C-114/97

1. Declare that, by maintaining in force 1. Dismiss the action; Articles 7, 8 and 10 of Law No 23/1992

* Original language: German. 1 — Boletín Oficial del Estado of 4 August 1992. 2 — Article 7(1 )(b) reads: '... las empresas de seguridad ... deberán tener la nacionalidad española. 2. Order the Commission to pay the costs.

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OPINION OF MR ALBER — CASE C-114/97

B — Facts — operation of central control offices for the reception, checking and transmission of alarm signals and their communication to the security forces {Fuerzas y Cuerpos de Seguridad), as well as provision of response I — The uncontested facts services in so far as these do not fall within the sphere of responsibility of the security 7 forces,

4. Law No 23/1992 (hereinafter 'the Law') in conjunction with Royal Decree No 2364/1994 (hereinafter 'the Decree') defines the purpose of, and requirements applicable to, private security services. Article 5(1) of the Law — planning and assistance in connection with 8 defines the services to be provided by secu­ the security services covered by the Law. rity firms, which cover the following activi­ ties:

7. Under Article 10(1) of the Law, 'security legislation, which cannot be justified by the staff' require prior authorisation from the objectives of the latter. Ministry of the Interior. Article 10(3)(a) makes such authorisation subject to the possession of Spanish nationality. 'Security staff' for the purposes of the Law means: watchmen, per­ sons in charge of security, bodyguards, pri­ vate field guards and private detectives. Field 10 11 1. Freedom of establishment guards and private detectives may also pursue their activities in a self-employed capacity.

OPINION OF MR ALBER — CASE C-114/97

60 of the Treaty. The requirement to have an connected, even occasionally, with the exer­ establishment in Spain in order to exercise cise of official authority are not subject to the those activities is in itself a negation of the provisions of the respective chapter of the freedom to provide services. The 'nationality Treaty (right of establishment or provision of 1 requirement applicable to undertakings' 4and services). By reference to the Court's case- 15 the residence condition applicable to their law, the Commission takes the view that it executive staff preclude any provision of ser­ cannot be assumed that all security services vices by persons not established in Spain. are connected with the exercise of official authority. The protection of goods and pri­ vate individuals serves a private interest and cannot be regarded as the exercise of sover­ eign powers. The nature of the services offered by the security companies has no official 3. Freedom of movement for workers character. At best, those services make a sub­ ordinate contribution to public security. Since the security companies operate only in the framework of private-law relations, any claim that they have a general responsibility for the 12. According to the Commission, the maintenance of public security must be dis­ majority of the staff employed by the security puted, even if they contribute to a certain companies are workers. The nationality extent to crime prevention. Crime prevention requirement to which 'authorisation' by the is not a prerogative of the authorities. Even Ministry of the Interior is made subject has occasional assistance given to the security the effect of completely excluding nationals forces should not necessarily be regarded as of other Member States from employment in the exercise of official authority. the private security sector. That is a restric­ tion of freedom of movement for workers.

COMMISSION v SPAIN

treatment is justified only if it is directed III. The Spanish Government's view against a genuine threat serious enough to affect a fundamental social interest. The Member State must show that such a threat exists. The exercise of the activity of a private detective or field guard cannot, in itself, be regarded as such a threat. The same applies to discrimination against legal persons. Even if a threat exists, a Member State may not pro­ hibit access to a whole sector of economic activity. Such a measure is in any case dispro­ 16. The Spanish Government does not deny portionate. It is up to the Member State to that freedom of establishment, the freedom to show that such a measure is proportionate to provide services and freedom of movement any threat which might arise. The grounds for workers are restricted, but is of the opinion put forward by the Spanish Government do that it can successfully rely on the grounds of not satisfy that requirement. justification provided for by the Treaty. In view of their objective, which consists in the maintenance of public security, the activities of private security companies involve the exer­ cise of official authority.

