LORD LLOYD-JONES AND LORD SALES: (with whom Lady Hale, Lord Kerr, Lord Carnwath, Lord Hodge and Lady Black
agree)
1.
The central issue in this case is whether Ms Tamara Gubeladze (“the
respondent”), a Latvian national living in the United Kingdom, is entitled to receive
state pension credit, a means tested benefit. She relies on regulation 5(2) of
the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (“the
2006 Regulations”), which implements article 17(1)(a) of Directive 2004/38/EC
(“the Citizens Directive”), as a “worker or self-employed person who has ceased
activity”.
2.
By a Treaty signed at Athens on 16 April 2003 (“the Athens Treaty”), ten
Accession States became member states of the EU with effect from 1 May 2004.
The Act of Accession, annexed to the Athens Treaty, set out the “conditions of
admission and the adjustments to the [EU] Treaties on which the Union is
founded, entailed by such admission” (article 1(2)). The Act of Accession
permitted the existing member states to apply national measures regulating
access to their labour markets by nationals of the eight most populous
Accession States (“the A8 States”) which included Latvia. Annex VIII of the Act
of Accession required the existing member states to apply for an initial period
of two years from the date of accession national measures or those resulting
from bilateral agreements, regulating access to their labour markets by Latvian
nationals. The existing member states were permitted to continue to apply such
measures until the end of the five year period following the date of the
accession (para 2). An existing member state maintaining national measures or
measures resulting from bilateral agreements at the end of the five year period
was permitted, “in case of serious disturbances of its labour market or threat
thereof and after notifying the Commission” to continue to apply these measures
until the end of the seven year period following the date of accession (para
5). Other annexes contained identical provisions in respect of nationals of the
other A8 States.
3.
The Act of Accession was given effect in the domestic law of the United
Kingdom by the European Union (Accessions) Act 2003 and the Accession
(Immigration and Worker Registration) Regulations 2004 (SI 2004/1219) (“the
2004 Regulations”). The 2004 Regulations established the Worker Registration
Scheme (“WRS”) which obliged any national of an A8 State to register before
starting employment and before taking up any new employment. Each registration
incurred a fee of £90 and the obligation to register continued until the worker
had worked for 12 months. Failure to register work in accordance with the WRS
would mean that the individual would not derive from that work a right to
reside in the United Kingdom. The WRS ran initially for five years, from 1 May
2004 to 30 April 2009.
4.
In Zalewska v Department for Social Development (Child Poverty
Action Group intervening) [2008] UKHL 67; [2008] 1 WLR 2602, the House of
Lords considered the legality of the WRS. The House of Lords held unanimously that
any requirements of the WRS were imposed pursuant to provisions permitting
derogation from EU rights and so had to be proportionate to a legitimate aim.
It held further, by a majority, that the requirements of the WRS met that test
and were, therefore, lawful.
5.
In 2009 HM Government asked the Migration Advisory Committee (“MAC”) to
advise it in relation to the continuation of the WRS. In the light of the MAC’s
advice, the Government decided to exercise the power conferred by the Act of
Accession to extend the derogations applicable to nationals of the A8 States
for a further two years. Having notified the Commission, it made the Accession
(Immigration and Worker Registration) (Amendment) Regulations 2009 (SI
2009/892) (“the Extension Regulations”) which extended the operation of the WRS
for a period of two years from 1 May 2009 to 30 April 2011.
6.
The respondent is a national of Latvia who came to the United Kingdom in
2008 and worked for various employers here between September 2009 and November
2012. In the periods when she was not working she was a jobseeker. She was
issued with a registration certificate under the WRS on 20 August 2010. Her
employment before that date was not covered by the certificate.
7.
On 24 October 2012, the respondent made a claim for state pension
credit. Entitlement was conditional on her having a right to reside in the
United Kingdom. The basis of her claim was that she had a right of residence in
the United Kingdom under regulation 5(2) of the 2006 Regulations as a person
who had retired, having pursued activities as a worker for at least a year in
the United Kingdom, and having resided continuously in the United Kingdom for
three years. The Secretary of State for Work and Pensions (“the Secretary of
State”) rejected her claim on the ground that the requirement of three years’
continuous residence required three years’ continuous “legal” residence which
meant a right of residence under the Citizens Directive. Since the respondent’s
asserted right of residence during that time was as a worker, but she had not
been registered under the WRS for part of that period, the Secretary of State
considered that she had not resided in the United Kingdom pursuant to a right
of residence conferred by the Citizens Directive and therefore did not meet the
three year residence requirement in regulation 5(2) of the 2006 Regulations.
Her claim for state pension credit was accordingly refused.
8.
The respondent’s appeal to the First-tier Tribunal was dismissed on
jurisdictional grounds. On appeal to the Upper Tribunal, it held that the
First-tier Tribunal had had jurisdiction to hear the appeal but, with the
consent of the parties, the Upper Tribunal retained the appeal and itself
re-made the substantive decision. It allowed the respondent’s appeal on two grounds.
First, it held that article 17 of the Citizens Directive, and therefore regulation
5(2)(c) of the 2006 Regulations, did not require that the three years’
continuous residence be in exercise of rights under the Citizens Directive.
Actual residence was sufficient. Secondly, the decision to extend the WRS in
2009 was disproportionate and therefore unlawful. Accordingly, the respondent
was not disqualified by her failure to meet the requirements of the WRS from
demonstrating three years’ continuous residence with a right of residence under
the Citizens Directive.
9.
The Secretary of State appealed to the Court of Appeal (Rupert Jackson,
Lindblom and Peter Jackson LJJ) which on 7 November 2017 dismissed the appeal
[2017] EWCA Civ 1751; [2018] 1 WLR 3324:
(1)
The Secretary of State succeeded on the construction of the Citizens
Directive. The word “reside” in article 17(1)(a) meant “legally reside” which
in this context meant residence in the exercise of rights under the Citizens
Directive. As a result, the Court of Appeal did not need to rule on a new
argument advanced by the respondent for the first time in the Court of Appeal,
namely that even if “resided” in article 17(1)(a) of the Citizens Directive
means “legally resided”, that word has a wider meaning in regulation 5(2)(c) of
the 2006 Regulation where it means actual residence, with or without any right
to remain. The Court of Appeal was, however, inclined to the view that “resided”
in regulation 5(2)(c) of the 2006 Regulations has the same meaning as in the
Citizens Directive.
(2)
There was no error of law in the Upper Tribunal’s conclusion that the
extension of the WRS was disproportionate and therefore incompatible with EU
law.
10.
On 19 June 2018 the Supreme Court granted permission to appeal on
condition that the Secretary of State pay the respondent’s costs in any event.
Permission to the Secretary of State to appeal included permission to argue a
new ground which had not been advanced in the Court of Appeal, namely that a
national measure adopted pursuant to a transitional provision in the Act of
Accession is not subject to proportionality review at all. So to hold would
involve departing from the reasoning of the House of Lords in Zalewska.
Accordingly, a seven Justice panel has been convened for this appeal.
11.
The following issues therefore arise for decision on this appeal:
(1)
Is the decision to extend the WRS open to challenge on grounds of
proportionality?
(2)
If the decision to extend the WRS is open to challenge on grounds of
proportionality, did the Upper Tribunal and the Court of Appeal err in their
approach and conclusion on this issue?
(3)
If the Secretary of State succeeds on Issue (1) or Issue (2), does article
17(1)(a) of the Citizens Directive require a person to show that, throughout
the period of continuous residence, she enjoyed a right of residence under the
Citizens Directive?
(4)
If article 17 of the Citizens Directive requires lawful residence, is
actual residence sufficient for the purposes of the 2006 Regulations?
Relevant EU instruments
Treaty establishing the
European Community
12.
At the material time, the Treaty establishing the European Community (“TEC”)
provided in relevant part:
“Article 12
Within the scope of application of
this Treaty, and without prejudice to any special provisions contained therein,
any discrimination on grounds of nationality shall be prohibited. …
Article 17
1. Citizenship of the
Union is hereby established. Every person holding the nationality of a member state
shall be a citizen of the Union. Citizenship of the Union shall complement and
not replace national citizenship.
2. Citizens of the Union
shall enjoy the rights conferred by this Treaty and shall be subject to the
duties imposed thereby.
Article 18
1. Every citizen of the
Union shall have the right to move and reside freely within the territory of
the member states, subject to the limitations and conditions laid down in this
Treaty and by the measures adopted to give it effect.
…
Article 39
1. Freedom of movement for
workers shall be secured within the Community.
2. Such freedom of
movement shall entail the abolition of any discrimination based on nationality
between workers of the member states as regards employment, remuneration and
other conditions of work and employment.
3. It shall entail the
right, subject to limitations justified on grounds of public policy, public
security or public health:
(a) to accept offers of
employment actually made;
(b) to move freely within
the territory of member states for this purpose;
(c) to stay in a member state
for the purpose of employment in accordance with the provisions governing the
employment of nationals of that state laid down by law, regulation or
administrative action;
(d) to remain in the
territory of a member state after having been employed in that state, subject
to conditions which shall be embodied in implementing regulations to be drawn
up by the Commission.
…
Article 49
Within the framework of the
provisions set out below, restrictions on freedom to provide services within
the Community shall be prohibited in respect of nationals of member states who
are established in a state of the Community other than that of the person for
whom the services are intended. …”
Regulation (EEC) No 1612/68
13.
Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom
of movement for workers within the Community (“Regulation 1612/68”) sets out in
articles 1 to 6 within Title I EU rules on eligibility for employment. Within
Title II (Employment and Equality of Treatment) article 7 provides in relevant
part:
“Article 7
1. A worker who is a
national of a member state may not, in the territory of another member state,
be treated differently from national workers by reason of his nationality in
respect of any conditions of employment and work, in particular as regards
remuneration, dismissal, and should he become unemployed, reinstatement or
re-employment; …”
The Accession Treaty
14.
The Athens Treaty states in the sixth recital that the Contracting
States:
“HAVE DECIDED to establish by
common agreement the conditions of admission and the adjustments to be made to
the Treaties on which the European Union is founded, …”
Article 1(1) provides that the Accession States:
“hereby become members of the
European Union and Parties to the Treaties on which the Union is founded as
amended or supplemented.”
Article 1 continues:
“2. The conditions of
admission and the adjustments to the Treaties on which the Union is founded,
entailed by such admission, are set out in the Act annexed to this Treaty. The
provisions of that Act shall form an integral part of this Treaty.
