C-350/96

CLEAN CAR AUTOSERVICE v LANDESHAUPTMANN VON WIEN

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 4 December 1997

I — Introduction administrative authority. Pursuant to Para­ graph 340 of the GewO 1994, this authority examines the application to ensure that the statutory conditions for the exercise of the trade applied for are fulfilled by the appli­ cant at the location concerned, failing which exercise of the trade shall be prohibited by a 1. This case concerns Austrian rules requir­ decision based on such a finding. ing managers of certain businesses to reside in Austria. It raises the preliminary question of the entitlement of employers to invoke in national proceedings the Community-law rights of workers (inter alios, the manager), as well as an issue of indirect discrimination, and of its possible justification by reference to the need to ensure the effective notifica­ 3. Among the statutory conditions for exer­ tion and execution of administrative sanc­ cise of a trade, Paragraph 9(1) of the tions. GewO 1994 states that legal persons, commercial-law partnerships and registered civil partnerships may exercise a trade, but must have appointed a manager or tenant, and refers further to Paragraph 39 of the GewO 1994. II — Legal and factual context

2. Trade activity in Austria is regulated by 4. Paragraph 39 of the GewO 1994 provides the Gewerbeordnung 1994 (Trade code, as follows: hereinafter 'the GewO 1994'). Paragraph 5(1) of the GewO 1994 provides that trades be exercised on the basis of the application to register the trade in question, pursuant to Paragraph 339. That paragraph provides for applications to be submitted to the district

6. Fortress Immobilien Entwicklungs Ges.m.b.H., now Clean Car Autoservice Ges.m.b.H. (hereinafter 'Clean Car'), a The manager of an owner who is not company established in Austria, applied on resident in Austria, to be appointed 13 June 1995 to the Magistrat der Stadt Wien

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(Vienna City Council), District Office for decision before the Verwaltungsgerichtshof, Districts 13 and 14, to register the trade of Wien (the Administrative Court, Vienna, 'maintenance and care of motor vehicles (ser­ hereinafter 'the national court'), on the basis vice station) excluding all artisanal activity'. that its arguments based on European Com­ It notified the appointment of Mr Rudolf munity law had been ignored. Clean Car Henssen as manager. It stated that Mr Hens- referred in particular to Articles 6 and 48 of sen, a German national, was looking for the Treaty establishing the European Com­ accommodation in Austria, so that evidence munity (hereinafter 'the Treaty') and to the of Austrian residence would be produced prohibition of covert discrimination, and later. It appears that Mr Henssen has since asserted that Mr Henssen was an employee moved to Vienna. The District Office for of the company and, therefore, a worker. District No 23 of Vienna decided on 20 July 1995 to prohibit the exercise of the trade applied for, as the nominated manager resided in Berlin and, thus, did not comply with the conditions in Paragraph 39(2) of the GewO 1994 that he reside in Austria and be III — Questions in a position to act in the business.

2. If employers of the host State have the right stated in Question 1: Are Article 48 of 12. Clean Car argues that an interpretation the EC Treaty and Articles 1 and 3 of Regu­ of Article 48 of the Treaty and of Articles 1 lation No 1612/68 to be interpreted as mean­ and 3 of Regulation No 1612/68 which did ing that a provision such as Paragraph 39(2) not grant employers the right to engage of the Gewerbeordnung 1994, under which workers without their having to comply the owner of a trade may appoint as a man­ with conditions which are typically con­ ager for trade law purposes only a person nected with having the nationality of a par­ whose residence is in the host State (Austria), ticular State would undermine the right of is consistent therewith?' free movement. The potential derogations provided for in Article 48(3) of the Treaty 2 should be interpreted restrictively and are not relevant to the present case. In particular, the public policy justification would be applicable only if a worker from another Member State were engaged in work which was itself contrary to public policy. Clean 10. The national court indicated that the first Car adds that the requirement that a man­ question essentially relates to the possibility ager be in a position to act effectively in a of an employer relying upon provisions business could, in certain locations, be more which are couched in terms of workers' easily satisfied by a frontier worker resident rights. It also suggested that account be in a contiguous part of Germany than by a taken, in answering the second question, of person residing in a distant part of Austria. the fact that the manager is responsible to the authorities for the observance of the pro­ visions of Austrian trade law.

