**Case C-567/07**

**Minister voor Wonen, Wijken en Integratie**

**v**

**Woningstichting Sint Servatius**

(Reference for a preliminary ruling from the Raad van State)

(Free movement of capital – Article 56 EC – Restrictions – Justification – Housing policy – Services of general economic interest)

Summary of the Judgment

1.        *Free movement of capital – Restrictions on property transactions*

*(Art. 56 EC)*

2.        *Preliminary rulings – Jurisdiction of the Court – Limits – Clearly irrelevant questions and hypothetical questions put in
a context not permitting a useful answer*

*(Art. 86(2) EC and Art. 234 EC)*

3.        *Preliminary rulings – Admissibility – Questions referred without sufficient information on the factual and legislative context*

*(Art. 234 EC; Statute of the Court of Justice, Art. 23)*

1.        Article 56 EC must be interpreted as precluding national legislation which makes the exercise of cross-frontier activities
of institutions approved in relation to housing matters subject to prior administrative authorisation, in so far as such legislation
is not based on objective, non-discriminatory criteria which are known in advance and which are capable of adequately circumscribing
the exercise by the national authorities of their discretion, a matter which falls to be determined by the national court.

The requirement for those institutions to obtain prior authorisation from the competent Minister before investing in immovable
property in Member States other than the State in which they have their seat constitutes a restriction on the free movement
of capital.

It is true that requirements related to public housing policy in a Member State and to the financing of that policy can constitute
overriding reasons in the public interest and therefore justify the restriction at issue. Such considerations can only acquire
greater significance in the light of certain features specific to the situation on the national market, such as a structural
shortage of accommodation and a particularly high population density.

In that regard, a prior authorisation scheme may indeed, in some cases, be necessary and proportionate to the goals pursued
if the latter cannot be achieved by less restrictive measures, in particular by an appropriate system of declarations. A prior
examination carried out by the competent administration might appear better able to ensure that the resources of the approved
institutions are used to meet, as a priority, the accommodation needs of certain sections of the population in the Member
State concerned, whilst a system of checks a posteriori could well occur at too late a stage, in particular when significant
expenditure has already been made and is not easily recoverable.

Nevertheless, if a scheme of prior administrative authorisation is to be justified even though it derogates from a fundamental
freedom, it must be based on objective, non-discriminatory criteria known in advance, in such a way as adequately to circumscribe
the exercise of the national authorities’ discretion. That is not the case where the national provisions concerned make prior
authorisation by the competent Minister dependent on a single condition, namely that the project concerned be in the interests
of public housing in the Member State concerned, and where, with regard to the question whether that condition is satisfied,
a check is carried out on a case-by-case basis but that check is not set within a legislative framework and there are no other
specific and objective criteria from which the institutions concerned can ascertain in advance the circumstances in which
their application for authorisation will be granted and on the basis of which the courts, if an action is brought before them
in respect of a refusal of authorisation, may exercise their powers of review to the full.

(see paras 24, 30, 33-35, 37, 39, operative part)

2.        In view of the division of responsibilities in the preliminary ruling procedure, the referring court alone can determine the
subject-matter of the questions it proposes to refer to the Court but, in exceptional circumstances, the Court will examine
the conditions in which the case was referred to it by the national court, in order to assess whether it has jurisdiction.
That is the case, in particular, where the problem referred to the Court is purely hypothetical or where the interpretation
of a Community rule which is sought by the national court has no relation to the actual facts of the main action or to its
purpose. Thus, the Court has no jurisdiction where it is obvious that the provision of Community law referred to the Court
for interpretation is incapable of applying.

In that regard, Article 86(2) EC is not applicable to a case which concerns neither the grant of special or exclusive rights
to an institution approved in relation to housing matters nor the classification of the latter’s activities as services of
general economic interest but concerns solely the lawfulness of a restriction to which that institution is subject, which
takes the form of an obligation to follow a procedure for prior administrative authorisation.