3. The provisions
concerning the rights and obligations of the member states and the powers and
jurisdiction of the institutions of the Union as set out in the Treaties
referred to in paragraph 1 shall apply in respect of this Treaty.”
Article 2(2) provides that the Treaty shall enter into
force on 1 May 2004.
15.
The Act of Accession annexed to the Athens Treaty provides in relevant
part:
“Article 2
From the date of accession, the
provisions of the original Treaties and the acts adopted by the institutions
and the European Central Bank before accession shall be binding on the new member
states and shall apply in those states under the conditions laid down in those
Treaties and in this Act.
…
Article 10
The application of the original
Treaties and acts adopted by the institutions shall, as a transitional measure,
be subject to the derogations provided for in this Act.
…
Article 24
The measures listed in Annexes V,
VI, VII, VIII, IX, X, XI, XII, XIII and XIV to this Act shall apply in respect
of the new member states under the conditions laid down in those Annexes.”
16.
Annex VIII to the Act of Accession sets out the transitional measures in
respect of Latvia. Section 1 of Annex VIII, which deals with free movement of
persons, provides in relevant part:
“1. Article 39 and the first
paragraph of article 49 of the EC Treaty shall fully apply only, in relation to
the freedom of movement of workers and the freedom to provide services
involving temporary movement of workers as defined in article 1 of Directive
96/71/EC between Latvia on the one hand, and [the existing member states] on
the other hand, subject to the transitional provisions laid down in paragraphs
2 to 14.
2. By way of derogation
from articles 1 to 6 of Regulation (EEC) No 1612/68 and until the end of the
two year period following the date of accession, the present member states will
apply national measures, or those resulting from bilateral agreements,
regulating access to their labour markets by Latvian nationals. The present member
states may continue to apply such measures until the end of the five year
period following the date of the accession.
Latvian nationals legally working
in a present member state at the date of accession and admitted to the labour
market of that member state for an uninterrupted period of 12 months or longer
will enjoy access to the labour market of that member state but not to the
labour market of other member states applying national measures.
Latvian nationals admitted to the
labour market of a present member state following accession for an
uninterrupted period of 12 months or longer shall also enjoy the same rights.
The Latvian nationals mentioned
in the second and third subparagraphs above shall cease to enjoy the rights
contained in those subparagraphs if they voluntarily leave the labour market of
the present member state in question.
Latvian nationals legally working
in a present member state at the date of accession, or during a period when
national measures are applied, and who were admitted to the labour market of
that member state for a period of less than 12 months shall not enjoy these
rights.
3. Before the end of the
two year period following the date of accession the Council shall review the
functioning of the transitional provisions laid down in paragraph 2, on the
basis of a report from the Commission.
On completion of this review, and
no later than at the end of the two year period following the date of accession,
the present member states shall notify the Commission whether they will
continue applying national measures or measures resulting from bilateral
agreements, or whether they will apply articles 1 to 6 of Regulation (EEC) No
1612/68 henceforth. In the absence of such notification, articles 1 to 6 of
Regulation (EEC) No 1612/68 shall apply.
4. Upon Latvia’s request
one further review may be held. The procedure referred to in paragraph 3 shall
apply and shall be completed within six months of receipt of Latvia’s request.
5. A member state
maintaining national measures or measures resulting from bilateral agreements
at the end of the five year period indicated in paragraph 2 may, in case of
serious disturbances of its labour market or threat thereof and after notifying
the Commission, continue to apply these measures until the end of the seven
year period following the date of accession. In the absence of such
notification, articles 1 to 6 of Regulation (EEC) No 1612/68 shall apply.”
The Citizens Directive
17.
The preamble to the Citizens Directive provides in material part:
“Citizenship of the Union confers
on every citizen of the Union a primary and individual right to move and reside
freely within the territory of the member states, subject to the limitations and
conditions laid down in the Treaty and to the measures adopted to give it
effect.” (recital (1))
“The free movement of persons
constitutes one of the fundamental freedoms of the internal market, which
comprises an area without internal frontiers, in which freedom is ensured in
accordance with the provisions of the Treaty.” (recital (2))
“Union citizenship should be the
fundamental status of nationals of the member states when they exercise their
right of free movement and residence. It is therefore necessary to codify and
review the existing Community instruments dealing separately with workers,
self-employed persons, as well as students and other inactive persons in order
to simplify and strengthen the right of free movement and residence of all Union
citizens.” (recital (3))
“Enjoyment of permanent residence
by Union citizens who have chosen to settle long term in the host member state
would strengthen the feeling of Union citizenship and is a key element in
promoting social cohesion, which is one of the fundamental objectives of the
Union. A right of permanent residence should therefore be laid down for all
Union citizens and their family members who have resided in the host member state
in compliance with the conditions laid down in this Directive during a
continuous period of five years without becoming subject to an expulsion
measure.” (recital (17))
“In order to be a genuine vehicle
for integration into the society of the host member state in which the Union
citizen resides, the right of permanent residence, once obtained, should not be
subject to any conditions.” (recital (18))
“Certain advantages specific to
Union citizens who are workers or self-employed persons and to their family
members, which may allow these persons to acquire a right of permanent
residence before they have resided five years in the host member state, should
be maintained, as these constitute acquired rights, conferred by Commission
Regulation (EEC) No 1251/70 of 29 June 1970 on the right of workers to remain
in the territory of a member state after having been employed in that state and
Council Directive 75/34/EEC of 17 December 1974 concerning the right of
nationals of a member state to remain in the territory of another member state
after having pursued therein an activity in a self-employed capacity.” (recital
(19))
18.
The Directive lays down the conditions governing the exercise of the
right of free movement and residence within the territory of the member states
by Union citizens and their family members, their right of permanent residence
in the territory of the member states and the limits placed on these rights on
grounds of public policy, public security or public health (article 1). Within
Chapter III, article 6 confers a right of residence on the territory of another
member state for up to three months without any conditions or any formalities
other than the requirement to hold a valid identity card or passport. Article 7
confers on all Union citizens the right of residence on the territory of
another member state for a period of longer than three months if, inter alia,
they are workers or self-employed persons in the host member state. Article 14
provides that Union citizens and their family members shall have the right of
residence provided for in article 6, as long as they do not become an
unreasonable burden on the social assistance system of the host member state (article
14(1)), and the right of residence provided for in article 7 as long as they
meet the conditions set out therein (article 14(2)).
19.
Article 16 provides:
“Article 16
General
rule for Union citizens and their family members
1. Union citizens who have
resided legally for a continuous period of five years in the host member state
shall have the right of permanent residence there. This right shall not be subject
to the conditions provided for in Chapter III.
2. Paragraph 1 shall apply
also to family members who are not nationals of a member state and have legally
resided with the Union citizen in the host member state for a continuous period
of five years.
3. Continuity of residence
shall not be affected by temporary absences not exceeding a total of six months
a year, or by absences of a longer duration for compulsory military service, or
by one absence of a maximum of 12 consecutive months for important reasons such
as pregnancy and childbirth, serious illness, study or vocational training, or
a posting in another member state or a third country.
4. Once acquired, the
right of permanent residence shall be lost only through absence from the host member
state for a period exceeding two consecutive years.”
20.
Article 17 provides in material part:
“Article 17
Exemptions
for persons no longer working in the host member state and their family members
1. By way of derogation
from article 16, the right of permanent residence in the host member state
shall be enjoyed before completion of a continuous period of five years of
residence by:
(a) workers or
self-employed persons who, at the time they stop working, have reached the age
laid down by the law of that member state for entitlement to an old age pension
or workers who cease paid employment to take early retirement, provided that
they have been working in that member state for at least the preceding 12
months and have resided there continuously for more than three years. …”
21.
Article 18 provides:
“Article 18
Acquisition of the right of
permanent residence by certain family members who are not nationals of a member
state
Without prejudice to article 17,
the family members of a Union citizen to whom articles 12(2) and 13(2) apply,
who satisfy the conditions laid down therein, shall acquire the right of
permanent residence after residing legally for a period of five consecutive
years in the host member state.”
22.
In order to understand the Citizens Directive it is also relevant to set
out certain parts of Commission Regulation (EEC) No 1251/70 on the right of
workers to remain in the territory of a member state after having been employed
in that state (“Regulation 1251/70”), which is one of the instruments referred
to in recital (19) to the Citizens Directive. Regulation 1251/70 provides as
follows:
“Whereas it is important, in the
first place, to guarantee to the worker residing in the territory of a member state
the right to remain in that territory when he ceases to be employed in that state
because he has reached retirement age or by reason of permanent incapacity to
work; whereas, however, it is equally important to ensure that right for the
worker who, after a period of employment and residence in the territory of a member
state, works as an employed person in the territory of another member state,
while still retaining his residence in the territory of the first state” (recital
(4))
“Article 1
The provisions of this Regulation
shall apply to nationals of a member state who have worked as employed persons
in the territory of another member state and to members of their families, as
defined in article 10 of Council Regulation (EEC) No 1612/68 on freedom of
movement for workers within the Community.
Article 2
1. The following shall
have the right to remain permanently in the territory of a member state:
(a) a worker who, at the
time of termination of his activity, has reached the age laid down by the law
of that member state for entitlement to an old-age pension and who has been
employed in that state for at least the last 12 months and has resided there
continuously for more than three years;
…
Article 4
1. Continuity of residence
as provided for in article … 2(1) … may be attested by any means of proof in
use in the country of residence. It shall not be affected by temporary absences
not exceeding a total of three months per year, nor by longer absences due to
compliance with the obligations of military service.
…”
Regulation 1251/70 was repealed by Commission Regulation
(EC) No 635/2006 of 25 April 2006 (“Regulation 635/2006”) with effect from 30
April 2006, in anticipation of the implementation of the Citizens Directive
into national laws with effect from the following day. We set out recital (1)
to Regulation 635/2006 in our discussion of Issue (3) below.
Relevant domestic legislation
The Accession (Immigration
and Worker Registration) Regulations 2004
23.
The 2004 Regulations, as in force on 30 April 2007, provided in relevant
part:
“2. ‘Accession state
worker requiring registration’
(1) Subject to the
following paragraphs of this regulation, ‘accession state worker requiring
registration’ means a national of a relevant accession state working in the
United Kingdom during the accession period.
