C-63/86

OPINION OF MR DA CRUZ VILAÇA—CASE 63/86

OPINION OF MR ADVOCATE GENERAL D A C R U Z VILAÇA delivered on 22 O c t o b e r 1987 *

Mr President, 3. The Commission examined the Italian Members of the Court, legislation as a result of that complaint and concluded that there were grounds for initiating the procedure provided for in Article 169 of the Treaty.

1. The Commission has asked the Court, 4. The Italian Government endeavoured to pursuant to Article 169 of the EEC Treaty, forestall the initiation of proceedings before to declare that by restricting by means of this Court by issuing to the regions and the various national and regional provisions national housing institutions a circular in access to ownership and rental of housing which, after acknowledging that the legis- built or renovated with the help of public lation in question did in fact discriminate funds and access to assisted mortgages to between Italian citizens and others as Italian citizens, the Italian Republic has regards access to housing, it stated that the introduced and maintained in its legislation national legislation — although still in effect discrimination based on nationality which is and applicable to nationals of non-member liable 'to hinder the right of establishment, countries — should be read in the light of the freedom to provide services and the free the Community rules which were directly movement of workers, in breach of the obli- applicable, so that nationals of other gations imposed on it by Articles 48, 52, Member States pursuing their main activities and 59 of the EEC Treaty and Article 9 (1) in Italy and/or residing there were to be of Regulation (EEC) No 1612/68 of the regarded as equivalent to Italian citizens Council of 15 October 1968. 1 with regard to access to housing constructed by the public sector and access to the advantages connected with State housing subsidies.

(1) As the Commission pointed out, and the Italian Government impliedly acknowledged in its reply to the supplementary reasoned opinion, the wording of the circular 8. As regards employed persons, the Italian contains a number of ambiguities and inade­ Government conceded during the written quacies which prevent it from fulfilling its procedure that the principle of aim of making the meaning and ambit of non-discrimination was fully applicable to the relevant Community law, with all its them, so that in their case it has requirements, plain. acknowledged that the Italian legislation does not comply with the provisions contained in Article 48 of the Treaty and (2) Apart from that, a ministerial circular is Article 9 (1) of Regulation No 1612/68. an administrative document which is not fully publicized, in particular by means of publication in the official gazette, and although it may be binding on the adminis­ trative authorities subject to the superior authority of the author of the circular, it cannot take precedence over the regional 9. At the hearing the Commission informed legislative powers and be binding on bodies the Court, however, that by means of a not subordinate to the central adminis­ Decree of the President of the Council of tration. Ministers of 15 May 1987 Italy had adopted provisions placing Italian citizens and employed persons who are nationals of (3) It is well-established in the case-law of other Member States and resident in Italy this Court 2 that ' . . . t h e maintenance of a on an equal footing, thus remedying the provision incompatible with the Treaty gives alleged failure to fulfil its obligations as rise to an ambiguous state of affairs by regards the latter. Consequently, the maintaining, as regards those subject to the Commission abandoned that part of the law who are concerned, a state of uncer­ application which concerned such persons, tainty as to the possibilities available to them on the ground that the alleged breach of of relying on Community law'. In that Article 48 of the Treaty and Article 9 (1) context, the Court held 3that 'the incom­ of Regulation No 1612/68 had been patibility of national legislation with terminated. provisions of the Treaty, even provisions which are directly applicable, can be finally remedied only by means of national provisions of a binding nature which have

