C-65/81

LANDESKREDITBANK BADEN-WÜRTTEMBERG, an institution incorporated under public law,

on the interpretation of Article 7 (1) of the EEC Treaty and Article 7 (2) of Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community (Official Journal, English Special Edition 1968 (II), p. 475),

REINA v LANDESKREDITBANK BADEN-WÜRTTEMBERG

THE COURT ( Third Chamber )

composed of: A. Touffait, President of Chamber , Lord Mackenzie Stuart and U . Everling, Judges ,

Advocate General : Sir Gordon Slynn Registrar : M . Dauses , Legal Secretan ·

JUDGMENT OF 14. 1. 1982 — CASE 65/81

the guidelines) due inter alia to the birth intended to have a beneficial effect on of a child. the birth trend in the Federal Republic of Germany and to reduce the number of voluntary abortions. Under the guidelines up to DM 8 000 is provided by way of such a childbirth loan and in exceptional cases up to 3. The plaintiffs in the main DM 12 000. The term of the loans is proceedings are Francesco and Letìzia seven years and they are interest-free. Reina, a married couple of Italian The Landeskreditbank receives contri­ nationality residing as workers in the butions for this purpose from the Land Federal Republic of Germany. On the of Baden-Württemberg out of funds occasion of the birth of twins they appropriated in the State budget. applied for the grant of a childbirth loan. The Landeskreditbank refused their According to the guidelines those application on the ground that under the entitled to apply for a loan are married guidelines for the grant of family loans a couples of whom at least one spouse is a childbirth loan may only be granted if at German national. The persons entitled to least one spouse is a German national. apply must have established their ordinary place of residence in Baden- The plaintiffs then brought an action Württemberg at the time of application. before the Verwaltungsgericht [Admini­ The childbirth loan is granted only if the strative Court] Stuttgart with a view to average monthly net income of the compelling the Landeskreditbank to married couple does not exceed a grant a childbirth loan. specified amount.

REINA v LANDESKREDITBANK BADEN-WÜRTTEMBERG

law grants upon application in the preparatory inquiry and to assign the event of the birth of a child interest- case to the Third Chamber in free loans to married couples whose accordance with Article 95 of the Rules income does not exceed a certain of Procedure. amount for the purpose of averting, alleviating or removing financial difficulties and in respect of which loans the Land of Baden-Württem­ II — Written observations berg provides the institution with assistance for the servicing of debts on the basis of the funds appro­ 1. As a preliminary submission, the priated from time to time in the Landeskreditbank Baden- Württemberg State budget, with the aim inter alia claims that the reference for a prelimi­ of countering by measures for family nary ruling is inadmissible because the assistance the decline in the birth Verwaltungsgericht Stuttgart did not rate in the Federal Republic of frame its order suspending the Germany and reducing* the number proceedings and making the reference of voluntary abortions? for a preliminary ruling in the manner prescribed by the relevant provisions of German procedural law. 2. If Article 7 (2) of Regulation (EEC) No 1612/68 is not applicable, is Article 7 (1) of the Treaty (a) As regards the first question, the establishing the European Economic Landeskreditbank states that under Community of 25 March 1957 to be Article 48 (2) of the EEC Treaty construed as meaning that in the freedom of movement for workers circumstances referred to above it comprises the abolition of dicrimination precludes discrimination between based on nationality only "as regards other nationals of the EEC and employment, remuneration and other German nationals as regards the conditions of work and employment" grant of childbirth loans?" and so presupposes some functional connection with the status of worker. The material scope of application of 4. The order making the reference for Regulation No 1612/68 is also subject to a preliminary ruling was received at the the same limitation. Court Registry on 30 March 1981.

