Activity based regulation – EU perspectives on partial access to reserved activities

Regulating legal services in England and Wales

The regulation of legal services is in England and Wales is in the process of major change. The Legal Services Board is considering whether certain ‘legal’ services (notably will-writing, estate administration and probate activities) should be reserved to persons with particular qualifications (or not). There are also LSB reviews ongoing regarding, for example, the regulation of immigration advice and services.  The current review of legal education in England and Wales, being undertaken by the LETR, will be assessing how the current regime of legal education in England and Wales is suited to the new post-Legal Services Act 2007 world, which will be allowing new modes of ownership of legal service providers, and is scheduled to recommend changes to meet the challenges at the end of 2012.

The LSB has oversight over eight types of legal actor in England and Wales that are authorised to practice the “reserved activities” in the legal sphere. Will there be consolidation or further fragmentation of the legal professions? What impact might there be on legal education?

The European Dimension

Naturally there is a European dimension to all of this ferment. For one thing many European trained legal actors (members of more than 26 professions) can freely practice law in the UK, and for another the authorised regulators of legal services in the UK (Competent Authorities in EU-speak) have an obligation to admit such professionals to practice, and, in some cases, admit them to their particular legal profession, and, if not admit them immediately, then assess their qualifications and indicate missing elements of knowledge of competence that must be made up before joining the relevant legal profession.

Moreover the European Commission has recently published a review of the economic impact of reserved activities (in the legal and other sectors) and legal services directives themselves are currently under evaluation.

Recognising competence to perform legal activities

This assessment of continental legal professionals by UK regulators is mandated by the Lisbon Treaty single market provisions and, in particular, for our current concern, by Directive 2005/36/EC. This Directive, which consolidated 15 earlier Directives, is now itself subject to revision. When Directive 2005/36/EC itself was initially proposed, it included a provision allowing for access to practice part of the professional activities of a profession by incoming migrants, without joining the profession itself. This did not survive the negotiating process and was dropped. The new proposal revives the idea of partial access. This potentially means that UK legal regulators may have to give access to reserved legal sector activities to persons not belonging to a UK legal profession.

Partial Access to reserved activities

The new provisions on partial access are more carefully drafted than their predecessors. They follow the lead of the CJEU in the Colegio case (C-330/03 Colegio de Ingenieros de Caminos, Canales y Puertos).

A revised Article 1 indicates the migrants will have ‘partial access to a regulated profession’ and a new Article 4(1) indicates that they will be able to gain access to ‘part of the same profession’, but the new Article 4f is more accurate in indicating that ‘The competent authority of the host Member State shall grant partial access to a professional activity in its territory…’ (my emphasis) if certain conditions are fulfilled. So here we have the separation of the host State profession from the host State professional activity. The activity in question must be lawful in the home State and should be able to be ‘objectively be separated from other activities falling under the regulated profession in the host Member State’. If the activity is autonomously exercised in the home State that would be sufficient to fulfil this criterion. Partial access by a migrant can be rejected if there are sound proportionate public interest reasons to do so.

Partial access is only to be granted where:

‘differences between the professional activity legally exercised in the home Member State and the regulated profession in the host Member State as such are so large that in reality the application of compensatory measures would amount to requiring the applicant to complete the full programme of education and training required in the host Member State to have access to the full regulated profession in the host Member State’.

Professional Identity

Persons permitted to access a reserved activity by these new provisions will normally do so under their home State professional title. So at one level we could say, so what, this is nothing new, already EU lawyers can practice law in the UK under their home State professional titles, but, one difference is that they are currently regulated by the UK professional bodies with whom they must register when they establish. [By virtue of Article 5 of Directive 2005/36/EC lawyers providing services will do so though operation of the provision of Directive 77/249/EEC and Directive 2005/36/EC will not apply.]

Lawyers, or others, seeking partial access to aspects of legal practice on a more permanent basis will be able to use the establishment provisions of the revised Directive should the proposal become EU law. The Member States could argue that regulation would be required by the host State regulator, but, as the new entrants would not necessarily be members of the host State profession so which professional rules and obligations woud apply to them, and how? There will clearly be pressure to atomise professional rules so that individual reserved activities can be effectively autonomously regulated. This disaggregation of professional activities could weaken professional identity. If an EU citizen can use EU law to access a reserved activity in another Member State without joining a host State profession then why logically should a UK national not be able to do so?

