Direct Effect and Covert Integration: A Critical Review of the Liberalization of Port Cargo Handling Services Through the Spanish Case

Abstract

Article 49 of the Treaty on the Functioning of the European Union contains the principle of freedom of establishment. Discrimination based on nationality was prohibited when freedom of establishment was involved. That was the only EU law provision invoked by the Commission to monitor a reform of Spanish Port Law, which concluded in May 2017. No secondary EU regulations were enacted, yet, the reform led to the overruling of the staff recruitment system for cargo-handling services in Spanish docks. The new recruitment system was already designed by the Commission and transposed by an Act of the Spanish Parliament as if it was derived from a Directive. An infringement action and a ruling of the European Court of Justice were the formal mechanisms to make the design of the Commission enforceable. Notwithstanding the apparent simplicity of this reform, there were indirect normative and institutional mechanisms working through well-known dynamics of supranational integration. This paper presents an analysis of those mechanisms, paying particular attention to the role of direct effect in the ECJ infringement decision and to the use of soft law and institutional cooperation as covert integration strategies.