In January 2014, I wrote a post discussing the plans of the UK Coalition government to withhold some benefits from ‘jobless’ EU migrants. I suggested that this group would be hard to define and that the most obvious persons to fall into this category would be those who are not only unemployed but also for some reason unemployable, such as Wadi Samin, an Austrian army veteran deemed permanently unable to work due to ill health. In Dano, the Grand Chamber of the CJEU seems to have confirmed that this is indeed the case. This decision has been welcomed by leaders including but not limited to David Cameron. However, it does not place major new restrictions on the right of free movement – rather it provides a welcome affirmation of the existing restrictions in the Treaties and secondary legislation. It does this by establishing that ‘sufficient resources’ in Article 7 of the Citizenship Directive refers to ‘own’ resources.
Ms Dano grew up in Romania but migrated to Germany where her 2-year old son, Florin, was born in 2009. Both are Romanian nationals. She settled in Leipzig with her sister and was issued with a permanent residence card in July 2011. She received no support from the child’s father but in addition to help provided by her sister, Dano received child benefit for her son, as well as an additional amount in maintenance payments. (totalling around EUR 317 per month). In 2011 she applied for a series of basic provision benefits (‘Grundsicherung’) provided under German legislation to jobseekers – subsistence benefit (‘existenzsichernde Regelleistung’) for herself, social allowance (‘Sozialgeld’) for her son as well as a contribution to accommodation and heating costs. This application was refused, as was a second application in 2012. An administrative challenge to the 2012 decision, based on Article 18 and 45 TFEU, failed. It was held that she was not eligible to receive these benefits under the relevant German legislation (Paragraph 7(1) of SGB II and Paragraph 23(3) of SGB XII).
She subsequently brought an action before the Social Court in Leipzig, challenging the refusal to grant these basic benefits. The Leipzig Court, although it agreed with the decision under appeal, was unsure that the German provisions were compatible with EU law, in particular the general principle of non-discrimination resulting from Article 18 TFEU, the general right of residence resulting from Article 20 TFEU and Article 4 of Regulation No 883/2004. It therefore referred four questions to the CJEU.
Question 1: the scope ratione personae of Article 4 Regulation No 883/2004
The first question concerned the scope ratione personae of Article 4 Regulation No 883/2004, which replaced Regulation No 1408/71 from 1 May 2010. Article 4, headed ‘Equality of treatment’, provides:
‘Unless otherwise provided for by this Regulation, persons to whom this Regulation applies shall enjoy the same benefits and be subject to the same obligations under the legislation of any Member State as the nationals thereof.’
Having decided that the basic provision benefits sought were ‘special non-contributory cash benefits’ (within the meaning of Article 70(2) of Regulation No 883/2004) the Leipzig Court asked whether such benefits were covered by Article 4. The Grand Chamber confirmed that they did.
Questions 2 and 3: whether Union citizens may be excluded from such benefits where these are provided to a member states own nationals
The second and third questions were the key ones for the case. They sought confirmation of who these benefits had to be provided to: did Articles 18 and 20(2) TFEU together with Article 24(2) of Directive 2004/38 (CD) and Article 4 of Regulation No 883/2004 oblige a member state to provide them to economically inactive Union citizens nationals where these were given to their own economically inactive nationals?
The CJEU re-affirmed citizenship as the ‘fundamental status of nationals of the member states’ as well as the unequivocal protection from discrimination granted to all EU citizens by Article 18 TFEU:
58 As the Court has held on numerous occasions, the status of citizen of the Union is destined to be the fundamental status of nationals of the Member States, enabling those among such nationals who find themselves in the same situation to enjoy within the scope ratione materiae of the FEU Treaty the same treatment in law irrespective of their nationality, subject to such exceptions as are expressly provided for in that regard.
59 Every Union citizen may therefore rely on the prohibition of discrimination on grounds of nationality laid down in Article 18 TFEU in all situations falling within the scope ratione materiae of EU law. These situations include those relating to the exercise of the right to move and reside within the territory of the Member States conferred by point (a) of the first subparagraph of Article 20(2) TFEU and Article 21 TFEU (see judgment in N., EU:C:2013:97, paragraph 28 and the case-law cited).
