Important legal notice

62001C0299

European Court reports 2002 Page I-05899

Opinion of the Advocate-General

The Member State is alleged to have infringed the provision by maintaining, in its national legislation, a requirement of a prior period of residence on its territory for the granting of a guaranteed minimum income.

I - Facts

The Commission contacted the Luxembourg authorities, pointing out that that condition might be incompatible with Community law. It received the reply that a draft law intended to remove the condition was being prepared.

II - The Community provisions

5. Article 43 EC, for its part, provides:

Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 48, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital.

III - The contested Luxembourg legislation

IV - The administrative procedure

On 31 May 2000, the government notified the Commission of its decision to make a new legislative change, in order to comply with the guidelines laid down in the reasoned opinion, and repeated that intention in its letter of 15 June 2000.

In its letter of 26 October 2000, the government provided some details of the future legislative provision, stating that it intended to submit it to the vote in the parliamentary session 2000-01. It added that, in the absence of applicable legislation, it was impossible to accede to the request in respect of the aforementioned nationals.

V - The contentious proceedings

10. On 26 July 2001, since it had received no news relating to the legislative amendment which had been announced, the Commission lodged an application before the Court seeking a declaration that the Member State had failed to fulfil its obligations.

11. The applicant alleges that the legislation currently in force in Luxembourg constitutes a manifest infringement of the principle of equality of treatment, which prohibits not only overt discrimination based on nationality but also all covert forms of discrimination which, by applying other distinguishing criteria, lead in fact to the same result. According to the case-law of the Court, the requirement that a person shall have been resident for a certain period is covert discrimination by reason of nationality, because such a requirement is more easily met by Luxembourg nationals than by nationals of other Member States. The fact that the requirement is imposed on Luxembourg nationals in the same way does not alter that assessment.

The Commission states that there is no doubt that the benefit in issue constitutes a social advantage, as the Court held in its judgment in Hoeckx, and it must therefore be granted on the same terms to all workers who are nationals of Member States.

Article 43 EC, for its part, confers on nationals of one Member State who wish to pursue activities as self-employed persons in another Member State the benefit of the same treatment as the host State's own nationals and also prohibits any discrimination based on nationality which hinders the taking up or pursuit of such activities.

The Commission also invokes, in support of its action, the judgment of the Court in Commission v Belgium, in which, in respect of a similar piece of legislation and a benefit similar in content, it held that to maintain the requirement of a period of residence on Belgian territory which workers from other Member States had to fulfil in order to qualify for the grant of the allowance of the minimum means of subsistence (minimex) was contrary to the principle of equality of treatment.

13. The Commission waived its right to submit a rejoinder, and also stated that there was no reason to stay the proceedings.

14. As neither of the parties has submitted a request stating the reasons why it wished to present oral observations, the Court has decided, in accordance with Article 44a of the Rules of Procedure, to give a decision on the case without holding a hearing.

VI - Examination of the action

A - The request for a declaration of failure to fulfil obligations

15. It is clear from the case-law of the Court cited by the applicant that the requirement that a worker must reside in one Member State constitutes covert discrimination by reason of nationality against the nationals of the other Member States, and that a benefit such as the one in question must be regarded as a social advantage which must be granted to the nationals of the other Member States on the same terms as to the nationals of the Member State concerned.

17. Furthermore, it is well known that the object of an action under Article 226 EC is established by the Commission's reasoned opinion, and even when the default has been remedied after the time-limit prescribed by paragraph 2 of the same article, pursuit of the action still has an object. That object may consist in establishing the basis of the liability that a Member State could incur towards those who acquire rights as a result of its default.

19. Since it has been established, without a shadow of a doubt, that Luxembourg has not fulfilled its obligation to adjust its national law to the provisions of Article 7(2) of Regulation No 1612/68 and Article 43 EC, within the time-limit prescribed in the reasoned opinion, the Commission's request for a declaration of failure to fulfil obligations must be granted and Luxembourg must be ordered to pay the costs.