The Landeskreditbank further remarks that the childbirth loans are granted Furthermore, restriction of the childbirth primarily for demographic reasons in loans to German nationals is also order to counteract the decline in the justified from the economic point of view birth rate of the German population in of securing the repayment of the loans. Baden-Württemberg. That birth rate is Foreign migrant workers will in many considerably lower than that of cases return to their home countries foreigners living there. Thus the grant of during the term of the loan so that, if the childbirth loans constitutes a their repayment obligations were not recognition of the burdens connected fulfilled, in many cases it would have to with the birth of children and their be expected that the claim for repayment upbringing. No unobjective preference is could not be successfully pursued. given to German nationals as the intention is only to make up the relative deficit in births among the German population in relation to the foreign population. Finally, it should be pointed out that if Article 7 (2) of Regulation No 1612/68 were construed as also applying to the childbirth loans, it would not be covered by any enabling provision under primary The EEC Treaty does not prevent Community law. The Community's Member States from treating nationals competence extends only to the adoption and foreigners differently as far as civic of rules to remove obstacles which, in rights and duties are concerned. In view practice or in law, hinder the mobility of the demographic objective of the of workers within the Community. childbirth loan, the requirement that However, there is no obstacle to the recipients of the loans must be German creation of complete freedom of nationals or married couples of whom at movement for workers if childbirth loans least one spouse has German nationality are made available in a Member State constitutes a measure, with a legitimate only to nationals of that State in order to national orientation, in the sphere of encourage their reproduction and to civic rights. make up an existing deficit in births in relation to the number of foreign nationals. Article48 et seq. of the EEC Treaty do not contain any prohibition of nationally oriented measures of Another reason why the childbirth loan demographic policy or contain any is not to be considered as a social authority for issuing such a prohibition.

(b) As regards the second question, the It should however be noted that the Landeskreditbank observes that the advantage is not granted exclusively to general prohibition of discrimination workers and therefore the existence of contained in Article 7 of the EEC Treaty an employment relationship is not a prior has no effect where the special provision legal condition for the grant of a contained in Article 48 (2) of the EEC childbirth loan. Treaty applies. At all events Article 7 may not be construed as having more far-reaching effects than those of Article 48 (2). The prohibition of discrimination However, in its judgment of 30 Sep­ laid down in Article 7 is expressly tember 1975 in Case 32/75 Cristini restricted to the area in which the EEC [1975] ECR 1085 the Court held that the Treaty applies and relates only to those reference to "social advantages" in areas encompassed by the economic Article 7 (2) may not be construed integration aimed at by the EEC Treaty restrictively but applies to all social and to which the specific demographic tax advantages, whether or not attached measures in question do not belong. to the contract of employment. The Court of Justice thus took account of the special importance of the right of freedom of movement. 2. (a) The Commission of the European Communities submits in regard to the first question that the answer depends on whether the grant of childbirth loans The Landeskreditbank's objection that provided for by the giudelines of the there is no legal entitlement to the grant Baden-Württemberg Ministry must be of a childbirth loan is not convincing considered to be "social advantages" either, because the principle of equal within the meaning of Article 7 (2) treatment embodied in Article 7 (2) of Regulation No 1612/68. In this of the regulation requires that the connection it is first necessary to enjoyment of social advantages should be examine whether grants of such loans granted to the beneficiaries on the same must be considered from a conceptual conditions as those which apply to point of view as social advantages and, national workers. That means that if so, whether the considerations, workers from other Member States are mentioned by the Verwaitungsgericht, just as entitled as national workers to which weighed with the competent have their application examined by the authority when making the appropri­ authorities and decided in accordance ations, or the aim of making efficient use with the relevant criteria for making the of the available funds, justify the decision. exclusion of nationals of other Member States from those advantages.

Nevertheless the aforementioned "1. Article 7 (2) of Regulation (EEC) considerations on which the Baden- No 1612/68 of the Council of Württemberg legislature proceeded the European Communities of provide no objective justification in the 15 October 1968 on freedom present context for giving German of movement for workers within nationals special status. The consider- the Community (Official Journal, ation that the childbirth loans are English Special Edition 1968 (II), intended to help to prevent voluntary p. 475) must be construed as abortions may clearly not be relied upon meaning that it also covers as an objective justification for the advantages such as the childbirth creation of such special status. Nor does loans described in the order of the it follow from the demographic objective Verwaltungsgericht Stuttgart making pursued by means of approval of an the reference for a preliminary appropriation, namely to counteract the ruling. falling birth rate, that it is necessary to reserve the advantages to German nationals. Member States may indeed 2. An answer to the second question is pursue demographic objectives by means unnecessary." of social measures; however they may not assume that this gives them the right to discriminate against nationals of other Member States. III — Oral procedure

3 The Landeskreditbank grants loans, upon application, on the basis of guidelines laid down by the competent authority of the Land of Baden- Württemberg, inter alia on the birth of a child. The childbirth loans, which are free of interest as a result of subsidies allocated by the Land, are granted for a term of seven years up to an amount of DM 8 000, which may be increased to DM 12 000 in exceptional cases. They may be granted to married couples only where at least one of the spouses is a German national and the family income does not exceed a specified amount. According to the information provided by the national court, this system of childbirth loans was introduced with a view to stimulating the birth rate of the German popu­ lation and in order to reduce the number of voluntary abortions.

