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Ruling of 13 September 2007 [.of the Court Fourth Chamber] in Case [C-260/04] Commission of the European Communities v Italian Republic [2007] ECR I-07083

 

Direct action under Article 226 EC, now Article 258 TFEU, for failure to fulfil obligations- infringement

 

FACTS:

 

In Italy, horse-race betting and gaming operations were originally run exclusively by the Unione Nazionale per l’Incremento delle Razze Equine (National Union for the Improvement of Horse Breeding, ‘UNIRE’), which had the option of operating the services of collecting and taking bets directly or delegating them to third parties. The UNIRE entrusted the operation of those services to bookmakers.

 

In 1996 a national law subsequently assigned the responsibility for the organisation and management of horse-race betting and gaming to the Ministry of Finance and the Ministry of Agriculture, Food and Forestry Resources, which were authorised either to operate the activity directly or through public bodies, companies or bookmakers appointed by them. Moreover, the national legislation provided a future reorganisation, by way of regulation, of the organisational, functional, fiscal and penal aspects of horse-race betting and gaming, as well as the sharing out of revenue from such betting. In the following years the Italian competent Authorities extended the period of validity of the licences that had already been granted until 30 October 2011 or until the date on which the new licences are allocated by means of a call for tenders, in order to take the necessary steps to calculate the amounts to be paid by the licence holders. Moreover, in 1999, only 329 licenses ware renewed, although  an additional 671 new licences were put out to tender.

 

In 2001 a private operator in the horse race betting sector lodged a complaint and as a result the Commission sent a letter of formal notice under Article 258 TFEU, to the Italian State, informing the latter about the irregularities contained in the national system of granting horse race betting licenses, in particular, the renewal by the contested decision of the 329 old licences granted by UNIRE without a competitive tendering procedure, with the general principle of transparency and the requirement of publication resulting from Articles 43 and 49 EC.

 

In response, the Italian State announced a bill for the adoption of a new Law tha would comply whit EU law. Because the Commission was not satisfied with the implementation of the provisions of that law, it issued a reasoned opinion on 16 October 2002 in which it asked the Italian Republic to adopt the necessary measures to comply with the reasoned opinion within two months of its receipt. By letter of 10 December 2002, the Italian Government responded that it had to conduct a detailed assessment of the financial status of existing licence holders before issuing calls for tenders. Because the Commission received no further information concerning the completion of that assessment and the launching of a call for tenders for the purposes of reallocating the licences at issue, the Commission decided to the action before the Court, arguing that by renewing the 329 old licences for horse-race betting operations without inviting any competing bids, the Italian Republic has failed to fulfil its obligations under the Treaty and has, in particular, infringed the general principle of transparency and the publication requirement resulting from Articles 43 and 49 EC, now Articles 49 and 56 TFEU.

 

ISSUES/QUESTIONS:

 

Failure of a Member State to fulfil obligations – Freedom of establishment and freedom to provide services – Public service concessions – Renewal of 329 horse-race betting licences without inviting competing bids – Requirements of publication and transparency/the Commission of the European Communities seeks a declaration by the Court that, by renewing 329 licences for horse-race betting operations without inviting any competing bids, the Italian Republic has failed to fulfil its obligations under the EC Treaty and has, in particular, infringed the general principle of transparency and the publication requirement resulting from Articles 43 and 49 EC, now Articles 49 and 56 TFEU.

 

ANSWER of the COURT:

 

The Court stated that by renewing 329 licences for horse-race betting operations without inviting any competing bids, the Italian Republic failed to fulfil its obligations under Articles 43 and 49 EC and, in particular, infringed the general principle of transparency and the obligation to ensure a sufficient degree of advertising.

 

REASONING of the Court

 

After assessing that the award of licenses for horse-race betting operations in Italy constitutes a public service concession the Court noted that public service concession contracts are subject to the fundamental rules enshrined by the Treaty, in particular the principle of non-discrimination on grounds of nationality.

 

The Court noted that the complete failure to invite competing bids for the purposes of granting licences for horse-race betting operations does not accord with Articles 43 and 49 EC, and, in particular, infringes the general principle of transparency and the obligation to ensure a sufficient degree of advertising. The renewal of the 329 old licences without a call for tenders precludes the opening up to competition of the licences and review of the impartiality of the procurement procedures.

 

The Court asked whether the renewal may be recognised as an exceptional measure, as expressly provided for in Articles 45 EC and 46 EC, now 49 and 56 TFEU,or justified, in accordance with the case-law of the Court, for reasons of overriding general interest. The assessment led to the conclusion that by renewing 329 licences for horse-race betting operations without inviting any competing bids, the Italian Republic failed to fulfil its obligations under Articles 43 and 49 EC and, in particular, infringed the general principle of transparency and the obligation to ensure a sufficient degree of advertising.

Comments:

 

As regards the principle of non discrimination in this case, it constituted a key criteria for the Courts ruling. The principle of non-discrimination was analysed in the light of Articles 49 and 56 TFEU, which give specific conditions to the effect of the principle of equal treatment. The obligation of transparency was assessed together with the foregoing. The outcome was that a complete failure to invite competing bids for the purposes of granting licences for horse-race betting operations does not accord with Articles 43 and 49 EC, and, in particular, infringes the general principle of transparency and the obligation to ensure a sufficient degree of advertising.

It must be pointed out that the Commissions’ application did not contained any forms of order sought in relation to the principle of non-discrimination. It was after the obligation of transparency was analysed that the Court put it all together and found that the national rules are in breach of the principle of non-discrimination, as expressed by the principle of equal treatment and of the obligation of transparency.

The court assessed this Case according to its settled case –law in the area of gambling, where the discrimination matter was always used when assessing the restrictions of the freedom to provide services.

So although, the parties made no reference to the principle of non-discrimination, the Court went in depth of the issue and ruled that this is case of indirect discrimination, that by not complying with the obligation of transparency, a national system such as the one at issue, cannot be justified under the objective invoked by the Italian Government, i.e. to discourage the development of clandestine activities for collecting and allocating bets.

Was this a matter of discrimination on grounds of nationality at EU level, on hypothetical grounds, that the fact that a non-national, not knowing about the bid, but wanting to establish or provide services of betting on the Italian territory? There must be a cross border element between EU Member States, that the situation falls under the provisions of non-discrimination.

Is this a new approach of the Court in the area of gambling services, in relation to the principle of non-discrimination on grounds of nationality, as enshrined by the Treaty? Because one is transparency and advertising obligations and discrimination on grounds of nationality is different.

 

Ruling of 1 July 2004 of the Court the Third Chamber in Case [C-65/03], Commission of the European Communities v Kingdom of Belgium [2004] ECR I-06427

 

Direct Action under Article 258 TFEU- Infringement

 

FACTS:

 

 Belgian national legislation provided that holders of secondary education diplomas obtained in other Member States cannot gain access to higher education organised by Belgium’s French Community under the same conditions as holders of the certificat d’enseignement secondaire supérieur (CESS).