(see paras 42-43, 46-47)

3.        The need to provide an interpretation of Community law which will be of use to the national court makes it necessary that
the national court define the factual and legislative context of the questions it is asking or, at the very least, explain
the factual circumstances on which those questions are based. It is also important that the national court should set out
the precise reasons why it was unsure as to the interpretation of Community law and why it considered it necessary to refer
questions to the Court for a preliminary ruling. In that connection, it is essential that the referring court provide at the
very least some explanation of the reasons for the choice of the Community provisions which it requires to be interpreted
and of the link it establishes between those provisions and the national legislation applicable to the dispute in the main
proceedings. The information provided in the decision making the reference serves not only to enable the Court to give useful
answers, but also to enable the governments of the Member States and other interested parties to submit observations in accordance
with Article 23 of the Statute of the Court of Justice. It is the Court’s duty to ensure that that possibility is safeguarded,
bearing in mind that, under that provision, only the decision making the reference is notified to the interested parties.
In addition, the need for precision, in particular with regard to the factual and legislative context of the main proceedings,
applies in particular in the area of competition, which is characterised by complex factual and legal situations.

Accordingly, a question referred by a national court is inadmissible where it is based on the premiss that State aid might
be granted, while neither the decision making the reference nor the observations of the parties to the main proceedings contain
any elements which might serve to establish that such an advantage would in fact have been granted, the main proceedings being
concerned not with the conditions on which such aid would have been or could be granted, but merely with an entirely separate
and independent issue.

(see paras 49-55)


JUDGMENT OF THE COURT (First Chamber)

1 October 2009 ([\*](#Footnote*))

(Free movement of capital – Article 56 EC – Restrictions – Justification – Housing policy – Services of general economic interest)

In Case C‐567/07,

REFERENCE for a preliminary ruling under Article 234 EC from the Raad van State (Netherlands), made by decision of 19 December
2007, received at the Court on 27 December 2007, in the proceedings

**Minister voor Wonen, Wijken en Integratie**

v

**Woningstichting Sint Servatius,**

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, A. Tizzano (Rapporteur), A. Borg Barthet, E. Levits and J.-J. Kasel, Judges,

Advocate General: M. Poiares Maduro,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 19 March 2009,

after considering the observations submitted on behalf of:

–        Woningstichting Sint Servatius, by M. de Boer, J. de Pree and P. Slot, advocaten,

–        the Netherlands Government, by C. Wissels and Y. de Vries, acting as Agents,

–        the German Government, by M. Lumma, acting as Agent,

–        Ireland, by D. O’Hagan, acting as Agent, and M. Gray, barrister,

–        the Hungarian Government, by J. Fazekas, R. Somssich and K. Borvölgyi, acting as Agents,

–        the Polish Government, by M. Dowgielewicz, P. Kucharski and K. Majcher, acting as Agents,

–        the Swedish Government, by S. Johannesson, acting as Agent,

–        the Commission of the European Communities, by E. Traversa, V. Di Bucci, H. van Vliet and A. Nijenhuis, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

**Judgment**

1        This reference for a preliminary ruling concerns the interpretation of Articles 56 EC, 58 EC, 86(2) EC, 87 EC and 88 EC.

2        The reference was made in the course of proceedings between the Minister voor Wonen, Wijken en Integratie (Minister for Housing,
Districts and Integration) (‘the Minister’) and the Woningstichting Sint Servatius (‘Servatius’) concerning the Minister’s
refusal to grant the latter, which is an approved institution active in the public housing sector in the Netherlands, authorisation
to invest in a construction project in Liège (Belgium).

**National law**

3        Article 22(2) of the Netherlands Constitution provides that ‘it shall be the responsibility of the Government to promote adequate
housing’. The nature and extent of that task are defined in the Housing Law (Woningwet) and the Decree concerning the management
of the public rented-housing sector (Besluit beheer sociale-huursector: ‘BBSH’).

4        Article 70(1) of the Housing Law provides:

‘Associations with full legal capacity and foundations which have as their object to operate solely in the public housing
sector and do not intend to distribute any profits other than in the interests of public housing may be approved by royal
decree as institutions operating solely in the interests of public housing.’

5        Under Article 70c of the Housing Law:

‘Approved institutions shall give priority to the housing of persons who, owing to their income or other circumstances, have
difficulty finding suitable accommodation ...’.