(c) Article 48(3) and (4) of the Treaty

18. With regard to the grounds of public — the need to make clear what rights citi­ security and public policy, the Spanish Gov­ zens may have to set up or use private ernment is of the opinion that it is the task of security firms as well as the underlying the Commission to prove that there are less reasons on which the public security ser­ drastic means than those chosen by the Spanish vice is based, State. As is clear from the nature of the func­ tions which the security firms exercise, public security and public policy may, in some cir­ cumstances, be threatened by the security firms themselves and therefore they must be strictly controlled. However, according to the — the need to prevent crime and to help Spanish Government, that is only possible to the extent necessary if the undertakings and maintain public security, natural persons concerned are established in the Member State in which they pursue their activities. Likewise, without a permanent establishment, rapid and direct contact with customers is not possible. Article 55 must be interpreted in the light of Article 56 of the — the need to prevent unwarranted assump­ EC Treaty. tion of authority, lack of standards for the approval of products, inadequate training of security guards, irregularities in the exercise of their functions and the com­ mission of numerous infringements, and 19. Finally, the Spanish Government relies on the absence of minimum requirements, overriding reasons relating to the public interest. In connection with the regulation of private security firms there are reasons which ,6 demand particular caution, such as :

21. With regard to freedom of movement for workers, the Spanish Government believes that it can rely successfully on the derogation in Article 48(3) of the EC Treaty because security personnel wear uniforms, are autho­ rised to bear arms and are vested with special privileges which could affect the rights and freedoms of citizens.

23. The question arises as to whether the C — Opinion activities of security firms fall within the scope of the exception defined by Article 55 of the EC Treaty, that is, whether the provi­ sions of the Treaty relating to freedom of establishment and to Article 66 do not apply to them. Under the first paragraph of Article 55 of the Treaty, that chapter does not apply I — Legal persons to activities which are connected, even occa­ sionally, with the exercise of official authority. In examining that criterion, account must be taken, on the one hand, of the fact that the exception cannot be given a scope which would exceed the objective for which it was 19 inserted and, on the other hand, of the fact that it is limited to those activities 'which, 1. Freedom of establishment taken on their own, constitute a direct and specific connection with the exercise of offi­ 20 cial authority.'

17 — See the judgment in Case 2/74, cited in footnote 15, at para- 22. Since the end of the transitional period, graphs 30 and 32. 18 — See footnote 2 above. the prohibition of discrimination on grounds 19 — See the Reyners case, cited in footnote 15, at paragraph 43. of nationality has been a directly effective 20 — See the Reyners case, cited in footnote 15, at paragraph 45.

25. The object of establishing and operating a security undertaking is to assume functions of surveillance and protection on the basis of private-law relations. The assets to be guarded (real property and valuables) will to a great extent be privately owned. The guarding of movable property in particular may also take place on public thoroughfares and in public 27. Even assuming that security firms take places, as the Spanish Government has pointed on auxiliary functions for the security forces, out. Likewise, security contracts awarded in that cannot hide the fact that the main func­ connection with sporting, cultural, political tions are reserved for the security forces. In or similar events may entail the exercise of that connection, the distinction between main functions in public facilities. However, ulti­ and auxiliary functions must be understood, mately none of those factors nor the owner­ not as a quantitative criterion, but as a quali­ ship of the assets to be guarded, is relevant in tative one. The Law's description of the tasks determining the nature of security firms' of private security firms supports the conclu­ object. What matters is that they act on pri­ sion that it is precisely the exercise of official vate initiative pursuant to contractual rela­ authority that is reserved for the security tions and in so acting are not vested with forces. For example, when, in the course of official authority.

