1. Introduction
In a recent Grand Chamber judgment, handed down on 29 July 2024, the ECJ made an important clarification of the right to equal treatment of third-country national long-term residents in the Member States. Long-term resident third-country nationals, who are generally excluded from the right to non-discrimination on the basis of nationality under Article 18 TFEU, nevertheless enjoy equal treatment with nationals when it comes to access to social security, social assistance, and social protection under Article 11(1)(d) Directive 2003/109 (also known as the “Long-Term Residence Directive”). In Joined Cases C-112/22 and C-223/22 CU and ND, the Court has strengthened that right by confirming that it protects against both direct and indirect forms of discrimination. It held that imposing a residence condition on the access to the national basic income is a form of unlawful indirect discrimination. The judgment relies on the Court’s standing case law on similar questions previously raised in the field of free movement and Union citizenship law. In its outcome, the judgment thus represents a step closer to the aim expressed in the 1999 Tampere Conclusions and recital 2 to the preamble of Directive 2003/109 to create rights “as are as near as possible to those enjoyed by citizens of the European Union”.
2. Facts
At issue in the preliminary reference before the Grand Chamber, was the Italian decreto-legge n. 4 “Disposizioni urgenti in materia di reddito di cittadinanza e pensioni”, as amended by Decree-Law 4/2019which provides for access to basic income. Beneficiaries of the basic income – Italian nationals, EU citizens, and long-term resident third-country nationals alike – were required to fulfil a residence condition: they must have been resident in Italy for at least ten years, with the last two years being consecutive (Article 2(1)).
CU and ND were the two defendants in the criminal proceedings that the Tribunale di Napoli referred to the Court of Justice. They had been accused of falsely declaring in 2020 that they fulfilled the residence conditions to receive the basic income. Both were long-term resident third-country nationals in Italy, having resided there since 2012 and 2013 respectively. The referring court wondered whether this residence condition put third-country nationals with the long-term resident status at a disadvantage and thus was incompatible with Article 11(1)(d) Directive 2003/109 and Article 34 CFREU. It further asked whether the condition can also be deemed compatible with the provisions related to EU citizens (i.e., Articles 18 and 45 TFEU and Article 7(2) Regulation No 492/2011). Finally, it asked whether the criminal sanctions applicable to anyone who falsely declares their compliance with the residence condition are compatible with EU law.
3. Judgment
Whilst the referred questions concern different categories of persons who are potentially put at a disadvantage by the Italian law, the Court of Justice reformulated and narrowed down the questions. It held that it would only consider the compatibility of the Italian law with Article 11(1)(d) Directive 2003/109, read in light of Article 34 CFREU. This was because the defendants in the proceedings before the referring court were third-country nationals with a long-term residence status in Italy (paras 30-33). The issue of EU citizens resident in Italy was thus left aside in the judgment.
The Court confirmed that the Italian residence condition of ten years is an unlawful form of indirect discrimination which breaches EU law (para. 59). Furthermore, the Italian criminal penalties for a false declaration of compliance with such national residence conditions are also incompatible with EU law (para. 60).
In its judgment, the Court highlighted the significance of the long-term residence status as one that “corresponds to the highest level of integration for third-country nationals and justifies them being guaranteed equal treatment with nationals” (para. 46). The Court established that Article 11 prohibits both direct and indirect forms of discrimination which “ultimately have the same effect” (para 48). It held that the residence condition affects primarily non-nationals and thus constitutes indirect discrimination (para. 52). The Court rejected the justification brought forward by the Italian Government, providing that the basic income is made conditional on the participation in a special support programme which “involves a process of social and professional integration” (see para. 54). The Court found that Article 11 contains an exhaustive list of two derogations from the right to equal treatment: (1) where the applicant does not have their registered or usual place of residence in the Member State, and (2) for benefits that are not core benefits (see Article 11(2) and (4)). Any other derogation is therefore “in itself” incompatible with Article 11(1)(d) (para. 55). Furthermore, the Court explained that the conditions that a third-country national must fulfil under the Directive to obtain the long-term resident status – legal and continuous residence of five years in a Member State showing sufficient resources and health insurance – already demonstrates a sufficient level of integration to enjoy equal access to social benefits (paras 44 and 57). Member States may not unilaterally change those conditions – i.e., by extending the residence requirement from five to ten years as in the present case (para. 58).