 

Considering that the national rules governing the academic recognition of qualifications and diplomas awarded on completion of secondary studies and access to higher education and university education in the French Community infringed Articles 12 EC, 149 EC and 150 EC, the Commission initiated the infringement procedure. Having called on the Kingdom of Belgium to submit its observations, the Commission delivered a reasoned opinion on 23 October 2001 requesting that Member State to take the measures necessary to comply with the opinion within a period of two months from its notification.

 

The Government of the French Community then informed the Commission that at its meeting on 20 December 2001 it had decided to comply with the conclusions set out by the Commission in its reasoned opinion. It also notified the Commission that the rules in force would be amended for the purpose of putting an end to the discrimination in question and that the measures necessary to implement that decision would be taken before the end of the academic year 2001/2002.

 

Since the French Community did not respond to the Commission’s two letters of reminder, the latter brought the present action for a declaration that, by failing to take the measures necessary to ensure that holders of secondary education diplomas awarded in other Member States can gain access to higher education organised by Belgium’s French Community (‘the French Community’) under the same conditions as holders of the certificat d’enseignement secondaire supérieur (Certificate of higher secondary education) (CESS), the Kingdom of Belgium has failed to fulfil its obligations under Articles 12 EC, 149 EC and 150 EC.

 

ISSUES:

 

 Failure of a Member State to fulfil obligations – Articles 12 EC, 149 EC and 150 EC – Secondary education diploma awarded in another Member State – Access to higher education.

 

ANSWER of the COURT:

 

 By failing to take the measures necessary to ensure that holders of secondary education diplomas obtained in other Member States can gain access to higher education organised by Belgium’s French Community under the same conditions as holders of the certificat d’enseignement secondaire supérieur (CESS), the Kingdom of Belgium has failed to fulfil its obligations under Article 12 EC, read in conjunction with Articles 149 EC and 150 EC.

 

REASONING of the Court

 

First the court points out that the conditions of access to vocational training fall within the scope of the Treaty. In this respect, the scope of Article 149 TEC, now 165 TFEU is to encourage mobility of students and teachers, inter alia by encouraging the academic recognition of diplomas and periods of study. Further, Article 150(2) EC, third indent, provides that Community action is to aim to facilitate access to vocational training and encourage mobility of instructors and trainees and particularly young people.

 

Next the Court assessed the issue of access to higher education under the principle of non-discrimination, as enshrined by Article 12 TEC, now article 18 TFEU. Considering that it is applicable to the Case brought before it, the Court found that the legislation in question places holders of secondary education diplomas awarded in a Member State other then Belgium at a disadvantage, since they cannot gain access to higher education organised by the French Community under the same conditions as holders of the CESS or the equivalent Luxembourg diploma. The criterion of differentiation applied works primarily to the detriment of nationals of other Member States.

 

As regards the justification of the restrictive measure, the Belgian Government did not put forward any argument.

 

Comments:

 

The Court decided to rule without need of the Advocate general Opinion.

The European Commission argued that the Belgian system creates twofold discrimination, against holders of diplomas awarded in other Member States, and against nationals of other Member States on the basis of the education system within which they were awarded their diploma on completion of secondary studies.

The Court recalled that the principle of equal treatment, of which the prohibition on any discrimination on grounds of nationality in the first paragraph of Article 12 EC is a specific instance, prohibits not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result.

Even if the contested national rules were amended in 2003, after the period laid down by the reasoned opinion of the Commission, expired, the Court withhold the applicant arguments relating to the fact that in past non-nationals were put in a disadvantage by the infringement of Community law complained of by the Commission in its application.

 

Tod’s SpA- Case [C-28/04]

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 30 June 2005 of the Court the Second Chamber in Case [C-28/04], Tod’s SpA and Tod’s France SARL v Heyraud SA [2005] ECR I-05781

 

Referred by [Tribunal de grande instance de Paris – France]

 

FACTS:

 

 Tod’s is a company established under Italian law which claims to be the proprietor of artistic intellectual property rights in the shoes distributed under the Tod’s and Hogan trade marks. Tod’s France is the distributor of those shoes in France.

 

Having learnt that Heyraud was offering for sale and selling under the Heyraud name designs of shoes which copied or at least imitated the principal characteristics of the Tod’s and Hogan designs, Tod’s arranged for a bailiff’s report to be drawn up on 8 February 2000. On 13 February 2002, the claimants in the main proceedings brought an action against Heyraud before the referring court.

 

The subject matter of the main proceedings consists, inter alia, of an action for infringement of registered designs of shoes bearing the Tod’s and Hogan trademarks, against which Heyraud raises a plea of inadmissibility under Article 2(7) of the Berne Convention. Heyraud contends that, under that provision, Tod’s is not entitled to claim copyright protection in France for designs that do not qualify for such protection in Italy.

 

Tod’s replies, inter alia, that application of the provision in question constitutes discrimination within the meaning of Article 12 EC, now Article 18 TFEU.

 

The referring court takes the view that the use of the phrase ‘shall be entitled … only’ in the second sentence of Article 2(7) of the Berne Convention has the effect of depriving Union nationals who, in the country of origin of their work, enjoy only the protection granted in respect of designs and models, of the right to bring proceedings based on copyright in the countries of the Union which allow accumulation of protection.

 

According to that court, while it appears that that provision makes no distinction based on the nationality of the proprietor of the copyright, it remains the case that its scope under Community law is debatable where the country of origin of the ‘published’ work will most commonly be the country of which the author is a national or in which he has his habitual residence, and where the country of origin of an ‘unpublished’ work will, under Article 5(4)(c) of that convention, be the country of which the author is a national.

 

ISSUES/QUESTIONS:

 

 Equal treatment – Principle of non-discrimination on grounds of nationality – Copyright and related rights/ ‘Does Article 12 … EC … , which lays down the general principle of non-discrimination on grounds of nationality, mean that the right of an author to claim in a Member State the copyright protection afforded by the law of that State may not be subject to a distinction based on the country of origin of the work?

 

ANSWER of the COURT:

 

 Article 12 EC, which lays down the general principle of non‑discrimination on grounds of nationality, must be interpreted as meaning that the right of an author to claim in a Member State the copyright protection afforded by the law of that State may not be subject to a distinguishing criterion based on the country of origin of the work.

 

REASONING of the Court

 

First the Court ruled on the admissibility of the action for a preliminary ruling. In this respect, the EU Court stated that under Article 234 TEC it is competent to provide guidance for the national courts when it comes to interpretation of EU law, in this case Article 12 TEC, now Article 18 TFEU.