(2) A national of a
relevant accession state is not an accession state worker requiring
registration if on 30 April 2004 he had leave to enter or remain in the United
Kingdom under the 1971 Act and that leave was not subject to any condition
restricting his employment. …
4. Right of residence
of work seekers and workers from relevant acceding states during the accession
period
(1) This regulation
derogates during the accession period from article 39 of the Treaty
establishing the European Community, articles 1 to 6 of Regulation (EEC) No
1612/68 on freedom of movement for workers within the Community and Council
Directive 2004/38/EC of the European Parliament and of the Council on the right
of citizens of the Union and their family members to move and reside freely
within the territory of the member states, insofar as it takes over provisions
of Council Directive (EEC) No 68/360 on the abolition of restrictions on
movement and residence within the Community for workers of member states and
their families.
(2) A national of a
relevant accession state shall not be entitled to reside in the United Kingdom
for the purpose of seeking work by virtue of his status as a work seeker if he
would be an accession state worker requiring registration if he began working
in the United Kingdom.
(3) Paragraph (2) is
without prejudice to the right of a national of a relevant accession state to
reside in the United Kingdom under the 2006 Regulations as a self-sufficient
person whilst seeking work in the United Kingdom.
(4) A national of a
relevant accession state who is seeking employment and an accession state worker
requiring registration shall only be entitled to reside in the United Kingdom
in accordance with the 2006 Regulations as modified by regulation 5.
5. Application of 2006
Regulations in relation to accession state worker requiring registration
(1) The 2006 Regulations
shall apply in relation to a national of a relevant accession state subject to
the modifications set out in this regulation.
(2) A national of a
relevant accession state who is seeking employment in the United Kingdom shall
not be treated as a jobseeker for the purpose of the definition of ‘qualified
person’ in regulation 6(1) of the 2006 Regulations and an accession state
worker requiring registration shall be treated as a worker for the purpose of
that definition only during a period in which he is working in the United
Kingdom for an authorised employer. …
…
7. Requirement for an
accession state worker requiring registration to be authorised to work
(1) By way of derogation
from article 39 of the Treaty establishing the European Community and articles
1 to 6 of Regulation (EEC) No 1612/68 on freedom of movement for workers within
the Community, an accession state worker requiring registration shall only be
authorised to work in the United Kingdom for an authorised employer.
(2) An employer is an
authorised employer in relation to a worker if -
…
(c) the worker has received
a valid registration certificate authorising him to work for that employer and
that certificate has not expired under paragraph (5); …”
Regulation 7(5)(b) provided that a registration
certificate expired on the date on which the worker ceased working for that
employer.
The Immigration (European Economic Area) Regulations
2006
24.
The 2006 Regulations transposed some of the provisions of the Citizens
Directive into domestic law. At the relevant time they provided in material
part:
“5. ‘Worker or
self-employed person who has ceased activity’
(1) In these Regulations,
‘worker or self-employed person who has ceased activity’ means an EEA national
who satisfies the conditions in paragraph (2), (3), (4) or (5).
(2) A person satisfies the
conditions in this paragraph if he -
(a) terminates his activity
as a worker or self-employed person and -
(i) has reached the age at
which he is entitled to a state pension on the date on which he terminates his
activity; or
(ii) in the case of a
worker, ceases working to take early retirement;
(b) pursued his activity as
a worker or self-employed person in the United Kingdom for at least 12 months
prior to the termination; and
(c) resided in the United
Kingdom continuously for more than three years prior to the termination. …”
…
15. Permanent right of
residence
(1) The following persons
shall acquire the right to reside in the United Kingdom permanently -
… (c) a worker or self-employed
person who has ceased activity; …”
25.
The State Pension Credit Act 2002 provides for conditions of entitlement
to state pension credit, including a condition that the claimant is in Great
Britain (section 1(2)(a)). The State Pension Credit Regulations 2002 (SI
2002/1792) made under that Act set out detailed provisions regarding who
qualifies as a person in Great Britain for these purposes. According to those
Regulations, so far as relevant, a person so qualifies if she is habitually
resident in the United Kingdom pursuant to a right to reside which is not
expressly excluded as a relevant right (regulation 2). A right of residence
arising pursuant to article 17 of the Citizens Directive is not excluded.
Accordingly it is common ground that if the respondent enjoyed a right of
permanent residence pursuant to article 17 she would be entitled to claim state
pension credit.
Issue (1): Is the
decision to extend the WRS open to challenge on grounds of proportionality?
26.
It is common ground between the parties that decisions to apply
transitional measures under the Act of Accession, such as the decision to
extend the WRS, cannot be challenged by A8 nationals as a disproportionate
restriction on their free movement rights under the EU Treaties or legislation
made under them. That is not the basis of the respondent’s case. On the
contrary, she seeks to challenge the proportionality of the measures adopted by
the United Kingdom within the context of the transitional provisions
established in EU law. In particular, she challenges as disproportionate the
decision of the United Kingdom in April 2009 to make the residence rights of A8
nationals contingent on compliance with the WRS beyond the expiry of the
initial five year accession period.
27.
Before the Court of Appeal, it was accepted on behalf of the Secretary
of State in the light of Zalewska that the decision to extend the
requirement of compliance with the WRS was subject to proportionality review.
However, before the Supreme Court and with its permission Mr Martin Chamberlain
QC, who has argued the case for the Secretary of State with great skill and
determination, now maintains that the decision cannot be challenged on grounds
of proportionality and identifies this as “the central question in this
appeal”. He accepts that the transitional provisions in Annex VIII were
designed to protect the labour markets in the existing member states from the
impact of large numbers of nationals arriving from the eight most populous new member
states and that this was to be achieved by a “derogation” from the ordinary
application of the relevant Treaty provisions on free movement of workers (Vicoplus
SC PUH v Minister van Sociale Zaken en Werkgelegenheid (Joined Cases
C-307/09 to C-309/09) [2011] ECR I-453 at para 34; Prefeta v Secretary of
State for Work and Pensions (Case C-618/16) [2019] 1 WLR 2040 at para 41).
As a result, the Accession Treaty established a carefully calibrated and
comprehensive suite of “derogations” from the ordinary operation of the
provisions in the EU Treaties governing free movement of workers. However, he
submits, nationals of the A8 States had never enjoyed rights under the Treaties
or under EU legislation and the effect of the “derogations” was to place
substantive limits, which in some cases depended on decisions by member states,
on the rights they would acquire by virtue of accession. In circumstances where
the primary provisions of EU law did not apply to nationals of the new member states,
they had, for the purposes of EU law, no protected interest in that respect
during the transitional period. Accordingly, he submits, the extension of the
WRS did not interfere with or derogate from any pre-existing protected interest
and it was, therefore, not subject to any requirement of proportionality. It
was sufficient that it fell within the scope of the permitted derogation in
paragraph 5 of Annex VIII to the Act of Accession and was notified to the
Commission.
28.
The respondent submits that the Secretary of State’s submission is wrong
as a matter of EU law and of national law. The decision to extend the WRS is a
national decision to limit fundamental EU law rights of free movement pursuant
to a transitional provision in the Act of Accession and is, therefore, subject
to proportionality review as a matter of EU law. In addition, the decision to limit
enjoyment of state pension credit for those who would otherwise enjoy it, by
reason of extension of the WRS, is a discriminatory infringement of the rights
to property of an A8 national, and falls to be justified under article 14 of
the European Convention of Human Rights (“ECHR”) read with article 1 Protocol 1
to that Convention (“A1P1”) by virtue of section 6 of the Human Rights Act
1998.
29.
The Secretary of State’s submission is in direct conflict with the
decision of the House of Lords in Zalewska v Department for Social
Development which upheld the legality of the WRS in the initial phase of
its operation from 2004. That appeal related to the provisions in Annex XII to
the Act of Accession concerning national measures regulating access to labour
markets within existing member states by Polish nationals. The House of Lords
approached the matter on the basis that derogation by the United Kingdom from article
39 pursuant to paragraph 2 of Part II of Annex XII to the Act of Accession
precluded direct reliance on article 39 by nationals of Poland and instead
required compliance during the transitional period with the national measures
governing such access. However, the House unanimously concluded that the powers
in the United Kingdom to impose conditions on Polish nationals were required to
be exercised in accordance with the Community principle of proportionality. It
proceeded on the basis that the UK measures were a derogation from the rights
which would otherwise be enjoyed. Lord Hope of Craighead stated the matter in
the following terms (at para 30):
“The proposition that I cannot
accept however is that the national measures that the United Kingdom selects
have nothing to do with Community law, so the issue as to whether they are
proportionate is irrelevant. The only authority that the United Kingdom has to
introduce national measures to give access to nationals of an A8 state to its
labour market in place of article 39 EC and Title I of Council Regulation (EEC)
No 1612/68 is that which is given to it by paragraph 2 of Part 2 of Annex XII.
As article 10 of the Act of Accession makes clear, this derogation from the
application of the original Treaties and Acts adopted by the institutions of
the Community was agreed to by the member states under the umbrella of
Community law. Furthermore, the fact that the derogation does not extend to
article 7 of the Regulation shows that where the national measures of an
existing member state give the status of ‘worker’ to an A8 state national he is
entitled to all the rights in that state that Community law gives to workers.
It is not possible to detach the opportunity that is given to the member states
to apply national measures from its Community law background. The conclusion
that any national measures that the member states introduce under the authority
of paragraph 2 must be compatible with the authority given to them by the
Treaty of Accession and with the Community law principle of proportionality
seems to me to be inescapable.”
Similarly, Baroness Hale of Richmond explained (at para
46) that the appeal was concerned with the restrictive effect of national
measures implementing EU law on the fundamental right of free movement of
workers. The national implementing regulations had been made under section 2(2)
of the European Communities Act 1972 for the purpose of implementing Community
law and in the exercise of powers conferred by section 2 of the European Union
(Accessions) Act 2003, which is headed “Freedom of movement for workers”. As a
result, any national measures had to be compatible with the principle of
proportionality in EU law. The House held by a bare majority that the national
measures there under consideration (namely, requirements under the WRS that
nationals of A8 accession states apply for a registration certificate for their
first employment in the United Kingdom and re-register if they changed
employment within a stipulated period) were not disproportionate.
30.