that a manager is responsible to the Austrian 15. In the alternative, the Austrian Govern­ authorities, on behalf of the owner of the ment argues that the material provisions of business, for the observance of all applicable Paragraph 39(2) of the GewO 1994 are justi­ legal provisions, and is liable to administra­ fied by reference to considerations of the 4 tive sanctions for any breach thereof. He general interest. Service of notice of sanc­ must therefore reside where such sanctions tions and their execution in other Member can be notified to him and, if necessary, States of the European Union are possible executed. The amended version of Para­ only in very limited circumstances, other graph 39(2) of the GewO 1994, applicable than pursuant to bilateral accords. In these from 1 July 1996 (but not to the facts of this circumstances, consideration of Articles 1 case), provides that the manager must live in and 3 of Regulation No 1612/68 is superflu­ Austria, in so far as the notification and ous, as they merely implement Article 48 of execution of any sanctions imposed is not the Treaty. guaranteed pursuant to an international agreement. The Landeshauptmann von Wien compares Paragraph 39(2) of the GewO 1994 with Article 38(2) of the Rules of Procedure of the Court, which requires that applica­ tions to the Court state an address for ser­ vice in the place where the Court has its seat and the name of the person who is autho­ 16. The Commission states that Article 48 of rised and has expressed willingness to accept the Treaty and Regulation No 1612/68 grant service. The function of manager, moreover, rights to employees, not employers. It, there­ is not limited to accepting service of admin­ fore, seeks to establish whether Mr Henssen istrative or other documents, but extends to is a worker within the meaning of those personal responsibility for the conduct of the provisions, as defined in the Court's judg­ business. ment in Lawrie-Blum v Land Baden- 5 Württemberg. In that case, the Court stated that an employment relationship is defined in accordance with objective criteria by ref­ erence to the rights and duties of the persons concerned, and that its essential feature is that for a certain period of time a person per­ forms services for and under the direction of 6 another person in return for remuneration. As the manager of a business is subject to the 14. The Austrian Government submits, by board of the company and to the general reference to the case-law of the Court, that meeting of the shareholders, who appoint an employer does not, as such, fall within the him to perform certain administrative tasks personal scope of application of Article 48 of on their behalf and at their direction, and as 3 the Treaty. This entails a negative answer to he probably has a contract of employment the first question, thereby removing any need to answer the second.

17. The Commission adds that the principal effect of the residence rule in Paragraph 39(2) of the GewO 1994 is to exclude non- 18. The national court has not raised a ques­ Austrians. Furthermore, it prevents busi­ tion regarding whether Mr Henssen is a nesses from appointing managers responsible worker within the meaning of Community for their activities in more than one Member law. In fact, it refers to a manager as an State. The Commission submits, further­ employee in its order for reference, a view more, that Article 48(3) of the Treaty is not which implicitly underlies both the first and applicable in the present case. While it is the second questions. The Court has indi­ possible to justify national rules which are cated that employees are to be treated as not directly discriminatory by reference to workers for the purposes of Community 7 considerations of the general interest, and law. 8 It is also well established that there is a general interest in securing the Article 48 of the Treaty gives rise to rights effective service and execution of administra­ which are directly effective before national 9 tive sanctions in the case of non-compliance courts. The issue raised by the first ques­ by a business with the applicable law, the tion is whether an employer, rather than an Commission submits that the Austrian rules employee, can invoke before national courts are disproportionately restrictive of the free­ rights deriving from Article 48 of the Treaty dom guaranteed by Article 48 of the Treaty. and Articles 1 and 3 of the Regulation. Since It would be sufficient to oblige the manager the latter provisions 'merely clarify and give to have a professional address in Austria, effect to the rights already conferred by 10 which could be that of the company itself Article 48', the answer to the first question where it is established in Austria, or to must be sought in that article. require the company to furnish, by agree­ ment with the authorities, a suitable guaran­

