# C_2008064EN.01001701.xml

| 8.3.2008 | EN | Official Journal of the European Union | C 64/17 |
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8.3.2008

EN

Official Journal of the European Union

C 64/17

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Action brought on 5 December 2007 — Commission of the European Communities v Federal Republic of Germany

(Case C-546/07)

(2008/C 64/26)

Language of the case: German

Parties

Applicant: Commission of the European Communities (represented by: E. Traversa and P. Dejmek, acting as Agents)

Applicant:

Defendant: Federal Republic of Germany

Defendant:

Form of order sought

| — | Declare that the Federal Republic of Germany has infringed its obligations arising from Article 49 EC and the standstill clause in Chapter 2 (Freedom of Movement for Persons), Paragraph 13 of Annex XII (List referred to in Article 24 of the Act of Accession of 16 April 2003) in that:






  (a) | in its administrative practice, it interprets the term ‘Unternehmen der anderen Seite’ (undertakings from the other side) in Paragraph 1(1) of the intergovernmental agreement between Germany and Poland of 31 January 1990 on the posting of workers from Polish undertakings to carry out works contracts as meaning ‘German undertakings’ and |
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Declare that the Federal Republic of Germany has infringed its obligations arising from Article 49 EC and the standstill clause in Chapter 2 (Freedom of Movement for Persons), Paragraph 13 of Annex XII (List referred to in Article 24 of the Act of Accession of 16 April 2003) in that:

(a)

in its administrative practice, it interprets the term ‘Unternehmen der anderen Seite’ (undertakings from the other side) in Paragraph 1(1) of the intergovernmental agreement between Germany and Poland of 31 January 1990 on the posting of workers from Polish undertakings to carry out works contracts as meaning ‘German undertakings’ and

| (b) | with the so-called ‘Arbeitsmarktschutzklausel’ (the clause protecting the labour market) it widened the regional restrictions for access of workers after 16 April 2003, namely the date the EU Act of Accession: Poland was signed; |
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(b)

with the so-called ‘Arbeitsmarktschutzklausel’ (the clause protecting the labour market) it widened the regional restrictions for access of workers after 16 April 2003, namely the date the EU Act of Accession: Poland was signed;

| — | order the defendant to pay the costs of the proceedings. |
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order the defendant to pay the costs of the proceedings.

Pleas in law and main arguments

| A. | The posting of polish workers to carry out works contracts in Germany takes place pursuant to an agreement of 31 January 1990 between the Government of the Federal Republic of Germany and the Polish Government on the posting of workers from Polish undertakings to carry out works contracts. Under German administrative practice, the term ‘Unternehmen der anderen Seite’ in Paragraph 1(1) of that agreement is interpreted as meaning ‘German undertakings’. |
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A.

The posting of polish workers to carry out works contracts in Germany takes place pursuant to an agreement of 31 January 1990 between the Government of the Federal Republic of Germany and the Polish Government on the posting of workers from Polish undertakings to carry out works contracts. Under German administrative practice, the term ‘Unternehmen der anderen Seite’ in Paragraph 1(1) of that agreement is interpreted as meaning ‘German undertakings’.

| B. | The result is that only German undertakings can conclude works contracts under the Agreement. The only alternative for undertakings from other Member States which wish to carry out work in Germany is to establish a subsidiary company in that Member State. Undertakings from other Member States are thus prevented from taking advantage of the freedom to provide services granted to them under Article 49 EC to conclude works contracts, for work to be carried out in the Federal Republic of Germany, with Polish undertakings under the Agreement between Germany and Poland. There is thus direct discrimination of undertakings from Member States other than Germany which is based on the nationality or the location of the registered office of undertakings. |
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B.

The result is that only German undertakings can conclude works contracts under the Agreement. The only alternative for undertakings from other Member States which wish to carry out work in Germany is to establish a subsidiary company in that Member State. Undertakings from other Member States are thus prevented from taking advantage of the freedom to provide services granted to them under Article 49 EC to conclude works contracts, for work to be carried out in the Federal Republic of Germany, with Polish undertakings under the Agreement between Germany and Poland. There is thus direct discrimination of undertakings from Member States other than Germany which is based on the nationality or the location of the registered office of undertakings.

| C. | Under Article 46 EC in conjunction with Article 55 EC, discriminatory special rules may only be justified on grounds of public policy, public security or public health. Pursuant to settled case-law, reliance on the justification of public policy, laid down in Article 46 EC, presupposes that the maintaining in force of the discriminatory measure must be necessary to counter a genuine and sufficiently serious threat to one of the fundamental interests of society. |
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C.

