Judgment — ECLI:EU:C:2004:655
Date: 2004-10-21
Language of the case: French
Court formation: First Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Freedom to provide services
Concepts: General
Procedure: Action for failure to fulfil obligations - successful
Origin: Luxembourg

summary order to pay the costs arising, without the need to guarantee their payment in advance. The defendant Member State is itself aware of this and has tabled a legislative amendment to repeal the provision. (41) VIII – Final consideration 57. I therefore consider that, by making the supply of services in its territory by undertakings established in another Member State using foreign workers subject to the abovementioned requirements of the 1972 Regulation, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 49 EC. 58. These conditions constitute a restriction on the freedom to provide services which, although it may sometimes be justified on grounds of the protection afforded to those workers, are disproportionate given that there are alternative means of doing so which are more consistent with Community law. 59. The foregoing is without prejudice to the fact that, as far as legislation is concerned, progress is being made in the direction indicated by the existing proposal for a directive (42) and that rules governing the various aspects of the employment relationship apply to foreign workers sent to the Grand Duchy of Luxembourg. (43) IX – Costs 60. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if the other party has applied for them. Since the application of the Commission should be upheld and it has applied for the legal costs to be borne by the Grand Duchy of Luxembourg, the latter should be ordered to pay the costs. X – Conclusion 61. In the light of the foregoing I propose that the Court: (1) Declare that, by making the supply of services in its territory by undertakings established in another Member State using foreign workers subject to: (a) the obtaining of an individual work permit, whose granting is discretionary, or of a collective authorisation which may be granted on an exceptional basis, provided that the contracts of employment in question are of unlimited duration and date back to at least six months prior to the posting; and (b) the provision, in either case, of a bank guarantee, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 49 EC; (2) Order the Grand Duchy of Luxembourg to pay the costs. 1 – Original language: Spanish. 2 – Grand-Ducal Regulation of 12 May 1972 on measures applicable to the employment of foreign workers in the Grand Duchy of Luxembourg, (Mém. A. 1972, p. 945), amended by Grand-Ducal Regulations of 29 July 1977 (Mém. A. 1977, p. 1345), 17 June 1994 (Mém. A. 1994, p. 1034) and 29 April 1999 (Mém. A. 1999, No 48). Its legal basis is the Law of 28 March 1972 on entry, residence, health checks and employment of foreign nationals, (Mém. A. 1972, p. 818). 3 – Approximately 1 487 euros. 4 – Such penalties are provided for in Article 34 of the Law of 28 March 1972 referred to in footnote 2. 5 – In my view, the reasoning adopted by the Court of Justice in paragraph 12 of its judgment in Case C-113/89 Rush Portuguesa [1990] ECR I-1417 is not applicable here. There the Court stated that ‘Articles 59 [of the EC Treaty (now, after amendment, Article 49 EC)] and 60 [of the EC Treaty (now Article 50 EC)] therefore preclude a Member State from prohibiting a person providing services established in another Member State from moving freely on its territory with all his staff and preclude that Member State from making the movement of staff in question subject to restrictions such as a condition as to engagement in situ or an obligation to obtain a work permit. To impose such conditions on the person providing services established in another Member State discriminates against that person in relation to his competitors established in the host country who are able to use their own staff without restrictions, and moreover affects his ability to provide the service’. In the present case the situation is different in that a Luxembourg undertaking wishing to use its foreign workers must also fulfil the same requirements as the undertaking from another Member State. The difference is only one of timing: one has already done so while the other must do so prior to the supply of services. It should not be forgotten that, as mentioned previously, the undertaking from the other Member State will have had to fulfil the relevant requirements applying to the employment of foreign workers. 6 – Directive of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services (OJ 1997 L 18, p. 1). 7 – Proposal for a directive of the European Parliament and of the Council on the posting of workers who are third-country nationals for the provision of cross-border services (OJ 1999 C 67, p. 12), submitted by the Commission on 12 February 1999. On the same date a further proposal for a Council directive was submitted extending the freedom to provide cross-border services to third-country nationals established within the Community. Amended proposals for both directives are dated 8 May 2000. 8 – These issues were also addressed in my Opinion in Joined Cases C-369/96 and C-376/96 Arblade and Leloup [1999] ECR I-8453. 9 – Paragraph 16 of the judgment in Case C-164/99 Portugaia Construções [2002] ECR I-787. Also along similar lines are the judgments in Joined Cases C-49/98, C-50/98, C-52/98 to C-54/98 and C-68/98 to C-71/98 Finalarte and Others [2001] ECR I-7831 and Arblade and Leloup, cited previously. The latter judgment cites Case C-76/90 Säger [1991] ECR I-4221, Case C-43/93 Vander Elst [1994] ECR I-3803, Case C-272/94 Guiot [1996] ECR I-1905, Case C-3/95 Reisebüro Broede [1996] ECR I-6511 and Case C-222/95 Parodi [1997] ECR I-3899. 10 – .Finalarte, paragraph 30, which in turn relies on the judgment in Case C-165/98 Mazzoleni and ISA [2001] ECR I-2189. 