of Article 16 will be accepted as justified depends on the importance the Court attaches to that objective. This, in turn, seems to depend on whether the objective is recognised and valued by EU law and, in the case of consumer protection, whether it serves the teleological purpose of furthering the integration of the single market.

It should not be assumed that the Court’s defensiveness of the aims of consumer protection, or human health are indicative of a broader willingness to prioritise the wider public interest and other fundamental rights over the freedom to conduct to business. Rather, it is indicative that it will defend the general objectives of EU law, which in turn help the construction of the single market. The Court’s robust attitude to consumer protection stems from the belief that consumer protection is a vital building block to securing a liberalised internal market. It has certainly been prepared to adopt a similar approach to other objectives of general interest of the Union, as it did in Sky Österreich with respect to freedom of information. Yet other competing interests, such as worker protection, do not appear to carry the same instrumental value. The case law bears this out: once the freedom to conduct a business has been pitted against the interests of worker protection, for example, it is largely the former that has triumphed. The Court of Justice has accepted a wide range of measures as prima facie infringements of the freedom to conduct a business. Whether it considers those infringements to be proportionately justified tends to depend, not on the severity of the breach, but whether the measure in question pursues an objective of general interest that is recognised under EU law, such as consumer protection.

H. The freedom to conduct a business as an autonomy right

The protection of a fundamental right ordinarily entails the protection of a distinct and limited interest. A right of autonomy, however, establishes an entirely different paradigm. This grants the individual a general right of freedom of action, meaning that any law, regulation or measure that limits the individual’s freedom of action is prima facie an infringement of a fundamental right. The onus is on the State to justify any measure it takes as a proportionate interference with that right. It is, in other words, a catch-all right. A prominent example is Article 2(1) of the German Basic Law. The protection offered by Article 2 means that the State is compelled to ‘provide justification in the form of a legitimate reason each time it intervenes in the freedom of a person.’Footnote ²¹⁶ The protection of the freedom to conduct a business has come to look increasingly like a general right of freedom of action for businesses.

The wording of Article 16 acknowledges ‘the freedom to conduct a business.’ It is not simply the freedom to open or establish a business without facing excessive barriers to entry (which is, of course, already protected by freedom of establishment in Article 49 TFEU). Nor is it something akin to the freedom of occupation, but is aimed at the self-employed.Footnote ²¹⁷ In national constitutions, the premise that one is entitled to engage in economic activity – or more specifically, to establish a business – is usually followed by the caveat that the right can be restricted in accordance with law or with the public interest. But Article 16 goes beyond ensuring fair entry into the market. As Everson has identified, it has a ‘broader performative character.’Footnote ²¹⁸ There does not appear to be any significant conceptual limit on what actions or decisions taken in the course of running a business can come within its scope. Thus, the provision goes further than existing EU law and provides protection to the decisions that determine how a business is organised, managed, and run on a day-to-day basis.Footnote ²¹⁹ The starting point is that any action a business takes in the course of its operations is the exercise of a fundamental rights. This means that any decision or action made in the course of running the business can potentially be shielded under Article 16. This shifts the burden onto state authorities to justify any action or regulation on those business activities as a proportionate infringement in the pursuit of some objective in the public interest. As one set of commentators acknowledged, ‘the potential of Article 16 is simply huge.’Footnote ²²⁰

Of course, not every decision will be found to be protected under Article 16, but the mere fact that any business decision could come within its scope demonstrates the provision’s remarkably broad potential. As Gill-Pedro puts it, the Court of Justice has interpreted Article 16 ‘as protecting the prima facie freedom of companies to conduct business in the way they see fit.’Footnote ²²¹ In turn, the question of whether an infringement of the freedom to conduct a business will be considered to be proportionately justified by the Court of Justice seems to largely depend on the value the Court places on the countervailing objective. Consumer protection, as we have seen, carries significant weight in the eyes of the Court. Yet measures that aim to redress the imbalance between employers and workers appear to be significantly more vulnerable before the Court of Justice. The continued use of Article 16 to challenge a broad array of regulatory measures is likely to produce only increased economic domination by powerful market actors. In addition to their considerable economic might, these corporate actors now have the additional weight of fundamental rights language on their side. They can now employ their considerable resources towards challenging any domestic and EU laws which they consider poses a threat to their profitable economic activity.Footnote ²²²

Unlike the four fundamental freedoms, Article 16 can be invoked by market actors to challenge inconvenient laws and regulations without the need to identify a cross-border element.Footnote ²²³ Koen Lenaerts, the current President of the Court of Justice, writing along with José Gutierrez-Fons, expressly acknowledged that Article 16 was ‘broader in scope’ than free movement rights, and that Article 16, much like free movement rights, protected ‘the exercise of private autonomy.’Footnote ²²⁴ If a national measure infringes the free movement provisions, it will be incompatible with Article 16.Footnote ²²⁵ Until recently, it would have been anticipated that a national measure that was incompatible only with Article 16 would fall outside the jurisdiction of the Court. Under Article 51(1) Member States are bound by the Charter only when they implement EU law.Footnote ²²⁶ There are, however, indicators that breaches of the Charter may be established even if the substance of free movement rights are not affected. In Commission v Hungary, Footnote ²²⁷ for example, the Court of Justice was prepared to find that a Hungarian law that compelled international higher education institutes to comply with a variety of demanding new terms and conditions constituted a breach of the freedom of establishment and free movement of services.Footnote ²²⁸ Unlike previous cases where the Court had concluded that a separate analysis of the Charter was unnecessary, the judgement went on to conclude that the law also violated Article 16.Footnote ²²⁹ The Court simply held that as the relevant international trade law instrument, the General Agreement on Trade in Service (GATS), formed part of EU law, the jurisdiction of the Charter was triggered.Footnote ²³⁰ The circumstances in which there is an obligation on Member States to comply with the requirements of Article 16 appear only to be expanding.