Commission v Luxembourg (Freedom of establishment) [2006] EUECJ C-193/05 (19 September 2006)

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(Failure to fulfil obligations - Directive 98/5/EC of the European Parliament and of the Council of 16 February 1998 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained - Language testing - Prohibition on being a person authorised to accept service (domiciliataire) on behalf of companies - Requirement to produce each year the certificate from the home Member State)

1. The present infringement proceedings concern access to the profession of lawyer in Luxembourg, as does the parallel reference for a preliminary ruling. (2) In particular, they concern the compatibility of the requirements laid down by Luxembourg law with Directive 98/5/EC of the European Parliament and of the Council of 16 February 1998 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained (3) (hereafter "the Directive").

2. Article 1(1) of the Directive provides that the purpose of the Directive is to facilitate practice of the profession of lawyer on a permanent basis in a self-employed or salaried capacity in a Member State other than that in which the professional qualification was obtained.

3. Article 2(1) provides that any lawyer is to be entitled to pursue on a permanent basis, in any other Member State under his home-country professional title, the activities specified in Article 5.

4. Paragraphs 1, 2 and 4 of Article 3 of the Directive, which concerns registration with the competent authority, provide:

7. The relevant provisions of the language regime are in the Loi du 24 février 1984 sur le régime des langues (hereafter "the Law of 1984"). (4)

8. Article 2 thereof provides that statutes and their implementing provisions shall be in French. Other regulations may be in a different language. The language used is the authentic one.

9. Article 3 of the Law of 1984 provides that subject to special provisions one may use French, German or the Luxembourg language in administrative and in judicial matters.

10. Directive 98/5 was transposed into the law of the Grand Duchy of Luxembourg by a Law of 13 November 2002 (5) (hereafter "the Law of 2002") amending certain provisions of Luxembourg law. (6)

11. The provisions concerning acting as person authorised to accept service ("domiciliataire") are in Article 1(1) of the Law of 31 May 1999 (7) as amended by Article 15 of the Law of 13 November 2002. It provides that only lawyers who are registered in List I within the meaning of Article 8(3) of the Law of 1991 may be authorised to accept service.

12. Article 8(3) of the Law of 1991, as amended by Article 14 of the Law of 2002, provides that there are four categories of lawyers: List I (lawyers who satisfy the requirements of Article 5, namely registration, and of Article 6, concerning the requirements for registration and an oath of allegiance, and who have passed the examination), List II (lawyers who satisfy the requirements of Articles 5 and 6), List III, and List IV (lawyers who practise the profession under their home-country professional title).

13. Further provisions of national law are in the Annex to my Opinion, also of today's date, in Case C-506/04.

14. In 2003 the Commission received a complaint claiming that obstacles existed to the practice of the profession of lawyer in Luxembourg under a home-country professional title. These obstacles were first, the language knowledge required by the Law of 2002, second, the prohibition on acting as a person authorised to accept service (domiciliataire), and third, the requirement to produce each year the certificate from the home Member State.

15. By letter of formal notice dated 17 October 2003 the Commission commenced infringement proceedings against Luxembourg under Article 226 EC. Following Luxembourg's reply dated 23 December 2003, the Commission issued a reasoned opinion on 9 July 2004, to which Luxembourg replied by letter dated 23 September 2004.

16. On 29 April 2005 the Commission brought an action against the Grand Duchy of Luxembourg before the Court under Article 226 EC, seeking

(1) a declaration that, by maintaining, for the purpose of establishment under the home-country professional title, language knowledge requirements, a prohibition on being a person authorised to accept service (domiciliataire) and the obligation to produce each year the certificate from the home Member State, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Directive 98/5/EC of the European Parliament and of the Council of 16 February 1998 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained, in particular Articles 2, 3 and 5 thereof,

(2) an order that the Grand Duchy of Luxembourg pay the costs of the proceedings.

17. Requiring an examination of language knowledge as a condition for registration of a "European lawyer" in the Bar Register is contrary to the general purpose of Directive 98/5 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained, and infringes in particular Article 3(2) of Directive 98/5, which provides that the host Member State is to register the lawyer simply "upon presentation of a certificate attesting to his registration with the competent authority in the home Member State".

