C-104/91

My Lords, as members of the Colegio Oficial. It is also argued that only natural persons, as opposed to bodies corporate, may act as estate agents. In that respect the case resembles Case C-76/90 Säger v Dennemeyer (judgment of 1. This case is a companion to Joined Cases 25 July 1991) but no question has been put C-330 and 331/90 López Brea and Hidalgo to the Court regarding that aspect of the Palacios, in which judgment was given on case. 28 January 1992. Once again the background to the case is a criminal prosecution against persons who have acted as estate agents in Spain notwithstanding that they do not hold the professional qualifications required by Spanish law. This case differs from the earlier cases inasmuch as one of the persons 3. In the proceedings before the Spanish involved is a national of another Member court Mr Newman stated that he was a State and holds a relevant qualification national of the United Kingdom and that in awarded in that Member State. 1981 he obtained a British qualification described as a 'Degree in Urban Estate Man- agement'. H e also stated that he was an Associate of the Royal Institution of Char- tered Surveyors. These statements are con- 2. O n 2 January 1990 the Colegio Oficial de firmed by documents contained in the case- Agentes de la Propiedad edad Inmobiliaria file. Mr Newman informed the Juzgado de (Official Association of Estate Agents, here- Instrucción that he had applied for enrol- after 'the Colegio Oficia') initiated criminal ment as a member of the Colegio Oficial but proceedings in the Juzgado de Instrucción had received no reply. According to the N o 20, Madrid, against Aguirre Newman Order for reference, the Colegio Oficial SA, which is presumably a company gov- informed the Spanish court that it had erned by Spanish law. The executive direc- refused to admit Mr Newman, 'account hav- tors of the company are Mr Santiago Aguirre ing been taken of the fact that he had set up Gil de Biedma and Mr Stephen Kenneth the company Aguirre Newman SA, operat- Newman. The latter is a British national. The ing as an intermediary in real-estate matters'. Colegio Oficial claims that the company is acting as an intermediary in the buying and selling of real property. Under Spanish law such activities may only be engaged in by persons who hold a specific qualification awarded by the State and have been enrolled 4. The Spanish court decided in those cir- cumstances to refer the following questions to the Court of Justice for a preliminary rul- * Original language: English. ing:

7. Two instruments governing the profession 2. Must the aforesaid Community legisla­ of estate agent in Spain have been cited in tion be interpreted as meaning that Ar­ these proceedings, namely Decree ticle 57(1) of the Treaty, which imposes N o 3248/69 of 4 December 1969 and Royal on the Council the obligation to issue Decree N o 1464/88 of 2 December 1988. directives for the mutual recognition of The purpose of the latter was to implement diplomas, certificates and other evidence Council Directive 67/43/EEC of 12 January of formal qualifications within a 1967 concerning the attainment of freedom reasonable time, and the absence of any of establishment and freedom to provide ser­ action to that end in so far as concerns vices in respect of activities of self-employed estate agents in 24 years, permit the persons concerned with inter alia real estate maintenance in a Member State of the (OJ, English Special Edition 1967, p. 3). The requirement for a person who wishes to requirements laid down by those decrees carry on that occupation and holds the were summarized at the hearing by counsel requisite qualification in his country of for the Colegio Oficial. They are three in origin to pass an examination? number: the prospective estate agent must have completed at least three years of university-level education; he must have passed an examination organized by the Ministry of Public Works and Transport; and 5. The Commission and the Spanish Gov­ he must be enrolled as a member of the ernment rightly deal with those questions in appropriate Colegio Oficial. In addition, reverse order, sińce logically the question Article 3 of Decree N o 3248/69 precludes whether a Member State may require the bodies corporate from acting as estate agents. holder of a qualification awarded in another Member State to obtain further qualifications must precede the question whether he can be subject to criminal penalties if he pursues the profession in question without obtaining the requisite qualifications. I shall therefore fol­ low the same approach and deal with ques­ 8. The activities reserved to estate agents tion 2 first. are defined by Article 1 of Decree