(4) In this case, the uncertain legal position resulting from the existence of measures which may be incompatible with the Treaty 15. (a) The style of the Commission's is aggravated by the fact that a number of argument in the written procedure, in different laws, both national and regional, particular in the reply (paragraph 9), are involved; moreover, as the Commission produces the impression that the application has pointed out, the adoption of a new is directed not only against the condition of discriminatory law in the region of Veneto nationality which appears in the Italian some months after the circular was issued legislation at issue, but also against the confirms the circular's lack of sufficient conditions regarding residence or principal legal authority. activity, conditions which are also imposed by the legislation (in particular Decree of the President of the Republic No 1035 of 30 December 1972 4) for access to the benefits 12. If the Italian legislation is held to be associated with subsidized housing and incompatible with Community law, it is which might be regarded as capable of irrelevant to inquire whether the circular, giving rise to indirect discrimination. after its contents have been revised and clarified and subject to official publication, may be — as the Commission appears to believe — a suitable instrument for termi- 16. The conclusions set out in the original nating the infringement 'provisionally', application are strictly confined, however, pending the passing of legislation which to the express reservation concerning conforms to the Treaty. nationality contained in the Italian legis­ lation, and for that reason the subject- matter of the application cannot be extended. 13. It is also irrelevant to distinguish — as the Italian Government suggests — between provisions 'intrinsically and blatantly incom- 17. I believe some confusion has been patible with a Community principle or rule' caused by the terms in which the discussion and others, a distinction whose purpose concerning — rather surprisingly — the would appear, in any case, difficult to grasp, content of the circular issued by the Italian particularly as regards possible breaches of authorities was conducted; but in any case the principle of non-discrimination laid the Commission explained at the hearing down in general terms in Article 7 of the Treaty. 4 — GURI No 58, of 3.3.1973, p. 1331.

21. In defining the ambit of that direct 23. As regards the second of those aspects, effect the Court distinguished there between the Court acknowledged that the directives the elimination of obstacles to the freedom provided for in the Treaty retained a broad of establishment and restrictions on the sphere of application in the case of measures freedom to provide services, on the one to be introduced into Member States' legis- hand, and the adoption of measures lation in order to encourage or facilitate the designed to facilitate the effective exercise exercise of those freedoms. of such freedoms on the other.

5 — Judgment of 21 June 1974 in Case 2/74 Reyners[1974] 24. The borderline between those two ECR 631. aspects thus remains largely to be 6 — Judgment of 3 December 1974 in Case 33/74 Van Bins- bergen [1974] ECR 1299. determined.

OPINION OF MR DA CRUZ VILAÇA —CASE 63/86

27. That was the case in particular in the judgments delivered on 18 June 1985 in Case 197/84 Steinhauser 7 and 28 January 30. Even earlier, in the judgment of 28 1986 in Case 270/83 Commission ν France, November 1978 in Choquer — which concerning financial credits. 8 concerned a requirement that nationals of other Member States who had been estab­ lished in the Federal Republic of Germany for more than one year and who held a 28. However, those cases were likewise foreign driving licence must obtain a clearly concerned with conditions relating German driving licence — the Court to the pursuit of an activity, understood, as conceded that a provision of that kind was the Court held in Steinhauser (paragraph capable in certain circumstances of preju­ 16), 'in the broad sense of the term'. In any dicing 'the free exercise [by those affected] case, the Court had already held in the first of the rights which Articles 48, 52 and 59 of case (Steinhauser, paragraph 16) that 'the the Treaty guarantee them in connection renting of premises for business purposes with the free movement of persons, freedom furthers the pursuit of an occupation and of establishment and freedom to provide therefore falls within the scope of Article 52 services', and must therefore be considered of the EEC Treaty' (the emphasis is mine). to contravene Community law (paragraph 8).

29. A similar conclusion emerges from the judgment in Segers of 10 July 1986 (Case 31. But it also departed from the conditions 79/85 [1986] ECR 2375), where the Court linked to the pursuit of an activity in Mutsch departed perhaps even a little more from the (judgment of 11 July 1985 10), when it simple consideration of conditions directly declared that workers who were nationals of