18. As is apparent from the judgment in Luxembourg v Parliament and Council, (8) the Community legislature chose, in preference to a system of prior testing of qualification in the national law of the host Member State, and certainly in preference to a system of prior testing of knowledge of the official languages of the host State, a plan of action combining consumer information, restrictions on the extent to which or the detailed rules under which certain activities of the profession could be practised, a number of applicable rules of professional conduct, compulsory insurance, and a system of discipline involving the competent authorities of both the home Member State and the host State.

19. Contrary to the submission of the Luxembourg Government, "European lawyers" who wish to practise under their home-country professional title in the host State cannot be made subject to the same conditions - in particular language requirements - as lawyers who wish to practise their profession under that Member State's professional title.

20. Closer consideration of the type of case usually handled by lawyers within the scope of application of Directive 98/5 (see in particular the fifth recital of Directive 98/5) makes it apparent that knowledge of the official languages of the host State is not absolutely necessary to carry them out.

21. Requiring a language examination as a condition of registration as a "European lawyer" in the Bar Register is contrary to the general purpose of Directive 98/5 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained, and infringes in particular Article 3(2) of Directive 98/5, which provides that the host Member State is to register the lawyer simply "upon presentation of a certificate attesting to his registration with the competent authority in the home Member State".

22. The language knowledge requirements apply without distinction to all lawyers who wish to be registered in one of the Bar Registers for the territory of Luxembourg. A lawyer cannot rely on his foreign professional title in order to address the Luxembourg authorities or the Luxembourg courts in a language other than the normal official languages of Luxembourg.

23. At this point it is necessary to refer to the judgment in Haim concerning the profession of dentist, the reasons for which are based on the need for reliable communication with clients, the authorities and professional associations, and which indicate that in the present case it is necessary for lawyers who wish to practise in Luxembourg under their home-country professional title to have certain language knowledge.

24. Since a lawyer who practises his profession under his home-country professional title may give advice also on Luxembourg law, requiring such a lawyer to have the language knowledge necessary to enable him to read and to understand Luxembourg legal texts is justified.

25. In addition, it is to be emphasised that penalty notices issued by the police following road traffic accidents are normally written in German, as are the Luxembourg tax laws, and this makes it necessary to consult case-law and commentaries written in German.

26. Moreover, a Luxembourg party who represents himself in court will normally use the Luxembourg language before the lower courts, where there is no obligation to be represented by a member of the Bar Association (avocat à la cour). Furthermore, many Luxembourg nationals speak exclusively in their native language when consulting a lawyer.

27. In addition, as is apparent from the rules of the Luxembourg Bar Associations, (9) the whole of the professional rules are written exclusively in French.

28. It must first be observed that the provision which is the subject of the dispute concerns a language examination for lawyers having a qualification from other Member States who wish to practice their profession on a permanent basis under their home-country professional title.

29. In that situation Article 3(1) of the Law of 2002 provides that in order to practise the profession of lawyer under their home-country professional titles "European lawyers" must be registered in the Bar Register. Pursuant to paragraph 2 of that provision, registration occurs once an oral language test has been passed, which examines knowledge of the French, Luxembourg and German languages.

30. To determine whether such a requirement is compatible with the guarantees laid down by Directive 98/5, it is necessary to consider first the wording of the Directive.

31. Directive 98/5 does not contain any express provisions regarding language examinations. Accordingly, it is necessary to consider whether it is possible at least to infer from it whether and what language knowledge may be required. Article 2(1) of the Directive provides that any lawyer is to be entitled to pursue on a permanent basis, in any other Member State under his home-country professional title, the activities specified in Article 5. Article 3(1) of Directive 98/5 specifies that registration with the competent authority in that Member State is a precondition for this. Article 3(2) of the Directive provides that registration requires presentation of a certificate attesting to registration of the lawyer with the competent authority in the home Member State.