See further

See Lonbay, J, ’Assessing the European Market for Legal Services: Developments in the Free Movement of Lawyers in the European Union’, Fordham International Law Journal 1629.


Details of proposed amendments to Directive 2005/36/EC regarding “partial access” to reserved activities

Details of proposed amendments to Directive 2005/36/EC regarding “partial access”

Article 1 of the Directive will have a second paragraph added:

This Directive also establishes rules concerning partial access to a regulated profession and access to and recognition of remunerated traineeships pursued in another Member State. (My emphasis)

Article 4(1) is replaced as follows:

The recognition of professional qualifications by the host Member State shall allow the beneficiary to gain access in that Member State to the same profession or, in the cases referred to in Article 4f, to part of the same profession, as that for which he is qualified in the home Member State and to pursue it in the host Member State under the same conditions as its nationals.” (My emphasis)

Article 4f is the main new provision on partial access. It provides:

Article 4f

Partial access

1. The competent authority of the host Member State shall grant partial access to a professional activity in its territory provided that the following conditions are fulfilled:

(a) differences between the professional activity legally exercised in the home Member State and the regulated profession in the host Member State as such are so large that in reality the application of compensatory measures would amount to requiring the applicant to complete the full programme of education and training required in the host Member State to have access to the full regulated profession in the host Member State;

(b) the professional activity can objectively be separated from other activities falling under the regulated profession in the host Member State.

For the purposes of point (b), an activity shall be deemed to be separable if it is exercised as an autonomous activity in the home Member State.

2. Partial access may be rejected if such rejection is justified by an overriding reason of general interest, such as public health, it would secure the attainment of the objective pursued and it would not go beyond what is strictly necessary.

3. Applications for establishment in the host Member State shall be examined in accordance with Chapters I and IV of Title III in case of establishment in the host Member State.

4. Applications for provision of temporary services in the host Member State concerning professional activities having public health and safety implications shall be examined in accordance with Title II.

5. By derogation from the sixth subparagraph of Article 7(4) and Article 52(1), the professional activity shall be exercised under the professional title of the home Member State once partial access has been granted.

Remunerated Traineeships European-style

The proposed Directive revising Dir 2005/36/EC introduces the notion of  a ‘remunerated traineeship’ (recital 20 of the proposal; Article 1 and Article 3(ii)j and Article 55a). What is a remunerated traineeship and why is it introduced?

Examining the definition of remunerated traineeship

An initial difficult aspect of the ‘remunerated traineeship’ is the definition in proposed Article 3(ii)j which states:

“(j) ‘remunerated traineeship’: the pursuit of supervised and remunerated activities, with a view to access to a regulated profession granted on the basis of an examination;  (my emphasis)

This last phrase (granted on the basis of an examination) seems unnecessary and could, on one reading, exclude, for example, the English and Welsh traineeships as there is no formal “examination” after the traineeship. It is not clear why the phrase is included; the important element is the ‘with a view to access to a regulated profession’. If the phrase cannot be deleted for some reason then “evaluation” or “assessment” would be better words to use rather than examination as this would cover most lawyerly traineeships. The French version seems to make clear than an exam is meant:

«j) «stage rémunéré»: l’exercice d’activités rémunérées et encadrées, dans la perspective d’accéder à une profession réglementée à la suite d’un examen »

The notion of remuneration

The new draft amendment talks of ‘remunerated’ traineeships ; I think that the qualifier ‘remunerated’ may be considered necessary to maintain the link with the legal base of the proposed Directive. Trainee lawyers who are remunerated are considered to be workers (Kranemann). The EU has competence regarding paid workers and remunerated service providers without doubt. If there are Bars and Law Societies where trainees are not paid (which I think might be the case in many European countries e.g.  Portugal, Italy  the UK (Bar) and Ireland (Bar), why should their trainees be left out from the protection of  the Directive (apart from the legal base argument above)? Perhaps the legal base could be extended?