19. Austria has argued that employers do ment of workers, which 'shall be secured in not fall within the personal scope of applica­ the Community by the end of the transi­ tion of Article 48 of the Treaty. The cases tional period at the latest', and which 'shall 1 which it cites 1establish the definition of a entail the abolition of any discrimination worker and of the employment relationship based on nationality between workers of the on which that status depends, and state that Member States as regards employment, the rights of freedom of movement are remuneration and other conditions of work 12 'linked' to that status. However, those and employment'. In the same vein, Article 3 decisions do not address, nor do they of the Regulation simply states that national exclude, either expressly or by implication, legal, regulatory or administrative provisions the extension of the benefit of Community- or administrative practices 'shall not apply' law provisions on freedom of movement of where they limit application for, offers of, or workers to persons other than workers who, the taking up and pursuit of employment, or none the less, have a material connection subject these to conditions not applicable in with a person who has that status. Nor can respect of their own nationals or which, any such inference be drawn from the texts though applicable irrespective of nationality, of the relevant Treaty and legislative provi­ have as their exclusive or principal aim or sions. For example, Article 49 of the Treaty effect to keep nationals of other Member is the legal basis for the Regulation, includ­ States away from the employment offered. ing its provisions on rights relating to the residence, housing, employment and educa­ tion of members of workers' families, irre­ spective of their nationality.

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of an internal market characterised by the of the conditions in the United Kingdom law abolition, as between Member States, of at issue. In response to the question of the obstacles to the free movement of persons. entitlement of the shipowner and employer to invoke these provisions, the Court responded simply that all of the provisions in question had direct effect and that they could, consequently, be relied upon by indi­ 17 viduals before a national court.

16 — The Queen v Ministry of Agriculture, Fisheries and Food, ex parte Agegate, cited in footnote 13 above, paragraph 40 of the judgment. 13 — Case C-3/87 [1989] ECR1-4459. 17 — Loc. cit., paragraph 42 of the judgment. 14 — Loc. cit., paragraph 34 of the judgment. 18 — Case C-179/90 [1991] ECR I-5889, paragraph 23 and operative part of the judgment. 15 — Loc. cit., paragraph 39 of the judgment; see also Case 77/82 Peskeloglott v Bundesanstalt für Arbeit [1983] ECR 1085. 19 — Case C-345/89 [1991] ECR I-4047.

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27 sonal scope of other internal-market free 170 of the Treaty. doms. In Luisi and Carbone v Ministero del 21 22 Tesoro and in Cowan v Tresor Public, the Court found that the Treaty provisions on services, which speak only of the freedom to provide services, can also be relied upon by the recipients of services, because this is a 23 necessary corollary thereof, and had in fact 24 been expressly envisaged from the outset. 25 Indeed, in Bachmann v Belgium, the Court held, in a case brought by a recipient of insurance services, that the impugned pro visions of Belgian tax law constituted a restriction on insurers' freedom to provide services.

29 20 — Council Directive 76/207/EEC of 9 February 1976 on the vices. Employers have a direct and real implementation of the principle of equal treatment for men ana women as regards access to employment, vocational economic interest in the effectiveness of training and promotion, and working conditions, OJ 1976 L 39, p. 40. 21 — Joined Cases 286/82 and 26/83 [1984] ECR 377, para graphs 10 and 16 of the judgment. 22 — Case 186/87 [1989] ECR 195, paragraph 15 of the judg 27 — Loc. cit., p. 13 of the judgment. ment. 28 — Sec Case C-362/88 GB-INNO-BM [1990] ECR I-667, 23 — Luisi and Carbone v Ministero del Tesoro, cited in foot- paragraph 8 of the judgment. note 21 above, paragraph 10 of the judgment. 29 — On the relationship of recruitment activities with the ser vices provisions of the Treaty, see Case C-113/89 Rush Por- 24 — Loc. cit., paragraphs 12 to 14 of the judgment. tuguesa [1990] ECR I-1417, paragraph 16 of the judgment; 25 — Cited in footnote 4 above, paragraph 31 of the judgment. see also Case C-41/90 Hofner and Elser [1991] ECR I-1979, 26 — Case 26/62 [1963] ECR 1, p. 12 of the judgment. paragraphs 35 to 40.