32. As regards requirements for registration, Directive 98/5 provides for complete harmonisation.

33. Presentation of such a certificate is the only condition for registration expressly laid down by Directive 98/5. This could lead to the conclusion that further conditions - for example, passing a language examination - were deliberately not provided for by the Community legislature and are therefore not permitted. This would accord also with the unconditional wording (10) of Article 2(1).

34. However, a different view would result if the only reason for not laying down any provisions concerning language tests was that the possibility of requiring them was already implicit in other provisions of Directive 98/5. Article 6(1) provides that a lawyer practising under his home-country professional title is to be subject to the rules of professional conduct of the host Member State. However, this does not allow the conclusion that a language examination required by the professional rules of the host State is automatically compatible with Directive 98/5; were it otherwise, the Member States could erect all sorts of obstacles to "European lawyers" in their rules and thus thwart the aims of Directive 98/5. It follows that Article 6 cannot be interpreted as authorising the disputed examination.

35. Thus, the wording of Directive 98/5 indicates that a language test is not compatible therewith.

36. Article 1(1) of Directive 98/5 provides that the purpose of the Directive is to realise freedom of movement as provided for in the Treaty for the profession of lawyer.

37. In that regard the first milestone in the legislative development was Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise by lawyers of freedom to provide services (11) (hereafter "Directive 77/249"). The next step was made by the enactment of Council Directive 89/48/EEC of 21 December 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years" duration (12) (hereafter "Directive 89/48").

38. However, because Directive 89/48 applied to a number of regulated professions, it was not regarded as sufficient to realise the fundamental freedoms for lawyers. The special features of the legal profession required special provision, and this was enacted in Directive 98/5. Its purpose was to make it easier for a particular class of migrant lawyers, namely those who wish to practise under their home-country professional title, to exercise their fundamental freedom of establishment. (13)

39. The fifth recital of Directive 98/5 states that the need for special provision arises from the changing needs of consumers of legal services who, owing to the realisation of the internal market, seek advice when carrying out transactions in which international law, Community law and domestic laws often overlap. For this purpose Directive 98/5 was intended, when compared with the general system for the recognition of diplomas (Directive 89/48), inter alia to provide an "easier" means of integration into the profession in a host Member State.

40. However, if a language test were required at national level this would make access to the profession of lawyer in another Member State subject to a similar hurdle as is allowed in the framework laid down by Directive 89/48: Article 4 of that Directive allows Member States to require an aptitude test for the profession of lawyer. Given that language and knowledge examinations have comparable effects, integration into the profession would hardly be "easier" than if the general recognition provisions were applied. The purpose of Directive 98/5 to make a further step towards integration beyond Directive 89/48 would thus be endangered.

41. Finally, it is to be emphasised that language knowledge is of course important for profitable activity. That applies in particular to knowledge of the official language or languages. It may be essential in communicating with clients and with the authorities of the relevant Member State. Thus, if a lawyer does not have the necessary language knowledge himself, he must obtain assistance from a lawyer who does. On this view, limited or lack of language knowledge affects the substantive activity of the "European lawyer" in question and restricts his field of activity.

42. In this connection reference should again be made to the fact that the issue in dispute in the present proceedings concerns the activities of lawyers practising under their home-country professional titles and not of so-called domestic lawyers, that is, those practising under the professional title of the host State. That is enough to require that "European lawyers" cannot be subject to the same requirements as lawyers who wish to practise under the professional title of the host State.

43. That requiring a language test is unlawful is supported also by consideration of the legislative process. From the Commission's first Proposal dated 30 March 1995 (14) to the final version of 16 February 1998 this was characterised by the number of amendments. For example, the Commission's draft Article 2 provided that the practice of the profession of lawyer in another Member State under the home-country professional title was to be limited to a period of five years.

44. However, it is striking that right from the beginning registration against presentation of a certificate by the home Member State remained the only condition for practice of the profession. Thus, the Commission's justification for Article 2 of its Proposal for Directive 98/5 even referred expressly to the "only condition" for registration. It was only in the Opinion of the Economic and Social Committee (15) that any doubt was expressed about a solution which permitted advice to be given on the law of the host State without prior examination of (language) knowledge. However, these doubts were not taken up in the subsequent legislative procedure and were not repeated in the discussions of the European Parliament and of the Council.