4. Comment
The Court’s judgment is an important affirmation of the right to equal treatment of long-term resident third-country nationals. It is inspired by its previous case law on free movement and Union citizenship. There, it has found that residence conditions, though not explicitly disadvantaging non-nationals, nonetheless predominantly exclude them, as such conditions can be more easily satisfied by nationals (see e.g. C-237/94 O’Flynn, para. 18). This is quite simply because, as the Court has previously explained, nationals more often than not reside in their Member State, whereas non-nationals more often reside outside of that Member State (see C‑73/08 Bressol and Others, para. 45). In paragraph 51 of the present judgment, the Court expressly cites C-20/12 Giersch and Others (commented on previously here), a case on the right to equal access to student benefits for children of frontier workers, to find in the present case that it does not matter that a residence condition may also apply and negatively affect certain nationals who have returned to the Member State after living abroad (para. 51). CU and ND can thus be read, in this regard, as a clear attempt of an approximation of the long-term residence status to the status of Union citizenship.
Notwithstanding this inspirational connection, the Court’s analysis of the justification brought forward by Italy highlights the self-standing nature of EU migration law instruments. Instead of applying its case law on indirect discrimination of EU citizens and their family members mutatis mutandis to long-term residents, the Court focused exclusively on the wording of the Long-Term Residence Directive to confirm that the instrument contains an exhaustive list of derogations that cannot be extended. On the one hand, this speaks to what has been termed an “administrative mindset” in the Court’s interpretation of EU migration law, i.e. an interpretation that focuses primarily on the wording and structure of the instrument at hand. On the other hand, it marks the departure from similar case law in the field of free movement.
As a reminder: the Court of Justice generally makes a distinction in free movement law between the justifications available in cases of direct and indirect discrimination. The Court is stricter in cases of direct discrimination, where Member States can only rely on the express derogations listed in relevant primary and/or secondary law (see e.g. C‑411/20 Familienkasse Niedersachsen-Bremen, para. 68). In cases of indirect discrimination, the Member State may also invoke other objective justifications (or mandatory requirements) which comply with the principle of proportionality (see e.g. C‑308/14 Commission v United Kingdom, paras 79-80). In the present case CU and ND, the Court seems to take the former approach despite establishing that the Italian law is indirectly discriminatory. In line with the finding of Advocate General Pikamäe in his Opinion (here, para. 45), the Court stated that “Article 11(2) of Directive 2003/109 provides an exhaustive list of situations in which Member States may derogate … Accordingly, outside those situations, a difference in treatment … is, in itself, an infringement of Article 11(1)(d)” (para. 55).
By adopting an interpretation that is closely focused on the wording of the Directive, the Court was able to forego an analysis of proportionality. Although, arguably, its analysis in paragraph 57, has a similar effect: the Court ultimately explains that extending the residence condition from five to ten years goes beyond what is necessary, as the EU legislator has already determined that five years of prior residence show that a person “has put down roots in the country”. Doctrinally, however, it is important to highlight that, following the Court’s interpretation in this case, any duration other than the legislatively determined five-year period would fail to meet the requirements of EU law and that any attempt of the Member States to refer to the principle of proportionality in this regard must be rejected.
The Court’s reasoning in this case equally allowed it to dispel the argument that the situation of nationals and long-term residents would be incomparable, as these categories of individuals would differ in their respective links with the Member State. As Advocate General Pikamäe had clarified (here, para. 48, with reference to C‑303/19 INPS, para. 34), this would negate the very premise upon which the equal treatment guarantees in the Long-Term Residence Directive are based. In adopting the Directive, and the equal treatment guarantees contained therein, the EU legislature took the view that the situation of Member State nationals and long-term residents should, by definition, be considered comparable for the purpose of assessing whether the latter may be discriminated against.
Lastly, the Court’s judgment addresses the question how far Member States may rely on criminal law instruments to sanction individuals who falsely claim entitlements derived from EU law. One should bear in mind that, in casu, the defendants in the main proceeding were faced with a severe custodial sentence. While this issue of enforcement principally falls into the sphere of Member States’ procedural autonomy, the Court used this judgment to remind Italian authorities of the “settled case-law” that criminal sanctions cannot be imposed where they stand accused of having violated a national rule that itself does not comply with EU law (para. 60, citing C-368/20 Landespolizeidirektion Steiermark, para. 97).
5. Conclusion
In conclusion, this judgment represents a welcome development that effectively puts a halt to a policy that disenfranchised long-term residents by effectively stripping them of an equal treatment guarantee, and imposing heavy criminal sanctions on them for trying to rely on EU law to this end. The judgment illustrates that the Court of Justice often draws inspiration from its case law on free movement of EU citizenship. In this case, this inspirational link allowed the judges in Luxembourg to confirm that the equal treatment guarantees in the Long-Term Residence Directive also cover indirect discrimination. At the same time, the judgment is also illustrative of the limits of this inspirational link. By adopting an interpretation that closely probes the wording and structure of the Directive, the Court departs from its case law in the context of free movement and EU citizenship. Unlike indirectly discriminatory measures in the latter context, the Court refutes the notion that indirectly discriminatory measures may be justified safe in those constellations as spelled out in the Long-Term Residence Directive.