B - The request that the Court specify the consequences of the declaration of failure to comply with obligations

In a letter dated 24 July 2000, sent by the Director-General for Employment and Social Affairs, the Commission asked the Luxembourg authorities for information about the measures adopted in order to regularise, immediately, the position of Community nationals who had applied to receive the disputed benefit. In support of that request it stated that the principle of non-discrimination by reason of nationality and the precedence of Community law were directly applicable throughout the territory of the Union. In the letter sent to the Commission by Luxembourg's Permanent Representative on 26 October 2000, it was stated that such action was impossible because there was no legal provision for the granting of the benefit to Community nationals without the requirement of a prior period of residence in the Grand Duchy.

21. I have to say that I sympathise with the Commission's position, but I must acknowledge that its request cannot be granted for the reasons I shall now explain.

22. Firstly, in accordance with settled case-law, the letter of formal notice from the Commission to the Member State, and then the reasoned opinion issued by the Commission delimit the subject-matter of the dispute, so that it cannot thereafter be extended. The opportunity for the State concerned to submit its observations, even if it chooses not to avail itself thereof, constitutes an essential guarantee intended by the Treaty, adherence to which is an essential formal requirement of the infringement procedure. Consequently, the reasoned opinion and the proceedings brought by the Commission must be based on the same complaints as those set out in the letter of formal notice initiating the pre-litigation procedure.

Although the Commission is not obliged to indicate in the reasoned opinion the measures or steps to be taken to eliminate the infringement, it is obliged to indicate, at least, the complaints which it intends to make the subject of its application to the Court. The Commission must specifically indicate to the Member State concerned that it must adopt a certain measure if it intends to make the failure to adopt that measure the subject-matter of its infringement action.

In the case I am considering, however, the Commission did not urge the Luxembourg Government - either in the letter of formal notice or in the reasoned opinion sent in January 2000 - to regularise immediately the position of nationals of other Member States to whom it had refused to grant the minimum guaranteed income allowance because they did not fulfil the residence requirement. According to the documents in the case, that request was not made until the following July, in a letter from the Director-General for Employment and Social Affairs, when the Luxembourg authorities had already replied to the opinion and the subject-matter of the future dispute had been delimited.

23. Secondly, the consequences of a declaration of failure to fulfil obligations is contained in Article 228 EC: the Member State is required to take the necessary measures to implement the judgment of the Court.

Those measures are not restricted to eliminating the effects of the national legislation for the future, but, as the judgment has effect ex tunc, also extend to removing the harmful consequences caused from the moment the incompatibility with the Community legislation arose. It is well known that Member States are required to make good loss and damage caused to individuals as a result of breaches of Community law. The basis for that obligation is found in, amongst other provisions, Article 10 EC, under which Member States are required to take all appropriate measures, whether general or particular, to ensure fulfilment of their obligations under Community law. Among these is the obligation to nullify the unlawful consequence of a breach of Community law.

According to the case-law, an interpretation given by the Court to a provision of Community law clarifies and defines its meaning and scope only as it should have been understood and applied from the time of its entry into force.

To that it must be added that the Member State has not requested the Court, as it could have done, to impose temporal limits on the effects of the judgment.

24. Finally, if, as I suggest, it is declared in these proceedings that the Member State has failed to fulfil its obligations, and if the Member State persists in its stubborn refusal to regularise the position of those who were adversely affected before the amended legislation came into force, the Commission has the opportunity of bringing a fresh action before the Court. Since early in 1998, when it received the individual complaint, until the new law becomes applicable, several years will have passed during which that Member State has apparently continued to infringe Community law.

I consider that, at this stage, a Member State cannot be permitted to use the absence of national legislation as a reason for refusing equal treatment to the nationals of other Member States residing in its territory, particularly when the case-law of the Court has held benefits of a very similar nature to be a tax advantage within the meaning of Article 7(2) of Regulation No 1612/68 and judgment has been given against several States for imposing a requirement of prior residence in its territory in order to qualify for them. Otherwise, it would be very easy for them to evade their obligations under Community law merely by not legislating or by delaying for as long as possible making an adjustment to their national laws.

25. For the reasons I have given, I consider that the Commission's request that the Court specify the consequences of the declaration of failure to comply with obligations cannot be granted.

VII - Conclusion

26. In the light of the foregoing considerations, I propose that the Court should:

(1) declare that, by maintaining in its national law a requirement of a prior period of residence on its territory for the grant of the guaranteed minimum income allowance, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 7(2) of Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community and Article 43 EC;

(2) order the Member State to pay the costs of the proceedings.