35. (c) Let us consider first the situation of a worker who has established himself in another Member State (in this case, Italy). 32. That case, however, concerned the position of an employed person and the Court held that such an option came under the heading of a 'social advantage' as described in Article 7 (2) of Regulation No 36. In any event, that appears to be the 1612/68 of the Council of 15 October 1968 situation which led the Commission to bring on freedom of movement for workers proceedings under Article 169 of the Treaty. within the Community, 1 according to which workers who are nationals of other Member States must enjoy, in the host Member State, 'the same social and tax advantages as national workers'. In Even, a judgment delivered on 31 May 1979, 11the Court held 37. Let us consider for the present solely that that expression embraced 'all those the case of persons principally established in [advantages] which, whether or not linked Italy. to a contract of employment, are generally granted to national workers primarily because of their objective status as workers or by virtue of the mere fact of their residence on the national territory . . . '. 38. Bear in mind that what is at issue is not the right to acquire or lease property destined for the pursuit of an occupation or merely access to real property, but the conditions of access to subsidized housing 33. That interpretation was based, however, and to reduced-rate mortgage loans on an express provision in a regulation contained in the Italian legislation. adopted in order to further the aim of free According to the information presented at movement of employed persons, and there is the hearing, apart from the condition no corresponding provision regarding self- regarding Italian nationality, the legislation employed workers. in question (in particular Article 2 of Decree of the President of the Republic No 1 — Official Journal, English Special Edition 1968 (II), p. 475. 1035/72) lists a number of other conditions 11 — Case 257/78 [1979] ECR 2019. for access to housing or to the benefits

connected therewith. In particular, it is 43. For such people setting up a business necessary to have one's residence or generally coincides with their access to principal activity in the commune where the employment as self-employed persons. housing is to be, to have no other real property in the place where the subsidy is being applied for, not to have received public housing aid in any other form and to have a family income lower than a 44. For such businesses the separation particular amount. between professional activities and living conditions of a personal or family nature, in particular housing conditions, is not at all clear-cut. The social and economic position of persons pursuing such an occupation is 39. The representative of the Italian similar to that of employed persons and that Republic explained that the system in is why the representative of the Italian question was for the benefit of citizens and Government submitted at the hearing that families of low income, who are to be given they could be assimilated. access to housing near their place of work; such payments are covered by State budgetary resources, enabling the State to assist the lowest income categories for 45. Naturally, that does not apply in the whom it is most difficult to resolve the case of owners of large companies, who difficulty of finding housing on the open would in any case find it very difficult to market. fulfil the other requirements imposed by Italian legislation for access to social housing —- those being conditions which in themselves are not discriminatory because they apply to all interested persons, whether 40. That circumstance naturally makes it a Italian or not. sensitive area of social policy for the central State or the regions, involving consider- ations of a financial nature which naturally require a certain degree of caution. 46. Just as the Court held in Mutsch (paragraph 16), that 'the right to use his own language in proceedings before the courts of the Member State in which he 41. Conversely, it is that circumstance resides, under the same conditions as which enables us to establish the necessary national workers, plays an important rôle in link with problems relating to the right of the integration of a migrant worker and his establishment. family into the host country, and thus in achieving the objective of free movement for workers', it must likewise be conceded that the possibility of obtaining subsidized housing on the same conditions as those 42. It is in fact an area which, in view of guaranteed to nationals contributes signifi- the conditions which are imposed, can only cantly to the integration of self-employed affect, in the case of self-employed workers, workers and their families into the host business enterprises of small, or at most country, thereby assisting, particularly in medium size, that is to say, mostly indi- such cases, the achievement of freedom of vidual or family businesses. establishment in the common market.