N o 3248/69 as mediation and brokerage in 11. According to the observations submitted the following operations: by the Colegio Oficial and by the Public Prosecutor (the Ministerio Fiscal), the rel- evant provisions of Community law merely require Member States to abolish discrimina- tion and to accord to nationals of other (a) the buying, selling and exchange of rural Member States the same treatment as their and urban property, (b) the granting of own nationals receive. Spain has complied loans secured by mortgages on rural and with that obligation by adopting Royal urban property, (c) the letting of rural Decree N o 1464/88 of 2 December 1988, and urban property and the assignment of Article 1 of which allows nationals of other leases and (d) the provision of valuations Member States to provide services and estab- in relation to immovable property. lish themselves in Spain as estate agents on the same terms as Spanish nationals. Since the Council has not yet adopted a directive on the mutual recognition of qualifications of estate agents, under Article 57(1) of the Treaty, or a directive coordinating the condi- 9. Although the question formulated by the tions of access to the profession, under Arti- national court speaks of a person who 'holds cle 57(2), each Member State remains free to the requisite qualification in his country of lay down the terms under which persons will origin', it should be noted that English law be allowed to act as estate agents and to does not prescribe any compulsory qualifica- require the nationals of other Member States tions for estate agents. It is true that section to comply with its legislation, regardless of 22 of the Estate Agents Act 1979 empowers any qualifications they may have obtained in the Secretary of State to make regulations another Member State. prescribing inter alia professional or aca- demic qualifications as well as a minimum period of practical experience. However, it appears that no such regulations have yet been made. At the hearing it was stated by counsel for the Colegio Oficial that the only country in the Community to have regulated 12. The Commission and the French Gov- access to the profession of estate agent, apart ernment paint a rather different picture of from Spain, is France. He also noted that the current state of Community law in rela- legislation is being contemplated in Belgium. tion to freedom of establishment. They cite the judgments of the Court in Case 71/76 Thieffry v Conseil de l'Ordre des Avo- cats à L· Cour de Paris [1977] ECR 765, Case 222/86 UNECTEF v Heylens [1987] ECR 4097 and Case C-340/89 Vlassopoulou [1991] 10. The fact that qualifications are not ECR 1-2357. They deduce from those judg- required by law in the United Kingdom does ments that where a Community national, not of course mean that relevant qualifica- qualified to pursue the profession of estate tions do not exist in the United Kingdom. In agent in one Member State, applies to the fact, Mr Newman holds such a qualification, authorities of another Member State for per- namely his Degree in Urban Estate Manage- mission to pursue that profession in the sec- ment, which is recognized by the Royal ond Member State, those authorities must Institution of Chartered Surveyors. examine to what extent the qualifications

Aware that one of the main obstacles to free- 13. The Spanish Government cites the three dom of establishment lay in the disparities cases mentioned above, but does not accept between national legislation regarding the that the practice of the Spanish authorities is requirements for admission to certain profes- at variance with that case-law. It emphasizes sions, the authors of the Treaty required the that the individual concerned must, before Council, by Article 57(1) of the Treaty, to requesting admission to the relevant profes- issue directives for the mutual recognition of sional association, forward the necessary diplomas, certificates and other evidence of documentation to the administrative author- formal qualifications. By Article 57(2), the ities so that they can rule on the issue of Council was required to issue directives, equivalence. The Spanish Government also before the end of the transitional period, for points out that the question of equivalence the coordination of the provisions laid down may be affected by the different legal envi- by law, regulation or administrative action in ronments in which estate agents work. The Member States concerning the taking up and Spanish Government proposes an affirmative pursuit of activities as self-employed per- answer to question 2. sons.

67/43 is of no assistance to Mr Newman, scribed by the legislation of the country of since it merely requires Member States to establishment. That principle was confirmed accord nationals of other Member States the in Case 11/77 Patrick v Ministre des Affaires same treatment as their own nationals. Culturelles [1977] ECR 1199. Admittedly, Article 1 of that directive, in conjunction with point B of Title III of the General Programme for the Abolition of Restrictions on Freedom of Establishment, requires the abolition of covert, as well as overt, discrimination, since it enjoins Mem- ber States to eliminate 'any requirements

In effect. Heylens, which concerned the free move- ment of workers under Article 48 of the Treaty, to which the same principles apply, and in VUssopoulou the Court went a step further and held that the authorities of the Member State in which the holder of qualifi- cations awarded in another Member State wishes to work or establish himself are 17. The Council's failure to implement fully under a positive duty to examine whether Article 57(1) and (2) of the Treaty has to the qualifications correspond to those some extent been offset by several decisions required under its own legislation (see, in of the Court. In the Thieffry case the Court particular, paragraphs 16 and 17 of the Vhs- held that, where Community law has made sopoulou judgment). In the course of that no specific provision to implement freedom examination the competent authorities may of establishment, that Treaty objective may take into account objective differences relat- be attained by measures enacted by the ing in particular to the legal context in which Member States, which under Article 5 of the the profession is pursued and to the range of Treaty are bound to take all appropriate activities covered by the profession.

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19. In Hey lens and VUssopoulou the Court lish a procedure for recognizing the qualifi- also laid down important procedural rules cations of estate agents who are entitled to regarding the host Member State's duty to pursue their profession in other Member have regard to qualifications obtained in States or at least that they have failed to another Member State. The decision taken establish the type of procedure required by by the national authorities must be subject to Community law. The Commission deduces judicial review, so that its conformity with from that supposed failure that the Spanish Community law may be tested, and the per- authorities are precluded from imposing son concerned must be able to obtain a state- criminal penalties on such persons for acting ment of the reasons for the decision. as estate agents without obtaining the quali- fications prescribed by Spanish law.

