Issue Two

Changing the Treaties without Changing the Treaties

Changing the Treaties without changing the Treaties: assessing the feasibility of Mr Cameron’s reform proposals

 

 

Author:

William Moody

 

Durham University

 

 

 

In his letter to Mr Tusk Mr Cameron stated:

 

‘So we have proposed that people coming to Britain from the EU must live here and contribute for four years before they qualify for in-work benefits or social housing.  And that we should end the practice of sending child benefit overseas.’

Do you think such a change is possible within the United Kingdom without amending the Treaties? Illustrate your answer with examples from the case law.

 

Mr Cameron, in November 2015, sent a politically-predicated letter to the President of the European Council Mr Tusk, outlining a number of desired areas for European Union (EU) reform. There is no simple answer as to whether the changes proposed in the title of this essay are possible without amendment to the Treaties underpinning the EU, but this answer will posit that under current case-law the four-year “live and contribute” requirement before qualifying for in-work benefits and social housing is arguably possible without Treaty change via one of two methods. The first method requires repeal and replacement of current Union secondary legislation though it is highly unlikely to be accepted by the European Union Court of Justice (CJEU) for reasons discussed below, whereas the second method requires changes only to United Kingdom legislation and would likely succeed in the CJEU should it be challenged. As for ending “the practice of sending child benefit overseas,” according to CJEU jurisprudence it would be impossible to make this change without violation of the Treaties and it would therefore require Treaty amendment to this effect.

 

 

 In-work benefits and social housing – Route One

Firstly, it must be clarified from where the rights to in-work benefits and social housing arise, in order to assess if Mr Cameron could qualify their receipt to a four-year “live and contribute” requirement without Treaty amendment.

The Treaty on the EU (TEU)[1] and the Treaty on the Functioning of the EU (TFEU)[2] are constitutional, “skeleton”[3] legislation which set out how Union law is to be created, applied and adjudicated upon. These “constitutional bones” have direct effect in Member States, meaning that the Treaties themselves are “intended to confer upon [citizens] rights.”[4] Article 45 of the TFEU creates the general right of free movement of workers, stating that “[f]reedom of movement for workers shall be secured within the Union,” and that this freedom “shall entail the abolition of any discrimination based on nationality.” Article 46 of the TFEU delineates the procedure by which this right shall be governed through more specific secondary Union legislation. The resultant legislation is Regulation 492/11[5], which explicates in more detail the rights of workers and obligations of states in attaining the Union objectives of free movement of workers.

Regulation 492/11 is “binding in its entirety and directly applicable in all Member States” by virtue of being a Union regulation.[6] Regulations are a form of Union secondary legislation, therefore legally subordinate to the Treaties.[7] Regulations are supreme over national law, and a conflict of the two results in the disapplication of the latter.[8] Regulation 492/11 was enacted “to enable the objectives laid down in Articles 45 and 46… to be achieved.”[9]  Indeed, the Regulations illuminate the meaning of the vague Article 45 by, inter alia, providing that a migrant worker “shall enjoy the same social and tax advantages as national workers.”[10] Furthermore, the Regulation extends the Treaty’s provisions to covering “all the rights and benefits accorded to national workers in matters of housing.”[11] These specific rights, pertinent to the title of this essay, therefore arise under secondary Union legislation, but are based on the need to achieve Treaty objectives in Article 45.

Removal of Regulation 492/11 which confers the rights to in-work benefits and social housing would, therefore, ostensibly remove the ability of migrant workers to claim them as equals to nationals. Furthermore, the principle of non-discrimination found in Articles 18 and 45 of the TFEU refer only to “discrimination based on nationality” and, assuming “people coming to Britain from the EU” is interpreted as applying indiscriminate of nationality, would not apply to a UK four-year “live and contribute” requirement to acquiring the relevant benefits.

