Concept and legal background of the internal market emergency
The term “internal market emergency” refers, in the context of European Union law, to situations in which extraordinary circumstances cause or imminently threaten to cause a significant disruption to the functioning of the European Union (EU) internal market. The aim of any measures in the event of an internal market emergency is to ensure the free movement of goods, services, people, and capital (“fundamental freedoms”) during and after crisis situations. Legal approaches aim to enable temporary, coordinated, and proportionate measures to maintain the European internal market. The basis is EU law, in particular the treaties and related secondary legal instruments.
Development of the legal framework
Contractual foundations
The Treaties on European Union (TEU) and on the Functioning of the European Union (TFEU) establish the principle of the internal market and its essential fundamental freedoms (Art. 26, 28 et seq., 45 et seq., 56 et seq., and 63 et seq. TFEU). The basic principles require Member States to refrain from measures that could impair the internal market. Nevertheless, in special emergency situations, such as disasters, significant threats to public health, or other exceptional crises, temporary restrictions and coordination mechanisms are warranted.
Developments in secondary legislation
The COVID-19 pandemic revealed gaps in joint crisis management and exceptional provisions for the internal market. In September 2022, the European Commission presented a proposal for a regulation to establish a Single Market Emergency Instrument (KOM[2022]459). The aim is a coherent, EU-wide approach in an internal market emergency, while limiting the impact on the functioning of the internal market.
The Single Market Emergency Instrument (SMEI) was designed in response to inconsistent or uncoordinated crisis measures by individual Member States and provides for, among others, the following legal mechanisms:
- Definition and determination of the emergency: Establishment of objective criteria and adoption of a formal decision on the existence of an internal market emergency by the Council based on a proposal from the Commission.
- Coordination mechanisms: Establishment of a coordination structure, typically in the form of a special internal market emergency group (“internal market steering group”).
- Temporary measures: Authority to adopt recommendations or binding measures, such as emergency authorizations, temporary suspension of certain internal market rules, or expedited completion of authorization and certification procedures.
- Monitoring and evaluation: Obligation of Member States to report national measures as well as to regularly review and evaluate the effectiveness of measures at the internal market level.
National implementation and relation to national law
The emergency instrument is conceived as a directly applicable regulation at Union law level and thus takes precedence over national provisions. Nevertheless, supplementary national measures adopted during an internal market emergency may only be enacted within the framework set by Union law. Coordination obligations remain mandatory.
Substantive dimensions of the internal market emergency
Requirements and initiation
The scope of application of an internal market emergency is strictly reserved for acute exceptional situations (e.g., pandemics, natural disasters, severe supply chain disruptions, market disturbances due to war or terrorism). The determination of such an emergency is subject to review and approval by EU institutions.
In contrast to other emergency regimes (e.g., internal security or defense), the internal market emergency primarily affects economic infrastructure and ensuring the functioning of the internal market, in particular maintaining supranational supply security and the smooth movement of goods.
Permissibility and limitations of measures
Any measures to address an internal market emergency must comply with the general principles of proportionality and non-discrimination under EU law (Art. 5 TEU in conjunction with Art. 18 TFEU). They must not go beyond what is necessary to manage the crisis and must be limited in duration. Such measures are subject to strict oversight by the Commission, the Council and, where applicable, the European Parliament.
Legal effects and binding force
The declaration of an internal market emergency results in a modification of the usual scope of internal market law. For example, in certain periods, national regulations (such as special authorizations, exemptions, national import bans) can be harmonized, suspended or temporarily applied differently at the Union-wide level.
In addition, the emergency framework establishes separate information, cooperation, and reporting obligations for Member States. National deviations remain limited to the absolutely necessary minimum. Exceeding the competences set under Union law can result in administrative, and where appropriate, administrative judicial consequences.
Legal protection and oversight
Review and revocation of internal market emergency measures
Measures related to an internal market emergency are subject to EU law review procedures. Natural and legal persons generally have access to EU courts, especially under Art. 263 TFEU. The review covers formal and substantive criteria, including the protection of fundamental rights and the prohibition of discrimination.
The revocation of the internal market emergency takes place upon determination that the disruption has been eliminated and has the effect that all temporary derogations must be withdrawn. The return to normal operation must be thoroughly documented.