6        Article 70d of the Housing Law states:

‘1.      Approved institutions shall be answerable to the competent Minister, in accordance with Article 71a(1), introductory words
and point (b).

2.      Additional requirements concerning supervision shall be adopted by, or pursuant to, general administrative measures ...’

7        Article 120a(1) of the Housing Law is worded as follows:

‘By or pursuant to general administrative measures, it may be stipulated that the competent Minister may, as an experimental
project, depart temporarily, or permit a temporary departure, from rules laid down by or pursuant to general administrative
measures.’

8        In accordance with Article 9 of the BBSH, amendments to the constitution of an approved institution, including any amendment
relating to the geographical area of activity of the institution, are subject to approval by the competent Minister.

9        Article 11(1) of the BBSH provides that ‘[the] approved institution shall operate solely in the public housing sector’.

10      Finally, Article 49(1) of the BBSH provides:

‘The competent Minister may depart temporarily, or permit a temporary departure, from this Decree to permit experimental project
which he believes to be in the interests of public housing.’

**The dispute in the main proceedings and the questions referred for a preliminary ruling**

11      Servatius is an approved institution within the meaning of Article 70(1) of the Housing Law. In accordance with its statutes,
its objective is to operate solely in the public housing sector and its area of activity is confined to certain Dutch municipalities.
Servatius is the sole shareholder and administrator of the holding company B.V. Servatius Holding Maastricht BV.

12      With a view to building housing in Liège, 30 km from the Netherlands border, Servatius established through Servatius Holding
Maastricht BV two Belgian-law companies and applied to the competent Netherlands Minister for authorisation on the ground
of the experimental nature of the project, in accordance with Article 120a of the Housing Law and Article 49 of the BBSH.
The project comprised a combination of rented dwellings, owner-occupied dwellings, parking areas and commercial premises.

13      In order to finance the project, Servatius lent money, at a rate of 1.5%, to one of its Belgian subsidiaries, having itself
contracted a loan, in its capacity as an approved institution in the Netherlands, on particularly favourable terms.

14      By decision of 5 December 2002, the Minister refused to authorise Servatius’ project on the ground of the project’s location
in Belgium. According to the Minister, Servatius had failed to show that the project would be of benefit to the Netherlands
housing market and, more specifically, to persons seeking accommodation in the Maastricht region (Netherlands). The project
did not therefore acquire the status of experimental project for the purposes of Article 120a of the Housing Law and Article
49 of the BBSH, which would have enabled Servatius to implement the construction project in Belgium.

15      By decision of 29 December 2003, the Minister declared Servatius’ objection to his refusal of authorisation for its construction
project to be unfounded.

16      By judgment of 19 May 2006, the Rechtbank Maastricht (District Court, Maastricht) (Netherlands) declared the action brought
by Servatius against the decision refusing authorisation to be well-founded. It annulled that decision, referred the case
back to the Minister and ordered him to take a fresh decision on Servatius’ objection.

17      On 29 June 2006, the Minister appealed to the referring court against that judgment.

18      Since it entertained some doubts concerning the interpretation of Articles 56 EC, 58 EC, 86(2) EC, 87 EC and 88 EC, the Raad
van State (Council of State) (Netherlands) decided to stay proceedings and to refer the following questions to the Court of
Justice for a preliminary ruling:

‘1.      Does the requirement that the Minister give prior authorisation for any cross-frontier activities of an undertaking which
is approved by law to promote the Netherlands’ public housing interests, which may rely on public resources for this purpose,
which may operate, by law, solely in those interests, and which in principle has its area of activity within the Netherlands
(“approved institution”), constitute a restriction on the free movement of capital, as referred to in Article 56 EC?

2a.      Can a Member State’s public housing interests be regarded as a public policy interest as referred to in Article 58 EC?

2b.      Can a Member State’s public housing interests be regarded as an overriding reason in the public interest recognised in the
case-law of the Court of Justice?

2c.      More specifically, can interest in the effectiveness of and the ability to finance a Member State’s public housing system
be regarded as a public policy interest as referred to in Article 58 EC or as an overriding reason in the public interest
recognised in the case-law of the Court of Justice?