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BORRELL AND OTHERS

ernment emphasizes that in the present case obtained. Throughout that period, which Mr Newman never requested the competent may well exceed one year, the person con- authority to recognize his British qualifica- cerned will be prevented from pursuing his tions; he simply commenced practising as an profession in Spain and, more seriously per- estate agent and a year later applied for haps, he will be unable to ascertain what fur- membership of the Colegio Oficial. The ther studies he must undertake in the event Spanish Government contends that its that his foreign qualifications are ultimately authorities cannot be faulted for failing to held to be only partially equivalent. The recognize the qualifications of someone who result is a substantial barrier to freedom of never applied for recognition. establishment and is not, in my view, consis- tent with a Member State's duty under Arti- cle 5 of the Treaty to take all appropriate measures to ensure fulfilment of the obliga- tions arising out of the Treaty.

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OPINION O F MR JACOBS — CASE C-104/91

26. What then are the responsibilities of the without being registered with the appropri- Colegio Oficial? At the hearing the Agent ate professional society was incompatible for the Spanish Government stressed that it with Community law in so far as registration is a body governed by private law and is not had been refused in contravention of Com- integrated into the Spanish administration. munity law (paragraph 19). Formally, that may be correct but the fact remains that the Colegio Oficial has been entrusted by the Spanish State with certain tasks and privileges and it has the power, since membership is compulsory, to deter- mine whether individuals, including citizens of other Member States, may work as estate agents in Spain. When exercising that power, 28. It seems to me, however, that the Com- it performs quasi-governmental regulatory mission is going too far when it suggests that functions and must therefore be subject to the national authorities are barred from the same obligations, under Article 5 as well prosecuting in the circumstances of the as Article 52 of the Treaty, as an ordinary present case. There is an important difference department of the Spanish administration. It between Auer and the present case. In Auer follows that, when it receives a request for it was established that the qualifications membership, supported by documentation, obtained in another Member State were from a national of another Member State equivalent to the qualifications required in who holds a relevant qualification, it cannot France and should have been recognized on simply ignore that request. It must respond the basis of a directive that had direct effect. promptly and advise the person concerned of In the present case there is no directive on the requirements laid down in its country for the recognition of qualifications and it is by admission to the profession of estate agent no means certain that Mr Newman's qualifi- and it must direct him towards the authority cations are fully equivalent to the qualifica- competent to decide whether his qualifica- tions required in Spain. tions should be recognized.

31. O n . t h e other hand, there would be no such danger if it subsequently transpired that the estate agent possessed all the requisite 30. The buying and selling of interests in knowledge inasmuch as his qualifications immovable property involves complex trans- acquired in another Member State were fully actions that take place against a background equivalent to those required in Spain. It of widely differing national law. In particu- seems to me therefore that the appropriate lar, the law governing the acquisition of title, solution is that the national court in which or concerning mortgages and other land the prosecution is brought cannot convict charges, varies considerably from one Mem- the accused estate agent unless the prosecut- ber State to another. A British estate agent, ing authority satisfies it that the qualifica- even if he does not himself carry out the tions obtained by that person in another transactions, may be expected to have some Member State do not correspond fully to familiarity with the relevant domestic laws. those required under its national law. That But he would not necessarily, without fur- solution, rather than the solution proposed ther training, be competent to assist individ- by the Commission, seems consistent with uals in the sale and purchase of immovable Auer II. property in Spain. In addition to differences in the relevant national laws there are no doubt differences in the structure of the property market and in local customs and practices. The interests of the individual who wishes to exercise his freedom of establish- ment must be balanced against the interests of his potential clients who are entitled to expect that their professional advisers pos- 32. I would say furthermore that, if the sess the necessary knowledge, including national court arrives at the conclusion that knowledge of local law. If an estate agent the qualifications are partially equivalent, the from another Member State were given an degree of equivalence is a matter that should automatic right to act as an estate agent in be taken into account when assessing any Spain simply because the Spanish authorities penalty. In my view, it would be contrary to had neglected to institute the necessary pro- the principle of proportionality if, for exam- cedures for recognizing qualifications ple, the national court treated with equal obtained in other Member States, as required rigour a person who holds no relevant qual- by the Heylens and Vlassopoulou decisions, ifications and a person who has acquired in there would be too great a danger that indi- another Member State qualifications that are viduals would suffer damage as a result of substantially equivalent to those required being advised by an estate agent who lacked under its national law.

(2) Where the competent authorities in the second Member State have not estab- lished appropriate administrative procedures for examining the equivalence of qualifications acquired in other Member States and where the person con- cerned has applied to a professional association which has statutory power to regulate admission to the profession and, having failed to obtain a properly reasoned reply, commences acting as an estate agent, no penalty may be imposed on him for pursuing that profession without holding the necessary qualifications, unless it is established that the qualifications obtained in the first Member State are not fully equivalent to those required in the second Member State. If the qualifications do not correspond fully, the degree of equivalence must be taken into account in assessing any penalty.

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