Treaty on the Functioning of the European Union (TFEU)
The Treaty of Lisbon, signed on 13 December 2007 and in force since 1 December 2009, profoundly reshaped the EC Treaty and the EU Treaty, taking into account significant elements of the failed Treaty establishing a Constitution for Europe. The EC Treaty changed its name to ‘Treaty on the Functioning of the European Union’ (TFEU) and the word ‘Community’ was replaced throughout by ‘Union’. Various provisions from the EC Treaty under ‘Principles’, ‘Institutions’ and ‘General and final provisions’ were replaced by provisions in the EU Treaty.
2. Principles, procedures and forms of legislation by the EU
For the principles, procedures and forms of legislation applicable under the EC Treaty, EC Treaty.
The Treaty of Lisbon has, in particular, made the following amendments with regard to these matters: a title headed ‘Categories and areas of Union competence’ has been included in the TFEU and contains general rules on the separation of powers. The provisions in the EC Treaty on the principles of conferred powers, subsidiarity and proportionality have been replaced by rules in the EU Treaty. A procedure has been incorporated in Protocol (No 2) on the application of the principles of subsidiarity and proportionality enabling the national parliaments to object to what they consider to be infringements of the principle of subsidiarity. A so-called ‘ordinary legislative procedure’ has been introduced that essentially corresponds to the former co-decision procedure. In the specific cases provided for by the TEU and the TFEU, the adoption of a regulation, directive or decision by the European Parliament with the participation of the Council, or by the latter with the participation of the European Parliament, constitute a so-called ‘special legislative procedure’ (Article 289(2) TFEU). The Commission’s monopoly over initiatives has been weakened by derogations, although these do not concern civil law. Legislative acts can now also take the form of decisions addressed to unspecified persons (European Constitution).
The European Court of Justice (ECJ) has adapted its case-law on the effect of EC law in general and on directives in particular to the new legal framework created by the Treaty of Lisbon. It is for the national courts to provide the legal protection which individuals derive from the rules of European Union law and to ensure that those rules are fully effective. In this respect, where proceedings between individuals are concerned, a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against an individual. However, in applying the national law, the national court called to interpret it is required to do so, as far as possible, in the light of the working and the purpose of the directive in question, in order to achieve the result pursued by the directive and thereby comply with the third paragraph of Art 288 TFEU. The requirement for national law to be interpreted in conformity with European Union law is inherent in the system of the Treaty (ECJ Case C-555/07 – Kücükdeveci  ECR I-0000). Where a directive merely gives expression to, but does not lay down, a general principle of European Union law, it is for the national court, hearing a dispute involving that principle as given expression in the directive, to provide, within the limits of its jurisdiction, the legal protection which individuals derive from European Union law and to ensure the full effectiveness of that law, disapplying if need be, any provision of national legislation contrary to that principle (ECJ Case C-555/07 – Kücükdeveci  ECR I-0000, clarifying ECJ Case 144/04 – Mangold  ECR I-9981).
3. Legal bases in the TFEU of relevance to private law
There are equivalents in the EC Treaty for almost all of the legal foundations of relevance to private law mentioned below. The corresponding provisions of the EC Treaty will therefore always be given, even if they are not absolutely identical to the provisions now contained in the TFEU. In some cases the wording of the provisions concerned has been amended only insofar as results from Art 2A of the Treaty of Lisbon, which provides for horizontal amendments throughout the EC Treaty—such as replacement of the words ‘the Council [shall], acting in accordance with the procedure referred to in Article 251’ by ‘the European Parliament and the Council [shall], acting in accordance with the ordinary legislative procedure’. In some places, however, the amendments made are also of a substantive nature.
The TFEU devotes a whole chapter (Title VII, ch 3) to the approximation of laws, as did the EC Treaty (Title VI, ch 3). Under Art 114(1) TFEU/ 95(1) EC, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, are to adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. This provision does not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons. The Commission, in its proposals envisaged in Art 114(1) TFEU/95(1) EC concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection, taking into account in particular any new development based on scientific facts.
