1.3.2. Substantive Approach
17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101
102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118
119 120 121 122 123 124 125 126 127
The manner in which the freedoms limit the conflicts autonomy of Member States
is most clearly visible in respect of the application of mandatory rules of law. The
international scope of such rules of law is determined by reference to their function
and the interest the regulating Member State has by its application. Where it concerns
the application of a rule to a legal relationship entered into in the exercise of one of
the freedoms, a Member State is not free in this determination. In its conflicts decision
whether or not to apply a rule of mandatory law the requirements of (Community law,
in particular those regarding the functioning of the internal market, will have to be
complied with. A good illustration may be found in the case Alpine Investments."
The case concerned a Dutch prohibition on the sales-technique of so-called 'cold
calling', the unsolicited phoning of and offering services to potential customers, for
the financial sector in futures trading. The prohibition not only applied to the calling
of Dutch consumers but also consumers in other Member States. The Dutch company
Alpine Investments B.V. objected to this measure arguing inter alia that the prohibition
was contrary to the free movement of services, as it was prevented from approaching
potential customers in other Member States. The Court held that the Dutch measure
resulted in an obstacle to the free movement of services as guaranteed by Article 49
EC. Accordingly, the prohibition could be applied lawfully only if and to the extent
it was necessary for the protection of a mandatory requirement of the public interest.''
The Dutch government argued that the measure was necessary both for the protection
of the good reputation of the Dutch financial market as well as for the protection of
the investing public. According to the Court the protection of consumers in other
Member States was not as such a matter for the Netherlands. However, the Court
accepted the protection of the reputation of the Dutch financial market as an overriding interest' and that the extraterritorial application of the prohibition was
necessary and proportionate to that aim.1'
The Dutch measure concerned a mandatory rule of law, the international scope of
which depended on its substance and function. In Alpine Investmcnis ihc measure was
applied to a cross-border transaction - the making of an offer - in the exercise of the
free movement of services. The application of the Dutch measures was therefore
subject to the strict requirements of Community law. If the Court had not accepted
the justification submitted by the Dutch government, the prohibition could not have
been lawfully applied and its international scope would as a matter of fact have been
restricted. True, the Netherlands would have remained free to resolve the conflict with
Article 49 EC by adjusting the substance of the norm rather than its (international)
scope. However, this possibility does nothing to change the fact that by holding the
application of a measure unlawful the conflicts process underlying the applicability
of the measure in the first place is left ineffective and in need of modification.'"