The re‐entry paradox: Abuse of EU law

• Published date: 01 November 2018
• DOI: http://doi.org/10.1111/eulj.12297
• Date: 01 November 2018

ORIGINAL ARTICLE

The re‐entry paradox: Abuse of EU law

Roman Guski*

Abstract

Abuse of law is a fundamental paradox: It is necessary to consider legal acts as illegal acts. The dis-

tinction legal/illegal is applied to itself. The article shows that the notion of abuse in the European

context is closely related to the antinomy of the Internal Market which describes itself as a

borderless area with internal borders. A closer look at the case law reveals that actors can make

use of the fundamental freedoms in the form of self‐contradictory arrangements (prototype: U‐

Turns). Put more generally, autonomy is taken seriously and subjective rights are not covered by

law when they are exercised in a tautological or paradoxical way.

1|THE RE‐ENTRY PARADOX

A spectre is haunting Europe: Abuse of law. Jurisprudence has been using the concept for decades but there is no

usable definition to this day. Abusive, it is said, are “artificial arrangements without economic reality”

1

—as if law‐

based plans and avoidance strategies were not economically very real and as if one could somehow innocently deal

with the mechanisms of law. So judicial rhetoric has switched from “artificial”to “purely artificial”arrangements.

2

But

no‐one knows what this purely artificial term is supposed to mean.

In addition to this conceptual embarrassment, contradictions arise. In company law the European Court of Justice

(ECJ) is known to tolerate circumventions of corporate rules under the flag of free establishment; by contrast, the

avoidance of tax burdens is increasingly being fought.

3

It seems like, among crucial common goods, some are consid-

ered more crucial than others.

4

It is also unclear whether an abuse of law is not covered by the right in question or

whether abuse only justifies national countermeasures. Furthermore, the scope of abuse remains cloudy: While the

discussion focuses mostly on market freedoms, there are plenty of decisions that consider arrangements abusive in

*

Freie Universität Berlin, Berlin, Germany.

1

ECJ, judgment of 14 December 2000, C‐110/99, Emsland‐Stärke, ECR I‐11569, para. 39 ff., 43; judgment of 18 July 2007, C‐231/05,

Oy AA, ECR I‐6393, para. 62; AG Kokott, opinion of 10 September 2009, C‐311/08, SGI, ECR I‐487, para. 61. The legislator uses the

same formula, see e.g. Art. 4 (3) Regulation 2988/95 and Regulation (EC) no. 1782/2003 of 29 September 2003 , recital no. 21.

2

EuGH, judgment of 12 September 2006, C‐196/04, Cadbury Schweppes, ECR I‐7995; judgment of 13 March 2007, C ‐524/04, Test

Claimants in the Thin Cap Litigation, ECR I‐2107, para. 74; judgment of 6 April 2006, C‐456/04, Agip Petroli, ECR I‐3410, Rn. 22; judg-

ment of 23 September 2003, C‐109/01, Akrich, ECR I‐9665.

3

Cf. EuGH, judgment of 9 March 1999, C‐212/97, Centros, ECR I‐1459, and, on the other hand, judgment of 12 September 2006, C‐

196/04, Cadbury Schweppes, ECR I‐7995, para. 68.

4

It is possible, of course, to develop different arguments for different common goods. For example, in matters of creditor protection,

the ECJ emphasises the individual responsibility of creditors to protect themselves. But then, the question of abuse is shifted to the

justification level—and remains unresolved here.

Received: 17 May 2018 Accepted: 14 August 2018

DOI: 10.1111/eulj.12297

422 © 2018 John Wiley & Sons Ltd. Eur Law J. 2018;24:422–433.wileyonlinelibrary.com/journal/eulj