In certain circumstances Member States are permitted to apply national provisions derogating from harmonization measures. They have to abide by a procedure that grants the Commission a right of control. The retention of national provisions derogating from a harmonization measure may be justified on grounds of major needs referred to in Art 36 TFEU/30 EC, or relating to the protection of the environment or the working environment. In certain restricted circumstances the introduction of new national provisions relating to the protection of the environment or the working environment, which derogate from harmonization measures, may be taken into consideration if they are based on new scientific evidence.
Under Art 115 TFEU/94 EC, the Council, acting unanimously in accordance with a consultancy procedure, shall issue directives for the approximation of such laws, regulations or administrative provisions as directly affect the establishment or functioning of the internal market.
Under Art 118 TFEU, in the context of the establishment and functioning of the internal market, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralized Union-wide authorization, coordination and supervision arrangements. The Council, acting unanimously in accordance with a consultancy procedure, shall by means of regulations establish language arrangements for the European intellectual property rights.
In some policy areas the TFEU provides legal bases allowing for an approximation of laws; these are mentioned below. They can be relevant to private law even though most of them might be primarily directed at public law. Article 352 TFEU/308 EC is also of relevance as a basis on which measures to approximate laws might be founded. Under that provision, if action by the Union should prove necessary to attain, within the framework of the policies defined in the Treaties, one of the objectives set out in the Treaties and the Treaties have not provided the necessary powers, the Council, acting unanimously on a proposal from the Commission and after obtaining the consent of the European Parliament, shall adopt the appropriate measures.
Under Art 18 TFEU/12 EC the European Parliament and the Council, acting under the ordinary legislative procedure, may adopt rules designed to prohibit discrimination on grounds of nationality. Under Art 19 TFEU/13 EC the Council may, acting unanimously in accordance with a consent procedure, take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.
Art 46 TFEU/40 EC gives the European Parliament and the Council competence, acting in accordance with the ordinary legislative procedure, to issue directives and make regulations to bring about freedom of movement for workers. Under Art 50 TFEU/44 EC the European Parliament and the Council, acting under the ordinary legislative procedure, shall adopt directives to attain freedom of establishment as regards a particular activity. This is to be achieved, in particular, by effecting the progressive abolition of restrictions on freedom of establishment in every branch of activity under consideration, both as regards the conditions for setting up agencies, branches or subsidiaries in the territory of a Member State and as regards the conditions governing the entry of personnel belonging to the main establishment into managerial or supervisory posts in such agencies, branches or subsidiaries. In order to make it easier for persons to take up and pursue activities as self-employed persons, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure pursuant to Art 53 TFEU/ 47 EC, shall issue directives for the mutual recognition of diplomas, certificates and other evidence of formal qualifications and for the coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons. Under Art 62 TFEU/55 EC, Art 53 TFEU/47 EC applies mutatis mutandis to services.
Under Art 81 TFEU/65 EC in conjunction with Art 67 EC (now repealed), the Union shall develop judicial cooperation in civil matters having cross-border implications. For this purpose the European Parliament and the Council shall adopt measures, particularly when necessary for the proper functioning of the internal market, aimed at ensuring: the mutual recognition and enforcement between Member States of judgments and of decisions in extrajudicial cases; the cross-border service of judicial and extrajudicial documents; the compatibility of the rules applicable in the Member States concerning conflict of laws and of jurisdiction; cooperation in the taking of evidence; effective access to justice; the elimination of obstacles to the proper functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States; the development of alternative methods of dispute settlement and support for the training of the judiciary and judicial staff. The European Parliament and the Council shall adopt the measures provided in Art 81 TFEU/65 EC in accordance with the ordinary legislative procedure, with the exception of measures concerning family law with cross-border implications, which are in principle subject to unanimity of the Council and a consultation procedure. Under the protocols on the position of Denmark and of the United Kingdom and Ireland, those Member States do not participate in such measures. An opt-in rule has been agreed upon, however.
Within the framework of the common transport policy, the Council shall, under Art 95 TFEU/75 EC, lay down rules for implementing the prohibition of discrimination which takes the form of carriers charging different rates and imposing different conditions for the carriage of the same goods over the same transport links on grounds of the country of origin or of destination of the goods in question.