3a.      Assuming that the requirement of prior authorisation for an approved institution as referred to in Question 1 constitutes
a restriction for which there is justification as referred to in Questions 2a, 2b and 2c, is that requirement necessary and
proportionate?

3b.      When applying that justification, does a Member State have a wide margin of discretion in determining the scale of the public
interest concerned and the manner in which that interest is promoted? Is one of the determinants in this context the fact
that the [European] Community has few, if any, powers in the public housing sector?

4a.      Besides, or in conjunction with, the overriding reasons in the public interest referred to in Article 58 EC and recognised
in the case-law of the Court of Justice, can a Member State rely on Article 86(2) EC to justify a restriction on the free
movement of capital, if special rights have been granted to the undertakings concerned and those undertakings are entrusted
with the operation of services of general economic interest?

4b.       Do the public interests referred to in Article 58 EC and the overriding reasons in the public interest recognised in the case-law
of the Court of Justice have the same content as the general economic interest referred to in Article 86(2) EC?

4c.      Does reliance by the Member State concerned on Article 86(2) EC, its contention being that the undertakings to which special
rights have been granted perform tasks of general economic interest, have additional weight over and above reliance on public
interests as referred to in Article 58 EC and the overriding reasons in the public interest recognised in the case-law of
the Court of Justice?

5a.      Can undertakings, such as the approved institutions referred to in Question 1, which, on the one hand, are required to employ
all their capital for the benefit of public housing, but which, on the other hand, also undertake commercial activities in
respect of public housing, be regarded, for all or some of their tasks, as undertakings entrusted with the operation of services
of general economic interest, as referred to in Article 86(2) EC?

5b.      For the answer to Question 5a to be in the affirmative, is it necessary for the undertakings concerned to keep separate accounts
from which it is absolutely clear what costs and receipts are associated with their social activities, on the one hand, and
with their commercial activities on the other, and for that obligation to be laid down in national legislation? Should it
then be ensured that a Member State’s financial resources benefit only the social activities and their continuity?

6a.      If an approved institution as referred to in Question 1 can be regarded, in respect of all or some of its activities, as an
undertaking entrusted with the operation of services of general economic interest as referred to in Article 86(2) EC, can
the entrustment of the operation of such services justify the imposition on the approved institution of a restriction on the
free movement of capital as referred to in Article 56 EC?

6b.      When applying that justification, does a Member State have a wide margin of discretion in determining the scale of the general
economic interest concerned and the manner in which that interest is promoted? Is one of the determinants in this context
the fact that the Community has few, if any, powers in the public housing sector?

7a.      Can the fact that a Member State provides certain undertakings as referred to in Article 86(2) EC with financial resources
make it necessary for the territorial scale of their activities to be limited in order to prevent those financial resources
from constituting prohibited State aid and the undertakings employing those resources in another Member State from competing
with undertakings in that Member State under conditions which do not comply with market rules?

7b.      Can a Member State, in this instance the Netherlands, require approved institutions as referred to in Question 1 wishing to
undertake housing construction activities of a social and commercial nature in another Member State to obtain prior authorisation
if there is as yet no legal obligation in the first-mentioned Member State to make a distinction between the two types of
activity? Is the requirement of prior authorisation in this case a necessary and proportionate means of ensuring compliance
with Articles 87 and 88 EC?’

**The first to third questions**

19      By its first three questions, which it is appropriate to examine together, the referring court asks, in essence, whether the
fact that a Member State requires an institution such as Servatius, which is approved for the purposes of Article 70(1) of
the Housing Law as an institution active in the housing sector, to obtain prior authorisation in order to invest in construction
projects in another Member State constitutes a restriction on the free movement of capital within the meaning of Article 56
EC. If that question is answered in the affirmative, the referring court wishes to know (i) whether, by virtue of a derogation
expressly granted by Article 58 EC or an overriding reason in the public interest recognised by the case-law of the Court,
a restriction of that type can be justified on grounds relating to the interests of public housing policy in the Member State
concerned and to the financing thereof, and (ii) whether such a restriction is a necessary and proportionate means of attaining
of the objective pursued.