 

As regards the question referred by the French court, the Court made reference to its case law, Joined Cases C-92/92 and C-326/92 Phil Collins and Others [1993] ECR I-5145, paragraph 27, and reminded that copyright and related rights, which by reason in particular of their effects on intra-Community trade in goods and services fall within the scope of application of the EC Treaty, are necessarily subject to the general principle of non-discrimination laid down by the first paragraph of Article 12 EC, now article 18 TFEU. Furthermore, the Court regard that the principle of equal treatment prohibits not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by the application of other distinguishing criteria, lead to the same result.

 

Then the Court examined whether, by adopting a distinguishing criterion based on the country of origin of the work, the application of rules such as those at issue in the main proceedings constitutes indirect discrimination by reason of nationality within the meaning of the settled case law. In this respect, it was noted by the Court that the existence of a link between the country of origin of a work within the meaning of the Berne Convention, on the one hand, and the nationality of the author of that work, on the other, cannot be denied.

 

As published works are concerned, the country of origin is essentially, as Article 5(4)(a) of the Berne Convention indicates, the country where the work was first published. The author of a work first published in a Member State will, in the majority of cases, be a national of that State, whereas the author of a work published in another Member State will generally be a person who is not a national of the first Member State. As a consequence, the application of rules such as those at issue in the main proceedings is liable to operate mainly to the detriment of nationals of other Member States and thus give rise to indirect discrimination on grounds of nationality.

 

In respect to the justification issue, the French Government argued that the legitimate aim of the Berne Convention is the protection of literary and artistic works and that Article 2(7) and Article 5(4) of that convention specify the conditions under which such works are to be protected by copyright on the basis of an objective criterion based on the law applicable to the classification of the work. In its view, where a design cannot aspire to classification as an artistic work in the country where it was first published, it is not entitled to such protection in the States party to the Berne Convention since it does not exist as an artistic work. Article 2(7) thus concerns not the detailed rules for the exercise of copyright, but the law applicable to the artistic classification of the work. In its reply the Court stated that it is apparent from Article 5(1) of the Berne Convention, that the purpose is not to determine the applicable law on the protection of literary and artistic works, but to establish, as a general rule, a system of national treatment of the rights appertaining to such works. Moreover, Article 2(7) of that convention contains, for its part, a rule of reciprocity under which a country of the Union grants national treatment, that is to say, twofold protection, only if the country of origin of the work also does so. The Court recalled that it is settled case-law that implementation of the obligations imposed on Member States by the Treaty or secondary legislation cannot be made subject to a condition of reciprocity.

 

As no further objectives capable of justifying therules such as those at issue in the main proceedings, those rules constitutes indirect discrimination on grounds of nationality prohibited by Article 12 EC, now Article 18 TFEU.

 

Comments:

 

The principle of non-discrimination was assessed by the Court in the light of the general principle of equal treatment. Its worthnoty the part of the Courts’ reasoning related to the reciprocity requirements that are not required under EU law. In this respect the principle of non-discrimination must be applied regardless of the country of origin criteria.

 

Ruling of 7 July 2005 of the Court the Second Chamber in Case [C-147/03], Commission of the European Communities v Republic of Austria [2005] ECR I-05969

 

Direct Action under Article 258 TFEU- Infringement

 

 

FACTS:

 

 The Austrian legislation on university studies (Universitäts-Studiengesetz) provides that students who have obtained their secondary education diploma in a Member State other than

Austria and who wish to pursue their higher or university studies in Austria must not only produce that diploma, but also prove that they fulfil the conditions of access to the chosen course of study in the State in which they obtained their diploma, such as, in particular, success in an entrance examination or obtaining a sufficient grade to be included in the numerus clauses.

 

ISSUES/QUESTIONS:

 

 Failure of a Member State to fulfil obligations – Articles 12 EC, 149 EC and 150 EC – Conditions of access to university education – Discrimination.

 

ANSWER of the COURT:

 

 By failing to take the necessary measures to ensure that holders of secondary education diplomas awarded in other Member States can gain access to higher and university education organised by it under the same conditions as holders of secondary education diplomas awarded in Austria, the Republic of Austria has failed to fulfil its obligations under Articles 12 EC, 149 EC and 150 EC.

 

REASONING of the Court

 

 The Court finds that that legislation on admission introduces not only differential treatment to the detriment of students who have obtained their secondary education diploma in a Member State other than Austria, but also a difference in treatment between those same students according to the Member State in which they obtained their secondary education diploma. That legislation adversely affects students from other Member States more than Austrian students and therefore leads to indirect discrimination on grounds of nationality.

 

That discrimination could be justified only if it were based on objective considerations independent of the nationality of the persons concerned and were proportionate to the legitimate aim of the national provisions.

 

The Court then verifies whether the indirect discrimination is justified.

 

The interest of safeguarding the homogeneity of the Austrian higher or university education system, was first invoked by the Austrian Government. In its reply, the Court ruled that, excessive demand for access to specific courses could be met by the adoption of specific non-discriminatory measures (an entry examination or the requirement of a minimum grade). Second, Austria has failed to demonstrate that, in the absence of the current legislation, the existence of the Austrian education system in general and the homogeneity of higher education in particular would be jeopardised.

 

Secondly, the objective of preventing abuse of Community law, was brought to the table by the Government of Austria. The Court reacted in the sense that the possibility for a student from the European Union, who has obtained his secondary education diploma in a Member State other than Austria, to gain access to Austrian higher or university education under the same conditions as holders of diplomas awarded in Austria constitutes the very essence of the principle of freedom of movement for students guaranteed by the EC Treaty. That possibility cannot therefore of itself constitute an abuse which, in any case, must be subject to assessment on a case-by-case basis.

 

Thirdly, the last legitimate aim meant to justify the contested national legislation was the compliance with the two conventions concluded within the framework of the Council of Europe in 1953 and 1977 on the equivalence of diplomas leading to admission to universities. In this regard, the Court assessed that the rights arising from international agreements concluded by a Member State before its accession to the European Union may not be invoked in intra-Community relations. That applies, a fortiori, in respect of agreements concluded by it following its accession.

 

The Court therefore holds that the indirect discrimination is not justified and declares that Austria has failed to fulfil its obligations under the principles of the EC Treaty.

 

Comments:

 

The EU Court found the Austrian legislation to be indirectly discriminatory under Article 12 TEC, now Article 18 TFEU. In this respect, the principle of equal treatment was applied to the de facto situation, in order to conclude that the two categories of students ware treated differently. Moreover, the Court followed Advocate General Opinion, as expressed at point 52, that the same objective can be attained by less restrictive measures, e.g. the establishment of an entry examination or the requirement of a minimum grade. In addition, the Austrian Government did not bring enough evidence to demonstrate its allegations, namely no figures ware submitted to the Court, but simply maintained at the hearing that the number of students registering for courses in medicine could be five times the number of available places, which would pose a risk to the financial equilibrium of the Austrian higher education system and, consequently, to its very existence.