However, “discrimination based on nationality” found in Article 45 has taken on a much broader reading than strict, “direct” discrimination per the wording of the Treaty – it stretches beyond nationality, and has been gradually broadened by case-law to both indirect discrimination and non-discriminatory barriers to market access.[12] To this effect, indirect discrimination was given a jurisprudential definition in O’Flynn, where it was held to be any measure “intrinsically liable to affect migrant workers more than national workers and if there is a consequent risk that it will place the former at a particular disadvantage.”[13] This interpretation of discrimination originates in the CJEU’s case-law[14], so UK legislation which requires a four-year “live and contribute” requirement to “people coming to Britain from the EU” would be indirectly discriminatory for being “intrinsically liable to affect migrant workers more” as a migrant worker is more likely to move from the EU to the UK than a national. Furthermore, it was stated in O’Flynn that there is no need for statistical proof of such an effect, just that it is liable to have such an effect.[15] Removal of the Regulations granting the rights to in-work benefits and social housing would therefore, by itself, not preclude discrimination claims aimed at the relevant UK legislation bringing the four-year “live and contribute” requirement coming into effect as claimants could ground their claim directly in the Treaty, and render inapplicable the relevant UK legislation.

However, a peculiarity of Regulation 492/11 might suggest that Union secondary legislation which explicitly permits indirect discrimination subject to a stated objective could legitimate the four-year “live and contribute” requirement without amending the Treaties. Whilst Regulation 492/11 has the objective of ensuring equality of treatment “in fact and in law,”[16] this preclusion of national legislation which prevents equality of treatment “shall not apply to conditions relating to linguistic knowledge required by reason of the nature of the post to be filled.”[17] A requirement of linguistic knowledge is a form of indirect discrimination, as it meets the O’Flynn requirement of being “intrinsically liable” to affect migrant workers more than nationals. This legislatively-justified violation of the principle of non-discrimination of workers was upheld in Groener.[18] Admittedly, its application in Groener was subject to a strict proportionality test[19] and that it must be applied in a non-discriminatory fashion[20], but it nevertheless displays how fundamental freedoms can be indirectly encroached by secondary legislation if in a restricted and narrow context.

Article 3(1) therefore provides evidence that indirect discrimination can be permitted if provided for in secondary legislation. Applying this to the broader provisions of in-work benefits and social housing, it may be possible to legally set the four-year “live and contribute” conditions desired by Cameron without amending the Treaties. Repeal of Regulation 492/11 and Directive 2004/38[21] would remove both the direct rights to in-work benefits and social housing (Articles 7 and 9 of the Regulation respectively) and the legislative right to non-discrimination of workers (Article 7(2) of the Regulation and Article 24(1) of the Directive). Implementation of a Union Regulation which permits a four-year “live and contribute” requirement to qualifying for in-work benefits and social housing for an objective permitted in the Treaty would allow the CJEU, like Article 3(1) of Regulation 492/11, to legitimately limit the exercise of freedom of movement.

However, even this repeal of secondary Union legislation and implementation of new secondary Union law which allows for the imposition of indirectly discriminatory conditions on workers would be contrary to Article 18 TFEU. This is based on a legalistic and contextualised reading of the Article, whereby non-discrimination applies “[w]ithin the scope of application of the Treaties, and without prejudice to any special provisions contained therein.” Article 24(2) of Directive 2004/38, as a derogation from equal treatment of EU Citizens, can be understood as within the scope of the Treaties as it is a “special provision[] contained therein,” as its parent article – Article 21(1) TFEU – allows for “limitations and conditions… to give [freedom of movement] effect.” Article 24(2) of Directive 2004/38 is one such “limitation” and “condition” which allows for this Treaty derogation. However, with relation to the wording of Article 45 TFEU, there is no such provision similar to Article 20 or 21 TFEU to limit and condition the exercise of workers’ right to non-discrimination. As such, secondary legislation created under Article 45 could not be enforced by the CJEU to legitimate discrimination (which must be understood as broadly as has been evidenced through case-law stated above). As such, Treaty amendment would be required to effect the desired change by this route as Article 18 would not permit such a derogation from the provisions of equal treatment of Article 45.

 

In-work benefits and social housing – Route Two

The second possible method to effecting Cameron’s desired change without amending the Treaties would be a change in UK legislation to apply the four-year “live and contribute” requirements to qualify for in-work benefits and social housing to nationals and non-nationals alike. This would remove the question of discrimination altogether, as the measures would apply equally in law and in fact to citizens, and it would not contravene the relevant equal treatment provisions in Regulation 492/11 or Directive 2004/38. However, what may arise is a question of the legislation being a non-discriminatory barrier to free movement, contrary to Article 45 of the Treaty, recognised by the CJEU in Kraus.[22]