20      In order to reply to those questions, it should be observed as a preliminary point that, according to settled case-law, capital
movements include investments in immovable property on the territory of a Member State by non-residents – as is also clear
from the nomenclature of capital movements set out in Annex I to Council Directive 88/361/EEC of 24 June 1988 for the implementation
of Article 67 of the [EC] Treaty (article repealed by the Treaty of Amsterdam) (OJ 1988 L 178, p. 5); that nomenclature still
has the same indicative value for the purposes of defining the notion of capital movements (see, inter alia, Case C-370/05
*Festersen* [2007] ECR I‐1129, paragraph 23 and the case-law cited). In other words, the right to acquire, use or dispose of immovable
property on the territory of another Member State generates capital movements when it is exercised (see, inter alia, Joined
Cases C‐515/99, C-519/99 to C-524/99 and C‐526/99 to C-540/99 *Reisch and Others* [2002] ECR I‐2157, paragraph 29, and *Festersen*, paragraph 22).

21      Therefore, as the Court has already held, the measures prohibited by Article 56(1) EC, as restrictions on the movement of
capital, include those which are likely to discourage residents of one Member State from making investments in immovable property
in other Member States (see, to that effect, *Festersen*, paragraph 24).

22      That is the case, in particular, of national measures which make investments in immovable property conditional upon a prior
authorisation procedure and thus restrict, by their very purpose, the free movement of capital (see, to that effect, Case
C-302/97 *Konle* [1999] ECR I‐3099, paragraph 39, and *Reisch and Others*, paragraph 32).

23      It is common ground in the main proceedings that, under the national provisions at issue, precisely what the Dutch approved
institutions must do is submit their cross-border property investment projects to a prior administrative authorisation procedure,
in which they are required to demonstrate that the investments concerned are in the interests of housing in the Netherlands.

24      In those circumstances, it must be concluded that the requirement for such institutions to obtain authorisation from the competent
Minister before investing in immovable property in Member States other than the State in which they have their seat constitutes
a restriction on the free movement of capital.

25      It must none the less be recalled that, according to well-established case-law, national measures restricting the free movement
of capital may be justified by the reasons referred to in Article 58 EC or by overriding reasons in the public interest, provided
that they are suitable for securing the attainment of the objective which they pursue and do not go beyond what is necessary
for that purpose (see Case C‐112/05 *Commission* v *Germany* [2007] ECR I-8995, paragraphs 72 and 73 and the case-law cited).

26      In the main proceedings, the Netherlands Government argues that the prior authorisation scheme in question is justified by
requirements associated with the housing policy it pursues and with the financing of that policy, by grounds of public policy
within the meaning of Article 58 EC and by an overriding reason in the public interest recognised in the case-law of the Court.

27      Thus, such a scheme seeks to ensure that approved institutions invest, in accordance with their statutes, in projects in the
interests of public housing in the Netherlands, in particular for the purpose of ensuring an adequate supply of accommodation
for persons on low incomes or for other categories of less fortunate members of the population. There is also a concern to
prevent the financial facilities available to those institutions by virtue of the objects laid down in their statutes being
diverted to other economic activities, thereby jeopardising the effectiveness and the financing of the public housing policy.

28      With regard first of all to the derogations allowed by Article 58 EC, suffice it to say that, even if it is accepted that
the need for a Member State to promote social housing can constitute a fundamental interest of society, public policy cannot
be invoked in the present case, inasmuch as the putative failure of approved institutions to comply with obligations under
their statutes and the possible diversion of the funds they receive to activities other than social activities cannot amount
to a genuine and sufficiently serious threat to that fundamental interest (see, to that effect, Case C‐54/99 *Église de scientologie* [2000] ECR I‐1335, paragraph 17 and the case-law cited).

29      Turning next to the justifications based on overriding reasons in the public interest, it should be recalled that the Court
has already accepted that national rules may restrict the free movement of capital in the interest of objectives directed
at resisting pressure on land or at maintaining, as a town and country planning measure, a permanent population in rural areas
(see, to that effect, *Konle*, paragraph 40; *Reisch and Others*, paragraph 34, and *Festersen*, paragraphs 27 and 28).

