Defining the Concept of Abuse of Union Law

Summary:

The concept of abuse of Union law can be defined as a gain-seeking, artificial and undesirable choice of law made by a private individual.

This definition can be decomposed in three components. The first component is the presence of a gain-seeking choice of law: abusive practices constitute first and foremost attempts to elect a favourable law. The second component is the artificiality requirement, which enquires into the economic rationality of the transaction in question: artificial practices cannot be rationally explained but for the regulatory benefit claimed. The third component, namely the teleological assessment, assesses the legitimacy of the artificial choice of law previously identified: where private citizens should not have the freedom to elect the law governing their activities, artificial choices of law are proscribed as abuses of law.

This definition permits the concept of abuse of Union law to be distinguished from seven different situations: single legal regime, abuse of rights, detrimental change of law, involuntary change of law, fraud, sound economic transaction, and legitimate choice of law.