Judgment — ECLI:EU:C:1998:519
Date: 1998-10-29
Language of the case: Spanish
Court formation: Fifth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment;Freedom to provide services;Free movement of workers
Concepts: General;Restrictions justified on grounds of public policy, public security or public health
Procedure: Action for failure to fulfil obligations - successful
Origin: Spain

Summary of the Judgment
1. Freedom of movement for persons — Freedom of establishment — Freedom to provide services
— Derogations — Activities connected with the exercise of official authority — Activities of
private security undertakings and staff — Excluded
(EC Treaty, Arts 55, first para., and 66)
2. Freedom of movement for persons — Derogations — Protection of public policy, public security
and public health — Private security activities generally excluded — Not permissible
(EC Treaty, Arts 48(3), 52 and 56)
3. Freedom of movement for persons — Freedom of establishment — Freedom to provide services
— Restrictions — Directors and managers of security undertakings subject to a residence condi­
tion — Not permissible — Public security justification — None
(EC Treaty, Arts 56(1) and 66)
I-6717
SUMMARY — CASE C-114/97
1. As a derogation from the fundamental rule
of freedom of establishment, the exception
provided for in the first paragraph of
Article 55 combined, where appropriate,
with Article 66 of the Treaty, must be
interpreted in a manner which limits its
scope to what is strictly necessary for
safeguarding the interests which that pro­
vision allows the Member States to pro­
tect. Thus the derogation for which it pro­
vides must be restricted to activities which
in themselves are directly and specifically
connected with the exercise of official
authority.
That does not cover the case of the activity
of security undertakings and security staff,
the purpose of which is to carry out sur­
veillance and protection tasks on the basis
of relations governed by private law: exer­
cise of their activity does not mean that
they are vested with powers of constraint.
Merely making a contribution to the main­
tenance of public security, which any indi­
vidual may be called upon to do, does not
constitute exercise of official authority.
2. In excluding the exercise, by a person or
undertaking possessing the nationality of
another Member State, of private security
activities, a Member State fails to fulfils its
obligations under Articles 48 and 52 of the
Treaty. Such a general exclusion from access
to certain occupations cannot be justified
on the grounds of public policy, public
security or public health referred to in
Articles 48(3) and 56 of the Treaty. The
right of Member States to restrict freedom
of movement for persons on such grounds
is not intended to exclude economic sec­
tors such as the private security sector
from the application of the principle of
freedom of movement, from the point of
view of access to employment, but to
allow Member States to refuse access to
their territory or residence there to per­
sons whose access or residence would in
itself constitute a danger for public policy,
public security or public health.
3. A rule of national law according to which
directors and managers of all security
undertakings must reside on the territory
of the Member State in which they are
established constitutes an obstacle to
freedom of establishment and to the
freedom to provide services. That resi­
dence condition is not necessary in order
to ensure public security in the Member
State and is not therefore covered by the
derogation provided for by Article 56(1)
combined, where appropriate, with Article
66 of the Treaty. Recourse to that justifica­
tion presupposes the existence of a genuine
and sufficiently serious threat affecting one
of the fundamental interests of society.
Effective monitoring of the activities of
private security undertakings may be car­
ried out and penalties imposed on any
undertaking established in a Member State,
whatever the place of residence of its direc­
tors. Moreover, the payment of any pen­
alty may be secured by means of a guar­
antee to be provided in advance.
I-6718