30      Thus, by analogy, it should be held that requirements related to public housing policy in a Member State and to the financing
of that policy can also constitute overriding reasons in the public interest and therefore justify restrictions such as that
established by the national legislation at issue in the main proceedings. As the Netherlands Government has rightly pointed
out, such considerations can only acquire greater significance in the light of certain features specific to the situation
on the national market in question in the main action, such as a structural shortage of accommodation and a particularly high
population density.

31      Moreover, as the Netherlands Government has rightly maintained, the Court has already accepted that the risk of seriously
undermining the financial balance of social policies can also constitute an overriding reason in the public interest capable
of justifying obstacles to the freedom of movement (see by analogy, in relation to a social security system, Case C‐372/04
*Watts* [2006] ECR I-4325, paragraph 103 and the case-law cited).

32      That stated, it remains important to ascertain whether the fact that an approved institution is required to follow a prior
authorisation procedure before it can implement a construction project in a Member State other than the one in which it has
its seat constitutes a measure which is necessary and appropriate to the attainment of the objectives referred to in paragraphs
26 and 27 of this judgment.

33      In that regard, it should be observed that a prior authorisation scheme may indeed, in some cases, be necessary and proportionate
to the goals pursued if the latter cannot be achieved by less restrictive measures, in particular by an appropriate system
of declarations (see, to that effect, Joined Cases C-163/94, C-165/94 and C-250/94 *Sanz de Lera and Others* [1995] ECR I-4821, paragraphs 23 to 28; *Konle*, paragraph 44; and Case C‐205/99 *Analir and Others* [2001] ECR I‐1271, paragraph 35).

34      It is conceivable that that might be the case in relation to a housing policy pursuing objectives such as those laid down
by the Housing Law and the BBSH. A prior examination carried out by the competent administration might appear better able
to ensure that the resources of the approved institutions are used to meet, as a priority, the accommodation needs of certain
sections of the population in the Netherlands, whilst a system of checks a posteriori could well occur at too late a stage,
in particular when significant expenditure has already been made and is not easily recoverable.

35      Nevertheless, the Court has also held, on many occasions, that a scheme of prior administrative authorisation cannot render
legitimate discretionary conduct on the part of the national authorities which is liable to negate the effectiveness of provisions
of Community law, in particular those relating to a fundamental freedom such as that at issue in the main proceedings. Therefore,
if such a scheme is to be justified even though it derogates from a fundamental freedom, it must be based on objective, non-discriminatory
criteria known in advance, in such a way as adequately to circumscribe the exercise of the national authorities’ discretion
(see, inter alia, Case C‐169/07 *Hartlauer* [2009] ECR I‐0000, paragraph 64 and the case-law cited).

36      In view of the material in the files lodged with the Court, it cannot be excluded that the provisions of the Housing Law and
of the BBSH at issue in the main proceedings do not fully satisfy those requirements.

37      In that regard, it is apparent most particularly from the answers of the Netherlands Government to the Court’s written questions
that the national provisions concerned make prior authorisation by the competent Minister dependent on a single condition,
namely that the project concerned be in the interests of public housing in the Netherlands, as required by Article 49(1) of
the BBSH. As to the question whether that condition is satisfied, it is apparent that a check is carried out on a case-by-case
basis but that the check is not set within a legislative framework and that there are no other specific and objective criteria
from which the institutions concerned can ascertain in advance the circumstances in which their application for authorisation
will be granted and on the basis of which the courts, if an action is brought before them in respect of a refusal of authorisation,
may exercise their powers of review to the full.

38      In those circumstances, subject to a review by the national court of such factors in the light of the criteria identified
by the case-law referred to in paragraph 35 of this judgment, the prior administrative authorisation scheme at issue in the
main proceedings might be considered not to be based on conditions capable of adequately circumscribing the exercise, by the
national authorities, of their discretion and, therefore, of justifying a derogation from the free movement of capital.