Non-discriminatory barriers to free movement are measures “liable to hamper or to render less attractive the exercise by Community nationals… fundamental freedoms guaranteed by the Treaty.”[23] The CJEU’s logic followed from the need for Member States to ascribe laws that do “not constitute an obstacle to the effective exercise of the fundamental freedoms.”[24] The UK’s four-year “live and contribute” requirement before receiving benefits would arguably hamper the exercise of free movement to the UK, as it could be contended that individuals residing in the UK before they enter the labour market are more likely to have local family support networks to supplement their income and accommodate them during the four years where they are not entitled to in-work benefits and social housing. However, as Craig and de Burca emphasise[25], non-discriminatory barriers to free movement are subject to the Graf limitation of the legislation being “too uncertain and indirect… to be regarded as liable to hinder freedom of movement.”[26] Little case-law exists surrounding what may be “too uncertain and indirect,” so it will be assumed that the CJEU does find the legislation to be a restriction on the exercise of free movement under Article 45. Under CJEU jurisprudence, in order to not be contrary to the Treaties the measure would have to “pursue[] a legitimate objective compatible with the Treaty and justified by pressing reasons of public interest.”[27] Therefore, the UK would have to prove to the CJEU that the national law in question meets the above requirements.

As for a legitimate objective justified by pressing public interest, the CJEU in Bosman took a wide view as to what would constitute a “legitimate aim.”[28] In this case it was found that the protection of “a balance between [football] clubs… and of encouraging the recruitment and training of young players” was legitimate in light of “the considerable social importance of… football in the Community.”[29] Once a legitimate objective has been established by the CJEU, the measure would need to be judged in light of proportionality[30] and public interest.[31] It must be noted that in both Kraus[32] and Bosman[33] the CJEU expressed a preference for the exercise of fundamental freedoms, which means the presumption is against the UK’s measure being proportionate and in the public interest. This interpretative presumption was demonstrated in the case of Lehtonen, whereby the CJEU held that the measure in question was objectively justified but went “beyond what is necessary to achieve the aim pursued” for lack of evidence that the measure would achieve the aim in question[34], rendering it contrary to the Treaty. The significance of this is that the UK would have to prove that the measure in question achieves the aim pursued and “does not go beyond what is necessary,”[35] though, ultimately, this is a question for the national court to decide. Therefore, an objective justification will likely be established by the CJEU and then the UK courts will decide “the extent to which objective reasons… justify such different treatment.”[36]

Route Two to effecting the desired changes without Treaty amendment would therefore depend on the CJEU’s interpretation of the legislation and whether or not it could be justified by the methods mentioned, the UK courts ultimately having the final say in whether it is justified or not. This is a more likely route to effecting the desired change without Treaty amendment, but its legal certainty is unknown and would not be certain until the CJEU adjudicated upon it.

 

 

Ending the practice of “sending child benefit overseas”

The second aspect to the Cameron quote in the title is the desire to “end the practice of sending child benefit overseas.” The legal basis of the right for Union citizens to send child benefits overseas is based in the Treaties (Article 48 TFEU) but is given specific effect in Regulation 883/2004[37], which seeks to harmonise the social security systems of Member States “[w]ith a view to guaranteeing the equality of treatment of all persons occupied in the territory of a Member State as effectively as possible.”[38] As regards the exportation of child benefits, Article 67 states that a “person shall be entitled to family benefits… as if they were residing in the former Member State.” This has been given a wide scope by CJEU jurisprudence.[39]

There is indeed limited case-law governing this area of Union law. Pinna, however, is a significant case in the field in which the CJEU questioned the compatibility of Article 73(2) of (now repealed) Regulation 1408/71 with Article 48 TFEU. The provision at issue sought to exclude workers in France from a right to export family benefits. The CJEU stated that the objective of Articles 45 and 48 of the TFEU – “securing free movement for workers within the Community” – will be “imperilled and made more difficult to realise” by Article 73(2).[40] This is because it violates the principle of equal treatment, which “prohibits not only overt discrimination based on nationality but all covert forms of discrimination which… in fact achieve the same result.”[41] As a result, the provision “impedes the achievement of the aims set out”[42] in the Treaty and is thereby void.[43]

Drawing analogy to this case, where the CJEU explicitly endorsed a direct Treaty right to prohibition from indirect discrimination for citizens, it would be impossible for the export of child benefits to be stopped without Treaty amendment. Even if a Regulation was implemented which explicitly permitted Member States to prohibit the sending of child benefit overseas, the CJEU made clear in Pinna that this would prohibit the free movement of workers contrary to the Treaty and would therefore be void. Thus, Treaty amendment would in all circumstances be necessary to effect this desired change.

