The Establishment of a Cross-Border Legal Practice in the European Union Florence R

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The Establishment of a Cross-Border Legal Practice in the European Union Florence R Boston College International and Comparative Law Review Volume 20 | Issue 2 Article 7 8-1-1997 The Establishment of a Cross-Border Legal Practice in the European Union Florence R. Liu Follow this and additional works at: http://lawdigitalcommons.bc.edu/iclr Part of the European Law Commons Recommended Citation Florence R. Liu, The Establishment of a Cross-Border Legal Practice in the European Union, 20 B.C. Int'l & Comp. L. Rev. 369 (1997), http://lawdigitalcommons.bc.edu/iclr/vol20/iss2/7 This Notes is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College International and Comparative Law Review by an authorized editor of Digital Commons @ Boston College Law School. For more information, please contact [email protected]. The Establishment of a Cross-Border Legal Practice in the European Union INTRODUCTION Traditionally, lawyers practice law in the country where they com­ pleted their legal studies. This practice, though still present, is slowly changing in the European Union (EU),! as greater economic integra­ tion leads to the greater mobility of lawyers.2 EU lawyers benefit from this increased mobility, as they may practice law in a country that is a member of the EU (Member State) in addition to the one where they obtained their legal education and license.3 In practice, this mobility is difficult to achieve because it requires a harmonization of legal standards among countries with different legal systems. 4 The EU's attempts to harmonize the legal profession are based on the Treaty Establishing the European Economic Community (Treaty of Rome), 5 which established as a primary goal of the EU the creation of an internal market without internal frontiers, where goods and services are to be traded freely and easily.6 To this end, the Treaty of Rome grants every EU national the "Freedom to Provide Services" and the "Right of Establishment" in another Member State.7 The Freedom to Provide Services envisions the gradual abolishment of restrictions on the free supply of temporary services within the EU.s The Right of Establishment includes the "right to take up and pursue activities as I The European Community (EC) became the European Union (EU) when the Treaty on European Union, signed in Maastricht, the Netherlands, came into force in November 1993. See TREATY ESTABLISHING THE EUROPEAN COMMUNITY, Feb. 7, 1992, OJ. (C 224) 1,31 I.L.M. 247. For purposes of consistency, this Note will refer to the pre-November 1993 EC as the EU. 2 See Jonathan Barsade, The E,lfect of EC Regulations upon the AiJility of u.s. Lawyers to Establish a Pan-European Practice, 28 INT'L LAW 313, 313 (1994). 3 See Council Directive 77/249, 1977 OJ. (L 78) 17, 17 [hereinafter Directive 77/249]. 4 See Barsade, supra note 2, at 313. 5 See TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY, opened for signature Nov. 23,1957,298 U.N.T.S. 11 (entered into force Jan. 1, 1958) [hereinafter EEC TREATY]. 6 See id. art. 3(c). Pursuant to Article 3(c) of the EEC Treaty, the abolition, as between Member States, of obstacles to freedom of movement for persons and services constitutes one of the objectives of the European Union. See id. 7 See id. arts. 52, 59. H See id. art. 59(1). 369 370 BOSTON COLLEGE INTERNATIONAL & COMPARATIVE LAw REVIEW [Vol. XX, No.2 self-employed persons" on a permanent basis in the host Member State.9 The drafters of the Treaty of Rome reasoned that these goals, in the context of the legal profession, reduce transactional costs and ensure the flow of services, thus rendering legal services available to clients in all Member States at all times.lO Furthermore, as lawyers play an in­ creasingly important role in business transactions, many of which in­ volve more than one Member State, the EU increasingly needs lawyers with cross-border practices. 11 While supporting these policies, each Member State seeks to maintain its sovereignty.12 As such, the EU institutions find themselves in the difficult position of establishing rules and regulations that will further legal integration while acknow­ ledging and appreciating the differences among Member States.13 In the legal profession, the EU attempted to resolve these tensions by passing a series of directives aimed at facilitating the mobility of lawyers among the Member States.14 In March 1977, the Council of Ministers (Council) 15 passed a directive to facilitate the development of legal services.16 This directive, though a major step in building a framework for a cross-border legal practice within the EU, is limited in scope.17 Thus, in December 1988, the Council passed a directive for the mutual recognition of higher-education diplomas. IS Furthermore, in March 1995, the European Commission (Commission) 19 submitted 9 EEC TREATY, art. 52(2). 