Curbing negative integration: German supervisory board codetermination does not restrict the common market

Abstract

TUI v Erzberger is a landmark decision on the normative meaning and scope of the fundamental freedoms. Mr Erzberger complained that the territoriality principle as the linking factor of German supervisory board codetermination violates European law. He argued that lack of voting rights among the employees of foreign subsidiaries was in violation of the ban on discrimination in Article 18 TFEU. He further argued that the possible loss of voting rights when domestic employees move across borders within the same company group makes the move less attractive and therefore violates the free movement of workers in Article 45 TFEU. The Appeals Court Berlin referred the case to the Court of Justice of the European Union, which ruled that the German regulation does not violate European law. The ruling went further than should have been necessary in order to reject the plaintiff’s legal view. It stated, first, the legality of the territoriality principle as the linking factor of national labour law as long as no European secondary law rules otherwise. Second, the Court raised fundamental insights about the telos of Article 45 TFEU and stated that its purpose is not to neutralise the heterogeneity of the social regulations of the Member States.