Mr Chamberlain does not shrink from submitting that Zalewska was
wrongly decided. He does not suggest, as was submitted in Zalewska, that
the national measures have nothing to do with EU law. He accepts that the
national measures fall within the scope of EU law and that they are required to
comply with the terms of the derogations permitted by EU law. He suggests,
rather, that Lord Hope’s underlying premise in para 30 of his speech, set out
above, is flawed in that the EU principle of proportionality can have no
application where there is no antecedent interest requiring protection. On his
case, nationals of the A8 States enjoyed no rights at all under the EU Treaties
at the point of accession and the only rights they enjoyed in this regard
during the transitional period were those permitted by the UK measures. On this
basis he submits that it is circular to argue that the national measures affect
the interests of Latvian nationals in free movement and entitlement to social
security payments as workers because these are not conferred until the
requirements of the national measures have been met.
31.
Mr Chamberlain is correct in his submission that the principle of
proportionality necessarily involves, as an essential component, an assessment
of the degree to which the impugned measure interferes with a protected
interest. Thus, in R (British Sugar plc) v Intervention Board for
Agricultural Produce (Case C-329/01) [2004] ECR I-01899 the Court of
Justice of the European Union observed (at para 59):
“It cannot be maintained that
rules which do not themselves interfere with protected interests are capable of
infringing the principle of proportionality.”
As a result, a measure the sole purpose of which was to
allow the correction of errors did not give rise to any interference with the
manufacturers’ interests in issue in that case and could not, therefore, constitute
a breach of the principle of proportionality. The British Sugar case was
referred to by Lord Reed and Lord Toulson in R (Lumsdon) v Legal Services
Board [2015] UKSC 41; [2016] AC 697 (at para 25) where they reiterated that
the principle of proportionality only applies to measures interfering with
protected interests. The point is also well made by Professor Tridimas in The
General Principles of EU Law (2nd ed, OUP: 2006) where he states (at p
139):
“The court assesses the adverse
consequences that the measure has on an interest worthy of legal protection and
determines whether those consequences are justified in view of the importance
of the objective pursued.”
Similarly, Professors Craig and De Búrca in EU Law:
Text, Cases, and Materials (6th ed, OUP: 2015) state (at p 551):
“In any proportionality inquiry
the relevant interests must be identified, and there will be some ascription of
weight or value to those interests, since this is a necessary condition
precedent to any balancing operation.”
32.
The question arises whether the Act of Accession created relevant
protectable interests by conferring rights of EU citizenship on the new EU
citizens from the A8 States subject to initial, tapering exceptions imposed by
the existing member states, or whether it should be regarded as providing for
only such rights as may be conferred by the existing member states during the
transitional period. This question lies at the heart of Issue (1). The House of
Lords in Zalewska took the former view.
33.
This reading is supported by the scheme of the relevant instruments. The
Treaty of Accession provides (article 1(1)) that the Accession States “hereby
become members of the European Union and Parties to the Treaties on which the
Union is founded as amended or supplemented”. The Act of Accession provides (article
2) that “[f]rom the date of accession, the provisions of the original Treaties
… shall be binding on the new member states and shall apply in those states
under the conditions laid down in those Treaties and in this Act”. Article 10
of the Act of Accession then provides that “[t]he application of the original
Treaties and acts adopted by the institutions shall, as a transitional measure,
be subject to the derogations provided for in this Act”. Article 24 provides
that the measures listed in Annex VIII shall apply in respect of Latvia under
the conditions there laid down. Paragraph 1 of Annex VIII provides that articles
39 and 49(1) TEC “shall fully apply only, in relation to the freedom of
movement of workers and the freedom to provide services involving temporary
movement of workers as defined in article 1 of Directive 96/71/EC” between
Latvia and the existing member states, “subject to the transitional provisions
laid down in paragraphs 2 to 14”. Paragraph 2 then provides that, during the
initial two year period, the existing member states will apply national
measures, or those resulting from bilateral agreements regulating access to
their labour markets by Latvian nationals “[b]y way of derogation from articles
1 to 6 of Regulation (EEC) No 1612/68”. The use of the word “derogation” in
this context is itself an indication that A8 nationals are regarded as having
significant relevant interests under EU law from the moment of accession,
subject to limitation only by action taken by member states which will be
subject to the general principle of proportionality in the usual way. The
transitional provisions are a derogation from the principle that the provisions
of EU law apply immediately and fully to new member states and their nationals
(see Vicoplus per Advocate General Bot at para 46).
34.
The provisions of the Citizens Directive are also relevant in this
regard. The preamble emphasises in recitals (1) to (3) that citizenship of the
Union confers on every citizen of the Union a primary and individual right to
move and reside freely within the territory of the member states, subject to
the limitations and conditions laid down in or pursuant to the Treaty; that
such a right of free movement is one of the fundamental freedoms of the
internal market; and that Union citizenship should be the fundamental status of
nationals of the member states as regards the exercise of their right of free
movement and residence. Every A8 national became a citizen of the EU on 1 May
2004 and these recitals indicate that it is by virtue of their status as such
that EU law contemplates that they have a protectable interest which came into
existence on that date so far as concerns rights of free movement. The
Directive lays down the conditions governing the exercise of the right of free
movement and residence within the territory of the member states by Union
citizens and their family members (article 1). It seems clear, therefore, that
the effect of Annex VIII to the Act of Accession is, during the transitional
period, to derogate from the rights which Latvian nationals would otherwise
enjoy in their newly established status as EU citizens. The application of
these derogating provisions is clearly subject to the principle of
proportionality in EU law.
35.
The same conclusion is arrived at when one has regard to the substance
of the matter. Nationals of the A8 States were to enjoy rights as EU citizens
from accession, subject to the derogating transitional provisions. The purpose
of the transitional provisions was to protect labour markets in existing member
states from the impact of large numbers of workers arriving from the eight most
populous new member states. This aim was to be achieved by requiring or
permitting existing member states to derogate temporarily from the normal
application of EU rules on free movement of workers. There was no intention to
confer an unfettered right to derogate from general principles of freedom of
movement. On the contrary, derogation must be subject to the principle of
proportionality in EU law.
36.
In the course of his submissions, Mr Chamberlain placed considerable
reliance on the decision of the CJEU in Vicoplus, which post-dated the
decision of the House of Lords in Zalewska and which, he maintained,
demonstrated that the EU principle of proportionality had no application in
circumstances such as the present. That case concerned Annex XII to the Act of
Accession, relating to Poland, which was materially identical to Annex VIII.
The appellants had been fined for posting Polish workers to the Netherlands
without having first obtained work permits. On a reference for a preliminary
ruling the Raad van State (Netherlands) asked whether, with a view to
protecting the domestic labour market, the requirement of a work permit under
national law for the provision of a service consisting in making workers
available was a proportionate measure in the light of articles 56 and 57 TFEU,
in view also of the reservation in Chapter 2, paragraph 2 of Annex XII to the
Act of Accession with regard to the free movement of workers. At paras 21-25 of
its judgment the Second Chamber of the CJEU reformulated the question. It
explained (at para 24) that if national legislation is “justified” pursuant to
that transitional measure in Annex XII, the question of compatibility with articles
56 and 57 TFEU can no longer arise. It observed (at para 25) that it was
“therefore necessary to examine whether legislation such as that at issue in
the main proceedings is covered by that transitional measure.” The Chamber considered
that an undertaking which was engaged in making labour available, although a
supplier of services, carried on activities which were specifically intended to
enable workers to gain access to the labour market of the host member state. In
its view, it followed that the national legislation in issue must be considered
to be a measure regulating access of Polish nationals to the labour market of
the Netherlands within the meaning of Chapter 2, paragraph 2 of Annex XII.
Moreover, a purposive interpretation of that provision led to the same
conclusion.
37.
Mr Chamberlain submits that notwithstanding a reference clearly framed
in terms of proportionality, the CJEU reformulated the question and failed
entirely to address the issue of proportionality. This, he submits,
demonstrates that proportionality has no part to play when deciding whether the
subject matter was “covered by that transitional measure”. In his submission it
is simply necessary to determine that the measure falls within the scope of the
derogating provision.
38.
The difficulty with this submission is that, although the question
referred to proportionality, the case seems to have had nothing to do with
proportionality. The essential question was whether the express exception in
Chapter 2, paragraph 2 of Annex XII to the Act of Accession permitted an
existing member state to make the hiring out of manpower on its territory
conditional on having a licence during the transitional period. The CJEU
focused on this issue and concluded that the derogation extended so as to
permit both measures with regard to employment and measures with regard to the
provision of services which made labour available. It was assumed in the
circumstances of that case that if the Dutch measure fell within the scope of
the derogation, as properly interpreted, then it was of a character which would
satisfy the principle of proportionality. This explains the shift in the
language used in the judgment from explaining that the referring court was
unsure whether the permit regime for Polish workers “can be justified in the
light of [the derogation in Chapter 2, paragraph 2 of Annex XII]” (para 23) and
the statement (in para 24) that if national legislation “is justified pursuant
to” that transitional derogation then the question of the compatibility of that
legislation with articles 56 and 57 TFEU can no longer arise, to asking (in
para 25) whether the legislation in question “is covered by” that transitional
derogation. The word “justified” indicates that the Chamber in fact considered that
a usual process of justification according to the principle of proportionality
is applicable, whereas the language used in para 25 indicates that it assumed
that in the circumstances of the particular case the justification issue would
be resolved if the Dutch regime fell within the scope of the transitional
derogation, as properly interpreted.
39.
In this respect the judgment follows the approach of Advocate General
Bot in his opinion. The case was concerned with the compatibility of a work
permit regime with the transitional provision in Chapter 2, paragraph 2 of
Annex XII. A work permit regime is inherently capable of having a major effect
as a national measure restricting or preventing access to the labour market of
the host member state which adopts it, by contrast with the monitoring regime
adopted by the UK. The Advocate General treated the case as concerned simply
with the interpretation of Chapter 2, paragraph 2 of Annex XII (see points 3-5,
25 and 57 of his opinion) and in addressing that question emphasised that both
in the case of direct access to the employment market of member states of A8
nationals as workers and in the case of the access of such nationals to that
market through their employment by an undertaking which hires out manpower
“there are potentially large movements of workers which, following new
accessions, risk disturbing the employment market of the member states” and
that the transitional provision should be interpreted as covering both kinds of
access in order to preserve its effectiveness (points 51-52).
40.
The judgment and the Advocate General’s opinion give no support to the
submission that there is no scope for the application of the principle of
proportionality in the context of adoption of national measures by a member state
in reliance on the transitional derogating provisions in the Annexes to the Act
of Accession. In particular, neither the judgment nor the opinion refers to the
absence of any relevant protectable interest. If it had been the intention of
the CJEU or the Advocate General to rule that the principle of proportionality
had no part to play in the context of derogation under the transitional
provisions in the Annexes to the Act of Accession, they would surely have said
so in terms and would have explained that that was why the question referred
proceeded on a false basis.