10 See Barsade, supra note 2, at 314. 11 See Proposal for a European Parliament and Council Directive to Facilitate Practice of the Profession of Lawyer on a Permanent Basis, 1995 OJ. (C 128) 6, 6 [hereinafter Proposed Directive ]. 12 See Barsade, supra note 2, at 313. 13 See id. 14 See generally Council Directive 89/48,1989 OJ. (L 19) 16, 16 [hereinafter Directive 89/48]; Directive 77/249, supra note 3; Proposed Directive, supra note 11. 15 The Council of Ministers is composed of ministers from each Member State and is organized according to the subject matter to be discussed. See RALPH FOLSOM, EUROPEAN COMMUNITY LAw 39 (1992). It reviews and then approves or rejects the proposals of the European Commission. See Kenneth S. Kilimnik, Lawyers Allroad: New Rules Jor Practice in a Global Economy, 12 DICK. J. INT'L L. 269, 294 (1994). 16 See Directive 77/249, supra note 3. 17 See Nicholas J. Skarlatos, European Lawyer's Right to Transnational Legal Practice in the European Community, 1 LEGAL ISSUES OF EUR. INTEGRATION 49, 55 (1991). 18 See Directive 89/48, supra note 14. 19 The European Commission consists of 20 members: two each from France, Germany, Italy, Spain, and the United Kingdom, and one from each of the other EU countries. See DOMINIK LASOK AND JOHN W. BRIDGE, AN INTRODUCTION TO THE LAw AND INSTITUTIONS OF THE EURO­ PEAN COMMUNITY 105-09 (1973). It is responsible for proposing and implementing EU laws. See id. 1997] CRoss-BoRDER LEGAL PRACTICES 371 a proposal for a European Parliament and Council Directive to facili­ tate the practice of law on a permanent basis in different Member States.20 This Note examines the EU and its progressive attempts at harmoni­ zation of legal standards. Part I discusses the Treaty of Rome, which provides for the Freedom to Provide Services and the Right of Estab­ lishment in the EU, and examines its relationship to the EU legal market. Part II outlines the various directives and the proposed direc­ tive, all of which are designed to facilitate the movement ofEU lawyers among Member States. Part III examines the limited impact of these initiatives on EU lawyers and suggests a few ways to lessen the internal disparities that continue to plague the EU legal market. 1. THE TREATY OF ROME Article 59 of the Treaty of Rome grants every EU national the freedom to provide services throughout the EU.21 Specifically, Article 59 provides that the "restrictions on freedom to provide services within the [EU] shall be progressively abolished ... in respect of nationals of Member States who are established in a [Member] State ... other than that of the person for whom the services are intended."22 Subsequent interpretations of Article 59 have limited its scope to the provision of non-regular and temporary services within the EU.23 Included within the scope of Article 59 is the provision of legal services, that is, the temporary legal activities of a lawyer of one Member State in another Member State.24 To this end, Member States may not discriminate against lawyers who provide legal services, based solely on that lawyer's citizenship.25 In addition, Member States must abolish all restrictions that impede or make impossible the services of a lawyer who is domi­ ciled in that Member State.26 While Article 59 governs the temporary provision of services, Articles 52 through 54 grant every EU national the right to establish a perma­ nent practice or business in another Member State.27 To this end, the 20 See Proposed Directive, supra note 11. 21 See EEC TREATY art. 59. 22Id. 23 See Christian E. Edye, Foreign Lawyers in Foreign Jurisdictions: Rights of Practice and Estab- lishment, DEF. COUNSELJ.,July 1996, available in LEXIS, Legnew Library, Allnws File. 24 See id. 25 See id. 26 See id. 27 See EEC TREATY arts. 52-54. 372 BOSTON COLLEGE INTERNATIONAL & COMPARATIVE LAW REvIEW [Vol. XX, No.2 Right of Establishment includes the right to engage permanently in and carryon non-wage earning activities and to establish and manage permanent enterprises, particularly companies under civil or commer­ cial law, including co-operative companies and other legal persons under public or private law. 28 By defining the Right of Establishment broadly to include legal persons under public or private law, the Treaty of Rome implicitly provides for the development of an ED legal market in which ED lawyers may establish their legal practices in different Member States.29 To implement these goals, the drafters of the Treaty of Rome envi­ sioned a progressive elimination of restrictions on the right of nation­ als of one Member State to reside and practice their professions in another Member State.30 This progressive elimination of restrictions also
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