Protectionism: 16 states told to bring laws in line with freedom of establishment rules

The European Commission has demanded that 16 member states scrap requirements that allow only their own nationals to practise as notaries.


The commission has issued final warnings to Austria, Belgium, France, Greece, Germany, Luxembourg and the Netherlands requesting that they modify their legislation to allow foreign nationals to practise as notaries, in line with EC rules on freedom of establishment.


It has also commenced pre-litigation infringement proceedings against nine of the ten member states that joined the EU in 2004 including the Czech Republic, Hungary and Poland.


The states have two months to respond satisfactorily to the allegations or the commission may refer the matter to the European Court of Justice.


In continental Europe, the notarial profession is different to the practice in England and Wales. Many countries require their involvement in legal transactions, including conveyancing, probate and divorce matters. Some also perform a tax collection role.


In addition to the nationality restriction, there are often internal limits on the number of notaries who can practise in a particular region or area. Critics argue that as a result there is little price competition - fees, which vary little, are typically 1% of the transaction value.


The continental notaries argue that the commission's actions are misguided because they perform acts connected with the exercise of official authority and therefore fall within an exemption to the single market rules.


The commission has insisted that notaries do not take decisions with regard to state authority and therefore cannot be deemed to exercise such authority.


Mark Kober-Smith, a notary public at Mayfair firm Kober-Smith & Associates, who has long campaigned for the removal of practice bars, said: 'We have a rigid, autocratic, anti-competitive and complete monopolistic system in which cartels of notaries effectively control prices and the supply of services.


'They have no incentive to improve services or even think about what the lay consumer may need. This will remain the case until competition is introduced. These barriers must be dropped, but it could be a long, slow battle.'


However, the Council of the Notariats of the European Union (CNUE) described the commission's argument as 'unacceptable', claiming it only refers to their advisory work and not their core role of providing a public service of authenticity.


'We can also wonder why the decision for such a procedure - postponed several times - has been taken when the services directive, which provides for the exclusion of civil law notaries in its last version, is on the point of being adopted,' the CNUE added in a statement.