45. One of the constants in the legislative history of Directive 98/5, characterised as it was by the large number of amendments, is that registration is dependent on nothing more than presentation of a certificate by the home State.

46. This indicates that all the organs which had any say in the legislative process proceeded on the basis that the Member States should not be allowed to lay down language requirements.

47. The conclusions derived from the wording, purpose and legislative history of the provision are consistent with the general case-law of the Court on the relevant fundamental freedoms.

48. However, one might regard the judgments in Groener (16) and Haim (17) as deviating from this general line. There the Court held that although language requirements constituted an obstacle to the exercise of the freedoms guaranteed by the Treaty, they could be justified by overriding reasons based on the general interest. (18) These included reliability of communication with patients as well as administrative authorities and professional bodies.

49. Similar considerations might be relevant in the present proceedings, namely communication between lawyer and client, protection of the latter against advice which is incorrect because of the lawyer's lack of language knowledge, and the guarantee of the proper administration of justice. If the aforementioned decisions were applicable by analogy to the present situation this would suggest that it was possible for Member States to require language tests.

50. In Groener the Court regarded an Irish provision making appointment to a permanent full-time post as a lecturer in public vocational education institutions conditional upon proof of an adequate knowledge of the Irish language as compatible with Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community. (19)

51. However, it based its decision on Article 3(1)(2) of Regulation (EEC) No 1612/68, which provided for an exception for language knowledge from the principle in the second indent of paragraph 1, according to which national laws, regulations or administrative actions or administrative practices of a Member State were not to apply where their aim or effect was to keep nationals of other Member States away from the employment offered. Directive 98/5 does not contain such an exception or enabling provision.

52. The reasoning of the Court was also based on the fact that through teaching and the privileged relationship which they had with their pupils, teachers had an essential role to play in the national policy of maintaining national identity and culture. Admittedly, the language situation in the Grand Duchy of Luxembourg is special in a way similar to that in the Republic of Ireland. (20) However, the profession of lawyer is not comparable with that of lecturer. It is not his task, nor is he in a position, to safeguard the language as an expression of national identity and culture. (21)

53. Because of those differences, the case of Groener cannot be relied on as an argument in favour of a national language test.

54. In its judgment in Haim the Court held that the competent authorities of a Member State could make the appointment, as a social security scheme dental practitioner, of a national of another Member State who was established in the first Member State and authorised to practise there conditional upon his having the linguistic knowledge necessary for the exercise of his profession in the Member State of establishment.

55. However, the provisions of Community law relevant in Haim differ materially from those of Directive 98/5.

56. Article 18(3) of Council Directive 78/686/EEC of 25 July 1978 concerning the mutual recognition of diplomas, certificates and other evidence of the formal qualifications of practitioners of dentistry, including measures to facilitate the effective exercise of the right of establishment and freedom to provide services (22) (hereafter "Directive 78/686") provides that Member States shall see to it that the persons benefited by Directive 78/686 acquire, in the interest of their patients, the linguistic knowledge necessary in the host Member State. Directive 98/5 does not contain any comparable provision.

57. Directive 78/686 was not in fact applicable in Haim, because Mr Haim had obtained his dentistry qualification not in the European Union but in Turkey. However, the fact that the decision of the Court to permit language requirements was a consequence of the special provision in Article 18(3) of Directive 78/686 is demonstrated in the analysis by Advocate General Mischo (23) in that case. According to that, the language requirement imposed by the Directive on Community nationals who were holders of qualifications awarded by other Member States and were thus within the scope of application of Article 18(3) applied a fortiori to nationals of other Member States who were holders of qualifications from non-Member States.

58. Thus, because of the differences in the present case the judgment in Haim cannot serve as an argument justifying a language test in the context of Directive 98/5.

59. There are further statements by the Court which indicate that a language test is not permitted, in the judgment in Luxembourg v Parliament and Council .(24)

60. In that case the Court had to determine an action brought by Luxembourg for annulment of Directive 98/5. Luxembourg challenged the validity of Directive 98/5 inter alia because it did not require prior testing of qualification in the national law of the host Member State for lawyers practising under their home-country professional title. This undermined the interests of consumers and the interest of the proper administration of justice as overriding reasons in the public interest.