Relation to other emergency regimes
The internal market emergency regime must be distinguished from other EU crisis regulations (for example in the areas of civil protection, civil defense, or state aid). Interfaces may exist, particularly in the context of coordination between various emergency regimes. However, priority remains with the specific regulatory area of internal market law and its stability.
Significance and outlook
The development of the internal market emergency instrument reflects the increasing importance of coordinated, EU-wide crisis mechanisms. Given globalization and supply chain vulnerabilities, flexible yet legally-bound emergency management is essential. Implementation and further development of the legal framework will remain subject to EU legislation and adaptation based on international crisis management experience.
The internal market emergency has established itself as a distinct crisis instrument in EU legal terminology to safeguard, stabilize and enforce the European fundamental freedoms, and will continue to grow in importance in the future.
Note: This overview outlines the regime of the internal market emergency according to current EU law and planned regulations. Future legislative adjustments should be taken into account.
Frequently Asked Questions
Which legal instruments can be activated in the context of an internal market emergency?
In the context of an internal market emergency, a variety of legal instruments can be activated at the EU level to safeguard the integrity and functionality of the internal market. Among the most important is the regulation on emergency measures for the internal market, which serves as the legal basis for temporary measures. In addition, sector-specific legal acts, such as emergency provisions in the health sector or concerning supply chains, may be used. The Commission may adopt implementing acts, for example, to expedite the temporary release of goods or services, or to permit derogations from certain internal market rules. At all times, the principle of proportionality must be observed, and any derogations may restrict the fundamental freedoms (free movement of goods, people, services and capital) only as far as necessary.
What role does the subsidiarity principle play in an internal market emergency?
The subsidiarity principle ensures that measures to address an internal market emergency are taken at the most appropriate level. This means that the EU acts only when objectives cannot be sufficiently achieved at national, regional, or local level. Legally, Article 5 TEU obliges EU institutions to examine and justify subsidiarity and proportionality in all emergency measures. In practice, this means that before emergency measures are activated, it must first be examined whether Member States can act effectively on their own or whether intervention at the EU level is justified and necessary.
How is legal coordination between Member States ensured during an internal market emergency?
In an emergency, the internal market emergency regulation establishes legal procedures for coordinating measures between Member States. This includes regular information obligations, the establishment of an emergency coordination group, and the European Commission acting as the central coordinating authority. Member States are required to notify the Commission of all planned and implemented measures to ensure transparency and coherence and to prevent market distortions. The Commission may issue recommendations or even order its own measures if national actions unduly affect the internal market.
What legal limits exist for national measures in the internal market emergency?
National measures may not restrict the free movement of goods, people, services, and capital beyond what is necessary. They must be based on a clear legal foundation and be compatible with the fundamental rights enshrined in the EU Charter of Fundamental Rights. The Commission may initiate infringement proceedings under Art. 258 TFEU against disproportionate or discriminatory national measures. National emergency measures must also be temporary, transparent, and proportionate.
What are the requirements for legal certainty and transparency in the emergency regime?
Legal certainty requires that all measures associated with an internal market emergency are based on clear, foreseeable, and published legal foundations. Measures by the EU as well as Member States must be published, explained, and made accessible without delay. There is also an obligation to inform and consult affected companies and citizens, especially when fundamental freedoms are restricted. Unclear or retroactive regulations are inadmissible and can be challenged in court.
Which legal control mechanisms exist for emergency measures?
The legal control mechanisms include both judicial and political oversight. Companies and citizens can challenge measures before national courts as well as before the Court of Justice of the European Union – for instance, by way of annulment or inaction actions under Art. 263/265 TFEU. In parallel, emergency measures are subject to parliamentary oversight by the European Parliament and the Council, particularly if delegated or implementing acts by the Commission are used.
How long may emergency measures remain in effect and how are they terminated?
Emergency measures are generally limited to a specific period, which is set out in the respective legal basis. Any extension beyond this period requires renewed legal review and may require the approval of Member States or European institutions. Termination occurs either automatically upon expiry of the period or by formal decision of the Commission once the disruption to the internal market no longer exists. Companies and citizens must be informed in good time about the termination or extension of measures.