51. I consider, therefore, that I am justified in suggesting that the Court uphold the application in that respect, on the ground 49. The requirement of nationality in order that the requirement of Italian nationality to have access to social housing thus means for access to subsidized housing contained that Italian citizens may make use of this in the national legislation at issue is in 'safety valve', whereas it is not available to breach of the rules governing freedom of citizens from other Member States who establishment contained in Article 52 of the may, for that reason, if they are unable to EEC Treaty. bear the cost of their previous family abode, be obliged to close down and even return to their country of origin. Yet these are workers already integrated into the social and economic life of the host country, in which they are pursuing an activity which gives them rights and obligations (prin­ 52. In my view, that is the only way in cipally taxation) on the same footing as which, within the scope of the Treaty, the Italian citizens. As the Court held in requirements devolving from the funda- Reyners, the effective exercise of the mental principle of non-discrimination or freedom of establishment is also linked to equal treatment set out in Article 7 may be the need to '(assist) economic and social fulfilled. As the Court declared in Mutsch interpénétration within the Community in (paragraph 12), 'that provision must be the sphere of activities as self-employed applied in every respect and in all circum-

OPINION OF MR DA CRUZ VILAÇA —CASE 63/86

12 — See also the judgment of 13 February 1985 in Case 293/83 59. (d) By contrast, I do not consider that Gravier ν City of Liège [1985] ECR 593, at pp. 611, 612, the Italian legislation prejudices either the paragraphs 15, 25 and 26. right of establishment where the estab- 13 — See judgment of 7 February 1979 in Case 115/78 Knoors [1979] ECR 399, at p. 409, paragraph 19. lishment is a secondary one, or the freedom 14 — Segers, paragraph 12. to provide services. 15 — See also the judgment of 4 April 1974 in Case 167/73 Commission v France [1974] ECR 359, at p. 359, paragraph 17 et seq; judgment of 13 July 1983 in Case 152/82 Forcheri[1983] ECR 2323, at p. 2335, paragraph 11. 60. In neither case is there a permanent or a 16 — See, for instance, Keyners, on the interpretation of the first stable link between the self-employed paragraph of Article 55, paragraph 33 et seq., in particular paragraph 43; judgment of 17 December Í980 in Case 149/79 Commission v Belgium ECR 3881, at pp. 3903-4, 17 — Official Journal, English Special Edition, Second Series No paragraphs 19 and 22. IX, p. 7.

COMMISSION ν ITALY

worker and the place where he pursues his 63. Article 59 provides for the abolition of activities, which would constitute a restrictions on the freedom to provide sufficient relationship between those acti­ services in the Community 'in respect of vities and the conditions for access to nationals of Member States who are estab­ housing or at least enable one to conclude lished in a State of the Community other than that the requirements governing access to that of the person for whom the services are housing were liable to give rise to actual intended' (my emphasis). discrimination against such a worker compared with nationals.

OPINION OF MR DA CRUZ VILAÇA —CASE 63/86

Member States than on Italian citizens who 70. The conditions imposed in this case are are not entitled to subsidized housing certainly not conditions which are neutral because they have no permanent residence on the face of it but result in discrimination or principal activity in the place where the based on nationality or create an unrea- housing is available. sonable obstacle to the exercise of the relevant rights.

COMMISSION ν ITALY

secondary establishments, where perhaps the 77. It is thus not at all certain that the person might wish to transfer his residence Italian legislation may be regarded, in that to the place of that establishment: however, respect, as contrary to Community law. in view of the nature of the housing in question and the other conditions governing 78. It would be different if the Italian legis­ access to it (family income, etc.) I consider lation introduced discrimination against that, in principle, the legislation in question nationals of other Member States as regards cannot apply where there is more than one access to housing changing hands on the establishment. open market; however, that is not the case in these proceedings, so that it is not necessary to consider that possibility. 76. Moreover, in the case of a secondary establishment it is quite possible that in most 79. In any case, the restriction is not one cases the situation to be considered in which obstructs the effective exercise of the connection with the exercise of that right, right of establishment if there is another that is, the management of the establishment establishment in another Member State, (which is the only context in which there because the doctrine set out in the judgment may be a long-term personal link of the in Klopp, 20 based on the general principles kind which may raise the question of access set out in the second sentence of the first to subsidized housing) will be rather that of paragraph of Article 52 (see, in particular, a paid worker, which is governed by the closing words of paragraph 20 of that different Treaty provisions. decision) does not apply.