61. However, in its judgment the Court rejected those arguments by Luxembourg. When adopting coordinating measures, the Community legislature was to have regard to the public interest pursued by the various Member States and to adopt a level of protection for that interest which seemed acceptable in the Community. (25) In paragraphs 34 to 43 the Court explained in detail that Articles 4, 5, 6 and 7 of the Directive already provided sufficient protection to guarantee the interests mentioned.

62. In that judgment the Court also stated that a lawyer practising under his home-country professional title is required, for example, to state his title also in the official language of his home State when providing information to consumers, to avoid any confusion with the professional titles of the host State. Furthermore, he is subject to certain restrictions on the extent to which and the detailed rules under which the profession may be practised, as well as the professional rules of the host State. In making such a choice of the method and level of consumer protection and of ensuring the proper administration of justice in preference to a system of prior testing of qualification in the national law, the Community legislature had not overstepped the limits of its discretion.

63. What must therefore be assessed is whether this analysis by the Court is to be regarded as meaning that the language test is incompatible with Directive 98/5. For that two conditions must be fulfilled. First, the Court's statements relate to an examination of (substantive) knowledge of the law of the host State. The same must apply in relation to an examination of language knowledge. Second, the judgment was made in an action for annulment. From the fact that the Community legislature did not overstep its discretion it would also have to follow that the Member States were not permitted to provide for a different scheme of protection.

64. As regards the first condition, namely that an examination of legal knowledge must be comparable to a language test, it is to be pointed out that - as the Court explained - the legislature did not abolish the requirement to know the national law, but simply released the lawyer from the obligation to prove that knowledge in advance. Thus, the Court accepted that (legal) knowledge could be assimilated gradually through practice.

65. Linguistic knowledge too can be improved continuously by working daily in the host State. In addition the means of protection provided for in respect of legal knowledge operate also to protect against linguistic inadequacy. In that regard, too, making lawyers subject to the professional rules of the host State prevents prejudice to clients. The applicable rules of professional conduct entail, like Article 3.1.3 of the Code of Professional Conduct adopted by the Council of the Bars and Law Societies of the European Union (CCBE), an obligation, breach of which may incur disciplinary sanctions, not to handle matters which the lawyer concerned knows or ought to know he is not competent to handle. That is of course applicable to lack of linguistic knowledge.

66. If his language ability is not sufficient for him to analyse competently a set of facts under application of the relevant norms, a lawyer is required not to handle the matter, in exactly the same way as where he has inadequate knowledge of the law.

67. It follows that what the Court said as regards substantive knowledge may be applied to language requirements.

68. However, the second condition must also be fulfilled. At first blush it appears arguable that the fact that in laying down means of protection which did not include prior testing the Community legislature kept within the scope of its discretion does not automatically mean that other schemes are prohibited. In fact it may not be inferred from the Court's discussion that a scheme of prior testing would not have been within the discretion of the Community legislature.

69. However, this question is not to be confused with the question as to what discretion remained to the Member States after the Community legislature had made its - lawful - choice of means of protection. Once the Community legislature has enacted a particular means, then subject to any express enabling provision it is not open to the Member States to deviate from it.

70. Accordingly, the second condition is fulfilled. It follows that what the Court said in Luxembourg v Parliament and Council concerning the annulment of Directive 98/5 is relevant also to the present proceedings. The conclusion arrived at from consideration of the wording and the legislative history that a language test is incompatible with Directive 98/5 is confirmed by the case-law of the Court.

71. It may be that Directive 98/5 is to be interpreted in the light of the new Directive 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications (26) (hereafter "Directive 2005/36"). Article 53 thereof provides that persons benefiting from the recognition of professional qualifications must have "a knowledge of languages" necessary for practising the profession in the host Member State.