22 — See Article 5 of the Law. 21 — See judgment in Case 147/86 Commission v Greece [1988] 23 — The original text reads: '... cuya realización no sea de la ECR 1637, at paragraph 8. competencia de dichas Fuerzas y Cuerpos'.

performing their surveillance duties, private for overriding reasons relating to the general security firms notice suspicious occurrences interest, it may do so by means of non­ or persons acting suspiciously, any ques­ discriminatory measures, provided that such tioning or even arrests may be carried out measures are suitable for securing the attain­ 24 only by the security forces, which clearly ment of the objective which they pursue and shows the difference of degree between their do not go beyond what is necessary in order 25 respective powers. to attain it. Thus, making the exercise of an activity by an undertaking subject to autho­ 26 risation appears to be a valid means of pro­ tecting the general interest. Authorisation as such, and supervision of the undertakings, as 28. It can therefore be concluded that private required by the Spanish legislation, are not security firms are not 'directly and specifi­ complained of by the Commission and are cally' involved in the exercise of official therefore not the subject-matter of these pro­ authority. Consequently, the exception pro­ ceedings. It is therefore sufficient to point out vided for in Article 55 of the EC Treaty does at this stage that the overriding reasons of not apply in this context. general interest asserted by the Spanish Gov­ ernment can be taken into account in connec­ tion with the authorisation and supervision of the undertakings. However, it is not possible to justify prescribing the 'nationality of the 29. In examining whether the Spanish Gov­ company' as one of the conditions of autho­ ernment is entitled to rely on Article 56 of risation. the EC Treaty, which allows special treatment for foreign nationals 'on grounds of public policy, public security or public health', account must be taken of the fact that that provision also authorises Member States to 2. Freedom to provide services apply to Community citizens, on the said grounds, provisions providing for special treat­ ment for foreign nationals exercising an activity in a self-employed capacity. In so far as it applies to natural persons, it is analogous 31. The finding of unjustified discrimination to Article 48(3) of the EC Treaty. In that applies with regard to the provision on respect, the structure and purpose of the pro­ freedom of establishment. However, it applies vision are not such as to justify making the a fortiori in relation to the provisions on 'nationality of an undertaking' a condition of freedom to provide services. That is because its freedom to pursue an activity. the requirement of a permanent establishment in the territory of a Member State as a condi­ tion for an undertaking to pursue its activity must be regarded as the very negation of the

freedom to provide services. 7 The'national­ managers of security firms is to be regarded ity requirement' in respect of security firms as indirect discrimination on grounds of goes even beyond that. Moreover, a Member nationality and thus as contrary to the prin­ State may not make the provision of services ciples of freedom of establishment. in its territory 'subject to compliance with all the conditions required for establishment and thereby deprive of all practical effectiveness the provisions whose object is to guarantee 28 the freedom to provide services'. The excep­ tions (Article 55 of the EC Treaty) and grounds of justification for any discrimination (Article 56 of the EC Treaty) which are applicable in 33. It must be assumed that the great majority relation to freedom of establishment also of the nationals of a Member State are resi­ apply, pursuant to Article 66, to freedom to dent and domiciled in that State, whereas the provide services. Their content, however, does nationals of other Member States are estab­ not go beyond their scope which is applicable lished primarily in those States. Consequently, in relation to freedom of establishment. The such a residence requirement definitely 'nationality requirement' for undertakings amounts to discrimination on grounds of must therefore be characterised as contrary to 29 nationality. The nationals of other Member Community law. States must first transfer their residence to that State in order to comply with the require­ ments of its legislation.

II — Natural persons

1. Freedom of establishment 34. The Spanish Government considers that the condition is justified, on the one hand, because of the need for strict controls and, on the other, because of the direct contact with the customers which may be necessary. (a) Residence of directors and managers