'[Taking into account the particular nature of the services to be provided, specific 27. It is contrary to Article 48(2) of the requirements imposed on the person provid­ Treaty, as well as to Article 3(1) of the Regu­ ing the service cannot be considered incom­ lation, for Member States to lay down condi­ patible with the Treaty where they have as tions for employment which are indirectly or their purpose the application of professional covertly discriminatory on grounds of rules justified by the general good — in par­ nationality. The Court has observed that ticular rules relating to organisation, qualifi­ national rules under which a distinction is cations, professional ethics, supervision and drawn on the basis of residence are liable to liability — which are binding upon any per­ operate mainly to the detriment of nationals son established in the State in which the ser­ of other Member States. Non-residents are in vice is provided, where the person providing 30 the majority of cases foreigners.

31 — See, for example, Schumacker, loc. cit., paragraph 39 of the 30 — Sec, for example, Schumacker, cited in footnote 4 above, judgment. paragraph 28 of the judgment. 32 — Case 33/74 [1974] ECR 1299.

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34 In the this is a legitimate objective, which can be light of the apparent difficulty in enforcing placed in the Van Binsbergen category of administrative penalties outside the State's professional rules on organisation. However, jurisdiction, conditions may be imposed to the residence requirement may be, according ensure that managers do not escape the to the circumstances, either unnecessary for ambit of Austria's rules on professional or, more fundamentally, unrelated to the responsibility by residing outside Austria. achievement of this aim. It is unnecessary if, as has been suggested, a frontier worker is able to perform his managerial tasks without giving up his residence in a neighbouring Member State. However, at the material time, Mr Henssen appears to have been resi dent in Berlin. It is more germane to this case to consider how the residence require ment is designed to secure the desired end.

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of professional rules of conduct connected expense involved would be prohibitive in the with the administration of justice and with circumstances of that case, the Court also respect for professional ethics, the adequacy stated that '[i]t would certainly be possible in of a lawyer established in another Member principle for such an undertaking to be State choosing an address for service in the accompanied by the deposit by the insurer of 36 38 Member State in question. In the context a guarantee'. of the present case, this could conceivably be either at the manager's place of business or, as the Commission has suggested, the seat of the legal person which employs him, if it is established in Austria.

36 — Cited in footnote 32 above, paragraphs 14 and 16 of the judgment. 37 — Cited in footnote 4 above, paragraph 24 of the judgment. 38 — Loc. cit., paragraph 25 of the judgment.

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35. Of course, even the burdensome require­ tigation by the national court. If such a con­ ment that a manager provide a guarantee vention was in force, it follows from the need only be imposed where enforcement of Court's decision in Wielockx v Inspecteur der 40 administrative sanctions cannot otherwise be Directe Belastingen that the relevant man­ secured in the Member State where he datory requirement of general interest — in resides. Similarly, an address for service need that case fiscal cohesion — was sufficiently only be provided where service at his place secured by the possibility of resort to its of residence cannot be ensured. Both of these terms. The fact that all Member States may restrictions could be avoided if notification not have concluded such conventions is not a and enforcement of sanctions were secured bar to relying upon them to reduce as far as through, for example, an international con­ possible the restrictions imposed on freedom vention. This, indeed, is recognised by the of movement of workers, even if there amended version of Paragraph 39 of the results a difference in the conditions imposed GewO 1994, which, as from 1 July 1996, by the host State on the nationals of the vari­ waives the residence requirement for manag­ ous other Member States. Therefore, assum­ ers where Austria is a party to such a con­ ing the effectiveness of the convention in vention with their country of residence. It question, the imposition of a requirement of appears that such a convention has been con­ Austrian residence on Mr Henssen consti­ cluded between Austria and the Federal tuted a disproportionate measure, whose Republic of Germany, the Member State indirectly discriminatory character cannot be where Mr Henssen resided at the material justified in the light of the requirements of time, and that it was applicable at that the general interest. 39 time. However, that is a matter for inves­

without being bound by national rules which discriminate, directly or indi­ rectly, on grounds of the nationality of the workers in question;

(2) A national rule under which the owner of a business may only appoint as a manager for trade-law purposes a person whose residence is in the host State constitutes indirect discrimination on grounds of nationality;

(3) Such a national rule may be justified by the Member States' interest in secur­ ing compliance with national rules or administrative decisions regarding the conduct of a registered trade unless the same objective can be effectively secured by the alternative of a financial guarantee or the terms of an applicable international convention.

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