72. By contrast, the present case concerns the practice of a profession in the host State under the home-country professional title. As the Court explained in Luxembourg v Parliament and Council with regard to the different treatment of the two categories of lawyer, (27) the two categories are not comparable with one another. (28)

73. This leads to the conclusion that the differences in the factual circumstances prevent arguments relating to practice under the professional title of the host State from being used in the area in which the dispute in the present case arises, namely practice of the profession of lawyer under one's home-country professional title. It follows that Directive 98/5 is therefore not to be interpreted in the light of Directive 2005/36. The conclusion remains that the language test is incompatible with the former Directive.

74. Finally, comparison with Directive 77/249 also suggests that a prior language test is not permitted. As appears from Luxembourg's submissions in Luxembourg v Parliament and Council, (29) the Grand Duchy does not dispute the right conferred by Directive 77/249 on foreign lawyers practising in the host State under their home-country professional title to give advice on the law of the host State without having to prove their language knowledge in advance.

75. That being so, there is much in favour of the same being true in the context of Directive 98/5. This is because so far as the provisions relevant in the present case are concerned the Directives are broadly equivalent. The sole difference is that one falls within the law on freedom to provide services and the other in the field governed by Articles 43 EC ff.

76. However, one might argue that this was a material difference which justified a different approach. This is because a lawyer who merely provides services is present in the other Member State for only a short period and handles significantly fewer matters there than a lawyer who has established himself there. Thus, the risk to clients of inadequate legal advice could be far lower in the context of Directive 77/249 than within the context of Directive 98/5.

77. However, careful consideration shows that this is not the case. The conclusion to be drawn a contrario from Article 4(1), (2) and (4) and Article 7(2) of Directive 77/249 is that a lawyer who provides services is not subject to the host State's professional rules and disciplinary procedures to the same extent as a "European lawyer" who has established himself there. The lesser "deterrent effect" could lead the former to engage in conduct which, having regard to his lack of language knowledge, involved greater risk. In addition, a lawyer who has established himself is fundamentally likely to be in a better position to give reliable advice, given his closer connection to the local legal system and language(s). (30)

78. Thus, the risks to clients and to the proper administration of justice on account of any lack of language knowledge on the part of a "European lawyer" who has established himself are at least not greater than those arising where a lawyer merely provides services.

79. For all these reasons, the competent authorities of the host State may not make practice of the profession of lawyer under the home-country professional title in the host State, that is in a Member State other than that in which the qualification was obtained, conditional on passing a prior language test.

80. Even if the Court were of the view that a language test were in principle compatible with the guarantees laid down by Directive 98/5, the further question would arise as to whether the Directive authorised the language knowledge requirements in force in Luxembourg.

81. As stated above, the language test being challenged covers French, German and the Luxembourg language.

82. Article 3 of the Law of 1984 on the language regime (31) provides that all three languages may be used in the administrative authorities and in the courts in Luxembourg. However, in terms of proportionality this by no means requires a "European lawyer" to have prior knowledge of all three languages.

83. Specifically, Article 2 of that Law provides that all Luxembourg laws and their implementing provisions are to be in French. According to the information provided by the Grand Duchy French is also the language in which the professional rules for lawyers are written. It is only parts of the general tax law which are written in German, namely the Tax Regulations taken over from the Federal Republic of Germany.

84. It follows that knowledge of at least the Luxembourg language - and probably also of German - is by no means necessary to ensure that legal advice is reliable in order to protect consumers and the proper administration of justice.

86. Article 5(1) of Directive 98/5 provides that subject to certain exceptions provided for by paragraphs 2 and 3 of Article 5 of Directive 98/5, a lawyer practising under his home-country professional title has the right to carry on the same professional activities as a lawyer practising under the relevant professional title used in the host Member State. It follows that the Member States do not have the right to provide for further exceptions when transposing Directive 98/5. Therefore, the prohibition on being authorised to accept service infringes Article 5(1) of Directive 98/5.

87. Contrary to the argument of the Luxembourg Government a "European lawyer" cannot be compared to a Luxembourg lawyer registered in List II of the Bar Register (trainee lawyer - avocat stagiaire), who is also prohibited from being authorised to accept service. Whereas that List is of lawyers who have been permitted to start a legal traineeship but whose final admission still depends on passing an examination at the end of that traineeship, a "European lawyer" is already a fully qualified lawyer.