39      In the light of all the foregoing considerations, the answer to the first three questions is that Article 56 EC must be interpreted
as precluding national legislation such as that at issue in the main proceedings, which makes the exercise of cross-frontier
activities of institutions approved under Article 70(1) of the Housing Law in relation to housing matters subject to prior
administrative authorisation, in so far as such legislation is not based on objective, non‐discriminatory criteria which are
known in advance and which are capable of adequately circumscribing the exercise by the national authorities of their discretion,
a matter which falls to be determined by the national court.

**The fourth to sixth questions**

40      By its fourth to sixth questions, which it is appropriate to examine together, the national court asks in essence whether,
in order to justify a restriction on the free movement of capital imposed on undertakings entrusted with the operation of
services of general economic interest and to which special rights have been granted, a Member State may rely on Article 86(2)
EC.

41      In connection with that issue, the national court queries whether, first, undertakings such as Servatius can, although they
also carry on commercial activities within the housing sector, be regarded, with regard to all or part of their tasks, as
undertakings entrusted with the operation of services of general economic interest within the meaning of Article 86(2) EC
and whether, for that purpose, it is necessary for the undertaking concerned to keep separate accounts distinguishing the
costs and receipts related to social activities from those relating to commercial activities. Second, it raises a question
about the scope of the discretion enjoyed by the Member States in determining the scale of the general economic interest for
the purposes of Article 86(2) EC and about the ways in which such an interest can be protected.

42      In that regard, it should be recalled at the outset that although, in view of the division of responsibilities in the preliminary
ruling procedure, the referring court alone can determine the subject-matter of the questions it proposes to refer to the
Court, the Court has also stated that, in exceptional circumstances, it will examine the conditions in which the case was
referred to it by the national court, in order to assess whether it has jurisdiction.

43      That is the case in particular where the problem referred to the Court is purely hypothetical or where the interpretation
of a Community rule which is sought by the national court has no relation to the actual facts of the main action or to its
purpose (see, to that effect, Case C‐415/93 *Bosman* [1995] ECR I-4921, paragraph 61; Case C‐466/04 *Acereda Herrera* [2006] ECR I-5341, paragraph 48; and Case C‐380/05 *Centro Europa 7* [2008] ECR I-349, paragraph 53). Thus, the Court has declined jurisdiction where it was obvious that the provision of Community
law referred to the Court for interpretation was incapable of applying (Case C-85/95 *Reisdorf* [1996] ECR I‐6257, paragraph 16 and the case-law cited).

44      Article 86(2) EC, in conjunction with Article 86(1) EC, may be relied on to justify the grant by a Member State to an undertaking
entrusted with the operation of services of general economic interest of special or exclusive rights which are contrary to
the provisions of the Treaty, to the extent that performance of the particular task assigned to that undertaking can be assured
only through the grant of such rights and provided that the development of trade is not affected to such an extent as would
be contrary to the interests of the Community (Case C‐340/99 *TNT Traco* [2001] ECR I‐4109, paragraph 52; Case C‐220/06 *Asociación Profesional de Empresas de Reparto y Manipulado de Correspondencia* [2007] ECR I-12175, paragraph 78).

45      In the present case, it nevertheless remains the case that the prior authorisation scheme provided for by the national legislation
at issue in the main proceedings does not serve such a purpose.

46      Thus, those proceedings concern neither the grant of special or exclusive rights to Servatius nor the classification of the
latter’s activities as services of general economic interest: they concern solely the lawfulness of a restriction to which
Servatius is subject, which takes the form of an obligation to follow a procedure for prior administrative authorisation.

47      It follows that there is no need to reply to the fourth to sixth questions referred by the national court concerning the interpretation
of Article 86(2) EC, since that provision is not applicable to a case such as that at issue in the main proceedings.

**The seventh question**

48      By this question, the national court asks essentially, first, whether, when a Member State provides financial resources to
undertakings entrusted with the operation of services of general economic interest, the territorial scale of the activities
of those undertakings should be limited in order to prevent those resources from constituting unlawful State aid in breach
of Article 87 EC and the undertakings, when employing those resources in another Member State, from distorting conditions
of competition. Second, the referring court asks whether, in a Member State in which there is no legal obligation to distinguish
between commercial activities and activities within the social field, the fact that the Member State requires approved institutions
wishing to pursue their activities in another Member State to obtain prior authorisation is a necessary and proportionate
means of ensuring compliance with Articles 87 EC and 88 EC.