Under Article 46 EC in conjunction with Article 55 EC, discriminatory special rules may only be justified on grounds of public policy, public security or public health. Pursuant to settled case-law, reliance on the justification of public policy, laid down in Article 46 EC, presupposes that the maintaining in force of the discriminatory measure must be necessary to counter a genuine and sufficiently serious threat to one of the fundamental interests of society.

| D. | Those conditions are not met in the present case. In order to properly supervise the implementation of the Agreement it is not necessary to impose a requirement that undertakings must have their registered office in Germany since all applications have to be made to the German authorities in any case. As regards the enforcement of the liability of the applicant for payment of social security contributions and penalties for infringements of law, such questions are not specifically related to the agreement on works contracts, but are related to the general provision of services in Germany by undertakings from other Member States. There also appears to be no reason why the opening of the bilateral agreement to undertakings from other Member States should lead to an incorrect application or circumvention of the transitional provisions in the Accession Agreement. Concerns about the incorrect use of the transitional provisions in no way amount to a sufficiently serious threat to public policy or security capable of justifying a discriminatory restriction on the freedom to provide services. |
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D.

Those conditions are not met in the present case. In order to properly supervise the implementation of the Agreement it is not necessary to impose a requirement that undertakings must have their registered office in Germany since all applications have to be made to the German authorities in any case. As regards the enforcement of the liability of the applicant for payment of social security contributions and penalties for infringements of law, such questions are not specifically related to the agreement on works contracts, but are related to the general provision of services in Germany by undertakings from other Member States. There also appears to be no reason why the opening of the bilateral agreement to undertakings from other Member States should lead to an incorrect application or circumvention of the transitional provisions in the Accession Agreement. Concerns about the incorrect use of the transitional provisions in no way amount to a sufficiently serious threat to public policy or security capable of justifying a discriminatory restriction on the freedom to provide services.

| E. | It is apparent from the wording of the standstill clause in Chapter 2, Paragraph 13 of Annex XII (List referred to in Article 24 of the Act of Accession of 16 April 2003) that the standstill obligation is absolute and any restriction on the access of Polish workers with works contracts to the German labour market which places them in a situation which is worse than the one they were in on 16 April 2003 is prohibited. Pursuant to the so-called ‘Arbeitsmarktschutzklausel’ (the clause protecting the labour market), which is continuously applied in the administrative practice of the Federal Employment Agency, works contracts are not permitted in principle if they are to be concluded in an agency district in which the average unemployment rate over the last 6 months has been at least 30 % above the unemployment rate of the Federal Republic of Germany. The list of the agency districts falling within that rule are updated quarterly. Consequently, the Arbeitsmarktschutzklausel infringes the standstill clause of the Act of Accession since new agency districts have been added to the list of ‘blocked’ districts after 16 April 2003. |
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E.

It is apparent from the wording of the standstill clause in Chapter 2, Paragraph 13 of Annex XII (List referred to in Article 24 of the Act of Accession of 16 April 2003) that the standstill obligation is absolute and any restriction on the access of Polish workers with works contracts to the German labour market which places them in a situation which is worse than the one they were in on 16 April 2003 is prohibited. Pursuant to the so-called ‘Arbeitsmarktschutzklausel’ (the clause protecting the labour market), which is continuously applied in the administrative practice of the Federal Employment Agency, works contracts are not permitted in principle if they are to be concluded in an agency district in which the average unemployment rate over the last 6 months has been at least 30 % above the unemployment rate of the Federal Republic of Germany. The list of the agency districts falling within that rule are updated quarterly. Consequently, the Arbeitsmarktschutzklausel infringes the standstill clause of the Act of Accession since new agency districts have been added to the list of ‘blocked’ districts after 16 April 2003.

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