88. In addition, the requirement to know local law cannot justify any restriction on the activities of a lawyer practising under his home-country professional title. For the Luxembourg Government to be able to rely on any threat to public order as justification, there would have to be a real and sufficiently serious risk affecting a fundamental interest of society, but there is no such risk where a lawyer admitted in another Member State carries on the activity of accepting service.

89. In order to ensure the full effectiveness of Article 5(1) of Directive 98/5, Article 6(3) of Directive 98/5 allows the Member States to require a lawyer practising under his home-country professional title either to take out professional indemnity insurance or to become a member of a professional guarantee fund.

90. The Luxembourg Government intended that for the protection of public order the Law of 1999 should reserve the activity of accepting service on behalf of companies to lawyers familiar with local law and local practice, in order to counter certain abuses connected with fictitious addresses for service which damage the Luxembourg market.

91. In so far as a person accepting service must verify that the company satisfies the legal requirements relating to access to the [commercial] profession and local provisions concerning registration for social security purposes and calling general meetings, carrying on the activity of accepting service requires professional experience and a good knowledge of company law, and for that reason the Luxembourg Government decided to exclude lawyers registered in List II (trainee lawyers - avocats stagiaires) and "European lawyers" from this activity.

92. Where a lawyer practises his profession under his home-country professional title, although fully qualified in his home State he is not in the same position as a lawyer qualified in the host State. However, Directive 98/5 (in particular the fourth recital) makes it possible for them to become integrated into the profession in the host State after the period necessary for acquiring professional experience and subject to the conditions laid down in Article 10 of Directive 98/5. During that period Article 5(4) of the Law of 2002 permits "European lawyers" to act only in conjunction with a lawyer who is a member of the Bar (avocat à la cour) who is answerable in law for documents and proceedings reserved by law and by regulations to such a lawyer, the same applying to trainee lawyers (avocats stagiaires).

93. It must first be observed that the Luxembourg provision that only lawyers registered in List I may be authorised to accept service excludes other lawyers from this activity. Specifically, these are lawyers registered in Lists II to IV.

94. Thus, these "excluded" lawyers are not able to carry on the same professional activities as lawyers practising under the professional title of the host State.

95. The effect of the provision in dispute in the present case is the negation of the fundamental right Article 5(1) of Directive 98/5 confers on lawyers practising under their home-country professional titles to carry on the same professional activities.

96. Article 5(1) of Directive 98/5 allows Member States to provide for certain exceptions from this fundamental right, but the provision in dispute in the present case does not correspond to any of the situations laid down by paragraphs (2) and (3) in that regard.

97. It is no answer to say that certain Luxembourg lawyers, namely "avocats stagiaires" registered in List II, may not be authorised to accept service. This category is not comparable to "European lawyers" because the latter are lawyers who have a full professional qualification. The two categories are thus too different to allow them to be made subject to the same legal rules in this regard.

98. Nor can such a difference in treatment be justified by the fact that the tasks involved in accepting service require professional experience and a particular familiarity with the law (specifically company law) and local practice. Legal practice always requires a certain degree of care and familiarity with the law, and this not only for reasons of liability.

99. Moreover, company law is an area of law in which there is a relatively high degree of harmonisation at Community law level. It is therefore likely that in broad areas similar rules apply in the European lawyer's home State.

100. Whether the obligation in dispute in the present case may be regarded as a requirement of the "ordre public" need not be considered in great detail, given the strict criteria the Court has laid down in that regard. (32) In the present case it is impossible to determine even which fundamental interest of society the disputed provision is intended to protect, and why it is thought that there is a real and present risk to such an interest.

102. The Commission is of the view that in its reply to the reasoned opinion the Luxembourg Government stated that it had taken due note of the Commission's argument that the requirement to produce each year the certificate of registration with the competent authorities of the home Member State constituted an unjustified administrative burden having regard to the provisions of Directive 98/5.

103. However, the Commission points out that, contrary to the terms of Directive 98/5, for the reasons stated in the reasoned opinion, at the present time that requirement remains in the text of the Law transposing Directive 98/5 into Luxembourg law.

