In February, Eutopialaw featured an analysis of Advocate General Mengozzi’s opinion in the Elodie Giersch case. Giersch concerns the question of whether a Luxembourg law that makes funding for higher education conditional upon residence in the Grand Duchy constitutes discrimination on the basis of nationality.
The effect of the national law was to exclude from its benefit the children of frontier workers from Belgium, Germany and France that currently make up around 44% of Luxembourg’s workforce. The Advocate General recognized that the measure indirectly discriminates between domestic and foreign workers. Still, he argued that such discrimination could be justified as it was aimed at increasing the number of Luxembourgers with a higher education degree in order to transform the Luxembourg economy into a knowledge-based economy. This approach not only contrasted with earlier case law, such as Gravier or Commission v Austria but further raised the fundamental question of how concerns for a national economy (Luxembourg’s future economy) can justify derogations from the European Union’s internal market imperatives. In my analysis of Advocate General Mengozzi’s opinion, I have argued that the concern for a single economy of a Member State can be placed into the current tendency to allocate increased respect to national peculiarities even if this entails the fragmentation of EU law.
Last week, the CJEU took a different approach to the issue. In its judgment issued on 20 June, the Luxembourg measure was declared incompatible with EU law. While the CJEU recognized that the Luxembourg legislation pursues a legitimate objective, namely the increase of Luxembourg residents with higher education degrees, it held that the current system extends beyond what is necessary to attain that objective. The Court qualified the financial aid measure as a social advantage that must be granted to migrant workers under the same condition as those applying to national workers. Equal treatment must be extended to those migrant workers whose residence remains in a different Member States, such as Luxembourg’s frontier workers. According to the CJEU’s judgment, the residence condition constitutes indirect discrimination on grounds of nationality as it operates mainly to the detriment of nationals of other Member States while benefitting Luxembourgers.
The CJEU did acknowledge that a residence condition can be an appropriate tool for attaining the objective of increasing the number of Luxembourg residents with a higher education degree but found that the current system is too exclusive in nature as it imposes a condition of prior residence (the student must be resident in Luxembourg prior to embarking on their studies). According to the Court, residence is not necessarily the sole element to be taken into account to examine the degree of attachment to a State, presuming that such attachment makes students more likely to work in Luxembourg after completing their studies. The reasoning followed that children of frontier workers, who have resided in a neighboring county and whose parents have worked in Luxembourg for a long period of time, might be just as likely to make themselves available for the Luxembourg labour market upon graduation as those who reside in the Grand Duchy prior to starting their studies.
In its judgment, the Court suggests alternative solutions Luxembourg that would allow the Member State to attain its objective, such as a system of loans where the grant of the loan or its reimbursement are conditional upon future work in the Grand Duchy or a condition according to which the recipient’s parents must have worked in the Member State for a certain amount of time. According to the Court, these would be adequate measures to prevent ‘study grant forum shopping’.
While the outcome of the case is hardly surprising, the Court’s reasoning inspires further reflection. Indeed, it states at paragraph 56 of its judgment that
“an action undertaken by a Member State in order to ensure that its resident population is highly educated and to promote the development of the economy pursues a legitimate objective which can justify indirect discrimination on grounds of nationality.”
Surely, the health of a single State’s economy, no matter how small, ultimately contributes to the well being of the internal market. Nonetheless it is worth pausing for a moment at this point. In making this statement, the Court joins its Advocate General’s stance that considerations relating to a single economy can justify derogations from the free movement imperatives. Rather than creating incentives for its own residents to pursue higher education, Luxembourg could just as well direct its policies at employing highly qualified workers from other Member States. It could be argued that this would even be the quicker, cheaper and more efficient option to achieve its declared objective. In accepting that Luxembourg chooses a different option that ultimately not only benefits its economy but also its own residents and citizens, the CJEU tolerates space for concerns other than those of a purely economic nature in its internal market case law. After all, such concerns have been part of EU law ever since the first stages of European integration and have become more important in recent times as more claims for the recognition of national particularities and identities are being made. In specifying to what extent national considerations can be taken into account, Giersch constitutes valuable guidance for national legislators and judges alike.