Commission of the European Communities v Kingdom of Spain.
Date: 2006-01-26
22. In its action, the Commission refers both to Article 43 EC, which guarantees freedom of establishment, and Article 49 EC, which relates to freedom to provide services. In that regard, it should be noted that the key element defining the respective fields of application of those two provisions is whether or not the economic operator concerned is established in the Member State in which it offers the service in question (the host Member State). When it is established there, by either its principal or secondary establishment, its situation falls within the scope of the principle of freedom of establishment within the meaning of Article 43 EC. In the contrary case, it must be classified as a ‘cross-border provider of services’ and falls under the principle of freedom to provide services pursuant to Article 49 EC (see, to that effect, Case C‑55/94 Gebhard  [1995] ECR I‑4165, paragraphs 25 to 28, and Case C‑215/01 Schnitzer  [2003] ECR I‑14847, paragraphs 28 to 32). In the context of the present case, the national laws and regulations in question appear to apply without distinction both to private security undertakings established in Spanish territory and to those established in other Member States and active in Spain on an occasional or temporary basis.
23. Private security services are not, to date, harmonised at Community level. However, although it is true that, in such circumstances, Member States remain, in principle, competent to define the conditions for the pursuit of the activities in that sector, they must, when exercising their powers in this area, respect the basic freedoms guaranteed by the Treaty (see Case C‑58/98 Corsten  [2000] ECR I-7919, paragraph 31; Case C‑108/96 Mac Quen and Others  [2001] ECR I-837, paragraph 24; and Case C‑294/00 Gräbner  [2002] ECR I‑6515, paragraph 26).
24. In accordance with the case-law of the Court, Article 59 of the EC Treaty (now, after amendment, Article 49 EC) requires not only the elimination of all discrimination on grounds of nationality against providers of services who are established in another Member State, but also the abolition of all restrictions, even if applicable without distinction to national providers of services and to those of other Member States, which are liable to prohibit or render less advantageous the activities of a provider of services established in another Member State, where he lawfully provides similar services (Case C‑43/93 Vander Elst  [1994] ECR I‑3803, paragraph 14, and Case C‑17/00 De Coster  [2001] ECR I‑9445, paragraph 29).
25. Furthermore, the Court has already held that Article 49 EC precludes the application of any national rules which have the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State ( De Coster , paragraph 30).
26. It should also be noted that any national measure liable to hinder or make less attractive the exercise of those freedoms can be justified only if it fulfils four conditions: it must be applied in a non-discriminatory manner; it must be justified by overriding reasons based on the general interest; it must be suitable for securing the attainment of the objective which it pursues; and it must not go beyond what is necessary in order to attain that objective (see, inter alia, Case C‑19/92 Kraus  [1993] ECR I‑1663, paragraph 32; Case C‑424/97 Haim  [2000] ECR I‑5123, paragraph 57; and Mac Quen and Others , paragraph 26).
27. In general, such a measure, when it involves the imposition of certain conditions on the exercise of the guaranteed rights, may only be justified in so far as the public interest relied on is not safeguarded by the rules to which the provider of the service is subject in the Member State in which he is established ( Corsten , paragraph 35). In other words, as the Advocate General observed in point 45 of her Opinion, the authorities of the host Member State must, in principle, take account of the requirements which the economic operators concerned and their employees already satisfy in their country of origin.
28. Finally, with regard to the argument of the Spanish Government concerning the closeness between the field of private security and that of public security, the Court has already held that the exception laid down in Article 46(1) EC authorising the Member States to maintain special regimes for foreign nationals justified on grounds of public safety did not apply to the general system for private security undertakings ( Commission  v Spain , paragraphs 45 and 46, and Case C‑355/98 Commission  v Belgium  [2000] ECR I‑1221, paragraphs 28 and 30).
The first complaint, concerning the legal form of the undertaking
Arguments of the parties
31. It should be remembered at the outset that, with regard to legislation analogous to the Spanish legislation criticised by the Commission, the Court has already held that the requirement that a private security undertaking must be constituted as a legal person in order to be able to carry out its activities constituted a restriction contrary to Articles 43 EC and 49 EC (Case C‑171/02 Commission  v Portugal  [2004] ECR I‑5645, paragraphs 41 to 44).
36. In this regard, the Court has already held that the requirement to have a minimum share capital, imposed on private security undertakings, infringed Articles 43 EC and 49 EC ( Commission  v Portugal , paragraphs 53 to 57). The justifications put forward by the Spanish Government, especially the particular terrorist threat existing in Spain, have no direct connection with the amount of the share capital of the undertaking and do not explain the restrictions placed on freedom to provide services and freedom of establishment.
42. The Court has already expressly held that providing security is less of a restriction on the freedom of establishment and freedom to provide services than is the setting of a minimum share capital to ensure the protection of creditors ( Commission  v Portugal , paragraph 55).
43. However, it is established case-law that such an obstacle may be justified only in so far as the public interest relied on is not safeguarded by the rules to which the provider of the service is subject in the Member State in which he is established (see Corsten , paragraph 35). The Spanish legislation at issue requires the security to be lodged with a Spanish body, the Caja General de Depósitos, without taking into account any security lodged in the Member State of origin. Furthermore, in the current state of development of the systems for cross-border debt recovery and execution of foreign judgments within the Union, such strictness appears disproportionate. The requirement to lodge security goes beyond what is necessary to ensure adequate protection of creditors.
44. Indeed, it is clear from the observations of the Spanish Government that it has declared itself prepared to take into account securities lodged with financial bodies of the other Member States, provided that sums relating to the activities carried out on Spanish territory are set aside and held at its disposal. In that regard, it should be noted that, according to settled case-law, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion and that the Court cannot take account of any subsequent changes (se e, inter alia, Case C‑103/00 Commission  v Greece  [2002] ECR I‑1147, paragraph 23, and Case C‑323/01 Commission  v Italy  [2002] ECR I‑4711, paragraph 8). Moreover, the present case involves a mere declaration by the defendant government and not a concrete legislative or regulatory measure.
49. With regard to the justification for that restriction, the mere fact that one Member State imposes less strict rules than another Member State does not necessarily mean that the stricter rules are disproportionate and incompatible with Community law (Case C‑384/93 Alpine Investments  [1995] ECR I‑1141, paragraph 51; Case C‑3/95 Reisebüro Broede  [1996] ECR I‑6511, paragraph 42; Mac Quen and Others , paragraphs 33 and 34; and Gräbner , paragraphs 46 and 47).
55. The Court has already held that the requirement that members of staff of a private security undertaking must obtain a fresh specific authorisation in the host Member State constitutes an unjustified restriction on that undertaking’s freedom to provide services within the meaning of Article 49 EC, in so far as it does not take account of the controls and verifications already carried out in the Member State of origin ( Commission  v Portugal , paragraph 66, and Case C‑189/03 Commission  v Netherlands  [2004] ECR I‑9289, paragraph 30).
57. With regard to the justification for that obstacle, the Court has held that, in the event of establishment in another Member State, an undertaking is in principle required to meet the same conditions as apply to nationals of the host Member State ( Gebhard , paragraph 36). That being the case, general application of an administrative authorisation procedure to foreign security undertakings is not of itself contrary to Article 43 EC. However, as the Advocate General rightly observed in points 84 and 85 of her Opinion, the Spanish legislation does not provide for the possibility of taking into account the requirements already met by individual members of the staff of those undertakings in their Member State of origin. Such strictness goes beyond what is necessary to attain the legitimate objective of checking the abovementioned staff.