104. On this point the Luxembourg Government refers to its answer to the reasoned opinion. There it took note of the Commission's argument that the disputed obligation constituted an unjustified administrative burden.

105. As regards the requirement in Article 3(2) of the Law of 2002 to produce each year the certificate from the home Member State, it is first to be observed that the Luxembourg Government appears to accept that this infringes its obligations under the Treaty.

106. It must be said in fact that this requirement of Luxembourg law is an obligation which is not expressly provided for in Directive 98/5. The lawfulness of such a requirement cannot be otherwise inferred from the Directive. Such a requirement is incompatible with the purposes pursued by the Directive and the mechanisms it lays down.

107. For example, Directive 98/5 requires the home State to cooperate with the host State. This is shown in particular by the obligation laid down in Article 7(2)(2) of the Directive to inform the competent authority of the host Member State(s) of the initiation of disciplinary proceedings.

108. It is in particular the annual nature of the obligation imposed by Luxembourg law which constitutes an administrative burden, which in any event does not comply with the principle of proportionality.

110. Article 69(2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. The Grand Duchy of Luxembourg having been unsuccessful in its submissions, it is to be ordered to pay the costs of the proceedings.

(1) declare that, by maintaining, for the purpose of establishment under the home-country professional title, a language test, a prohibition on being a person authorised to accept service (domiciliataire) and the obligation to produce each year the certificate from the home Member State, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Directive 98/5/EC of the European Parliament and of the Council of 16 February 1998 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained,

2 - Case C-506/04 Wilson v Conseil de l'Ordre des Avocats du Barreau de Luxembourg; see my Opinion in that case of today's date (11 May 2006).

6 - The Law of 10 August 1991 concerning the profession of lawyer (Mémorial A, no 58, of 27 August 1991, p. 1110) and the Law of 31 May 1999.

10 - To this effect, see also Jacques Pertek: "Le Communauté peut instituer un système de reconnaissance mutuelles des autorisations nationales d'exercice permettant de pratiquer toutes les activités typiques de l'avocat dans un État d'acceuil", in La Semaine juridique - édition générale, 2001 II 10637, p. 2258, at p. 2260.

13 - Luxembourg v Parliament and Council (cited above, footnote 8), paragraph 43.

18 - See Case C-281/98 Angonese [2000] ECR I-4139, paragraphs 42 to 44, and Case C-473/93 Commission v Luxembourg [1996] ECR I-3207, paragraph 35.

19 - Council Regulation of 15 October 1968, OJ English Special Edition 1968 (II), p. 475.

23 - Opinion of Advocate General Mischo in Haim (cited above, footnote 17), paragraphs 89 to 91.

25 - Luxembourg v Parliament and Council (cited above, footnote 8), paragraph 32, and Case C-233/94 Germany v Parliament and Council [1997] ECR I-2405, paragraph 17.

27 - Luxembourg v Parliament and Council (cited above, footnote 8), paragraphs 20 to 29.

28 - For criticism of the Court's approach, see Pedro Cabal, in Common Market Law Review (2002), pp. 140 to 143, albeit in agreement with the result.

29 - Cited above, footnote 8, paragraphs 20 and 21; to the same effect see also Georges Friden, Cour de justice des communautés européennes, Annales du droit luxembourgeois (2000), p. 283, at p. 284.

30 - Opinion of Advocate General Ruiz-Jarabo Colomer in Luxembourg v Parliament and Council (cited above, footnote 8), paragraphs 43 f.

32 - Case 79/85 Segers [1986] ECR 2375, Case C 114/97 Commission v Spain [1998] ECR I-6717, and Case C-355/98 Commission v Belgium [2000] ECR I-1221.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Commission v Luxembourg (Freedom of establishment) [2006] EUECJ C-193/05 (19 September 2006) URL: http://www.bailii.org/eu/cases/EUECJ/2006/C19305.html Cite as: [2006] EUECJ C-193/5, [2006] ECR I-8673, [2006] EUECJ C-193/05

Court of Justice of the European Communities (including Court of First Instance Decisions)