The rights of the remunerated trainee

The proposed Article granting rights regarding remunerated traineeships is a new Article 55a which reads as follows:

Article 55a  Recognition of remunerated traineeship

With a view to grant (sic) access to a regulated profession, the home Member State shall recognise the remunerated traineeship pursued in another Member State and certified by a competent authority of that Member State.

It now becomes clearer why an examination is included in the definition of ‘remunerated traineeship’. This proposed Article goes beyond Morgenbesser. It seems to lay out a duty to recognise any traineeship certified by a competent authority of another Member State. There is no provision allowing for an ‘assessment of comparability’ nor any possibility of ‘compensation’ mooted. So, for example, someone with an LLB (English qualifying law degree) could in principle undertake a traineeship in, say, Portugal, and this would have to be ‘recognised’ by the English Competent Authorities (CA) with no possibility of assessing the content of such a traineeship to ensure that home State requirements are fulfilled. Perhaps though the phrase ‘[W]ith a view to grant (sic) access’ allows for an interpretation that permits a CA discretion in accepting or not the remunerated traineeship as completely fulfilling the national traineeship conditions vis a vis the experience element represented by the stage / traineeship?

Article 55a, as I interpret it initially, in my view, goes beyond what the EU can do. It is for the MS to set justifiable standards and requirements for their professions, and these must be fulfilled (though sometimes by different means) by migrants, assisted in this case by the PQD.  I would argue for a modification of this provision to allow that such a migrant could still be evaluated as per Article 13 mutatis mutandis (though a new article would be necessary or perhaps a paragraph 2 to the new Article 55a) and subject to compensation measures (similar to Article 14 mutatis mutandis) if necessary. This would make more sense and would fit in with the new purpose of the Directive – permitted movement of ‘fully and semi-qualified’ professional migrants. AAAH, but there’s the rub, I think the European Commission may be seeking to stay true to the Directive’s original intent – to allow fully qualified EU citizens to move more freely – the so-called “finished products”.

What about those who are semi-qualified?

In my view Article 55a is not a proper implementation of the Morgenbesser / Pesla principle. This is another problem with the proposed alteration to Directive 2005/36/EC.  An implementation of Morgenbesser / Pesla would impose an obligation on the host State to assess and evaluate migrants with law-related degrees from higher education institutions and oblige the Competent Authorities to specify to them elements that are missing from their knowledge and competence, in order to allow them to complete their (legal) training in the host State, and then, in due course, join the host State relevant profession. Instead what we get is an obligation on the home State to recognise ‘remunerated traineeships’. Under the proposed Directive (as amended) a Morgenbesser applicant would not gain the benefit of the (valuable) procedural safeguards of the Directive. I think the Directive should include such a protection.

So there seems to be some work to be done on the notion of ‘remunerated traineeship’ in  the proposed Directive.

Modernising the Professional Qualifications Directive 2005/36/EC

On 19th December 2011 the European Commission published its proposal for amending Directive 2005/36/EC on the recognition of professional qualifications. The Single Market Act included such a revision as ‘Lever 2 – Citizen’s mobility’. This blog will comment on the proposal and reactions to it as it passes through the legislative process.

Negotiations on the proposed Directive started last Wednesday (25 January 2012) and have begun with generic aspects of the proposed Directive. The European Commission would like the measure adopted by the end of 2012.

The proposal is entitled Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2005/36/EC on the recognition of professional qualifications and Regulation on administrative cooperation through the Internal Market Information System and is available on Eur-Lex as an html, PDF or doc.

European Commission DG Markt Directorate E – SERVICES, Unit E4 deals with the free movement of professionals. Their website is very helpful and carries a lot of useful information. In the European Parliament, IMCO (Committee on the Internal Market and Consumer Protection) will be dealing with it. The European Commission presented its proposal and the Impact Assessment to the IMCO Members on the 9th January. The first exchange of views in the Committee are expected on the 28th February.

Precursors to the proposal to revise Directive 2005/36/EC can be found here.

More posts will follow.

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