However, it then noted that Article 18(1) TFEU only prohibits discrimination on grounds of nationality ‘[w]ithin the scope of application of the Treaties, and without prejudice to any special provisions contained therein’. In addition Article 20(2) TFEU explicitly states that the rights conferred on Union citizens are to be exercised ‘in accordance with the conditions and limits defined by the Treaties and by the measures adopted thereunder’. Likewise Article 21(1) TFEU subjected the right of Union citizens to move and reside freely within the Member States to compliance with the ‘limitations and conditions laid down in the Treaties and by the measures adopted to give them effect’ (citing Brey, C‑140/12).
Taken together this led to the established conclusion that Article 18 does not contain an absolute right. It described Article Article 24 CD and Article 4 Regulation 883/2004 as ‘specific expressions’ of the conditional right in Article 18 TFEU.
Article 24 CD has two paragraphs. Article 24(1) affirms equal treatment for Union citizens and their families:
‘Subject to such specific provisions as are expressly provided for in the Treaty and secondary law, all Union citizens residing on the basis of this Directive in the territory of the host Member State shall enjoy equal treatment with the nationals of that Member State within the scope of the Treaty. The benefit of this right shall be extended to family members who are not nationals of a Member State and who have the right of residence or permanent residence.’
This is then limited by Article 24(2) which allows the host Member State to defer equal treatment:
‘By way of derogation from paragraph 1, the host Member State shall not be obliged to confer entitlement to social assistance during the first three months of residence or, where appropriate, the longer period provided for in Article 14(4)(b), nor shall it be obliged, prior to acquisition of the right of permanent residence, to grant maintenance aid for studies, including vocational training, consisting in student grants or student loans to persons other than workers, self-employed persons, persons who retain such status and members of their families.’
This derogation was mentioned in Foerster  and Bressol , and was first ruled upon in two cases concerning education finance, Commission v Austria and N. In those cases the CJ approached it in the same way as other derogations – its use must be narrowly circumscribed. However, as Dano had resided in Germany for longer than 3 months, it did not apply to her.
Having eliminated it, the CJ continued to consider whether Article 24 (1) read together with Article 4 of Regulation No 883/2004 secured her access to the desired benefits. This is where her status became unstuck: in order to enjoy equal access to social benefits, her residence in Germany had to comply with the conditions of Directive 2004/38 as laid out in Articles 6 and 7. According to Article 7 CD, the right of residence is granted to those who if not a student, worker or self-employed,
(1)(b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State;
The CD does not mention the source of these resources and Grand Chamber has quietly added a new element to this provision – economically inactive persons seeking residence can only meet this condition by having sufficient resources ‘of their own’ . Ms Dano could not use Germany’s welfare system to demonstrate ‘sufficient resources’ and clearly had no funds of her own to rely upon. This had a domino effect: without sufficient resources, she could not claim a right of residence under Article 7(1) CD; without that right of residence, she could not invoke the principle of non-discrimination in Article 24(1) CD and equal access to social assistance. Thus
84 …the answer to the second and third questions is that Article 24(1) of Directive 2004/38, read in conjunction with Article 7(1)(b) thereof, and Article 4 of Regulation No 883/2004 must be interpreted as not precluding legislation of a Member State under which nationals of other Member States are excluded from entitlement to certain ‘special non-contributory cash benefits’ within the meaning of Article 70(2) of Regulation No 883/2004, although those benefits are granted to nationals of the host Member State who are in the same situation, in so far as those nationals of other Member States do not have a right of residence under Directive 2004/38 in the host Member State.
Question 4: do Articles 1, 20 and 51 of the EU Charter of Fundamental Rights (CFR) require Member States to grant Union citizens non-contributory cash benefits to enable permanent residence or to fund return to the home State?
Article 1 CFR proclaims that human dignity is inviolable. Article 20 CFR states that everyone is equal before the law. With this question, the Leipzig Court sought guidance on any human rights obligations arising from provision of non-contributory cash benefits. However, before this question could be answered, it had to be brought within the scope of EU law – under Article 51(1), the Charter is addressed ‘to Member States only when they are implementing Union law’, and Article 6(1) TEU states that the CFR does not establish any new power for the European Union or modify its powers. In Frannson, the CJEU Grand Chamber confirmed that where
22…a legal situation does not come within the scope of European Union law, the Court does not have jurisdiction to rule on it and any provisions of the Charter relied upon cannot, of themselves, form the basis for such jurisdiction (see, to this effect, the order in Case C‑466/11 Currà and Others  ECR, paragraph 26).
