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Consequences of EU Law on Scandinavian Welfare States, especially in the Field of Services of General Interest

Research project

Project overview

Project period:

2009-07-01 2012-06-30

Participating departments and units at Umeå University

Department of Law, Faculty of Social Sciences

Research area


Project description

1. Ongoing research projects
The project Welcome to the twilight zone was initialized during the Spring 2008 when I participated in a conference – and presented a paper – in Potsdam concerning The changing framework of public services in Europe – The impact of European competition, state aid and procurement law on financing and organizing services of general economic interest. The conclusion from the conference is that the harmonization of the welfare services are causing problems in the whole EU, but especially in the Nordic countries with our tradition of being welfare states.

The project Welcome to the twilight zone is a continuation of the two ongoing projects that in a logical way will deepen our understanding of the area and that also be will be of great importance for the Swedish legislator and for the Swedish municipalities, especially when it comes to the questions of what actually falls within the concept of a welfare service, a service of general interest and a service of general economic interest from a Swedish view. But also I will also try to answer the most important question, who can provide these services and how the provider of the welfare service is chosen.

2. Project Relevance
In Nordic societies the provision of welfare services through the welfare state has been a key element for a number of years and there has been considerable political consensus on the desirability of preserving the welfare state. However, liberalisation and privatisation which is generally promoted at the economic and social level through the development of the Internal Market in the EU may put pressure on welfare states and create tensions between the EU and Member States in matters of welfare. One problem with the development is the so called “Kommunalblindheit” – blindness regarding local authorities – of EC-law and –lawyers when it comes to the municipal responsibility for planning and developing infra structure and social services etc. – a responsibility that has a long tradition in the Scandinavian welfare states. The literature on article 86 EC is enormously large, but it is, until now, nearly exclusively a domain of EC-law and international law of economy. The conflict between that and local autonomy, especially the organisational autonomy of municipalities and, as a guarantee of it, the European Charter on Local Self-Government, is normally not taken into account, which makes such an approach very important.

The project will examine the ongoing Europeanization of welfare functions and its impact on Swedish law. It will also from a strictly legal perspective analyse the sustainability of the Swedish welfare state in an EU context and on the integration of welfare functions into EU law. The specific legal aspects of the development of the specific Swedish welfare state in interaction with EU law have not hitherto been the object of detailed study. The project will therefore bring important new knowledge and understanding of the legal system and some of its basic characteristics.

3. Problem formulation

3.1. Research questions
The project aims to answer two main research questions:
a) Does EU law put constraints upon Swedish law on core welfare services, and if yes, how, to what extent and what is the trend in the development?
b) Is EU law ensuring the provision of core welfare services, and if yes, how, to what extent and what is the trend in the development?

I use the term welfare services in a broad sense, but especially in the light of services of general interest within the meaning of Article 86(2) EC. Services of general interest within the meaning of Article 86(2) EC are different from services of general economic interest because the public authorities view their provision as essential even though the market does not have sufficient motivation to secure their provision. Typical examples of such services exist within the sectors of public transportation, telecommunications, and energy. However, in the present legal system, the border line between the two above sub-categories of welfare services is not very clear-cut.

I will also subdivide welfare services into market services and state services. Market services are services within the meaning of Article 50 EC, i.e. they are normally provided for remuneration. The same service, e.g. health care will in a welfare state often be provided by the state outside the market and not for remuneration, i.e. not as a market service but as a state service.

Traditionally, the following traits have been basic for the classic Swedish welfare state: public-owned infrastructure; tax financed welfare services in the form of state services; high quality and high level state services and an interplay between state services and the labour market resulting in flexicurity, i.e. a high degree of flexibility in employment combined with a fairly high degree of income security and a guaranteed minimum living standard.
The EU is, according to Article 6 EU, founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law – principles which are common to the Member States. In the legal development in Sweden, and in many other countries, in the second half of the 19th century there was a sharp separation between the public sphere of constitutional rights and the private sphere of market relations, including private contractual relations. The Swedish welfare state from the 20th century extended the public sphere but was still built on a fairly sharp distinction between public and private.

As Community law stands at present there is an increasingly blurred line between state and market. Member States may decide to support the market to ensure that certain objectives of general interest are met. In so doing, they must respect Community law, in particular the Internal Market law on free movement. At the same time certain basic values and principles, e.g. non-discrimination, equality, social inclusion, and access to essential services are increasingly being pursued not only by the state but also in the market place, elevating fundamental rights, values and principles from being restrictions solely on state action to becoming general principles of law binding for both the state and private actors on the market.