be earned out without the directors and man­ (b) Nationality of field guards and private agers having to take up residence in the ter­ detectives ritory of the Member State. Authorisation and supervision constitute a rather abstract pro­ cess in relation to a company, one which is not affected by the place of residence of the company's executive personnel. In the con­ text of freedom of establishment in particular, Article 54(3)(f) of the EC Treaty, which is a provision concerning the abolition of restric­ tions, demonstrates the point that the entry of executive personnel into managerial or supervisory posts in secondary establishments 30 is to be encouraged. 37. The nationality requirement imposed on workers defined as 'security personnel' con­ stitutes, in the case of field guards and private detectives (the Law expressly includes also those acting in a self-employed capacity), direct discrimination on grounds of nation­ ality. Such discrimination could be justified only under Article 55 or 56 of the EC Treaty. In so far as neither field guards nor private detectives are entrusted with the exercise of official authority, reliance on Article 55 of the EC Treaty is precluded. However, under Article 56 of the EC Treaty, only limitations based on risks posed by the person concerned 36. Finally, the way in which contact with may be imposed on self-employed persons customers is established and organised is, ulti­ on grounds of public policy, public security mately, a matter for the security firms on the or public health. For example, measures imple­ one hand and the potential customers on the menting the derogation under Article 3(1) of other. The fact that business relations are 31 Directive 64/221 must be based exclusively shaped on the basis of private law does not on the personal conduct of the individual entitle a Member State to impose, by a sov­ concerned. Consequently, general consider­ ereign act, a residence requirement on a par­ ations relating to crime prevention are not ticular group of executive personnel. The resi­ sufficient justification for barring access to an dence requirement must therefore be regarded entire occupation by means of a nationality as unjustified discrimination and thus as con­ requirement. Such a requirement must there­ trary to the principles of freedom of estab­ fore be regarded as contrary to Community lishment. law.

2. Freedom of movement for workers 41. There can be no objection to an official authorisation or examination of the suitability of a person for the exercise of a particular activity, provided that it is carried out without discrimination. In principle, therefore, 'min­ isterial authorisation', as prescribed by the Law, is unproblematic from the point of view of Community law. For that purpose, it would be reasonable and possible to verify that the 39. As far as employed persons are con­ individual applicant satisfied certain condi­ cerned, in principle no other conclusion can tions, such as possessing the right to vote and be reached. By laying down a nationality hold public office. requirement in respect of security personnel, nationals of other Member States are barred from entering that occupation. Such a condi­ tion of entry appears to be discrimination between workers of the Member States as regards employment, which is prohibited 42. Finally, Article 48(4) excludes 'employ­ under Article 48(2) of the EC Treaty, if it ment in the public service' from the scope of cannot be justified under Article 48(3) or (4). freedom of movement for workers provided for under Article 48. As a derogation from the rule, that exception must be construed in 33 such a way as to 'limit its scope to what is strictly necessary for safeguarding the inter­ ests which that provision allows the Member States to protect'. The content and limits of the exception must be determined on the basis 40. Article 48(3) allows limitations of freedom of Community law. The Court has consis­ of movement for workers on grounds of tently held that employment in the public public policy, public security or public health. service is to be understood as limited to such As already indicated in the examination of posts as 'involve direct or indirect participa­ Article 56 of the EC Treaty, only grounds tion in the exercise of powers conferred by connected with the person concerned can jus­ public law and duties designed to safeguard tify invoking that derogation. Thus, restric­ tions may not be imposed on the right of a national of any Member State to enter the ter­ 32 — Judgments in Case 36/75 Rutili [1975] ECR 1219, at para- ritory of another Member State, to stay there graph 28, and Case 30/77 Bouchereau [1977] ECR 1999, at and to move freely within it unless his pres­ paragraph 35. 33 — Judgment in Case 225/85 Commission v Italy [1987] ECR ence or conduct 'constitutes a genuine and 2625, at paragraph 7.

(1) Declare that , in so far as Articles 7, 8 and 10 of Law No 23 / 1992 of 30 July 1992 make the grant of authorisation to carry on private security activities in the case of 'security companies' subject to the requirement of being constituted in Spain, the requirement that their directors and managers should reside in Spain and the requirement that the 'security staff' should possess Spanish nationality , the Kingdom of Spain has failed to fulfil its obligations under the EC Treaty, in particular Articles 48 , 52 and 59.

(2) Order the Kingdom of Spain to pay the costs .

34 — See the judgments in Case 149/79, first judgment in that case, Commission v Belgium [1980] ECR 3881, at paragraph 10, and Case C-290/94 Commission v Greece [1996] ECR I-3285, at paragraph 2. 35 — See the judgment in Commission v Greece, cited in footnote 34, at paragraph 36.

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