Under Art 103 TFEU/83 EC, the Council is to lay down regulations or directives on the prohibition of anticompetitive agreements, decisions and concerted practices and the prohibition of abuse of a dominant position. Article 106 TFEU/ 86 EC governs the position under competition law of public undertakings, undertakings to which Member States grant special or exclusive rights and undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly. To ensure the application of the provisions of that article, the Commission may address directives to Member States. Under Art 109 TFEU/89 EC, the Council, after consulting the European Parliament, may make regulations for the application of provisions on state aid. Under Art 42 TFEU/36 EC the provisions of the chapter relating to rules on competition apply to production of and trade in agricultural products only to the extent determined by the European Parliament and the Council.
Under Art 153 TFEU/137 EC, the European Parliament and the Council may adopt, by means of directives, and having regard to the conditions and technical rules obtaining in each of the Member States, minimum requirements for gradual implementation in the following fields: (a) improvement in particular of the working environment, to protect workers’ health and safety; (b) working conditions; (c) social security and social protection of workers; (d) protection of workers where their employment contract is terminated; (e) the information and consultation of workers; (f) representation and collective defence of the interests of workers and employers, including codetermination; (g) conditions of employment for third-country nationals legally residing in Union territory; (h) the integration of persons excluded from the labour market; and (i) equality between men and women with regard to labour market opportunities and treatment at work. Such directives shall avoid imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small and medium-sized undertakings. In the fields referred to in paras (c), (d), (f) and (g) the Council is to act unanimously after consulting the European Parliament, whilst in the other fields the European Parliament and the Council act under the ordinary legislative procedure. Article 153 TFEU/ 137 EC does not apply to pay, the right of association, the right to strike or the right to impose lock-outs. Under Art 157(3) TFEU/141 (3) EC the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures to ensure the application of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation, including the principle of equal pay for equal work or work of equal value.
In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union, under Art 169 TFEU/153 EC, shall contribute to protecting the health, safety and economic interests of consumers as well as to promoting their right to information, education and to organize themselves in order to safeguard their interests. This shall be achieved, firstly, by measures adopted pursuant to Art 114 TFEU/95 EC and, secondly, by measures which support, supplement and monitor the policy pursued by the Member States; these measures are to be adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure. Article 192 TFEU/ 175 EC contains provisions on competence for the approximation of laws in the field of environmental protection, which is to be exercised partly by way of the ordinary legislative procedure and partly by unanimous action. The Member States are permitted to take more stringent protective measures in both fields.
Certain individual provisions in the TFEU provide for the conclusion of international agreements by the EU. In the field of common commercial policy this topic, including trade in services and the commercial aspects of intellectual property as well as foreign direct investment, is governed by Art 207 TFEU/133 EC.
Unwritten ancillary competences, which are not included in powers expressly granted, are conceded to the EU under the doctrine of competence by virtue of cohesion. Hence, whenever Union law creates for its institutions powers within its internal system for the purpose of attaining a specific objective, the Union has authority to undertake international commitments necessary for the attainment of that objective even in the absence of an express provision to that effect (for established case law, see ECJ Case C‑22/70 AETR  ECR 263, and Opinion 1/03 – Lugano Convention  ECR I‑1145; external competence of the EU).
4. Scope of application of the TFEU
The TFEU applies to the 27 Member States of the EU. Its territorial scope of application also extends to the French overseas departments (currently Guadeloupe, French Guiana, Martinique, Réunion, Saint Barthélemy and Saint Martin), the Azores and Madeira as part of Portugal, and to the Canary Islands belonging to Spain. The Spanish towns of Ceuta and Melilla situated in Africa also come within its scope of application but are excluded from the customs union. Special provisions apply to the Åland Islands belonging to Finland and to the British Crown Colony of Gibraltar. The TFEU does not apply to Faroe, which belongs to Denmark. The TFEU only applies with major provisos to the Channel Islands and to the Isle of Man, which do not form part of the United Kingdom but are British Crown dependencies. The TFEU provides for a special system of association with a number of overseas countries and sovereign territories which have special links with Denmark, France, the Netherlands and the United Kingdom. Greenland, which forms part of Danish sovereign territory, was granted the status of an associated territory after it had voted against remaining in the EC in a 1982 referendum on the basis of its autonomous status.
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