The project title refers both to the ‘twilight zone’ between public and private law in regard to welfare services and to the ‘twilight zone’ between EU law and national law on this subject. It can also refer to the confusion when it comes to relevant concepts, e.g. discrimination, systematizations and law on the one side and morality and political views on the other, and between law as a normative phenomenon (institutional fact) and law as a social fact. When analysing Services of general interest within the meaning of Article 86(2) EC, the interaction of Swedish law and EU law poses challenges and a trend towards more blurring boundaries is discernible. The project aims at clarifying this development.

3.2. Services of general interest within the meaning of Article 86(2) EC
In the classic model of the Swedish welfare state traditionally state or municipal-owned infra-structure has played an essential role. However, waves of liberalisation and privatisation are in these years changing the traditional way of setting up services of general interest. The pressure on the traditional set-up and provision of these services originate, among others, from EU-competition law including state aid, and the internal market law.

Focus is largely on analysing to which degree market values are given priority over non-market considerations. If the analysis results in the finding that a large degree of priority is given to market values, it implies that Member State competence in this field has diminished dramatically.

The project is meant as a piece of basic research, since it must be considered as being a primary task of legal science of this kind to develop the law as a system, in particular its basic concepts and general principles. The aim is to contribute to the clarification of the relevant legal concepts related to the integration of the Swedish welfare state in the EU and the Internal Market and to establishing the general principles emerging in this context, not least from the case law of the ECJ.

4. Method
The primary method used in the project is legal, dogmatic analysis, i.e. the traditional legal method is applied. It is concerned with a textual analysis of authoritative sources of law, e.g. legislative acts, judgments, etc. There are some characteristic differences between the pattern of sources of law in Swedish law and in EU law. As EU law has certain specific characteristics compared to national law, attention to this will be taken. Under all circumstances, there will be an emphasis on the interpretation of legal texts and case law. In other words, it will be written by a lawyer and in so far as the law is built with words, legal science will begin with them which are why legal science is largely about hermeneutics.

A major part of the analyses will be put on the decisions of the ECJ. An evolutionary approach will be taken. As EU law largely is a case law-based system the approach is suitable in order to thoroughly analyse the individual cases in order to provide a synthesis of the interpretational guidelines which may be deduced. By this approach it will be possible to achieve the best foundation for understanding the development of the creation of the law in force today as well as the law itself. Also, as the ECJ seldom explicitly over-rules previous decisions, the approach will be helpful in detecting the more implicit changes over times.

It is necessary as a point of departure to start with a descriptive analysis with the ECJ’s formal argumentation so that the state of law may be deducted through the traditional legal method adjusted to the EU law, whereby the internal logic of the analysed decisions is sought. At the same time, it has to be accepted that behind the formal argumentation other important layers of meaning may be hidden. Therefore, formal reasoning may be necessary (for example, to secure certainty and equality under the law), but it is no longer sufficient. Because formal arguments no longer provide all the legal answers, a justification based on formal arguments is, in many cases, no longer legitimate justification. Judicial neutrality, with reference to an ideal “robot-court”, associated with syllogistic reasoning in the application and interpretation of law, does not correspond to the present complexity of the judicial process and the exercise of discretion it entails. This is by now a non-contentious assertion. The exercise of judicial discretion requires a “second-order justification” involving “justifying choices; choices between the rival rulings which are possible”.

The project is a mono-disciplinary one in the sense that it is a legal dogmatic analysis and not a multi-disciplinary analysis. Law, EU and the welfare state is an object of interest not only to legal science but also to other social sciences, e.g. political science, economy and sociology. Therefore, I will focus on the analysis of legal texts in order to find out what the answers to my research questions are on the basis of the legal material interpreted in accordance with a professional, legal standard. This ‘narrow’ methodological approach also adds to the projects originality since no such legal analyses exist whereas there are multi-disciplinary studies of EU Law and the welfare state. The project will show whether a pure legal analysis results in a different picture from that obtained by a mixed multi-disciplinary study.

5. Time frame, international cooperation and expected outcome of the project
The project will start on the second semester 2009. The intention is to perform the research in close relation and in cooperation with professor Ulla Neergaard at the Copenhagen Business School, who currently is a participant in the Danish project “Blurring Boundaries: EU Law and the Danish Welfare State” and dr Tarjei Bekkedal at the Department of Law at the university of Oslo, who currently is a participant in the project “Mellom demokratisk styring, effektiv konkurranse og avtalefrihet i markedsstaten”. Trough this cooperation we will cover the development in three Scandinavian countries, on the condition that also they will receive funding for the project. Research results from the project will be published in books and international journals.