49      As has been observed in paragraphs 42 and 43 of this judgment, the presumption of relevance attaching to questions referred
by the national courts for a preliminary ruling can be rebutted only in exceptional cases. Where the questions submitted concern
the interpretation of Community law, the Court is in principle bound to give a ruling.

50      It is clear from well-established case-law, however, that the need to provide an interpretation of Community law which will
be of use to the national court makes it necessary that the national court define the factual and legislative context of the
questions it is asking or, at the very least, explain the factual circumstances on which those questions are based (Joined
Cases C-320/90 to C-322/90 *Telemarsicabruzzo and Others* [1993] ECR I-393, paragraph 6; Case C‐470/04 *N* [2006] ECR I‐7409, paragraph 69; and the order in Case C‐305/07 *RAI* [2008] ECR I-55, paragraph 16).

51      It is also important that the national court should set out the precise reasons why it was unsure as to the interpretation
of Community law and why it considered it necessary to refer questions to the Court for a preliminary ruling. In that connection,
it is essential that the referring court provide at the very least some explanation of the reasons for the choice of the Community
provisions which it requires to be interpreted and of the link it establishes between those provisions and the national legislation
applicable to the dispute in the main proceedings (Joined Cases C‐453/03, C‐11/04, C‐12/04 and C‐194/04 *ABNA and Others* [2005] ECR I‐10423, paragraph 46; Joined Cases C-338/04, C‐359/04 and C‐360/04 *Placanica and Others* [2007] ECR I-1891, paragraph 34; and *Centro Europa 7*, paragraph 54).

52      The information provided in the decision making the reference serves not only to enable the Court to give useful answers,
but also to enable the governments of the Member States and other interested parties to submit observations in accordance
with Article 23 of the Statute of the Court of Justice. It is the Court’s duty to ensure that that possibility is safeguarded,
bearing in mind that, under that provision, only the decision making the reference is notified to the interested parties (see
Joined Cases 141/81 to 143/81 *Holdijk and Others* [1982] ECR 1299, paragraph 6; and order in Case C-116/00 *Laguillaumie* [2000] ECR I‐4979, paragraph 14).

53      It should also be added that the need for precision, in particular with regard to the factual and legislative context of the
main proceedings, applies in particular in the area of competition, which is characterised by complex factual and legal situations
(see, to that effect, Case C-238/05 *Asnef-Équifax and Administración del Estado* [2006] ECR I‐11125, paragraph 23, and the order in *RAI*, paragraph 18).

54      In this instance, the seventh question is based on the premiss that, in the case with which the national court is concerned,
if Servatius used public resources to implement a future project, that would constitute State aid within the meaning of Article
87(1) EC. Neither the decision making the reference nor the observations of the parties to the main proceedings contain any
elements which might serve to establish that such an advantage would in fact have been granted in the context of the construction
project at issue in the main proceedings – which in any event was not implemented as Servatius did not obtain the necessary
prior authorisation.

55      Furthermore, it should be noted that the main proceedings are concerned not with the conditions on which such aid would have
been or could be granted to Servatius but merely with an entirely separate and independent issue, namely Servatius’ challenge
to the lawfulness of the refusal of its application for prior authorisation to implement a construction project outside the
Netherlands.

56      Accordingly, the seventh question referred by the national court must be held to be inadmissible.

**Costs**

57      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules:

**Article 56 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which
makes the exercise of cross-frontier activities of institutions approved under Article 70(1) of the Housing Law (Woningwet)
in relation to housing matters subject to prior administrative authorisation, in so far as such legislation is not based on
objective, non-discriminatory criteria which are known in advance and which are capable of adequately circumscribing the exercise
by the national authorities of their discretion, a matter which falls to be determined by the national court.**

[Signatures]

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[\*](#Footref*) Language of the case: Dutch.