As the allegations ware not proven, but even if they would have been, and the proportionality test was found to be breached, the Court ruled that the legislation at issue infringes EU law.

Schempp- Case -C-403/03

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 12 July 2005 [.of the Court Grand Chamber] in Case [C-403/03] Egon Schempp v Finanzamt München [2005] ECR I-06421

 

Referred by [Bundesfinanzhof – Germany]

 

FACTS:

 

 

Following his divorce, Mr. Schempp, a German national resident in Germany, pays maintenance to his former spouse resident in Austria.

 

Mr. Schempp sought to deduct the maintenance payments, in accordance with the correspondent German law. However, in his income tax assessments for 1994 to 1997, the Finances Authorities  refused him the deduction on the ground that it had not received a certificate from the Austrian tax authorities to show that his former spouse had been taxed in Austria on the maintenance payments.

 

Mr. Schempp was unable to produce such a certificate, as Austrian tax law excludes, in principle, taxation of maintenance payments and does not allow them to be deducted. The documents in the case show, however, that Mr. Schempp would have been able to deduct the total amount of the maintenance payments to his former spouse if she had been resident in Germany. In that case, she for her part would not have paid any tax on the maintenance, as her income is less than the taxable minimum in Germany.

 

ISSUES/QUESTIONS:

 

Citizenship of the Union – Articles 12 EC and 18 EC – Income tax – Deductibility from taxable income of maintenance paid by a taxpayer resident in Germany to his former spouse resident in Austria – Proof of taxation of the maintenance payments in that Member State / Is the first paragraph of Article 12 EC and Article 18(1) EC to be interpreted as precluding a taxpayer resident in Germany from being unable, under the national legislation at issue in the main proceedings, to deduct from his taxable income in that Member State the maintenance paid to his former spouse resident in Austria, where he would have been entitled to do so if she were still resident in Germany?

 

ANSWER of the COURT:

 

The first paragraph of Article 12 EC and Article 18(1) EC must be interpreted as not precluding a taxpayer resident in Germany from being unable, under national legislation such as that at issue in the main proceedings, to deduct from his taxable income in that Member State the maintenance paid to his former spouse resident in another Member State in which the maintenance is not taxable, where he would be entitled to do so if his former spouse were resident in Germany.

 

REASONING of the Court

 

First the Court examined if the case falls under the scope of EU law. In the light of the fact that the applicant did not make use of his rights under Article 18 TEC, now Article 21 TFEU, but his former spouse did, in respect to the effect that this had on his deductibility capacity, the situation is not purely internal, so that it falls under the scope of EU law.

 

As regards the first paragraph of Article 12 EC, now Article 18 TFEU and Article 18(1) EC, now Article 21 TFEU,it must be interpreted as not precluding a taxpayer resident in a Member State from being unable under national legislation to deduct from his taxable income in that Member State the maintenance paid to his former spouse resident in another Member State in which the maintenance is not taxable, where he would be entitled to do so if his former spouse were resident in the same Member State.

Article 12 EC, now Article 18 TFEU is not concerned with any disparities in treatment, for persons and undertakings subject to the jurisdiction of the Community, which may result from divergences existing between the various Member States, so long as they affect all persons subject to them in accordance with objective criteria and without regard to their nationality.

Moreover, the Treaty offers no guarantee to a citizen of the Union that transferring his activities to a Member State other than that in which he previously resided will be neutral as regards taxation. Given the disparities in the tax legislation of the Member States, such a transfer may be to the citizen’s advantage in terms of indirect taxation or not, according to circumstances. The same principle applies a fortiori to a situation in which the person concerned has not himself made use of his right of movement, but claims to be the victim of a difference in treatment following the transfer of his former spouse’s residence to another Member State.

 

Comments:

 

The Court showed no hesitation to examine German tax rules applied to a German citizen residing in Germany. The claimant was placed in a marginally less favourable situation as regards the tax treatment of duly payable alimony, as a result of the fact that his former wife had moved to Austria. The Court considered the case to be far from being purely internal; as his former wife had exercised her free movement rights, there was no bar for him to appeal

to Articles 12 and 18 (1) EC, though the German rules at stake were ultimately found to square with these provisions.

 

Considering that there is no discrimination under Article 18 TFEU, resulting from the existing disparities in the tax regimes of Member states, the Court ruled that there is no difference in treatment, applying the assessement of the principle of equal treatment. The court stated that the payment of maintenance to a recipient resident in Germany cannot be compared to the payment of maintenance to a recipient resident in Austria. The recipient is subject in each of those two cases, as regards taxation of the maintenance payments, to a different tax system. As a consequence, given the fact that there is no breach of the equal treatment principle, there is no discrimination under Article 18 TFEU[1].

 

Under the EU citizenship provisions, namely Article 21 TFEU, the Court followed AGs’ Opinion, as expressed at point 39, and ruled that the disparities between the tax regimes cannot constitute a restriction on the freedom to move and reside within EU, as enshrined by the Treaty, so that no discrimination was found there either.

 

Advocate General in the Case stated at point 34 of his Opinion that the situation is the result of a lack of coordination between the tax systems of the Member States and can only be resolved by the Community legislature. Does that mean that he suggested that maybe a harmonization in the field of taxation at EU level would be welcomed?



[1] C-403/03 Egon Schempp v Finanzamt München [2005] ECR I-06421, paragraph 36

 

Parking Brixen GmbH- Case -C-458/03

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 13 October 2005 of the Court the First Chamber in Case [C-458/03], Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG [2005] ECR I-08585

 

Referred by [Verwaltungsgericht, Autonome Sektion für die Provinz Boz (Italy)]

 

FACTS:

 

 In 2001, the Municipality of Brixen (Italy) converted Stadtwerke Brixen, a municipal undertaking, into a company limited by shares, Stadtwerke Brixen AG. The company’s nominal capital was 100% owned by the municipality which, however, was allowed under national legislation to remain the sole shareholder for only the following two years.

 

In 2002, the Municipality of Brixen concluded an agreement with Stadtwerke Brixen AG for the management, for a nine-year term, of a car park with about 200 spaces.

 

In consideration of the management of the car park, Stadtwerke Brixen AG collects the parking charges. In addition, it provides a free bicycle hiring service and accepts that theweekly market continues to be held on the area in question. Finally, the routine and non routine maintenance of the area is the task of that company which takes full responsibility in

that regard.

 

Parking Brixen GmbH, the company which managed another car park in the Municipality of Brixen, challenged before the Verwaltungsgericht, Autonome Sektion für die Provinz Bozen, the award of the management of the car park to Stadtwerke Brixen AG. In its submission, the Municipality of Brixen should have issued a public call for tenders.