41.
The Secretary of State also relies on a passage in the judgment of the
Second Chamber of the CJEU in Valeško v Klagenfurt (Case C-140/05)
[2006] ECR I-10025. That case concerned another provision in the Act of
Accession which provided a transitional derogation from EU Treaty provisions
and legislation governing excise duties. Austrian legislation purportedly made
under that derogation limited the exemption for the import of cigarettes in
personal luggage to 25 cigarettes. On a preliminary reference, the Independent
Finance Tribunal, Klagenfurt Division, asked whether the Austrian legislation
was compatible with Treaty provisions governing the free movement of goods and
customs duties (now contained in articles 28, 30 and 31 TFEU). Mr Chamberlain
places particular reliance on the following passage in the judgment of the court
(at para 74):
“Since that national legislation
is justified in the light of one of the measures referred to in article 24 of
the Act of Accession, in this case the transitional measure provided for in
section 6(2) of Annex XIII to that Act, the question of the compatibility of
that legislation with other provisions of primary law, such as articles 23 EC,
25 EC and 26 EC, can no longer arise.”
Here, the court was saying no more than that once
national legislation is justified for the purposes of the derogating
transitional measures, it is not necessary to justify it in addition in the
wider context of the principles governing free movement of goods. Again, we
consider that the court’s use of the word “justified” is significant. It
indicates that the court contemplated that a usual process of justification
under EU law, including by reference to the principle of proportionality, would
be required in relation to reliance on the transitional provision referred to.
42.
We were also referred by Mr Chamberlain to the decision of the Supreme
Court in Mirga v Secretary of State for Work and Pensions [2016] UKSC 1;
[2016] 1 WLR 481. There the claimants failed to establish that domestic
regulations violated their rights under article 18 and article 21(1) TFEU,
respectively. Lord Neuberger of Abbotsbury, with whom the other members of the
Supreme Court agreed, held that those rights were qualified and, in particular,
that those of Ms Mirga under article 21(1) were subject to the limitations and
conditions laid down in the Treaties and the measures adopted to give them
effect. Those measures included the 2003 Accession Treaty and the Citizens
Directive. Clearly, the more general Treaty provisions must be read subject to
those qualifications or derogations arising under transitional provisions such
as those in the Act of Accession. Lord Neuberger then rejected a further
submission founded on a lack of proportionality. Mr Chamberlain drew our
attention in particular to the following passage (at para 69):
“Where a national of another
member state is not a worker, self-employed or a student, and has no, or very
limited, means of support and no medical insurance …, it would severely
undermine the whole thrust and purpose of the [Citizens] Directive if
proportionality could be invoked to entitle that person to have the right of
residence and social assistance in another member state, save perhaps in extreme
circumstances. It would also place a substantial burden on a host member state
if it had to carry out a proportionality exercise in every case where the right
of residence (or indeed the right against discrimination) was invoked.”
As appears from its final words, however, this passage
appears in the context of a submission by the claimants that the determination
of the authorities, courts and tribunals below had failed to give consideration
to the proportionality of refusing each of them social assistance on a case by
case basis, taking into account all the particular circumstances of their
respective cases. It has no bearing on the issue of whether national
legislation derogating from rights or prospective rights under EU law is
required to be proportionate and it provides no support for the Secretary of
State’s case on this issue.
43.
Mr Chamberlain is correct in his submission that, if a national measure
is adopted pursuant to a transitional provision in the Act of Accession, no
question of its compatibility with any provision of EU “primary law” can arise.
In the present case, the compatibility of national measures with EU law will
have to be assessed, not in the wider context of the principles of free
movement of workers, but in the particular context of the transitional
provisions. However, it does not follow that the national measure does not have
to satisfy the EU principle of proportionality. On the contrary, measures
adopted pursuant to a temporary derogation from the law and the rights of EU
citizens which would otherwise apply do require to be justified in accordance
with the principle of proportionality. Furthermore, there is no basis for the
submission on behalf of the Secretary of State that this would confer in
substance the same rights of free movement which the Act of Accession provides
do not apply during the transitional period; rather, it will simply require
that the measure is suitable and necessary to achieve the particular objective
identified by the provision authorising the transitional derogation and that
the burden imposed is, having regard to that specific objective, not excessive.
44.
We consider, therefore, that there is no good reason to depart from the
decision of the House of Lords in Zalewska as regards the applicability
of the principle of proportionality in the present context. As Lord Reed and Lord
Toulson pointed out in their judgment in the Lumsdon case, at para 24,
proportionality is a general principle of EU law. There is no basis for saying
that it has no application in the context of reliance by a member state on a
derogating provision such as that in paragraph 5 of Annex VIII. We consider
that it is clear to the acte clair standard that the measures taken by
the United Kingdom in issue in this case are required to satisfy the EU
principle of proportionality.
45.
In these circumstances there is no need to address the respondent’s
alternative submission based on article 14 of the ECHR, A1P1 and the Human
Rights Act 1998.
Issue (2): If the
decision to extend the WRS is open to challenge on grounds of proportionality,
did the Upper Tribunal and the Court of Appeal err in their approach and
conclusion on this issue?
46.
In April 2009 the Secretary of State had a limited, binary choice to
make pursuant to paragraph 5 of Annex VIII. The UK had instituted the WRS at
the time the Accession Agreements came into effect as its sole relevant
national measure regulating access to its labour market under paragraph 2 of
Annex VIII, by way of derogation from articles 1 to 6 of Regulation 1612/68.
The UK had exercised its discretion under paragraph 2 of Annex VIII to continue
to apply that measure until the end of the five year period following the date
of the accession and had notified the EU Commission of this under paragraph 3
of that Annex. It is common ground that in 2009 there were serious disturbances
of the UK’s labour market or threat thereof, owing to the financial crisis.
Accordingly, pursuant to paragraph 5 of Annex VIII the Secretary of State had
to consider whether to continue to apply the WRS for an additional two years,
as the sole relevant national measure in place at the time, or not. The
question of the proportionality of the WRS as extended in 2009 has to be
assessed in this context, as Judge Ward in the Upper Tribunal and the Court of
Appeal correctly understood.
47.
The WRS had originally been introduced in 2004 as a measure to allow the
monitoring of the impact of migration into the UK of workers who were A8
nationals and to safeguard the UK’s social security system from exploitation by
people who wished to come to the UK not to work but to live off benefits: see Zalewska
at paras 34-35 per Lord Hope. It was as a measure having those objectives
that it was held to be proportionate and lawful by a bare majority in the House
of Lords in the Zalewska case. However, in 2009 the Secretary of State
had to consider under paragraph 5 of Annex VIII whether the WRS could properly
be maintained in place for an additional two years as a measure to address and
ameliorate serious disturbances of the UK’s labour market or the threat
thereof. Put shortly, in 2009 did the WRS have a deterrent effect to moderate
the in-flow of A8 nationals as workers which might exacerbate the serious
disturbance of the labour market then being experienced and, if so, would it be
proportionate to continue to maintain it in place for that purpose?
48.
In the context of the decision to be made pursuant to paragraph 5 of
Annex VIII, Mr Chamberlain accepts that the protection of the benefits system
was not itself any longer a valid objective. Although the MAC in its report
stated that it thought there might be a small impact of savings in spending on
benefits if the WRS was retained, it also made it clear that its recommendation
that the WRS be retained was not based on this.
49.
It is significant that for her case on proportionality of the extension
of the WRS in 2009 for two years, the Secretary of State has simply relied upon
what is said in the MAC report of April 2009. In effect she has adopted the
MAC’s reasoning. She has not filed evidence to explain any distinct reasoning
of her own as to why the extension of the WRS was justified, nor to point to
any additional relevant factors other than those taken into account by the MAC
in its report.
50.
This poses problems for the Secretary of State. The MAC was not asked to
consider whether an extension of the WRS would be proportionate in terms of EU
law and it expressed no view about that.
51.
Instead, the MAC was asked to consider, first, whether there was at the
time a serious disturbance to the UK labour market. It concluded that there was
a serious disturbance, as the UK economy was in recession and there had been a
rise in unemployment and redundancies. That conclusion is not put in issue in
these proceedings.
52.
The MAC was also asked to “consider what the likely labour market impact
of relaxing transitional measures [for A8 nationals] would be and whether it
would be sensible to do so”. In addressing these questions the MAC summarised
its views at the start of its report as follows (pp 6-7):
“Would retaining the WRS help
to address the disturbance?
Ÿ
A8 immigration has increased rapidly since the date of accession
and studies show that its impact on UK employment and unemployment rates to
date has been negligible. These studies relate to a period of sustained
economic growth prior to the current recession.
Ÿ
Examination of the potential labour market impacts and review of
the evidence available suggests that removing the WRS would not result in
substantial increases in flows of A8 immigrants. It is, however, plausible to
argue that it would probably result in a small positive impact on immigration
flows relative to what would happen otherwise. In the current economic climate,
we are concerned that these additional flows would have a small negative impact
on the labour market, thus exacerbating the serious labour market disturbance
already occurring.
Ÿ
We emphasise that any effects of ending the WRS would be small in
relation to the overall negative labour market consequences of the economic
downturn. Nonetheless, we believe that it would be sensible to retain the WRS
for two more years due to the possibility of small but adverse labour market
impacts from abolishing it.”
53.
In the body of the report the MAC emphasised problems with the available
evidence base and the difficulties this posed for analysis of what was likely
to happen if the WRS was not extended (para 5.3). However, it considered that
there was sufficient information available for it to draw broad conclusions
regarding the advisability, or otherwise, of retaining the WRS (para 5.4). At
para 5.16 the MAC said this:
“In conclusion, it is very
unlikely that removing the WRS would result in any substantial change in A8
immigrant inflows. However, it is possible that some factors, including the £90
registration fee, could have a small effect at the margin. The effect of
maintaining the WRS will be to slightly reduce flows relative to what would
otherwise be observed. We argue in this report that this slight dampening
effect on flows is a positive phenomenon in the current economic circumstances,
which is why we have not given detailed consideration to the option of relaxing
the WRS by keeping the scheme but abolishing the £90 fee.”
54.
