Hanging EU nationals out to dry: CJEU protects the UK’s fundamental right to discriminate

In CG the CJEU has delivered another plot twist in the pre-settled status and benefits saga, coming out significantly more in favour of the UK government’s curbing of EU nationals’ rights than the UK’s own national court. The Court of Appeal of England and Wales in Fratila found that excluding holders of pre-settled status awarded under the EU Settled Status Scheme from entitlement to access benefits on the same terms as UK nationals was direct discrimination. 

The Advocate General’s Opinion, released on 24 June 2021 sounded a warning bell of confusion, by pivoting from the questions asked – about primary law rights of equal treatment under Article 18 TFEU, and the applicability of Trojani – to Article 24 of Directive 2004/38. This was surprising, given the right to reside in question arose from UK national law, not from the Directive. The AG went on to find that the UK measures excluding pre-settled status from the list of qualifying rights to reside necessary to establish habitual residence in order to claim benefits, were indeed discriminatory, but indirectly discriminatory, so capable of justification. However, he still ended largely in favour of the claimants by suggesting that the measure failed a proportionality test.

The Court has however surpassed the AG on the matter of confusing reasoning.

What did the Court say?

In a convoluted and incoherent judgment, the Court avoids engaging in questions of direct/indirect discrimination and justification, with the startling finding that people in the claimants’ situation are not entitled to any protections in EU law from discrimination on the ground of nationality. In so doing, the Court has abandoned its rather short-lived resuscitation of EU citizenship and primary law principles as seen in Krefeld. 

Treaty rights – what Treaty rights?

The Court starts with, and quickly dismisses, Article 18 TFEU because it “is intended to apply independently only to situations governed by EU law with respect to which the FEU Treaty does not lay down specific rules on non-discrimination”, and such specific rules are to be found, according to the Court, in Article 24 of Directive 2004/38, which is the “specific expression” of Article 18 TFEU “in relation to Union citizens who exercise their right to move and reside within the territory of the Member States”. As for the possible relevance of Trojani, relied upon heavily in claimant submissions, the Court ignores the question, only mentioning Trojani in order to acknowledge that the claimant’s submissions relied upon it.

But, woah – wait a minute. Just a moment before that, the Court had acknowledged that:

“Every Union citizen may therefore rely on… Article 18 TFEU in all situations falling within the scope ratione materiae of EU law… [including] those relating to the exercise of the right to move and reside… conferred by point (a) of Article 20(2) TFEU and Article 21 TFEU”.

So, EU nationals who move and reside in a different EU Member State, are exercising Article 21 TFEU and are entitled to rely on Article 18 TFEU, except they are also not entitled to do so because just by moving their equal treatment rights are automatically constrained by Directive 2004/38?   

This just does not make much sense. When does the Article 18 TFEU right to non-discrimination apply independently if it never does when there has been cross-border movement – given that purely internal situations are outside of the scope of EU law? Maybe when the Directive cannot apply because of a technicality like in Lounes – where an EU migrant naturalised in the host state and so was no longer in a state other than that of nationality? This judgment appears to significantly diminish what otherwise appeared to be a broad and important right – even a fundamental one, intertwined with EU citizenship itself – to something with almost no autonomous force.

The Directive applies. Because it doesn’t apply

As someone who had moved and resided in another Member State, CG was found to come within the scope of the Directive, and so subject to the equal treatment provision in Article 24. Her situation did not fall within the derogations from equal treatment allowed in that provision (i.e. she was not in the first three months of residence, or jobseeking, and she was not claiming student benefits). She therefore could try to rely on the Article 24(1) right to equal access to social assistance.

But, the Court added, she could only claim equal treatment “by virtue of that provision” if she met the residence conditions of the Directive – and here the Court cites Dano.

This is where the Court’s reasoning gets especially mangled. The finding that Article 24(1) of Directive 2004/38 applied flies in the face of the wording of that provision, which states:

“1. Subject to such specific provisions as are expressly provided for in the Treaty and secondary law, all Union citizens residing on the basis of this Directive in the territory of the host Member State shall enjoy equal treatment with the nationals of that Member State within the scope of the Treaty.”

But CG was not ‘residing on the basis of this Directive’; she was residing on the basis of a national, constitutive right to reside – pre-settled status. What is more, the Court ITSELF STATES later in the judgment that her “right of residence cannot however be regarded in any way as being granted ‘on the basis of’ Directive 2004/38 within the meaning of Article 24(1) of that directive.”

Surely this means that Article 24(1) is not in fact a “specific expression” of Article 18 TFEU that applies to CG? It is hard to imagine a scenario more clearly designed for consideration of Article 18 TFEU.

Since she was not residing on the basis of the Directive, it also seems strange to automatically subject her to the conditions contained in the Directive and the general formulation of Dano. The Dano line of case law concerned EU nationals whose right to reside depended on meeting the conditions of the Directive. In CG what we have is – unprecedented in the UK, and unlikely to be widespread in the EU – a (more or less) unconditional constitutive right to reside awarded outside the scope of the Directive.

Somewhat surprisingly, it sounds from the AG’s Opinion as though the Commission was also at pains to ardently defend Member States’ rights to discriminate against EU nationals:

“as the Commission emphasised orally, the fact that no conditions are imposed for the grant of a right of residence must not have the effect of obliging Member States to refrain from carrying out any check as regards entitlement to social benefits.”

But the idea that EU migrants like CG should not be able to rely on non-discrimination rights, because that would dodge the requirements of the CRD to be economically active, rather ignores the fact that we are not talking about Dano claimants. Rather, we are only talking about EU nationals who have been granted a domestic, unconditional right to reside which has only materialised as a quirk of Brexit.