 

The Municipality of Brixen maintained that it completely controls Stadtwerke Brixen AG and that there was therefore no award of a contract or concession to a third party. There was no obligation to proceed by way of a public call for tenders.

 

In that context, the Verwaltungsgericht, Autonome Sektion für die Provinz Bozen, referred two questions to the Court of Justice of the European Communities for a preliminary ruling.

 

 

ISSUES/QUESTIONS:

 

 Interpretation of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, p. 1) Articles 43 EC, 49 EC and 86 EC, and the principles of non-discrimination, transparency and equal treatment/ whether the award of the management of the public pay car parks in question in the main proceedings involves a public service contract within the meaning of Directive 92/50, or a public service concession and; whether the award of a public service concession without it being put out to competition is compatible with Community law, if the concessionaire is a company limited by shares resulting from the conversion of a special undertaking of a public authority, a company whose share capital is at the time of the award 100% owned by the concession-granting public authority, but whose administrative board enjoys all extensive powers of routine administration and can effect independently, without the agreement of the shareholders’ meeting, certain transactions up to a value of EUR 5 million.

 

 

ANSWER of the COURT:

 

 The award, by a public authority to a service provider, of the management of a public pay car park, in consideration for which that provider is remunerated by sums paid by third parties for the use of that car park, is a public service concession to which Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts does not apply.

 

Articles 43 EC and 49 EC, and the principles of equal treatment, non-discrimination and transparency, are to be interpreted as precluding a public authority from awarding, without putting it out to competition, a public service concession to a company limited by shares resulting from the conversion of a special undertaking of that public authority, a company whose objects have been extended to significant new areas, whose capital must obligatorily be opened in the short term to other capital, the geographical area of whose activities has been extended to the entire country and abroad, and whose Administrative Board possesses very broad management powers which it can exercise independently.

 

REASONING of the Court

 

 The Court points out, first, that the Directive relating to the coordination of procedures for the

award of public service contracts[1] applies to contracts which involve consideration which is paid directly by the contracting authority to the service provider, but does not apply to service concessions.

 

In this case, the service provider’s remuneration comes from the sums paid by third party users of the car park concerned. That method of remuneration means that the provider takes the risk of operating the services in question and is thus characteristic of a public service concession.

 

Therefore, since it is a public service concession, the directive does not apply.

Nevertheless, the Court makes clear that a concession-granting public authority is, as a rule, bound to comply with the general rules of the EC Treaty such as freedom of establishment and freedom to provide services, as well as the principles of equal treatment, nondiscrimination and transparency.

 

The application of those rules is excluded only if the concession-granting public authority exercises over the concessionaire a control similar to that which it exercises over its own departments and if that concessionaire carries out the essential part of its activities with the controlling authority. Such control must enable the concession-granting authority to have a decisive influence over both the concessionaire’s strategic objectives and its significant decisions.

 

In this case, Stadtwerke Brixen AG enjoys a high degree of independence which precludes the municipality from exercising over it control similar to that which it exercises over its own departments. Indeed, the company’s objects were broadened to other fields such as the carriage of persons and goods, its activities expanded to the whole of Italy and abroad, and its capital had to be opened to other shareholders. In addition, broad powers were conferred on its Administrative Board with, in practice, no management control by the municipality. Consequently, the award cannot be regarded as an ‘in-house’ transaction to which the rules and principles of Community law do not apply.

 

The Court concludes therefore that the complete failure to put out to tender the award of a public service concession such as that in question is not compatible with Community law.

 

Comments:

 

After the Court found that Directive 92/50 is not applicable, carried on with assessing the case in the light of the freedom of establishment and services, as governed by the principles of equal treatment and non-discrimination, on the basis of the obligation of transparency, that is incumbent to the public authority when granting a concession. Moreover, the Court made reference to the competition provisions as enshrined by the Treaty, namely Article 106 (1) TFEU, which states that, “in the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaty, in particular to those laid down in Articles 18 TFEU and 101 EC to 109 TFEU”.

In this respect, even if the secondary legislation was not found to be applicable to the situation brought before the Court, the Case was analysed under primary legislation, in relation to the fundamental rules that govern EU law. In this regard, the discrimination matter was not assessed as in the light of Article 8 TFEU, which provides for a general expression, but as derived from the freedoms of establishment and services and, consequently in relation to the competition rules.

The Case is retains a high degree of complexity in respect of anti-discrimination law. In this respect, the court emphasized that a member State legislation must always comply with the fundamental freedoms, in particular with the principle of non-discrimination on grounds of nationality[2].

Next, the court found that more specifically applicable provisions, other than the Directive aforementioned, include, so they are not limited to, in particular Articled 49 and 56 TFEU, freedom of establishment and freedom to provide services. In addition, the Court noted that Articles 49 and 56 TFEU are expressions of the principle of equal treatment and not of the principle of non-discrimination, as stated in other Cases that were brought before it.

In order to reach its conclusions in this Case, the Court considered that this was not a matter of internal affairs, but one of the Internal Market, and consequently assessed together the principles of equal treatment and non-discrimination, which sets up a duty of transparency which enables the concession public authority to ensure that these principles are complied with. Moreover, the obligation of transparency consist in ensuring , for the benefit of any potential tenderer a degree of advertising sufficient to enable the service concession to be opened up to competition and the impartiality of procurement procedures to be reviewed[3].

The parties’ arguments sought to maintain that EU law is not applicable, namely the defendants in the main proceedings and the Italian Government, referred to the fact that the situation is an internal one, given that all the parties’ premises are located in Italy and that the plaintiff in the main proceedings is not an entity independent of that municipality.

None of them ware accepted, as the Court assessed the Case in the hypothesis that if a Member State would be interested to provide the same services. When the case maybe, if there is no advertising, then other member States are discriminated and that will hinder the free movement of establishment and services. Moreover, it will distort competition within the Internal Market.

No issues of direct or indirect discrimination were dealt with here, as the principle of discrimination was used to decide whether EU law was applicable or not to the Case brought before the Court. But when the Treaty contains fundamental freedoms based on fundamental rights, that are generally valid, it would be difficult for one not to find them applicable, even if there was a hypothetical situation that the Court ruled on.



[1] Council Directive 92/50/EEC of 18 June 1992

[2] Case [C-458/03], Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG [2005] ECR I-08585, paragraph 46

[3] Idem Paragraoh 49.

Ruling of 19 March 2002 of the Court the Sixth Chamber in Case C- 224/00, Commission of the European Communities v Italian Republic [2002] ECR I-02965

 

Direct Action under Article 258 TFEU- Infringement

 

FACTS:

 

 The Commission brought an action against Italy on the ground that certain provisions of the new Italian highway code involve discriminatory treatment based on the place of registration of the vehicle.