It is right to observe that the conclusion of the MAC regarding the
impact of removal of the WRS on the flow of workers into the UK from the A8 States
was tentative and hedged about with qualifications. But on a fair reading of
the report the MAC was clear that such removal would have a small effect in
increasing the likely flow of such workers into the UK and that this would
exacerbate the prevailing serious disturbance of the labour market. The MAC was
a body with the relevant experience and expertise to make an assessment of this
kind. This was a legitimate conclusion for it to reach. Although the WRS had
originally been introduced for the purpose of monitoring rather than deterring
the flow of workers from the A8 States, that does not mean that in the
circumstances obtaining in 2009 the scheme was incapable of having the small
deterrent effect which the MAC found that it did.
55.
In Chapter 6 of the report, entitled “Conclusions”, the MAC stated that
it recognised that the Government would want to weigh the slight reduction in
the inward flow to the UK of A8 nationals as workers if the WRS were retained
“against the longer-term aim of free movement of labour within the EU and the
spirit of the Treaty of Accession” (para 6.7). It also said (para 6.8):
“… it is clear that the WRS
creates burdens for employers and immigrants. While we do not wish to
trivialise these, they need to be assessed against the benefits of the scheme.”
This was not an exercise the MAC attempted to undertake
itself.
56.
The Secretary of State has not adduced any evidence as to how she sought
to balance the small impact on the labour market in the UK from retention of
the WRS against the significant detriments resulting from the continued
implementation of the WRS for employers and A8 nationals in the UK as workers.
Whilst we do not consider that this disables the Secretary of State from
contending that the retention of the WRS is to be regarded as a proportionate
measure, it does mean that it is difficult to say that any significant weight
or respect should be given to the Secretary of State’s (unexplained) assessment
that it was right to extend the WRS when conducting a proportionality review.
57.
The leading decision of this court on the principle of proportionality
in EU law is now Lumsdon. The judgment of Lord Reed and Lord Toulson,
with which the other members of the court agreed, authoritatively sets out the
approach to be adopted.
58.
At para 33 Lord Reed and Lord Toulson summarised the test of
proportionality in EU law as follows:
“Proportionality as
a general principle of EU law involves a consideration of two questions: first,
whether the measure in question is suitable or appropriate to achieve the
objective pursued; and secondly, whether the measure is necessary to achieve
that objective, or whether it could be attained by a less onerous method. There
is some debate as to whether there is a third question, sometimes referred to
as proportionality stricto sensu: namely, whether the burden imposed by the
measure is disproportionate to the benefits secured. In practice, the court
usually omits this question from its formulation of the proportionality
principle. Where the question has been argued, however, the court has often
included it in its formulation and addressed it separately, as in R v
Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C-331/88)
[1990] ECR I-4023.”
59.
For reasons which appear below, it should be emphasised that Lord Reed
and Lord Toulson in this passage have made it clear that the third question,
regarding proportionality stricto sensu, does indeed constitute an aspect of
the EU law principle of proportionality. It is identified as such by the Court
of Justice whenever it is necessary for it to do so.
60.
Lord Reed and Lord Toulson then went on at paras 34 and following to
give guidance regarding the appropriate intensity of review in applying the
proportionality standard. This depends on context. It ranges from intervening
on the basis that a measure is “manifestly inappropriate” (the usual standard
applied in proportionality review of measures taken by EU institutions or of
national measures implementing EU measures, at least where these reflect
political, economic or social choices and a complex assessment of such factors:
paras 40 and 73 respectively) to more demanding standards of review which may
be relevant in relation to national measures falling within the scope of EU law
which derogate from fundamental freedoms, including free movement of workers
(paras 50-72). Also, as Lord Reed and Lord Toulson point out at para 74, where
a member state relies on a reservation or derogation in a Directive in order to
introduce a measure which is restrictive of one of the fundamental freedoms
guaranteed by the Treaties, “the measure is likely to be scrutinised in the
same way as other national measures which are restrictive of those freedoms.”
As a result of this analysis, at paras 75-82 Lord Reed and Lord Toulson were
critical of the reasoning of the English Court of Appeal in R (Sinclair
Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437; [2012] QB 394, in which the less intrusive “manifestly inappropriate” standard of review
was applied in relation to a national measure restricting the free movement of
goods.
61.
As we have held above, Judge Ward correctly concluded that it was
necessary to conduct a proportionality review of the 2004 Regulations at the
time when they were given extended effect in 2009 for a further two years. His
judgment was delivered before the decision in the Lumsdon case was
handed down. In the section of his judgment in which he carried out this
review, Judge Ward first considered at paras 82 to 103 the appropriate
intensity of review to be applied, particularly in the light of the decision of
the Court of Appeal in the Sinclair Collis case. Following the guidance
given by Lord Neuberger MR in that case regarding factors which affect the
intensity of proportionality review, Judge Ward characterised the decision as
one involving economic or social choice, as a factor tending to expand the area
of discretion available to the Secretary of State under the proportionality
test, albeit the choice was limited in its range by the binary nature of the
decision to be made and was not one involving a political dimension to any
significant degree (since the Secretary of State had in effect sub-contracted
consideration of the issue of extension of the WRS to a technical body, the
MAC, and there was only limited Parliamentary scrutiny of the extension
decision under the negative resolution procedure) (para 98); and the judge had
regard to the difficulties of assessment of the evidence regarding the effects
of maintaining the WRS in place, as a factor again tending to expand the area
of discretion for the Secretary of State (para 99). But Judge Ward also took
into account a series of factors which in his view tended to reduce that area
of discretion: that the measure was adopted by delegated legislation and
subject only to the negative resolution procedure, and in reliance on a report
which the MAC itself considered to be rushed (para 100); that the Secretary of
State adduced no evidence of having conducted his own proportionality analysis,
despite the limitations in the question put to the MAC and the need, identified
by the MAC, for its answer to the Secretary of State to be weighed against
other factors (para 101); and the fact that the measure in question was a
national measure in derogation from the principle of the free movement of
workers, in relation to which a court should be astute to ensure that the
national government has not unduly sought to favour its national interest at
the expense of EU principles (para 102). His conclusion was that the relevant
degree of intensity of review was not confined to the “manifestly appropriate”
test which appears in some cases, but was significantly more intrusive than
that, albeit with allowance for some margin of appreciation for the Secretary
of State (para 103).
62.
In the next section of his judgment, at paras 104 to 121, Judge Ward
considered whether the Extension Regulations promulgated in 2009 in relation to
the WRS passed the proportionality test. He came to the conclusion that the fee
and registration requirements in those Regulations were disproportionate and
contrary to EU law. He reached this conclusion on two distinct grounds:
i)
the fee was set to defray the costs of an administrative scheme aimed at
monitoring migrant inflows “which does not itself materially help to address
the disturbance [of the labour market]”, so the WRS could not be regarded as an
“appropriate” tool for proportionality purposes for addressing the serious
disturbance to the UK labour market “in that it relies effectively on payment
of a sum of money by A8 nationals, while not otherwise affecting their access
to it” (para 112). Therefore, the Secretary of State’s case on proportionality
failed to satisfy the first stage of the proportionality test; and in any
event, even if that was wrong,
ii)
the WRS failed to comply with proportionality stricto sensu, at the
third stage of the test. Regulation 9 of the 2004 Regulations created a
criminal offence if an employer employed an A8 national who was not registered
as required under the WRS, subject to certain defences. Accordingly, the judge
found that the WRS created a burden on employers, even if little research had
been done to examine its scale (para 114). In addition, the judge referred at
para 115 to the impact of the WRS in relation to A8 nationals who came to work
in the UK, paid taxes here and participated actively in UK society. He noted
that the MAC report indicated that for language and other reasons there was a
significant rate of non-registration by A8 nationals working in the UK which could
be up to 33%, and further noted that failure by an A8 national to register
under the WRS had significant adverse consequences for such a person in terms
of exclusion from welfare benefits, “no matter how unforeseeable the
circumstances which have caused them to be in need of them”, and it prevented
them from relying on time spent working in the UK whilst unregistered as a
contribution to the five years needed to establish a right of permanent
residence here under article 16 of the Citizens Directive. The judge found that
these detriments constituted “a very real downside” for A8 nationals who did
not register, noting that this had been characterised as “severe” by Baroness
Hale at para 57 of her speech in Zalewska. Moreover, for those A8
nationals who did comply with the registration requirement under the WRS, the
fee they had to pay was a sum equivalent to around 1% of annual gross pay for
someone working at the national minimum wage for a 35 hour week for 48 weeks
(as noted in para 5.9 of the MAC report). The judge found that the small and
speculative advantage in respect of reducing the inward flow of A8 nationals as
workers from extending the WRS was “wholly outweighed” by the disadvantage to
A8 nationals and employers in the UK and the limitation on Treaty principles of
free movement (para 117). That was the judge’s view in light of the conclusion
he had reached at para 103 regarding the appropriate intensity of review, as
referred to above. But he went on to hold that even if the appropriate standard
of review was the “manifestly inappropriate” test, which allows a wider margin
of discretion to the relevant decision-maker, he would have come to the same
conclusion (para 118).
63.
The Secretary of State challenged this assessment in the Court of
Appeal. The Lumsdon judgment had now been handed down and the Court of
Appeal analysed the position with reference to the guidance it contains.
64.
Rupert Jackson LJ gave the leading judgment, with which the other
members of the court agreed. At paras 57 to 63 he accepted a submission for the
Secretary of State that Judge Ward at para 98 of his judgment had gone too far
in discounting the political aspect of the decision to promulgate the Extension
Regulations when he assessed the intensity of review to be applied; but Rupert
Jackson LJ still held that whilst the degree of scrutiny “should not be
intense”, it was not a case in which the more generous “manifestly
disproportionate” test applied (para 63). In the event, the modest difference
between Rupert Jackson LJ and Judge Ward regarding the precise intensity of
review to be applied was immaterial, because Judge Ward had come to the view
that the Extension Regulations were disproportionate even if the “manifestly
disproportionate” test was applied. Rupert Jackson LJ pointed out that the
Upper Tribunal is a specialist tribunal whose decision deserves respect, and
that it can only be interfered with if the tribunal has erred in law: see
section 13 of the Tribunals, Courts and Enforcement Act 2007. He set out paras
111 to 115 in the judgment of Judge Ward and said that he could find no fault
with his reasoning in those paragraphs. Therefore, Rupert Jackson LJ dismissed
the Secretary of State’s challenge to the Upper Tribunal’s assessment that the
Extension Regulations were disproportionate.