In that case, a link was identified between on the one hand the tax penalties and criminal proceedings to which Fransson was subject and on the other ‘breaches of his obligations to declare VAT’. However in Siragusa, the 10th Chamber of the Court rejected the argument that protection of the landscape was in any way – even indirectly – connected to EU law. In Dano, the Grand Chamber followed Siragusa and did not find a link. Citing Brey, it argued that
89 …Article 70 of Regulation No 883/2004, which defines the term ‘special non-contributory cash benefits’, is not intended to lay down the conditions creating the right to those benefits. It is thus for the legislature of each Member State to lay down those conditions.
Since those conditions are linked to national rather than EU law, the Member States are not implementing EU law when they determine the conditions for the grant of special non-contributory cash benefits and the extent of such benefits. The Grand Chamber concluded that the CJEU lacked jurisdiction to answer this question.
This is an important decision. The conditions highlighted in Articles 18, 20 and 21 TFEU have existed for as long as these provisions have been in the Treaty. Although the CJEU has often highlighted them, it has tended to do so in general terms. It has now added some substance, using the idea of ‘own’ resources. The interpretation of ‘sufficient resources’ as ‘own resources’ is reminiscent of the so-called ‘Playboy Directives’ that governed free movement of the economically inactive prior to the establishment of EU citizenship. These Directives extended the right of free movement only to those who had sufficient personal finances to support themselves. Their repeal and the creation of the more inclusive Citizenship Directive was seen as a progressive step towards fairer and broader access to the privileges of EU membership. Dano therefore suggests a retreat from the fabric and values of EU citizenship – the market citizen is re-affirmed.
However, there are three reasons why the decision should not be interpreted as the introduction of a major restriction on free movement of persons. First, as mentioned, it does not establish any new legal powers but highlights those that already exist in the TFEU. The ruling provides timely guidance on how the Treaty limitations should be used, given the recent heated statements on free movement of persons in the EU. The Court’s decision may quell the political storm brewing across the EU for a fundamental revision of these rights.
Second, as with all CJEU rulings, Ms Dano’s case is very particular. Although the court found that she had the ability to work, she had never done so, neither in Romania nor Germany. Her prospects of finding work were low for a number of reasons, most importantly because she had a small child to look after. This meant that she was neither seeking nor available for work. The court also held it relevant that she had hardly any schooling – in Romania she had attended school for 3 years but did not obtain any certificates – and no professional training. Finally, her linguistic ability was limited – she understood and was able to express herself ‘simply’ in German but could neither write nor read the language. Most EU migrants will not be in this situation: if they can demonstrate that they have worked, even briefly, at home or abroad, and that they are available for and actively seeking work they will not fall into Article 7(1)(b) CD. The majority of migrant workers may therefore not be affected.
Second, although the Grand Chamber found it in keeping with the Treaty to prevent migrant Union citizens from becoming an unreasonable burden on the social assistance system of a host Member State , it has only agreed that member states should ‘have the possibility’  under Article 7 CD, of refusing to grant social benefits to a particular group – those almost mythical ‘benefit tourists’ who traverse the internal market ‘solely in order to obtain another Member State’s social assistance although they do not have sufficient resources to claim a right of residence.’ The possibility of refusing benefits is therefore confined to this group of EU migrants, who remain an unknown quantity. It should be remembered that in its study of October 2013, the European Commission concluded that they comprised a very small share of benefit claimants across the EU.
Finally, member states cannot refuse social assistance to persons in this group per se. The Grand Chamber requires that member states take an individual approach:
80 …the financial situation of each person concerned should be examined specifically, without taking account of the social benefits claimed, in order to determine whether he meets the condition of having sufficient resources to qualify for a right of residence under Article 7(1)(b) of Directive 2004/38.
Any refusal of social assistance must be preceded by an objective and thorough examination of each individual circumstance. It is likely that cases will soon find their way back to the CJEU should any attempt be made to behave otherwise. Therefore, as stated previously, the ruling is likely to affect a small group, but this group will comprise the most vulnerable and those least able to help themselves. It may include teenage mothers but will not include the majority of EU migrants who are protected by Article 45 TFEU. The ruling is arguably more important for the legal and political signal that it sends to both would-be migrants and the member states.