The highway code provides that, in the case of a breach punishable by a fine, the driver may, within 60 days, make a reduced payment of an amount equal to the minimum fine or bring an appeal before the prefect. However, if the vehicle is registered in another Member State, the offender may immediately pay the minimum fine or give a guarantee there and then (in the form of a security or a surety document) corresponding to twice the minimum fine, in order to avoid the immediate confiscation of his driving licence or the impounding of his car as a precautionary measure.

 

ISSUES/QUESTIONS:

 

 Failure by a Member State to fulfil its obligations – Principle of non-discrimination on grounds of nationality – Difference in treatment of persons contravening the highway code according to the place of registration of their vehicle – Proportionality

 

ANSWER of the COURT:

 

By maintaining in forcethe contested provisions of the Italian highway code, a disproportionate difference in treatment between offenders based on the place of registration of their vehicles, the Italian Republic has failed to fulfil its obligations under the principle of non-discrimination as enshrined by the Treaty

 

REASONING of the Court

 

 First, the Court states that the difference in treatment based on the place of registration of the vehicle amounts to a difference in treatment between Italian nationals and those of other Member States, since the majority of drivers whose vehicles are registered in another Member State are not Italian nationals and vice versa.

That difference in treatment is such that the highway code in fact leads to the same result as discrimination based on nationality.

Italy has sought to justify its legislation, however, by arguing that the absence of a mechanism to ensure the payment of fines in Member States other than Italy justifies the difference in treatment.

The Court acknowledges the merits of a system for the provision of security, but considers that the amount fixed by the highway code is disproportionate.
The security amounts to twice the minimum amount fixed in the case of immediate payment and has the effect of encouraging offenders to pay the fine immediately and to waive their legal right to a period of time in which to decide whether to contest the alleged infringement before the prefect.

The Court considers that Italy could have ensured the payment of fines by offenders from other Member States just as effectively if it had provided for the lodging of security in an amount equal to the minimum fine, which could be confiscated on the expiry of the time-limit for lodging an appeal.

 

Comments:

 

The Court found the situation brought before it to be indirectly discriminatory. One can observe, the difference in the criteria, namely that the Court noticed the link between the provision related to the registration place of the vehicle and the owner, which is most likely a non-resident of Italy.

Discrimination was the main issue of the Case and it was assessed in the light of the principle of equal treatment. By finding that the latter EU law was breached the Court analysed if there is a justification for the national Italian rules. In this respect, the Court ruled that even if the contested law is justified by the fact that there are no international or Community instruments to ensure that a pecuniary penalty for an infringement of the highway code committed in one Member State may if necessary be enforced in another Member State, there is a risk that the penalty will not be paid and collected, it is still not proportionate to the aim of ensuring  the payment of pecuniary penalties owed by offenders in possession of a vehicle registered in a Member State other than Italy. Moreover, it was also agreed upon that there are no bilateral conventions between the Italian Republic and other Member States which could ensure such enforcement.

Being found to be disproportionate to the objective, the Court followed the EU Commission argument related to a less restrictive measure. As a consequence, the Court stated that that objective could also be achieved if the offenders covered by the national rules were obliged to pay security in an amount equal to the minimum prescribed and that security could be confiscated by the Italian authorities at the end of the 60-day period prescribed in the same national legislation.

Waltraud- Case- C-443/06

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 11 October 2007 of the Court the Fourth Chamber in Case [C-443/06], Erika Waltraud Ilse Hollmann v Fazenda Pública [2007] ECR I-08491

 

Referred by [Supremo Tribunal Administrativo – Portugal]

 

FACTS:

 

 Mrs Hollmann has resided in Germany since the time of the facts in the case in the main proceedings. Following the death of her husband, in 1998 Mrs Hollmann inherited immovable property situated in Portugal. She was taxed on the basis of tax on inheritance and donations on the value of that asset. In 2003 Mrs Hollmann sold the immovable property in question and made a capital gain of EUR 619 757.46 corresponding to the difference between the amount of that sale and the asset value subject to tax on inheritance and donations.

In her notice of income tax assessment for 2003 the competent tax authorities took account of the total amount of the capital gains realised by Mrs Hollmann to determine her net taxable income, adding that sum to her other taxable income in Portugal. According to the tax authorities, the applicant in the main proceedings was not entitled to rely on the favourable tax provisions of Article 43(2) of the CIRS on the ground that she was residing in a Member State of the European Union which was not Portugal.

Mrs Hollmann challenged that notice of assessment before the Tribunal administrativo e fiscal de Loulé (Administrative and Tax Court, Loulé). Her action having been dismissed she brought an appeal against that judgment before the Supreme Administrative Tribunal in Portugal.

 

ISSUES/QUESTIONS:

 

 Direct taxation – Taxation of capital gains on immovable property – Free movement of capital – Basis of assessment – Discrimination – Cohesion of the tax system/ whether it is contrary to Articles 12 EC, 18 EC, 39 EC, 43 EC and 56 EC for national legislation, such as that in dispute in the main proceedings, to subject capital gains arising from the transfer of immovable property situated in a Member State, where that transfer is made by a resident of another Member State, to tax which is higher than that which would be applicable for the same operation to capital gains realised by a resident of the State in which that immovable property is situated.

 

ANSWER of the COURT:

 

 Article 56 EC must be interpreted as precluding national legislation, such as that in dispute in the main proceedings, which subjects capital gains resulting from the transfer of immovable property situated in a Member State, in this case Portugal, where that transfer is made by a resident of another Member State, to a tax burden greater than that which would be applicable for the same type of transaction to capital gains realised by a resident of the State in which that immovable property is situated.

 

REASONING of the Court

 

First the Court points out that it has jurisdiction to provide guidance for the interpretation of EU law, under article 267 TFEU, ex Article 234 TEC, and as consequence ruled that the action brought before it is admissible.

 

Next the Court noted that the applicant in the main proceedings can rely only on the Treaty provisions related to the principle of prohibition of non-discrimination and on the freedom of capital. Furthermore, the Court emphasized that as regards the principle of non-discrimination, Article 63 TFEU, ex Article 56 TEC sets up a specific application of the principle of non-discrimination, justified only by the overriding reasons in the public interest or the difference in treatment must concern situations which are not objectively comparable.

 

When assessed the situation in fact the Court found that the Portuguese rules on taxation constitutes indirect discrimination under Article 63 TFEU, ex Article 53 TEC, and as a consequence hinders free movement of capital, by making less attractive for non-residents to sell immovable property there or to produce income on the Portuguese territory.

 

The Portuguese Government, in respect to objectively comparable situations, submits that a different basis of assessment for non-residents, in the case of realisation of capital gains, is justified in the light of the income tax system and in particular in the light of the different tax rates applicable to residents and non-residents. For the former, taxable income results from the accumulation of different categories of income, thus including capital gains received each year, subject to a progressive rate, whereas for non-residents the tax Portuguese rules lays down a special proportional rate. The Court pointed out that the taxation of the capital gains resulting from the transfer of immovable property concerns only one of the categories of income received by taxable persons, whether they are resident or non-resident; second, it concerns both categories of taxable persons; and third, the Member State in which the taxable income arises is the Republic of Portugal in both cases. Given that it results from the national tax rules a heavier taxation for non-residents, where the two situation are objectively comparable, the Court ruled that the claim made by the Portuguese Government in the present case cannot be accepted.