65.
The Secretary of State appeals to this court on this issue. Mr
Chamberlain submits that Judge Ward erred in relation to both the grounds on
which he found that the Extension Regulations were disproportionate and that
the Court of Appeal erred in endorsing his assessment.
66.
We consider that there is force in Mr Chamberlain’s criticism of the
first ground relied on by Judge Ward at paras 112 and 113 of his judgment, in
relation to the first question that arises on a proportionality review (whether
the measure is suitable or appropriate to achieve the objective pursued). Mr
Chamberlain submits that, as found by the MAC in its report, extending the WRS
in 2009 would have a small effect in reducing the inward flow of workers as
compared to what would happen if it were not extended, and to that (admittedly
small) extent it would prevent the then existing serious disturbance of the
labour market from getting worse. Therefore, the extension of the WRS pursuant
to paragraph 5 of Annex VIII was a measure appropriate to achieve the relevant
objective, namely alleviation of the disturbance in the labour market as
compared with the position which would obtain if the WRS were not extended,
even if only to a small degree. Moreover, under paragraph 5 of Annex VIII, by
virtue of the binary choice that it imposed on the UK in 2009, that was the
only measure available to the Secretary of State to take at that time to
alleviate the general disturbance in the national labour market. It could not
be said that there was any less onerous method of achieving that objective.
67.
Mr Thomas de la Mare QC for the Interveners submitted that in order for
the Secretary of State to satisfy the first stage of the proportionality test
he had to be able to show that the extension of the WRS was materially capable
of tackling or mitigating the serious disturbances to the labour market
referred to in paragraph 5 of Annex VIII. He further submitted that the
Secretary of State could not show that this was the case.
68.
We did not understand Mr Chamberlain to dispute the first of these
submissions, save that he emphasised that the idea of materiality in this
context is not a demanding one, and would only exclude measures which were
immaterial or wholly de minimis in relation to their effect in tackling or
mitigating the serious disturbances to the labour market in question. We agree.
69.
Mr Chamberlain took issue with the second submission. He was right to do
so. The MAC report showed that extending the WRS would have a material, though
small, effect in mitigating the serious disturbances to the UK labour market by
reducing the flow of workers from A8 States which would otherwise occur, which
would have the effect of exacerbating those disturbances.
70.
However, we cannot accept Mr Chamberlain’s wider submission that Judge
Ward and the Court of Appeal erred in their assessment regarding the third
stage of the proportionality analysis (proportionality stricto sensu). The
position was stark. The extension of the WRS would have only a small and rather
speculative mitigating effect in relation to the serious disturbances in the
UK’s labour market, as found by the MAC, whereas the burdens and detriments it
would impose on employers and A8 nationals working in the UK were substantial
and serious.
71.
We should say that we have some reservations about whether Rupert
Jackson LJ was right to criticise the level at which Judge Ward pitched the
intensity of review which he considered to be appropriate in this case.
Although, obviously, Judge Ward did not have the benefit of the analysis by
this court in Lumsdon when he made his assessment, we think that in
broad terms the level of intensity he judged to be appropriate in this case is
compatible with the guidance given in Lumsdon. In particular, the
extension of the WRS was rightly regarded by Judge Ward as a national measure
which was restrictive of the fundamental freedom of movement for A8 nationals
as protected by the Treaties, taken in reliance on a reservation or derogation
in an EU instrument, in relation to which a relatively demanding intensity of
review is appropriate: see Lumsdon at para 74.
72.
However, this is not a case which turns on the precise calibration of
the intensity of review to be applied in relation to the decision to extend the
WRS in 2009. Both Judge Ward and the Court of Appeal considered that this
measure failed to pass muster even if the markedly more generous “manifestly
inappropriate” test was applied. In our view, they were plainly entitled to
come to that conclusion in the circumstances of this case, particularly in the
absence of any attempt by the Secretary of State to explain why the very
limited and rather speculative benefits associated with the extension of the
WRS in addressing labour market disturbances outweighed the considerable
detriments for employers and workers from A8 States associated with the scheme.
We agree with their conclusion.
73.
In arriving at this view, we have noted that in the Zalewska case
in the House of Lords it was held, by a majority, that it was not
disproportionate for the WRS to be introduced and implemented from 2004 as a
monitoring measure in the initial phase of the expansion of the European Union
by the accession of the A8 States. That conclusion does not provide a relevant
guide for the outcome of the proportionality analysis in the present case. By
contrast with the proportionality review in Zalewska, the analysis in
this case has to be undertaken in the very different legal context set out in
paragraph 5 of Annex VIII. In order to justify the extension of the WRS in
2009, the Secretary of State has to be able to say that this is a measure which
is proportionate having regard to the objective of mitigating serious
disturbances in the labour market. Factors which were relevant to the
assessment in the Zalewska case, including a desire to protect against
additional and inappropriate demands on the UK’s social security system (see paras
35-36 per Lord Hope), are no longer relevant in the present context. In Zalewska,
the Government’s position was that the WRS was intended to be a monitoring
measure and was not expected to be a barrier to those who wanted to work (see
para 34 per Lord Hope), whereas in the present context this position is
reversed: the justification of the extension of the WRS is said to be that it
does provide, to a degree, a barrier to A8 nationals who might otherwise come
to work in the UK and the justification does not rely upon the effect of the
WRS as a monitoring measure.
74.
The result of the analysis relevant in the present case is that the
extension of the WRS in 2009 was a disproportionate measure which was unlawful
under EU law.
75.
As we have come to the clear conclusion that the decision to extend the
WRS in 2009 was required to conform with the principle of proportionality in EU
law and as the CJEU would take the view that the application of that principle
to the facts is a matter for the national court, these matters are acte
clair and this court is not required to make a preliminary reference to the
CJEU.
Issue (3): If the
Secretary of State succeeds on Issue 1 or Issue 2, does article 17(1)(a) of the
Citizens Directive require a person to show that, throughout the period of
continuous residence, she enjoyed a right of residence under that Directive?
76.
The conclusion on the proportionality issue above means that the
Secretary of State’s appeal falls to be dismissed, as happened in the Court of
Appeal. However, Ms Helen Mountfield QC on behalf of the respondent contends
that there is another, alternative reason why the Secretary of State’s appeal
should be dismissed, even if the extension of the WRS in 2009 was proportionate
and lawful.
77.
On her alternative case the respondent submits that as a result of her
residence in the UK from 2008 and working here from 14 September 2009 she had
acquired the right of permanent residence by virtue of article 17(1)(a) of the
Citizens Directive and regulation 5(2)(c) of the 2006 Regulations by the time
she made her claim for state pension credit on 24 October 2012 and was for that
reason entitled to claim that benefit. Although, on the hypothesis that the
extension of the WRS was lawful, she did not qualify as a worker with a right
of residence under article 7 of the Citizens Directive in the period before she
registered for a certificate to work on 20 August 2010, that does not matter. Article
17(1)(a) confers the right of permanent residence on workers or self-employed
persons who reach the age of retirement “provided that they have been working
in that member state for at least the preceding 12 months and have resided
there continuously for more than three years”; the relevant requirement of
residence in this provision is residence in fact, rather than residence
pursuant to the provisions set out in the Citizens Directive; and the
respondent can show that by the time of her claim for state pension credit she
had resided in the UK for more than three years.
78.
The Secretary of State disputes this alternative argument of the
respondent. She submits that the concept of residence in article 17(1)(a) is to
be read in the light of article 16(1) of the Citizens Directive, from which it
is said to derogate. Article 16(1) provides that Union citizens “who have
resided legally” in a host member state for a stipulated continuous period will
acquire a right of permanent residence there. Similarly, although article
17(1)(a) uses the term “resided” without the adverb “legally”, it should be
taken to be referring to the same concept of legal residence. The case law of
the CJEU has established that “legal residence” in the context of article 16(1)
means residence in accordance with article 7 of the Citizens Directive: see, in
particular, the judgment in Ziolkowski v Land Berlin (Joined Cases
C-424/10 and C-425/10) EU:C:2011:866; [2014] All ER (EC) 314, paras 31-51. The
respondent cannot show that her period of residence in the UK was “legal” in
this sense; in particular, since she did not comply with the requirement of
registration under the WRS until 20 August 2010, she cannot show that before
that date she was resident here as a worker or self-employed person within the
scope of article 7(1)(a) of the Citizens Directive.
79.
On this issue, Judge Ward accepted the submission of the respondent,
whereas the Court of Appeal accepted the submission of the Secretary of State.
Resolution of the dispute on this issue is not necessary for the determination
of the present appeal, because the Secretary of State has lost on the
proportionality issue in relation to the extension of the WRS. However, since
the issue regarding the interpretation of article 17(1)(a) may be important in
other cases and we are of the view the Court of Appeal has erred on this point,
we consider that we should deal with it. It is unnecessary to decide whether
the position is acte clair, because by reason of our conclusion on the
proportionality issue there is no need for a reference to the CJEU.
80.
Recital (17) to the Citizens Directive explains the purpose of article
16. Recital (19) explains the purpose of article 17. Recital (17) is explicit
in stating that the right of permanent residence which article 16 provides for
“should … be laid down for all Union citizens and their family members who have
resided in the host member state in compliance with the conditions laid down in
this Directive during a continuous period of five years …”. Recital (19) is in
different terms. It does not refer to residence in compliance with the
conditions laid down in the Citizens Directive. It refers to, among others,
workers who “have resided” in the host member state who have acquired rights
under Regulation 1251/70.
81.
Article 1 of Regulation 1251/70 stipulates that the Regulation shall
apply to nationals of a member state who have worked as employed persons in the
territory of another member state, and it uses the term “worker” in this sense.
Article 2(1)(a) of Regulation 1251/70 provides for a right to remain
permanently in the territory of a host member state for a worker who satisfies
certain conditions, including where she has been employed in that state for at
least the last 12 months “and has resided there continuously for more than
three years”. Article 4 provides that continuity of residence “may be attested
by any means of proof in use in the country of residence”. Accordingly, Regulation
1251/70 uses the term “worker” in a simple factual sense and similarly refers
to continuous residence in a simple factual sense. By contrast with the
Citizens Directive, the Regulation contains no reference to “lawful residence”
which could be taken to inform the meaning of “continuous residence”. The
reference in Recital (19) to the Citizens Directive to rights of permanent
residence acquired under Regulation 1251/70 is a strong indication that the EU
legislature intended the concept of continuous residence as used in article
17(1)(a) of the Directive to reflect the concept of continuous residence as
used in article 2(1)(a) of the Regulation. Accordingly, both in its text, which
contrasts with the text of recital (17), and by reason of its reference back to
rights acquired under Regulation 1251/70, Recital (19) indicates that the
concept of residence as referred to in article 17(1)(a) is factual residence,
as the respondent contends.