Interpret restrictions strictly. Except also interpret them expansively.

The Court’s invocation of Dano is also considerably at odds with the approach taken in Krefeld, in which the Court confirmed that residence on another legal basis – in that case, Regulation 492/2011 – should not be subjected to the residence conditions of Directive 2004/38.

In Krefeld the Court stated:

“it must be recalled that the Court has previously held on several occasions that, as a derogation from the principle of equal treatment laid down in the first paragraph of Article 18 TFEU, of which Article 24(1) of Directive 2004/38 is merely a specific expression, Article 24(2) must be interpreted strictly”.

The Court added that the derogation from equal treatment contained in Article 24(2) could only apply to “situations where the right of residence is based on that directive, and not in situations where that right has an independent basis in Article 10 of Regulation No 492/2011”. One could say the same about other rights independent of the Directive. And if the conditions spelled out in Article 24(2) cannot be exported from the Directive, it would seem something of a stretch to find that implicit conditions woven into the Directive by case law should be transplanted from the Directive to other rights to reside, and should in fact be sovereign over, and preclude any investigation of, Article 18 TFEU.  Nevertheless, this seems to be the Court’s current position.

The fundamental rights fall-back

The Court does not completely throw the claimant to the wolves. She is not entitled to protection from discrimination on the ground of nationality – so there is no need for the UK to justify its rules, or to show they are proportionate. But the UK must show that it respects the claimant’s fundamental rights under the Charter of Fundamental Rights of the EU. In particular, the Court noted the right to live in dignity (Article 1), the right to private and family life (Article 7) and the best interests of the child (Article 24).

It is, of course, not clear what this will mean in practice. The conclusion to the judgment states:

“the national authorities empowered to grant social assistance are required to check that a refusal to grant such benefits based on that legislation does not expose that citizen, and the children for which he or she is responsible, to an actual and current risk of violation of their fundamental rights”.

It seems likely that we now face a dispute over (i) who the relevant national authorities are, and (ii) what is required procedurally to demonstrate such an assessment and (iii) what is substantively required to discharge duties under the CFR.

What does this mean for Fratila?

Once upon a time it seemed possible that Fratila would be determined in effect by the CG judgment – through a finding that the regulations either were, or were not, unlawful. Instead it seems we have questions that must be answered by the national court.

It is likely therefore that there will be a hearing. Since the Court stated that national authorities can take account of “all means of assistance provided for by national law, from which the citizen concerned and his or her children may actually and currently benefit” the UK government will probably argue that various forms of emergency, back-stop support, such as that theoretically provided in section 17 of the Children Act 1989, are sufficient to discharge their fundamental rights obligations. There are a number of problems with that approach – the first of which is that such support is often fictional; local authorities have faced funding cuts, and in practice getting substantial support is rare. A COMPAS report on local authority provision of section 17 support, found that one LA provided payments that for a family with two adults and two children “would amount to little over £1 per person per day”. In “all cases” payments were “well below welfare benefit rates, below Home Office s95 support for destitute asylum seekers, “and even marginally below Home Office s4 ‘hard case’ support rates”.

Secondly, the fundamental rights assessment should be done by the authorities awarding the social assistance – which in this case would be the DWP, awarding the Universal Credit. The wording of the judgment suggests an expectation that fundamental rights be part and parcel of the first instance assessment, which would make it a potential ground for appeal. Note that the judgment states that:

“the competent national authorities may refuse an application for social assistance, such as Universal Credit, only after ascertaining that that refusal does not expose the citizen concerned and the children for which he or she is responsible to an actual and current risk of violation of their fundamental rights”

So such an assessment must pre-date the refusal. If the onus is on the DWP to make that call, then the consequent actual lack of local authority support may open the way to appeal the original DWP decision, rather than throwing claimants onto (probably hopelessly) judicially reviewing the local authority. 

What does this mean for EU nationals?

We need to wait and see what the Supreme Court decide; for now, the indication is that the Court of Appeal judgment will not be upheld, since we have now been told that there is no applicable protection from discrimination. However, the CJEU ruling suggests that individuals will be able to make case-by-case claims/appeals based on risks to their fundamental rights.

What will the UK government do next?

All of this concerns claims made before the end of the transition period on the 31st December 2020. There are still likely to be some disputes however, over whether the obligation to observe fundamental rights continues into cases arising after transition, given the unclear role of the Charter in the Withdrawal Agreement and the post-Brexit UK.

And it might be possible to resurrect a non-discrimination angle, relying on Article 12 of the Withdrawal Agreement, which reproduces Article 18 TFEU. It would arguably make even less sense to find that Article 12 WA cannot apply where an EU national has moved to reside in the UK, because the whole of the citizens’ rights provisions in the Agreement only apply to EU nationals who have moved to reside in the UK. On top of that, the different relationship between the UK and Directive 2004/38 – indeed the different legislative structure conditioning EU citizens’ rights – make it possible to argue that a new, and different, analysis is appropriate.

This judgment is disappointing on a number of levels. First, it is striking that the CJEU and the EU Commission have less appetite than the Court of Appeal of England and Wales for protecting the rights of EU nationals cast adrift in the UK. Second, it is concerning that the Court is so willing to dismiss and marginalise primary non-discrimination rights, eviscerating Article 18 TFEU of independent content, subordinating it to conditions attached to secondary law, even in situations outside the scope of those provisions. This could have significant ramifications for the interpretation of equal treatment rights throughout the EU long after the UK has left, and pre-settled status is a thing of the past. And third, almost most discouraging of all is the garbled legal reasoning, replete with internal contradictions, and the rambling and disjointed mangling of legislation. Though in that respect, it is a judgment that fits right into the UK political landscape.