 

As regards, second, the justification based on overriding reasons in the public interest, the Portuguese Government alleges that it is necessary to maintain the coherence of the national tax system. In this respect, the Court made reference to its settled case-law in the area, i.e. Case C‑471/04 Keller Holding [2006] ECR I‑2107, paragraph 40, and Case C‑347/04 Rewe Zentralfinanz [2007] ECR I‑0000, paragraph 62 and the case‑law cited, and reiterated that such a argument can be upheld under the condition that a direct link must be established between the tax advantage concerned and the offsetting of that advantage by a particular tax levy.

 

The Portuguese Government submits that account needs to be taken of the purpose and logic of the tax system on the realisation of capital gains resulting from the transfer of immovable property. In that regard, the tax system in question seeks to avoid penalising residents, in the context of the taxation of capital gains, by applying a progressive rate in their regard. Essentially there is a direct link, for residents, between the tax advantage resulting from the reduction by half of the taxation of capital gains and the progressive tax rate applicable to all their income. In reply, the Court answered that there can be no direct link between the tax advantage and the offsetting of that advantage by a particular tax levy, as the tax advantage granted to residents, consisting of a reduction of half of the tax basis of capital gains, in any event outweighs the consideration for that advantage, namely, the application of a progressive rate to the taxation of their income.

 

In the light of the foregoing, the Court found that the restriction resulting from the tax legislation in dispute in the main proceedings cannot be justified by the need to ensure the cohesion of the tax system.

 

Comments:

 

Article 63 TFEU provides for a prohibition of discrimination on grounds of nationality when it comes to payments between Member States and third countries. Such restriction can be justified only under overriding reason of public interest.

The Court, when found that the national rules have the effect of restricting free movement of capital, applied the principle of equal treatment which governs the principle of non-discrimination on grounds of nationality. In this respect, the Court analyzed if the two categories of taxable persons are objectively comparable, according to the rule that comparable situations must be treated the same way and different ones must not be treated the same.

After it was ruled that the national rules discriminate indirectly against non-residents, the issue of justification was assessed. The Portuguese Government, invoked the overriding reason of public interest, namely alleged that it is necessary to maintain the coherence of the national tax system. The Court pointed out that such an argument will be successfully accepted only if there is a direct link between the tax advantage concerned and the offsetting of that advantage by a particular tax levy. As the tax advantage granted to residents, consisting of a reduction of half of the tax basis of capital gains, in any event outweighs the consideration for that advantage, namely, the application of a progressive rate to the taxation of their income, the Court found no link as mentioned above.

Grunkin- Case-[C-353/06

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 14 October 2008 [.of the Court Grand Chamber] in Case [C-353/06] Stefan Grunkin and Dorothee Regina Paul [2008] ECR I-07639 

 

Referred by [Amtsgericht Flensburg – Germany)]

 

FACTS:

 

Leonhard Matthias Grunkin was born on 27 June 1998 in Denmark, the child of Dorothee Paul and Stefan Grunkin who at the time were married and are both of German nationality,. The child also has German nationality and has lived in Denmark since he was born. His surname, composed of the surnames of both his father and his mother, was entered on his Danish birth certificate. In Denmark it is possible to have such a double-barrelled surname.

In 2006 the parents of the child applied to have him registered in the family register held in Niebüll, Germany, with the surname Grunkin-Paul. However, the German authorities refused to register that name on the ground that the surnames of German citizens fall to be determined by German law, which does not allow a child to bear a double-barrelled surname.

The parents brought an action before the Amtsgericht Flensburg against that decision of the German authorities.

 

ISSUES/QUESTIONS:

 

Right to move and reside freely within the territory of the Member States – Private international law relating to surnames – Applicable law determined by nationality alone – Minor child born and resident in one Member State with the nationality of another Member State – Non-recognition in the Member State of which he is a national of the surname acquired in the Member State of birth and residence/Does EU law precludes national law from requiring a citizen of the European Union to bear a different surname according to the Member State in which he happens to be?

 

ANSWER of the COURT:

 

Article 18 EC, now Article 21 TFEU, precludes the authorities of a Member State, in applying national law, from refusing to recognise a child’s surname, as determined and registered in a second Member State in which the child – who, like his parents, has only the nationality of the first Member State – was born and has been resident since birth.

 

REASONING of the Court

 

The Court points out, first, that although the rules governing a person’s surname are matters coming within the competence of the Member States, the latter must none the less, when exercising that competence, comply with Community law. In addition, the situation of Leonhard Matthias falls within the scope of Community law because he is a national of one Member State and is lawfully resident in the territory of another Member State.

Secondly, the Court states that having to use a surname, in the Member State of which the person concerned is a national, that is different from that conferred and registered in the Member State of birth and residence is liable to hamper the exercise of the right, established in Article 18 EC, to move and reside freely within the territory of the Member States.

 

Many everyday dealings require proof of identity, which is normally provided by a passport. As Leonhard Matthias has only German nationality, the issuing of that document falls within the competence of the German authorities alone. Therefore, if the German authorities refuse to recognise Leonhard Matthias’ surname as determined and registered in Denmark, the child will be issued with a passport by those authorities in a name that is different from the name he was given in Denmark.

 

Such a discrepancy in surnames in the various German and Danish documents is liable to cause serious inconvenience for Leonhard Matthias at both professional and private levels, in particular inasmuch as it is likely to give rise to doubts as to his identity and the authenticity of the documents submitted or the veracity of their content.

In those circumstances, and having regard to the fact that the restrictive German provisions have not been duly justified, the Court rules that the right of European citizens to move and reside freely within the territory of the Member States precludes the German authorities from refusing to recognise Leonhard Matthias’ surname as determined and registered in Denmark.

 

Comments:

 

The Court assessed the Case in the light of Article 18 TEC, now Article 21 TFEU, making no difference between citizenship and nationality. The Court followed the parties opinion, that under Article 12 TEC, now Article 18 TFEU, that the child Leonhard Matthias is not, in Germany, being discriminated against on grounds of nationality[1]. The Court found the refusal to register the child under both surnames, under German law, to be indirectly discriminatory and carried on its analysis with the proportionality test. In this respect, the Commission argued that insofar as the connecting factor of nationality seeks to ensure that a person’s surname may be determined with continuity and stability, in circumstances such as those in the main proceedings, that connecting factor will result in an outcome contrary to that sought. Every time the child crosses the border between Denmark and Germany, he will bear a different name. The Court followed exactly the latter opinion and noted that German law does not wholly preclude the possibility of conferring double-barrelled surnames on children of German nationality. Moreover, the German Government stated that where one of the parents has the nationality of another State, the parents may choose to form the child’s surname in accordance with the law of that State. Seems that the principle of equal treatment is the source of the principle of non-discrimination, under Article 12 TEC, now Article 18 TFEU.