 

Conclusions

In sum, strong enforcement mechanisms are in place to maintain the integrity of the fundamental freedoms enshrined in the Treaties. As a result, implementing a system of indirect discrimination (as Mr Cameron desires to do) will be a legally challenging and uncertain task, as the Treaties themselves prevent this on a general basis, as interpreted by the CJEU. As such, Route One to qualifying in-work benefits and social housing to a four-year “live and contribute” requirement via secondary Union legislation and UK legislation will be challenged on the direct Treaty right to non-discrimination, interpreted by the CJEU as involving a prohibition on indirect discrimination as well as direct, and be overruled by the CJEU. Route Two would, on the balance of evidence and should it be challenged as a non-discriminatory barrier, likely succeed though it would remain a question for the CJEU and national courts to determine its compatibility with the Treaties, so whether or not the changes desired for in-work benefits can be effected without Treaty amendment is unknowable. As for preventing the “sending of child benefit overseas”, the limited CJEU case-law suggests that in no circumstances could this change be effected without Treaty amendment, thereby rendering Mr Cameron’s plans unattainable without it.

 

 

 


[1] Consolidated Version of the Treaty on European Union [2008] OJ C115/13.

[2] Consolidated Version of the Treaty on the Functioning of the European Union [2007] OJ C326/01.

[3] Robert Schutze, European Constitutional Law (1st edn, CUP 2012) 312.

[4] C-26/62 Van Gend en Loos v Nederlandse [1963] ECR 0003, 12.

[5] Council and European Parliament Regulation 492/11 on freedom of movement for workers within the Union [2011] OJ L141/1.

[6] TFEU, art 288.

[7] Paul Craig and Grainne de Burca, EU Law: Text, Cases and Materials (6th edn, OUP 2015) 111.

[8] C-106/77 Amministrazione delle Finanze dello Stato v Simmenthal S.P.A. [1978] ECR 00629, para 26.

[9] Regulation 492/11, recital 3.

[10] Regulation 492/11, art 7(2).

[11] Regulation 492/11, art 9.

[12] Takis Tridimas, The General Principles of EU Law (2nd edn, OUP 2006) 120.

[13] C-237/94 O’Flynn v Adjudication Officers [1996] ECR I-2631, para 20.

[14] C-190/98 Graf v Filzmoser Maschinenbau GmbH [2000] ECR I-513, para 14.

[15] O’Flynn (n13), para 21.

[16] Regulation 492/11, recital 6.

[17] Ibid, art 3(1).

[18] C-379/87 Groener v Minister for Education and the City of Dublin Vocational Educational Committee [1989] ECR I-3987.

[19] Ibid, para 19.

[20] Ibid, para 23.

[21] Council Directive 2004/38/EC of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States [2004] OJ L158/77.

[22] C-19/92 Kraus v Land Baden-Wurttemberg [1993] ECR I-1689.

[23] Ibid, para 32.

[24] Ibid, para 28.

[25] Craig and de Burca (n6) 762.

[26] Graf (n14), para 25.

[27] Kraus (n22), para 32.

[28] C-415/93 Union Royale Belge des Societes de Football Association ASBL v Bosman [1995] ECR I-5040.

[29] Ibid, para 106.

[30] Kraus (n22), para 37.

[31] Ibid, para 32.

[32] Ibid, para 41.

[33] Bosman (n28), para 94.

[34] C-176/96 Lehtonen v Federation Royale Belge des Societies de Basket-ball [2000] ECR I-2714, para 58.

[35] Ibid, para 56.

[36] Ibid, para 59.

[37] Council and European Parliament Regulation 883/2004 on the coordination of social security systems [2004] OJ L166/1.

[38] Ibid, recital 10.

[39] Joined Cases C-245/95 and C-312/94 Hoever, Zachow v Land Nordrhein-Westfalen [1996] ECR I-4926, para 35.

[40] C-41/84 Pinna v Caisse d’allocations familiales de la Savoie [1986] ECR 17, para 21.

[41] Ibid, para 23.

[42] Ibid, para 22.

[43] Ibid, para 25.

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