11 – .Finalarte, paragraph 31. See also the judgments in Portugaia Construções, Arblade and Leloup, Säger, Vander Elst and Guiot, cited above, and in Case 279/80 Webb [1981] ECR 3305, Case C‑180/89 Commission v Italy [1991] ECR I-709 and Case C-198/89 Commission v Greece [1991] ECR I-727. 12 – .Finalarte, paragraph 32. This line of reasoning also appears in the Portugaia Construções, Arblade and Leloup, Säger, Guiot, Commission v Italy and Commission v Greece judgments cited above and in Case C-19/92 Kraus [1993] ECR I-1663 and Case C-55/94 Gebhard [1995] ECR I-4165. 13 – Joined Cases 62/81 and 63/81 Seco and Desquenne & Giral [1982] ECR 223 as well as Finalarte, Mazzoleni and ISA, Arblade and Leloup, Rush Portuguesa and Webb, cited above. 14 – Paragraph 37 of the judgment in Arblade and Leloup, which refers to Case C-18/95 Terhoeve [1999] ECR I-345. 15 – Paragraph 22 of the judgment in Finalarte, cited in footnote 9, which refers to Rush Portuguesa and Vander Elst, also cited above. 16 – Paragraph 47 of the abovementioned Finalarte judgment. 17 – Paragraphs 16 and 17 of the judgment in Rush Portuguesa, cited above. 18 – As explained by Advocate General Tesauro in Vander Elst at point 1 of his Opinion. 19 – Article 1 of the 1972 Regulation substantially repeats Articles 26 and 28 of the Law of 28 March 1972 on entry, residence, health checks and employment of foreign nationals referred to in footnote 2. As a further example, the grounds for Article 10(1) can be found in Article 27 of that Law. 20 – It argues that the 1972 Regulation should be interpreted in accordance with the Law of 24 May 1989 on contracts of employment. 21 – Such criteria do not apply to the granting or refusal of the collective authorisation, which is for exceptional cases (Article 9). 22 – At point 29 of this Opinion. 23 – At point 28 of this Opinion. 24 – As noted at point 25 above, the proposal for a directive on the posting of workers who are third-country nationals for the provision of cross-border services also tends towards a different approach. 25 – It is true that this requirement, like the others, is applicable to all undertakings, including Luxembourg undertakings, in relation to any foreign worker. However, what is relevant here is the impact on the freedom to provide services. 26 – Especially as regards minimum wages and safety at work, which legislation is stricter in Luxembourg, according to the Luxembourg Government. Although the terms of the comparison are not stated, they appear to relate to the legislation of any other Member State. No evidence was produced in support of such a statement. 27 – Advocate General Tesauro made the same point in his Opinion in the Vander Elst case, cited above. Moreover, such a notification could be required to include information about the workers in question, their contracts with the undertaking and the purpose and conditions of the posting, among other things. 28 – According to the judgment in the Vander Elst case, cited above, at paragraph 23, ‘Community law does not preclude Member States from extending their legislation, or collective labour agreements entered into by both sides of industry relating to minimum wages, to any person who is employed, even temporarily, within their territory, no matter in which country the employer is established; nor does Community law prohibit Member States from enforcing those rules by appropriate means’, which do not, in my opinion, include the prior authorisation required by the 1972 Regulation. Similar reasoning can be found in the judgments in the Rush Portuguesa and Seco cases, cited above. Directive 96/71, which is cited by the Luxembourg Government, is also consistent with this approach, although it does not require a prior authorisation as a means of applying laws or collective labour agreements. 29 – Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475). 30 – It is also referred to in Article 10 of the 1972 Regulation. 31 – See point 49 of this Opinion. 32 – Although those concepts may comprise aspects relating to matters such as salaries, vacancies, irregular employment and employment priority, according to what can be inferred from the judgments of the Luxembourg Tribunal Administratif (Administrative Court) lodged with the defence. 33 – In the same vein, Advocate General Tesauro stated at point 27 of his Opinion in the Vander Elst case, cited in footnotes 18 and 27, that ‘checks carried out to that end must be formal in nature and must not lead to a discretionary assessment; this means that, once it has been established that a lawful contract of employment exists, authorisation for the workers to move must automatically be given’. However, it would perhaps be appropriate to verify whether such a lawful contract demonstrates lawful and habitual employment in the terms set out in paragraph 26 of the Vander Elst judgment (cited). This issue is dealt with in more detail at points 53 and 54 of this Opinion. 34 – See Rush Portuguesa, Vander Elst and Finalarte, cited above. See also, in this respect, point 30 of this Opinion. 35 – Directive 96/71 requires an employment relationship between the undertaking of origin or making the posting, the temporary employment undertaking or placement agency, as the case may be, and the worker during the period of posting (Article 1(3)). 36 – A similar concept to contracts for ‘non-significant’ work, referred to in Directive 96/71, Article 3(5). 37 – See footnote 9. 38 – My emphasis. 39 – See point 44 of this Opinion. 40 – According to the information provided by the defendant, these amount to 25 euros every six months. 41 – Defence, page 15, paragraph 2. 42 – See point 25 of this Opinion. 43 – See paragraph 25 of the Vander Elst judgment, cited above. Similarly, Article 3 of Directive 96/71. See point 45 of this Opinion.