4 In the present case, the plaintiffs in the main action, Mr and Mrs Reina, applied for the grant of a loan on the birth of twins. The Landeskreditbank Baden-Württemberg rejected their application on the ground that under the above-mentioned guidelines, a loan may be granted only if at least one spouse is a German national. The plaintiffs then brought an action before the Verwaltungsgericht Stuttgart challenging the conformity of that requirement with Community law.

JUDGMENT OF 14. I 1982 — CASE tóm

5 Since it took the view that it required a ruling of the Court of Justice to enable it to give judgment, the Verwaltungsgericht Stuttgart referred the following questions to the Court of Justice for a preliminary ruling.

In that regard, it is necessary to recall that Article 177 of the EEC Treaty confers on the Court jurisdiction to give preliminary rulings on questions of Community law referred to it by a court or tribunal of one of the Member States Under the scheme of that provision, it is for the Court to consider, with a view to confirming its own jurisdiction, whether it is duly seized of a matter brought before it by a court or tribunal of a Member State. However,

REINA v LANDESKREDITBANK BADEN-VÜRTTEMBERC

in view of the distribution of functions between itself and the national court, it is not for the Court to determine whether the decision whereby a matter is brought before it was taken in accordance with the rules of national law governing the organization of the courts and their procedure. The Court is therefore bound by a decision of a court or tribunal of a Member State referring a matter to it, in so far as that decision has not been rescinded on the basis of a means of redress provided for by national law.

8 It follows from those considerations that where a court of a Member State brings a matter before the Court of Justice under Article 177 of the EEC Treaty the Court has jurisdiction, under that provision, to answer the questions raised without there being any need to consider first whether the decision making the reference to it was taken in accordance with the rules oł national law governing the organization of the courts and their procedure.

The first question

9 In its first question, the national court asks in substance whether Anicie 7 (2) of Regulation No 1612/68 of the Council of 15 October 1968 must be construed as meaning that the concept of "social advantage" referred to in that provision encompasses interest-free loans granted on childbirth by a credit institution incorporated under public law, on the basis of guidelines and with financial assistance from the State, to families with a low inccme with a view to stimulating the birth rate.

13 Consequently, childbirth loans such as those referred to by the national court satisfy in principle the criteria enabling them to be classified as social advantages to be granted to workers of all the Member States without any discrimination whatever on grounds of nationality, in particular in view of their aim which is to alleviate, in the case of families with a low income, the financial burden resulting from the birth of a child.

1 4 The Landeskreditbank disputes that conclusion by maintaining that childbirth loans, such as those at issue, fall outside the scope of the concept of "social advantage" within the meaning of Article 7 (2) of Regulation No 1612/68 since they are granted principally for reasons of demographic policy in order to counteract the decline in the birth rate of the German population. It is therefore a measure adopted in the area of political rights, necessarily linked to nationality, and which as a result falls outside the ambit of Article 48 et seq. of the Treaty and of the rules adopted to implement those provisions.

15 It should be stated that, since the Community has no powers in the field of demographic policy as such, the Member States are permitted, in principle, to pursue the achievement of the objectives of such a policy, even by means of social measures. This does not mean, however, that the Community

REINA v LANDESKREDITBANK BADEN-WURTTEMBERG

exceeds the limits of its jurisdiciton solely because the exercise of its jurisdiciton affects measures adopted in pursuance of that policy. Accordingly, childbirth loans of that kind may not be considered as falling outside the scope of the rules of Community law relating to the free movement of persons and, more specifically, of Article 7 (2) of Regulation No 1612/68, solely because they are granted for reasons of demographic policy.

Second question

As the second question was only put in the event of the first question's being answered in the negative, it does not call for a reply.

JUDGMENT OF 14. 1. 1982 — CASE 65/81

Costs

19 The costs incurred by the Italian Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

H. A. Rühl A. Touffait Principal Administrator President of the Third Chamber