A restriction on the freedom to move and reside within European Union fell under Article 18 TEC, now Article 21 TFEU, where the Court made no distinction between EU citizenship and nationality.



[1] Case [C-353/06] Stefan Grunkin and Dorothee Regina Paul [2008] ECR I-07639, paragraph 19

 

Heinz Huber -Case C‑524/06

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 16 December 2008 [.of the Court Grand Chamber] in Case [C‑524/06Heinz Huber v Bundesrepublik Deutschland [2008] ECR I-09705

 

Referred by [Oberverwaltungsgericht für das Land Nordrhein-Westfalen – Germany]

 

FACTS:

 

German law has established a centralised register which contains certain personal data relating to foreign nationals who are resident in Germany for a period of more than three months. The Federal Office for Migration and Refugees (Bundesamt für Migration und Flüchtlinge) is responsible for maintaining that register and assists, amongst others, the public authorities who have the duty of implementing the legislation concerning the law relating to foreign nationals. In particular, the register is used for statistical purposes and by the security and police services and by the judicial authorities in exercising their powers in relation to the prosecution and investigation of criminal activities or which threaten public security.

 

Mr. Huber, an Austrian national, moved to Germany in 1996 in order to carry on business there as a self-employed insurance agent. Since he took the view that he was discriminated against because the personal data concerning him are contained in the centralised register and, in particular, because a database of that kind does not exist for German nationals, Mr. Huber requested that those data to be deleted. 

 

ISSUES/QUESTIONS:

 

Protection of personal data – European citizenship – Principle of non-discrimination on grounds of nationality – Directive 95/46/EC – Concept of necessity – General processing of personal data relating to citizens of the Union who are nationals of another Member State – Central register of foreign nationals/Is the processing of personal data of the kind undertaken in the centralised register, under the German legislation, compatible with Community law?

 

ANSWER of the COURT:

 

The processing and storage of those data relating to Union citizens for statistical purposes or with a view to fighting crime is contrary to Community law

 

REASONING of the Court

 

The Court of Justice holds, first of all, that the data in question constitute personal data within the meaning of the Data Protection Directive[1]. The directive provides that such data may lawfully be processed only if it is necessary to do so for the performance of a task carried out in the public interest or in the exercise of official authority.

 

The Court notes that the right of residence of a Union citizen in a Member State of which he is not a national is not unconditional but may be subject to limitations. Thus, it is, in principle, legitimate for a Member State to have relevant particulars and documents relating to foreign nationals available to it and to use a register for the purpose of providing support to the authorities responsible for the application of the legislation relating to the right of residence, provided that there is compliance with the requirement of necessity laid down by the Directive on the Protection of Personal Data.

 

The Court concludes that such a system for processing personal data complies with Community law if it contains only the data which are necessary for the application by those authorities of that legislation and if its centralised nature enables that legislation to be more effectively applied as regards the right of residence of Union citizens who are not nationals of that State.

As regards the storage and processing of those data for statistical purposes, the Court observes that Community law does not exclude the power of Member States to adopt measures enabling the national authorities to have an exact knowledge of population movements affecting their territory. Those statistics presuppose that certain information will be collected by those States. However, the exercise of that power does not, of itself, mean that the collection and storage of individualised personal information of the kind undertaken in the register at issue is, of itself, necessary. Consequently, the Court decides that such processing of personal data does not satisfy the requirement of necessity laid down by the directive.

 

Lastly, as regards the question of the use of the data contained in the register for the purposes of fighting crime, the Court holds, in particular, that that objective involves the prosecution of crimes and offences committed, irrespective of the nationality of their perpetrators. The register at issue does not contain personal data relating to nationals of the Member State concerned. Consequently, use for the purposes of fighting crime is contrary to the principle of non-discrimination and hence contrary to Community law.

 

Comments:

 

The principle of non-discrimination was assessed in this Judgment from two standpoints, that led to two different outcomes.

First, the Court dealt with the requirement of necessity, as enshrined by Directive 95/46/EC, which was interpreted in the light of the principle of non-discrimination on grounds of nationality, as provided by Article 12 TEC, now Article 18 TFEU. In this respect, the Court found the German system which imposes a registration for the application of the law relating to the right of residence (more than three months) to be indirectly discriminatory. As a consequence, the assessment continued with the proportionality test, so that it was left for the national court to ascertain whether the two following conditions can justify the German legislation, in respect to the residence matter: a)it contains only the data which are necessary for the application by those authorities of that legislation and; b) its centralised nature enables the legislation relating to the right of residence to be more effectively applied as regards Union citizens who are not nationals of that Member State.

It must be pointed out that, the Court did not assess the matter of indirect discrimination according to its settled case-law, so that unlike the national court, the Luxembourg Court made no reference to cornerstone Cases like C‑85/96 Martínez Sala [1998] ECR I‑2691, C-184/99 Grzelczyk [2001] ECR I-6193, Case C-209/03 Bidar [2005] ECR I-2119, which concerned the principle of non-discrimination the EU citizenship. One common element would be the recalling of the provisions of Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States, which indeed stipulates that may require every Union citizen who is a national of another Member State and who wishes to reside in its territory for a period of more than three months to register with the relevant authorities[2]. So it is lawful for national Authorities to require proof from non-nationals that wish to reside on their territory for more than three months, but to have a register only for non-nationals with the objective of providing support for the national Authorities that apply the law related to the right of residence is not necessary for attaining the objective of Directive 95/46[3].

 

Secondly, as regards the processing of personal data relating to Union citizens who are nationals of other Member States for the purposes of fighting crime, the Court assessed the discrimination issue according to its settled case-law, making reference to the landmark Cases aforementioned. The Court recalled that that the principle of non-discrimination, which has its basis in Articles 12 EC and 43 EC, now Article 18 and 49 TFEU, requires that comparable situations must not be treated differently and that different situations must not be treated in the same way. Such treatment may be justified only if it is based on objective considerations independent of the nationality of the persons concerned and is proportionate to the objective being legitimately pursued. The Court applied the principle of equal treatment and found that the fact that comparing the situations of national and non-nationals within that register, where no data of the German citizens is contained, constitutes a case of direct discrimination on grounds of nationality.



[1] Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of data and on the free movement of such data

[2] Case [C‑524/06Heinz Huber v Bundesrepublik Deutschland [2008] ECR I-09705 paragraph 57.

[3] Article 1 of Directive 95/46: “In accordance with this Directive, Member States shall protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data”.