82.
We consider that recital (3) to the Citizens Directive reinforces this
interpretation of article 17(1)(a). It explains that the EU legislature
intended to codify and review the existing EU instruments dealing with workers
and others “in order to simplify and strengthen the right of free movement and
residence of all Union citizens”. Thus, it was part of the purpose of the
Directive to enhance existing rights of free movement and residence, such as
those which had arisen under Regulation 1251/70, and not to subject them to new
restrictive conditions. The same point emerges from recital (1) to Regulation
635/2006, which repealed Regulation 1251/70, as follows:
“[The Citizens Directive]
consolidated in a single text the legislation on the free movement of citizens
of the Union. Article 17 thereof includes the main elements of [Regulation
1251/70] and amends them by granting beneficiaries of the right to remain a
more privileged status, namely that of the right of permanent residence.”
83.
There are in addition two textual features of article 17(1)(a) which in
our view point strongly in favour of the interpretation arrived at by Judge
Ward. First, the text in article 17(1) essentially tracks that in article 2 of Regulation
1251/70, with appropriate minor modifications. Secondly, the language used in article
17 (“residence”; “have resided … continuously”) is in marked contrast to that
used in article 16 and again in article 18 (“have resided legally” and “after
residing legally”). This has every appearance of being deliberate, and the
underlying purpose of article 17 as set out in recital (19) and the
correspondence of its text with article 2 of Regulation 1251/70 confirms that
impression. It is also noteworthy that in the CJEU’s analysis in the Ziolkowski
judgment of the meaning of “legal residence” in article 16 and article 18,
which itself turns on a close textual analysis of the Directive, the court did
not suggest that the term “residence” in article 17 had to be interpreted as having
the same meaning.
84.
Furthermore, since article 17(1) is concerned with preserving and
protecting rights already acquired under Regulation 1251/70, it seems
impossible to read it as referring to “legal residence” in the sense given by
the Ziolkowski judgment. When the Citizens Directive first came into
force in 2004 and when it was first implemented at national level throughout
the EU within two years after that as required by article 40, no one could have
built up any period of continuous residence pursuant to their rights under article
7 of the Directive, let alone the three years of continuous residence referred
to in article 17(1)(a). Yet individuals could in principle have rights under article
17(1) as soon as implementation of the Directive took effect. Accordingly, it
seems necessary to interpret the concept of continuous residence in article
17(1)(a) as referring to factual residence rather than “legal residence” as
that term is used in article 16. The meaning of continuous residence in article
17 cannot change over time, so it is no answer to the respondent’s claim to be
entitled to a right of permanent residence in the UK under article 17(1)(a)
that she had not herself acquired rights under Regulation 1251/70 in the UK
prior to the coming into force of the Citizens Directive and the domestic
regulations which implemented it in domestic law.
85.
Mr Chamberlain emphasised the introductory sentence in article 17(1),
which states that the provision applies “By way of derogation from article 16”
and refers to acquisition of a right of permanent residence “before completion
of a continuous period of five years of residence” by the persons then
specified in the sub-paragraphs. He submitted that the reference back to article
16 meant that “residence” in article 17(1) was being used in the same sense as
“residence” in article 16, that is to say “legal residence”.
86.
However, we do not consider that the opening words of article 17(1) can
bear the weight which Mr Chamberlain sought to place on them. In itself the use
of the word “residence” in the opening part of article 17(1) is neutral on the
question of what form of residence is referred to in the sub-paragraphs which
follow. It is those sub-paragraphs which set out positively the conditions
which have to be satisfied for an individual to acquire the right of permanent
residence under that provision. For a right of permanent residence to arise
under article 16(1) a five year period of residence which has the quality of
being “legal” in the requisite sense is required. In order to indicate that article
17(1) sets out a right of permanent residence which departs from, and is more
generous than, the right conferred under article 16(1), it was sufficient for
the drafter to state that the right under article 17(1) arises where there is a
period of residence of less than five years, without needing to refer also to
whether the residence in question had to be “legal” or not. Further, it is
natural for the drafter simply to speak of “residence” in the opening words of article
17(1) if it is the concept of factual “residence” rather than “legal residence”
which is employed in the following sub-paragraphs in that provision. In any
event, the indications from the text of article 17(1) and its purpose as set
out in recital (19), as discussed above, appear to us to have far greater
weight than any indication to be derived from the opening words of the
provision.
87.
Mr Chamberlain also relied on other judgments of the CJEU, but they were
not concerned with the interpretation of article 17(1), nor did they involve
any attempt to examine the purpose of that provision. In particular, Mr
Chamberlain referred to the judgments in Alarape v Secretary of State for
the Home Department (Case C-529/11) [2013] 1 WLR 2883 and in FV (Italy)
v Secretary of State for the Home Department and B v Land Baden-Württenberg
(Joined Cases C-424/16 and C-316/16) [2019] QB 126. However, these
judgments do not support his interpretation of article 17(1).
88.
In the Alarape case the CJEU addressed the question whether
periods of residence completed pursuant to article 12 of Regulation 1612/68,
which provides a right for the child of a worker to be admitted to educational
courses in the host member state, could count towards the five years of “legal
residence” required for acquisition of a right of permanent residence under article
16(1) of the Citizens Directive. The CJEU applied its ruling in the Ziolkowski
judgment regarding the meaning of “legal residence” in article 16(1) and held
that residence pursuant to article 12 of Regulation 1612/68, but which did not
comply with article 7 of the Citizens Directive, did not count for the purposes
of article 16(1). In our view, this does not support Mr Chamberlain’s
interpretation of article 17(1) of the Citizens Directive. If anything, it
tends to support Judge Ward’s interpretation of that provision. That is
because, following the guidance in the judgments in Ziolkowski and Alarape,
residence in a host member state pursuant to rights under Regulation 1251/70
and Directive 75/34/EEC likewise would not count as “legal residence” for the
purpose of article 16(1) of the Citizens Directive; but it is rights acquired
by residence pursuant to Regulation 1251/70 and Directive 75/34/EEC which are
intended to be respected and protected by article 17 of the Citizens Directive:
see recital (19) to that Directive.
89.
FV (Italy) concerned the interpretation of article 28(3)(a) of
the Citizens Directive, which provides for enhanced protection against
expulsion of EU citizens if they “have resided in the host member state for the
previous ten years”: in such a case the host member state may only decide to
expel them “on imperative grounds of public security”. The CJEU held that article
28 had to be read as a whole, as creating steadily increasing protection for EU
citizens according to their integration in the society of the host member
state. Therefore, the protection in article 28(3) was to be taken to be
conditional on the EU citizen having a right of permanent residence in the host
member state, as referred to in article 28(2): see paras 40-61 in the judgment.
In answer to the first question referred by this court, the CJEU held at para
61 that article 28(3)(a) “must be interpreted as meaning that it is a
prerequisite of eligibility for the protection against expulsion provided for
in that provision that the person concerned must have a right of permanent
residence within the meaning of article 16 and article 28(2) of [the Citizens]
Directive.” Again, the ruling in Ziolkowski regarding the interpretation
of article 16(1) was applied: see para 59. In FV (Italy) there was no
question of acquisition of a right of permanent residence pursuant to article
17 of the Citizens Directive, so the question referred did not mention that
provision: see para 39. The CJEU made no reference to it in its judgment. Since
article 28(2) refers in general terms to “Union citizens or their family
members … who have the right of permanent residence”, if an individual had
acquired such a right by virtue of article 17 rather than by virtue of article
16 of the Citizens Directive it seems entirely possible that by extension of
its reasoning in FV (Italy) the CJEU would hold that such an individual
likewise enjoys enhanced protection under article 28(3)(a). The important
point, however, is that the judgment in FV (Italy) does not support Mr
Chamberlain’s submission regarding the proper interpretation of article 17(1).
90.
Mr Chamberlain also relied on observations by Advocate General Trstenjak
in her opinion in Secretary of State for Work and Pensions v Lassal (Case
C-162/09) [2011] 1 CMLR 31, at points 68-69, to the effect that article 16(1)
and article 17(1) of the Citizens Directive are closely connected and that
therefore
“it must in principle be assumed
that the two factual elements whose wording is almost identical - ‘a continuous
period of five years of residence in the host member state’ in article 16(1) of
the Directive and ‘resided continuously in the host member state for more than
two years’ in article 17(1)(b) of the Directive - are to be interpreted in the
same way.”
91.
However, this part of the Advocate General’s reasoning was not endorsed
by the CJEU in its judgment. Moreover, as Judge Ward pointed out in his
judgment at para 58, the Advocate General’s recitation of the text in the two
provisions contains an unfortunate and highly significant misquotation, in that
she omits the critical phrase, “have resided legally”, in article 16(1).
Also, the Advocate General’s view is not supported by any positive reasoning,
other than to point out the linkage between article 16 and article 17(1) which
appears from the opening sentence of article 17(1) - as to which, see above.
Accordingly, we do not consider, with respect, that Advocate General
Trstenjak’s opinion on this point represents a sound guide to the
interpretation of article 17(1).
92.
For the reasons set out above, in our judgment the Court of Appeal erred
in its interpretation of article 17(1). Judge Ward arrived at a correct
interpretation of that provision, in holding that residence in article 17(1)
refers to factual residence rather than “legal residence” as required under article
16(1), as interpreted by the CJEU in the Ziolkowski judgment.
Issue (4): If article
17 of the Citizens Directive requires “legal residence” in the relevant sense,
is actual residence sufficient for the purposes of the 2006 Regulations?
93.
As we would hold that the term “residence” in article 17(1)(a) has the
meaning set out above, no question arises regarding a possible difference of
meaning between article 17(1)(a) and regulation 5(2)(c) of the 2006 Regulations
which implements that article in domestic law by using the phrase “resided in
the United Kingdom continuously for more than three years prior to the
termination [of employment or self-employment]”. Therefore the fourth issue on
the appeal does not arise.
Conclusion
94.
For the reasons we have set out, we would dismiss the Secretary of
State’s appeal.
